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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 70 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT [X]
OF 1940
AMENDMENT NO. 26 [X]
(CHECK APPROPRIATE BOX OR BOXES)
THE AMERICAN HERITAGE FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1370 AVENUE OF THE AMERICAS, NEW YORK, NY 10019
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 212-397-3900
------------
JONATHAN B. REISMAN, 5100 TOWN CENTER CIRCLE, BOCA RATON, FL 33486
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(NAME AND ADDRESS OF AGENT FOR SERVICE)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX):
<TABLE>
<S> <C>
[ ] 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)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) [ ] ON (DATE) 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.
</TABLE>
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PART A
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THE AMERICAN HERITAGE FUND, INC.
PROSPECTUS
The Fund is a no-load mutual fund which seeks maximum capital growth.
AS WITH ALL MUTUAL FUNDS, NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY
STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
, 2000
<PAGE> 4
TABLE OF CONTENTS
Risk/Return Summary.........................................................3
Investment Objective and Principal Investment Strategies....................8
Financial Highlights.......................................................10
Management's Discussion of Our Performance.................................11
Management.................................................................11
Pricing of Shares..........................................................12
Procedures for Buying Fund Shares..........................................12
Procedures for Redeeming Fund Shares.......................................13
Distributions and Taxes....................................................14
Shareholder Services.......................................................14
Legal Proceedings..........................................................15
Custodian and Transfer Agent...............................................16
<PAGE> 5
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE
Our investment objective is to seek maximum capital growth. Income from our
investment portfolio will be only an incidental consideration and entirely
subordinate to our investment objective.
PRINCIPAL INVESTMENT STRATEGIES
We make speculative investments in small and virtually unknown companies,
including companies that have never earned a profit. We may utilize short-term
trading, hedging, leveraging through borrowing, the purchase and sale of put and
call options and warrants, the writing of listed put and call options and the
purchase of foreign securities. Through the use of these and other investment
techniques described in this prospectus, we seek to take advantage of investment
opportunities in both rising and declining markets. An investment in the Fund is
not a complete investment program. We may not, at any particular time, engage in
all or any of the investment activities described in this prospectus. The
activities may be engaged in only periodically or not at all.
Fundamental analysis plays the most important role in choosing the stocks that
we decide to purchase. We review both the available financial data as well as
the experience of the management. In the case of lesser known companies, we
often meet with their management before we make a positive investment decision.
We make our assessment of the growth potential of individual companies after our
review.
We generally identify companies as potential investments based upon our belief
in their future growth potential and the actual share price. Our intention is to
identify companies which promise a price appreciation over the following 12
months of at least 20%. We also consider companies that have fallen out of favor
and might not immediately recover to previous levels.
PRINCIPAL RISKS
Investing in securities is inherently risky, and there is no guarantee that we
will achieve our investment objective and you may lose money by investing in the
Fund. Many of the techniques which we may utilize involve greater than normal
risk and attainment of our investment objective cannot, of course, be assured.
An investment in the Fund is not a complete investment program and is designed
for investors willing to assume risks inherent in our investment policies and
practices. Investors should carefully consider all of the risks described below
as well as the risks described elsewhere in this prospectus:
* MARKET RISKS. The price of particular securities may fall because of
declines in the stock market regardless of the success of individual
companies' businesses. We invest in securities not listed in the Standard
and Poor's 500 Index. These securities may perform poorly and the Standard
and Poor's 500 Index as well as other recognized indices may
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outperform us.
* SPECULATIVE SECURITIES. We purchase securities issued by companies which
are speculative. These securities may lose all or substantially all their
value. In addition, because earnings, if any, tend to be less predictable,
market prices are more volatile and the speculative securities less liquid
than those of larger, more established companies. In the case of
speculative debt securities, changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade debt
securities. Speculative debt securities may include obligations of issuers
that are in default or in bankruptcy when we believe that the prospect of
capital appreciation outweighs the risk of investment. The risk of
investing in those securities, as well as other debt securities, can be
substantial because their value is based upon the ability of the issuer to
make all required payments of interest and principal. On December 30, 1000,
the securities of each of two companies which are speculative represented
approximately 17% and 83% of the value our net assets.
* WE ARE NOT A DIVERSIFIED INVESTMENT COMPANY. Subject only to the
restrictions described in this prospectus, we can invest without limitation
in the securities of any one or more companies.
