FORM N-1A
As filed with The Securities and Exchange Commission on May 12,1999
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. __
Post-Effective Amendment No. __
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amemdment no. __
THE MEDICAL FUND AND THE CURE FOR CANCER INC.
(Exact Name of Registrant as Specified in Charter)
344 Van Buren Street,
North Babylon, New York 11704
(Address of Principle Executive Office)
516-893-5326
(Registrants Telephone Number, Including Area Code)
Approximate Date of Proposed Public Offering:
The Registrant hereby amends this Registration Statement on such a date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall become
effective on such a date as the Commision, acting pursuant to said section 8(a),
may determine.
<PAGE>
THE MEDICAL FUND AND THE CURE FOR CANCER INC.
Cross Reference Sheet
(as required under rule 495)
PART A - INFORMATION REQUIRED IN PROSPECTUS
N-1A Item Number Location In Registration Statement
1. Cover Page Cover Page
2. General Description Fund Summary
3. Risk/Return Summary Fund Summary
4. Fund Performance Past Performance
5. Fund Expenses Fund Expenses
6. Investment Objectives Investment Objectives and Strategies
7. Management of the Fund Management of the Fund
8. Shareholder Information Distribution of Shares,How to Purchase
Shares, How to Redeem Shares
9. Taxation of the Fund Distribution and Taxes
10. Financial Statements Financial Highlights
11. Year 2000 Compliance Year 2000 Issue
12. Fund Service Providers Fund Service Providers
<PAGE>
PART B- STATEMENT OF ADDITIONAL INFORMATION
13. Cover Page Cover Page
and Table of Contents
14. Description of Fund Investment Objectives, Strategies and Risk,
and Investment Risks Investment Restrictions, Tempory Investments
15. Management of the Fund Management of the Fund
16. Control Persons and Control Persons and Principal Holders
Pricipal Holders of Securities of Securities
17. Investment Adviser and Investment Adviser, Admistrative Services,
and Other Fund Services Custodian
18. Capitalization Capitalization
19. Purchase Redemption Pricing of Shares, Purchasing Shares,
and Pricing Redemption of Shares
20. Brokerage Brokerage
21. Taxationof the Fund Taxes
22. Performance Information Performance Information
23. Auditors Auditors
24. Financial Statements Finacial Statements
PART C
Information required to be in Part C is set forth under the appropriate item,
so numbered, in part C of this Registration Statement.
<PAGE>
May 12, 1999
The Medical Fund and the Cure
for Cancer,Inc.
[picture]
Prospectus
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of the
prospectus. Any representation to the contrary is a criminal
offense
<PAGE>
TABLE OF CONTENTS
Fund Summary 1
Past Performance Information 2
Fund Expenses 3
Investment Objectives and Strategies 4
Management Of The Fund 5
Distribution Of Shares 6
Pricing of Fund Shares 6
How To Purchase Shares 7
How To Redeem Shares 8
Distribution And Taxes 9
Financial Highlights 10
Year 2000 Issue 11
You may obtain the following and other information on The Medical
Fund and the Cure for Cancer, Inc. free of charge:
Statement of Additional Information (SAI) dated May 12, 1999
The SAI for the fund provides more details about the fund's
policies and management. The fund's SAI, is incorporated by
reference into this prospectus.
Annual and Semi-Annual Report
The annual and semi-annual reports provide the fund's most recent
portfolio listings. The annual report contains a discussion of
the market conditions and investment strategies that affected the
fund's performance during the last fiscal year.
You may receive any of the above documents of the documents of
The Medical Fund and the Cure for Cancer ,Inc. by:
Telephone:
(516) 893-5326
Mail:
The Medical Fund and the Cure for Cancer
344 Van Buren Street
North Babylon, NY 11704
Internet:
http://www.sec.gov (text only version)
SEC:
You may also receive a text only version of fund documents upon
payment of a duplicating fee, by writing the Public Reference
Room of the SEC, Washington, D.C. 20549-6009. Information about
the Fund (including the SAI) can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Please call the
SEC at 1-800-SEC-0330 for information relating to the operation
of the Public Reference Room.
<PAGE>
The Medical Fund and the Cure for Cancer, Inc.
Fund Summary
Investment Objectives
The Medical Fund's primary investment objective is long-term
growth of capital. The Fund seeks to achieve this goal by
investing primarily in the common stocks and securities
convertible into common stocks of domestic and foreign companies
engaged in the field of Cancer treatment research and Medical and
Pharmaceutical research and development. Although the Fund has a
particular interest in investment opportunities in the fields of
cancer research and treatment, it is not limited solely to this
sub-field of the medical-care industry. The Fund seeks to obtain
current income as a secondary objective.
Principal Investment Strategies
The Fund's strategy to achieve its goal is to invest companies
that engage in Cancer treatment research Medical and
Pharmaceutical research and that are involved in the development
of Medical-care and Pharmaceutical related treatment and
technologies. The fund's investment adviser believes that the
field of medical and pharmaceutical research offers unique
investment opportunities because of continuous innovations and
progress in the treatment, prevention, and cure of cancer.
Medical and Pharmaceutical treatment technologies are constantly
changing, developing and advancing, benefiting people across the
globe. Keeping that in mind, the fund invests in common stock
and other securities of companies whose research and development
efforts with respect to medical care consumption and usage may
result in higher stock values.
Principal Risk of Investing in the Fund
Investing in common stock has inherent risks that could cause you
to lose money. The principal risks of investing in this fund are
listed below and could adversely affect the fund net asset value
yield and total return.
Stock Market Risk: Stock mutual funds are subject to stock
market risks and significant fluctuations in value. If the stock
market declines in value, the fund is likely to decline in value.
Stock Selection Risk: The stocks selected by the investment
adviser may decline in value or not increase in value when the
stock market in general is rising.
Liquidity Risk: The investment adviser may not be able to
sell stocks at an optimal time or price.
Industry Risk: Mutual funds that invest in a particular
industry carry a risk that a group of related stocks will decline
in price due to industry specific development. Companies in the
same or similar industries may share common characteristics and
are more likely to react to industry specific market or economic
developments.
Medical and Pharmaceutical Industry Specific Risks: Medical
and Pharmaceutical-related companies are generally subject to the
rate of change in technology, which is higher than other
industries.In addition, many products and services of companies
engaged in the medical and pharmaceutical related activities are
also subject to relatively high risks of rapid obsolescence
caused by progressive scientific and technological advances.
Management Risk: The investment adviser has no previous
experience managing a mutual fund.
Who May Want to Invest
This fund may be appropriate for people who:
wish to invest for a long term.
want to diversify their portfolios.
want to allocate some portion of their long-term investments
to aggressive equity investing
are willing to accept a high degree of volatility and risk
in exchange for the opportunity to realize greater financial
gains in the future.
