Rule 497(c)
Registration No. 333-00767
AMERINDO
TECHNOLOGY FUND
PROSPECTUS 1996
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY................................................................................. 2
EXPENSE SUMMARY.................................................................................... 4
INVESTMENT OBJECTIVE AND POLICIES.................................................................. 5
ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS................................................. 7
INVESTMENT RESTRICTIONS............................................................................ 10
MANAGEMENT OF THE FUND............................................................................. 10
PURCHASE OF SHARES................................................................................. 14
REDUCTION OR ELIMINATION OF SALES LOADS............................................................ 16
REDEMPTION OF SHARES............................................................................... 17
DIVIDENDS AND DISTRIBUTIONS........................................................................ 19
NET ASSET VALUE.................................................................................... 20
DISTRIBUTION AND SERVICE PLAN...................................................................... 20
PERFORMANCE INFORMATION............................................................................ 22
DESCRIPTION OF COMMON STOCK........................................................................ 23
TAXES.............................................................................................. 23
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT....................................................... 25
COUNSEL AND INDEPENDENT AUDITORS................................................................... 25
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PROSPECTUS July 31, 1996
AMERINDO TECHNOLOGY FUND
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One Embarcadero
Suite 2300 399 Park Avenue
San Francisco, CA 18th Floor
94111 New York, New York 10022
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Amerindo Technology Fund (the "Fund"), a non-diversified, open-end,
management investment company, is a series of Amerindo Funds Inc. The Fund's
investment objective is to seek long-term capital appreciation by investing at
least 65% of its assets (although the Fund intends, as a non-fundamental policy,
to invest at least 80% of its assets) in the common stocks of technology
companies. Technology companies are those companies with primary business
operations in either the technology or science areas. Industries likely to be
represented in the portfolio include computers, networking and internetworking
software, computer aided design, telecommunications, media and information
services, medical devices and biotechnology. The Fund may also invest in the
stocks of companies that should benefit from the commercialization of
technological advances, although they may not be directly involved in research
and development. Current income is incidental to the Fund's investment
objective. The technology and science areas have exhibited and continue to
demonstrate rapid growth, both through increasing demand for existing products
and services and the broadening of the technology market. THIS FUND IS DESIGNED
FOR LONG-TERM INVESTORS WHO UNDERSTAND AND ARE WILLING TO ACCEPT THE RISK OF
LOSS INVOLVED IN SEEKING LONG-TERM CAPITAL APPRECIATION AND SHOULD NOT BE USED
AS A SHORT-TERM TRADING VEHICLE. THE FUND IS ALSO DESIGNED AS A SPECIALIZED
INVESTMENT VEHICLE AND IS NOT INTENDED TO BE USED BY AN INVESTOR AS A COMPLETE
INVESTMENT PROGRAM. See "Investment Objective" herein.
All subscriptions during the initial purchase period for shares of the Fund
will be deposited in an interest-bearing escrow account until the earlier of (1)
the acceptance by the Fund of subscriptions for shares of at least $100 million,
or (2) 90 days from the date of this Prospectus. Each subscriber's pro rata
share of the interest earned in the escrow account will be used to purchase
additional full or fractional shares of the Fund. The escrow account will be
maintained with The Northern Trust Company, the Fund's custodian. During this
initial purchase period, investors purchasing Class A shares may do so without
incurring any initial sales load.
The Fund offers two classes of shares to investors, Class A and Class D
shares (each individually a "Class" or collectively the "Classes"). Class A
shares are sold subject to an initial sales load of up to 2.50%. Class D shares
are sold without an initial sales load. The Fund, on behalf of each Class, has
adopted a distribution and service plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended. Under the Plan, each Class
pays a servicing fee equal to 0.25% of its respective average daily net assets
and Class A pays a distribution fee equal to 0.25% of its average daily net
assets. The minimum initial investment for purchases of Class A shares is
$25,000 and the minimum subsequent investment is $2,500. The minimum initial
investment for purchases of Class D shares is $150,000 and the minimum
subsequent investment is $15,000.
Consistent with the Fund's investment objective of long-term capital
appreciation, shareholders in Class A and Class D shares may be subject to a
3.00% redemption fee for redeeming shares held less than one year. The
redemption fee is assessed against the net assets redeemed and is retained by
the Fund. See "Redemption of Shares".
The Fund will pay Amerindo Investment Advisors Inc., the Fund's investment
adviser (the "Adviser"), a monthly advisory fee at the annual rate of 1.50% of
the Fund's average daily net assets. This fee is higher than the fee paid by
most other mutual funds, however, the Board of Directors believes it to be
reasonable in light of the advisory services the Fund receives thereunder.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing and it should be retained
for future reference. Additional information about the Fund, including
additional information concerning risk factors relating to an investment in the
Fund, has been filed with the Securities and Exchange Commission in a Statement
of Additional Information for the Fund, dated July 31, 1996. This information is
incorporated by reference and is available without charge upon request from
Furman Selz LLC (the "Distributor"), 230 Park Avenue, New York, New York 10169.
General information about the Fund may be requested in writing to the Fund, at
237 Park Avenue, New York, New York 10017 or by calling the Fund at (1-888-TECH
FUND).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing in this Prospectus.
THE FUND. Amerindo Technology Fund, a non-diversified, open-end, management
investment company, is a series of Amerindo Funds Inc. The Fund offers two
classes of shares to investors, Class A and Class D shares.
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek long-term
capital appreciation by investing at least 65% of its assets (although the Fund
intends, as a non-fundamental policy, to invest at least 80% of its assets) in
the common stocks of technology companies. Technology companies are those
companies with primary business operations in either the technology or science
areas. Industries likely to be represented in the portfolio include computers,
networking and internetworking software, computer aided design,
telecommunications, media and information services, medical devices and
biotechnology. The Fund may also invest in the stocks of companies that should
benefit from the commercialization of technological advances, although they may
not be directly involved in research and development. This Fund is designed for
long-term investors who understand and are willing to accept the risk of loss
involved in seeking long-term capital appreciation and should not be used as a
trading vehicle. Current income is incidental to the Fund's investment
objective. See "Investment Objective".
MANAGEMENT AND FEES. The Fund will pay Amerindo Investment Advisors Inc., the
Adviser, a monthly advisory fee at the annual rate of 1.50% of each Class's
average daily net assets. This fee is higher than the fee paid by most other
mutual funds, however, the Board of Directors believes it to be reasonable in
light of the advisory services the Fund receives thereunder. Furman Selz LLC
serves as both the Administrator and Distributor. For the services rendered to
the Fund by the Administrator, the Fund pays the Administrator an annual fee
paid monthly equal to 0.15% of the Fund's aggregate average daily net assets.
The Administrator, however, has agreed to waive a portion of its fees and may
not change this waiver policy without the prior consent of the Fund's Board of
Directors. The Fund, on behalf of each Class, has adopted a distribution and
service plan (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended. Under the Plan, each Class pays a servicing fee equal
to 0.25% of its respective average daily net assets and Class A pays a
distribution fee equal to 0.25% of its average daily net assets. See
"Distribution and Service Plan".
HOW TO PURCHASE SHARES. Shares of the Fund may be purchased at the net asset
value per share next determined, plus any applicable sales load, after receipt
of an order by the Fund's transfer agent in proper form with accompanying check
or other bank wire payment arrangements satisfactory to the Fund. Class A shares
are sold subject to an initial sales load of up to 2.50%. Class D shares are
sold without an initial sales load. The minimum initial investment in Class A is
$25,000 and the minimum subsequent investment is $2,500. The minimum initial
investment in Class D is $150,000 and the minimum subsequent investment is
$15,000. See "Purchase of Shares".
INITIAL PURCHASE PERIOD. All subscriptions during the initial purchase period
for shares of the Fund will be deposited in an interest-bearing escrow account
until the earlier of (1) the acceptance by the Fund of subscriptions for shares
of at least $100 million, or (2) 90 days from the date of this
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Prospectus. Each subscriber's pro rata share of the interest earned in the
escrow account will be used to purchase additional full or fractional shares of
the Fund. The escrow account will be maintained with The Northern Trust Company,
the Fund's custodian. During this initial purchase period, investors purchasing
Class A shares may do so without incurring any initial sales load.
HOW TO SELL SHARES. Shares of the Fund may be redeemed by a shareholder at any
time at the net asset value per share next determined after the redemption
request is received by the Fund's transfer agent in proper order. Consistent
with the Fund's investment objective of long-term capital appreciation,
shareholders of both Class A and Class D may be subject to a 3.00% fee on the
redemption of shares held for less than one year. These redemption fees are
assessed against net assets and will be retained by the Fund. See "Redemption of
Shares".
DIVIDENDS AND REINVESTMENT. Each dividend and capital gains distribution, if
any, declared by the Fund on its outstanding shares will, unless a shareholder
elects otherwise, be paid on the payment date in additional shares of the Fund
having an aggregate net asset value as of the ex-dividend date of such dividend
or distribution equal to the cash amount of such distribution. Shareholders may
change this election by notifying their shareholder servicing agent or
broker-dealer in writing at any time prior to the record date for a particular
dividend or distribution. There are no sales or other charges in connection with
the reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains. The Fund, however, currently intends to
pay dividends and capital gains distributions, if any, at least on an annual
basis. See "Dividends and Distributions".
RISK FACTORS. Investors should consider the risks of investing in the
technology and science areas, smaller capitalized companies, and foreign
securities. Companies in rapidly changing fields of technology and science face
special risks such as competitive pressures and technological obsolescence and
may be subject to greater governmental regulation than many other industries.
Investments in smaller capitalized companies may involve greater risks, such as
limited product lines, markets and financial or managerial resources.
Investments in securities of foreign issuers may involve risks that are not
associated with domestic investments. Foreign issuers may lack uniform
accounting, auditing and financial reporting standards, practices and
requirements, and there is generally less publicly available information about
foreign issuers than there is about U.S. issuers. See "Additional Investment
Information and Risk Factors". The Fund should not be used as a trading vehicle.
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EXPENSE SUMMARY
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INVESTOR TRANSACTION EXPENSES
Class A Class D
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Maximum Sales
Load Imposed on
Purchases (as a
percentage of the
offering price) 2.50% None
Redemption Fees (for shares 3.00% 3.00%
held less than one year)
ESTIMATED ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET
ASSETS)
Management Fees 1.50% 1.50%
12b-1 Fees 0.50%* 0.25%
Other Expenses (after expense
reimbursements or fee waivers) 0.50% 0.50%
Total Estimated Annual
Operating Expenses (after expense
reimbursements or fee waivers) 2.50% 2.25%
EXAMPLE:An investor in the Fund would pay the following expenses
on a $1,000 investment in the Fund assuming a 5% annual
return reinvested and redemption at the end of each time
period:
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Year 1 Year 3
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Class A $ 80 $ 104
Class D $ 53 $ 73
Assuming no redemption at the
end of each time period:
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Year 1 Year 3
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Class A $ 50 $ 104
Class D $ 23 $ 73
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The purpose of the expense table provided above is to assist investors in
understanding the various costs and expenses that an investor will bear directly
or indirectly. For a further discussion of these fees see "Management of the
Fund." The Adviser, Administrator and the Distributor may voluntarily waive all
or a portion of their respective Management Fee, Administrative Fee or 12b-1
fees. The "Total Estimated Annual Operating Expenses", including "Other
Expenses", are based on the Fund's anticipated expenses for the current fiscal
year assuming net assets of $90 million. Absent certain expense reimbursements
or fee waivers "Other Expenses" and "Total Estimated Annual Operating Expenses"
would have been 0.55% for each of Class A and Class D and 2.55% and 2.30% for
each of Class A and Class D, respectively, of the Fund's average daily net
assets. THE "EXAMPLE" SET FORTH ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
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*Includes an annual distribution fee of 0.25% and an annual service fee of 0.25%
of the Class A Shares' average daily net assets. As a result of the asset-based
sales charge, long-term shareholders of the Fund may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc.
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INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE. The Fund's investment objective is to seek long-term
capital appreciation by investing at least 65% of its assets (although the Fund
intends, as a non-fundamental policy, to invest at least 80% of its assets) in
the common stocks of technology companies. Technology companies are those
companies with primary business operations in either the technology or science
areas. Industries likely to be represented in the portfolio include computers,
networking and internetworking software, computer aided design,
telecommunications, media and information services, medical devices and
biotechnology. The Fund may also invest in the stocks of companies that should
benefit from the commercialization of technological advances, although they may
not be directly involved in research and development. Current income is
incidental to the Fund's investment objective. The investment objective is
fundamental to the Fund and may not be changed without shareholder approval.
There can be no assurance that the Fund's investment objective will be achieved.
This Fund is designed for long-term investors who understand and are willing to
accept the risk of loss involved in investing in a fund seeking long-term
capital appreciation. Investors should consider their investment goals, their
time horizon for achieving them, and their tolerance for risks before investing
in the Fund. If you seek an aggressive approach to capital growth and can accept
the above average level of price fluctuations that this Fund is expected to
experience, this Fund could be an appropriate part of your overall investment
strategy. The Fund should not be used as a trading vehicle and should not be
used as a complete investment program.
The Adviser believes that because of rapid advances in technology and science,
an investment in companies with business operations in these areas will offer
substantial opportunities for long-term capital appreciation. Of course, prices
of common stocks of even the best managed, most profitable corporations are
subject to market risk, which means their stock prices can decline. In addition,
swings in investor psychology or significant trading by large institutional
investors can result in price fluctuations.
The technology and science areas have exhibited and continue to demonstrate
rapid growth, both through increasing demand for existing products and services
and the broadening of the technology market. In general, the stocks of large
capitalized companies that are well established in the technology market can be
expected to grow with the market and will frequently be found in the Fund's
portfolio. The expansion of technology and science areas, however, also provides
a favorable environment for investment in small to medium capitalized companies.
The Fund's investment policy is not limited to any minimum capitalization
requirement and the Fund may hold securities without regard to the
capitalization of the issuer. The Adviser's overall stock selection for the Fund
is not based on the capitalization or size of the company but rather on an
assessment of the company's fundamental prospects. The Fund will not purchase
stocks of companies during their initial public offering or during an additional
public offering of the same security. The Adviser anticipates, however, that a
significant portion of the Fund's holdings will be invested in newly-issued
securities being sold in the secondary market.
PERMITTED INVESTMENTS. Although the Fund will primarily invest in common stocks
issued by U.S. companies, the Fund also may invest in other types of securities
such as convertible stocks, preferred
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stocks, bonds and warrants, as well as in foreign securities, when the
investment in such securities is considered consistent with the Fund's
investment objective by the Adviser. The Adviser does not currently intend to
invest in these other types of securities.
The Fund will not invest more than 20% of its total assets in convertible
stocks, preferred stocks, bonds and warrants. The bonds in which the Fund may
invest are not required to be rated by a recognized rating agency. As a matter
of policy, however, the Fund will invest only in "investment grade" debt
securities (I.E., rated within the four highest ratings categories by a
nationally recognized statistical rating organization, E.G., BBB by Standard &
Poor's Corporation ("S&P"), Baa by Moody's Investor Services Inc. ("Moody's"),
BBB by Fitch Investors Services, Inc., or BBB by Duff & Phelps Credit Rating
Co.--such ratings may have speculative characteristics) or, in the case of
unrated securities, debt securities that are, in the opinion of the Adviser, of
equivalent quality to "investment grade" securities. In addition, the Fund will
not necessarily dispose of any securities that fall below investment-grade based
upon the Adviser's determination as to whether retention of such a security is
consistent with the Fund's investment objective, provided, however, that such
securities do not exceed 5% of the Fund's total assets.
The Fund may invest up to 20% of its assets in foreign securities. It is,
however, the present intention of the Fund to limit the investment in foreign
securities to no more than 5% of its assets. By investing a portion of its
assets in foreign securities, the Fund will attempt to take advantage of
differences among economic trends and the performance of securities markets in
various countries. To date, the market values of securities of issuers located
in different countries have moved relatively independently of each other. During
certain periods, the return on equity investments in some countries has exceeded
the return on similar investments in the United States. The Adviser believes
that, in comparison with investment companies investing solely in domestic
securities, it may be possible to obtain significant appreciation from a
portfolio of foreign investments and securities from various markets that offer
different investment opportunities and are affected by different economic
trends. International diversification reduces the effect that events in any one
country will have on the Fund's entire investment portfolio. On the other hand,
a decline in the value of the Fund's investments in one country may offset
potential gains from investments in another country.
The Fund's portfolio turnover rate will be influenced by the Fund's investment
objective, other investment policies, and the need to meet redemptions. While
the rate of portfolio turnover will not be a limiting factor when the Adviser
deems changes appropriate, it is anticipated that given the Fund's investment
objective, its annual portfolio turnover should not generally exceed 30%. (A
portfolio turnover rate of 33% would occur, for example, if all of the stocks in
the Fund were replaced over a period of approximately three years.)