* UNDERVALUED SECURITIES. We may purchase securities that we believe the
market undervalues in relation to their actual worth. We assume that the
market will ultimately recognize the actual worth of these companies, thus
causing their stock prices to rise. The market may, however, indefinitely
undervalue these securities, causing their prices to remain the same or
decline. In addition, our belief that the securities are undervalued may be
incorrect.
* SECURITIES PAYING LITTLE OR NO DIVIDENDS. We purchase the securities of
companies that expect their earnings to rise and which pay little, if any,
dividends. Those securities are risky because their stock prices often
decline in market downturns.
* MONEY MARKET SECURITIES. Under adverse market conditions, we could invest
some or all of our assets in money market securities. Although we would do
so only in seeking to avoid losses, it could reduce the benefit from any
upswing in the market.
* EXPENSES. Because of our extremely small size, our aggregate annual
operating expenses as a percentage of our net assets is substantially
higher than those of most other mutual funds.
* SHORT TERM TRADING. This practice may increase capital gains distributions,
which in turn would increase your tax liability. Frequent trading will also
increase our transaction costs, which may reduce our investment
performance.
* FOREIGN SECURITIES. We may purchase securities issued by companies
organized in
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foreign countries. The foreign countries may have either developed or
emerging markets. Foreign securities markets generally are not as developed
or efficient as those in the United States. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable
U.S. issuers. Similarly, volume and liquidity in most foreign securities
markets are less than in the United States and, at times, volatility of
price can be greater than in the United States. Because evidences of
ownership of foreign securities usually are held outside the United States,
we will be subject to additional risks which include possible adverse
political and economic developments, seizure or nationalization of foreign
deposits and adoption of governmental restrictions which might adversely
affect or restrict the payment of principal, interest and dividends on the
foreign securities to investors located outside the country of the issuer,
whether from currency blockage or otherwise. Moreover, foreign securities
held by us may trade on days when we do not calculate our net asset value
and thus affect the our net asset value on days when investors cannot
purchase or redeem our shares. Developing countries have economic
structures that are generally less diverse and mature, and political
systems that are less stable, than those of developed countries. The
markets of developing countries may be more volatile than the markets of
more mature economies; however, such markets may provide higher rates of
return to investors. Many developing countries have experienced
substantial, and in some periods extremely high, rates of inflation for
many years. Inflation and rapid fluctuations in inflation rates have had
and may continue to have adverse effects on the economies and securities
markets of certain of these countries. Since foreign securities often are
purchased with and payable in currencies of foreign countries, the value of
these assets as measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations.
On December 30, 1999, approximately 83% of the value of our net assets was
represented by our investment in a foreign company.
* BROAD AND FLEXIBLE INVESTMENT POWERS. Because of our broad and flexible
investment powers, our success or failure may be more dependent upon our
skill and ability and less dependent upon movement of the securities market
in general than is the case with most mutual funds whose investment powers
are not as broad or as flexible.
* BORROWING. We may borrow money to purchase additional securities. If the
investment performance of the securities purchased with borrowed monies
fails to cover our interest cost, our net asset value of the Fund will
decrease faster than would otherwise be the case. If for any reason,
including market fluctuations, the value of our assets falls below the
coverage requirement of the Investment Company Act of 1940, we may have to
sell a portion of our investments at a time when it may be disadvantageous
to do so.
* RESTRICTED AND OTHER ILLIQUID SECURITIES. We may acquire portfolio
securities called restricted securities, which are illiquid because they
can be sold only pursuant to an effective registration statement under the
Securities Act of 1933 or an exemption from such registration. We will have
to bear the risk of market conditions prior to any such registration or
exemption. In the absence of an agreement obtained at the time of purchase
of such securities, there can be no assurance that the issuer will register
the
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restricted securities. Furthermore, if we dispose of restricted securities
without registration, it may be necessary to sell them at a discount
similar to or greater than that at which we purchased the securities. Other
securities held by us may be or become illiquid. Based solely upon the
reported trading volume of securities in our portfolio, on December 30,
1999, securities representing approximately 100% of our net assets would be
considered to be illiquid. We believe, however, that on that date
substantially all of our securities were liquid. Our belief is based
primarily upon offers we have received from foreign companies, including a
company whose investment decisions are made by Heiko H. Thieme, to purchase
securities from us at their then current market values. Because the offers
may be withdrawn at any time prior to our acceptance, the degree of
liquidity of our portfolio is subject to rapid change. Although we intend
to make, and always have made, cash payments for our shares that are
redeemed by our shareholders, depending on the future liquidity of our
portfolio, we may pay for redeemed shares in kind. See "Procedures for
Redeeming Fund Shares."
