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. [2]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [5]
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
4747 Research Forest Drive
Suite 180, # 303
The Woodlands, TX 77381
(281) 367-8409
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Approximate Date of Proposed Public Offering:
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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)
/X/ 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)
/ / on July 15, 2000 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 August 12, 2000
THE ISDAQ (TM)
MUTUAL FUND
26 Broadway, Suite 741
New York, New York 10004
212-425-0650
AMIDEX Funds, Inc. (the "Company") is an open-end investment management company
currently consisting of two portfolios, the AMIDEX35 Mutual Fund and The ISDAQ
Mutual Fund. The ISDAQ Mutual Fund (the "Fund") is being offered by this
Prospectus.
The minimum investment in the Fund is $2,000 for regular accounts and $2,000 for
retirement accounts or custodial accounts for minors. The minimum subsequent
investment is $1,000 for regular accounts and $250 for retirement accounts or
custodial accounts for minors.
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 crime.
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TABLE OF CONTENTS
THE BASICS ABOUT THE FUND
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FEES AND EXPENSES
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ADDITIONAL INVESTMENT INFORMATION
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THE FUND'S INVESTMENT ADVISER
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HOW TO BUY AND SELL SHARES
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DIVIDENDS AND DISTRIBUTIONS
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TAX CONSIDERATIONS
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GENERAL INFORMATION
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FOR MORE INFORMATION
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THE BASICS ABOUT THE FUND
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THE FUND'S INVESTMENT OBJECTIVE IS:
Long-term growth of capital. Current income is not a significant investment
consideration, and any such income realized will be considered incidental to the
Fund's investment objective.
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THE FUND'S PRINCIPAL INVESTMENT STRATEGIES ARE:
o normally investing at least 95% of the Fund's total assets in the common
stock of companies listed on the ISDAQ(TM)Index (the "Index"). The Index is
a new index tracking the performance of the 20 largest market
capitalization Israeli companies traded on NASDAQ. When the Index was first
calculated on January 1, 2000, the companies in the Index ranged in size
from approximately $300 million in market capitalization to over $13
billion;
o employing a "passive management" approach to investing the Fund's assets.
This means that 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 also to replicate the performance of the Index.
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THE PRINCIPAL RISKS OF INVESTING IN THE FUND ARE:
o General Risk - Like with most investments, you may lose money by investing
in the Fund.
o Stock Market Risk - The Fund is exposed to the risks of investing in common
stocks, including price risk and credit risk.
o Diversification Risk - 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, 2000, four of those companies
individually comprised more than X% of the Index and together made up about
X% of the Index. Investing in this manner is riskier than investing in a
broader variety of securities.
o Foreign Taxation Risk - 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.
o Liquidity Risk - 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 of these securities,
which could have a negative impact on the Fund.
o Management Risk - This is a new Fund without a prior operating history. The
Adviser to the Fund has one year of experience managing the AMIDEX35 Mutual
Fund. The Fund's lack of performance history and management experience may
pose additional risks.
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THE FUND INVESTS IN THE SECURITIES COMPRISING THE ISDAQ INDEX BECAUSE:
o 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. 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.
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HOW HAS THE FUND PERFORMED IN THE PAST?(1)
This is a new Fund without a prior performance history. Accordingly, performance
information is not yet available for this Fund.
FEES AND EXPENSES
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES:
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(fees paid directly from your investment)
MAXIMUM SALES CHARGE (LOAD)
IMPOSED ON PURCHASES NONE
(As a percentage of offering price)
MAXIMUM DEFERRED SALES
CHARGE (LOAD) NONE
(As a percentage of redemption proceeds)
REDEMPTION FEES NONE(1)
1. You will be charged a redemption fee equal to 2.00% of the net amount of your
redemption, if you redeem your shares less than 365 calendar days after you buy
them. If this fee is imposed, it will raise the expenses of your shares. This
fee is imposed only to discourage short-term trading of Fund shares. Such fees,
when imposed, are credited directly to the assets of the Fund to help defray the
expense to the Fund of such short-term trading activities. These fees are never
used to pay for distribution or sales fees.