The Fund's investment policies, unlike its investment objective, are not
fundamental and may be changed by the Board of Directors without shareholder
approval. If a percentage limitation is adhered to at the time an investment is
made, a later change in percentage resulting from changes in the value of the
Fund's securities will not be considered a violation of the Fund's policies or
restrictions.
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ADDITIONAL INVESTMENT INFORMATION AND RISK FACTORS
THE TECHNOLOGY AND SCIENCE AREAS. Companies in the rapidly changing fields of
technology and science face special risks. For example, their products or
services may not prove commercially successful or may become obsolete quickly.
The value of the Fund's shares may be susceptible to factors affecting the
technology and science areas and to greater risk and market fluctuation than an
investment in a fund that invests in a broader range of portfolio securities not
concentrated in any particular industry. As such, the Fund is not an appropriate
investment for individuals who are not long-term investors and who, as their
primary objective, require safety of principal or stable income from their
investments. The technology and science areas may be subject to greater
governmental regulation than many other areas and changes in governmental
policies and the need for regulatory approvals may have a material adverse
effect on these areas. Additionally, companies in these areas may be subject to
risks of developing technologies, competitive pressures and other factors and
are dependent upon consumer and business acceptance as new technologies evolve.
SMALLER CAPITALIZED COMPANIES. The Adviser believes that smaller capitalized
companies generally have greater earnings and sales growth potential than larger
capitalized companies. The level of risk will be increased to the extent that
the Fund has significant exposure to smaller capitalized or unseasoned companies
(those with less than a three-year operating history). Investments in smaller
capitalized companies may involve greater risks, such as limited product lines,
markets and financial or managerial resources. In addition, less
frequently-traded securities may be subject to more abrupt price movements than
securities of larger capitalized companies.
FOREIGN SECURITIES. Investments in securities of foreign issuers may involve
risks that are not associated with domestic investments, and there can be no
assurance that the Fund's foreign investments will present less risk than a
portfolio of domestic securities. Foreign issuers may lack uniform accounting,
auditing and financial reporting standards, practices and requirements, and
there is generally less publicly available information about foreign issuers
than there is about U.S. issuers. Governmental regulation and supervision of
foreign stock exchanges, brokers and listed companies may be less pervasive than
is customary in the United States. Securities of some foreign issuers are less
liquid, and their prices are more volatile, than securities of comparable
domestic issuers. Foreign securities settlements may in some instances be
subject to delays and related administrative uncertainties which could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon and may involve a risk of loss to the Fund. Foreign securities markets
may have substantially less volume than U.S. markets and far fewer traded
issues. Fixed brokerage commissions on foreign securities exchanges are
generally higher than in the United States and transaction costs with respect to
smaller capitalization companies may be higher than those of larger
capitalization companies. Income from foreign securities may be reduced by a
withholding tax at the source or other foreign taxes. In some countries, there
may also be the possibility of expropriation or confiscatory taxation (in which
the Fund could lose its entire investment in a certain market), limitations on
the removal of monies or other assets of the Fund, political or social
instability or revolution, or diplomatic developments that could affect
investments in those countries. In addition, it may be difficult to obtain and
enforce a judgment in a court outside the U.S.
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<PAGE>
FOREIGN CURRENCY. Investments in foreign securities will usually be denominated
in foreign currency, and the Fund may temporarily hold funds in foreign
currencies. The value of the Fund's investments denominated in foreign
currencies may be affected, favorably or unfavorably, by the relative strength
of the U.S. dollar, changes in foreign currency and U.S. dollar exchange rates
and exchange control regulations. The Fund may incur costs in connection with
conversions between various currencies. The Fund's net asset value per share
will be affected by changes in currency exchange rates. Changes in foreign
currency exchange rates may also affect the value of dividends and interest
earned, gains and losses realized on the sale of securities and net investment
income and gains, if any, to be distributed to shareholders by the Fund. The
rate of exchange between the U.S. dollar and other currencies is determined by
the forces of supply and demand in the foreign exchange markets (which in turn
are affected by interest rates, trade flow and numerous other factors,
including, in some countries, local governmental intervention).
BORROWING. The Fund may from time to time borrow money from banks for
temporary, extraordinary or emergency purposes. Such borrowing will not exceed
an amount equal to one-third of the value of the Fund's total assets less its
liabilities and will be made at prevailing interest rates. The Fund may not,
however, purchase additional securities while borrowings exceed 5% of its total
assets.
SHORT SALES. The Fund may make short sales of securities "against-the-box." A
short sale "against-the-box" is a sale of a security that the Fund either owns
an equal amount of or has the immediate and unconditional right to acquire at no
additional cost. The Fund will make short sales "against-the-box" as a form of
hedging to offset potential declines in long positions in the same or similar
securities.
TEMPORARY INVESTMENTS. When the Adviser believes that market conditions warrant
a temporary defensive position, the Fund may invest up to 100% of its assets in
short-term instruments such as commercial paper, bank certificates of deposit,
bankers' acceptances, variable rate demand instruments or repurchase agreements
for such securities and securities of the U.S. Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. Investments in domestic bank certificates of deposit and bankers'
acceptances will be limited to banks that have total assets in excess of $500
million and are subject to regulatory supervision by the U.S. Government or
state governments. The Fund's investments in foreign short-term instruments will
be limited to those that, in the opinion of the Adviser, equate generally to the
standards established for U.S. short-term instruments.
REPURCHASE AGREEMENTS. The Fund's portfolio position in cash or cash
equivalents may include entering into repurchase agreements. A repurchase
agreement is an instrument under which an investor purchases a U.S. Government
security from a vendor, with an agreement by the vendor to repurchase the
security at the same price, plus interest at a specified rate. Repurchase
agreements may be entered into with member banks of the Federal Reserve System
or "primary dealers" (as designated by the Federal Reserve Bank of New York) in
U.S. Government securities. Repurchase agreements usually have a short duration,
often less than one week. The Fund requires continual maintenance by the Fund's
custodian of the market value of underlying collateral in amounts equal to, or
in excess of, the value of the repurchase agreement including the agreed upon
interest. If the institution defaults on the repurchase agreement, the Fund will
retain possession of the underlying
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securities. In addition, if bankruptcy proceedings are commenced with respect to
the seller, realization on the collateral by the Fund may be delayed or limited
and the Fund may incur additional costs. In such case the Fund will be subject
to risks associated with changes in the market value of the collateral
securities. The Fund intends to limit repurchase agreements to transactions with
institutions believed by the Adviser to present minimal credit risk. Repurchase
agreements may be considered to be loans under the Investment Company Act of
1940.
NON-DIVERSIFIED STATUS. Because the Fund is "non-diversified", more of the
Fund's assets may be concentrated in the common stock of any single issuer,
which may make the value of Fund shares more susceptible to certain risks than
shares of a diversified mutual fund. The Fund intends to qualify for tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended. The Fund will diversify its assets so that, at the close of
each quarter of its taxable year: (a) at least 50% of the total value of its
assets is represented by cash and cash items, government securities and other
securities with respect to which the Fund will not invest more than 5% of its
total assets, at market value, in the securities of any one issuer or more than
10% of the outstanding voting securities of any one issuer and (b) not more than
25% of the total value of its assets is invested in securities of any one issuer
or of any two or more issuers controlled by the Fund, which, pursuant to the
regulations under such Code, may be deemed to be engaged in the same, similar or
related trades or businesses. Changes in the market value of securities in the
Fund's portfolio generally will not cause the Fund to cease to qualify as a
regulated investment company unless any failure to satisfy these restrictions
exists immediately after the acquisition of any security or other property and
is wholly or partly the result of such acquisition.
BROKERAGE AND EXECUTION POLICIES. The Adviser is responsible for the selection
of broker-dealers and the negotiation of any brokerage commission rates paid by
the Fund. The Adviser's primary consideration in effecting a security
transaction will be execution at the most favorable price. In the
over-the-counter markets, where a majority of the portfolio securities are
expected to be traded, orders are placed with responsible primary market-makers
unless a more favorable execution or price is believed to be obtainable. In
selecting a broker-dealer to execute exchange-traded securities, the Adviser
will also consider the reliability, integrity and financial condition of the
broker-dealer, the size of and difficulty in executing the order, the value of
the expected contribution of the broker-dealer to the investment performance of
the Fund on a continuing basis, as well as other factors such as the
broker-dealer's ability to engage in transactions in securities of issuers which
are thinly traded. The Adviser does not intend to employ a broker-dealer whose
commission rates fall outside of the prevailing ranges of execution costs
charged by other broker-dealers offering similar services.
Except as noted above, the foregoing investment policies are not fundamental and
the Board of Directors of the Fund may change such policies without the vote of
a majority of outstanding voting securities of the Fund. A more detailed
description of the Fund's investment policies, including a list of those
restrictions on the Fund's investment activities which cannot be changed without
such a vote, appears in the Statement of Additional Information.
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INVESTMENT RESTRICTIONS
As a non-diversified investment company, 50% of the assets of the Fund are
subject to the following limitations: (a) it may not invest more than 5% of its
total assets in the securities of any one issuer, except obligations of the
United States Government and its agencies and instrumentalities, and (b) it may
not own more than 10% of the outstanding voting securities of any one issuer. As
used in this Prospectus, the term "majority of the outstanding shares" of the
Fund means, respectively, the vote of the lesser of (i) 67% or more of the
shares of the Fund present at the meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the outstanding shares of the Fund.
The Fund operates under certain investment restrictions which are deemed
fundamental policies of the Fund and may be changed only with the approval of
the holders of a majority of the Fund's outstanding shares. In addition to other
restrictions listed in the Statement of Additional Information, the Fund may not
(except where specified):
(i) invest more than 15% (currently 10%, subject to certain states'
securities regulations) of the market value of the Fund's net assets in
illiquid investments (as defined herein under "Illiquid Securities") and
including foreign securities and bank participation interests for which
a readily available market does not exist;
(ii) purchase securities on margin or borrow money, except from banks for
extraordinary or emergency purposes (not for leveraging or investment),
provided that such borrowings do not exceed an amount equal to
one-third of the value of the total assets of the Fund less its
liabilities (not including the amount borrowed) at the time of the
borrowing, and further provided that 300% asset coverage is maintained
at all times;
(iii) purchase additional securities while borrowings exceed 5% of its total
assets;
(iv) mortgage, pledge or hypothecate any assets except that the Fund may
pledge not more than one-third of its total assets to secure borrowings
made in accordance with paragraph (ii) above. However, although not a
fundamental policy of the Fund, as a matter of operating policy in
order to comply with certain state statutes, the Fund will not pledge
its assets in excess of an amount equal to 15% of net assets; or
(v) lend portfolio securities of value exceeding in the aggregate one-third
of the market value of the Fund's total assets less liabilities other
than obligations created by these transactions.
MANAGEMENT OF THE FUND
ADVISER. Amerindo Investment Advisors Inc. (the "Adviser" or "Amerindo"), a
registered investment adviser, is a California corporation with its principal
offices located at One Embarcadero, Suite 2300, San Francisco, California 94111
and 399 Park Avenue, New York, New York 10022. The Adviser, an emerging growth
stock manager specializing in the technology and healthcare sectors, has been
retained by the Board of Directors as the investment adviser for the Fund
pursuant to an Investment Advisory Agreement entered into by the Fund on behalf
of each Class. The Adviser had assets under management of approximately $2.3
billion at December 31, 1995. The Adviser, however,
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has not managed the assets of an investment company prior to the Fund. The
Adviser supervises all aspects of the Fund's operations and provides investment
advice and portfolio management services to the Fund. The Fund's Annual Report
to Shareholders will contain information regarding the Fund's performance and
will be provided, without charge, upon request. Subject to the supervision of
the Fund's Board of Directors, the Adviser makes the Fund's day-to-day
investment decisions, arranges for the execution of portfolio transactions and
generally manages the portfolio investments.
In the early 1980's, Amerindo pioneered the management of dedicated emerging
technology portfolios of high technology and healthcare stocks designed to
service the financial needs of the institutional investor. As reported in the
Wall Street Journal's Money Manager Scorecard on July 24, 1996, May 1, 1996 and
January 18, 1996, Amerindo ranked first for its one-year and 5-year performance,
respectively. Amerindo did not have a 10-year performance number. Each Money
Manager Scorecard represents a ranking at June 30, 1996, March 31, 1996 and
December 31, 1995, respectively, of the estimated stock-market performance of
U.S. money managers with over $100 million under management. The 1, 5 and
10-year performance rankings were compiled by Thompson Investment Software, CDA
Investment Technologies, utilizing data provided by CDA/Spectrum, with respect
to data on 754, 409, and 217 managers, respectively. This performance
information relates to Amerindo's management of institutional accounts and
should not be interpreted as indicative of future performance of the Fund. The
performance figures upon which these rankings were based do not include a
reduction for any charges or expenses with respect to such accounts. Further,
Amerindo has not independently verified the accuracy, completeness or process
underlying the performance figures upon which these rankings were based and
makes no representation as to the accuracy or completeness of this performance
information.
In addition to managing the assets of the Fund, the Adviser manages assets on a
discretionary basis for other clients and, as a result, the Adviser may effect
transactions in such clients' accounts in securities in which the Fund currently
holds or, in the near future may hold, a position. The Adviser makes the
determination to purchase or sell a security based on numerous factors,
including those that may be particular to one or more of its clients. Therefore,
it is possible that the Adviser will effect transactions in certain securities
for select clients, which may or may not include the Fund, that it may not deem,
in its sole discretion, as being appropriate for other clients, which may or may
not include the Fund.
The following persons will be primarily responsible for the day-to-day
management of the Fund's portfolio.
ALBERTO W. VILAR, 54, began his career with Citibank N.A. in New York in 1964
and worked there as an International Credit Officer until 1967. From 1967 to
1971, he served as Vice President, Portfolio Manager and Manager of the
Investment Management Division of Drexel Burnham Lambert in New York. From 1971
to 1973, he served as Executive Vice President, Portfolio Manager and Director
of Equity Strategy at M.D. Sass Investor Services in New York. In 1973, he
became Vice President and Portfolio Manager of Endowment Management & Research
Corporation in Boston. From 1977 to 1979, he served as Senior Vice President,
Director of Research, Chief Investment Strategist and Partnership Manager of the
Boston Company in Boston. He founded the predecessors of Amerindo Advisors
(U.K.) Limited and Amerindo Investment Advisors, Inc. (Panama) in 1979 and has
served
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since then as a Principal Portfolio Manager. Mr. Vilar holds the degrees of B.A.
in Economics from Washington & Jefferson College and an M.B.A. from Iona
College, and he completed the Doctoral Studies Program in Economics at New York
University. Mr. Vilar has been a Chartered Financial Analyst since 1975.
DR. GARY A. TANAKA, 51, served as a Portfolio Manager for Crocker Bank in San
Francisco from 1971 to 1977, and as a Partnership Manager for Crocker Investment
Management Corp. in San Francisco from 1978 to 1980. From 1975 to 1980, he also
served as a Consultant to Andron Cechettini & Associates in San Francisco. In
1980, he joined the predecessors of Amerindo Advisors (U.K.) Limited and
Amerindo Investment Advisors, Inc. (Panama) as a Principal Portfolio Manager.
Dr. Tanaka holds the degrees of B.S. in Mathematics from Massachusetts Institute
of Technology and Ph.D. in Applied Mathematics from Imperial College, University
of London.
RALPH H. CECHETTINI, 55, was a Vice President, Portfolio Manager and Partner of
Shuman, Agnew & Company from 1970 until 1976. In 1976, Mr. Cechettini founded
the firm, Cechettini & Company, where he remained until 1979. In 1979, he
started the firm of Andron Cechettini & Associates, Inc., where he was President
and Chief Executive Officer until 1989. In 1989, Mr. Cechettini founded R.H.
Cechettini & Associates (currently named C.I.M.), an investment advisory firm
through which he continues to manage assets for clients and, as a result, may
from time to time purchase or sell securities for the accounts of such clients
substantially similar to those securities purchased or sold by the Fund. Since
February, 1991, Mr. Cechettini has been employed by Amerindo as a Portfolio
Manager and Senior Analyst. Mr. Cechettini holds a B.S. degree in Business from
the University of San Francisco.
ADVISER'S FEES. Pursuant to the terms of the Investment Advisory Agreement, the
Fund will pay monthly advisory fees equal to 1.50% of each Class' annual average
daily net assets. This fee is higher than the fee paid by most other mutual
funds, however, the Board of Directors believes it to be reasonable in light of
the advisory services the Fund receives thereunder. The Adviser will also
receive the service fees of 0.25% of each Class' average daily net assets. Any
portion of the advisory fees received by the Adviser may be used by the Adviser
to provide investor and administrative services and for distribution of Fund
shares. The Adviser may voluntarily waive a portion of its fee or assume certain
expenses of the Fund. This would have the effect of lowering the overall expense
ratio of the Fund and of increasing yield to investors in the Fund. See "Expense
Limitation" in the Statement of Additional Information.
