1933 Act Registration No. 333-68099
1940 Act Registration No. 811-9123
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20546
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [1]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [4]
AMIDEX FUNDS, INC
(Exact name of registrant as specified in Charter)
26 BROADWAY, SUITE 741
NEW YORK, NEW YORK 10004
(Address of Principle Executive Offices and Zip Code)
212-425-0650
(Registrant's Telephone Number including Area Code)
Terence P. Smith
The Declaration Group
555 North Lane, Suite 6160
Conshohocken, PA 19428
(Name and Address of Agent for Service)
Please send copy of communications to:
DAVID D. JONES, ESQUIRE
PMB # 134
518 Kimberton Road
Phoenixville, Pennsylvania 19460
610-718-5381
------------
Approximate Date of Proposed Public Offering:
- ---------------------------------------------
As soon as practicable following effective date.
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(3)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[x] on September 30, 1999 pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant declares hereby that an indefinite number or amount of its securities
has been registered by this Registration Statement.
TOTAL NUMBER OF PAGES _____
EXHIBIT INDEX BEGINS
ON PAGE _____
ACCESSION NUMBER:
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PROSPECTUS
DATED
SEPTEMBER 30, 1999
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The AMIDEX35(TM) Mutual Fund
A series of Amidex Funds, Inc.
26 Broadway, Suite 741
New York, New York 10004
888-876-3566
The Fund offers three different classes of shares by this Prospectus so that you
may choose the class that best suits your investing needs. Each class differs as
to sales charges, minimum investment amounts and ongoing fees. These share
classes are sold to the public through brokers, dealers and other financial
service organizations. The Fund also offers other classes of shares that are not
subject to sales charges or loads, but have different minimum investment
amounts, fees and charges. To obtain a Prospectus containing information
regarding the Fund's other share classes, please contact the Fund.
The Fund's investment goal is to achieve capital growth, and the Fund attempts
to achieve its goal by investing in the common stock of the companies comprising
the AMIDEX35(TM) Index (the "Index"), an Index of the 35 largest market
capitalization Israeli companies. Index company stocks trade in Israel on the
Tel Aviv Stock Exchange ("TASE") or in the United States on the New York Stock
Exchange ("NYSE"), the American Stock Exchange ("AMEX") or NASDAQ, or on the
Exchanges of both countries.
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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TABLE OF CONTENTS
Risk/Return Summary.
Fees And Expenses.
Investment Objectives And Policies.
Why Invest in the Fund.
The AMIDEX 35(TM) Index.
Risk Factors.
Purchasing Shares.
Redeeming Shares.
Tax Considerations.
Management of the Fund.
Investment Adviser.
Plan of Distribution.
General Information.
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RISK/RETURN SUMMARY
The Fund's investment objective is capital growth. The Fund seeks to achieve
capital growth by primarily investing in the common stock of companies listed on
the AMIDEX35(TM) Index (the "Index"). The Index is an index tracking the
performance of the thirty-five largest market capitalization Israeli companies.
Index company stocks trade in Israel on the Tel Aviv Stock Exchange ("TASE") or
in the United States on the New York Stock Exchange ("NYSE"), the American Stock
Exchange ("AMEX") or NASDAQ, or on the exchanges of both countries. When the
Index was first calculated on January 1, 1999, the companies in the Index ranged
in size from approximately $300 million in market capitalization to over $3
billion.
Based on its research into Israel's historical stock market performance, the
Fund's Adviser believes that the companies in the Index are experiencing, or
have the potential to experience, above-average capital growth. The Adviser
believes that investing primarily in Index companies will allow the Fund to
achieve its investment objective of capital growth, over the long term.
The Adviser will employ a "passive management" approach to investing the Fund's
assets. This means that, instead of trying to determine which Israeli companies
will outperform their peers during a given time period, the Fund normally will
invest in all of the companies in the Index, in approximately the same
percentages as those companies are represented in the Index. By replicating the
composition of the Index, the Fund seeks to also replicate the performance of
the Index. As the companies in the Index grow, the value of the Index will grow,
and the value of the Fund's investments will grow in a similar fashion.
Conversely, if the companies in the Index decline, the value of the Index and
the Fund will decline accordingly. You should be aware that there is no
assurance that the Adviser will be successful in achieving the Fund's
objectives, since all investments involve risks.
The Principal Risks Of Investing In The Fund Are:
- -------------------------------------------------
You may lose money by investing in the Fund. Your risk of loss is greater if you
only hold your shares for a short period of time. The Fund is a
"non-diversified" Fund because it primarily invests in the companies that are
included in the Index. When the Index was first calculated on January 1, 1999,
four of those companies individually comprised more than 5% of the Index and
together made up about 29% of the Index. A diversified Fund is limited to
investing 25% of its net assets in companies that comprise more than 5% of the
net assets of the Fund. Accordingly, the Fund cannot presently be classified as
a diversified fund. Investing in this manner is riskier than investing in a
broader variety of securities.
Because the Fund invests in securities of Israeli issuers, the Fund may be
exposed to special risks and considerations. There is less publicly available
information than in the U.S., potential difficulty in obtaining or enforcing a
court judgement, and unique characteristics of Israeli securities and markets
which may have a negative impact on the Fund. Any major hostilities involving
Israel, or the interruption or curtailment of trade between Israel and its
present trading partners could have a negative impact on the Fund.
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Shares and dividends of Israeli companies are often NIS (New Israeli Shekel)
denominated. Changes in the relationship of the NIS to the dollar and other
currencies could have a negative impact on the Fund.
The government of Israel may change the way in which Israeli companies are
taxed, or may impose taxes on foreign investment. Such actions could have an
impact on the overall market for Israeli securities and on the Fund.
Some of the companies in which the Fund invests may not have a vigorous
secondary trading market. As a result, the Fund could experience difficulties in
timely buying or selling these securities, which could have a negative impact on
the Fund.
The Fund invests in common stocks, both in Israel and in the United States.
Accordingly, the Fund is subject to the risks inherent in the stock markets. The
stock market is cyclical, with prices generally rising and falling over periods
of time. Some of these cycles can be pronounced and last for extended periods.
Investments in foreign securities involve greater risks compared to domestic
investments. Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information about
foreign companies than about U.S. companies. Dividends and interest on foreign
securities may be subject to foreign withholding taxes. Such taxes may reduce
the net return to shareholders. Other risks include the possibility of
expropriation, confiscation, currency blockage or devaluation, political or
social instability, and warfare and terrorism. In the event that an Index
company trades on the TASE and an American exchange or over-the-counter market,
the Fund normally will invest in the United States market, but may invest in the
Israeli market if, in the Adviser's opinion, extraordinary circumstances are
present. The Fund will invest in the common stock of companies included in the
Index that are publicly traded on the TASE.
The Fund is an "index fund", meaning that it invests in the companies in the
Index to replicate the composition of the Index and to replicate the Index's
performance. Because the Fund will invest in a "passive" manner, any volatility
in the Index will be closely reflected in the Fund. If the Index declines, the
Fund will decline with it. However, if the companies in the Index perform well,
the Fund will closely reflect that performance.
This is a new Fund without a prior operating history, and this is a new position
for the Adviser to the Fund. The Fund's lack of performance history and
management experience may pose additional risks.
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FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
SHAREHOLDER FEES: CLASS A CLASS B CLASS C
- ----------------- ------- ------- -------
(fees paid directly from your investment)
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES 4.00% NONE NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES CHARGE (LOAD) NONE 5.00%(1) 1.00%(2)
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE(3) NONE NONE
ANNUAL FUND OPERATING EXPENSES: CLASS A CLASS B CLASS C
- ------------------------------- ------- ------- -------
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (4) 2.20% 2.20% 2.20%
DISTRIBUTION (12B-1) FEES (5) 0.25% 1.00% 1.00%
OTHER EXPENSES (6) 0.05% 0.05% 0.05%
----- ----- -----
TOTAL ANNUAL FUND
OPERATING EXPENSES 2.50% 3.25% 3.25%
1. The maximum deferred sales charge of 5.00% is charged to shares redeemed
within the first year of purchase. These deferred sales charges decline to
0.00% over a period of five years.
2. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1% is imposed in the event
of certain redemption transactions within one year following such
investments.
3. If you are a participant in a qualified employee retirement benefit plan
with at least 100 eligible employees, you may purchase Class A shares
without any sales charges. However, if you redeem your shares within one
year of purchase, you will be charged a fee of 1.00% of the redemption
proceeds.
4. Management fees include a fee of 0.50% for investment advisory services and
1.70% for administrative and other services. Both fees are paid to the
Adviser.
5. Because 12b-1 fees are paid out of the assets of the Fund on an ongoing
basis, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
6. Due to the contract structure of the Fund, the Adviser is responsible for
the payment of all fees and expenses of the Fund except for taxes,
interest, litigation expenses and other extraordinary expenses. Under
normal operating conditions, the Fund will not incur these Other Expenses.
Example: This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
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1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A MAXIMUM SALES CHARGE OF 4.00% IS INCLUDED IN THE CLASS A SHARE EXPENSE
CALCULATIONS. The maximum contingent deferred sales charge applicable to each
time period is included in the Class B and Class C expense calculations.
IF YOU DID NOT REDEEM YOUR SHARES, YOUR EXPENSES WOULD BE:
1 Year 3 Years
------ -------
Class A $----- $------
Class B $----- $------
Class C $----- $------
A MAXIMUM SALES CHARGE OF 4.00% IS INCLUDED IN THE CLASS A SHARE EXPENSE
CALCULATIONS. Contingent deferred sales charges are not included in the Class B
and Class C expense calculations.
BECAUSE THE FUND HAS NO OPERATING HISTORY, THESE EXPENSE FIGURES ARE BASED ON
ESTIMATED AMOUNTS FOR THE FUND'S FIRST FISCAL YEAR.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives and strategies have been described in the
Risk/Return Section of this Prospectus. This Section sets out additional
information that you should know concerning your investment in the Fund.
Under normal circumstances, the Fund will invest at least 95% of its net assets
in the common stocks of the companies comprising the Index, in approximately the
same percentages as those companies included in the Index. You should be aware
that the Index is a new index, and no historical performance data is available
for the Index.
Investing the Fund's assets primarily in Index companies is not a fundamental
policy of the Fund. The Board of Directors of the Fund may vote to change or
eliminate the percentages of Fund assets invested in Index companies and to
choose other investment strategies instead. If the Board votes to change the
Fund's investment strategies, we will notify you in writing at least thirty days
before the changes take place. If you decide to redeem your shares as a result
of such a change, you will not be charged any redemption fees, even if you have
held your shares for less than 365 days. You will find a full listing of the
Fund's fundamental and non-fundamental investment policies in the Fund's
Statement of Additional Information ("SAI") in the Section entitled, "Investment
Policies and Restrictions".
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The Declaration Money Market Fund
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The Fund invests in foreign securities. Brokerage, custodial and other expenses
are higher for overseas transactions. Each time the Fund makes an overseas
investment, it has to pay those higher fees. In order to minimize transaction
expenses arising from purchasing overseas securities, the Fund will normally
invest in the market only in aggregate amounts of $1,000,000 or more (the
"Minimum Investment Amount").
Until the Fund has accumulated approximately $25 million in average net assets,
holding Fund assets in cash to accumulate the Minimum Investment Amount may
cause such holdings to make up a very large percentage of the Fund's assets. If
the Fund holds this cash for any length of time, there will be a large variation
between the performance of the Fund and the performance of the Index. To avoid
this problem, the Fund cannot hold a large percentage of its assets in cash for
any length of time.
To avoid the potential problem of large cash positions in the Fund, when you
send money to the Fund, YOUR MONEY MAY NOT BE IMMEDIATELY PLACED IN THE FUND.
INSTEAD, YOUR MONEY MAY BE INVESTED TEMPORARILY IN THE DECLARATION MONEY MARKET
FUND ("MONEY MARKET FUND"). The Money Market Fund is a newly formed mutual fund
which invests only in short-term U.S. Government and agency securities and
repurchase agreements and is designed to maintain a stable net asset value of
$1.00 per share. The Money Market Fund is a series of the Declaration Fund, an
open-end management investment company organized as a Pennsylvania business
trust. The transfer agent and fund accountant for the Money Market Fund is
Declaration Service Company ("DSC"). DSC is also the transfer agent and fund
accountant for the Fund.
You should be aware that the Money Market Fund is a new fund with no operating
history, and the portfolio manager is also new and has no prior experience
managing a money market fund. The Fund is not affiliated with the Money Market
Fund or DSC, except that both funds employ DSC as transfer agent and fund
accountant, and both funds employ Declaration Distributors, Inc. ("DDI") as
principal underwriter. The Fund does not receive any compensation or other
consideration for its use of the Money Market Fund. The Board can discontinue
use of the Money Market Fund at any time.
By placing your initial investment in the Money Market Fund, the money you have
initially invested does not reside in the AMIDEX35(TM) Mutual Fund. Instead, it
is in another fund and therefore does not affect the AMIDEX35(TM) Mutual Fund's
performance. By avoiding the accumulation of large cash positions in the Fund,
it is easier for the Adviser to keep the Fund's assets closely aligned with the
composition of the Index.
