Advisor Series Prospectus
Dated September 30, 1999
AMIDEX35(TM)
MUTUAL FUND
A series of AMIDEX(TM) Funds, InC.
26 Broadway, Suite 741
New York, New York 10004
888-876-3566
The Fund offers two 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 about the
Fund's other share classes, please contact the Fund.
The Fund's investment goal is 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.
As for all mutual funds, the Securities and Exchange Commission has neither
approved nor 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 AMIDEX35(TM) Index
Risk Factors
Purchasing Shares
Redeeming Shares
Tax Considerations
Management of the Fund
Investment Advisor
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 investing primarily in the common stock of companies listed on
the AMIDEX35(TM)Index (the "Index"). The Index tracks the performance of the 35
largest market capitalization Israeli companies. Index company stocks trade in
Israel on the Tel Aviv Stock Exchange ("TASE"), 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 Advisor believes that the companies in the Index are experiencing, or
have the potential to experience, above-average capital growth. The Advisor
believes that investing primarily in Index companies will allow the Fund to
achieve its investment objective of capital growth over the long term.
The Advisor employs 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
invests in all 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 also to 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 grow in a similar fashion. Conversely, if the
companies in the Index decline, the value of the Index and the Fund decline
accordingly. You should be aware that there is no assurance that the Advisor
will be successful in achieving the Fund's objectives, since all investments
involve risks.
Principal Risks Of Investing In The Fund
- ----------------------------------------
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 invests primarily in the companies that are
included in the Index. When the Index was first calculated, on January 1, 1999,
4 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
that 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.
Shares and dividends of Israeli companies are often denominated in NIS (New
Israeli Shekel). 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.
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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 compare 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 Advisor'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 the Fund invests in the companies in
the Index to replicate the composition of the Index and to replicate the Index's
performance. Because the Fund invests 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 Advisor 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.
Class A Class C
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Shareholder Fees:
- -----------------
(Fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases 4.00% None
(As a percentage of offering price)
Maximum Deferred Sales Charge (Load) None 1.00%(1)
(As a percentage of redemption proceeds)
Redemption Fees None (2) None
Annual Fund Operating Expenses: Class A Class C
- ------------------------------- ------- -------
(Expenses that are deducted from Fund assets)
Management Fees (3) 0.50% 0.50%
Distribution (12b-1) Fees (4) 0.25% 1.00%
Other Expenses (5) 1.45% 1.45%
----- -----
Total Annual Fund
Operating Expenses 2.20% 2.95%
1. Investments in Class C shares are not subject to an initial sales charge;
however, a contingent deferred sales charge of 1.00% is imposed in the
event of certain redemption transactions within thirteen months following
such investments.
2. 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.
3. Management fees include a fee of 0.50% for investment advisory services and
1.45% for administrative and other services. Both fees are paid to the
Advisor.
4. 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.
5. The Advisor is paid a fee of up to 1.45% annually, for administrative and
other services. As a result of this agreement, the Advisor is responsible
for providing, or arranging to provide, all administrative services to the
Fund, and is responsible for the payment of all fees and expenses of the
Fund except for taxes, interest, litigation expenses and other
extraordinary 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
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Class A $614 $1,061
Class C $289 $ 913
If you did not redeem your shares, your expenses would be:
1 Year 3 Years
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Class A $614 $1,061
Class C $399 $ 913
Class C $399 $ 913
A maximum sales charge of 4.00% is included in the Class A Share expense
calculations in both examples. The maximum contingent deferred sales charge
applicable to each time period is included in the Class C expense calculations
for redemptions.
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 about investing 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 are 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 30 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."
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, the Czech Republic, the
Slovak Republic, Poland, and Hungary.
Between 1950 and 1997, Israel's gross domestic product (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 has
university or other advanced degrees. Israel has the highest per capita
concentration of scientists and technicians of any country in the world and has
the world's greatest per capita number of engineers or doctors (135 per 10,000
workers). In addition, in recent years Israel experienced an extraordinary
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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 the
influx of scientists and physicians from the former Soviet Union and also due to
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 does any other nation except the
U.S. Israel is second only to the United States in new high-technology start-up
companies. Direct foreign investments in Israel grew to more than $2 billion in
1998, from virtually none in1990.
Israel's economy has surged ahead of many European nations. Its 1998 $16,000 per
capita GDP places Israel among the developed Western European countries, in
large part due to technology exports. Technology exports now account for about
1/2 of all Israel's exports. Exports from Israel more than doubled between 1992
and 1998. Israeli companies, especially high-technology 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 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 lift partially their trade boycotts of Israel.
As a result of progress in the peace process and 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 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 eventual
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 financial services, government procurement, and cooperation in research
and development, additional agricultural products, and improve Israel's access
to
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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 FTA agreement
with the United States also has resulted in 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 joined certain
O.E.C.D. committees in an observer status.