ADMINISTRATOR. The Administrator for the Fund is Furman Selz LLC (the
"Administrator"), which has its principal office at 230 Park Avenue, New York,
New York 10169, and is primarily an institutional brokerage firm whose
activities include membership on the New York, American, Boston, Midwest,
Pacific and Philadelphia Stock Exchanges, investment banking activities with
offices in New York and San Francisco, and mutual fund administrative activities
with approximately $20 billion under administration for numerous mutual funds.
The Administrator and its affiliate, Furman Selz Capital Management, Inc., serve
as an investment adviser to numerous individual and institutional accounts. The
Administrator also serves as administrator and distributor of other mutual
funds.
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Pursuant to an Administrative Services Agreement with the Fund, the
Administrator provides all administrative services necessary for the Fund, other
than those provided by the Adviser, subject to the supervision of the Fund's
Board of Directors. The Adviser and the Administrator will provide persons to
serve as officers of the Fund. Such officers may be directors, officers or
employees of the Adviser or the Administrator or their affiliates.
ADMINISTRATOR'S FEES. For the services rendered to the Fund by the
Administrator, the Fund pays the Administrator an annual fee paid monthly equal
to 0.15% of the Fund's aggregate average daily net assets. The Administrator,
however, has agreed to waive a portion of its fees and may not change this
waiver policy without the prior consent of the Fund's Board of Directors. For
additional information, see "Custodian, Transfer Agent and Dividend Agent." In
addition, the Administrator serves as the Fund's transfer agent and performs
Fund accounting services for which it is paid separately.
Both the Investment Advisory Agreement and the Administrative Services Agreement
are terminable by the Board of Directors of the Fund, the Adviser or the
Administrator, respectively, on sixty days' written notice and terminate
automatically in the event of an "assignment" as defined by the Investment
Company Act. Each Agreement shall remain in effect for two years from the date
of its initial approval, and subject to annual approval of the Fund's Board of
Directors for one-year periods thereafter. Each Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Adviser or the Administrator, respectively, or reckless disregard of its
obligations thereunder, the Adviser or the Administrator shall not be liable for
any action or failure to act in accordance with its duties thereunder.
DISTRIBUTOR. Pursuant to the Distribution Agreement entered into with the Fund,
Furman Selz LLC (the "Distributor") will serve as the exclusive distributor of
the Fund's shares. The Distributor will receive the distribution fee equal to
0.25% of the Class A shares' average daily net assets under the terms of the
Plan. The Distributor pays the promotional and advertising expenses related to
the distribution of the Fund's shares and for the printing of all Fund
prospectuses used in connection with the distribution and sale of Fund shares.
In addition, the distribution fee may be used by the Distributor to compensate
financial intermediaries for providing distribution assistance with respect to
the sale of Class A shares. See "Management of Fund" in the Statement of
Additional Information. The Distributor has entered into a dealer agreement with
Garal & Company, Inc. (an affiliate of the Adviser) to participate in the offer
and sale of shares of the Fund.
EXPENSES. The Fund is responsible for payment of its expenses, including the
following expenses, without limitation: fees payable to the Adviser,
Administrator, Custodian, Transfer Agent and Dividend Agent; brokerage and
commission expenses; Federal, state or local taxes, including issuance and
transfer taxes incurred by or levied on them; commitment fees, certain insurance
premiums and membership fees and dues in investment company organizations;
interest charges on borrowings; telecommunications expenses; recurring and
nonrecurring legal and auditing expenses; costs of organizing and maintaining
the Fund's existence as a corporation; compensation, including directors' fees,
of any directors, officers or employees who are not the officers of the Adviser,
the Administrator or their affiliates; costs of other personnel providing
administrative and clerical services; costs of shareholders' services and costs
of shareholders' reports, proxy solicitations, and corporate meetings; fees and
expenses of registering the Fund's shares under the appropriate federal
securities laws and of
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qualifying its shares under applicable state securities laws, including expenses
attendant upon the initial registration and qualification of these shares and
attendant upon renewals of, or amendments to, those registrations and
qualifications; and expenses of preparing, printing and delivering the
Prospectus to existing investors and of printing investor application forms for
investor accounts. The Adviser and the Administrator have each agreed to a
reduction in the amounts payable to it and to reimburse the Fund, as necessary,
if in any fiscal year the sum of the Fund's expenses exceeds the limits set by
applicable regulations of state securities commissions.
PURCHASE OF SHARES
INITIAL PURCHASE PERIOD. All subscriptions during the initial purchase period
for shares of the Fund will be deposited in an interest-bearing escrow account
until the earlier of (1) the acceptance by the Fund of subscriptions for shares
of at least $100 million, or (2) 90 days from the date of this Prospectus. Each
subscriber's pro rata share of the interest earned in the escrow account will be
used to purchase additional full or fractional shares of the Fund. The escrow
account will be maintained with The Northern Trust Company, the Fund's
custodian. During this initial purchase period, investors purchasing Class A
shares may do so without incurring any initial sales load.
INITIAL INVESTMENTS BY WIRE. Subject to acceptance by the Distributor, shares
of each Class of the Fund may be purchased by wiring immediately available
federal funds (subject to each Class's minimum investment) to Investors
Fiduciary Trust Company (see instructions below). The minimum initial investment
in Class A is $25,000 and the minimum initial investment in Class D is $150,000,
each of which may be waived by the Fund, from time to time. A completed Account
Application should be forwarded to the Fund at the address noted below under
"Initial Investments by Mail" in advance of the wire. Notification must be given
to the Fund at 1-888-TECH FUND prior to 4:15 p.m., New York time, with funds to
be wired on the next business day. (Prior notification must also be received
from investors with existing accounts.) Funds should be wired through the
Federal Reserve Bank to:
Investors Fiduciary Trust Company
Kansas City, MO
----------------------------------------------
ABA# 101003621
Account # 7512996
F/B/O Amerindo Technology Fund
Ref. (Class)
Fund Acct. No. ___________________________________
Federal fund purchases will be accepted only on a day on which the Fund, the
Distributor and the custodian bank are open for business.
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INITIAL INVESTMENTS BY MAIL. Subject to acceptance by the Fund's Distributor,
an account may be opened by completing and signing an Account Application and
mailing it to the Fund at the address noted below, together with a check
(subject to each Class's minimum investment) payable to:
Amerindo Technology Fund
237 Park Avenue
New York, New York 10017
The minimum initial investment in Class A is $25,000 and the minimum initial
investment in Class D is $150,000, each of which may be waived by the Fund, from
time to time. Subject to acceptance by the Fund's Distributor, payment for the
purchase of shares received by mail will be credited to a shareholder's account
at the net asset value per share of the particular Class next determined after
receipt. Such payment need not be converted into federal funds (monies credited
to the Fund's custodian bank by a Federal Reserve Bank) before acceptance by the
Fund's Distributor.
ADDITIONAL INVESTMENTS. Additional investments may be made at any time (subject
to the minimum subsequent investment in Class A of $2,500 and the minimum
subsequent investment in Class D of $15,000) by purchasing shares of the
particular Class at net asset value, plus any applicable sales load, by mailing
a check to the Fund at the address noted under "Initial Investments by Mail"
(payable to Amerindo Technology Fund Class A/Class D) or by wiring monies to the
clearing bank as outlined above. Notification must be given to the Fund at
1-888-TECH FUND - prior to 4:15 p.m., New York time, with funds to be wired on
the next business day.
OTHER PURCHASE INFORMATION. Investors may open accounts in the Fund only
through the exclusive Distributor for the Fund. Under the Distribution
Agreement, the Distributor, for nominal consideration and as agent for the Fund,
will solicit orders for the purchase of Fund shares, provided that any
subscriptions and orders will not be binding on the Fund until accepted by the
Fund as principal.
The purchase price paid for shares of each Class is the current public offering
price, that is, the next determined net asset value of the shares after the
order is placed plus any applicable sales charge, with respect to Class A
shares. See "Net Asset Value" herein. The sales load, with respect to Class A
shares, is a one-time charge paid at the time of purchase of shares, most of
which ordinarily goes to the investor's broker-dealer as compensation for the
services provided the investor. Class A Shares of the Fund are sold on a
continuous basis with a maximum front-end sales charge of 2.50% of the net asset
value per share. Class D Shares are sold without a front-end sales load. Volume
discounts are provided for both initial purchase, as well as for additional
purchases of Class A Shares of the Fund. See "Reduction or Elimination of Sales
Loads" herein. The Fund reserves the right to reject any subscription for
shares. In addition, the Fund does not intend to issue certificates.
The Fund must receive an order and payment by the close of business for the
purchase to be effective and dividends to be earned on the same day. If funds
are received after the close of business, the purchase will become effective and
dividends will be earned on the next business day. Purchases made by check will
be invested and begin earning income on the next business day after the check is
received.
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Shares of the Fund may be purchased in exchange for securities which are
permissible investments of the Fund, subject to the Adviser's determination that
the securities are acceptable. Securities accepted in exchange will be valued at
the mean between their bid and asked quotations. In addition, securities
accepted in exchange will be liquid securities that are not restricted as to
transfer and will have a value that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on NASDAQ,
the American Stock Exchange or the New York Stock Exchange, or on the basis of
prices provided by a pricing service. The Fund and the Adviser reserve the right
to reject any such purchase order. Shareholders will bear any costs associated
with a purchase of Fund shares through such an exchange.
All purchases of the Fund's shares will be made in full and fractional shares of
the Fund calculated to three decimal places.
Shares of the Fund may also be sold to corporations or other institutions such
as trusts, foundations or broker-dealers purchasing for the accounts of others
("Shareholder Organizations"). Investors purchasing and redeeming shares of the
Fund through a Shareholder Organization may be charged a transaction-based fee
or other fee for the services of such organization. Each Shareholder
Organization is responsible for transmitting to its customers a schedule of any
such fees and information regarding any additional or different conditions
regarding purchases and redemptions. Customers of Shareholder Organizations
should read this Prospectus in light of the terms governing accounts with their
organization. The Fund does not pay to or receive compensation from Shareholder
Organizations for the sale of the Fund's shares.
The Fund has available a form of Individual Retirement Account ("IRA") which may
be obtained from the Fund that permits the IRA to invest in either Class A or
Class D Shares of the Fund. The minimum investment for all retirement plans
investing in either Class of the Fund is the same as the minimum initial
investment for such Class -- $25,000 for Class A and $150,000 for Class D.
Investors desiring information regarding investments through IRAs should write
or telephone the Fund.
FOR CLASS A SHAREHOLDERS ONLY
REDUCTION OR ELIMINATION OF SALES LOADS
VOLUME DISCOUNTS. Volume discounts are provided if the total amount being
invested in Class A shares of the Fund reaches the levels indicated in the sales
load schedule provided below. The applicable volume discount available to
investors is determined by aggregating all Class A share purchases of the Fund.
Volume discounts are also available to investors making sufficient additional
purchases of Class A Fund shares. The applicable sales charge may be determined
by adding to the total current value of Class A shares already owned in the Fund
the value of new purchases computed at the offering price on the day the
additional purchase is made. For example, if an investor previously
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purchased, and still holds, Class A shares worth $70,000 at the current offering
price and purchases an additional $5,000 worth of Class A shares, the sales
charge applicable to the new purchase would be that applicable to the $75,000 to
$149,999 bracket in the sales load schedule provided below.
<TABLE>
<CAPTION>
Amount of sales charge
reallowed to dealers as
Sales Charge as a % of a percent
Amount of Purchase Sales Charge Net Amount Invested of offering price
- ----------------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C>
$25,000-74,999 2.50% 2.56% 2.50
$75,000-149,999 1.00% 1.01% 1.00
$150,000 and over 0 0 0
</TABLE>
LETTER OF INTENT. Any investor in Class A may sign a Letter of Intent,
available from the Fund, stating an intention to make purchases of Class A
shares totaling a specified amount on an aggregate basis within a period of
thirteen months. Purchases within the thirteen-month period can be made at the
reduced sales load applicable to the total amount of the intended purchase noted
in the Letter of Intent. If a larger purchase is actually made during the
period, then a downward adjustment will be made to the sales charge based on the
actual purchase size. Any shares purchased within 90 days preceding the actual
signing of the Letter of Intent are eligible for the reduced sales charge and
the appropriate price adjustment will be made on those share purchases. A number
of shares equal to 5% of the dollar amount of intended purchases specified in
the Letter of Intent is held in escrow by the Distributor until the purchases
are completed. Dividends and distributions on the escrowed Class A shares are
paid to the investor. If the intended purchases are not completed during the
Letter of Intent period, the investor is required to pay the Fund an amount
equal to the difference between the regular sales load applicable to a single
purchase of the number of Class A shares actually purchased and the sales load
actually paid. If such payment is not made within 20 days after written request
by the Fund, then the Fund has the right to redeem a sufficient number of
escrowed Class A shares to effect payment of the amount due. Any remaining
escrowed Class A shares are released to the investor's account. Agreeing to a
Letter of Intent does not obligate you to buy, or the Fund to sell, the
indicated amount of Class A shares. You should read the Letter of Intent
carefully before signing.
PURCHASED AT NET VALUE. There is no initial sales charge for "Qualified
Persons". Qualified Persons is defined to include persons who are active or
retired Trustees, Directors, officers, partners, employees, clients, independent
professional contractors, shareholders or registered representatives (including
their spouses and children) of the Investment Adviser, Distributor or any
affiliates or subsidiaries thereof (the Directors, officers or employees of
which shall also include their parents and siblings for all purchases of Fund
shares) or any Director, officer, partner, employee or registered representative
(including their spouses and children) of any Broker-Dealer who has executed a
valid and currently active selling agreement with the Distributor.
REDEMPTION OF SHARES
Shares of the Fund may be redeemed by mail, or, if authorized, by telephone. The
value of shares redeemed may be more or less than the purchase price, depending
on the market value of the investment securities held by the Fund.
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BY MAIL. The Fund will redeem its shares at the net asset value next determined
after the request is received in "good order". The net asset value per share of
the Fund is determined as of 4:15 p.m., New York time, on each day that the New
York Stock Exchange, Inc. (the "NYSE"), the Fund and the Distributor are open
for business. Requests should be addressed to Amerindo Technology Fund, 237 Park
Avenue, New York, New York 10017.
Requests in "good order" must include the following documentation:
(a) a letter of instruction, if required, or a stock assignment specifying
the number of shares or dollar amount to be redeemed, signed by all
registered owners of the shares in the exact names in which they are
registered;
(b) any required signature guarantees (see "Signature Guarantees" below);
and
(c) other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit
sharing plans and other organizations.
SIGNATURE GUARANTEES. To protect shareholder accounts, the Fund and its
transfer agent from fraud, signature guarantees are required to enable the Fund
to verify the identity of the person who has authorized a redemption from an
account. Signature guarantees are required for (1) redemptions where the
proceeds are to be sent to someone other than the registered shareholder(s) and
the registered address, and (2) share transfer requests. Signature guarantees
may be obtained from certain eligible financial institutions, including but not
limited to, the following: banks, trust companies, credit unions, securities
brokers and dealers, savings and loan associations and participants in the
Securities Transfer Association Medallion Program ("STAMP"), the Stock Exchange
Medallion Program ("SEMP") or the New York Stock Exchange Medallion Signature
Program ("MSP"). Shareholders may contact the Fund at 1-888-TECH FUND for
further details.
BY TELEPHONE. Provided the Telephone Redemption Option has been authorized, a
redemption of shares may be requested by calling the Fund at 1-888-TECH FUND and
requesting that the redemption proceeds be mailed to the primary registration
address or wired per the authorized instructions. If the Telephone Redemption
Option is authorized, the Fund and its transfer agent may act on telephone
instructions from any person representing himself or herself to be a shareholder
and believed by the Fund or its transfer agent to be genuine. The transfer
agent's records of such instructions are binding and shareholders, and not the
Fund or its transfer agent, bear the risk of loss in the event of unauthorized
instructions reasonably believed by the Fund or its transfer agent to be
genuine. The Fund will employ reasonable procedures to confirm that instructions
communicated are genuine and, if it does not, it may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures employed by the
Fund in connection with transactions initiated by telephone include tape
recording of telephone instructions and requiring some form of personal
identification prior to acting upon instructions received by telephone.
FURTHER REDEMPTION INFORMATION. Redemption proceeds for shares of the Fund
recently purchased by check may not be distributed until payment for the
purchase has been collected, which may take up to fifteen business days from the
purchase date. Shareholders can avoid this delay by utilizing the wire purchase
option.
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Other than as described above, payment of the redemption proceeds will be made
within seven days after receipt of an order for a redemption. The Fund may
suspend the right of redemption or postpone the date at times when the NYSE or
the bond market is closed or under any emergency circumstances as determined by
the United States Securities and Exchange Commission (the "SEC").
If the Board of Directors determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make a payment wholly or
partly in cash, the Fund may pay the redemption proceeds in whole or in part by
a distribution in-kind of readily marketable securities held by a Fund in lieu
of cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions.