* CHANGE IN MARKET PHILOSOPHY. Our principal investment strategies may fall
out of favor in the securities markets which would adversely affect our
performance.
* LITIGATION. We and certain others are defendants in a purported class
action. See "Legal Proceedings."
PAST PERFORMANCE
The bar chart and performance table below illustrate some of the risks of
investing in the Fund. The bar chart shows the changes in our performance from
year to year from January 1, 1989 to December 31, 1998. The performance table
shows how our total return for one year, five year and ten year periods ended
December 31, 1998 compared with those of the Standard and Poor's 500 Index, a
broad measure of market performance. When you review the chart and table, be
aware that past investment performance does not necessarily indicate how we will
perform in the future.
ANNUAL TOTAL RETURNS FOR EACH CALENDAR YEAR
<TABLE>
<S> <C>
1990 -30.8%
1991 97.1%
1992 19.3%
1993 41.4%
1994 -35.3%
1995 -30.6%
1996 -5.1%
1997 75.0%
1998 -61.2%
1999 -31.6%
</TABLE>
During the periods shown above, our best quarter ended on March 31, 1991 during
which we had a return of 54% and our worst quarter ended on September 30, 1998
during which we had a return of -34%. Our total return from June 1, 1999 to
December 31, 1999 was -7.2%.
AVERAGE ANNUAL TOTAL RETURNS
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One Year Five Years Ten Years
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<TABLE>
<CAPTION>
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Year Ended Five Years Ended Ten Years Ended
December 31, 1999 December 31, 1990 December 31, 1999
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<S> <C> <C> <C>
Fund -31.6% -21.1% -7.6%
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S&P 500 21.0% 28.5% 18.2%
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</TABLE>
SHAREHOLDER FEES AND EXPENSES
THE FOLLOWING TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY
AND HOLD SHARES OF THE FUND.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load) imposed on purchases
(as a percentage of offering price) None
Maximum deferred sales charge (load)
(as a percentage of offering price) None
Maximum sales charge (load) imposed on reinvested
dividends (as a percentage of offering price) None
Redemption fee (as a percentage of amount redeemed) None
Exchange fee None
ANNUAL FUND OPERATING EXPENSES
(expenses deducted from Fund assets)
Management fees 1.25%
Distribution (12b-1) and service fees None
Other expenses 7.63%
Total annual Fund operating expenses 8.88%
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:
* you invest $10,000 in the Fund for the time periods indicated;
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* you redeem all your shares at the end of those time periods;
* your investment has a 5% return each year; and
* our operating expenses remain the same.
Although your actual costs may be higher or lower, under these assumptions your
costs would be:
<TABLE>
<CAPTION>
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Number of Years 1 3 5 10
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<S> <C> <C> <C> <C>
$932 $2,678 $4,276 $7,704
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</TABLE>
INVESTMENT OBJECTIVE AND PRINCIPAL
INVESTMENT STRATEGIES
Our investment objective is to seek maximum capital growth. Income from our
investment portfolio will be only an incidental consideration entirely
subordinate to the capital growth objective. Our investment objective cannot be
changed without shareholder approval. We seek maximum capital growth by
investing primarily in companies that we believe have above average potential
for growth or whose securities are undervalued in the market.
In contrast to most mutual funds, we may seek to obtain our investment objective
through the use of certain speculative investment techniques which entail
greater than average risks which are described below. Our success or failure may
be more dependent upon our skill and ability and less dependent upon movement of
the securities market in general than is the case with most mutual funds whose
investment powers are not as broad or as flexible as ours.
Generally, more than 80% of the value of our assets, other than cash and cash
equivalents, will consist of common stocks and securities convertible into or
exchangeable for common stocks, such as rights, warrants and options. To a
limited degree, we may invest in preferred stocks and debt securities, such as
corporate bonds and debentures and securities issued by the United States
Government and its instrumentalities, when they are believed to offer
opportunities for growth of capital or are desirable in the light of prevailing
market or economic conditions. Any such debt securities we so purchase may be
either "investment grade" or speculative. Debt securities in the lowest category
of investment grade debt may have speculative characteristics and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities. Speculative debt securities may include obligations of
issuers that are in default or in bankruptcy when we believe that the prospect
of capital appreciation outweighs the risk of investment therein. Naturally, the
risk attendant to the investment in such securities, as well as other debt
securities, can be substantial inasmuch as the value thereof is based upon the
ability of the issuer to make all required payments of interest and principal.