ANNUAL FUND OPERATING EXPENSES:
(expenses that are deducted from Fund assets)
MANAGEMENT FEES (1) 2.20%
DISTRIBUTION & SERVICING (12B-1) FEES (2) 0.25%
OTHER EXPENSES(2) (3) 0.05%
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TOTAL ANNUAL FUND
OPERATING EXPENSES 2.50%
1. Management fees include a fee of 0.50% for investment advisory services and
1.70% for administrative services provided to the Fund by the Fund's
Adviser.
2. 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.
3. Under normal circumstances, most expenses of the Fund are the contractual
obligation of the Adviser. Accordingly, the Fund does not anticipate
incurring any "Other Expenses" during its first year.
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.
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The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be: Higher or
lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS
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$ 329 $ 703
ADDITIONAL INVESTMENT INFORMATION
The Fund's principal investment objectives and strategies have been summarized
in the "Basics About the Fund" Section of this Prospectus. What follows is
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 are 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. 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.
Celebrating over 50 years of existence, the State of Israel has significantly
improved its economic performance. 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
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treatment of its exports to certain countries pursuant to the GATT Generalized
System of Preferences.
Israel is not only rich in research, technology and intellectual investment, but
also 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
8.14% 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 1,000 securities, with a
current market capitalization of about $80 billion.
These dramatic developments 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 ISDAQ(TM) INDEX
The ISDAQ(TM) Index is a new, unmanaged Index consisting of the 20 largest
publicly traded Israeli companies traded on the NASDAQ, as measured by market
capitalization. A company is an "Israeli company" if its stock is traded on the
Tel Aviv Stock Exchange ("TASE") or the NASDAQ 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:
1. It must be a publicly traded "Israeli" company, as defined above; and
2. 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) 20 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 20 companies during
the year. If less than 20 Israeli companies meet the criteria for inclusion at
the beginning of a new calendar year, then the Index will contain only those
companies.
If a company ceases operation, is de-listed, 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
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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, 2000 at an initial Index Value of 1,000. 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. Some Index
companies trade on both the TASE and the NASDAQ. 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. Bloomberg, L.P. 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 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, the
Adviser, or any of the Fund's other service providers. The Adviser may, if
necessary, select an alternative independent company to calculate, maintain or
publish the Index in the future.
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 0.95 correlation
10.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 to construct the Fund's portfolio to
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 believes, is 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."
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THE FUND'S 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 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(TM) Funds, Inc. The mission statement of the Adviser is "To
develop and introduce Israeli-related investment vehicles to individuals and
financial institutions worldwide."
Advisory Agreement.
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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.
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.
HOW TO BUY AND SELL SHARES
BUYING SHARES
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To purchase shares of the Fund, first complete and sign a New Account Purchase
Application, included with this Prospectus, and mail it, together with your
check for the total purchase price, to:
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The ISDAQ(TM) Fund
c/o Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428.
Checks are accepted subject to collection at full face value in United States
currency. If your check does not clear, your purchase will be canceled and you
will be subject to any losses or fees incurred by the Fund with respect to the
transaction.
Each time you make a purchase, you will receive a statement showing the number
of shares purchased, the net asset value at which your shares were purchased,
and the new balance of Fund shares owned. The Fund does not issue stock
certificates. All full and fractional shares will be carried on the books of the
Fund.
DETERMINING SHARE PRICES
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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. Shares of the Fund are purchased at their net
asset value and are 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 net asset value is determined on days on which the New York Stock
Exchange is open for trading. The Fund is a No-Load Fund. This means that you
will not be charged any sales commissions or underwriting discounts.
PLAN OF DISTRIBUTION
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The Fund has adopted a Plan of Distribution, or "12b-1 Plan" under which it may
finance activities primarily intended to sell shares. Under the 12b-1 Plan, the
Fund may pay a distribution fee at an annual rate of up to 0.25% of average
daily net assets of the Fund to the Adviser for services primarily intended to
sell shares and for providing certain shareholder services. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers, and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund.
Payments under the 12b-1 Plan are not tied exclusively to the distribution
and/or shareholder servicing expenses actually incurred by the Adviser, and such
payments may exceed the expenses actually incurred. The Company's Board of
Directors evaluates the Plan on a regular basis. You should be aware that, over
time, 12b-1 fees will increase the costs of your investment, and may eventually
cost you more than other types of sales charges.