REDEMPTION FEE. The Fund is designed for long-term investors willing to accept
the risks associated with a long-term investment in the common stocks of
companies in the technology, technology-related and science industries. The Fund
is not designed for short-term traders whose frequent purchases and redemptions
can generate substantial cash flow. These cash flows can unnecessarily disrupt
the Fund's investment program. Short-term traders often redeem when the market
is most turbulent, thereby forcing the sale of underlying securities held by the
Fund at the worst possible time as far as long-term investors are concerned.
Additionally, short-term trading drives up the Fund's transaction costs --
measured by both commissions and bid/ask spreads -- which are borne by the
remaining long-term investors. For these reasons, the Fund assesses a 3.00% fee
on the redemption of shares held for less than one year. Redemption fees will be
paid to the Fund to help offset transaction costs. The fee does not apply to any
shares purchased through reinvested distributions (dividends and capital gains)
or to shares held in retirement plans (such as 401(k), 403(b), 457, Keogh,
Profit Sharing Plans, and Money Purchase Pension Plans). This fee also does not
apply to shares held in IRA accounts.
The Fund will use the first-in, first-out (FIFO) method to determine the
one-year holding period. Under this method, the date of the redemption will be
compared to the earliest purchase date of shares held in the account. If this
holding period is less than one year, the redemption fee will be assessed. In
determining "one year" the Fund will use the anniversary date of a transaction.
Thus, shares purchased on April 5, 1996, for example, will be subject to the fee
if they are redeemed on or prior to April 4, 1997. If they are redeemed on or
after April 5, 1997, the shares will not be subject to the redemption fee.
DIVIDENDS AND DISTRIBUTIONS
At least 90% of each Class's net investment income will be declared as dividends
and paid annually. If an investor's shares are redeemed prior to the date on
which dividends are normally declared and paid, accrued but unpaid dividends
will be paid with the redemption proceeds. Substantially all the realized net
capital gains for each Class, if any, are declared and paid on an annual basis.
Dividends are payable to investors of record at the time of declaration. For a
discussion of the taxation of dividends or distributions, see "Taxes".
The net investment income of each Class for each business day is determined
immediately prior to the determination of net asset value. Net investment income
for other days is determined at the time
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net asset value is determined on the prior business day. Shares of each Class
earn dividends on the business day their purchase is effective but not on the
business day their redemption is effective. See "Purchase of Shares" and
"Redemption of Shares".
CHOOSING A DISTRIBUTION OPTION. Distribution of dividends from each Class may
be made in accordance with several options. A shareholder may select one of
three distribution options:
1. AUTOMATIC REINVESTMENT OPTION. Both dividends and capital gains
distributions will be automatically reinvested in additional shares of the
Fund unless the investor has elected one of the other two options.
2. CASH DIVIDEND OPTION. Dividends will be paid in cash, and capital gains, if
any, will be reinvested in additional shares.
3. ALL CASH OPTION. Both dividend and capital gains distributions will be paid
in cash.
NET ASSET VALUE
Net asset value per share for each Class is determined by subtracting from the
value of such Class's total assets the amount of its liabilities and dividing
the remainder by the number of its outstanding shares. The value of each
security for which readily available market quotations exist is based on a
decision as to the broadest and most representative market for the security; the
value is based either on the last sale price on a national securities exchange,
or, in the absence of recorded sales, at the readily available closing bid price
on such exchanges, or at the quoted bid price in the over-the-counter market.
Assets for which market quotations are not readily available are valued in
accordance with procedures established by the Fund's Board of Directors,
including use of an independent pricing service or services which use prices
based on yields or prices of comparable securities, indications as to values
from dealers and general market conditions.
The Fund computes each Class's net asset value once daily on Monday through
Friday, at 4:15 p.m. New York time, except on the holidays listed under "Net
Asset Value" in the Statement of Additional Information.
DISTRIBUTION AND SERVICE PLAN
The Fund, on behalf of each Class, has adopted a distribution and service plan,
pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule provides that an
investment company which bears any direct or indirect expense of distributing
its shares must do so only in accordance with a plan permitted by the Rule. The
Plan provides that each Class will compensate the Adviser for certain expenses
and costs incurred in connection with providing shareholder servicing and
maintaining shareholder accounts and to compensate parties with which it has
written agreements and whose clients own shares of each Class for providing
servicing to their clients ("shareholder servicing"), which is subject to a
maximum service fee of 0.25% per annum of each Class's average daily net assets.
The Plan also provides that the Distributor is paid a fee equal to 0.25% of
Class A's average daily net assets, on an annual basis, to enable it to provide
promotional support to the Fund and to
-20-
<PAGE>
make payments to broker-dealers and other financial institutions with which it
has written agreements and whose clients are Class A shareholders (each a
"broker-dealer") for providing distribution assistance.
Each shareholder servicing agent will, as agent for its customers, among other
things: answer customer inquiries regarding account status and history, the
manner in which purchases and redemptions of shares of the Fund may be effected
and certain other matters pertaining to the Fund; assist shareholders in
designating and changing dividend options, account designations and addresses;
provide necessary personnel and facilities to establish and maintain shareholder
accounts and records; assist in processing purchase and redemption transactions;
arrange for the wiring of funds; transmit and receive funds in connection with
customer orders to purchase or redeem shares; verify and guarantee shareholder
signatures in connection with redemption orders and transfers and changes in
shareholder designated accounts; furnish (either separately or on an integrated
basis with other reports sent to a shareholder by the Fund) monthly and year-end
statements and confirmations of purchases and redemptions, as required by Rule
10b-10 under the Securities Exchange Act of 1934; transmit, on behalf of the
Fund, proxy statements, annual reports, updating prospectuses and other
communications from the Fund to shareholders; receive, tabulate and transmit to
the Fund, proxies executed by shareholders with respect to meetings of
shareholders of the Fund; and provide such other related services as the Fund or
a shareholder may request.
The Plan provides that the Adviser and the Distributor may make payments from
time to time from their own resources which may include the advisory fee and
past profits for the following purposes: (i) to defray the costs of and to
compensate others, including financial intermediaries with whom the Distributor
or Adviser has entered into written agreements, for performing shareholder
servicing and related administrative functions; (ii) to compensate certain
financial intermediaries for providing assistance in distributing each Class's
shares; (iii) to pay the costs of printing and distributing the Fund's
prospectus to prospective investors; and (iv) to defray the cost of the
preparation and printing of brochures and other promotional materials, mailings
to prospective shareholders, advertising, and other promotional activities,
including the salaries and/or commissions of sales personnel in connection with
the distribution of the Fund's shares. The Distributor or the Adviser, as the
case may be, in their sole discretion, will determine the amount of such
payments made pursuant to the Plan with the shareholder servicing agents and
broker-dealers they have contracted with, provided that such payments made
pursuant to the Plan will not increase the amount which the Fund is required to
pay to the Distributor or the Adviser for any fiscal year under the shareholder
servicing agreements or otherwise. Any servicing fees paid to the Adviser also
may be used for purposes of (i) above and any asset based sales charges paid to
the Distributor also may be used for purposes of (ii), (iii) or (iv) above.
Shareholder servicing agents and broker-dealers may charge investors a fee in
connection with their use of specialized purchase and redemption procedures
offered to investors by the shareholder servicing agents and broker-dealers. In
addition, shareholder servicing agents and broker-dealers offering purchase and
redemption procedures similar to those offered to shareholders who invest in the
Fund directly may impose charges, limitations, minimums and restrictions in
addition to or different from those applicable to shareholders who invest in the
Fund directly. Accordingly, the net yield to investors who invest through
shareholder servicing agents and broker-dealers may be less
-21-
<PAGE>
than by investing in the Fund directly. An investor should read the Prospectus
in conjunction with the materials provided by the shareholder servicing agent
and broker-dealer describing the procedures under which Fund shares may be
purchased and redeemed through the shareholder servicing agent and
broker-dealer.
The Glass-Steagall Act limits the ability of a depository institution to become
an underwriter or distributor of securities. However, it is the Fund's position
that banks are not prohibited from acting in other capacities for investment
companies, such as providing administrative and shareholder account maintenance
services and receiving compensation from the Distributor for providing such
services. However, this is an unsettled area of the law and if a determination
contrary to the Fund's position is made by a bank regulatory agency or court
concerning shareholder servicing and administration payments to banks from the
Distributor, any such payments will be terminated and any shares registered in
the banks' names, for their underlying customers, will be re-registered in the
name of the customers at no cost to the Fund or its shareholders. In addition,
state securities laws on this issue may differ from the interpretation of
federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law.
In accordance with the Rule, the Plan provides that all written agreements
relating to the Plan entered into by the Fund, on behalf of each Class, the
Distributor or the Adviser, and the shareholder servicing agents,
broker-dealers, or other organizations must be in a form satisfactory to the
Fund's Board of Directors. In addition, the Plan requires the Fund and the
Distributor to prepare, at least quarterly, written reports setting forth all
amounts expended for distribution purposes by the Fund and the Distributor
pursuant to the Plan and identifying the distribution activities for which those
expenditures were made.
PERFORMANCE INFORMATION
The Fund, on behalf of each Class, may from time to time include yield,
effective yield and total return information in advertisements or reports to
investors or prospective investors. The "yield" refers to income generated by an
investment in a particular Class of the Fund over a thirty-day period. This
income is then "annualized." That is, the amount of income generated by the
investment during that month is assumed to be generated each month over a
12-month period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the monthly income earned
by an investment in a particular Class of the Fund is assumed to be reinvested.
The "effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The "total return" of the Fund
is required to be included in any advertisement containing each Class's yield.
Total return is the average annual total return for the period which began at
the inception of a particular Class of the Fund and ended on the date of the
most recent balance sheet, and is computed by finding the average annual
compound rates of return over the period that would equate the initial amount
invested to the ending redeemable value. For a description of the methods used
to calculate total return, see the Statement of Additional Information. Yield,
effective yield and total return may fluctuate daily and do not provide a basis
for determining future yields, effective yields or total returns. For Class A
Shares, the annual total rate of
-22-
<PAGE>
return and yield figures will assume payment of the maximum initial sales load
at the time of purchase. One-, five- and ten-year periods will be shown, unless
the Class of the Fund has been in existence for a shorter period.
The yields and the net asset values of each Class of shares of the Fund will
vary based on the current market value of the securities held by the Fund and
changes in such Class' expenses. The Adviser, the Administrator or the
Distributor may voluntarily waive a portion of their fees on a month-to-month
basis. These actions would have the effect of increasing the net income (and
therefore the yield and total rate of return) of a Class of shares of the Fund
during the period such waivers are in effect. These factors and possible
differences in the methods used to calculate the yields and total rates of
return should be considered when comparing the yields or total rates of return
of a Class of the Fund to yields and total rates of return published for other
investment companies and other investment vehicles.
The Fund's Annual Report to Shareholders will contain information regarding the
Fund's performance and will be provided, without charge, upon request.
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in the State of Maryland on February 6, 1996. The
authorized capital stock of the Fund consists of one billion shares of stock
having a par value of one-tenth of one cent ($.001) per share. The Fund's Board
of Directors is authorized to divide the unissued shares into separate series of
stock, each series representing a separate, additional investment portfolio. The
Board currently has authorized the division of the unissued shares into two
Classes. Shares of any series or class will have identical voting rights, except
where, by law, certain matters must be approved by a majority of the shares of
the affected series or class. Each share of any series or class of shares when
issued will have equal dividend, distribution, liquidation and voting rights for
which it will be issued, and each fractional share will have those rights in
proportion to the percentage that the fractional share represents of a whole
share. Shares will be voted in the aggregate. There are no conversion or
preemptive rights in connection with any shares of the Fund. All shares, when
issued in accordance with the terms of the offering, will be fully paid and
non-assessable. Shares are redeemable at net asset value, at the option of the
investor.
The shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares outstanding voting for the election of
directors can elect 100% of the directors if the holders choose to do so, and,
in that event, the holders of the remaining shares will not be able to elect any
person or persons to the Board of Directors. Unless specifically requested by an
investor who is an investor of record, the Fund does not issue certificates
evidencing Fund shares. On April 30, 1996, the Adviser purchased $100,000 shares
of the Fund at an initial purchase price of $10.00 per share.
TAXES
The Fund intends to elect to qualify under the Internal Revenue Code of 1986, as
amended (the "Code"), as a regulated investment company. As a regulated
investment company, the Fund will not be subject to federal income taxes on the
investment company taxable income and long-term capital
-23-
<PAGE>
gains that it distributes to its investors, provided that at least 90% of its
investment company taxable income for the taxable year is distributed. The
Fund's policy is to distribute as dividends each year 100% (and in no event less
than 90%) of its investment company taxable income. If for any taxable year a
Portfolio does not qualify as a regulated investment company, all of its taxable
income will be taxed to it at corporate rates and no distribution will be
deductible.
The Fund has adopted a policy of declaring dividends annually, in an amount
based on its net investment income. Dividends paid from taxable income and
distributions of any realized short-term capital gains are taxable to investors
as ordinary income for federal income tax purposes, whether received in cash or
reinvested in additional shares of the Fund. Distributions of net realized
capital gains after utilization of capital loss carryforwards, if any, are made
annually to meet applicable distribution and excise tax requirements. If shares
that are redeemed have been held by the investor for more than one year, the
investor will generally realize a long-term capital gain or loss upon a
redemption. An investor who acquires shares shortly before the Fund pays a
dividend will be required to include the dividend in income even though the
dividend represents, in effect, a return of capital.
The Fund is required, subject to certain exemptions, to withhold at a rate of
31% from dividends paid or credited to investors in addition to the proceeds
from the redemption of Fund shares, if a correct taxpayer identification number,
certified when required, is not on file with the Fund. Corporate investors are
not subject to this requirement.
The Code imposes a nondeductible 4% excise tax on the Fund unless it meets
certain requirements with respect to distributions of net ordinary income and
capital gain net income. It is anticipated that this provision will not have any
material impact on the Fund.
Dividends and interest paid by foreign issuers may be subject to withholding and
other foreign taxes, which may decrease the net return on foreign investments as
compared to dividends and interest paid by domestic issuers. The Fund does not
expect that it will qualify to elect to pass through to its investors the right
to take a foreign tax credit for foreign taxes withheld from dividends and
interest payments.
For federal income tax purposes, distributions of net capital gains (the excess
of net long-term capital gains over net short-term capital loss), if any, are
taxable as net capital gains regardless of the length of time investors have
owned their shares. A preferential tax rate for net capital gains is currently
applicable for individual shareholders. Generally, on the sale or exchange of
obligations held for more than one year, gain realized by the Fund will be
long-term capital gain. Such capital gain, if any, will be distributed as
capital gain dividends. Capital gain dividends, designated as such in a written
notice to investors mailed not later than 60 days after the Fund taxable year
closes, will be taxed as long-term capital gain. However, if an investor
receives a capital gain dividend and sells shares after holding them for six
months or less (not including periods during which the investor holds an
offsetting position), then any loss realized on the sale will be treated as
long-term capital loss to the extent of such capital gain dividend.
The federal, state and local income tax rules that apply to the Fund and its
investors have changed extensively in recent years, and investors should
recognize that additional changes may be made in the future, some of which could
have an adverse effect on the Fund and its investors for federal and/or
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<PAGE>
state and local income tax purposes. Investors in the Fund should consult their
tax advisors about the federal, state and local tax consequences of an
investment in the Fund in light of their own individual circumstances.
CUSTODIAN, TRANSFER AGENT
AND DIVIDEND AGENT
The Northern Trust Company serves as custodian for the Fund's cash and
securities. The Custodian does not assist in, and is not responsible for,
investment decisions involving assets of the Fund. Furman Selz LLC, the Fund's
Administrator and Distributor, also acts as the Fund's transfer and dividend
agent. The Fund pays the Administrator $15.00 per year per account, plus
out-of-pocket expenses, for such services.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of common stock of the
Fund are passed upon by Battle Fowler LLP, 75 East 55th Street, New York, New
York 10022. Morrison, Brown, Argiz & Co., P.A., 9795 South Dixie Highway, Miami,
Florida 33156, have been selected as auditors for the Fund.
-25-
<PAGE>
AMERINDO TECHNOLOGY FUND
BOARD OF DIRECTORS
-------------------------------------
ALBERTO W. VILAR
GARY A. TANAKA
JOHN RUTLEDGE
JUDE T. WANNISKI
OFFICERS OF FUND
-------------------------------
<TABLE>
<CAPTION>
Alberto W. Vilar Chairman of the Board
<S> <C>
Gary A. Tanaka President
Ralph H. Cechettini Vice President
Anthony Ciulla Vice President
Sarah L. Gordon-Wild Vice President/Secretary
Dana E. Smith Vice President/Treasurer
</TABLE>
<PAGE>
INVESTMENT ADVISOR
- ------------------------------------------
Amerindo Investment Advisors Inc.