Generally, debt securities which we
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believe to offer opportunities for growth of capital, including securities
referred to as "junk bonds," may be purchased by us when we believe (a) interest
rates will decline and, therefore, the value of the debt securities will
increase, or (b) their market value is likely to appreciate due to factors
affecting specific issuers.
We may purchase restricted securities if we receive a substantial discount from
the market value of similar unrestricted securities. In addition, we may
purchase restricted securities issued by companies who do not have any publicly
traded securities.
We may engage in active and frequent trading.
We may borrow money from banks and use the borrowed money principally to
purchase additional securities. This technique may be used in order to increase
the amount of money available to us for investment in securities believed to
have appreciation potential and to increase the amount of money available to
secure short positions. All of our assets may be pledged as collateral for bank
loans.
We may engage in short sales in an attempt to protect against downward market
movement. A short sale is made by selling a security which the seller does not
own in the hope of purchasing the same security at a later date at a lower
price. In order to make delivery to the buyer and thus effect a sale, we must
borrow the security and agree to replace the security, whatever its price may be
at the time we purchase it for delivery to the lender.
We invest in foreign companies. Although we intend to invest in foreign
companies located in nations which we consider to have relatively stable
governments, there is the possibility of expropriation, nationalization or
confiscatory taxation, taxation of income earned in a foreign country and other
foreign taxes, foreign exchange controls (which may include suspension of the
ability to transfer currency from a country), default in foreign government
securities, political or social instability or diplomatic developments which
could adversely affect investments in securities of foreign companies. issuers.
We buy securities based upon our belief that the market has undervalued them in
relation to their actual worth or because of the potential growth of the issuer
of the securities. We often blend both approaches in making our selections. In
determining which securities to sell, we select securities which we believe will
not yield performance we seek based primarily upon the foregoing criteria.
We may, from time to time, take temporary defensive positions that are
inconsistent with our principal investment strategies in attempting to respond
to adverse market, economic, political, or other conditions. During any time
that we take a defensive position, we may not achieve our investment objective.
Although we normally invest according to our investment strategy, we may invest
without limitation in preferred stocks and investment-grade debt instruments for
temporary, defensive purposes.
The value of our investments varies in response to many factors. Stock values
fluctuate in
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response to the activities of individual companies and general market and
economic conditions. Although we may use various investment techniques to hedge
a portion of our risks, we cannot assure you that these techniques will work as
we intend. We seek to spread investment risk by diversifying our holdings among
many companies and industries. When you sell or redeem your shares, they may be
worth more or less than what you paid for them.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand our financial
performance for the period of our operations. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Mathieson Aitken Jemison, LLP, whose report,
along with our financial statements, are included in our annual report, which is
available upon request.
<TABLE>
<CAPTION>
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1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C>
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Net asset value, beginning of period $0.93 $0.83 $0.76 $0.63 $1.19
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Income from investment operations
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Net investment income (loss) (0.04) (0.04) (0.03) (0.02) 0.06
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Net gains or (losses) on securities (both
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realized and unrealized) (0.61) 0.14 0.10 0.15 (0.48)
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Total from investment operations (0.65) 0.10 0.07 0.13 (0.42)
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Less distributions
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Dividends (from net investment income) 0.07
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Distributions (from capital gains)
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Returns of capital 0.07
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Total distributions 0.14
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Net asset value, end of period $0.28 $0.93 $0.83 $0.76 $0.63
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Total return (69.89)% 12.05% 9.21% 20.63% (38.37)%
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Ratio/Supplemental data
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Net assets, end of period $4,348,413 $16,890,738 $18,126,591 $21,429,753 $30,779,569
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Ratio of expenses to average net assets 8.88% 5.85% 6.42% 6.25% 3.69%
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Ratio of net income (loss) to
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average net assets -8.67% -4.08% -4.97% -3.53% 6.55%
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Portfolio turnover rate 1528% 1180% 470% 606% 620%
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</TABLE>
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MANAGEMENT'S DISCUSSION OF OUR PERFORMANCE
During our fiscal year ended Man 31, 1999, the factor that materially affected
our performance was the significant decline in market value of our largest
holding, a speculative security of a foreign issuer.