MINIMUM INVESTMENTS
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The minimum initial investment is $2,000, except for Individual Retirement
Accounts (IRAs), other pension accounts and custodial accounts for minors, where
the minimum is $2,000. Minimum subsequent purchases for regular accounts are
$1,000 and $250 for IRA, or pension accounts or custodial accounts for minors.
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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
REDEEMING SHARES
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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; and
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, trustees, 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:
a. being mailed to an address other than the address of record,
b. made payable to other than the registered owner(s); or
c. transferring shares to another owner.
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The redemption price per share is net asset value per share, next determined
after your redemption order is received by the Fund (See, "Purchasing and
Redeeming Shares" in the SAI). If you hold your shares for 365 days or longer,
there is no redemption charge. Otherwise, a fee of 2.00% of the value of your
redeemed shares will be deducted from the proceeds of your redemption and paid
to the Fund. 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. 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, regard-less 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. You will also be
subject to a redemption fee of 2.00% of total assets in such a circumstance. 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.
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Fund are derived from net investment income. Net
investment income will be distributed at least annually. The Fund's net
investment income is made up of dividends received from the stocks and other
securities it holds, as well as interest accrued and paid on any other
obligations that might be held in the Fund's portfolio.
The Fund realizes capital gains when it sells a security for more than it paid
for it. The Fund may make distributions of its net realized capital gains (after
any reductions for capital loss carry forwards), generally, once a year.
Unless you elect to have your dividends and/or distributions paid in cash, your
distributions will be reinvested in additional shares of the Fund. You may
change the manner in which your dividends are paid at any time by writing to the
Transfer Agent.
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.
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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 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 advisers for a detailed and complete review of tax
ramifications.
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.
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 $1,000 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.
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<PAGE>
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 or
international rating services and financial publications that monitor mutual
fund performance. The Fund may also, from time to time, compare its performance
to the Standard & Poor's Composite Index of 500 Stocks ("S&P 500"), or some
other widely recognized, unmanaged index of common stock prices.
FOR MORE INFORMATION
Additional information about the Fund is available in the Company's latest
Statement of Additional Information (SAI). The SAI contains more detailed
information on all aspects of the Funds. A current SAI, dated August 12, 2000
has been filed with the SEC and is incorporated by reference into this
prospectus.
To receive information without charge concerning the Fund, or to request a copy
of the SAI, please contact the Fund at:
AMIDEX FUNDS, INC.
C/O DECLARATION SERVICE COMPANY
555 NORTH LANE, SUITE 6160
CONSHOHOCKEN, PA 19460
(888) 876-3566
A copy of your requested document(s) will be sent to you within three days of
your request.
You may also receive information concerning the Funds, or request a copy of the
SAI or other documents relating to the Funds, by contacting the Securities and
Exchange Commission:
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
Investment Company Act No.
811-9123
11
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 12, 2000
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 ISDAQ Mutual Fund, dated August 12,
2000. 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
Management of the Company
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
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
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 following Funds:
AMIDEX 35 Mutual Fund
ISDAQ Mutual Fund
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 back-end contingent
deferred sales charge, (3) Class C shares, with no sales charges but an
additional ongoing shareholder distribution fee; and (4) No-Load shares, with no
sales charges.
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Shareholders of each share class 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. The Company
currently offers No-Load Shares of the ISDAQ Mutual Fund and Class A, B, C and
No-Load shares of the AMIDEX 35 Mutual Fund (each a "Fund" and together the
"Funds").
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's principal investment goals and strategies are defined in each Fund's
Prospectus. Each 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
not more than 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 Funds have not yet achieved a full year of operating
history and therefore have no reportable portfolio turnover. Higher portfolio
turnover rates may result in higher rates of net realized capital gains to a
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 Funds anticipate that their annual
portfolio turnover will be not greater than 75%.
INVESTMENT RESTRICTIONS. The complete list of each Fund's investment
restrictions is as follows:
The Funds will not:
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).
2
<PAGE>
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
or the ISDAQ Index, as applicable;
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 or the ISDAQ Index, as applicable.
10. Purchase warrants on securities, although the Funds may receive and exercise
warrants received by a 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
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.
Each Fund has also adopted the following restrictions that may be changed by the
Board of Directors without shareholder approval:
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
or the ISDAQ Index, as applicable.
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.