San Francisco, California
New York, New York
ADMINISTRATOR, DISTRIBUTOR AND
TRANSFER AND DIVIDEND AGENT
- ------------------------------------------
Furman Selz, LLC
New York, New York
CUSTODIAN
- ------------------------------------------
The Northern Trust Company
Chicago, Illinois
LEGAL COUNSEL
- ------------------------------------------
Battle Fowler LLP
New York, New York
INDEPENDENT ACCOUNTS
- ------------------------------------------
Morrison, Brown, Argiz & Company
Miami, Florida
1-888 TECH FUND
WWW.AMERINDO.COM
AMPRO
<PAGE>
AMERINDO FUNDS INC. For assistance in completing the
Mail to: Amerindo Technology Fund application,
P.O. Box 4490 call the Amerindo Technology Fund at
Grand Central Station 1-888-TECH FUND
New York, New York 10163-4490
AMERINDO TECHNOLOGY FUND-NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
1. INITIAL INVESTMENT
/ / Class A $
- --------------------------- ($25,000 minimum)
/ / Class D $
- --------------------------- ($150,000 minimum)
- --------------------------------------------------------------------------------
2. ACCOUNT REGISTRATION
/ / Individual if joint, check one:
FIRST MIDDLE / / With Right of LAST Survivorship
/ / Tenants in
Common
/ / Joint Tenant / / Tenants by the
Entireties
FIRST MIDDLE LAST
/ / Uniform Gifts/Transfers to Minors Act ______________________________________
CUSTODIAN'S NAME
Minor's Birthdate ____/____/____
as Custodian for ______________________________________________________ State of
Residency _____________________________________________________
MINOR'S NAME
/ / Corporation, Trust Partnership, or other Entity ____________________________
LEGAL ENTITY NAME
- --------------------------------------------------------------------------------
TRUSTEE'S NAME (FOR TRUST
ONLY) DATE OF TRUST (IF
APPLICABLE)
- --------------------------------------------------------------------------------
3. ACCOUNT ADDRESS
Street Address --------------------------------------------------
City/State/Zip
--------------------------------------------------
--------------------------------------------------
Daytime Telephone
--------------------------------------------------
Citizen of: / / U.S. / / Other Country
COUNTRY OF RESIDENCE
- --------------------------------------------------------------------------------
4. SOCIAL SECURITY/TAX IDENTIFICATION NUMBER
- ------------------------------------- OR -------------------------------------
SOCIAL SECURITY NUMBER TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
5. SOURCE OF INTEREST (PLEASE SPECIFY)
/ / Advertisement ______________________ / / TV/Newspaper _____________________
/ / Internet / / Referral _____________________ / / Other ____________________
- --------------------------------------------------------------------------------
6. DISTRIBUTIONS
Dividends and capital gains will be automatically reinvested unless otherwise
indicated. If you wish Dividend/Capital Gains to be paid in cash, please check
the appropriate box.
Dividends are to be: / / Paid in Cash Capital gains are to be: / / Paid in Cash
- --------------------------------------------------------------------------------
7. LETTER OF INTENT (LOI) FOR CLASS A SHARES
/ / I agree to the terms of the Letter of Intent and provisions set forth in the
Prospectus. Although I am not obligated
to do so, it is my intention to invest over a 13 month period:
/ / $25,000 - $74,999 / / $75,000 -
$149,999 / / $150,000 or more
(PURCHASES MADE WITHIN THE LAST 90 DAYS WILL BE APPLIED TOWARDS LOI AMOUNT)
- --------------------------------------------------------------------------------
8. TELEPHONE REDEMPTIONS
If you do not want telephone redemption privileges, check here. / /
I (we) authorize The Amerindo Funds and its agents to act upon instructions,
from shareholder or dealer of record, received by telephone or letter, to have
amounts wired to my (our) bank account designated below or mailed to the address
of record established for this account. I (we) ratify any such instructions. If
you will be utilizing the bank wiring option, please attach a voided check from
your bank account and complete the information below.
- --------------------------------------------------------------------------------
BANK
NAME STREET CITY STATE ZIP
CODE
- --------------------------------------------------------------------------------
ABA ROUTING NUMBER ACCOUNT
NAME ACCOUNT NUMBER
- --------------------------------------------------------------------------------
9. SIGNATURE & CERTIFICATION FOR THE IRS (US INVESTORS ONLY)
Each of the undersigned has the authority and legal capacity to purchase mutual
fund shares, each is of legal age
in their state and believes each investment is suitable for themselves. Each of
the undersigned has received and read the Prospectus and agrees to its terms.
CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued to me), and (2) I am not subject to
backup withholding because: (a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue Service (IRS) that I am subject
to backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS - you must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.
- ---------------------------------------------------------------------------
SIGNATURE SIGNATURE DATE
* If joint account, all tenants must sign ** If corporate account or other
legal entity, authorized person must sign in capacity
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF ADDITIONAL INFORMATION
July 31, 1996
This Statement of Additional Information sets forth
information which may be of interest to investors but which is not necessarily
included in the Fund's Prospectus, dated July 31, 1996 (the "Prospectus"). This
Statement of Additional Information is not a prospectus and should be read in
conjunction with the Prospectus, a copy of which may be obtained without charge
by writing to the Fund at 237 Park Avenue, New York, New York 10017. This
Statement of Additional Information is incorporated by reference into the
Prospectus in its entirety.
C/M: 12034.0001 338027.9
<PAGE>
THE FUND
Amerindo Technology Fund (the "Fund"), a non-diversified,
open-end, management investment company, is a series of Amerindo Funds Inc.
which was incorporated under Maryland law on February 6, 1996. The Fund offers
two classes of shares to investors -- Class A and Class D shares (a "Class" or
the "Classes"). This Fund is designed for long-term investors who understand
and are willing to accept the risk of loss involved in seeking long-term
capital appreciation. The Fund is also designed as a specialized investment
vehicle and is not intended to be used by an investor as a complete investment
program. The Fund should not be used as a trading vehicle. Amerindo Investment
Advisors Inc. (the "Adviser"), manages the investments of the Fund from
day-to-day in accordance with the Fund's investment objective and policies.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
A detailed description of the types and quality of the
securities in which the Fund may invest is given in the Prospectus and is
incorporated herein by reference. The investment objective is fundamental and
may be changed only with the approval of a majority of the Fund's outstanding
shares. There can be no assurance that the Fund's investment objective will be
achieved.
The Fund's investment objective is to seek long-term capital
appreciation by investing at least 65% of its assets (although the Fund
intends, as a non-fundamental policy, to invest at least 80% of its assets) in
the common stocks of technology companies. Technology companies are those
companies with primary business operations in either the technology or science
areas. Current income is incidental to the Fund's investment objective. The
investment objective is fundamental to the Fund and may not be changed without
shareholder approval. There can be no assurance that the Fund's investment
objective will be achieved.
This Fund is designed for long-term investors who understand
and are willing to accept the risk of loss involved in investing in a mutual
fund seeking long-term capital appreciation. Investors should consider their
investment goals, their time horizon for achieving them, and their tolerance
for risks before investing in the Fund. If you seek an aggressive approach to
capital growth and can accept the above average level of price fluctuations
that this Fund is expected to experience, this Fund could be an appropriate
part of your overall investment strategy. The Fund should not be used as a
trading vehicle.
DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES AND DERIVATIVES
The Technology and Science Areas
The Adviser believes that because of rapid advances in
technology and science, an investment in companies with business operations in
these areas will offer substantial opportunities for long-term capital
appreciation. Of course, prices of common stocks of even the best managed, most
profitable corporations are subject to market risk, which means their stock
prices can decline. In addition, swings in investor psychology or significant
trading by large institutional investors can result in price fluctuations.
Industries likely to be represented in the portfolio include computers,
networking and internetworking software, computer aided design,
telecommunications, media and information services, medical devices and
biotechnology. The Fund may also invest in the stocks of companies that should
benefit from the commercialization of technological advances, although they may
not be directly involved in research and development.
The technology and science areas have exhibited and continue
to exhibit rapid growth, both through increasing demand for existing products
and services and the broadening of the technology market. In general, the
stocks of large capitalized companies that are well established in the
technology market can be expected to grow with the market and will frequently
be found in the Fund's portfolio. The expansion of technology and its related
industries, however, also provides a favorable environment for investment in
small to medium capitalized companies. The Fund's investment policy is not
limited to any minimum capitalization requirement and the Fund may hold
securities without regard to the capitalization of the issuer. The Adviser's
overall stock selection for the Fund is not based on the capitalization or size
of the company but rather on an assessment of the company's fundamental
prospects. The Fund will not purchase stocks of companies during their initial
public offering or during an additional public offering of the same security.
The Adviser anticipates, however, that a significant portion of the Fund's
holdings will be invested in newly-issued securities being sold in the
secondary market.
C/M: 12034.0001 338027.9
<PAGE>
Companies in the rapidly changing fields of technology and
science face special risks. For example, their products or services may not
prove commercially successful or may become obsolete quickly. The value of the
Fund's shares may be susceptible to factors affecting the technology and
science areas and to greater risk and market fluctuation than an investment in
a fund that invests in a broader range of portfolio securities not concentrated
in any particular industry. As such, the Fund is not an appropriate investment
for individuals who are not long-term investors and who, as their primary
objective, require safety of principal or stable income from their investments.
The technology and science areas may be subject to greater governmental
regulation than many other areas and changes in governmental policies and the
need for regulatory approvals may have a material adverse effect on these
areas. Additionally, companies in these areas may be subject to risks of
developing technologies, competitive pressures and other factors and are
dependent upon consumer and business acceptance as new technologies evolve.
Foreign Securities
The Fund may invest in certain foreign securities. Investment
in obligations of foreign issuers and in direct obligations of foreign nations
involves somewhat different investment risks from those affecting obligations
of United States domestic issuers. There may be limited publicly available
information with respect to foreign issuers and foreign issuers are not
generally subject to uniform accounting, auditing and financial standards and
requirements comparable to those applicable to domestic companies. There may
also be less government supervision and regulation of foreign securities
exchanges, brokers and listed companies than in the United States. Foreign
securities markets have substantially less volume than domestic securities
exchanges and securities of some foreign companies are less liquid and more
volatile than securities of comparable domestic companies. Brokerage
commissions and other transaction costs on foreign securities exchanges are
generally higher than in the United States. Dividends and interest paid by
foreign issuers may be subject to withholding and other foreign taxes, which
may decrease the net return on foreign investments as compared to dividends and
interest paid to the Fund by domestic companies. Additional risks include
future political and economic developments, the possibility that a foreign
jurisdiction might impose or change withholding taxes on income payable with
respect to foreign securities, the possible seizure, nationalization or
expropriation of the foreign issuer or foreign deposits and the possible
adoption of foreign governmental restrictions such as exchange controls.
U.S. Government Obligations
U.S. Government obligations are obligations which are backed
by the full faith and credit of the United States, by the credit of the issuing
or guaranteeing agency or by the agency's right to borrow from the U.S.
Treasury. They include (i) U.S. Treasury obligations, which differ only in
their interest rates, maturities and times of issuance as follows: U.S.
Treasury bills (maturity of one year or less), U.S. Treasury notes (maturity of
one year or ten years), U.S. Treasury bonds (generally maturities of more than
ten years); and (ii) obligations issued or guaranteed by U.S. Government
agencies and instrumentalities that are supported by the full faith and credit
of the United States (such as securities issued by the Government National
Mortgage Association, the Federal Housing Administration, the Department of
Housing and Urban Development, the Export-Import Bank, the General Services
Administration and the Maritime Administration, and certain securities issued
by the Farmers' Home Administration and the Small Business Administration, most
of which are explained below under the section entitled "Mortgage-Backed
Securities"). The maturities of U.S. Government obligations usually range from
three months to thirty years.
Repurchase Agreements
When the Fund purchases securities, it may enter into a
repurchase agreement with the seller wherein the seller agrees, at the time of
sale, to repurchase the security at a mutually agreed upon time and price. The
Fund may enter into repurchase agreements with member banks of the Federal
Reserve System and with broker-dealers who are recognized as primary dealers in
United States government securities by the Federal Reserve Bank of New York.
Although the securities subject to the repurchase agreement might bear
maturities exceeding one year, settlement for the repurchase would never be
more than 397 days after the Fund's acquisition of the securities and normally
would be within a shorter period of time. The resale price will be in excess of
the purchase price, reflecting an agreed upon market rate effective for the
period of time the Fund's money will be invested in the security, and will not
be related to the coupon rate of the purchased security. At the time the Fund
enters into a repurchase agreement the value of the underlying security,
including accrued interest, will be equal to or exceed the value of the
repurchase agreement, and, in the case of a repurchase agreement exceeding one
day, the seller will agree that the value of the underlying security, including
accrued interest, will at all times be equal to or exceed the value of the
repurchase agreement. The Fund may engage in a repurchase agreement with
respect to any security in which it is authorized to invest, even though the
underlying security may mature in more than one year.
-2-
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<PAGE>
The collateral securing the seller's obligation must be of a credit quality at
least equal to the Fund's investment criteria for securities in which it
invests and will be held by the Custodian or in the Federal Reserve Book Entry
System.
For purposes of the Investment Company Act of 1940, a
repurchase agreement is deemed to be a loan from the Fund to the seller subject
to the repurchase agreement and is therefore subject to the Fund's investment
restriction applicable to loans. It is not clear whether a court would consider
the securities purchased by the Fund subject to a repurchase agreement as being
owned by the Fund or as being collateral for a loan by the Fund to the seller.
In the event of the commencement of bankruptcy or insolvency proceedings with
respect to the seller of the securities before repurchase of the security under
a repurchase agreement, the Fund may encounter delay and incur costs before
being able to sell the security. Delays may involve loss of interest or decline
in price of the security. If the court characterized the transaction as a loan
and the Fund has not perfected a security interest in the security, the Fund
may be required to return the security to the seller's estate and be treated as
an unsecured creditor of the seller. As an unsecured creditor, the Fund would
be at the risk of losing some or all of the principal and income involved in
the transaction. As with any unsecured debt obligation purchased for the Fund,
the Adviser seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the obligor, in this case the seller. Apart
from the risk of bankruptcy or insolvency proceedings, there is also the risk
that the seller may fail to repurchase the security, in which case the Fund may
incur a loss if the proceeds of the sale to a third party are less than the
repurchase price. However, if the market value of the securities subject to the
repurchase agreement becomes less than the repurchase price (including
interest), the Fund involved will direct the seller of the security to deliver
additional securities so that the market value of all securities subject to the
repurchase agreement will equal or exceed the repurchase price. It is possible
that a Fund will be unsuccessful in seeking to impose on the seller a
contractual obligation to deliver additional securities.
Hedging Transactions
The Fund may, but does not currently intend to, enter into
hedging transactions. Hedging is a means of transferring risk which an investor
does not desire to assume during an uncertain market environment. The Fund is
permitted to enter into the transactions solely (a) to hedge against changes in
the market value of portfolio securities or (b) to close out or offset existing
positions. The transactions must be appropriate to reduction of risk; they
cannot be for speculation. In particular, the Fund may write covered call
options on securities or stock indices. By writing call options, the Fund
limits its profit to the amount of the premium received. By writing a covered
call option, the Fund assumes the risk that it may be required to deliver the
security having a market value higher than its market value at the time the
option was written. The Fund will not write options if immediately after such
sale the aggregate value of the obligations under the outstanding options would
exceed 25% of the Fund's net assets.
To the extent the Fund uses hedging instruments which do not
involve specific portfolio securities, offsetting price changes between the
hedging instruments and the securities being hedged will not always be
possible, and market value fluctuations of the Fund may not be completely
eliminated. When using hedging instruments that do not specifically correlate
with securities in the Fund, the Adviser will attempt to create a very closely
correlated hedge.
Options Transactions
The Fund may, but does not currently intend to, enter into
options transactions. The Fund may purchase call and put options on securities
and on stock indices in an attempt to hedge its portfolio and to increase its
total return. Call options may be purchased when it is believed that the market
price of the underlying security or index will increase above the exercise
price. Put options may be purchased when the market price of the underlying
security or index is expected to decrease below the exercise price. The Fund
may also purchase all options to provide a hedge against an increase in the
price of a security sold short by it. When the Fund purchases a call option, it
will pay a premium to the party writing the option and a commission to the
broker selling the option. If the option is exercised by the Fund, the amount
of the premium and the commission paid may be greater than the amount of the
brokerage commission that would be charged if the security were purchased
directly.
In addition, the Fund may write covered call options on
securities or stock indices. By writing options, the Fund limits its profits to
the amount of the premium received. By writing a call option the Fund assumes
the risk that it may be required to deliver the security at a market value
higher than its market value at the time the option was written plus the
difference between the original purchase price of the stock and the strike
price. By writing a put option, the Fund assumes the risk that it may be
required to purchase the underlying security at a price in excess of its
current market value.