Comparison of a $10,000 investment in the Fund to the same investment in the
S&P 500 index
<TABLE>
<CAPTION>
Date AHERX AHERX AHERX $10,000 buys Mkt. Value SPX SPX $10,000 invst
1984 Month End Price Dividend Reinvest shares Index dividends gives
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan-86 2.41 211.78 0.68
Feb-86 2.46 226.92 0.69
Mar-86 2.50 238.9 0.68
Apr-86 2.33 235.52 0.69
May-86 2.16 4629.63 10,000 247.35 0.7 40.42854255
Jun-86 2.04 4629.63 9,444 250.84 0.69 40.53975167
Jul-86 1.85 4629.63 8,565 236.12 0.69 40.65821867
Aug-86 1.88 4629.63 8,704 252.93 0.7 40.7707429
Sep-86 1.86 4629.63 8,611 231.32 0.7 40.89411969
Oct-86 1.86 4629.63 8,611 243.98 0.68 41.00809625
Nov-86 1.85 4629.63 8,565 249.22 0.69 41.12163283
Dec-86 1.42 0.36 1.49 5750.68 8,166 242.17 0.69 41.23879816
Jan-87 1.56 5750.68 8,971 274.08 0.7 41.344122
Feb-87 1.70 5750.68 9,776 284.2 0.71 41.44740957
Mar-87 1.70 5750.68 9,776 291.7 0.7 41.54687198
Apr-87 1.62 5750.68 9,316 288.36 0.75 41.65493189
May-88 1.14 8771.93 10,000 10263.16 262.16 1.399 38.14464449
Jun-88 1.17 8771.93 10,263 273.5 0.682 38.23976203
Jul-88 1.09 8771.93 9,561 272.02 0.438 38.30133477
Aug-88 1.08 8771.93 9,474 261.52 1.278 38.48850633
Sep-88 1.11 8771.93 9,737 271.91 0.74 38.59325236
Oct-88 1.10 8771.93 9,649 278.97 0.506 38.66325339
Nov-88 1.06 8771.93 9,298 273.7 1.285 38.84477433
Dec-88 1.07 8771.93 9,386 277.72 0.751 38.94981691
Jan-89 1.09 8771.93 9,561 297.47 0.53 39.01921349
Feb-89 1.08 8771.93 9,474 288.86 1.216 39.18347079
Mar-89 1.08 8771.93 9,474 294.87 0.721 39.27928007
Apr-89 1.11 8771.93 9,737 309.64 0.524 39.34575192
1 May-89 1.14 8771.93 10,000 319.05 1.601 31.34304968
2 Jun-89 1.12 8771.93 9,825 317.98 0.736 31.41559665
3 Jul-89 1.15 8771.93 10,088 346.08 0.585 31.46870033
4 Aug-89 1.16 8771.93 10,175 351.45 1.373 31.59163823
5 Sep-89 1.13 8771.93 9,912 349.15 0.869 31.67026671
6 Oct-89 1.06 8771.93 9,298 340.36 0.693 31.73474989
7 Nov-89 1.05 8771.93 9,211 345.99 1.283 31.85242868
8 Dec-89 1.04 8771.93 9,123 353.4 0.887 31.93237521
9 Jan-90 1.02 8771.93 8,947 329.08 0.608 31.99137267
10 Feb-90 1.02 8771.93 8,947 331.89 1.46 32.13210425
11 Mar-90 1.02 8771.93 8,947 339.94 0.738 32.20186213
12 Apr-90 1.00 8771.93 8,772 330.8 0.672 32.26727825
13 May-90 1.03 8771.93 9,035 361.23 1.754 32.42395628
14 Jun-90 1.04 8771.93 9,123 358.02 0.775 32.49414389
15 Jul-90 0.97 8771.93 8,509 356.15 0.726 32.56038212
16 Aug-90 0.83 8771.93 7,281 322.56 1.437 32.70543814
17 Sep-90 0.74 8771.93 6,491 306.05 0.835 32.79466879
18 Oct-90 0.70 8771.93 6,140 304 0.756 32.87622396
19 Nov-90 0.70 8771.93 6,140 322.22 1.392 33.01825022
20 Dec-90 0.72 8771.93 6,316 330.22 0.971 33.1153392
21 Jan-91 0.73 8771.93 6,404 343.93 0.635 33.17648024
22 Feb-91 0.98 8771.93 8,596 367.07 1.426 33.30536482
23 Mar-91 1.11 8771.93 9,737 375.22 0.73 33.37016125
24 Apr-91 1.07 8771.93 9,386 375.34 0.762 33.43790799
25 May-91 1.11 8771.93 9,737 389.83 1.657 33.58003819
26 Jun-91 1.10 8771.93 9,649 371.16 0.824 33.65458811
27 Jul-91 1.16 8771.93 10,175 387.81 0.635 33.70969413
28 Aug-91 1.24 8771.93 10,877 395.43 1.541 33.8410616