When the Minimum Investment Amount has accumulated in the Money Market Fund, or
not more than thirty days from the date of your initial investment have passed,
whichever comes sooner, your money and any earned interest will be transferred
to the Fund and invested in the Index companies. Your money will never be held
in the Money Market Fund for longer than thirty days, even if that means the
Fund will have to transfer less than the Minimum Investment Amount. You will not
be charged any fees for investing in the Money Market Fund, nor will you be
charged any fees when a transfer takes place. When your investment is received
by the transfer agent, it will inform you if
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your money is initially placed in the Money Market Fund, and when your money is
transferred to the Fund. Once the Fund's average net assets rise above $25
million, your investment will always be placed directly in the Fund, and the
Fund will no longer use the Money Market Fund.
If the Money Market Fund ceases to operate or, in the Adviser's opinion, ceases
to be an appropriate investment vehicle, the Board of Directors of the Fund will
choose another money market fund for short-term investing. You will be informed
of any such change, and you will be provided with a copy of the prospectus for
the new money market fund, free of charge, at your request.
WHY INVEST IN THE FUND?
The State of Israel is a highly developed, industrialized democracy. Since the
beginning of the decade, Israel's Economy has grown significantly, presenting
improvement in most economic indicators. Israel has made substantial progress in
opening its economy including the removal of its trade barriers and tariffs.
Israel has concluded free trade agreements with its major trading partners, and
is the only nation that is a party to free trade agreements with both the United
States and the European Union. In recent years Israel has signed free trade
agreements with Switzerland, Norway, Canada, Turkey, Czech Republic, Slovakia,
Poland and Hungary.
Celebrating 50 years of existence, the State of Israel has significantly
improved its economic performance. Between 1950 and 1997, Israel's GDP grew by
an average annual rate of 7%. Throughout these years, the production of goods
and services shifted mainly towards high-technology value added industries,
causing the trade deficit to drop from 23% of the GDP in 1950, to about 7% in
1998.
Israel's productive and highly educated population remains a principal strength.
Based on a 1996 survey, approximately 34% of the Israeli work force had
university or other advanced degrees. Israel has the highest per capita
concentration of scientists and technicians of any country in the world. Israel
boasts the world's greatest per capita number of engineers and doctors (135 per
10,000 workers). In addition, in recent years Israel experienced an
extraordinary influx of new immigrants, primarily from the republics of the
former Soviet Union. From 1990 through 1997, about 822,000 immigrants arrived,
increasing Israel's population by approximately 18%.
Israel's traditional cultural and economic investment in technology, medicine,
and research has been increasing throughout the last decade due in part to this
huge influx of scientists and physicians from the former Soviet Union, and due
to an influx of investments from abroad.
Major U.S. and other companies are forming partnerships and other business
ventures with Israeli companies at a remarkable rate. Investment capital has
been flowing in to support Israel's research and development in the computer
hardware and software industries; in pharmaceutical and bio-technology
companies; and in Internet and Telecommunications products and services. Israel
attracts more American venture capital than any other nation except the U.S.
Israel is second only to the United States in new high tech start up companies.
Direct foreign investments in Israel grew to more than $2 billion in 1998, up
from virtually none in 1990.
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Israel's economy has surged ahead of many European nations. Israel's 1998
- -$16,000 per capita gross domestic product places Israel among the developed
Western European countries, in large part due to technology exports. Technology
exports account for about 1/2 of all Israel's exports. Exports from Israel more
than doubled between 1992 and 1998. Israeli companies, especially high tech
companies, are globally diversified in their revenue streams and over 70% of
Israel's GDP is derived from foreign exports. Israel has improved its country
credit rating to "A- stable" (S&P) and "A3 solid" (Moody's), the same ratings as
China and Hong Kong, and higher than Hungary, Argentina, Brazil and Chile. Rapid
and ongoing privatization of formerly state run financial, communications, and
utility concerns has added to the breadth and strength of Israel's publicly
traded companies.
In September 1993, Israel and the Palestinian Liberation Organization signed a
"Declaration of Principles," a turning point in Israeli-Arab relations. Since
that time, the peace process has progressed with further agreements between
Israel and the Palestinians, and the signing of a peace treaty with Jordan.
These treaties join the 1979 accords with Egypt as the first peace agreements
between Israel and its neighbors. In addition, a number of members of the Arab
League have announced their intention to partially lift their trade boycotts of
Israel. As a result of progress in the peace process and the partial lifting of
the economic boycott, Israel and its Arab neighbors have taken several
initiatives to encourage the development of economic relations among the
countries of the region.
Israel is a member of a number of international organizations, including the
United Nations, the World Bank Group (including the International Finance
Corporation), the International Monetary Fund (the "IMF"), the European Bank for
Reconstruction and Development, and the Inter-American Development Bank.
Israel is a signatory to the General Agreement on Tariffs and Trade ("GATT") of
1947 and 1994, which provides for reciprocal lowering of trade barriers among
its members. Under GATT, Israel is eligible to receive a number of trade
preferences that are available only to certain GATT participants, including
duty-free treatment of its exports to certain countries pursuant to the GATT
Generalized System of Preferences. Israel is a founding member of the World
Trade Organization.
Israel has concluded free trade area ("FTA") agreements with its major trading
partners and is the only nation that is a party to free trade agreements with
both the United States and the European Union (the "EU"). In addition, Israel
has recently concluded free trade agreements with both the Czech and Slovak
Republics, Hungary and Poland and is in the process of negotiating such an
agreement with Slovenia. In 1996 Israel concluded FTA agreements with Turkey and
Canada. In 1975, Israel entered into an FTA agreement with the EU that provided
for the gradual reduction and ultimate elimination of tariffs on manufactured
goods and certain agricultural products. In July 1995, Israel concluded
negotiations with the EU for a new agreement to include services, including
financial services, government procurement, and cooperation in research and
development, and also to include additional agricultural products and to improve
Israel's access to European markets in the advanced industry and high-technology
sectors. In 1985, Israel and the United States entered into an FTA agreement
that resulted in the elimination of all tariffs on all products by January 1,
1995. The
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FTA agreement with the United States also has resulted in the elimination of
certain non-tariff barriers to trade between the two countries. In 1992, Israel
concluded an FTA agreement with the European Free Trade Association that applied
largely to manufactured products.
Israel's FTA agreements allow Israel to export products with little or no duties
to both the United States and most Western industrialized nations. In March
1996, the Council of Ministers of the O.E.C.D. approved Israel's request to
participate in the organization's activities, and Israel has accordingly joined
certain O.E.C.D. committees with an observer status.
Of course, Israel is not only rich in research, technology and intellectual
investment, it is the only democratic nation in the middle east. The influx of
venture capital, the infusion of human resources (Israel's population nearly
doubled in the last 15 years), and the conversion of the economic focus from
military to commercial (defense spending dropped from about 30% of GNP in 1973
to less than 14% in 1998), have led many to believe that Israel is the next
"Silicon Valley." There has been a dramatic increase in the number of Israeli
companies trading on U. S. Exchanges, particularly the NASDAQ. In 1996, 17% of
all new non-U.S. companies to join the NASDAQ were Israeli, more than any other
nation. Israel is third, behind only the U.S. and Canada in the number of
companies traded on Wall Street. In Israel, the Tel Aviv Stock Exchange now
lists more than 665 companies and over 1000 securities, with a current market
capitalization of about $80 billion.
These dramatic developments in Israel present a new and relatively unexploited
opportunity for equity investment. Currently, there are no other U.S. based open
end no load mutual funds available as a vehicle for investment in Israel
securities.
THE AMIDEX35(TM) INDEX
The AMIDEX35(TM) Index is an unmanaged index consisting of the 35 largest
publicly traded Israeli companies, as measured by market capitalization. A
company is an "Israeli company" if:
o Its stock is traded on the Tel Aviv Stock Exchange, or
o Its stock is traded on the New York Stock Exchange ("NYSE"), the American
Stock Exchange ("AMEX"), or the NASDAQ over-the-counter market and the
company has been listed by the Israeli financial newspaper, Globes as
"Israeli shares traded on the New York Bourse".
If Globes stops publishing a list of "Israeli shares traded on the New York
Bourse", the Board of Directors will select an alternative publication that
similarly defines such companies.
Index Composition Criteria. In order for a company to be included in the Index,
that company must satisfy all the following criteria:
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o It must be a publicly traded "Israeli" company, as defined above.
o It must have maintained an average minimum daily trading volume of at least
$150,000 in the previous calendar year.
The largest (as measured by market capitalization) 35 Israeli companies that
satisfy all of the criteria described above will be included in the Index. You
should be aware that the Index may contain more or less than 35 companies during
the year. If less than 35 Israeli companies meet the criteria for inclusion at
the beginning of a new year, then the Index will contain only those companies.
If a company ceases operation or becomes insolvent, it will be deleted from the
Index and not replaced until the beginning of the new year. If a single company
splits into multiple companies, all such companies will be included in the Index
until the Index is rebalanced at the beginning of the new year. During the first
ten business days of each calendar year, the Index is adjusted to add or delete
companies.
An "unmanaged" index means that the criteria for inclusion of companies in the
Index are objective and not subject to arbitrary change, so that any company
that is eligible for inclusion in the Index must be included, and any company
that ceases to qualify for inclusion in the Index must be deleted.
The Index is a market capitalization index. The Index began being calculated on
January 1, 1999 at an initial Index Value of 1000. Market capitalization means
the total current U.S. dollar value of a company's outstanding shares of common
stock, and is calculated by multiplying the number of outstanding shares of
common stock of a company by the price of that common stock, adjusted to U.S.
currency. Some Israeli companies that trade on the TASE have multiple classes of
stock, each of which individually would qualify as common stock by U.S.
standards. For those companies, all classes of their "common" stock are included
in calculating the company's total market capitalization to determine whether
such a company is among the 35 largest Israeli companies. Thereafter, the Fund
will use the class of stock that has the greatest trading liquidity to determine
that company's weighting in the index, and will only purchase the class of stock
that has the most trading liquidity. Some Index companies trade on both the TASE
and an American exchange. For those companies, the Fund normally will purchase
stock from the American exchange, but may purchase stock from the TASE when, in
the Adviser's opinion, there are exceptional circumstances.
The Index name, rules, methods of calculation, and proprietary data are owned by
the Adviser. The Adviser developed the criteria and the rules of operation for
the Index. The Adviser has entered into agreements with various companies to
construct, calculate and publish the Index. Business Graph Group (Tochna
L'Inyan), a company based in Israel, performed the initial calculations needed
to create the Index and selects the companies that will be included in or
deleted from the Index, based on the criteria described above. The Tel-Aviv
Stock Exchange (TASE) provides information regarding the Israeli companies
participating in the Index. Business Graph Group (Tochna L'Inyan) is responsible
for maintaining and publishing the Index. Business Graph Group has no
affiliation with the Fund, the Adviser, or any of the Fund's other service
providers. The Adviser may, if necessary, select an alternative independent
company to maintain and publish the Index in the future.
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When companies are added to or deleted from the Index, the Adviser will alter
the Fund's investments to conform the portfolio to the Index. This will result
in certain risks to the Fund, including the risks of losses and tax consequences
to shareholders resulting from realized capital gains. You should also be aware
that the Fund will incur certain expenses that are not incurred by the Index,
including transaction charges. Accordingly, the performance of the Fund will
vary from that of the Index as a result of such expenses.
The Adviser will attempt to maintain a correlation coefficient of at least 0.95
in performance between the Index and the Fund. This means that the Adviser will
attempt to replicate at least 95% of the Index's performance. The Adviser will
be responsible for tracking the Fund's performance, under the supervision of the
Company's Board of Directors. If the Fund fails to achieve a .95 correlation
coefficient, the Board will take action to rectify whatever problem is causing
the discrepancy, including, as an example, altering the Fund's servicing
arrangements to reduce Fund expense ratios or changing the Fund's investment
strategy of investing in the Index.
The Adviser has determined that, in order construct the Fund's portfolio to
fully reflect the performance of the Index, the Fund must have approximately $25
million in net assets. Until such asset levels are reached, the Adviser may
invest Fund assets in a representative sample of Index securities and such other
permissible securities as the Adviser deems likely to track Index performance
most closely. You should be aware that there is no assurance that the Adviser
will be successful in replicating the performance of the Index during this
period. You will find a more detailed discussion of the Index in the SAI in the
Section entitled "The Index."
Under normal circumstances, the Fund will invest at least 95% of its average net
assets in the following securities:
COMMON STOCK. Common stock is issued by companies to raise cash for business
purposes and represents a proportionate equity interest in the issuing
companies. Therefore, the Fund participates in the success or failure of any
company in which it holds common stock. The market value of common stock can
fluctuate significantly, reflecting the business performance of the issuing
company, investor perception, and general economic or financial market
movements. Smaller companies are especially sensitive to these factors. However,
common stocks historically have offered the greatest potential for gain on
investment, compared to other classes of financial assets. There is additional
risk inherent in investing in foreign-based companies. The Fund may invest in
the common stock of foreign issuers which are publicly traded on U.S. exchanges
either directly or in the form of American Depository Receipts (ADRs), but only
if such foreign issuers are included in the Index. The Fund will only invest in
ADRs that are issuer sponsored. Sponsored ADRs typically are issued by a U.S.
bank or Trust company and evidence ownership of underlying securities issued by
a foreign corporation. The Fund may also hold warrants or other rights or assets
on common stock if such warrants are issued as dividends on stocks already held
in the Fund's portfolio. Because the Fund will concentrate its investments in
Israeli companies, the Fund will be exposed to the risks associated with Israeli
companies to a greater degree than will funds whose investment policies do not
require or allow such concentration. The Fund will invest in the common stock of
companies included in the Index that trade on the TASE, NYSE, the AMEX, or
NASDAQ.