-3-
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<PAGE>
Lending of Securities
The Fund may, but does not currently intend to, lend its
portfolio securities to qualified institutions as determined by the Adviser. By
lending its portfolio securities, the Fund attempts to increase its income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that may occur during the term of the loan will
be for the account of the Fund in such transaction. The Fund will not lend
portfolio securities if, as a result, the aggregate of such loans exceeds 33%
of the value of its total assets (including such loans). All relevant facts and
circumstances, including the creditworthiness of the qualified institution,
will be monitored by the Adviser, and will be considered in making decisions
with respect to lending of securities, subject to review by the Fund's Board of
Directors. The Fund may pay reasonable negotiated fees in connection with
loaned securities, so long as such fees are set forth in a written contract and
their reasonableness is determined by the Fund's Board of Directors.
Variable-Amount Master Demand Notes
The Fund may purchase variable amount master demand notes
("VANs"). VANs are debt obligations that provide for a periodic adjustment in
the interest rate paid on the instrument and permit the holder to demand
payment of the unpaid principal balance plus accrued interest at specified
intervals upon a specified number of days' notice either from the issuer or by
drawing on a bank letter of credit, a guarantee, insurance or other credit
facility issued with respect to such instrument.
The VANs in which the Fund may invest are payable on not more
than seven calendar days' notice either on demand or at specified intervals not
exceeding one year depending upon the terms of the instrument. The terms of the
instruments provide that interest rates are adjustable at intervals ranging
from daily to up to one year and their adjustments are based upon the prime
rate of a bank or other appropriate interest rate adjustment index as provided
in the respective instruments. The Fund will decide which variable rate demand
instruments it will purchase in accordance with procedures prescribed by its
Board of Directors to minimize credit risks.
The VANs that the Fund may invest in include participation
certificates purchased by the Fund from banks, insurance companies or other
financial institutions in fixed or variable rate, or taxable debt obligations
(VANs) owned by such institutions or affiliated organizations. A participation
certificate gives the Fund an undivided interest in the obligation in the
proportion that the Fund's participation interest bears to the total principal
amount of the obligation and provides the demand repurchase feature described
below. Where the institution issuing the participation does not meet the Fund's
high quality standards, the participation is backed by an irrevocable letter of
credit or guaranty of a bank (which may be a bank issuing a confirming letter
of credit, or a bank serving as agent of the issuing bank with respect to the
possible repurchase of the certificate of participation or a bank serving as
agent of the issuer with respect to the possible repurchase of the issue) or
insurance policy of an insurance company that the Board of Directors of the
Fund has determined meets the prescribed quality standards for the Fund. The
Fund has the right to sell the participation certificate back to the
institution and, where applicable, draw on the letter of credit, guarantee or
insurance after no more than 30 days' notice either on demand or at specified
intervals not exceeding 397 days (depending on the terms of the participation),
for all or any part of the full principal amount of the Fund's participation
interest in the security, plus accrued interest. The Fund intends to exercise
the demand only (1) upon a default under the terms of the bond documents, (2)
as needed to provide liquidity to the Fund in order to make redemptions of the
Fund's shares, or (3) to maintain a high quality investment portfolio. The
institutions issuing the participation certificates will retain a service and
letter of credit fee (where applicable) and a fee for providing the demand
repurchase feature, in an amount equal to the excess of the interest paid on
the instruments over the negotiated yield at which the participations were
purchased by the Fund. The total fees generally range from 5% to 15% of the
applicable prime rate* or other interest rate index. With respect to insurance,
the Fund will attempt to have the issuer of the participation certificate bear
the cost of the insurance, although the Fund retains the option to purchase
insurance if necessary, in which case the cost of insurance will be an expense
of the Fund subject to the expense limitation on investment company expenses
prescribed by any state in which the Fund's shares are qualified for sale. The
Adviser has been instructed by the Fund's Board of Directors to continually
monitor the pricing, quality and liquidity of the variable rate demand
instruments held by the Fund, including the participation certificates, on the
basis of published financial information and
- --------
* The "prime rate" is generally the rate charged by a bank to its most
creditworthy customers for short term loans. The prime rate of a
particular bank may differ from other banks and will be the rate
announced by each bank on a particular day. Changes in the prime rate
may occur with great frequency and generally become effective on the
date announced.
-4-
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<PAGE>
reports of the rating agencies and other bank analytical services to which the
Fund may subscribe. Although these instruments may be sold by the Fund, the
Fund intends to hold them until maturity, except under the circumstances stated
above.
While the value of the underlying variable rate demand
instruments may change with changes in interest rates generally, the variable
rate nature of the underlying variable rate demand instruments should minimize
changes in value of the instruments. Accordingly, as interest rates decrease or
increase, the potential for capital appreciation and the risk of potential
capital depreciation is less than would be the case with a portfolio of fixed
income securities. The Fund may contain VANs on which stated minimum or maximum
rates, or maximum rates set by state law limit the degree to which interest on
such VANs may fluctuate; to the extent it does, increases or decreases in value
may be somewhat greater than would be the case without such limits. In the
event that interest rates increased so that the variable rate exceeded the
fixed-rate on the obligations, the obligations could no longer be valued at par
and this may cause the Fund to take corrective action, including the
elimination of the instruments. Because the adjustment of interest rates on the
VANs is made in relation to movements of the applicable banks' "prime rate", or
other interest rate adjustment index, the VANs are not comparable to long-term
fixed-rate securities. Accordingly, interest rates on the VANs may be higher or
lower than current market rates for fixed-rate obligations or obligations of
comparable quality with similar maturities.
For purposes of determining whether a VAN held by a Fund
matures within 397 days from the date of its acquisition, the maturity of the
instrument will be deemed to be the longer of (1) the period required before
the Fund is entitled to receive payment of the principal amount of the
instrument or (2) the period remaining until the instrument's next interest
rate adjustment. If a variable rate demand instrument ceases to meet the
investment criteria of the Fund, it will be sold in the market or through
exercise of the repurchase demand.
INVESTMENT RESTRICTIONS
The Fund has adopted the following fundamental investment
restrictions which may not be changed unless approved by a majority of the
Fund's outstanding shares. The Fund may not:
(1) Make portfolio investments other than as described under
"Investment Objective, Policies and Restrictions" or any other form of
investment, where applicable, which meets the Fund's investment criteria, as
determined by the Adviser and the Board of Directors, and which is consistent
with the Fund's objective and policies.
(2) Borrow Money. This restriction shall not apply to
borrowing from banks for temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests that might otherwise require the
untimely disposition of securities, in an amount up to one-third of the value
of the Fund's total assets (including the amount borrowed) valued at market
less liabilities (not including the amount borrowed) at the time the borrowing
was made. While borrowings exceed 5% of the value of the Fund's total assets,
the Fund will not purchase additional securities. Interest paid on borrowings
will reduce net income.
(3) Pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to 15% of the value of its net assets and only
to secure borrowings for temporary or emergency purposes.
(4) Sell securities short, except short sales
"against-the-box," or purchase securities on margin, or engage in the purchase
and sale of put, call, straddle or spread options or in writing such options,
except to the extent permitted in the Prospectus or this Statement of
Additional Information or, to the extent that securities subject to a demand
obligation and stand-by commitments may be purchased as set forth under
"Investment Objective, Policies and Risks."
(5) Underwrite the securities of other issuers, except
insofar as the Fund may be deemed an underwriter under the Securities Act of
1933 in disposing of a portfolio security.
(6) Invest more than an aggregate of 15% of its net assets in
repurchase agreements maturing in more than seven days, variable rate demand
instruments exercisable in more than seven days or securities that are not
readily marketable, except as described in the Fund's Prospectus.
(7) Purchase or sell real estate, real estate investment
trust securities, commodities or commodity contracts, or oil and gas interests,
but this shall not prevent the Fund from investing in Government obligations
secured by real estate or interests in real estate.
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<PAGE>
(8) Make loans to others, except through the purchase of
portfolio investments, including repurchase agreements, as described under
"Investment Objective, Policies and Risks."
(9) Invest more than 25% of its assets in the securities of
"issuers" in any single industry, except in the technology and science areas as
set forth under "Investment Objective and Policies" in the Prospectus and
provided also that there shall be no limitation on the Fund to purchase
obligations issued or guaranteed by the United States government, its agencies
or instrumentalities. When the assets and revenues of an agency, authority,
instrumentality or other political subdivision are separate from those of the
government creating the issuing entity and a security is backed only by the
assets and revenues of the entity, the entity would be deemed to be the sole
issuer of the security. Similarly, in the case of an industrial revenue bond,
if that bond is backed only by the assets and revenues of the non-governmental
issuer, then such non-governmental issuer would be deemed to be the sole
issuer. If, however, in either case, the creating government guarantees a
security, such a guarantee would be considered a separate security and would be
treated as an issue of such government.
(10) Invest in securities of other investment companies,
except (i) the Fund may purchase unit investment trust securities where such
unit investment trusts meet the investment objectives of the Fund and then only
up to 5% of the Fund's net assets, except as they may be acquired as part of a
merger, consolidation or acquisition of assets and (ii) as permitted by Section
12(d) of the Act.
(11) Issue senior securities except insofar as the Fund may
be deemed to have issued a senior security in connection with any permitted
borrowing.
Percentage Restrictions
Any investment restrictions herein which involve a maximum
percentage of securities or assets, other than the restriction that the Fund
may not purchase additional securities while borrowings exceed 5% of the value
of the Fund's total assets, shall not be considered to be violated if the
change in the percentage holding results from changes in the value of the
Fund's securities. Investment restrictions that involve a maximum percentage of
securities or assets will be considered to be violated, however, if an excess
over the percentage occurs immediately after, and is caused by, an acquisition
of securities or assets of, or borrowings by, the Fund.
MANAGEMENT OF THE FUND
The directors and officers of the Fund and their principal
occupations during the past five years are set forth below. Their titles may
have varied during this period. Asterisks indicate that those directors are
"interested persons" (as defined in the Investment Company Act of 1940, as
amended) of the Fund. Unless otherwise indicated, the address of each director
and officer is 399 Park Avenue, New York, New York 10022.
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<PAGE>
Officers and Directors of the Fund
<TABLE>
<S> <C>
*ALBERTO W. VILAR Mr. Vilar is Chairman of the Board of Directors and Chief Executive Officer
Amerindo Investment Advisors Inc. of the Fund. He began his career with Citibank N.A. in New York in 1964
One Embarcadero and worked there as an International Credit Officer until 1967. From 1967 to
Suite 2300 1971, he served as Vice President, Portfolio Manager and Manager of the
San Francisco, CA 94111 Investment Management Division of Drexel Burnham Lambert in New York.
399 Park Avenue From 1971 to 1973, he served as Executive Vice President, Portfolio Manager
18th Floor and Director of Equity Strategy at M.D. Sass Investor Services in New York.
New York, NY 10022 In 1973, he became Vice President and Portfolio Manager of Endowment
(55) Management & Research Corporation in Boston. From 1977 to 1979, he
served as Senior Vice President, Director of Research, Chief Investment
Strategist and Partnership Manager of the Boston Company in Boston. He
founded the predecessors of Amerindo Advisors (U.K.) Limited and Amerindo
Investment Advisors, Inc. (Panama) in 1979 and has served since then as a
Principal Portfolio Manager. He holds the degrees of B.A. in Economics from
Washington & Jefferson College and an M.B.A. from Iona College, and he
completed the Doctoral Studies Program in Economics at New York
University. He has been a Chartered Financial Analyst since 1975.
*DR. GARY A. TANAKA Dr. Tanaka is Director, President of the Fund and Chief Executive Officer of
Amerindo Investment Advisors Inc. the Fund. He served as a Portfolio Manager for Crocker Bank in San
43 Upper Grosvenor Street Francisco from 1971 to 1977, and as a Partnership Manager for Crocker
London, England W1X9PG Investment Management Corp. in San Francisco from 1978 to 1980. From
(51) 1975 to 1980, he also served as a Consultant to Andron Cechettini &
Associates in San Francisco. In 1980, he joined the predecessors of Amerindo
Advisors (U.K.) Limited and Amerindo Investment Advisors, Inc. (Panama) as
a Principal Portfolio Manager. Dr. Tanaka holds the degrees of B.S. in
Mathematics from Massachusetts Institute of Technology and Ph.D. in Applied
Mathematics from Imperial College, University of London.
DR. JOHN RUTLEDGE Dr. Rutledge is Director of the Fund. He also is Chairman of Rutledge &
Rutledge & Company, Inc. Company, Inc., a merchant banking firm, since 1991 and serves as a director
One Greenwich Office Park of Earle M. Jorgensen Company, Lazard Freres Funds, Fluidrive, Inc.,
Greenwich, CT 06831 General Medical Corporation, Medical Specialties Group, United Refrigerated
(47) Services, Inc. and Utenduhl Capital Partners and is a special advisor to Kelso
& Companies, Inc. He is the author of books and investment publications,
writes a monthly column in Forbes Magazine and is a frequent contributor to
periodicals.
JUDE T. WANNISKI Mr. Wanniski is a Director of the Fund. He also has been president of
Polyconomics, Inc. Polyconomics, Inc. since 1978 and serves as a director for Repap Enterprises
86 Maple Avenue Inc.
Morristown, NJ 07960
(59)
</TABLE>
- --------
* "Interested person" of the Fund, as defined in the Investment Company Act.
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<PAGE>
<TABLE>
<S> <C>
SARAH L. GORDON-WILD Ms. Gordon-Wild is the Vice President of and Secretary to the Fund.
Amerindo Investment Advisors Inc. She has been a biotechnology analyst with Amerindo Investment Advisors Inc.
399 Park Avenue since March 1990.
New York, NY 10022
(37)
DANA E. SMITH Ms. Smith is the Vice President of and Treasurer to the Fund. She has been
Amerindo Investment Advisors Inc. the Compliance Officer of Amerindo Investment Advisors Inc. since April
399 Park Avenue 1993. From December 1991 to March 1993, she was a Mutual Fund
New York, NY 10022 Marketing Associate at Lazard Freres Asset Management and an officer of The
(37) Lazard Funds, Inc.
ANTHONY CIULLA Mr. Ciulla is the Vice President of the Fund. He has been the Senior Trader
Amerindo Investment Advisors Inc. of Amerindo Investment Advisers Inc. since October 1, 1990.
One Embarcadero
Suite 2300
San Francisco, CA 94111
(64)
RALPH H. CECHETTINI Mr. Cechettini is a Vice President of the Fund. He has been a Portfolio
Amerindo Investment Advisors Inc. Manager with Amerindo Investment Advisers Inc. since February, 1991.
One Embarcadero
Suite 2300
San Francisco, CA 94111
(55)
</TABLE>
COMPENSATION TABLE
(Estimated for the year ended April 30, 1997)
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits Estimated Annual from Fund and
Name of Person Position Compensation from Accrued as Part of Benefits upon Fund Complex
Fund Fund Expenses Retirement Paid to Directors
<S> <C> <C> <C> <C>
Alberto W. Vilar $ 0 $ 0 $ 0 $ 0
Director
Dr. Gary A. Tanaka 0 0 0 0
Director
Dr. John Rutledge 30,000 0 0 30,000
Director
Jude T. Wanniski 30,000 0 0 30,000
Director
</TABLE>
Each Director who is not an interested person of the Fund
receives a base annual fee of $25,000 which is paid by the Fund, plus $1,250
for each meeting attended.
Investment Adviser
Amerindo Investment Advisors Inc., a registered investment
adviser, is a California corporation, with its principal offices located at One
Embarcadero, Suite 2300, San Francisco, California 94111 and 399 Park Avenue,
New York,
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<PAGE>
New York 10022. The Adviser has been employed by the Board of Directors to
serve as the investment adviser of the Fund pursuant to an Investment Advisory
Agreement entered into by the Fund on behalf of each Class. Currently, the
Adviser's only investment company client is the Fund. The Adviser supervises
all aspects of the Fund's operations and provides investment advice and
portfolio management services to the Fund. Pursuant to the Advisory Agreement
and subject to the supervision of the Fund's Board of Directors, the Adviser
makes the Fund's day-to-day investment decisions, arranges for the execution of
portfolio transactions and generally manages the Fund's investments.
The Adviser provides persons satisfactory to the Board of
Directors of the Fund to serve as officers of the Fund. Such officers, as well
as certain other employees and directors of the Fund, may be directors,
officers or employees of the Adviser or its affiliates.
The Adviser also may provide the Fund with supervisory
personnel who will be responsible for supervising the performance of
administrative services, accounting and related services, net asset value and
yield calculation, reports to and filings with regulatory authorities, and
services relating to such functions. However, the Administrator will provide
personnel who will be responsible for performing the operational components of
such services. The personnel rendering such supervisory services may be
employees of the Adviser, of its affiliates or of other organizations. The
Advisory Agreement was approved on May 14, 1996 by the Board of Directors,
including a majority of the directors who are not interested persons (as
defined in the Investment Company Act of 1940) of the Fund or the Adviser.