29 Sep-91 1.24 8771.93 10,877 387.86 0.95 33.92394978
30 Oct-91 1.33 8771.93 11,667 392.45 0.603 33.97607398
31 Nov-91 1.31 8771.93 11,491 375.22 1.47 34.1091821
32 Dec-91 1.02 0.38 0.98 12207.30 12,451 417.09 0.97 34.18850768
33 Jan-92 1.14 12207.30 13,916 408.78 0.537 34.23341992
34 Feb-92 1.21 12207.30 14,771 412.7 1.382 34.34805667
35 Mar-92 1.20 12207.30 14,649 403.69 0.993 34.43254631
36 Apr-92 1.16 12207.30 14,160 414.95 0.577 34.48042576
37 May-92 1.15 12207.30 14,038 415.35 1.629 34.61565777
38 Jun-92 1.12 12207.30 13,672 408.14 1.033 34.7032698
39 Jul-92 1.10 12207.30 13,428 424.22 0.59 34.75153468
40 Aug-92 1.04 12207.30 12,696 414.03 1.514 34.878612
41 Sep-92 1.04 12207.30 12,696 417.8 1.097 34.97019132
42 Oct-92 1.11 12207.30 13,550 418.68 0.554 35.01646409
43 Nov-92 1.17 12207.30 14,283 431.35 1.547 35.14204766
44 Dec-92 1.13 0.08 1.05 13142.03 14,850 435.71 0.932 35.21721781
45 Jan-93 1.13 13142.03 14,850 438.78 0.57 35.26296697
46 Feb-93 1.24 13142.03 16,296 443.38 1.378 35.37256228
47 Mar-93 1.34 13142.03 17,610 451.67 1.059 35.45549792
48 Apr-93 1.28 13142.03 16,822 440.19 0.563 35.50084526
49 May-93 1.42 13142.03 18,662 450.19 1.741 35.63813612
50 Jun-93 1.47 13142.03 19,319 450.53 0.975 35.71526125
51 Jul-93 1.45 13142.03 19,056 448.13 0.586 35.76196453
52 Aug-93 1.52 13142.03 19,976 463.56 1.536 35.88046133
53 Sep-93 1.54 13142.03 20,239 458.93 1.075 35.96450791
54 Oct-93 1.62 13142.03 21,290 467.83 0.587 36.00963363
55 Nov-93 1.57 13142.03 20,633 461.79 1.601 36.13447701
56 Dec-93 1.53 0.07 1.49 13723.28 20,997 466.45 0.923 36.20597904
57 Jan-94 1.52 13723.28 20,859 481.61 0.683 36.25732491
58 Feb-94 1.40 13723.28 19,213 467.14 1.41 36.36676283
59 Mar-94 1.26 13723.28 17,291 445.76 1.043 36.45185465
60 Apr-94 1.22 13723.28 16,742 450.91 0.571 36.49801466
61 May-94 1.19 13723.28 16,331 456.51 1.781 36.64040577
62 Jun-94 1.09 13723.28 14,958 444.27 1.06 36.72782745
63 Jul-94 1.08 13723.28 14,821 458.26 0.588 36.77495345
64 Aug-94 1.08 13723.28 14,821 475.5 1.516 36.8922002
65 Sep-94 1.08 13723.28 14,821 462.71 1.182 36.98644191
66 Oct-94 1.04 13723.28 14,272 472.35 0.721 37.0428984
67 Nov-94 1.02 13723.28 13,998 453.69 1.482 37.1639008
68 Dec-94 0.85 0.14 0.84 15974.55 13,578 459.27 1.136 37.25582535
69 Jan-95 0.84 15974.55 13,419 470.42 0.752 37.31538145
70 Feb-95 0.81 15974.55 12,939 487.39 1.345 37.41835687
71 Mar-95 0.76 15974.55 12,141 500.71 1.039 37.49600196
72 Apr-95 0.71 15974.55 11,342 514.71 0.735 37.54954582
73 May-95 0.63 15974.55 10,064 533.4 1.841 37.67914596
74 Jun-95 0.65 15974.55 10,383 544.75 1.03 37.75038877
75 Jul-95 0.67 15974.55 10,703 562.06 0.745 37.8004262
76 Aug-95 0.65 15974.55 10,383 561.88 1.587 37.90719148
77 Sep-95 0.67 15974.55 10,703 584.41 1.17 37.98308241
78 Oct-95 0.63 15974.55 10,064 581.5 0.823 38.03684006
79 Nov-95 0.61 15974.55 9,744 605.37 1.632 38.13938251
80 Dec-95 0.59 15974.55 9,425 615.93 1.101 38.20755821
81 Jan-96 0.64 15974.55 10,224 636.02 0.849 38.2585601
82 Feb-96 0.69 15974.55 11,022 640.43 1.503 38.34834761
83 Mar-96 0.71 15974.55 11,342 645.5 1.098 38.41357841