12
<PAGE>
The Fund will normally invest up to a total of 5% of its aggregate average net
assets in the following securities:
MONEY MARKET FUNDS. The Fund may invest in securities issued by other registered
investment companies that invest in short-term debt securities (i.e., money
market funds) to maintain liquidity. As a shareholder of another registered
investment company, the Fund would bear a pro rata portion of that company's
advisory fees and other expenses. Such fees and expenses will be borne
indirectly by the Fund's shareholders. The Fund will not invest more than 5% of
its net assets in such securities, and will not invest in such securities if
such investments would represent more than 3% of such issuer's outstanding
shares.
DEBT SECURITIES. The Fund may invest in U.S. Government debt securities
including Treasury Bills and short term notes, to maintain liquidity. U.S.
Government securities include direct obligations of the U.S. Government and
obligations issued by U.S. Government agencies and instrumentalities. The market
value of such securities fluctuates in response to interest rates and the
creditworthiness of the issuer. In the case of securities backed by the full
faith and credit of the United States Government, shareholders are only exposed
to interest rate risk. The Fund will not invest more than 5% of its net assets
in such securities, and will not invest in any such security with a maturity in
excess of one year.
REPURCHASE AGREEMENTS. The Fund may invest a portion of its assets in repurchase
agreements ("Repos") with broker-dealers, banks and/or other financial
institutions to maintain liquidity. The Fund's custodian must always have
possession of the securities serving as collateral for the Repos or have proper
evidence of book entry receipt of such securities. In a Repo, the Fund purchases
securities subject to the seller's simultaneous agreement to repurchase those
securities from the Fund at a specified time (usually one day) and price. The
repurchase price reflects an agreed-upon interest rate during the time of
investment. All Repos entered into by the Fund must be collateralized by U.S.
Government Securities, the market value of which equals or exceeds 102% of the
principal amount of the money invested by the Fund. If an institution with which
the Fund has entered into a Repo enters insolvency proceedings, the resulting
delay, if any, in the Fund's ability to liquidate the securities serving as
collateral could cause the Fund some loss if the securities declined in value
prior to liquidation. To minimize the risk of such loss, the Fund will enter
into Repos only with institutions and dealers considered creditworthy, and will
not invest more than 5% of its net assets in such transactions.
The Fund may also invest in the following securities and employ the following
investment guidelines:
CASH RESERVES. The Fund may, to meet liquidity needs, temporarily hold up to 5%
of its net assets in cash. The Fund may hold cash in the United States, Israel,
or in both. The primary risk associated with such a policy is that the Fund's
performance will vary, perhaps significantly, from the performance of the Index
when the Fund holds a high percentage of its net assets as cash reserves.
13
<PAGE>
FUTURES AND OPTIONS ON EQUITY SECURITIES AND THE INDEX. The Fund may enter into
futures contracts relating to the equity securities of companies included in the
Index, may write (i.e., sell) covered put and call options on such securities
and on the Index, and may purchase put and call options on such equity
securities and on the Index. Such options can include long-term options with
durations of up to three years. The Fund may use futures and options to increase
or decrease its exposure to the effects of changes in security prices, to hedge
securities held, to maintain cash reserves while remaining fully invested, to
facilitate trading, to reduce transaction costs, or to seek higher investment
returns when a futures or options contract is priced more attractively than the
underlying security or index. The Fund may enter into these transactions so long
as the value of the underlying securities on which such options or futures
contracts may be written at any one time does not exceed 100% of the net assets
of the Fund, and so long as the initial margin required to enter into such
contracts does not exceed five percent (5%)of the Fund's total net assets.
Risk Factors Associated With Futures And Options. The primary risks associated
with the use of options and futures are; (1) imperfect correlation between a
change in the value of the underlying security or index and a change in the
price of the option or futures contract, and (2) the possible lack of a liquid
secondary market for an options or futures contract and the resulting inability
of the Fund to close out the position prior to the maturity date.
RESTRICTED AND ILLIQUID SECURITIES. The Fund will not invest more than 15% of
its net assets in securities that the Adviser determines, under the supervision
of the Board of Directors, to be illiquid and/or restricted. Illiquid securities
are generally defined as securities that cannot be liquidated within seven (7)
days at the approximate price at which the Fund has valued the instrument. Also,
the sale of some illiquid and other types of securities may be subject to legal
restrictions. You should be aware that in the event that more than 15% of the
Index is comprised of companies considered to be illiquid, the Fund will be
unable to match precisely its investments to the percentages contained in the
Index, and that inability may pose additional risks to the Fund, including the
risk that the performance of the Fund will vary from that of the Index.
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities of companies comprising the Index on a when-issued basis, and it may
purchase or sell such securities for delayed-delivery. These transactions occur
when securities are purchased or sold by the Fund with payment and delivery
taking place at some future date. The Fund may enter into such transactions
when, in the Adviser's opinion, doing so may secure an advantageous yield and/or
price to the Fund that might otherwise be unavailable. The Fund has not
established any limit on the percentage of assets it may commit to such
transactions, but to minimize the risks of entering into these transactions, the
Fund will maintain a segregated account with its Custodian consisting of cash,
cash equivalents, U.S. Government Securities, or other high-grade liquid debt
securities, denominated in U.S. dollars or non-U.S. currencies, in an amount
equal to the aggregate fair market value of its commitments to such
transactions.
RISK FACTORS
You may lose money by investing in the Fund. Your risk of loss is greater if you
hold your investment for shorter time periods. The Fund may be appropriate for
long-term aggressive
14
<PAGE>
investors who understand the potential risks and rewards of investing in the
common stock of Israeli companies. The value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates and
other company, political, and economic news. Over the short-term, stock prices
can fluctuate dramatically in response to these factors. However, over longer
time periods, stocks, although more volatile, have historically shown greater
growth potential than other investments. The Index is a new index composed of
only 35 companies, and this limited number of companies may pose additional
risks to the Fund. Some of the companies included in the Index are considered to
be smaller companies. Companies with small market capitalizations can be riskier
investments than larger capitalized companies, due to their lack of experience,
product diversification, cash reserves and/or lack of management depth. Neither
the Fund or the Fund's Adviser has any operating history, and this may pose
additional risks. There is risk involved in the Fund's investment policy of
tracking the Index, due to the potential company turnover that may occur in the
Index, the possible addition of companies to the Index that may not have a long
operating history, and the risks inherent in concentrated investing in the
Israeli market.
When you sell your Fund shares, they may be worth more or less than what you
paid for them. There is no assurance that the Fund can achieve its investment
objective, since all investments are inherently subject to market risk. The
relatively limited liquidity of some of the equities in the Index may affect the
Fund's ability to acquire or dispose of securities at a desirable price and
time. At times, the Fund may be unable to acquire desired positions quickly, or
may be unable to dispose of securities promptly. This could cause net asset
value to decline, and could negatively affect the Fund's correlation to the
Index.
Some share transactions will be denominated in New Israeli Shekels (NIS), and
for liquidity purposes, some cash or short term investments may be held in New
Israeli Shekels as well. The Fund is subject to the risk that the value of the
New Israeli Shekel will change relative to the dollar, and this could adversely
affect the Fund.
Israel's economy has been subject to destabilizing influences in the past,
including military conflicts, civil unrest, strikes, political division and
periods of hyper-inflation. The Israeli government has intervened via fiscal and
monetary means, import duties, currency and wage restrictions, and other
measures. The Fund is subject to the risks of changes in Israeli government
policies and unforeseeable changes in securities, banking, currency and other
regulations. The Israeli economy has a substantial amount of concentrated
control, and the government is directly involved in and influences aspects of
private companies. Although various privatization programs are under way, the
government still owns or controls numerous corporations and other entities.
Actions by the government, such as nationalization, expropriation, imposition of
new taxes, restrictions on trade and regulations could have a significant impact
on the prices of securities or the ability of the Fund to invest in or liquidate
specific securities.
Financial Disclosure and Regulation
Companies in Israel are subject to accounting, auditing and financial standards
and requirements that, while substantially similar, are different in some
respects from those applicable to US companies. In particular, financial
statements generally must be adjusted to reflect the effects of
15
<PAGE>
inflation. There is less government supervision and regulation of the Israeli
securities exchange, brokers and listed companies with respect to such matters
as insider trading rules, restrictions on market manipulation and shareholder
proxy requirements than exists in the United States, although the Israel
Securities Authority has extensive power and authority to regulate the
securities and capital markets. There is also less publicly available
information about Israeli companies compared with that available about US
companies. In addition, credit analysis and a ratings systems are not well
developed.
PURCHASING SHARES
The Fund is open for business on each day that the New York Stock Exchange
("NYSE") is open. The Fund's net asset value per share ("NAV") is normally
determined as of 4:00 p.m., New York time. The Fund's NAV is calculated by
subtracting its liabilities from the closing fair market value of its total
assets and dividing the result by the total number of shares outstanding on that
day. Fund liabilities include accrued expenses and dividends payable, and its
total assets include the market value of the portfolio securities as well as
income accrued but not yet received. Shares of the Fund are purchased at their
public offering price, which is the per share NAV plus any sales charges, next
computed after receipt of your purchase order or the transfer of your assets
from the Money Market Fund to the Fund.
The Fund's NAV is determined on days on which the New York Stock Exchange is
open for trading. Note that the TASE is open on Sundays and closed on Fridays
and Saturdays. The schedule of holidays in Israel is also different from that in
the U.S., and there may be a delay in calculating NAV due to the inconsistent
schedules of the Tel Aviv and New York markets. You should be aware that the
Fund's NAV may change on days when you cannot purchase or redeem shares because
the companies in which the Fund invests may trade on the TASE, an exchange which
is open on days when the NYSE is closed.
All applications to purchase shares of the Fund are subject to acceptance by
authorized officers of the Fund and are not binding until accepted. The Fund
reserves the right to reject purchase orders under circumstances or in amounts
considered disadvantageous to existing shareholders. Please see the Sections of
the SAI entitled "Purchasing and Redeeming Shares" and "Tax Information" for
more information concerning share purchases. You may direct inquiries concerning
the Fund to:
AMIDEX(TM) FUNDS, INC.
C/O THE DECLARATION GROUP
555 NORTH LANE, SUITE 6160
CONSHOHOCKEN, PA 19428
1-888-876-3566
Variable Pricing System
- -----------------------
The Fund offers three classes of shares so that you can choose the class that
best suits your investment needs. The main differences between each class are
sales charges and ongoing fees. In choosing which class of shares to purchase,
you should consider which will be most beneficial to you, given the amount of
your purchase and the length of time you expect to hold the shares. All
16
<PAGE>
three classes of shares in the Fund represent interests in the same portfolio of
investments in the Fund.
17
<PAGE>
CLASS A SHARES.
Class A shares are offered at their public offering price, which is net asset
value per share plus the applicable sales charge. The sales charge varies,
depending on how much you invest. There are no sales charges on reinvested
distributions. The following sales charges apply to your purchases of Class A
shares of the Fund:
Sales Charge
As a % of Dealer
Amount Invested offering price Reallowance
- --------------- -------------- -----------
Less than $ 99,999 4.00% 3.50%
100,000 to 249,999 3.00% 2.50%
250,000 to 499,999 2.00% 1.50%
500,000 to 999,999 1.50% 1.00%
1,000,000 or more 1.00% 0.75%
If you are a participant in a qualified employee retirement benefit plan with at
least 100 eligible employees, you may purchase Class A shares without any sales
charges. However, if you redeem your shares within one year of purchase, you
will be charged a fee of 1.00% of the redemption proceeds.
Declaration Distributors, Inc, ("DDI") the Fund's principal underwriter, will
pay the appropriate dealer concession to those selected dealers who have entered
into an agreement with DDI to sell shares of the Fund. The dealer's concession
may be changed from time to time. DDI may from time to time offer incentive
compensation to dealers who sell shares of the Fund subject to sales charges,
allowing such dealers to retain an additional portion of the sales load. A
dealer who receives all of the sales load may be deemed to be an "underwriter"
under the Securities Act of 1933, as amended.
Exemptions from sales charges
- -----------------------------
The Fund will waive sales charges for purchases by fee-based registered
investment advisers for their clients, broker/dealers with wrap fee accounts,
registered investment advisers or brokers for their own accounts, employees and
employee related accounts of the Adviser, and for an organization's retirement
plan that places either (i) 200 or more participants or (ii) $300,000 or more of
combined participant initial assets into the Fund. For purchasers that qualify
for fee waiver, shares will be purchased at net asset value.