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 TASE 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 index 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. 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. A company is
an "Israeli company" if:
o Its stock is traded on the Tel Aviv Stock Exchange (TASE), 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:
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.
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The largest (as measured by market capitalization) 35 Israeli companies that
satisfy all the criteria described above are 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 the component 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.
The Index is a market capitalization index. Calculation of the Index began 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, in U.S. dollars.
Some Israeli companies that trade on the TASE have multiple classes of stock,
each of which individually may 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
Advisor's opinion, there are exceptional circumstances.
The Index name, rules, methods of calculation, and proprietary data are owned by
the Advisor. The Advisor developed the criteria and the rules of operation for
the Index. The Advisor 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 may assist in selecting the companies that will be
included in or deleted from the Index, based on the criteria described above.
The TASE provides information regarding the Israeli companies participating in
the Index. Bloomberg L.P. is responsible for maintaining and publishing the
Index. Bloomberg L.P. has no affiliation with the Fund or the Advisor. The
Advisor may, if necessary, select an alternative independent company to maintain
and publish the Index in the future.
When companies are added to or deleted from the Index, the Advisor 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 Advisor will attempt to maintain a correlation coefficient of at least 0.95
in performance between the Index and the Fund. This means that the Advisor will
attempt to replicate at least 95% of the Index's performance. The Advisor is
responsible for tracking the Fund's performance, under the supervision of the
Advisor'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 Advisor has determined that, in order to construct the Fund's portfolio to
reflect fully the performance of the Index, the Fund must have approximately $25
million in net assets. Until such an asset level is reached, the Advisor may
invest Fund assets in a representative sample of Index securities and such other
permissible securities as the Advisor deems likely to track Index performance
most closely. You should be aware that there is no
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assurance that the Advisor 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 that are traded publicly 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 concentrates 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 invests in the common stock of
companies included in the Index that trade on the TASE, NYSE, the AMEX, or
NASDAQ.
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 prorated 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 the 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, 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
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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 countries. 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.
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 3 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 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 Advisor determines, under the supervision
of the Board of Directors, to be illiquid or restricted. Illiquid securities are
generally defined as securities that cannot be liquidated within 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 such an 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 Advisor's opinion, doing so may secure an advantageous yield or
price to the Fund that might otherwise be unavailable. The Fund has not
established a 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
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U.S. dollars or non-U.S. currencies, in an amount equal to the aggregate fair
market value of its commitments to such transactions.
FUTURES AND OPTIONS ON THE ISRAELI SHEKEL. The Fund may enter into futures
contracts relating to the Israeli Shekel, may write (i.e., sell) covered put and
call options on such securities, and may purchase put and call options on such
securities. The Fund may use futures and options to decrease the Fund's exposure
to the effects of changes in the Israeli Shekel against the U.S. Dollar, or to
seek higher investment returns when a futures or options contract is priced more
attractively than the existing foreign exchange rate between the Shekel and the
U.S. Dollar. 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 5% of the Fund's total net assets.
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 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
capitalization can be riskier investments than larger capitalized companies, due
to their lack of experience, product diversification, cash reserves, or lack of
management depth. Neither the Fund nor the Fund's Advisor 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 affect negatively the Fund's correlation with 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 NIS as
well. The Fund is subject to the risk that the value of the NIS 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 high inflation rates. 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
10
<PAGE>
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 to those applicable to US
companies do differ in some respects. In particular, financial statements
generally must be adjusted to reflect the effects of 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 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.
The Fund's NAV is determined on days on which the NYSE 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
entitled, "Purchasing and Redeeming Shares" and "Tax Information" for more
information about 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 two classes of shares, so that you can choose the class that
suits best your investment needs. The main differences between the classes are
sales charges and ongoing fees. In choosing the 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. Both classes of
shares in the Fund represent interests in the same portfolio of investments in
the Fund.
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 $ 49,999 4.00% 3.50%
$50,000 to $ 99,999 3.50% 3.00%
$100,000 to 249,999 3.00% 2.50%
250,000 to 499,999 2.50% 2.00%
500,000 to 999,000 1.50% 1.00%
1,000,000 or more 0.00% 0.00%
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 1 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 change 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 Advisors for their clients, broker/dealers with wrap fee accounts,
registered investment Advisors or brokers for their own accounts, employees and
employee related accounts of the Advisor, 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 2.00% on your $60,000 purchase instead of the normal 3.50% on that
purchase, because you had accumulated more than $500,000 total in the Fund.
Letter of intent
- ----------------
You can qualify immediately 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 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.
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<PAGE>
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 servicing fee of 0.25% of average
daily net assets and an additional 12b-1 shareholder distribution 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 CDSC of 1.00% of the value of your redemption if
you redeem your shares within 13 months from the date of purchase. You will not
be charged a CDSC on reinvested dividends or capital gains, amounts purchased
more than 1 year prior to the redemption, and increases in the value of your
shares.