84 Apr-96 0.76 15974.55 12,141 654.17 0.837 38.46272797
85 May-96 0.76 15974.55 12,141 669.12 1.894 38.57159993
86 Jun-96 0.69 15974.55 11,022 670.63 1.04 38.63141602
87 Jul-96 0.61 15974.55 9,744 639.95 1.067 38.69582687
88 Aug-96 0.62 15974.55 9,904 651.99 1.478 38.78354667
89 Sep-96 0.59 15974.55 9,425 687.31 1.344 38.85938593
90 Oct-96 0.59 15974.55 9,425 705.27 0.99 38.91393354
91 Nov-96 0.56 15974.55 8,946 757.02 1.512 38.99165655
92 Dec-96 0.56 15974.55 8,946 740.74 1.284 39.05924475
93 Jan-97 0.73 15974.55 11,661 786.16 0.832 39.10058149
94 Feb-97 0.79 15974.55 12,620 790.82 1.511 39.17528999
95 Mar-97 0.83 15974.55 13,259 757.12 1.269 39.24095124
96 Apr-97 0.83 15974.55 13,259 801.34 0.94 39.28698226
97 May-97 0.83 15974.55 13,259 848.28 1.816 39.37108793
98 Jun-97 1.00 15974.55 15,975 885.14 1.123 39.42103905
99 Jul-97 1.07 15974.55 17,093 954.29 1.259 39.47304744
100 Aug-97 1.09 15974.55 17,412 899.47 1.399 39.53444225
101 Sep-97 1.04 15974.55 16,614 947.28 1.422 39.59378899
102 Oct-97 0.99 15974.55 15,815 914.62 1.061 39.63971955
103 Nov-97 0.91 15974.55 14,537 955.4 1.524 39.70295059
104 Dec-97 0.98 15974.55 15,655 970.43 1.366 39.75883739
105 Jan-98 0.85 15974.55 13,578 980.28 0.872 39.79420454
106 Feb-98 0.81 15974.55 12,939 1049.34 1.602 39.85495731
107 Mar-98 0.79 15974.55 12,620 1101.75 1.283 39.90136885
108 Apr-98 0.83 15974.55 13,259 1111.75 1.08 39.94013069
109 May-98 0.93 15974.55 14,856 1090.82 1.846 40.00772157
110 Jun-98 0.76 15974.55 12,141 1133.84 1.254 40.05196915
111 Jul-98 0.85 15974.55 13,578 1120.67 1.127 40.09224735
112 Aug-98 0.49 15974.55 7,828 957.28 1.529 40.15628405
113 Sep-98 0.50 15974.55 7,987 1017.01 1.6 40.21945949
114 Oct-98 0.48 15974.55 7,668 1098.67 0.991 40.25573743
115 Nov-98 0.44 15974.55 7,029 1163.63 1.601 40.31112396
116 Dec-98 0.38 15974.55 6,070 1229.23 1.411 40.35739602
117 Jan-99 0.33 15974.55 5,272 1279.64 0.973 40.38808257
118 Feb-99 0.34 15974.55 5,431 1238.33 1.548 40.43857053
119 Mar-99 0.32 15974.55 5,112 1286.37 1.491 40.48544189
120 Apr-99 0.29 15974.55 4,633 1335.18 1.006 40.51594591
121 May-99 0.28 15974.55 4,473 1301.84 1.855 40.57367733
Jun-99 0.26 15974.55 4,153 1372.71 1.321 40.6127226
Jul-99 0.25 15974.55 3,994 1328.72 1.169 40.64845343
Aug-99 0.21 15974.55 3,355 1320.41 1.692 40.70054118
Sep-99
Oct-99
Nov-99
Dec-99
</TABLE>
<TABLE>
<CAPTION>
Since End May 89 Annual
Mkt. Value to End May 99 Changes
AT end of month Date AHF AHF SPX
<S> <C> <C> <C> <C> <C>
Jan-86
Feb-86
Mar-86
Apr-86
10,000 May-31-1986
10,169 Jun-86
9,600 Jul-86
10,312 Aug-86
9,460 Sep-86
10,005 Oct-86
10,248 Nov-86
9,987 Dec-86
11,332 Jan-87
11,779 Feb-87
12,119 Mar-87
12,012 Apr-87
10,000 May-88
10,459 Jun-88
10,419 Jul-88
10,066 Aug-88
10,494 Sep-88
10,786 Oct-88
10,632 Nov-88
10,817 Dec-88
11,607 Jan-89
11,319 Feb-89
11,582 Mar-89
12,183 Apr-89
10,000 May-89 $10,000 $10,000
9,990 Jun-89 $9,825 $9,990
10,891 Jul-89 $10,088 $10,891
11,103 Aug-89 $10,175 $11,103
11,058 Sep-89 $9,912 $11,058
10,801 Oct-89 $9,298 $10,801
11,021 Nov-89 $9,211 $11,021
11,285 Dec-89 $9,123 #DIV/0! $11,285 #DIV/0!