Reduced sales charges
- ---------------------
You may qualify for a reduced sales charge by aggregating the net asset value of
all your load shares previously purchased in the Fund with the dollar amount of
shares to be purchased. For example, if you already owned Class A, shares in the
Fund with an aggregate net asset value of $450,000, and you decided to purchase
an additional $60,000 of Class A shares of the Fund, there would be a sales
charge of 1.50% on your $60,000 purchase instead of the normal 4.00% on that
purchase, because you had accumulated more than $500,000 total in the Fund.
18
<PAGE>
Letter of Intent
- ------------------
You can immediately qualify for a reduced or eliminated sales charge by signing
a non-binding letter of intent stating your intention to buy an amount of shares
in the Fund during the next thirteen (13) months sufficient to qualify for the
reduction. Your letter will not apply to purchases made more than 90 days prior
to the letter. During the term of your letter of intent, the transfer agent will
hold in escrow shares representing the highest applicable sales load for the
Fund each time you make a purchase. Any shares you redeem during that period
will count against your commitment. If, by the end of your commitment term, you
have purchased all the shares you committed to purchase, the escrowed shares
will be released to you. If you have not purchased the full amount of your
commitment, your escrowed shares will be redeemed in an amount equal to the
sales charge that would apply if you had purchased the actual amount in your
account all at once. Any escrowed shares not needed to satisfy that charge would
be released to you.
CLASS B SHARES
Unlike Class A shares, Class B shares are sold at net asset value without an
initial sales charge. Instead, a Contingent Deferred Sales Charge ("CDSC") is
imposed on certain redemptions of Class B shares. This means that all of your
initial investment is invested in the Fund, and you will only incur a sales
charge if you redeem shares within six years. In that case, a CDSC may be
imposed on your redemption. If a CDSC is imposed, it will be calculated on an
amount equal to the lesser of the current market value or the cost of the shares
redeemed. What this means is that no sales charge is imposed on increases in the
net asset value of your shares above their original purchase price. Also, no
charge is assessed on shares derived from reinvestment of dividend or capital
gains distributions.
The amount of the CDSC, if any, varies depending on the number of years you have
held your shares. To determine that time period, all purchases made in any month
are aggregated together and deemed to have been made on the last day of the
month. For Class B shares of the Fund, the following CDSC charges apply:
Redemption Within CDSC Percentage
First Year......................................5.00%
Second Year.....................................4.00%
Third Year......................................3.00%
Fourth Year.....................................2.00%
Fifth Year......................................1.00%
Sixth Year and Thereafter........................None
When you send a redemption request to the Fund, unless you specify otherwise,
shares not subject to the CDSC are redeemed first, then shares that have been
held the longest, and so on. That way, you will be subject to the smallest
charge possible.
CDSC Waivers
- ------------
The CDSC is waived on redemptions of Class B shares (i) following the death or
disability (as defined in the Code) of a shareholder (ii) in connection with
certain distributions from an IRA or
19
<PAGE>
other retirement plan (iii) for annual withdrawals up to 10% of the value of the
account, (iv) pursuant to the right of the Fund to liquidate a shareholder's
account.
Conversion Feature
- ------------------
Class B shares automatically convert to Class A shares once the economic
equivalent of a 5.00% sales charge is recovered by the Fund for each investment
account. The sales charge is recoverable by the Fund through the distribution
fees paid under each Fund's Plan of Distribution for its Class B shares. Class B
shares converting to Class A shares are not subject to additional sales charges.
CLASS C SHARES
Class C Shares are sold at net asset value without an initial sales charge. This
means that 100% of your initial investment is placed into shares of the Fund.
However, Class C shares pay an annual 12b-1 distribution fee of 0.25% of average
daily net assets and an additional shareholder servicing fee of 0.75% per annum
of average daily net assets.
In order to recover commissions paid to dealers on investments in Class C
Shares, you will be charged a contingent deferred sales charge ("CDSC") of 1.00%
of the value of your redemption if you redeem your shares within one year from
the date of purchase. You will not be charged a CDSC on reinvested dividends or
capital gains, amounts purchased more than one year prior to the redemption, and
increases in the value of your shares.
FACTORS TO CONSIDER WHEN CHOOSING A SHARE CLASS
When deciding which class of shares to purchase, you should consider your
investment goals, present and future amounts you may invest in the Fund, and the
length of time you intend to hold your shares. You should consider, given the
length of time you may hold your shares, whether the ongoing expenses of Class C
or Class B shares will be greater than the front-end sales charge of Class A
shares, and to what extent such differences may be offset by the higher
dividends on Class A shares. To help you make a determination as to which class
of shares to buy, please refer back to the examples of Fund expenses over time
in the Risk/Return Summary.
Distribution Fees
- -----------------
Amidex(TM) Funds, Inc. (the "Company") has adopted distribution plans (the
"Distribution Plans"), pursuant to Rule 12b-1 under The Investment Company Act
of 1940, as amended, by Class of Shares, for each Fund. The Distribution Plans
provide for fees to be deducted from the average net assets of the Funds in
order to compensate the Adviser or others for expenses relating to the promotion
and sale of shares of each Fund.
Under the Class A Plan, the Class A shares of each Fund compensate the Adviser
and others for distribution expenses at a maximum annual rate of 0.25% (of
which, the full amount may be service fees), payable on a monthly basis, of the
Fund's average daily net assets attributable to Class A shares.
Under the Class B Plan, the Class B Shares of the Fund compensate the Adviser
and others for distribution and service fees at an annual rate of 1.00% (0.25%
of which is a service fee) payable on a monthly basis, of the Fund's average
daily net assets attributable to Class B shares. Amounts
20
<PAGE>
paid under the Class B Plan are paid to the Adviser and others to compensate it
for services provided and expenses incurred in the distribution of Class B
shares, including the paying of commissions for sales of Class B shares. The
Class B Plan is designed to allow investors to purchase Class B shares without
incurring a front-end sales load and to permit the distributor to compensate
authorized dealers for selling such shares. Accordingly, the Class B Plan
combined with the CDSC for Class B shares is to provide for the financing of the
distribution of Class B shares.
Under the Class C Plan, Class C Shares of the Fund compensate the Adviser and
others for distribution and service fees at an annual rate of 1.00% (0.75% of
which is a service fee) payable on a monthly basis, of the Fund's average daily
net assets attributable to Class C shares. Amounts paid under the Class C Plan
are paid to the Adviser and others to compensate it for services provided and
expenses incurred in the distribution of Class C shares, including the paying of
ongoing "trailer" commissions for sales of Class C shares. The Class C Plan is
designed to allow investors to purchase Class C shares without incurring a
front-end sales load or a CDSC charge, and to permit the Distributor to
compensate authorized dealers for selling such shares. Accordingly, the Class C
Plan's purpose is to provide for the financing of the distribution of Class C
shares.
The Distribution Plans provide that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising materials and
sales literature, and payments to dealers and shareholder servicing agents.
The Distribution Plans are reviewed annually by the Company's Board of
Directors, and may be renewed only by majority vote of the shareholders of the
Fund's Classes, or by majority vote of the Board, and in both cases also a
majority vote of the "disinterested" Directors of the Company, as that term is
defined in the 1940 Act.
Minimum Investment Amounts
- --------------------------
Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Please remember that Fund management
reserves the right to reject any purchase order for Fund shares if, in the
Fund's opinion, such an order would cause a material detriment to existing
shareholders. Your purchase of Fund shares is subject to the following minimum
investment amounts:
MINIMUM MINIMUM
INVESTMENT SUBSEQUENT
CLASS TO OPEN ACCOUNT INVESTMENTS
- --------------------------------------------------------------------------------
CLASS A Regular $2,500 $1,000
& IRAs $1,000 $ 100
CLASS B
21
<PAGE>
Automatic Regular $2,500 $100 per month minimum
- ---------
Investment Plan IRAs $1,000 $100 per month minimum
- ---------------
- --------------------------------------------------------------------------------
CLASS C Regular $5,000 $1,000
IRAs $1,000 $ 100
Automatic Regular $2,500 $100 per month minimum
- ---------
Investment Plan IRAs $1000 $100 per month minimum
- ---------------
- --------------------------------------------------------------------------------
Opening and Adding To Your Account
- ----------------------------------
You can invest in the Fund by mail, wire transfer and through participating
financial service professionals. After you have established your account, you
may make subsequent purchases by telephone. You may also invest in the Fund
through an automatic payment plan. Any questions you may have can be answered by
calling 1-888-876-3566.
Purchase By Mail
- -----------------
To make your initial purchase of Fund shares, complete an Account Registration
Form (be sure to choose which Class of shares you wish to purchase), make a
check payable to The Amidex35(TM) Fund, and mail the Form and check to:
Amidex(TM) Funds, Inc.
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428.
Your purchase order, if accompanied by payment, will be processed upon receipt
by Declaration Service Company, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the Exchange
(currently 4:00 p.m. East Coast time), your shares will be purchased at the
Fund's public offering price calculated at the close of regular trading on that
day. Otherwise, your shares will be purchased at the public offering price
determined as of the close of regular trading on the next business day. To make
subsequent purchases of shares, simply mail a check made out to The Amidex35(TM)
Fund to the Transfer Agent. Make sure your account number and the class of
shares you wish to purchase are noted on the check. If you do not designate a
class of shares, Class A shares will be purchased.
Wire Transfer Purchases
- ------------------------
To make initial purchases of Fund shares by wire, call 1-888-876-3566 to inform
us that a wire is being sent. We will assign an account number to you, which you
should then include in your wire instructions. Then ask your bank to wire funds
to account of:
22
<PAGE>
FirStarBank, NA, ABA #: 042000013
Credit: Amidex Funds, Inc., Acct. #:48902 3382
Further credit: The Amidex35 Mutual Fund.
Account # [Your Account Number]
Include your name(s), address and taxpayer identification number or Social
Security number. The wire should state that you are opening a new Fund account,
and should also state which class of shares you wish to purchase. If you fail to
designate a share class, Class A shares will be purchased for you. When you make
subsequent purchases by wire, be sure to include your account number on the wire
transfer instructions.
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. You should contact your bank (which will need to be a commercial
bank that is a member of the Federal Reserve System) for information on sending
funds by wire, including any charges that your bank may make for these services.
Purchases through Financial Service Organizations
- -------------------------------------------------
You may purchase shares of the Fund through participating brokers, dealers, and
other financial professionals. Simply call your investment professional to make
your purchase. If you are a client of a securities broker or other financial
organization, you should note that such organizations may charge a separate fee
for administrative services in connection with investments in Fund shares and
may impose account minimums and other requirements. These fees and requirements
would be in addition to those imposed by the Fund. If you are investing through
a securities broker or other financial organization, please refer to its program
materials for any additional special provisions or conditions that may be
different from those described in this Prospectus (for example, some or all of
the services and privileges described may not be available to you). Securities
brokers and other financial organizations have the responsibility of
transmitting purchase orders and funds, and of crediting their customers'
accounts following redemptions, in a timely manner in accordance with their
customer agreements and this Prospectus.
Automatic Investment Plan
- -------------------------
You may purchase Class A, Class B and Class C shares of the Fund through an
Automatic Investment Plan (the "Plan"). The Plan provides a convenient way for
you to have money deducted directly from your checking, savings, or other
accounts for investment in shares of the Fund. You can take advantage of the
plan by filling out the Automatic Investment Plan application on page __ of this
prospectus. You may only select an account maintained at a domestic financial
institution which is an Automated Clearing House ("ACH") member for automatic
withdrawals under the plan. The Fund may alter, modify, amend or terminate the
plan at any time, but will notify you if it does so. For more information, call
the Transfer Agent at 1-888-876-3566.
Telephone Purchases
- -------------------
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by
23
<PAGE>
telephone. Shares purchased by telephone will be purchased at the per share
public offering price determined at the close of business on the day that the
transfer agent receives payment through the Automatic Clearing House. Call the
Transfer Agent for details.
You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed within
three business days of your call. To preserve flexibility, the Company may
revise or eliminate the ability to purchase Fund shares by phone, or may charge
a fee for such service, although the Company does not currently expect to charge
such a fee.
Declaration Service Company, the Fund's transfer agent, employs certain
procedures designed to confirm that instructions communicated by telephone are
genuine. Such procedures may include, but are not limited to, requiring some
form of personal identification prior to acting upon telephonic instructions,
providing written confirmations of all such transactions, and/or tape recording
all telephonic instructions. Assuming procedures such as the above have been
followed, neither the Transfer Agent nor the Fund will be liable for any loss,
cost, or expense for acting upon telephone instructions that are believed to be
genuine. The Company shall have authority, as your agent, to redeem shares in
your account to cover any such loss. As a result of this policy, you will bear
the risk of any loss unless the Fund has failed to follow procedures such as the
above. However, if the Fund fails to follow such procedures, it may be liable
for such losses.
REDEEMING SHARES
You may redeem your shares in the Fund at any time and for any reason. Upon
receipt by the Fund of a redemption request in proper form, your shares of the
Fund will be redeemed at their next determined net asset value. Redemption
requests must be in writing and delivered to the Fund at AMIDEX FUNDS, INC., C/O
THE DECLARATION GROUP, 555 NORTH LANE, SUITE 6160, CONSHOHOCKEN, PA 19428. To be
in "proper form," your redemption request must:
1. specify the number of shares or dollar amount to be redeemed, if less than
all shares are to be redeemed;
2. be signed by all owners exactly as their names appear on the account;
3. if required, include a signature guarantee from any "eligible guarantor
institution" as defined by the rules under the Securities Exchange Act of
1934. Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. A notary public
is not an eligible guarantor.