Because the fund concentrates its investments in a single
industry (i.e., the Medical/Pharmaceutical Industry), its shares
do not represent a complete investment program and the value of
the shares may fluctuate more than shares invested in a broader
range of industries.
<PAGE>
Past Performance Information
Because the Medical Fund and the Cure for Cancer is a new mutual
fund and has not been in existence for a notable period, no
performance data is available. When the Fund has been
operational for a period that allows for the accurate and
beneficial compilation of data regarding performance, such
information will be made public immediately. The performance
data, once compiled, will be made available and distributed to
investors and prospective investors in the manner shown below.
The bar chart and table shown below illustrates the variability
of the fund's returns. The bar chart indicates the risks of
investing in the fund by showing the changes in the fund's
performance from year to year (on a calendar year basis). The
table shows how the fund's average annual returns compare with
those of the S&P 500 Index and the NASDAQ Composite Index both of
which represent broad measures of market performance. The fund's
past performance is not necessarily an indication of how the fund
will perform in the future.
(CHART)
Best Quarter: - - -
Worst Quarter: - - -
Average Total Returns as of 12/31/98
1 Year Since Inception
The Medical Fund and the Cure N/A N/A
for Cancer
S&P 500 Index (with dividends - N/A
reinvested)1
Lipper Health/Biotech Index - N/A
1 The S&P 500 Index is an unmanaged index created by Standard
& Poor's Corporation that is considered to represent U.S. stock
market performance in general and is not an investment product
available for purchase. The fund returns presented above include
operating expenses (such as management fees, transaction costs,
etc.) that reduce returns, while the return of the S&P 500 Index
does not. An individual who purchases an investment product
which attempts to mimic the performance of the S&P 500 Index will
incur expenses such as management fees, transaction costs, etc,
that reduce returns.
2 Lipper Health/Biotech Index is a measure of the performance
of mutual funds concentrating in the health and biotech sector.
<PAGE>
Fund Expenses
As an investor, you pay certain fees and expenses in connection
with the fund. These fees are described on the table below and
further explained in the example that follows.
Fee Table
Shareholder Transaction
Expenses
(fees paid directly from your
investment)
Maximum Sales Charge on Purchases None
(as a percentage of offering
price)
Maximum Deferred Sales Charge None
Maximum Sales Charge on None
Reinvested Dividends
Redemption Fee1 None
Exchange Fee IRA Trustee Fee $15.00
$15 Annually
Estimated Annual Operating Expenses
(expenses deducted from fund assets)
Management Fees 1.25%
Rule 12b-1 Fees .25%
Other Expenses .50%
Total Fund Operating Expenses 2.00%
Although no sales loads or transaction fees are charged,
you will be assessed fees for outgoing wire transfers,
returned checks and stop payment orders.
Expense Example
The example below is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds. The example assumes that:
1. You invest $1000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those
periods,
2. Your investment has a 5% return each year, and
3. 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:
1 Year 3 Years
$20 $63
<PAGE>
Investment Objectives and Strategies
Investment Objectives
The Medical Fund's primary investment objective is long-term
growth of capital. The Fund seeks to achieve this goal by
investing primarily in the common stocks and securities
convertible into common stocks of domestic and foreign companies
engaged in the field of Medical and Pharmaceutical research, with
a particular, but not limiting interest, in cancer related
medical research companies. The Fund seeks to obtain current
income as a secondary objective.
Investment Strategies
Under normal circumstances, at least 80% of the fund's total
assets will be invested in the securities of companies engaged in
Cancer treatment research and Medical and Pharmaceutical related
activities. The fund's investment adviser believes that
favorable investment opportunities are available through
companies that are developing technology, products, and/or
services in the field of Cancer research and treatment.
Accordingly, the fund seeks to invest in common stock and
convertible securities of companies whose research and
development efforts, may result in higher stock values.
In addition to evaluating trends in corporate revenues, earnings
and dividends, the adviser measures the amount of capital a
company currently expends on research and development. The
adviser believes that dollars invested in research and
development today frequently have significant bearing on future
growth.
Portfolio securities generally will be selected from companies in
the following groups:
Pharmaceutical Development Companies: Companies that develop
drugs and medications for the treatment and prevention of disease
and illness.
Surgical and Medical Instrument Manufacturers and
Developers: Companies that produce, manufacture and develop the
tools used by health care providers in the delivery of medical
care and procedures.
Pharmaceutical Manufacturers: Companies that primarily
engage in the mass production of existing drugs and medicines.
Medical Research Companies: Companies who primarily research
and develop new methods and procedures in the provision of health
care related services.
Temporary Investments
To respond to adverse market, economic, political or other
conditions, the fund may invest up to 100% of its assets in U.S.
and foreign short-term money market instruments. The fund may
invest up to 35% of its assets in these securities to maintain
liquidity. Some of the short-term money instruments include:
commercial paper
certificates of deposit, demand and time deposits and
banker's acceptance
U.S. government securities
repurchase agreements
To the extent the fund engages in this temporary, defensive
strategy, the fund may not achieve its investment objective.
The Statement of Additional Information contains more information
about the fund and the types of securities in which it may
invest.
<PAGE>
Management of the Fund
Investment Adviser
The fund's investment adviser is Kinetics Holdings Corporation,
Inc., 344 Van Buren Street, North Babylon, New York, 11704. The
management and affairs of the fund are supervised by its Board of
Directors whose name and general background information appear in
the Statement of Additional Information. The adviser conducts
investment research and supervision for the fund and is
responsible for the purchase and sale of securities for the funds
portfolio. The adviser receives an annual fee from the fund for
its services of 1.25% of the fund's average daily net assets.
Bruce P. Abel is the President of Kinetics Holdings Corporation,
and is co-manager of the fund. His primary duties include
research and analysis of developing scientific technologies and
innovations in the Medical, Bio-technical and Pharmaceutical
industries. Mr. Abel has over ten years experience in the fields
of science, chemistry, physics, and engineering. Mr. Abel has
been employed with a National Laboratory since 1989 where he
worked researching, developing and implementing technical and
scientific programs and systems in the areas of nuclear physics,
computer programming, and industrial design. Mr. Abel was a
freelance writer for Academic Science News and Review,
researching, reporting, and providing scholarly analysis and
insight on a myriad of issues and developments in the fields of
science and technology. Mr. Abel holds a Masters Degree in
Mechanical Engineering with an emphasis on Nuclear Engineering,
and also has studied extensively in the areas of Applied
Mathematics, Hydrodynamics, Aerodynamics, and Physics.