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<PAGE>
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"), as amended on July 15, 2000. 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 review by the Board of Directors. The
directors of the Company, including those directors who are also officers, are
listed below:
<TABLE>
<CAPTION>
Name, Age, Address, Position Principal Occupation For the
with Fund Last Five Years
---------------------------------------------------------------------------------------------
<S> <C>
Clifford A. Goldstein* (Age 41) Managing Partner and Attorney with Weber,
President and Director of Fund, Goldstein, Greenberg, Gallagher, Phil. PA, PA,
President, Controlling Partner of 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 Partner Initiatives, Ltd., Tel-Aviv, Israel, a financial
Of Adviser 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. International
Director of Fund, Minority Partner Derivatives Specialist with SBG Warburg, New York,
Of Adviser 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 minister of
Director 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
</TABLE>
* Indicates an "interested person" as defined in the Investment Company Act of
1940.
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
ISDAQ Mutual Fund prior to the effective date of the Fund's registration and
will be deemed initially to control the Fund.
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.
5
<PAGE>
PERFORMANCE INFORMATION
From time to time the Funds 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 Funds 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
Each 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 each 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, each Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, the Funds
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 Funds, 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.
6
<PAGE>
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.
Each 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. 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 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.
7
<PAGE>
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, 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.
8
<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).
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.
9
<PAGE>
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).
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 Company 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%.
10
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PORTFOLIO TRANSACTIONS
The Funds 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 Funds expect that their annual
portfolio turnover rate will not exceed 75% under normal conditions. However,
there can be no assurance that the Funds 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 Funds 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 Funds 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.
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 No-load Share and Class A Plan, each share class 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 each Fund compensate the Adviser
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 each 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 each Fund compensate the Adviser and
others for distribution and service fees at an annual rate of 1.00% (0.75% of
which is a distribution fee)
11
<PAGE>
payable on a monthly basis, of each 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 each 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 each
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 moneys 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
12
<PAGE>
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.
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") 555 North Lane, Suite 6160,
Conshohocken, PA 19428, 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: David Jones & Assoc., P.C., 4747 Research Forest Drive, Suite
180, # 303, The Woodlands, TX 77381, has passed on certain matters relating to
this registration statement and serves as counsel to the Fund.
13
<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.- (1)
Incorporated by reference from Pre-Effective Amendment # 2, filed on March
2, 1999. (2) Amendment to Investment Advisory Agreement filed herein as
Exhibit 23D
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.- (1)
Incorporated by reference from Pre-Effective Amendment # 2, filed on
March 2, 1999; (2) Amended Operating Services Agreement attached
herein as Exhibit 23H(1)
(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- Filed herein as Exhibit 23I
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-
(1) Amended Plan of Distribution Pursuant to Rule 12b-1- Attached herein
as Exhibit 23M
N. NONE
O. RULE 18F-3 PLAN- Attached herein as Exhibit 23O
<PAGE>
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 19428
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 19428
Item 30. Undertakings.
---------------------
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(a) 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 8th day of June, 2000.
AMIDEX FUNDS, INC.
(Registrant)
/s/ Clifford A. Goldstein
-----------------------------
By: 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
--------------------------------------------------------------------------------
/s/ Clifford A. Goldstein President, Director June 8, 2000
---------------------------
CLIFFORD A. GOLDSTEIN
/s/ Andrea Fiest Treasurer, Director June 8, 2000
---------------------------
ANDREA FIEST
/s/ Ron Tira Secretary, Director June 8, 2000
---------------------------
RON TIRA
/s/ Brian Klazmer Director June 8, 2000
---------------------------
BRIAN KLAZMER
/s/ Micah Harish Director June 8, 2000
---------------------------
MICH HARISH
/s/ Daniel Schwartz Director June 8, 2000
---------------------------
DANIEL SCHWARTZ
<PAGE>
EXHIBIT INDEX
EXHIBIT 23D - AMENDED INVESTMENT ADVISORY AGREEMENT BETWEEN REGISTRANT AND
TRANSNATIONS INVESTMENTS, LLC
EXHIBIT 23H(1) - AMENDED OPERATING SERVICES AGREEMENT BETWEEN REGISTRANT AND
TRANSNATIONS INVESTMENTS, LLC
EXHIBIT 23I - OPINION AND CONSENT OF COUNSEL
EXHIBIT 23M - AMENDED PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
EXHIBIT 23O - RULE 18F-3 PLAN