Further documentation, such as copies of corporate resolutions and instruments
of authority may be requested from corporations, administrators, executors,
personal representatives, Directors, or custodians to evidence the authority of
the person or entity making the redemption request.
Signature Guarantees. A signature guarantee is designed to protect you and the
Fund by verifying your signature. SIGNATURE GUARANTEES ARE REQUIRED WHEN:
24
<PAGE>
1. establishing certain services after the account is opened;
2. requesting redemptions in excess of $10,000;
3. redeeming or exchanging shares, when proceeds are:
4. being mailed to an address other than the address of record,
5. made payable to other than the registered owner(s); or
6. transferring shares to another owner.
The redemption price per share is net asset value per share, next determined
after your redemption order is received by the Fund, less any applicable CDSC
charges. (See, "Purchasing and Redeeming Shares" in the SAI). When you redeem
your shares, they may be worth more or less than you paid for them, depending
upon the value of the Fund's portfolio securities at the time of redemption.
If the value of your account falls below $1,000 as a result of previous
redemptions and not market price declines, the Fund may redeem the shares in
your account. However, the Fund will notify you first if such an event occurs,
and you will have 60 days to bring your account balance up to the minimum levels
before the Fund will exercise its option to redeem. Also, in the event your
shares are redeemed by the Fund under such circumstances, you will not be
charged any redemption fees, regardless of the time you have held your shares.
Payment for shares redeemed is made within seven days after receipt by the Fund
of a request for redemption in proper form. If shares are purchased by check and
redeemed by letter within seven business days of purchase, the Fund may hold
redemption proceeds until the purchase check has cleared, provided that the Fund
does not hold such proceeds for more than 15 calendar days. The Fund reserves
the right to suspend or postpone redemptions during any period when (a) trading
on any of the major U.S. stock exchanges is restricted, as determined by the
Securities and Exchange Commission, or that the major exchanges are closed for
other than customary weekend and holiday closings, (b) the Commission has by
order permitted such suspension, or (c) an emergency, as determined by the
Commission, exists making disposal of portfolio securities or valuation of net
assets of the Fund not reasonably practicable.
TAX CONSIDERATIONS
The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code so as to be relieved of federal income tax on its capital gains and
net investment income currently distributed to its shareholders. To qualify as a
regulated investment company, the Fund must, among other things, derive at least
90% of its gross income from dividends, interest, payments with respect to
securities loans, gains from the sale or other disposition of stock, securities,
or other income derived with respect to its business of investing in such stock
or securities, and distribute substantially all of such income to its
shareholders at least annually.
The Fund intends to distribute to shareholders all net investment income and any
net capital gains realized from sales of the Fund's portfolio securities at such
times and in such amounts as to avoid all taxes, both state and federal.
Dividends from net investment income and distributions from any
25
<PAGE>
net realized capital gains are reinvested in additional shares of the Fund
unless you request in writing to have them paid by check.
Dividends from investment income and net short-term capital gains are generally
taxable to you as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time that shares
in the Fund have been held. Distributions are taxable, whether received in cash
or reinvested in shares of the Fund.
You will be advised annually of the source of distributions for federal income
tax purposes.
If you fail to furnish your Social Security or other tax identification number
or to certify properly that it is correct, the Fund may be required to withhold
federal income tax at the rate of 31% (backup withholding) from your dividend,
capital gain and redemption payments. Dividend and capital gain payments may
also be subject to backup withholding if you fail to certify properly that you
are not subject to backup withholding due to the under-reporting of certain
income.
Distributions by the Fund will result in a reduction in the fair market value of
the Fund's shares. Should a distribution reduce the fair market value below your
cost basis, such distribution would be taxable to you as ordinary income or as a
long-term capital gain, even though, from an investment standpoint, it may
constitute a partial return of capital. In particular, you should be careful to
consider the tax implications of buying shares of the Fund just prior to a
distribution. The price of such shares include the amount of any forthcoming
distribution so that you may receive a return of investment upon distribution
that will, nevertheless, be taxable.
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. You should consult a tax adviser regarding the effect of
federal, state, local, and foreign taxes on an investment in the Fund. The
information in this Prospectus is not intended to be a full discussion of
present or future tax ramifications of investment in the Fund, and investors
should consult their own tax advisors for a detailed and complete review of tax
ramifications.
Israeli Taxes and Pass Through to Shareholders
The following is a short summary of Israeli taxes that may be imposed on the
Fund. The following discussion is partially based on enacted Israeli legislation
that has not been subjected to judicial or administrative interpretation. There
can be no assurance that views expressed herein will be accepted by the courts
or by the Israeli Tax Commission. For a more complete discussion of Israeli tax
considerations, please see the SAI.
Capital Gains Tax: The Israeli Income Tax Ordinance (the "Ordinance") imposes a
tax on capital gains derived by residents of Israel, or non-residents of Israel
who sell assets which represent a direct or an indirect interest in Israeli
assets. The Fund, as a non-resident of Israel, may be subject to capital gains
tax on the sale of securities issued by Israeli corporations, subject to any
exemption or rate reduction that may be applicable.
Other Taxation
26
<PAGE>
Distributions also may be subject to additional state, local and foreign taxes
depending on each shareholder's particular situation.
This discussion is limited only to U.S. federal income tax and Israeli tax.
Moreover, the U.S. federal income tax and Israeli tax discussion set forth above
is a summary included for general information purposes only. In view of the
individual nature of tax consequences, you should consult your own tax adviser
with respect to the specific tax consequences of participation in the Fund,
including the effect and applicability of state, local, foreign and other tax
laws and the possible effects of changes in federal or other tax laws.
MANAGEMENT OF THE FUND
AMIDEX(TM) Funds, Inc. (the "Company") was incorporated in Maryland on April 27,
1999. The Company is an open-end management investment company, and is
registered as such with the Securities and Exchange Commission. The Board of
Directors approves all significant agreements between the Company and the
persons and companies that furnish services to the Fund, including agreements
with the Fund's custodian, transfer agent, investment Adviser and administrator.
The day-to-day operations of the Fund are delegated to the Adviser. The
Statement of Additional Information contains background information regarding
each of the Company's Directors and Executive Officers. The Company's Articles
of Incorporation permit the Board of Directors to issue 500,000,000 shares of
common stock. The Board of Directors has the power to designate one or more
classes ("series") of shares of common stock and to classify or reclassify any
unissued shares with respect to such series. Currently the shares of the Fund
are the only class of shares being offered by the Company. Shareholders are
entitled: (i) to one vote per full share; (ii) to such distributions as may be
declared by the Company's Board of Directors out of funds legally available; and
(iii) upon liquidation, to participate ratably in the assets available for
distribution. There are no conversion or sinking fund provisions applicable to
the shares, and the holders have no preemptive rights and may not cumulate their
votes in the election of Directors. The shares are redeemable and are fully
transferable. All shares issued and sold by the Fund will be fully paid and
nonassessable.
INVESTMENT ADVISER
TransNations Investments, LLC (the "Adviser") has entered into an Investment
Advisory Agreement (the "Advisory Agreement") with the Fund to provide
investment management services to the Fund. In addition, the Adviser has entered
into an Operating Services Agreement (the "Services Agreement") with the Fund to
provide virtually all day-to-day operational services to the Fund. As is
explained further below, the combined effect of the Advisory Agreement and the
Services Agreement is to place a cap or ceiling on the Fund's ordinary operating
expenses at 2.20% of daily net asset value of the Fund, excepting Rule 12b-1
fees, brokerage, interest, taxes, litigation, and other extraordinary expenses.
Clifford A. Goldstein is President and Chief Executive Officer of the Adviser.
Boaz Rahav is the Fund Manager, and is responsible for all investment decisions
relating to the Fund. Mr. Goldstein also serves as the President and as a
Director of Amidex Funds,
27
<PAGE>
Inc. The mission statement of the Adviser is "To develop and introduce
Israeli-related investment vehicles to individuals and financial institutions
worldwide."
MANAGEMENT AGREEMENTS
ADVISORY AGREEMENT. The Fund is an index fund. Rather than relying on any one
manager or management team to "pick" stocks, the Fund is managed "passively" by
normally investing only in the companies comprising the Index in approximately
the same percentages as each company represents in the Index. Boaz Rahav, who
last served as Chief Economist for the Government of Israel Ministry of Finance
in New York, is the Fund Manager for the Adviser. Mr. Rahav has over 8 years
experience in Israeli financial markets, having worked for a large institutional
brokerage house in Israel as a trader and as a mutual fund manager from 1994 to
1996. Previously, Mr. Rahav worked from 1991 to 1993 for the Federation of
Israeli Chambers of Commerce. Mr. Rahav also served from 1987 to 1990 in the
Intelligence Wing of the Israeli Air Force. Mr. Rahav has a business degree from
the Tel Aviv College of Business, an MBA (with distinguished honors) from the
New York Institute of Technology, an Investment Adviser and Analyst Diploma from
Tel Aviv University, and a Trader Certificate from the Tel Aviv Stock Exchange.
Mr. Rahav joined the Adviser in February, 1999.
The Adviser invests the assets of the Fund according to the Fund's investment
objectives, policies, and restrictions. The Fund pays the Adviser a fee, accrued
daily and payable monthly, at an annual rate of 0.50% of the Fund's net assets.
The Adviser furnishes at its own expense office space to the Company and all
necessary office facilities, equipment, and personnel for managing the assets of
the Fund. The Adviser also pays all expenses of marketing shares of the Fund,
and related bookkeeping.
SERVICES AGREEMENT. Under the terms of the Services Agreement, the Adviser,
subject to the supervision of the Board of Directors, will provide, or arrange
to provide, essentially all day-to-day operational services to the Fund. The
Adviser pays all fees and expenses associated with the services it provides,
including, but not limited to, expenses of legal compliance, shareholder
communications, and meetings of the shareholders.
For such services, the Fund will pay to the Adviser on the last day of each
month a fee equal to an annual rate of 1.70% of the average net asset value of
the Fund. This fee is computed daily based upon the net asset value of the Fund.
The Adviser and the Fund have entered into an Investment Company Services
Agreement with Declaration Service Company ("DSC") to provide Transfer Agent and
essentially all administrative services for the Fund, and have entered into a
Distribution Agreement with Declaration Distributors, Inc. ("DDI") to act as
principal underwriter for the Fund's shares. DSC and DDI are affiliated
companies.
The Adviser pays all expenses incident to the Fund's operations and business
except expenses relating to legal fees resulting from litigation, brokerage
expenses, taxes, if any, and other extraordinary charges.
28
<PAGE>
The "Year 2000 Issue": Many existing computer programs use only two digits to
identify a year in their date fields. These programs were designed and developed
without considering the impact of the upcoming change in the century. If not
corrected, many computer applications could fail or create erroneous results by
or at the year 2000. The Fund is a new Fund, and the Adviser is a newly formed
company. All of the computer programs purchased by the Adviser for its own use
or for the use of the Fund are new programs and have been warranted as Year 2000
compliant. Further, the Company has entered into agreements with various third
parties to provide services to the Fund, and as part of those agreements, has
received warranties from each such party that its systems are presently year
2000 compliant, or adequate steps are being undertaken by the party to insure
that compliance is met prior to the turn of the century. The Fund will not enter
into any agreement with a party unless such warranties are given. Accordingly,
at the present time, there do not appear to be any materially adverse
consequences to the Fund relating to the Year 2000 issue.
GENERAL INFORMATION
The Fund will not issue stock certificates evidencing shares. Instead, your
account will be credited with the number of shares purchased, relieving you of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued for all purchases of shares.
You will be provided at least semi-annually with a report showing the Fund's
portfolio and other information and annually after the close of the Fund's
fiscal year, which ends December 31, with a report containing audited financial
statements.
The Fund's average annual total return is computed by determining the average
annual compounded rate of return for a specified period that, if applied to a
hypothetical $1000 initial investment, would produce the redeemable value of
that investment at the end of the period, assuming reinvestment of all dividends
and distributions and with recognition of all recurring charges. The Fund may
also utilize a total return calculation for differing periods computed in the
same manner but without annualizing the total return.
In reports or other communications to investors, or in advertising material, the
Fund may describe general economic and market conditions affecting the Fund and
may compare its performance with other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar nationally recognized
rating services and financial publications that monitor mutual fund performance.
The Fund may also, from time to time, compare its performance to the Standard &
Poors Composite Index of 500 Stocks ("S&P 500"), or some other widely
recognized, unmanaged index of common stock prices.
According to the law of Maryland, under which the Company is incorporated, and
the Company's bylaws, the Company is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act of 1940.
Accordingly, the Company will not hold annual shareholder meetings unless
required to do so under the Act.
29
<PAGE>
The Fund and the Adviser have entered into an Investment Services Agreement,
dated April 27, 1999 with Declaration Services Company ("DSC") wherein DSC will
provide substantially all administrative, accounting and transfer agent services
to the Fund. DSC will be paid for such services by the Adviser.