FACTORS TO CONSIDER WHEN CHOOSING A SHARE CLASS
When deciding on a 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
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 lower ongoing expenses on
Class A shares. To help you make a determination as to which class of shares to
buy, please refer 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, for each Class of Shares, for the Fund. The Distribution
Plans provide for fees to be deducted from the average net assets of the Funds,
in order to compensate the Advisor 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 Advisor
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 C Plan, Class C Shares of the Fund compensate the Advisor and
others for distribution and service fees at an annual rate of 1.00% (0.75% of
which is a distribution 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 Advisor and others to compensate it for services provided
and expenses incurred in the distribution 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.
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<PAGE>
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
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 $1,000 $100 per month
minimum
- --------------------------------------------------------------------------------
Opening and Adding To Your Account
- ----------------------------------
You can invest in Advisor Series shares of the Fund through participating
financial service professionals. After you have established your account, you
may make subsequent purchases by telephone. You may also make subsequent
investments in the Fund through an automatic payment plan. Any questions you may
have can be answered by calling 1-888-876-3566 or by contacting your financial
Advisor.
Purchases through Financial Service Organizations
- -------------------------------------------------
You may purchase shares of the Fund through participating brokers, dealers, or
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
are 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.
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<PAGE>
Automatic Investment Plan
- -------------------------
You may purchase Class A 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 option on the application form. You may only
select an account maintained at a domestic financial institution that 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.
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(TM)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:
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 being: mailed to an
address other than the address of record, made payable to other than the
registered owner(s); or transferred shares to another owner.
The redemption price per share is the net asset value per share, next determined
after your redemption order is received by the Fund, less any applicable CDSC
charges. 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 in such an event, and you
will have 60 days to bring your account balance up to the minimum level 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 7 days after receipt by the Fund of a
request for redemption in proper form. If shares are purchased by check and
redeemed by letter
14
<PAGE>
within 7 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
U.S. Taxes and Pass Through to Shareholders:
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 must 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 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 the number 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 Advisor 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.
15
<PAGE>
Israeli Taxes:
The following is a short summary of Israeli taxes that may be imposed on the
Fund. The following discussion is based partially 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.
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
that 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
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 Advisor
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 Advisor, and administrator. The
day-to-day operations of the Fund are delegated to the Advisor. 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
series of shares of common stock (each a "Fund") and to classify or reclassify
any unissued shares with respect to such series. The Company currently offers
the Fund as its only series.
The Board is further empowered to classify and reclassify shares of each series
into various classes of shares. Currently the Company has authorized the
following classes of Shares for each series of the Company: (1) Class A shares,
with a front-end sales load, (2) Class B shares, with a contingent deferred
sales load: (3) Class C shares, with no sales charges but an additional ongoing
shareholder distribution fee; and (4) No-Load shares, with no sales charges.
Shareholders of each share class are entitled to: (i) one vote per full share;
(ii) such distributions as may be declared by the Company's Board of Directors
out of funds legally available; and (iii) participate ratably in the assets
available for distribution upon liquidation. 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.
16
<PAGE>
INVESTMENT ADVISOR
TransNations Investments, LLC (the "Advisor") has entered into an Investment
Advisory Agreement (the "Advisory Agreement") with the Fund to provide
investment management services to the Fund. In addition, the Advisor 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 1.95% of daily net asset value of the Fund, excepting Rule 12b-1
fees, brokerage, interest, taxes, litigation, or other extraordinary expenses.
Clifford A. Goldstein is President and Chief Executive Officer of the Advisor.
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(TM)Funds, Inc. The mission statement of the Advisor 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 Advisor. 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, Series 7 and Series 63 certificates, an
Investment Advisor and Analyst Diploma from Tel Aviv University, and a Trader
Certificate from the Tel Aviv Stock Exchange. Mr. Rahav joined the Advisor in
February 1999.
The Advisor invests the assets of the Fund according to the Fund's investment
objectives, policies, and restrictions. The Fund pays the Advisor a fee, accrued
daily and payable monthly, at an annual rate of 0.50% of the Fund's net assets.
The Advisor 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 Advisor also pays all expenses of marketing shares of the Fund,
and related bookkeeping.
SERVICES AGREEMENT. Under the terms of the Services Agreement, the Advisor,
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
Advisor 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 Advisor on the last day of each
month a fee equal to an annual rate of 1.45% of the average net asset value of
the Fund. This fee is computed daily based upon the net asset value of the Fund.
The Advisor 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 Advisor 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.
17
<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 Advisor is a newly formed
company. All of the computer programs purchased by the Advisor 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 ensure
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 or 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 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.
The Fund and the Advisor 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 Advisor.
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 upon 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 Advisor.
18
<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.amidex.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 AMIDEX35(TM) 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