Peter Doyle is co- portfolio manager of the Fund and is primarily
responsible for the day-to-day management of the fund's assets
and securities. He has been the portfolio manager for the fund
since inception. In addition to his position with Kinetics, Mr.
Doyle is a research analyst and portfolio manager with Horizon
Asset Management, Inc., a New York-based investment advisory
firm. Mr. Doyle's managed portfolios have significant exposure
to Pharmaceutical stocks. Prior to joining Horizon in 1994, Mr.
Doyle was a senior investment officer in the Investment Services
Group at Bankers Trust Co. He was responsible for managing
approximately $250 million in equity and fixed-income assets. In
an analytical role, he served on several research subgroups.
During Mr. Doyle's ten years at Bankers Trust oversaw
approximately $500 million in equity assets. Peter Doyle is also
a founder of The Internet Fund.
James G. Doyle Executive Vice President and General Counsel. Mr.
James Doyle is a securities attorney with his own practice.
Magaret B. Doyle Chairman Emeritus. Mrs. Doyle was superintendent
of North Babylon UFSD and past CEO of The Internet Fund.
Fund Administrator, Fund Accounting and Transfer Agent
The Medical Fund and the Cure for Cancer, Inc . 344 Van Buren
Street, North Babylon, New York, 11704 serves as its own
administrator and transfer agent. As such, The Fund provides
certain shareholder services and record management services as
well as acts as its own dividend paying agent.
Custodian
Firstar Bank Milwaukee, N.A, an affiliate of Firstar Mutual Fund
Services, LLC located in Milwaukee, Wisconsin acts as custodian
of the fund's assets.
<PAGE>
Distribution of Shares
The fund is self-distributed, which means that you may purchase
shares directly from the fund itself.
Pricing of Fund Shares
Shares of the fund are sold at their net asset value per share
("NAV"), which is determined by the fund as of the close of
regular trading (generally 4:00 p.m. eastern time) on each day
that the New York Stock Exchange is open for unrestricted
business. Purchase and redemption requests are priced at the
next NAV calculated after receipt and acceptance of a completed
purchase or redemption request. The NAV is determined by
dividing the value of the fund's securities, cash and other
assets, minus all expenses and liabilities, by the number of
shares outstanding (assets-liabilities/ #of shares = NAV). The
NAV takes into account the expenses and fees of the fund,
including management, distribution and shareholder servicing
fees, which are accrued daily.
The fund's portfolio securities are valued each day at the last
quoted sales price on the securities principal exchange. If
market quotations are not readily available, securities will be
valued at their fair market value as determined in good faith, or
in accordance with procedures approved by the Board of Trustees.
The fund may use independent pricing services to assist in
calculating the NAV.
How To Purchase Shares
Shares of the fund may be purchased on any business day through
authorized investment dealers or directly from the fund's
Distributor. Except for the fund itself, only the investment
dealers that have a sales agreement with the fund are authorized
to sell shares of the fund.
Shares of the fund are sold at net asset value, without a sales
charge, and will be credited to a stockholder's account at the
net asset value next computed after an order is received. The
minimum initial investment for Regular Accounts is $2,000 and
for Individual Retirement Accounts is $1,000. Minimum subsequent
investments for both types of accounts is $100. The Fund
management reserves the right to reject any purchase order if, in
its opinion, it is in the Fund's best interest to do so.
Purchase By Mail
To purchase fund shares by mail, simply complete and sign the
enclosed New Account Application Form and mail it, along with a
check or money order made payable to The Medical Fund and the
Cure For Cancer, to:
The Medical Fund and the Cure for Cancer, Inc.
344 Van Buren Street
North Babylon, NY 11704
For Overnight or Express Mail, send to:
The Medical Fund and the Cure for Cancer
344 Van Buren Street
North Babylon, NY 11704
Subsequent Investments
You may add to your account at any time by purchasing shares by
mail (minimum $100), by telephone (minimum $100), or by wire
(minimum $1,000). You must call to notify the fund (516) 893-
5236 before wiring. A remittance form which is attached to your
individual account statement should accompany any investments
made through the mail. All purchase requests must include your
shareholder account number.
Individual Retirement Accounts
You may invest in the fund by establishing a tax-sheltered
individual retirement account. The fund offers Traditional IRA,
Roth IRA, and Educational IRA. For additional information on IRA
options, please call (516) 893-4200
<PAGE>
How To Redeem Shares
In General
You may redeem part or all of your fund shares on any business
day that the fund calculates NAV. To redeem shares, you must
contact the fund either by mail or by phone to place a redemption
order. Redemption orders for $50,000 or more must be in writing.
The fund will normally mail the redeemed proceeds the next
business day and, in any event, no later than seven days after
the receipt of a redemption request in good order. Note,
however, that when a purchase order has been made by check, the
fund may hold payment of the redemption proceeds until it is
satisfied that the check has cleared. This may take up to 12
days.
Redemption requests will be sent to the address of record. If
the proceeds of a redemption are requested to be sent to an
address other than the address of record or if the address of
record has been changed within 15 days of the redemption request,
the request must be in writing with your signature guaranteed.
Signature guarantees can be obtained from banks and securities
dealers, but not from a notary public. The fund is not
responsible for interest lost on redemption amounts due to lost
or misdirected mail.
Written Redemption
Most redemptions can be executed by the investor furnishing an
unconditional written request to the Fund to redeem his or her
shares at the current NAV. Redemption requests in writing should
be sent to the Transfer Agent at:
The Medical Fund and the Cure for Cancer, Inc.
344 Van Buren Street
North Babylon, NY 11704
Overnight Express Mail requests should be forwarded to:
The Medical Fund and the Cure for Cancer
344 Van Buren Street
North Babylon, NY 11704
Requests for redemption must
indicate the name of the Fund
be signed exactly as the shares are registered, including
the signature of each owner
specify the number of shares or dollar amount to be redeemed
indicate your account registration number, and
include the investor's social security number or tax
identification number
Telephone Redemption
If you are set up to perform telephone transactions (either
through your New Account Application or by subsequent arrangement
in writing with the fund) you may redeem shares in any amount up
to $50,000, but not less than $100 by instructing the fund by
phone at (516) 893-5326. A signature guarantee is required of
all shareholders in order to qualify for or to change telephone
redemption privileges.
Note: Neither the fund nor any of its service contractors will be
liable for any loss or expense in acting upon instructions that
are reasonably believed to be genuine. To confirm that all
telephone instructions are genuine, the fund will use reasonable
procedures, such as requesting:
That a shareholder correctly state his or her fund account
number,
The name in which his or her account is registered;
The social security or tax identification number under which
the account is registered,
Address of the account holder, as stated in the New Account
Application.