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, PA
19428 ("DDI") has agreed to act as principal underwriter for the Fund's shares,
pursuant to a Distribution Agreement dated April 27, 1999. The Agreement will
expire on April 26, 2001, unless renewed annually thereafter by the Fund's board
of directors voting as a whole and by a majority of the Fund's "uninterested"
directors, as that term is defined in the Investment Company Act of 1940. Either
party to the Distribution Agreement may terminate the agreement on 60 days
written notice, and the agreement will terminate automatically in the event of
its assignment. DDI will be paid for such services by the Adviser.
30
<PAGE>
FOR MORE INFORMATION
STATEMENT OF ADDITIONAL BY MAIL:
INFORMATION (SAI)
AMIDEX(TM)Funds, Inc.
The SAI contains more detailed c/o Declaration Service Company
Information on all aspects of the 555 North Lane, Suite 6160
Fund. A current SAI, dated September 30, Conshohocken, PA 19428
1999, has been filed with the SEC
and is incorporated by reference BY PHONE: 1-888-876-3566
into (is legally a part of) this
prospectus. ON THE INTERNET:
www.Amidexfunds.com
To request a free copy of the SAI,
please contact the Fund. Or you may view or obtain these
documents from the SEC.
IN PERSON: at the SEC's Public
Reference Room in Washington, D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference Section,
Securities and Exchange Commission,
Washington, D.C. 20549-6009
(duplicating fee required)
ON THE INTERNET: www.sec.gov
The AMIDEX(TM) 35 Mutual Fund
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
1-888-876-3566
Investment Company Act No.
811-9123
31
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED SEPTEMBER 30, 1999
AMIDEX(TM) FUNDS, INC.
26 BROADWAY, SUITE 741
NEW YORK, NEW YORK 10004
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of The AMIDEX(TM) 35 Mutual Fund, dated
September, 1999. You may obtain a copy of the Prospectus, free of charge, by
writing to AMIDEX(TM) Funds, Inc, c/o The Declaration Group, 555 North Lane,
Suite 6160, Conshohocken, PA 19428, phone number 1-888-876-3566.
TABLE OF CONTENTS
Investment Policies and Restrictions Fund Service Providers
Investment Adviser Independent Accountants
Directors and Officers Independent Auditors Report
Performance Information Financial Statements
Purchasing and Redeeming Shares
Tax Information
Portfolio Transactions
INVESTMENT POLICIES AND RESTRICTIONS
The Fund currently is the only series offered by AMIDEX(TM) Funds, Inc., an
open-end, management investment company organized as a Maryland corporation. The
Fund is a non-diversified Fund. The Investment Company Act of 1940 defines a
diversified fund to mean that as to 75% of the Fund's assets (valued at the time
of investment), a fund will not invest more than 5% of its assets in securities
of any one issuer, except in obligations of the United States Government and its
agencies and instrumentalities, thereby reducing the risk of loss. The Fund
normally will invest at least 95% of its net assets in 35 Israeli companies. It
is likely that a few of these companies will comprise a large percentage of the
Fund's portfolio holdings--in excess of the 25% limit on holdings in excess of
5%. As a result, the Fund will not be diversified.
PORTFOLIO TURNOVER. The Fund has no operating history and therefore has no
reportable portfolio turnover. Higher portfolio turnover rates may result in
higher rates of net realized capital gains to the Fund, thus the portion of the
Fund's distributions constituting taxable gains may increase. In addition,
higher portfolio turnover activity can result in higher brokerage costs to the
Fund. The Fund anticipates that its annual portfolio turnover will be not
greater than 75%.
INVESTMENT RESTRICTIONS. The complete list of the Fund's investment restrictions
is as follows:
The Fund will not:
<PAGE>
1. Acquire securities of any one issuer that at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;
2. Borrow money, except from banks for temporary or emergency purposes in
amounts not exceeding 5% of the value of the Fund's net assets at the time
of borrowing;
3. Underwrite the distribution of securities of other issuers, or acquire
"restricted" securities that, in the event of a resale, might be required
to be registered under the Securities Act of 1933;
4. Make margin purchases or short sales of securities;
5. Invest in companies for the purpose of management or the exercise of
control;
6. Lend money (but this restriction shall not prevent the Fund from investing
in debt securities or repurchase agreements, or lend its portfolio
securities).
7. Acquire or retain any security issued by a company, an officer or director
of which is an officer or director of the Company or an officer, director
or other affiliated person of the Advisor.
8. Invest in oil, gas or other mineral exploration or development programs,
although it may invest in marketable securities of companies engaged in
oil, gas or mineral exploration, if such companies are members of the
AMIDEX(TM) 35 Index;
9. Purchase or sell real estate or real estate loans or real estate limited
partnerships, although it may invest in marketable securities of companies
that invest in real estate or interests in real estate, if such companies
are members of the AMIDEX(TM) 35 Index.
10. Purchase warrants on securities, although the Fund may receive and exercise
warrants received Fund as dividends on previous securities purchases.
11. Issue senior securities.
12. Invest in commodities, or invest in futures or options on commodities.
13. Invest more than 25% of its assets (valued at time of investment) in
securities of issuers in a single industry (fundamental)
Restrictions 1 through 13 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940.
The Fund has also adopted the following restrictions that may be changed by the
Board of Directors without shareholder approval:
2
<PAGE>
The Fund may not:
1. Invest more than 15% of its net assets in securities that are not readily
marketable;
2. Acquire securities of other Investment Companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission and
(b) where acquisition results from a dividend or merger, consolidation or
other reorganization.
3. purchase more than 3% of the voting securities of any one investment
company;
4. Pledge, mortgage or hypothecate its assets, except for temporary or
emergency purposes and then to an extent not greater than 5% of its total
assets at cost;
5. Invest more than 10% of the Fund's assets (valued at time of investment) in
initial margin deposits of options or futures contracts;
6. Invest less than 95% of its net assets (valued at the time of investment)
in securities of issuers which are not members of the AMIDEX(TM) 35 Index.
INVESTMENT ADVISER
TransNations Investments, LLC (the "Adviser") was organized under the laws of
the State of Pennsylvania as an investment advisory corporation in October,
1998, and changed form to a limited liability company in March, 1999. The
Adviser registered as an Investment Advisor with the Securities and Exchange
Commission in December, 1998. The Adviser was created to provide investment
advice to the Fund, and at present that is the exclusive business of the
Adviser. Mr. Clifford A. Goldstein owns a 40% interest in and controls the
Adviser. The Adviser manages the investment portfolio and the general business
affairs of the Fund pursuant to an investment services agreement with the Fund
dated March 1, 1999 (the "Agreement"). Clifford A. Goldstein, Ron Tira and
Andrea Fiest are affiliated persons of the Adviser and act as Directors of the
Company.
The Agreement provides that the Adviser shall not be liable for any loss
suffered by the Fund or its shareholders as a consequence of any act or omission
in connection with services under the Agreement, except by reason of the
adviser's willful misfeasance, bad faith, gross negligence, or reckless
disregard of its obligations and duties under the Advisory Agreement.
The Agreement has a term of two years, but may be continued from year to year so
long as its continuance is approved annually (a) by the vote of a majority of
the Directors of the Fund who are not "interested persons" of the Fund or the
Adviser cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors as a whole or by the vote of a
majority (as defined in the 1940 Act) of the outstanding shares of the Fund. The
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
DIRECTORS AND OFFICERS
The board of directors has overall responsibility for conduct of the Company's
affairs. The day-to-day operations of the Fund are managed by the Adviser,
subject to the bylaws of the Company and
3
<PAGE>
review by the Board of Directors. The directors of the Company, including those
directors who are also officers, are listed below:
Name, Age, Address, Position Principal Occupation For the
with Fund Last Five Years
- --------------------------------------------------------------------------------
Clifford A. Goldstein* (Age 41) Managing Partner and Attorney with Weber,
President and Director of Fund, Goldstein, Greenberg, Gallagher, Phil. PA,
President, Controlling Partner of PA, a general litigation firm, since 1991.
BA Adviser from Temple University,
Philadelphia, PA, 4/78. J.D. from Temple
University School of Law, 3/82.
Ron Tira* (Age 33) Principal and Director of Fertile Crescent
Director of Fund, Minority Initiatives, Ltd., Tel-Aviv, Israel, a
Partner Of Adviser financial management firm, since 1997.
Lawyer with Firm of Lipa Meir & Company,
Tel-Aviv, Israel, from 8/93 to 3/97. LLB
Degree from London School of Economics and
Political Science, London, England, 1993.
Andrea Kramer Fiest* (Age 41) Lawyer, self-employed since 12/95.
Director of Fund, Minority International Derivatives Specialist with
Partner Of Adviser SBG Warburg, New York, NY from 1/94 to
12/95. Attorney with firm of Cadwalader,
Wickersham & Tait, New York, NY from 10/87
to 1/94. B.A. degree form Dickinson
College, Carlisle, PA, 4/79. J.D. from
Temple University School of Law,
Philadelphia, PA, 3/82. LLM in taxation
from New York University, New York, NY,
4/86.
4
<PAGE>
Brian Klazmer (Age 40) Principal of the Klazmer Financial Group,
Director Philadelphia, PA, financial services and
Insurance firm. B.A. degree from
Dickinson College, Carlisle, PA in 1980.
J.D. from Temple University School of Law,
1983. Mr. Klazmer has his Series 7
Registered Representative License and is
also licensed for the sale of life and
health insurance.
Micah Harish (Age 62) Retired since 1995. Former Israeli
Director minister of Trade and Industry. Currently
Chairman of the Board of Deloitte, Touche
Management Consulting Israel, Ltd.
Chairman of the Advisory Committee of
Information Technology Association of
Israel.
Daniel Schwartz (Age 37) Director of Trade, Government of Israel
Director Economic Mission, New York since
1996. Previously employed in the real
estate development industries in
California. Undergraduate degree from
University of Arizona, Tempe; Graduate
studies undertaken at San Francisco State
University
* Indicates an "interested person" as defined in the Investment Company Act
of 1940.
Amidex Funds, Inc. (the "Company") was organized as a Maryland Corporation on
April 27, 1999 (See the Sections titled "Management of the Fund" and "General
Information" in the Fund's Prospectus). The table below sets forth the
compensation anticipated to be paid by the Company to each of the directors of
the Company during the fiscal year ending April 30, 2000.
Name of Director Compensation Pension Annual Total Compensation
from Company Benefits Benefits Paid to Director
- --------------------------------------------------------------------------------
Clifford A. Goldstein 0.00 0.00 0.00 0.00
Andrea Fiest 0.00 0.00 0.00 0.00
Ron Tira 0.00 0.00 0.00 0.00
Brian Klazmer 5000.00 0.00 0.00 5000.00
Micah Harish 5000.00 0.00 0.00 5000.00
Daniel Schwartz 5000.00 0.00 0.00 5000.00
Clifford A. Goldstein intends to purchase substantially all of the shares the
Fund prior to the effective date of the Fund's registration and will be deemed
initially to control the Fund.
5
<PAGE>
The Company will call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing to
do so by record holders of at least 10% of the Fund's outstanding common shares.
The Company's bylaws contain procedures for the removal of directors by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed directors.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.
Average Annual Total Return is computed as follows: 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 shares at the end of the period
Yield. The Fund may advertise performance in terms of a 30-day yield quotation.
The 30-day yield quotation is 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/cd + 1)6 - 1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the
period that they were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period]
6
<PAGE>
The Fund's performance is a function of conditions in the securities markets,
portfolio management, sales charges on particular classes of shares, if any, and
operating expenses. Although information such as that shown above is useful in
reviewing the Fund's performance and in providing some basis for comparison with
other investment alternatives, it should not be used for comparison with other
investments using different reinvestment assumptions or time periods.
In sales literature, the Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, the Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Information concerning purchases and redemptions of shares is contained in the
Fund's Prospectus under the Sections "Purchasing Shares" and "Redeeming Shares".
This section supplements that information.
Redemptions will be made at net asset value. The Fund's net asset value is
determined on days on which the New York Stock Exchange is open for trading. For
purposes of computing the net asset value of a share of the Fund, securities
traded on security exchanges, or in the over-the-counter market in which
transaction prices are reported, are valued at the last sales price at the time
of valuation or, lacking any reported sales on that day, at the most recent bid
quotations. Securities for which quotations are not available and any other
assets are valued at a fair market value as determined in good faith by the
Advisor, subject to the review and supervision of the board of directors. The
price per share for a purchase order or redemption request is the net asset
value next determined after receipt of the order.
The Fund is open for business on each day that the New York Stock Exchange
("NYSE") is open. The Fund's share price or net asset value per share ("NAV") is
normally determined as of 4:00 p.m., New York time. The Fund's share price is
calculated by subtracting its liabilities from the closing fair market value of
its total assets and dividing the result by the total number of shares
outstanding on that day. Fund liabilities include accrued expenses and dividends
payable, and its total assets include the market value of the portfolio
securities as well as income accrued but not yet received. Since the Fund
generally does not charge sales or redemption fees, the NAV is the offering
price for shares of the Fund. For shares redeemed prior to being held for at
least 365 days, the redemption value is the NAV less a redemption fee equal to
2.00% of the NAV.
TAX INFORMATION
Information concerning the taxation of the Fund is generally discussed in the
Prospectus under the Section titled "Tax Considerations". This Section
supplements that discussion.