The Advisory Agreement has a term which extends to July 30,
1998 and may be continued in force thereafter for successive twelve-month
periods beginning each July 31, provided that such continuance is specifically
approved annually by majority vote of the Fund's outstanding voting securities
or by the Board of Directors, and in either case by a majority of the directors
who are not parties to the Advisory Agreement or interested persons of any such
party, by votes cast in person at a meeting called for the purpose of voting on
such matter.
The Advisory Agreement is terminable without penalty by the
Fund on sixty days' written notice when authorized either by majority vote of
the outstanding voting shares of the Fund or by a vote of a majority of the
Fund's Board of Directors, or by the Adviser on sixty days' written notice, and
will automatically terminate in the event of its assignment. The Advisory
Agreement provides that in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser, or of reckless disregard of its
obligations thereunder, the Adviser shall not be liable for any action or
failure to act in accordance with its duties thereunder.
Adviser's Fees
Pursuant to the terms of the Advisory Agreement, the Fund, on
behalf of each Class, will pay a monthly advisory fee equal to 1.50% of the
Fund's average daily net asset per annum. This fee is higher than the fee paid
by most other mutual funds; however, the Board of Directors believes that this
fee is reasonable in light of the advisory services performed by the Adviser
for the Fund. Any portion of the advisory fees received by the Adviser may be
used by the Adviser to provide investor and administrative services and for
distribution of Fund shares. The Adviser may voluntarily waive a portion of its
fee or assume certain expenses of the Fund. This would have the effect of
lowering the overall expense ratio of the Fund and of increasing yield to
investors. See "Expense Limitation" below.
Expense Limitation
The Adviser has agreed to reimburse the Fund for its expenses
(exclusive of interest, taxes, brokerage, and extraordinary expenses) which in
any year exceed the limits on investment company expenses prescribed by any
state in which the Fund's shares are qualified for sale. For the purpose of
this obligation to reimburse expenses, the Fund's annual expenses are estimated
and accrued daily, and any appropriate estimated payments are made to it on a
monthly basis. From time to time, the Adviser may voluntarily assume certain
expenses of the Fund. This would have the effect of lowering the overall
expense ratio and of increasing yield to investors. Subject to the obligations
of the Adviser to reimburse the Fund for its excess expenses as described
above, the Fund has, under the Advisory Agreement, confirmed its obligation for
payment of all other expenses, including without limitation: fees payable to
the Adviser, Administrator, Custodian, Transfer Agent and Dividend Agent;
brokerage and commission expenses; federal, state or local taxes, including
issuance and transfer taxes incurred by or levied on it; commitment fees,
certain insurance premiums and membership fees and dues in investment company
organizations; interest charges on borrowings; telecommunications expenses;
recurring and non-recurring legal and accounting expenses; costs of organizing
and maintaining the Fund's existence as a corporation; compensation, including
directors' fees, of any directors, officers or employees who are not also
officers of the Adviser or its affiliates and costs of other personnel
providing administrative and clerical services; costs of stockholders' services
and costs of stockholders'
-9-
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<PAGE>
reports, proxy solicitations, and corporate meetings; fees and expenses of
registering its shares under the appropriate Federal securities laws and of
qualifying its shares under applicable state securities laws, including
expenses attendant upon the initial registration and qualification of these
shares and attendant upon renewals of, or amendments to, those registrations
and qualifications; and expenses of preparing, printing and delivering the
Prospectus to existing shareholders and of printing shareholder application
forms for shareholder accounts.
The Fund may from time-to-time hire its own employees or
contract to have management services performed by third parties, and the
management of the Fund intends to do so whenever it appears advantageous to the
Fund. The Fund's expenses for employees and for such services are among the
expenses subject to the expense limitation described above.
Administrator
The Administrator for the Fund is Furman Selz LLC (the
"Administrator"), which has its principal office at 230 Park Avenue, New York,
New York 10169, and is primarily an institutional brokerage firm with
membership on the New York, American, Boston, Midwest, Pacific and Philadelphia
Stock Exchanges.
The Administrator serves as a investment adviser to numerous
individual and institutional accounts. The Administrator also serves as
administrator and distributor of other mutual funds.
Pursuant to an Administrative Services Agreement with the
Fund, the Administrator provides all administrative services necessary for the
Fund, other than those provided by the Adviser, subject to the supervision of
the Fund's Board of Directors. The Administrator will provide persons to serve
as officers of the Fund. Such officers may be directors, officers or employees
of the Administrator or its affiliates.
The Administrative Services Agreement is terminable by the
Board of Directors of the Fund or the Administrator on sixty days' written
notice and terminates automatically in the event of its "assignment" as defined
by the 1940 Act. The Agreement shall remain in effect for two years from the
date of its initial approval, and subject to annual approval of the Fund's
Board of Directors for one-year periods thereafter. The Agreement provides that
in the absence of willful misfeasance, bad faith or gross negligence on the
part of the Administrator or reckless disregard of its obligations thereunder,
the Administrator shall not be liable for any action or failure to act in
accordance with its duties thereunder.
Under the Administrative Services Agreement, the
Administrator provides all administrative services, including, without
limitation: (i) provides services of persons competent to perform such
administrative and clerical functions as are necessary to provide effective
administration of the Fund, including maintaining certain books and records
described in Rule 31a-1 under the 1940 Act, and reconciling account information
and balances among the Fund's Custodian and Adviser; (ii) overseeing the
performance of administrative and professional services to the Fund by others,
including the Fund's Custodian; (iii) preparing, but not paying for, the
periodic updating of the Fund's Registration Statement, Prospectus and
Statement of Additional Information in conjunction with Fund counsel, including
the printing of such documents for the purpose of filings with the Securities
and Exchange Commission and state securities administrators, preparing the
Fund's tax returns, and preparing reports to the Fund's shareholders and the
Securities and Exchange Commission; (iv) preparing in conjunction with Fund
counsel, but not paying for, all filings under the securities or "Blue Sky"
laws of such states or countries as are designated by the Distributor, which
may be required to register or qualify, or continue the registration or
qualification, of the Fund and/or its shares under such laws; (v) preparing
notices and agendas for meetings of the Fund's Board of Directors and minutes
of such meetings in all matters required by the 1940 Act to be acted upon by
the Board; (vi) monitoring daily and periodic compliance with respect to all
requirements and restrictions of the Investment Company Act, the Internal
Revenue Code and the Prospectus; and (vii) monitoring and evaluating daily
income and expense accruals, and sales and redemptions of shares of the Fund.
The Administrator also provides the Fund with all accounting
services, including: (i) daily computation of net asset value; (ii) maintenance
of security ledgers and books and records as required by the Investment Company
Act; (iii) production of the Fund's listing of portfolio securities and general
ledger reports; (iv) reconciliation of accounting records; and (v) calculation
of yield and total return for the Fund.
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Administrator's Fees
For the services rendered to the Fund by the Administrator,
the Fund pays the Administrator an annual fee paid monthly equal to 0.15% of
the Fund's aggregate average daily net assets. The Administrator, however, has
agreed to waive a portion of its fees and may not change this waiver policy
without the prior consent of the Fund's Board of Directors.
In return for providing the Fund with all accounting related
services, the Fund pays the Administrator an annual fee paid monthly equal to
$35,000, plus out-of-pocket expenses for such services.
Custodian, Transfer Agent and Dividend Agent
The Northern Trust Company serves as custodian for the Fund's
cash and securities. Pursuant to a Custodian Agreement with the Fund, it is
responsible for maintaining the books and records of the Fund's portfolio
securities and cash. The Custodian does not assist in, and is not responsible
for, investment decisions involving assets of the Fund. Furman Selz LLC, the
Fund's Administrator, also acts as the Fund's transfer and dividend agent.
TAXES
The Fund will elect to qualify under the Internal Revenue
Code of 1986, as amended ("the Code"), as a regulated investment company. As a
regulated investment company, the Fund will not be subject to federal income
taxes on its investment company taxable income and the long-term capital gains
that it distributes to its shareholders, provided that at least 90% of its
investment company taxable income for the taxable year is distributed, and
numerous other requirements concerning regulated investment companies are
satisfied. The Fund's policy is to distribute as dividends each year 100% (and
in no event less than 90%) of its investment company taxable income. The Fund
will be treated as a separate corporation and generally will have to comply
with the qualifications and other requirements applicable to regulated
investment companies. If for any taxable year the Fund does not qualify as a
regulated investment company, all of its taxable income would be taxable at
corporate rates and no distributions would qualify as tax exempt.
The Fund has adopted a policy of declaring dividends annually
in an amount based on its net investment income. The amount of each dividend
may differ from actual net investment income calculated in accordance with
federal income tax principles. Dividends paid from taxable income, if any, and
distributions of any realized short term capital gains are taxable to
shareholders as ordinary income, whether received in cash or reinvested in
additional shares of the Fund. Distributions of net realized capital gains
after utilization of capital loss carryforwards, if any, are made annually to
meet applicable distribution and excise tax requirements. Distributions paid by
the Fund may result in a liability (or increased liability) under the
alternative minimum tax.
The Fund may be subject to state or local tax in
jurisdictions in which the Fund is organized or may be deemed to be doing
business. However, Maryland taxes regulated investment companies in a manner
that is generally similar to the federal income tax rules described herein.
Distributions may be subject to state and local income taxes.
In addition, the treatment of the Fund and its shareholders in those states
that have income tax laws might differ from their treatment under the federal
income tax laws.
The Code imposes a nondeductible 4% excise tax on the Fund
unless it meets certain requirements with respect to distributions of ordinary
income and capital gain net income. 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, plus at least 98% of the
excess of its capital gains over its capital losses realized during the
one-year period ending October 31 during such year, which shall be reduced (but
not below net capital gain) by the amount of the Fund's net ordinary loss for
the year.
It is anticipated that this provision will not have any material impact on the
Fund.
Dividends and interest paid by foreign issuers may be subject
to withholding and other foreign taxes, which may decrease the net return on
foreign investments as compared to dividends and interest paid by domestic
issuers. The Fund does not expect that it will qualify to elect to pass through
to its shareholders the right to take a foreign tax credit for foreign taxes
withheld from dividends and interest payments.
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For federal income tax purposes, distributions of net capital
gains (the excess of net long-term capital gains over net short-term capital
loss), if any, are taxable as net capital gains regardless of the length of
time shareholders have owned their shares. Although the Tax Reform Act of 1986
eliminated the preferential treatment previously available for net capital
gains, the preferential treatment for net capital gains was restored, to some
extent, by the Revenue Reconciliation Act of 1990, which, in limited
circumstances, places a 28% ceiling on the marginal rate applicable to net
capital gains realized by individuals. Distributions attributable to short-term
capital gains (whether from tax exempt or taxable obligations) are taxable as
ordinary income for federal income tax purposes. Generally, on the sale or
exchange of obligations held for more than one year, gain realized by the Fund
will be long-term capital gain. Such capital gain, if any, will be distributed
as capital gain dividends. Capital gain dividends, designated as such in a
written notice to investors mailed not later than 60 days after the Fund's
taxable year closes, will be taxed as long-term capital gain. However, if an
investor receives a capital gain dividend and sells shares after holding them
for six months or less (not including periods during which the shareholder
holds an offsetting position), then any loss realized on the sale will be
treated as long-term capital loss to the extent of such capital gain dividend.
If any net capital gains are retained by the Fund for reinvestment, requiring
federal income taxes thereon to be paid by it, the Fund will elect to treat
such capital gains as having been distributed to shareholders. As a result,
shareholders will report such capital gains as net capital gains, will be able
to claim their share of federal income taxes paid by the Fund on such gains as
a credit against their own federal income tax liability, and will be entitled
to increase the adjusted tax basis of their Fund shares by 65% of their share
of the undistributed gain.
Distributions of net capital gains are not eligible for the dividends received
deduction.
All taxable dividends from investment company taxable income
are taxable as ordinary income. It is not expected that any income
distributions from the Fund will qualify for the dividends received deduction
for corporations.
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 value of a share on the reinvestment date.
Redemptions of shares may result in tax consequences (gain or
loss) to shareholders and are also subject to reporting requirements.
The Tax Reform Act of 1986 contained a provision limiting
miscellaneous itemized deductions for individuals and certain other
shareholders, such as estates and trusts, to the extent such miscellaneous
itemized deductions do not exceed 2% of adjusted gross income for a taxable
year. However, the Revenue Reconciliation Act of 1989 provided an exemption
from the limitation for publicly-offered regulated investment companies.
Interest incurred or continued to purchase shares of the Fund
is generally treated as investment interest, and in the case of non-corporate
taxpayers is deductible only to the extent of net investment income. Under
rules used by the Internal Revenue Service to determine when borrowed funds are
used for the purpose of purchasing or carrying particular assets, the purchase
of shares may be considered to have been made with borrowed funds even though
the borrowed funds are not directly traceable to the purchase of shares.
Under the federal income tax law, the Fund will be required
to report to the Internal Revenue Service all distributions of taxable income
and capital gains as well as gross proceeds from the redemption or exchange of
Fund shares, except in the case of exempt shareholders, which include most
corporations. Under the backup withholding provisions of Section 3406 of the
Code, distributions of 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
taxpayer identification numbers and their required certifications regarding
their status under the federal income tax law. 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. Corporate shareholders should provide the Fund with their taxpayer
identification numbers and should certify their exempt status in order to avoid
possible erroneous application of backup withholding.
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. domestic 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, including the possibility
that such a shareholder may be subject to a U.S. withholding tax at a rate of
30% (or at a lower rate under an applicable income tax treaty) on amounts
constituting ordinary income received by such person, where such amounts are
treated as income from U.S. sources under the Code.
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The federal, state and local income tax rules that apply to
the Fund and its shareholders have changed extensively in recent years, and
investors should recognize that additional changes may be made in the future,
some of which could have an adverse affect on the Fund and its investors for
federal and/or state and local tax purposes. Shareholders should consult their
tax advisors about the application of the provisions of tax law described in
this statement of additional information in light of their particular federal
and state tax situations.
PURCHASE AND REDEMPTION
Furman Selz LLC serves as the exclusive distributor of the
Fund's shares pursuant to its Distribution Agreement with the Fund (the
"Distributor"). Investors may open accounts in the Fund only through the
exclusive Distributor for the Fund. Under the Distribution Agreement, the
Distributor, for nominal consideration and as agent for the Fund, will solicit
orders for the purchase of Fund shares, provided that any subscriptions and
orders will not be binding on the Fund until accepted by the Fund as principal.
Shares of Class A may be purchased at the net asset value per
share next determined, plus any applicable sales load, after receipt of an
order by the Fund's transfer agent in proper form with accompanying check or
other bank wire payment arrangements satisfactory to the Fund. Shares of Class
D are sold without an initial sales load. Class A shares are sold subject to an
initial sales load of up to 3.00%. The Fund's minimum initial investment for
Class A shares is $25,000 and the minimum subsequent investment for Class A
Shares is $2,500. The minimum initial investment for Class D shares is $150,000
and the minimum subsequent investment for Class D shares is $15,000.
Shares of the Fund may be redeemed by a shareholder at any
time at the net asset value per share next determined after the redemption
request is received by the Fund's Distributor or transfer agent in proper
order. Shareholders in each Class may be subject to a 3.00% fee on the
redemption of shares held for less than one year. These redemption fees are
assessed against net assets and will be retained by the Fund.
The material relating to the purchase, redemption and
exchange of Fund shares in the Prospectus is incorporated herein by reference
and investors should refer to the Prospectus for information relating to these
areas.
DIVIDENDS AND DISTRIBUTIONS
Net investment income is declared as dividends and paid
annually. Substantially all the realized net capital gains for the Fund, if
any, are declared and paid on an annual basis. Dividends are payable to
shareholders of record at the time of declaration.
Dividends of the Fund are automatically reinvested in
additional Fund shares unless the shareholder has elected to have them paid in
cash.
The net investment income of the Fund for each business day
is determined immediately prior to the determination of net asset value. Net
investment income for other days is determined at the time net asset value is
determined on the prior business day. See "Purchase of Shares" and "Redemption
of Shares" in the Prospectus.
NET ASSET VALUE
Net asset value per share is determined by subtracting from
the value of the Fund's total assets the amount of its liabilities and dividing
the remainder by the number of its outstanding shares. The value of each
security for which readily available market quotations exist is based on a
decision as to the broadest and most representative market for the security;
the value is based either on the last sale price on a national securities
exchange, or, in the absence of recorded sales, at the readily available
closing bid price on such exchanges, or at the quoted bid price in the
over-the-counter market. Assets for which market quotations are not readily
available are valued in accordance with procedures established by the Fund's
Board of Directors, including use of an independent pricing service or services
which use prices based on yields or prices of comparable Government
obligations, indications as to values from dealers and general market
conditions.
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The Fund computes its net asset value once daily on Monday
through Friday, except that the net asset value is not computed for the Fund on
the holidays listed herein. The Fund does not determine net asset value per
share on the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas.
The Fund computes net asset value at 4:15 p.m. New York Time.