Wire Redemption
Wire transfers may be arranged to redeem shares. However, the
transfer agent charges a $12 fee per wire redemption against your
account. The minimum wire redemption is $1,000.
Systematic Withdrawal Plan
If you own shares with a value of $10,000 or more, you may
participate in the Systematic Withdrawal Plan. The Systematic
Withdrawal Plan allows you to make automatic withdrawals from
your account at regular intervals. Funds will be transferred
from your fund account to the account you chose at the interval
you select on the New Account Application form. If you expect to
purchase additional fund shares, it may not be to your advantage
to participate in the Systematic Withdrawal Plan because of the
possible adverse tax consequences of making contemporaneous
purchases and redemptions.
The Fund's Right to Redeem an Account
The fund reserves the right to redeem the shares of any
shareholder whose account balance is less than $500, other than
as a result of a decline in the value per share of the Fund or if
the shareholder is an active participant in the AutoInvest Plan.
The fund will provide a shareholder a 30-day written notice prior
to redeeming the account.
IRA Redemption
If you are an IRA shareholder, you must indicate on your
redemption request whether or not to withhold federal income tax.
Requests that do not indicate a preference will be subject to
withholding.
<PAGE>
Distribution and Taxes
Distributions
Distributions (whether treated for tax purposes as ordinary
income or long-term capital gains) to stockholders of the Fund
are paid in additional shares of the fund, with no sales charge,
based on the fund's net asset value as of the close of business
on the record date for such distributions. However, you may
elect on the application form to receive distributions as
follows:
Option 1: To receive income dividends in cash and capital gain
distributions in additional fund shares, or
Option 2: To receive all income dividends and capital gain
distributions in cash.
The Fund intends to pay any dividends from investment company
taxable income and distributions representing capital gain at
least annually, usually in November. The Fund will advise each
stockholder annually of the amounts of dividends from investment
company taxable income and of net capital gain distributions
reinvested or paid in cash to the stockholder during the calendar
year.
If you select Option 1 or Option 2 and the U.S. Postal Service
cannot deliver your checks, or if your checks remain uncashed for
six months, your distribution checks be will reinvested in your
account at the then current net asset value and your election
will be converted to the purchase of additional shares.
Taxes
The fund intends to continue to qualify and elect to be taxed as
a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). In any taxable
year in which the fund so qualifies and distributes at least 90%
of its investment company taxable income (which includes, among
other items, dividends, interest, and the excess of realized net
short-term capital gain over realized net long-term capital
loss), the fund generally will be relieved of Federal income tax
on its investment company taxable income and net capital gain
(the excess of realized net long-term capital gain over realized
net short-term capital loss) distributed to stockholders.
Amounts not distributed on a timely basis in accordance with a
calendar distribution requirement are also subject to a
nondeductible 4% excise tax. To prevent application of the
excise tax, the fund intends to make its distributions in
accordance with the calendar year distribution requirement. A
distribution will be treated as paid on December 31 of the
calendar year if it is declared by the fund in October, November,
or December of that year to stockholders of record on a date in
such a month and paid by the fund during January of the following
calendar year. Such distributions will be taxable to
stockholders in the calendar year the distributions are declared,
rather than the calendar year in which the distributions are
received.
Distributions from investment company taxable income are taxable
to stockholders as ordinary income. Distributions of net capital
gains designated by the Fund as capital gains dividends are
taxable as long-term capital gains regardless of the length of
time a stockholder may have held shares of the fund. The tax
treatment of distributions treated as ordinary income or capital
gains will be the same whether the stockholder reinvests the
distributions in additional shares or elects to receive them in
cash. Stockholders will be notified each year of the amounts and
nature of dividends and distributions, including the amount (if
any) for that year that has been designated as capital gains
distributions. Investors should consult their tax advisers for
specific information on the tax consequences of particular types
of distributions.
<PAGE>
Financial Highlights
Because The Medical Fund and the Cure for Cancer is a mutual
fund of very recent inception, there are no financial
performance data to report. When the fund has become
operational for a period of time such that the compilation of
such data is practicable and beneficial to investors, the
information will be made immediately available. Such data
regarding the financial status of the Fund will be in the form
as shown below.
The financial highlights table set forth below is intended to
help you understand the fund financial performance for the
fund period of operations. Most of the information reflects
financial results with respect to a single fund share. The
total returns in the tables represent the rates that an
investor would have earned (or lost) on an investment in a
fund (assuming reinvestment of all dividends and
distributions).
Year ended December 31
1998 1997 1996(1)
Net asset value, beginning
of period N/A N/A N/A
Income from investment
operations N/A N/A N/A
Net realized and
unrealized gain (loss) N/A N/A N/A
Net unrealized gain
(loss)on investments N/A N/A N/A
Total income (loss) from
investment operations N/A N/A N/A
Net Asset Value, end of
period N/A N/A N/A
Total Return N/A N/A N/A
Capital Stock Transactions N/A N/A N/A
Net proceeds from sales of
shares N/A N/A N/A
Shares redeemed N/A N/A N/A
Net asset value, end of
period N/A N/A N/A
Total return(2)
Ratios & Supplemental data N/A N/A N/A
Actual net assets, end of
period N/A N/A N/A
(000's omitted)
Ratio of Expenses to
Average Net Assets N/A N/A N/A
Ratio of Net Income to
Average Net Assets N/A N/A N/A
Expense
waiver/reimbursement N/A N/A N/A
Portfolio Turnover Rate N/A N/A N/A
(1) The fund's inception was on April 31, 1999. Because this is
a new fund, no information is available with respect to the above
financial highlights.
(2) Based on net asset value.
<PAGE>
Year 2000 Issue
Like other mutual funds, financial and business
organizations and individuals around the world, the fund could be
adversely affected if the computer systems used by the adviser,
the administrator and other service providers do not properly
process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000
Problem." The investment adviser and the administrator are
taking steps that they believe are reasonably designed to address
the Year 2000 Problem with respect to computer systems that they
use. The investment adviser and administrator are also obtaining
reasonable assurances that comparable steps are being taken by
the fund's other major service providers.
Although there can be no assurance at this time that there
will be no adverse impact on the fund, the fund's service
providers have advised the fund that they have been actively
working on necessary changes to their computer systems to prepare
for the year 2000. The fund's service providers expect that
their systems, and those of other parties they deal with, will be
adapted in time for that event. However, there can be no
assurance that the computer systems of the companies in which the
fund invests will be timely converted or that the value of such
investments will not be adversely affected by the year 2000
issue.
Fund Service Providers
Investment Kinetics Holdings Corporation.
Adviser 344 Van Buren Street
North Babylon, NY 11704
Legal Counsel Beckman, Millman, Sanders LLP
116 John Street
New York, NY 10038
Independent McCurdy and Associates CPA's, Inc.