The Fund intends to qualify as a regulated investment company under Sub Chapter
M of the Internal Revenue Code so as to be relieved of federal income tax on its
capital gains and net investment income currently distributed to its
shareholders. To qualify as a regulated investment
7
<PAGE>
company, the Fund must, among other things, derive at least 90% of its gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock, securities, or other income
derived with respect to its business of investing in such stock or securities.
If the Fund qualifies as a regulated investment company and distributes at least
90% of its net investment income, the Fund will not be subject to Federal income
tax on the income so distributed. However, the Fund would be subject to
corporate income tax on any undistributed income other than tax-exempt income
from municipal securities.
The Fund intends to distribute to shareholders, at least annually, substantially
all net investment income and any net capital gains realized from sales of the
Fund's portfolio securities. Dividends from net investment income and
distributions from any net realized capital gains are reinvested in additional
shares of the Fund unless the shareholder has requested in writing to have them
paid by check.
Dividends from investment income and net short-term capital gains are generally
taxable to the shareholder as ordinary income. Distributions of long-term
capital gains are taxable as long-term capital gains regardless of the length of
time shares in the Fund have been held. Distributions are taxable, whether
received in cash or reinvested in shares of the Fund.
Each shareholder is advised annually of the source of distributions for federal
income tax purposes. A shareholder who is not subject to federal income tax will
not be required to pay tax on distributions received.
If shares are purchased shortly before a record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Fund may be
required to withhold federal income tax at the rate of 31% (backup withholding)
from dividend, capital gain and redemption payments to him. Dividend and capital
gain payments may also be subject to backup withholding if the shareholder fails
to certify properly that he is not subject to backup withholding due to the
under-reporting of certain income.
Taxation of the Shareholder. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such month will be deemed to have been received on
December 31st if paid by the Fund during the following January.
Distributions by the Fund will result in a reduction in the fair market value of
the Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution would be taxable to the shareholder
as ordinary income or as a long-term capital gain, even though,
8
<PAGE>
from an investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
include the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will, nevertheless, be
taxable to them.
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. Each investor should consult a tax advisor regarding the
effect of federal, state, local, and foreign taxes on an investment in the Fund.
Dividends. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions.
A portion of the Fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Short-term capital
gains are distributed as dividend income. The Fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.
Capital Gain Distribution. Long-term capital gains earned by the Fund from the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains, regardless of the length of time shareholders have held
their shares. If a shareholder receives a long-term capital gain distribution on
shares of the Fund, and subsequently such shares are sold at a loss, the portion
of the loss equal to the amount of the long-term capital gain distribution may
be considered a long-term loss for tax purposes. Short-term capital gains
distributed by the Fund are taxable to shareholders as dividends, not as capital
gains. Taxation issues are complex and highly individual. You should consult
with your tax advisor concerning the effects of transactions in the Fund.
9
<PAGE>
ISRAELI TAXES
Highlights
- ----------
Under current Israeli tax laws, capital gains realized upon the sale of
"Exchange-Listed Securities" (i.e., Israeli securities that were listed on the
TASE when acquired and when sold , or that are shares in "industrial companies"
or "industrial holding companies" and that were listed on certain non-Israeli
stock exchanges when acquired and when sold) generally are not subject to
Israeli tax. Capital gains realized upon the sale of Israeli securities that are
not Exchange-Listed Securities are subject to Israeli tax at ordinary tax rates
(which in the case of corporate shareholders is 36% and in the case of
individuals is 35-50%, depending on the individual's marginal tax rate) for the
1999 tax year. In the case of a shareholder which is in the business of buying
and selling securities in Israel (as defined under the Israeli Income Tax
Ordinance), gains realized upon the sale of Exchange-Listed Securities are not
capital gains and are subject to Israeli tax at ordinary rates, as specified
above. Dividends paid with respect to Israeli securities are subject to an
Israeli withholding tax of 25%.
The Israeli authorities are reviewing from time to time the question of imposing
a Capital Gains Tax on some TASE investments. At this point in time, it appears
as if there are no concrete plans for the imposition of such a tax, nor can its
structure, if and when imposed, be predicted. The possibility of an imposition
of capital gains tax, should, nonetheless, be considered (however, even if a
Capital Gains Tax is imposed, it is likely that it will not apply to the Fund -
as detailed below).
If a Capital Gains Tax is enacted, under the bilateral income tax treaty between
the United States and Israel (the "Treaty") a resident of the United States or
Israel is exempt from capital gains tax by the other state provided certain
conditions (including the condition that such capital gains be treated as not
being attributable to a permanent establishment (i.e., the conduct of a trade or
business) in the other state) are satisfied. Thus, assuming such conditions are
satisfied, the Fund's capital gains on all Israeli securities, including both
Exchange-Listed Securities and securities that are not Exchange-Listed
Securities, will be exempt from the Capital Gains Tax. In addition, under the
Treaty dividends paid with respect to Israeli securities will be subject to a
ten percent (10%) Israeli withholding tax as opposed to the usual 25% rate.
If the Fund is deemed to be engaged in the trade or business of buying and
selling securities in Israel then the Treaty will not apply. In that case, the
Fund's capital gains on all Israeli securities, including on Exchange-Listed
Securities, will be subject to Israel tax at the ordinary corporate rates (36%
in the 1999 tax year).
Detailed Description of Israeli Taxes
Capital Gain Tax: The Israeli Income Tax Ordinance (the "Ordinance") imposes
capital gains taxes derived by residents of Israel, or non-residents of Israel
who sell assets which represent a direct or an indirect interest in Israeli
assets. The Fund, as a non-resident of Israel, will be subject to capital gains
tax on the sale of securities issued by Israeli corporations, subject to any
exemption or rate reduction that may be applicable (see below).
10
<PAGE>
The Ordinance distinguishes between "real" capital gains, which are generally
subject to tax at a corporate rate of 36% in the 1999 tax year, and an
"inflationary amount," which is generally subject to tax at a rate of 10%.
However, currently, the Ordinance does not tax the "inflationary amount" for
investments made at present (only for investments made in the past), and such
tax shall therefore not apply to the Fund.
Israeli law currently provides for an exemption from capital gains tax for gains
realized from the sale of securities (including shares, debt securities and
warrants) that are traded on the TASE, provided that the seller did not hold the
securities prior to their listing on the TASE. In addition, gains realized from
the sales of shares of Israeli corporations defined as "industrial companies" or
"industrial holding companies" that are traded on certain non-Israeli (including
US) exchanges or through NASDAQ are exempted from capital gains tax, provided
that the shares were not acquired by the seller prior to the their listing. The
securities to which the exemption currently applies are referred to herein as
"Exchange-Listed Securities."
The current exemptions apply only where the gains from the sale of securities
are deemed "capital gains". Persons who are engaged in the business of buying
and selling securities in Israel (as defined under the Israeli Income Tax
Ordinance) are subject to ordinary income tax, and therefore the exemption from
capital gains tax are inapplicable to such investors.
If the Fund is deemed to be engaged in the trade or business of buying and
selling securities in Israel then the Fund's capital gains on all Israeli
securities, including on Exchange-Listed Securities, will be subject to Israel
tax at the ordinary corporate rates 36% in the 1999 tax year.
Corporate Taxes: Israeli corporations are generally subject to a tax on their
income at a rate of 36% in the 1999 tax year. Reduced tax rates apply to those
portions of a company's operations which qualify as Approved Enterprises under
the Law for the Encouragement of Capital Investments. A company which also
qualifies as a Foreign Investors' Company is entitled to further reductions in
the Corporate Tax generally applicable to Approved Enterprises.
Withholding Tax on Payment of Dividends. Non-residents of Israel who receive
dividends from Israeli corporations are generally subject to a withholding tax
of 25%.
Bilateral Income Tax Treaty: Under the bilateral income tax treaty between the
United States and Israel (the "Treaty") a resident of the United States or
Israel is exempt from capital gains tax by the other state provided certain
conditions (including the condition that such capital gains be treated as not
being attributable to a permanent establishment (i.e., the conduct of a trade or
business) in the other state are satisfied. Thus, assuming such conditions are
satisfied, the Fund's capital gains on all Israeli securities, including both
Exchange-Listed Securities and securities that are not Exchange-Listed
Securities, will be exempt from the Capital Gains Tax. In addition, any gain
realized by investors upon the sale of shares issued by the Fund will be exempt
from taxation (unless the investor is taxed in Israel on income from a permanent
establishment which is related to the shares issued by the Fund).
11
<PAGE>
Under the Treaty dividends paid with respect to Israeli securities will be
subject only to a ten percent (10%) Israeli withholding tax instead of the 25%.
The Fund believes, and has an expert opinion to that effect, that it does not
have a permanent establishment in Israel, (as defined under applicable laws) and
that therefore it is not deemed to be engaged in the trade or business of buying
and selling securities in Israel. Therefore, it is believed that the Treaty
applies to the Fund, and as a result under the Treaty no capital gain tax or
income tax shall be imposed on the Fund's capital gains. The Fund shall be
subjected to a withholding tax on dividends at a rate of 10%.
PORTFOLIO TRANSACTIONS
The Fund will generally purchase and sell securities without regard to the
length of time the security has been held. Accordingly, the rate of portfolio
turnover may be substantial. However, the Fund expects that its annual portfolio
turnover rate will not exceed 75% under normal conditions. However, there can be
no assurance that the Fund will not exceed this rate, and the portfolio turnover
rate may vary from year to year.
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Company's Board of Directors. In placing purchase and
sale orders for portfolio securities for the Fund, it is the policy of the
Adviser to seek the best execution of orders at the most favorable price. In
selecting brokers to effect portfolio transactions, the determination of what is
expected to result in the best execution at the most favorable price involves a
number of largely judgmental considerations. Among these are the Adviser's
evaluations of the broker's efficiency in executing and clearing transactions.
Over-the-counter securities are generally purchased and sold directly with
principal market makers who retain the difference in their cost in the security
and its selling price. In some instances, the Adviser feels that better prices
are available from non-principal market makers that are paid commissions
directly.
12
<PAGE>
DISTRIBUTION FEES
Amidex Funds, Inc. (the "Company") has adopted distribution plans (the
"Distribution Plans"), pursuant to Rule 12b-1 under The Investment Company Act
of 1940, as amended, by Class of Shares, for each Fund. The Distribution Plans
provide for fees to be deducted from the average net assets of the Funds in
order to compensate the Adviser or others for expenses relating to the promotion
and sale of shares of each Fund.
Under the Class A Plan, the Class A shares of each Fund compensate the Adviser
and others for distribution expenses at a maximum annual rate of 0.25% (of
which, the full amount may be service fees), payable on a monthly basis, of the
Fund's average daily net assets attributable to Class A shares.
Under the Class B Plan, the Class B Shares of the Fund compensate the Adviser
and others for distribution and service fees at an annual rate of 1.00% (0.25%
of which is a service fee) payable on a monthly basis, of the Fund's average
daily net assets attributable to Class B shares. Amounts paid under the Class B
Plan are paid to the Adviser and others to compensate it for services provided
and expenses incurred in the distribution of Class B shares, including the
paying of commissions for sales of Class B shares. The Class B Plan is designed
to allow investors to purchase Class B shares without incurring a front-end
sales load and to permit the distributor to compensate authorized dealers for
selling such shares. Accordingly, the Class B Plan combined with the CDSC for
Class B shares is to provide for the financing of the distribution of Class B
shares.
Under the Class C Plan, Class C Shares of the Fund compensate the Adviser and
others for distribution and service fees at an annual rate of 1.00% (0.25% of
which is a service fee) payable on a monthly basis, of the Fund's average daily
net assets attributable to Class C shares. Amounts paid under the Class C Plan
are paid to the Adviser and others to compensate it for services provided and
expenses incurred in the distribution of Class C shares, including the paying of
ongoing "trailer" commissions for sales of Class C shares. The Class C Plan is
designed to allow investors to purchase Class C shares without incurring a
front-end sales load or a CDSC charge, and to permit the distributor to
compensate authorized dealers for selling such shares. Accordingly, the Class C
Plan's purpose is to provide for the financing of the distribution of Class C
shares.
The Distribution Plans provide that the Fund may finance activities which are
primarily intended to result in the sale of the Fund's shares, including but not
limited to, advertising, printing of prospectuses and reports for other than
existing shareholders, preparation and distribution of advertising materials and
sales literature, and payments to dealers and shareholder servicing agents.
13
<PAGE>
The Distribution Plans are reviewed annually by the Company's Board of
Directors, and may be renewed only by majority vote of the shareholders of the
Fund's Classes, or by majority vote of the Board, and in both cases also a
majority vote of the disinterested Directors of the Company, as that term is
defined in the 1940 Act.
The Board of Directors has determined that a consistent cash flow resulting from
the sale of new shares is necessary and appropriate to meet redemptions and to
take advantage of buying opportunities without having to make unwarranted
liquidations of portfolio securities. The Board therefore believes that it will
likely benefit the Fund to have monies available for the direct distribution
activities of the Distributor in promoting the sale of the Fund's shares, and to
avoid any uncertainties as to whether other payments constitute distribution
expenses on behalf of the Fund. The Board of Directors, including the non-
interested Directors, has concluded that in the exercise of their reasonable
business judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plans will benefit the Fund and its shareholders.