The days on which a Fund's net asset value is determined are its business days.
COMPUTATION OF YIELD AND PERFORMANCE INFORMATION
The Fund computes yield based on a 30-day (or one month)
period ended on the date of the most recent balance sheet included in the
registration statement, computed 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, according to the following formula:
YIELD = 2[( a-b + 1)6 - 1]
-----
cd
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 dividends.
d = the maximum offering price per share on the last day of the
period.
Actual future yields will depend on the type, quality, and
maturities of the investments held by the Fund, changes in interest rates on
investments, and the Fund's expenses during the period.
Computation of Total Return
The total return must be displayed in any advertisement
containing the Fund's yield. Total return is the average annual total return
for the 1-, 5- and 10-year period ended on the date of the most recent balance
sheet included in the Statement of Additional Information, computed by finding
the average annual compounded rates of return over 1-, 5- and 10-year periods
that would equate the initial amount invested to the ending redeemable value
according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial investment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1000
payment made at the beginning of the 1-, 5- or
10-year periods at the end of the 1-, 5- or 10-year
periods (or fractions thereof).
Because the Fund has not had a registration in effect for 1, 5 or 10 years, the
period during which the registration has been effective shall be substituted.
Yield information may be useful for reviewing the performance
of the Fund and for providing a basis for comparison with other investment
alternatives. However, unlike bank deposits or other investments which pay a
fixed yield for a stated period of time, the Fund's yield does fluctuate, and
this should be considered when reviewing performance or making comparisons.
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From time to time evaluations of performance of the Fund made
by independent sources may be used in advertisements. These sources may include
Lipper Analytical Services, Wiesenberger Investment Company Service, Donoghue's
Money Fund Report, Barron's, Business Week, Changing Times, Financial World,
Forbes, Fortune, Money, Personal Investor, Bank Rate Monitor, and The Wall
Street Journal. From time to time evaluations of performance of the Adviser
made by independent sources may be used in advertisements of the Fund.
DESCRIPTION OF COMMON STOCK
The Fund was incorporated in the State of Maryland on
February 6, 1996. The authorized capital stock of the Fund consists of one
billion shares of stock having a par value of one-tenth of one cent ($.001) per
share. The Fund's Board of Directors is authorized to divide the unissued
shares into separate classes and series of stock, each series representing a
separate, additional investment portfolio. The Board currently has authorized
the division of the unissued shares into two Classes. Shares of any class or
series will have identical voting rights, except where, by law, certain matters
must be approved by a majority of the shares of the affected class or series.
Each share of any class or series of shares when issued has equal dividend,
distribution, liquidation and voting rights within the class or series for
which it was issued, and each fractional share has those rights in proportion
to the percentage that the fractional share represents of a whole share. Shares
will be voted in the aggregate. There are no conversion or preemptive rights in
connection with any shares of the Fund. All shares, when issued in accordance
with the terms of the offering, will be fully paid and non-assessable. Shares
are redeemable at net asset value, at the option of the investor.
The shares of the Fund have non-cumulative voting rights,
which means that the holders of more than 50% of the shares outstanding voting
for the election of directors can elect 100% of the directors if the holders
choose to do so, and, in that event, the holders of the remaining shares will
not be able to elect any person or persons to the Board of Directors. Unless
specifically requested by an investor who is a investor of record, the Fund
does not issue certificates evidencing Fund shares.
As a general matter, the Fund will not hold annual or other
meetings of the Fund's shareholders. This is because the By-laws of the Fund
provide for annual meetings only (a) for the election of directors, (b) for
approval of revisions to the Fund's investment advisory agreement, (c) for
approval of revisions to the Fund's distribution agreement with respect to a
particular class or series of stock, and (d) upon the written request of
holders of shares entitled to cast not less than twenty-five percent of all the
votes entitled to be cast at such meeting. Annual and other meetings may be
required with respect to such additional matters relating to the Fund as may be
required by the Investment Company Act of 1940 (the "Act") including the
removal of Fund directors and communication among shareholders, any
registration of the Fund with the Securities and Exchange Commission or any
state, or as the Directors may consider necessary or desirable. Each Director
serves until the next meeting of shareholders called for the purpose of
considering the election or reelection of such Director or of a successor to
such Director, and until the election and qualification of his or her
successor, elected at such meeting, or until such Director sooner dies,
resigns, retires or is removed by the vote of the shareholders.
Rule 18f-2 under the Act provides that any matter required to
be submitted by the provisions of the Act or applicable state law, or
otherwise, to the holders of the outstanding voting securities of an investment
company such as the Fund shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each class or series affected by such matter, i.e., by a majority of the Fund's
outstanding shares. Rule 18f-2 further provides that a class or series shall be
deemed to be affected by a matter unless it is clear that the interests of each
class or series in the matter are substantially identical or that the matter
does not affect any interest of such class or series. However, the Rule exempts
the selection of independent public accountants, the approval of principal
distribution contracts and the election of directors from the separate voting
requirements of the Rule.
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Fund, on behalf of each Class, has adopted a distribution
and service plan, pursuant to Rule 12b-1 under the Act (the "Rule"). The Rule
provides that an investment company which bears any direct or indirect expense
of distributing its shares must do so only in accordance with a plan permitted
by the Rule. The Plan provides that each Class of the Fund will compensate the
Distributor or the Adviser for certain expenses and costs incurred in
connection with providing shareholder servicing and maintaining shareholder
accounts and to compensate parties with which it has written agreements and
whose clients own shares of either Class of shares of the Fund for providing
servicing to their clients
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<PAGE>
("shareholder servicing"), which is subject to a maximum of 0.25% per annum of
each Class' average daily net assets. The Plan also provides that the
Distributor is also paid a fee equal to 0.25% of the Class A shares' average
daily net assets on an annual basis to permit it to make payments to
broker-dealers and other financial institutions with which it has written
agreements and whose clients are Fund shareholders (each a "broker-dealer") for
providing distribution assistance and promotional support to the Fund.
Each shareholder servicing agent and broker-dealer will, as
agent for its customers, among other things: answer customer inquiries
regarding account status and history, the manner in which purchases and
redemptions of shares of each Class of the Fund may be effected and certain
other matters pertaining to the Fund; assist shareholders in designating and
changing dividend options, account designations and addresses; provide
necessary personnel and facilities to establish and maintain shareholder
accounts and records; assist in processing purchase and redemption
transactions; arrange for the wiring of funds; transmit and receive funds in
connection with customer orders to purchase or redeem shares; verify and
guarantee shareholder signatures in connection with redemption orders and
transfers and changes in shareholder designated accounts; furnish monthly and
year-end statements and confirmations of purchases and redemptions, as required
by Rule 10b- 10 under the Securities Exchange Act of 1934; transmit to
shareholders of each Class proxy statements, annual reports, updated
prospectuses and other communications; receive, tabulate and transmit proxies
executed by shareholders with respect to meetings of shareholders of the Fund;
and provide such other related services as the Fund or a shareholder may
request.
The Plan, the shareholder servicing agreements and the
Distribution Agreement each provide that the Adviser and the Distributor may
make payments from time to time from their own resources which may include the
advisory fee and the asset based sales charges and past profits for the
following purposes: (i) to defray the costs of and to compensate others,
including financial intermediaries with whom the Distributor or Adviser has
entered into written agreements, for performing shareholder servicing and
related administrative functions of each Class; to compensate certain financial
intermediaries for providing assistance in distributing Class shares; (ii) to
pay the costs of printing and distributing the Fund's prospectus to prospective
investors; and (iii) to defray the cost of the preparation and printing of
brochures and other promotional materials, mailings to prospective
shareholders, advertising, and other promotional activities, including the
salaries and/or commissions of sales personnel in connection with the
distribution of the Fund's shares. Further, it provides that the Adviser may
use its service fee for the purposes enumerated in (i) above and any asset
based sales charges paid to the Distributor also may be used for purposes of
(ii) or (iii) above. The Distributor or the Adviser, as the case may be, in
their sole discretion, will determine the amount of such payments made pursuant
to the Plan with the shareholder servicing agents and broker-dealers with whom
they have contracted, provided that such payments made pursuant to the Plan
will not increase the amount which a Class is required to pay to the
Distributor or the Adviser for any fiscal year under the shareholder servicing
agreements or otherwise.
Shareholder servicing agents and broker-dealers may charge
investors a fee in connection with their use of specialized purchase and
redemption procedures offered to investors by the shareholder servicing agents
and broker-dealers. In addition, shareholder servicing agents and
broker-dealers offering purchase and redemption procedures similar to those
offered to shareholders who invest in the fund directly may impose charges,
limitations, minimums and restrictions in addition to or different from those
applicable to shareholders who invest in the Fund directly. Accordingly, the
net yield to investors who invest through shareholder servicing agents and
broker-dealers may be less than realized by investing in the Fund directly. An
investor should read the Prospectus in conjunction with the materials provided
by the shareholder servicing agent and broker-dealer describing the procedures
under which Fund shares may be purchased and redeemed through the shareholder
servicing agent and broker-dealer.
The Glass-Steagall Act limits the ability of a depository
institution to become an underwriter or distributor of securities. However, it
is the Fund's position that banks are not prohibited from acting in other
capacities for investment companies, such as providing administrative and
shareholder account maintenance services and receiving compensation from the
Distributor for providing such services. However, this is an unsettled area of
the law and if a determination contrary to the Fund's position concerning
shareholder servicing and administration payments to banks from the Distributor
is made by a bank regulatory agency or court, any such payments will be
terminated and any shares registered in the banks' names, for their underlying
customers, will be re-registered in the names of the customers at no cost to
each Class or its shareholders. In addition, state securities laws on this
issue may differ from the interpretation of federal law expressed herein and
banks and financial institutions may be required to register as dealers
pursuant to state law.
In accordance with the Rule, the Plan provides that all
written agreements relating to the Plan entered into by the Fund, on behalf of
each Class, the Distributor or the Adviser, and the shareholder servicing
agents, broker-dealers, or other organizations, must be in a form satisfactory
to the Fund's Board of Directors. In addition, the Plan requires the
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Fund and the Distributor to prepare, at least quarterly, written reports
setting forth all amounts expended for distribution purposes by the Fund and
the Distributor pursuant to the Plan and identifying the distribution
activities for which those expenditures were made.
BROKERAGE AND PORTFOLIO TURNOVER
Brokerage
The Adviser makes the Fund's portfolio decisions. In the
over-the-counter market, where a majority of the portfolio securities are
expected to be traded, orders are placed with responsible primary market-makers
unless a more favorable execution or price is believed to be obtainable.
Regarding exchange-traded securities, the Adviser determines the broker to be
used in each specific transaction with the objective of negotiating a
combination of the most favorable commission and the best price obtainable on
each transaction (generally defined as best execution). When consistent with
the objective of obtaining best execution, brokerage may be directed to persons
or firms supplying investment information to the Adviser, or portfolio
transactions may be effected by the Adviser. Neither the Fund nor the Adviser
has entered into agreements or understandings with any brokers regarding the
placement of securities transactions because of research services they provide.
To the extent that such persons or firms supply investment information to the
Adviser for use in rendering investment advice to the Fund, such information
may be supplied at no cost to the Adviser and, therefore, may have the effect
of reducing the expenses of the Adviser in rendering advice to the Fund. While
it is impossible to place an actual dollar value on such investment
information, its receipt by the Adviser probably does not reduce the overall
expenses of the Adviser to any material extent. Consistent with the Rules of
Fair Practice of the National Association of Securities Dealers, Inc., and
subject to seeking best execution, the Adviser may consider sales of shares of
the Fund as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The investment information provided to the Adviser is of the
type described in Section 28(e) of the Securities Exchange Act of 1934 and is
designed to augment the Advisor's own internal research and investment strategy
capabilities. Research services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser in carrying out its
investment management responsibilities with respect to all its clients'
accounts. There may be occasions where the transaction cost charged by a broker
may be greater than that which another broker may charge if the Adviser
determines in good faith that the amount of such transaction cost is reasonable
in relation to the value of brokerage and research services provided by the
executing broker. The Adviser may consider the sale of shares of the Fund by
brokers including the Distributor as a factor in its selection of brokers of
Fund transactions.
A majority of the portfolio securities that the Fund
purchases or sells will be done as principal transactions. In addition, debt
instruments are normally purchased directly from the issuer, from banks and
financial institutions or from an underwriter or market maker for the
securities. There usually are not brokerage commissions paid for any such
purchases. Any transactions involving such securities for which the Fund pays a
brokerage commission will be effected at the best price and execution
available. Purchases from underwriters of portfolio securities include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked price. The Fund may purchase Government obligations with a demand feature
from banks or other financial institutions at a negotiated yield to the Fund
based on the applicable interest rate adjustment index for the security. The
interest received by the Fund is net of a fee charged by the issuing
institution for servicing the underlying obligation and issuing the
participation certificate, letter of credit, guarantee or insurance and
providing the demand repurchase feature.
Allocation of transactions, including their frequency, to
various dealers is determined by the Adviser in its best judgment and in a
manner deemed in the best interest of shareholders of the Fund rather than by a
formula. The primary consideration is prompt execution of orders in an
effective manner at the most favorable price.
Investment decisions for the Fund will be made independently
from those for any other investment companies or accounts that may become
managed by the Adviser or its affiliates. If, however, the Fund and other
investment companies or accounts managed by the Adviser are simultaneously
engaged in the purchase or sale of the same security, the transactions will be
averaged as to price and allocated equitably to each account. In some cases,
this policy might adversely affect the price paid or received by the Fund or
the size of the position obtainable for the Fund. In addition, when purchases
or sales of the same security for the Fund and for other investment companies
managed by the Adviser occur
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<PAGE>
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantage available to large denomination purchasers or
sellers.
In addition to managing the assets of the Fund, the Adviser
manages assets on a discretionary basis for other clients and, as a result, the
Adviser may effect transactions in such clients' accounts in securities in
which the Fund currently holds or, in the near future may hold, a position. The
Adviser makes the determination to purchase or sell a security based on
numerous factors, including those that may be particular to one or more of its
clients. Therefore, it is possible that the Adviser will effect transactions in
certain securities for select clients, which may or may not include the Fund,
that it may not deem, in its sole discretion, as being appropriate for other
clients, which may or may not include the Fund.
Portfolio Turnover
The Fund's average annual portfolio turnover rate, i.e., the
ratio of the lesser of sales or purchases to the monthly average value of the
portfolio (excluding from both the numerator and the denominator all securities
with maturities at the time of acquisition of one year or less) is expected to
be low. Purchases and sales are made for the Fund whenever necessary in the
Adviser's opinion, to meet the Fund's investment objective. In order to qualify
as a regulated investment company, less than 30% of the Fund's gross income
(including tax exempt income) must be derived from the sale or other
disposition of stock, securities or certain investments held for less than
three months. Although increased Fund turnover may increase the likelihood of
additional capital gains for the Fund, the Fund expects to satisfy the 30%
income test.
COUNSEL AND INDEPENDENT AUDITORS
Legal matters in connection with the issuance of shares of
common stock of the Fund are passed upon by Battle Fowler LLP, 75 East 55th
Street, New York, New York 10022. Morrison, Brown, Argiz & Co., P.A., 9795
South Dixie Highway, Miami, Florida 33156, have been selected as auditors for
the Fund.
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C/M: 12034.0001 338027.9
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TABLE OF CONTENTS
AGE
THE FUND ............................................................. 1
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS....................... 1
DESCRIPTION OF THE FUND'S INVESTMENT SECURITIES AND DERIVATIVES....... 1
The Technology and Science Areas............................. 1
Foreign Securities........................................... 2
U.S. Government Obligations.................................. 2
Repurchase Agreements........................................ 2
Hedging Transactions......................................... 3
Options Transactions......................................... 3
Lending of Securities........................................ 4
Variable-Amount Master Demand Notes.......................... 4
INVESTMENT RESTRICTIONS............................................... 5
Percentage Restrictions...................................... 6
MANAGEMENT OF THE FUND................................................ 6
Investment Adviser........................................... 8
Adviser's Fees............................................... 9
Expense Limitation........................................... 9
Administrator................................................ 10
Administrator's Fees......................................... 11
Custodian, Transfer Agent and Dividend Agent................. 11
TAXES ............................................................. 11
PURCHASE AND REDEMPTION............................................... 13
DIVIDENDS AND DISTRIBUTIONS........................................... 13
NET ASSET VALUE....................................................... 13
COMPUTATION OF YIELD AND PERFORMANCE INFORMATION...................... 14
Computation of Total Return.................................. 14
DESCRIPTION OF COMMON STOCK........................................... 15
SHAREHOLDER SERVICING AND DISTRIBUTION PLAN........................... 15
BROKERAGE AND PORTFOLIO TURNOVER...................................... 17
Brokerage.................................................... 17
Portfolio Turnover........................................... 18
COUNSEL AND INDEPENDENT AUDITORS...................................... 18
C/M: 12034.0001 338027.9
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