Accountants 27955 Clemems Rd.
Westlake, OH 44145
Transfer Agent, Kinetics Holdings Corporation.
Fund 344 Van Buren Street
Administrator North Babylon, NY 11704
Custodian Firstar Bank Milwaukee, N.A.
615 East Michigan Street
Milwaukee, WI 53202
You may obtain the following and other information on The Medical
Fund and the Cure for Cancer, Inc. free of charge:
Statement of Additional Information (SAI) dated May 12, 1999
The SAI for the fund provides more details about the fund's
policies and management. The fund's SAI, is incorporated by
reference into this prospectus.
Annual and Semi-Annual Report
The annual and semi-annual reports provide the fund's most recent
portfolio listings. The annual report contains a discussion of
the market conditions and investment strategies that affected the
fund's performance during the last fiscal year.
You may receive any of the above documents of The Medical Fund
and the Cure for Cancer, Inc. by:
Telephone:
(516) 893-5326
Mail:
The Medical Fund and the Cure for Cancer, Inc.
344 Van Buren Street
North Babylon, NY 11704
Internet:
http://www.sec.gov (text only version)
SEC:
You may also receive a text only version of fund documents upon
payment of a duplicating fee, by writing the Public Reference
Room of the SEC, Washington, D.C. 20549-6009. Information about
the Fund (including the SAI) can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. Please call the
SEC at 1-800-SEC-0330 for information relating to the operation
of the Public Reference Room.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE MEDICAL FUND AND THE CURE FOR CANCER INC.
344 Van Buren Street,
North Babylon, NY 11704
(516) 893-4200
May 12, 1999
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional is not a prospectus but should be
read in conjunction with the Fund's current Prospectus dated
May 12, 1999. To obtain the Prospectus, please write the Fund
or call either of the telephone numbers shown above.
THE MEDICAL FUND AND THE CURE FOR CANCER INC.
The Fund 1
Investment Objectives, Strategies, and Risks 1
Investment Restrictions 2
Temporary Investments 3
Management of the Fund 4
Control Persons and Principal Holders of Securities 5
Investment Adviser 5
Administrative Services 6
Custodian 6
Capitalization 7
Pricing of Shares 7
Purchasing Shares 7
Redemption of Shares 8
Brokerage 9
Taxes 9
Performance Information 10
Auditors 11
Financial Statements 12
<PAGE>
The Fund
The Medical Fund and the Cure for Cancer Inc. (the "Fund") was
incorporated in Maryland on March 26, 1999. The Fund's
registered office is in North Babylon, New York, with its
principal office at 344 Van Buren Street, North Babylon, New York
11704. The Fund is a diversified, open-end management investment
company.
Investment Objectives, Strategies, and Risks
The Fund's primary investment objective is long-term growth of
capital - a goal it seeks by investing primarily in common stocks
and securities of domestic companies engaged in Cancer treatment
research and Medical and Pharmaceutical-related activities
relating to the prevention, treatment, and/or cure for cancer.
Although the Fund has a particular interest in investment
opportunities in the filed of cancer research and treatment, it
is not limited solely to this sub-field of the medical-care
industry. Current income is a secondary objective.
Except during temporary defensive periods, not less than 80% of
the Fund's total assets will be invested in the securities of
companies engaged in Cancer treatment research and Medical and
Pharmaceutical-related activities. As a diversified investment
company, at least 75% of the Fund's total assets are required to
be invested in securities limited in respect of any one issuer to
not more than 5% of the Fund's total assets and to not more than
10% of the issuer's voting securities.
Common and Preferred Stock
Common stocks are units of ownership of a corporation. Preferred
stocks are stocks that often pay dividends at a specific rate and
have a preference over common stocks in dividend payments and
liquidation of assets. Some preference stocks may e convertible
into common stock. Convertible securities are securities that
may be converted into or exchanged for a specified amount of
common stack of the same or different issuer within a particular
period of time at a specified price or formula.
Convertible Debt Securities
The Fund may invest in debt securities convertible into common
stocks. Debt purchased by the Fund will consist of obligations
of medium-grade or higher, having at least adequate capacity to
pay interest and repay principal. Non-convertible debt
obligations will be rated BBB or higher by S&P, or Baa or higher
by Moody's. Convertible debt obligations will be rated B or
higher by S&P or B or higher by Moody's. Securities rated Baa by
Moody's are considered by Moody's to be medium-grade securities
and have adequate capacity to pay principal and interest. Bonds
in the lowest investment grade category (BBB) have speculative
characteristics, with changes in the economy or other
circumstances more likely to lead to a weakened capacity of the
bonds to make principal and interest payments than would occur
with bonds rated in higher categories. Securities rated B are
referred to as "high-risk" securities, generally lack
characteristics of a desirable investment, and are deemed
speculative with respect to the issuer's capacity to pay interest
and repay principal over a long period of time. See "Appendix"
to this Statement of Additional Information for a description of
debt security ratings.
Fixed-Income Securities
The fixed-income securities in which the Fund may invest are
generally subject to two kinds of risk: credit risk and market
risk.
Credit risk relates to the ability of the issuer to meet interest
and principal payments, as they come due. The ratings given a
security by Moody's and S&P provide a generally useful guide as
to such credit risk. The lower the rating given a security by
such rating service, the greater the credit risk such rating
service perceives to exist with respect to such security.
Increasing the amount of Fund assets invested in unrate or lower-
grade securities, while intended to increase the yield produced
by those assets, also will increase the credit risk to which
those assets are subject.
Market risk relates to the fact that the market values of
securities in which the Fund may invest generally will be
affected by changes in the level of interest rates. An increase
in interest rates will tend to reduce the market values of such
securities, whereas a decline in interest rates will tend to
increase their values. Medium- and lower-rated securities (Baa
or BBB and lower) and non-rated securities of comparable quality
tend to be subject to wilder fluctuations in yields and market
values than higher-rated securities. Medium-rated securities
(those rated Baa or BBB) have speculative characteristics while
lower-rated securities are predominantly speculative. The Fund
is not required to dispose of debt securities whose ratings are
downgraded below these ratings subsequent to the Fund's purchase
of the securities. Relying in part on ratings assigned by credit
agencies in making investments will not protect the Fund from the
risk that fixed-income securities in which the Fund invests will
decline in value, since credit ratings represent evaluations of
the safety of principal, and dividend and interest payments on
preferred stocks and debt securities, not the market values of
such securities, and such ratings may not be changed on a timely
basis to reflect subsequent events.
At no time will the Fund have more than 5% of its total assets
invested in any fixed-income securities that are unrated or are
rated below investment grade either at the time of purchase or as
a result of a reduction in rating after purchase.