The Plans have been approved by the Funds' Board of Directors, including all of
the Directors who are non-interested persons as defined in the 1940 Act. The
Plans must be renewed annually by the Board of Directors, including a majority
of the Directors who are non-interested persons of the Funds and who have no
direct or indirect financial interest in the operation of the Plans. The votes
must be cast in person at a meeting called for that purpose. It is also required
that the selection and nomination of such Directors be done by the
non-interested Directors. The Plans and any related agreements may be terminated
at any time, without any penalty: 1) by vote of a majority of the non-interested
Directors on not more than 60 days' written notice, 2) by the Underwriter on not
more than 60 days' written notice, 3) by vote of a majority of the Fund's
outstanding shares, on 60 days' written notice, and 4) automatically by any act
that terminates the Underwriting Agreement with the underwriter. The underwriter
or any dealer or other firm may also terminate their respective agreements at
any time upon written notice.
The Plans and any related agreement may not be amended to increase materially
the amounts to be spent for distribution expenses without approval by a majority
of the Fund's outstanding shares, and all material amendments to the Plans or
any related agreements shall be approved by a vote of the non-interested
Directors, cast in person at a meeting called for the purpose of voting on any
such amendment.
The underwriter is required to report in writing to the Board of Directors of
the Fund, at least quarterly, on the amounts and purpose of any payment made
under the Plans, as well as to furnish the Board with such other information as
may reasonably be requested in order to enable the Board to make an informed
determination of whether the Plans should be continued.
14
<PAGE>
FUND SERVICE PROVIDERS
CUSTODIAN FirStar Bank, N.A. of Cincinnati. Ohio acts as U.S. custodian for the
Fund. As such, the Bank holds all securities and cash of the Fund, delivers and
receives payment for securities sold, receives and pays for securities
purchased, collects income from investments and performs other duties, all as
directed by officers of the Company. The Bank does not exercise any supervisory
function over the management of the Fund, the purchase and sale of securities or
the payment of distributions to shareholders.
TRANSFER AGENT Declaration Services Company ("DSC") acts as transfer, dividend
disbursing, and shareholder servicing agent for the Fund pursuant to a written
agreement with the Advisor and Fund. Under the agreement, DSC is responsible for
administering and performing transfer agent functions, dividend distribution,
shareholder administration, and maintaining necessary records in accordance with
applicable rules and regulations.
ADMINISTRATION. DSC also provides services as Administrator to the Fund pursuant
to a written agreement with the Advisor and Fund. The Administrator supervises
all aspects of the operations of the Fund except those performed by the Adviser
under the Fund's investment advisory agreement. The Administrator is responsible
for:
(a) calculating the Fund's net asset value
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the Investment Company Act of 1940
(c) preparing financial statements contained in reports to stockholders of the
Fund
(d) preparing the Fund's federal and state tax returns
(e) preparing reports and filings with the Securities and Exchange Commission
(f) preparing filings with state Blue Sky authorities
(g) maintaining the Fund's financial accounts and records
DISTRIBUTOR Declaration Distributors, Inc., 555 North Lane, Suite 6160,
Conshohocken, PA 19428, a wholly-owned subsidiary of The Declaration Group,
serves as distributor and principal underwriter of the Fund's shares pursuant to
a written agreement with the Adviser and Fund.
INDEPENDENT AUDITORS McCurdy & Associates, CPAs, Inc., 27955 Clemens Road,
Westlake, Ohio 44145 serves as the Company's independent auditors for its first
fiscal year.
LEGAL COUNSEL: The Law Offices of David D. Jones, P.C., PMB # 134, 518 Kimberton
Road, Phoenixville, PA 19460, has passed on certain matters relating to this
registration statement and serves as counsel to the Fund.
15
<PAGE>
PART C
OTHER INFORMATION
Item 23 Exhibits
A. ARTICLES OF INCORPORATION OF REGISTRANT- Incorporated by reference from
Pre-Effective Amendment # 2, filed on March 2, 1999
B. BYLAWS OF REGISTRANT- Incorporated by reference from Pre-Effective
Amendment # 2, filed on March 2, 1999
C. NONE [Not Applicable]
D. INVESTMENT ADVISORY AGREEMENT WITH TRANSNATIONS INVESTMENTS, INC.-
Incorporated by reference from Pre-Effective Amendment # 2, filed on March
2, 1999
E. DISTRIBUTION AGREEMENT WITH DECLARATION DISTRIBUTORS, INC.- Incorporated by
reference from Pre-Effective Amendment # 2, filed on March 2, 1999
F. NONE [Not Applicable]
G. CUSTODIAN AGREEMENT WITH STAR BANK, N.A.- Incorporated by reference from
Pre-Effective Amendment # 2, filed on March 2, 1999
H. (1) OPERATING SERVICES AGREEMENT WITH TRANSNATIONS INVESTMENTS, INC.-
Incorporated by reference from Pre-Effective Amendment # 2, filed on
March 2, 1999
(2) INVESTMENT SERVICES AGREEMENT WITH DECLARATION SERVICE COMPANY-
Incorporated by reference from Pre-Effective Amendment # 2, filed on
March 2, 1999
I. OPINION OF COUNSEL- Incorporated by reference from Pre-Effective Amendment
# 2, filed on March 2, 1999
J. CONSENT OF INDEPENDENT AUDITORS- Incorporated by reference from
Pre-Effective Amendment # 2, filed on March 2, 1999
K. NONE [Not Applicable]
L. SUBSCRIPTION AGREEMENT- Incorporated by reference from Pre-Effective
Amendment # 2, filed on March 2, 1999
M. PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1- Attached as Exhibit 23M
N. FINANCIAL DATA SCHEDULE- Incorporated by reference from Pre-Effective
Amendment # 2, filed on March 2, 1999
<PAGE>
O. NONE- [Not Applicable]
Item 24. Persons Controlled by or under Common Control with Registrant.
No person is directly or indirectly controlled by, or under common control with
the Registrant.
Item 25. Indemnification.
Section 2-418 of the General Corporation Law of Maryland authorizes the
registrant to indemnify its directors and officers under specified
circumstances. Section 7 of Article VII of the bylaws of the Registrant (exhibit
2 to the registration statement, which is incorporated herein by reference)
provides in effect that the registrant shall provide certain indemnification to
its directors and officers. In accordance with section 17(h) of the Investment
Company Act, this provision of the bylaws shall not protect any person against
any liability to the registrant or its shareholders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. With respect to the indemnification provisions of any agreement
entered into by the Company, to the extent that such indemnification provisions
may be inconsistent with, or unenforceable, under any federal or state
securities law, the Company shall not be liable therefore.
Item 26. Business and Other Connections of Investment Adviser.
The Adviser has no other business or other connections.
Item 27. Principal Underwriters.
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, PA
will be the Fund's principal underwriter.
Item 28. Location of Accounts and Records.
Declaration Service Company.
555 North Lane, Suite 6160
Conshohocken, PA 19468
TransNations Investment, INC.
26 Broadway, Suite 741
New York, New York 10004
Item 29. Management Services.
Declaration Service Company.
555 North Lane, Suite 6160
Conshohocken, PA
Item 30. Undertakings.
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Philadelphia and State of Pennsylvania on the 2nd day of September 3, 1999.
Amidex Funds, Inc.
(Registrant)
By: /s/ Clifford A. Goldstein, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Name Title Date
Clifford A. Goldstein President September 3, 1999
Andrea Feist Director September 3, 1999
Ron Tira Director September 3, 1999
Brian Klazmer Director September 3, 1999
Micah Harish Director September 3, 1999
Daniel Schwartz Director September 3, 1999
<PAGE>
EXHIBIT INDEX
EXHIBIT 23M PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
<PAGE>
EXHIBIT 23M
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
Adopted September 30, 1999
RECITALS
1. AMIDEX(TM) FUNDS, INC, a corporation organized under the laws of the
State of Maryland (the "Company") is engaged in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act").
2. The Company operates as a "series company" within the meaning of Rule
18f-2 under the Act and is authorized to issue shares of beneficial interest in
various series (collectively the "Funds"). The Company, by virtue of such
arrangement, may be deemed to act as a distributor of its shares as provided in
Rule 12b-1 under the Act and desires to adopt a Plan pursuant to such Rule (the
"Plan").
3. Funds of the Company may utilize Fund assets to pay for sales or
promotional services or activities that have been or will be provided in
connection with distribution of shares of the Funds if such payments are made
pursuant to a Plan adopted and continued in accordance with Rule 12b-1 under the
Act. The Company currently offers the following series ("Funds"):
The AMIDEX35(TM) Mutual Fund (the "Fund")
4. The Company is further authorized to issue various Classes of shares
within each series. The Company has authorized the classification of the
following Classes of shares for each Fund of the Company:
o Class A shares, with a front-end sales load
o Class B shares, with a back-end contingent deferred sales charge
o Class C shares, with no sales charges but an ongoing shareholder
servicing fee; and
o No-Load shares, with no sales charges or additional ongoing
shareholder servicing fees.
5. The Directors as a whole, and the Directors who are not interested
persons of the Company (as defined in the Act) and who have no direct or
indirect financial interest in the operation of this Plan and any agreements
relating to it (the "Qualified Directors"), having determined, in the exercise
of reasonable business judgement and in light of their fiduciary duties under
state law and under Section 36(a) and (b) of the Act, that there is a reasonable
likelihood that this Plan will benefit the Funds and their shareholders, and
have approved the Plan by votes cast in person at a meeting called for the
purpose of voting on this Plan and agreements related thereto.
6. The shareholder(s) of each Class of Shares affected by this Plan have
approved the Plan.
<PAGE>
PLAN PROVISIONS
SECTION 1. EXPENDITURES
- ------------------------
(a) Purposes. Each Fund's assets may be utilized to pay for promotional
services related to the distribution of Fund shares, including personal services
provided to prospective and existing Fund shareholders, which include the costs
of: printing and distribution of prospectuses and promotional materials; making
slides and charts for presentations; assisting shareholders and prospective
investors in understanding and dealing with the Fund; and travel and
out-of-pocket expenses (e.g. copy and long distance telephone charges) related
thereto.
(b) Amounts. Each Fund will pay to TransNations Investments, LLC (the
"Adviser"), or others at the direction of the Adviser, a monthly distribution
fee at an annual rate of 0.25% of each Fund's net assets, on Class A, Class B,
and Class C shares, and a monthly servicing fee of 0.75% on Class B and Class C
shares, such fees to be computed daily based on the daily average net assets of
each Fund. The Adviser shall utilize such fees to pay for sales and promotional
services related to the distribution of Fund shares, including personal services
provided to prospective and existing Fund shareholders.
SECTION 2. TERM AND TERMINATION
- --------------------------------
(a) Initial Term. This Plan shall become effective on September 30, 1999
and shall continue in effect for a period of one year thereafter unless
terminated or otherwise continued or discontinued as provided in this Plan.
(b) Continuation of the Plan. The Plan and any related agreements shall
continue in effect for periods of one year thereafter for so long as such
continuance is specifically approved at least annually by votes of a majority of
both (a) the Directors of the Company and (b) the Qualified Directors, cast in
person at a meeting called for the purpose of voting on this Plan and such
related agreements.
(c) Termination of the Plan. This Plan may be terminated as to any Class of
shares at any time by vote of a majority of the Qualified Directors, or by vote
of a majority of the outstanding voting securities of Class of shares of the
Fund affected thereby.
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SECTION 3. AMENDMENTS
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This Plan may not be amended to increase materially the amount of
distribution expenditures provided for in Section 1 hereof unless such amendment
is approved by a vote of the majority of the outstanding voting securities of
the Funds, and no material amendment to the Plan shall be made unless approved
in the manner provided for annual renewal in Section 2(b) hereof.
SECTION 4. INDEPENDENT DIRECTORS
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While this Plan is in effect with respect to the Funds, the selection and
nomination of Directors who are not interested persons of the Company (as
defined in the Act) shall be committed to the discretion of the Directors who
are not interested persons.
SECTION 5. QUARTERLY REPORTS
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The Treasurer of the Company shall provide to the Directors and the
Directors shall review, at least quarterly, a written report of the amounts
accrued and the amounts expended under this Plan for distribution, along with
the purposes for which such expenditures were made.
SECTION 6. RECORDKEEPING
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The Company shall preserve copies of this Plan and any related agreements
and all reports made pursuant to Section 5 hereof, for a period of not less than
six years from the date of this Plan, the agreements or such report, as the case
may be, the first two years in an easily accessible place.
SECTION 7. AGREEMENTS RELATED TO THIS PLAN
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Agreements with persons providing distribution services to be paid for or
reimbursed under this Plan shall provide that:
(a) the agreement will continue in effect for a period of one year and will
continue thereafter only if specifically approved by vote of a majority of
the Directors of the Company;
(b) the agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of (i) the Qualified Directors or (ii) the
outstanding voting securities of the Fund, on not more than sixty (60)
days' written notice to any other party to the agreement;
(c) the agreement will terminate automatically in the event of an
assignment; and
(d) in the event the agreement is terminated or otherwise discontinued, no
further payments will be made by the Fund after the effective date of such
action.
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