<PAGE>
Investment Restrictions
The Fund is subject to certain investment restrictions described
here, which may be changed only with the approval of the holders
of a majority of the Fund's outstanding shares.
1. The Fund will not act as underwriter for securities of other
issuers except to the extent the Fund may be deemed an
underwriter in selling its own portfolio securities.
2. The Fund will not make loans. The purchase of a portion of
a readily marketable issue of publicly distributed bonds,
debentures or other debt securities will not be considered the
making of a loan.
3. With respect to 75% of its total assets, the Fund will not
invest more than 5% of its assets in the securities of any one
issuer (except securities issued or guaranteed by the U.S.
Government, its agencies, and instrumentality's).
4. With respect to 75% of its total assets, the Fund will not
invest in the securities of any issuer if as a result the Fund
holds more than 10% of the outstanding securities or more than
10% of the outstanding voting securities of such issuer.
5. The Fund will not borrow money or pledge, mortgage, or
hypothecate its assets except to facilitate redemption requests
that might otherwise require untimely disposition of portfolio
securities and then only from banks and in amounts not exceeding
the lesser of 10% of its total assets valued at cost or 5% of its
total assets valued at market at the time of such borrowing,
pledge, mortgage, or hypothecation and except that the Fund may
enter into futures contracts and related options.
6. The Fund will not invest more than 10% of the value of its
net assets in illiquid securities, restricted securities, and
other securities for which market quotations are not readily
available.
7. The Fund will not invest in the securities of any one
industry except the Cancer research, Medical and Health-Care
related industries, with the exception of securities issued or
guaranteed by the U.S. Government, its agencies, and
instrumentality's, if as a result, more than 20% of the Fund's
total assets would be invested in the securities of such
industry. Except during temporary defensive periods, not less
than 80% of the Fund's total assets will be invested in the
securities of companies engaged in Cancer treatment research and
Medical and Health-Care related activities. Except during
temporary defensive periods, the Fund would normally expect at
least 90% of its total assets to be so invested.
8. The Fund will not purchase or sell commodities or commodity
contracts, or invest in oil, gas or mineral exploration or
development programs or real estate except that the Fund may
purchase and sell securities of companies that deal in oil, gas,
or mineral exploration or development programs or interests
therein.
9. The Fund will not issue senior securities.
If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage
resulting from a change in value in the Fund's portfolio
securities will not constitute a violation of such limitation.
<PAGE>
Temporary Investments
Due to the changing nature of the Medical and Pharmaceutical
industry, the national economy and market conditions, the Fund
may, as a temporary defensive measure, invest without limitation
as to the amount in money market securities with a rating of A2-
P2 or higher.
In order to have funds available for redemption and investment
opportunities, the Fund may also hold a portion of its portfolio
in cash or U.S. short-term money market instruments.
Certificates of deposit purchased by the Fund will be those of
U.S. banks having total assets at the time of purchase in excess
of $1 billion, and bankers' acceptances purchased by the Fund
will be guaranteed by U.S. or foreign banks having total assets
at the time of purchase in excess of $1 billion. The Fund
anticipates that not more than 10% of its total assets will be so
invested in money market instruments or held in cash at any given
time, except when the Fund is in a temporary defensive posture
Portfolio Turnover
In order to qualify for the beneficial tax treatment afforded
regulated investment companies, and to be relieved of Federal tax
liabilities, the Fund must distribute substantially all of its
net income to stockholders generally on an annual basis. Thus,
the Fund may have to dispose of portfolio securities under
disadvantageous circumstances to generate cash or borrow cash in
order to satisfy the distribution requirement. The Fund does not
trade in securities for short-term profits but, when
circumstances warrant, securities may be sold without regard to
the length of time they have been held.
<PAGE>
Management of the Fund
Board of Directors
The Fund is managed by a board of directors. The Fund's board of
directors consist of five individuals, three of whom are not
"interested persons" of the Fund as that term is defined in the
1940 Act. The directors are fiduciaries for the fund's
shareholders and are governed by the laws of the State of New
York in this regard. They establish policies for the operation
of the Fund and appoint the officers who conduct the daily
business of the Fund.
Officers and directors are listed below with their addresses,
present positions with the Fund and principal occupations.
Name and Address Age Position Principal Occupation
during the Past Five
Years
Bruce P. Abel* 35 President, Mechanical Engineer,
282 Snedecor Treasurer, Nuclear Engineer,
Avenue and Director Project Engineer,
Bayport, NY 11705 Brookhaven National
Laboratory
James G. Doyle, 46 Secretary Attorney and Counselor
Esq.* and Director at Law,
175 Church St. James G. Doyle Law
Saratoga Springs, Firm.
NY 12866
Steven Russell 36 Independent Attorney and Counselor
146 Fairview Director at Law,
Avenue Steven Russell Law
Bayport, NY 11705 Firm.
Professor of Business
Law, Suffolk County
Community College
Douglas Cohen, 36 Certified Public
C.P.A Accountant
86 Samuel Street Douglas Cohen CPA
Ronkonkoma, NY
11779
John Meditz 50 Investment Adviser
21 Hamilton St.
Wehawken, NJ
*Interested persons as defined in the 1940 Act.
Compensation
For their service as directors, the independent directors receive
a $99 per meeting attended, as well as reimbursement for expenses
incurred in connection with attendance at such meetings. The
interested trustees of the Fund receive no compensation for their
service as directors. The table below details the amount of
compensation received by the directors from the Fund for the past
fiscal year. Presently, none of the executive officers receive
compensation from the Fund.
Name and Aggregate Pension or Estimated Total
Position Compensat Retirement Annual Compensation
ion From Benefits Benefits from Fund
Fund Accrued As Upon Paid to
Part of Retirement Directors
Fund
Expenses
Bruce P. Abel* None None None None
Director,
President and
Treasurer
James G. Doyle, None None None None
Esq.*
Director and
Secretary
Steven Russell, None None None None
Esq.
Independent
Director None None None None
Douglas Cohen,
C.P.A.
Independent
Director
*This trustee is deemed to be an interested person as defined in
the Investment Company Act of 1940.
<PAGE>
Control Persons and Principal Holders of Securities
Currently, there are no control persons or principal holders of
securities of the fund. Control persons are persons deemed to
control the Fund because they own beneficially over 25% of the
outstanding equity securities. Principal holders are persons
that own beneficially 5% more of the Fund's outstanding equity
shares.
Management Ownership
As a group, the officers and directors of the Fund own less than
1% of the outstanding shares of the Fund.
Investment Adviser
Kinetics Holdings Corporation is a New York corporation that
serves as an investment adviser to the Fund. Bruce P. Abel is the
president and treasurer of Kinetics Holdings Corporation. Mr.
Abel has more than 10 years experience the scientific and
research field, including chemistry, engineering, and physics.
On April 10, 1999 the Board of the Directors of the Fund approved
a management and advisory contract with Kinetics Holdings
Corporation. This Agreement continues on a year-to-year basis
provided that specific approval is voted at least annually by the
Board of Directors of the Fund or by the vote of the holders of a
majority of the outstanding voting securities of the Fund. In
either event, it must also be approved by a majority of the
directors of the Fund who are neither parties to the Agreement
nor interested persons as defined in the Investment Company Act
of 1940 at a meeting called for the purpose of voting on such
approval. The Investment Adviser's decisions are made subject to
direction of the Fund's board of directors. The Agreement may be
terminated at any time, without the payment of any penalty, by
the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund. Ultimate decisions as
to the investment policy and as to individual purchases and sales
of securities are made by the Fund's officers and directors
Under the Agreement, Kinetics Holdings Corporation furnishes
investment advice to the Fund by continuously reviewing the
portfolio and recommend to the Fund when, and to what extent,
securities should be purchased or disposed. Pursuant to the
Agreements, the Investment Advisor:
(1) renders research, statistical and Advisory services to the
Fund;
(2) makes specific recommendations based on the Fund's
investment requirements;
(3) pays the salaries of those of the Fund's employees who may
be officers or directors or employees of the Investment Advisor.
For these services, the Fund has agreed to pay to Kinetics
Holdings Corporation a annual fee of 1.25% of the Fund's average
daily net assets. All fees are computed on the average daily
closing net asset value of the Fund and are payable monthly. The
fee is higher than the fee paid by most other funds.
Fees of the custodian, administrator, fund accountant and
transfer agent are paid by the Fund. The Fund pays all other
expenses, including:
fees and expenses of directors not affiliated with the
Advisor;
legal and accounting fees;
interest, taxes, and brokerage commissions; and
record keeping and the expense of operating its offices.
<PAGE>
Administrative Services
The Fund's advisor provides administrative services to the fund.
Administrative services include, but are not limited to,
providing office space, equipment, telephone facilities, various
personnel, including clerical and supervisory, and computers, as
is necessary or beneficial to:
1. establish and maintain shareholders' accounts and records,
process purchase and redemption transactions,
process automatic investments of client account cash
balances,
2. answer routine client inquiries regarding the Fund,
assist clients in changing dividend options,
account designations, and addresses, and
providing such other services as the Fund may reasonably
request.
Custodian
Firstar Bank Milwaukee, N.A. is custodian for the securities and
cash of the Fund. Under the Custodian Agreement, Firstar Bank
Milwaukee, N.A. holds the Fund's portfolio securities in
safekeeping and keeps all necessary records and documents
relating to its duties. The custodian receives an annual fee
equal to 0.015% of the Fund's average daily net assets with a
minimum annual fee of $3,000.
<PAGE>
Capitalization
The authorized capitalization of the Fund consists of 20,000,000
shares of common stock of $0.001 par value per share. Each share
has equal dividend, distribution and liquidation rights. There
are no conversion or preemptive rights applicable to any shares
of the Fund. All shares issued are fully paid and non-
assessable. Each holder of common stock has one vote for each
share held. Voting rights are non-cumulative.
Pricing of Shares
Shares of the Fund are sold on a continual basis at the net asset
value per share next computed following acceptance of an order by
the Fund. The Fund's net asset value per share for the purpose
of pricing purchase and redemption orders is determined at the
close of normal trading (currently 4:00 p.m. Eastern Time) on
each day the New York Stock Exchange is open for trading. The
NYSE is closed on the following holidays: New Year's Day, Martin
Luther King, Jr.'s Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day.
Securities listed on a U.S. securities exchange or Nasdaq for
which market quotations are readily available are valued at the
last quoted sale price on the day the valuation is made. Price
information on listed securities is taken from the exchange where
the security is primarily traded. Options, futures, unlisted
U.S. securities and listed U.S. securities not traded on the
valuation date for which market quotations are readily available
are valued at the mean of the most recent quoted bid and asked
price.
Fixed-income securities (other than obligations having a maturity
of 60 days or less) are normally valued on the basis of quotes
obtained from pricing services, which take into account
appropriate factors such as institutional sized trading in
similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics and other market
data. Fixed-income securities purchased with remaining
maturities of 60 days or less are valued at amortized cost if it
reflects fair value. In the event that amortized cost does not
reflect market, market prices as determined above will be used.
Other assets and securities for which no quotations are readily
available (including restricted securities) will be valued in
good faith at fair value using methods determined by the Board of
Directors of the Fund.
Purchasing Shares
Shares of the Fund are sold in a continuous offering and may be
purchased on any business day though authorized investment
dealers or directly from the Fund. Except for the Fund itself,
only the investment dealers that have a sales agreement with the
Fund are authorized to sell shares of the Fund.
Stock Certificates and Confirmations
The Fund does not intend to issue stock certificates representing
shares purchased. Confirmations of the opening of an account and
of all subsequent transactions in the account are forwarded by
the Fund to the stockholder's address of record.
Special Incentive Programs
At various times the Fund may implement programs under which a
dealer's sales force may be eligible to win nominal awards for
certain sales efforts or recognition program conforming to
criteria established by the Fund, or participate in sales
programs sponsored by the Fund. In addition, the Adviser, in its
discretion may from time to time, pursuant to objective criteria
established by the Adviser, sponsor programs designed to reward
selected dealers for certain services or activities that are
primarily intended to result in the sale of shares of the Fund.
These program will not change the price you pay for your shares
or the amount that the Fund will receive from such sale.
Investing Through Authorized Dealers
If any authorized dealer receives an order of at least $1,000,
the dealer may contact the Fund directly. Orders received by
dealers by the close of trading on the New York Stock Exchange on
a business day that are transmitted to the Fund by 4:00 p.m. EST
on that day will be effected at the net asset value per share
determined as of the close of trading on the New York Stock
Exchange on that day. Otherwise, the orders will be effected at
the next determined net asset value. It is the dealer's
responsibility to transmit orders so that they will be received
by the Distributor before 4:00 p.m. EST.
<PAGE>
Redemption of Shares
To redeem shares, shareholders may send a written request to:
The Medical Fund and the Cure for Cancer Inc.
344 Van Buren Street,
North Babylon, NY 11704
(516) 893-4200
The written letter of instructions must include:
the shareholder's name,
the fund name,
the account number,
the share or dollar amount to be redeemed, and
signatures by all shareholders on the account.
The proceeds will be wired to the bank account of record or sent
to the address of record within seven days.
If shareholders request redemption proceeds be sent to an address
other than that on record with the funds or proceeds made payable
other than to the shareholder(s) of record, the written request
must have signatures guaranteed by:
a trust company or commercial bank whose deposits are
insured by the BIF, which is administered by the FDIC;
a member of the New York, Boston, American, Midwest, or
Pacific Stock Exchange;
a savings bank or savings association whose deposits are
insured by the SAIF, which is administered by the FDIC; or
any other ''eligible guarantor institution'' as defined in
the Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary
public.
The Fund and its transfer agent have adopted standards for
accepting signature guarantees from the above institutions. The
Fund may elect in the future to limit eligible signature
guarantors to institutions that are members of a signature
guarantee program. The Fund and its transfer agent reserve the
right to amend these standards at any time without notice.
<PAGE>
Brokerage
The Adviser requires all brokers to effect transactions in
portfolio securities in such a manner as to get prompt execution
of the orders at the most favorable price.
The Adviser selects brokers who, in addition to meeting primary
requirements of execution and price, may furnish statistical or
other factual information and services, which, in the opinion of
the Adviser, are helpful or necessary to the Fund's normal
operations. Information or services may include economic
studies, industry studies, statistical analysis, corporate
reports or other forms of assistance to the Fund or its Adviser.
No effort is made to determine the value of these services or the
amount they might have reduced expenses of the Adviser.
Other than set forth above, the Fund has no fixed policy,
formula, method or criteria that it uses in allocating brokerage
business to brokers furnishing these materials and services. The
Board of Directors evaluates and reviews the reasonableness of
brokerage commissions paid semiannually.
Taxes
Under provisions of Sub-Chapter M of the Internal Revenue Code of
1986 as amended, the Fund, by paying out substantially all of its
investment income and realized capital gains, has been and
intends to continue to be relieved of federal income tax on the
amounts distributed to shareholders. In order to qualify as a
"regulated investment company" under Sub-Chapter M, at least 90%
of the Fund's income must be derived from dividends, interest and
gains from securities transactions. No more than 50% of the
Fund's assets may be in security holdings that exceed 5% of the
total assets of the Fund at the time of purchase.
Distribution of any net long-term capital gains realized by the
Fund will be taxable to the shareholder as long-term capital
gains, regardless of the length of time Fund shares have been
held by the investor. All income realized by the Fund, including
short-term capital gains, will be taxable to the shareholder as
ordinary income. Dividends from net income will be made annually
or more frequently at the discretion of the Fund's Board of
Directors. Dividends received shortly after purchase of shares
by an investor will have the effect of reducing the per share net
asset value of his shares by the amount of such dividends or
distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains,
distributions, and redemptions) paid to shareholders who have not
complied with IRS regulations. In order to avoid this
withholding requirement, you must certify on a W-9 tax form
supplied by the Fund that your Social Security or Taxpayer
Identification Number provided is correct and that you are not
currently subject to back-up withholding, or that you are exempt
from back-up withholding.
<PAGE>
Performance Information
Total Return
Average annual total return quotations used in the Fund's
advertising and promotional materials are calculated according to
the following formula:
P(1+T)n = ERV
where P equals a hypothetical initial payment of $1,000; T equals
average annual total return; n equals the number of years; and
ERV equals the ending redeemable value at the end of the period
of a hypothetical $1,000 payment made at the beginning of the
period.
Under the foregoing formula, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last
day of the most recent quarter prior to submission of the
advertising for publication. Average annual total return, or "T"
in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the
initial amount invested to the ending redeemable value. Average
annual total return assumes the reinvestment of all dividends and
distributions.
Cumulative Total Return
Cumulative total return represents the simple change in value of
an investment over a stated period and may be quoted as a
percentage or as a dollar amount. Total returns may be broken
down into their components of income and capital (including
capital gains and changes in share price) in order to illustrate
the relationship between these factors and their contributions to
total return.
Yield
Annualized yield quotations used in a Fund's advertising and
promotional materials are calculated by dividing the Fund's
interest income for a specified thirty-day period, net of
expenses, by the average number of shares outstanding during the
period, and expressing the result as an annualized percentage
(assuming semi-annual compounding) of the net asset value per
share at the end of the period. Yield quotations are calculated
according to the following formula:
YIELD = 2[(a-b/(c-d) + 1)6 - 1]
where "a" equals dividends and interest earned during the period;
"b" equals expenses accrued for the period, net of
reimbursements; "c" equals the average daily number of shares
outstanding during the period that are entitled to receive
dividends; and "d" equals the maximum offering price per share on
the last day of the period.
For purposes of these calculations, the maturity of an obligation
with one or more call provisions is assumed to be the next date
on which the obligation reasonably can be expected to be called
or, if none, the maturity date. The average annual total return
of the fund one fiscal year and since inception is as follows:
Other Information
The Fund's performance data quoted in advertising and other
promotional materials represents past performance and is not
intended to predict or indicate future results. The return and
principal value of an investment in a Fund will fluctuate, and an
investor's redemption proceeds may be more or less than the
original investment amount.
If permitted by applicable law, the Fund may advertise the
performance of registered investment companies or private
accounts that have investment objectives, policies and strategies
substantially similar to those of the Fund.
Comparison of Fund Performance
The performance of a Fund may be compared to data prepared by
Lipper Analytical Services, Inc., CDA Investment Technologies,
Inc., Morningstar, Inc., the Donoghue Organization, Inc. or other
independent services which monitor the performance of investment
companies, and may be quoted in advertising in terms of its
ranking in each applicable universe. In addition, the Fund may
use performance data reported in financial and industry
publications, including Barron's, Business Week, Forbes, Fortune,
Investor's Daily, IBC/Donoghue's Money Fund Report, Money
Magazine, The Wall Street Journal and USA Today.
The Fund may from time to time use the following unmanaged
indices for performance comparison purposes:
S&P 500 - The S&P 500 is a Fund of 500 stocks designed to
mimic the overall equity market's industry weightings. Most, but
not all, large capitalization stocks are in the index. There are
also some small capitalization names in the index. The list is
maintained by Standard & Poor's Corporation It is market
capitalization weighted. There are always 500 issuers in the S&P
500. Changes are made by Standard & Poor's as needed.
Lipper Health/Biotech Index-The Lipper Health and Biotech Index
measures the performance of mutual funds investing in the biotech
and health care sectors.
<PAGE>
Auditors
McCurdy and Associates CPA's, Inc. serve as the Fund's
independent auditors, whose services include examination of the
Fund's financial statements and the performance of other related
audit and tax services.
Financial Statements
Because the Fund began operations in April 1999, an Annual Report
is not available for the calendar year 1998.