10,528 Jan-90 $8,947 $10,528
10,664 Feb-90 $8,947 $10,664
10,947 Mar-90 $8,947 $10,947
10,674 Apr-90 $8,772 $10,674
11,713 May-90 $9,035 $11,713
11,634 Jun-90 $9,123 $11,634
11,596 Jul-90 $8,509 $11,596
10,549 Aug-90 $7,281 $10,549
10,037 Sep-90 $6,491 $10,037
9,994 Oct-90 $6,140 $9,994
10,639 Nov-90 $6,140 $10,639
10,935 Dec-90 $6,316 -30.77% $10,935 -3.10%
11,410 Jan-91 $6,404 $11,410
12,225 Feb-91 $8,596 $12,225
12,521 Mar-91 $9,737 $12,521
12,551 Apr-91 $9,386 $12,551
13,091 May-91 $9,737 $13,091
12,491 Jun-91 $9,649 $12,491
13,073 Jul-91 $10,175 $13,073
13,382 Aug-91 $10,877 $13,382
13,158 Sep-91 $10,877 $13,158
13,334 Oct-91 $11,667 $13,334
12,798 Nov-91 $11,491 $12,798
14,260 Dec-91 $12,451 97.15% $14,260 30.40%
13,994 Jan-92 $13,916 $13,994
14,175 Feb-92 $14,771 $14,175
13,900 Mar-92 $14,649 $13,900
14,308 Apr-92 $14,160 $14,308
14,378 May-92 $14,038 $14,378
14,164 Jun-92 $13,672 $14,164
14,742 Jul-92 $13,428 $14,742
14,441 Aug-92 $12,696 $14,441
14,611 Sep-92 $12,696 $14,611
14,661 Oct-92 $13,550 $14,661
15,159 Nov-92 $14,283 $15,159
15,344 Dec-92 $14,850 19.27% $15,344 7.61%
15,473 Jan-93 $14,850 $15,473
15,683 Feb-93 $16,296 $15,683
16,014 Mar-93 $17,610 $16,014
15,627 Apr-93 $16,822 $15,627
16,044 May-93 $18,662 $16,044
16,091 Jun-93 $19,319 $16,091
16,026 Jul-93 $19,056 $16,026
16,633 Aug-93 $19,976 $16,633
16,505 Sep-93 $20,239 $16,505
16,846 Oct-93 $21,290 $16,846
16,687 Nov-93 $20,633 $16,687
16,888 Dec-93 $20,997 41.39% $16,888 10.06%
17,462 Jan-94 $20,859 $17,462
16,988 Feb-94 $19,213 $16,988
16,249 Mar-94 $17,291 $16,249
16,457 Apr-94 $16,742 $16,457
16,727 May-94 $16,331 $16,727
16,317 Jun-94 $14,958 $16,317
16,852 Jul-94 $14,821 $16,852
17,542 Aug-94 $14,821 $17,542
17,114 Sep-94 $14,821 $17,114
17,497 Oct-94 $14,272 $17,497
16,861 Nov-94 $13,998 $16,861
17,110 Dec-94 $13,578 -35.33% $17,110 1.32%
17,554 Jan-95 $13,419 $17,554
18,237 Feb-95 $12,939 $18,237
18,775 Mar-95 $12,141 $18,775
19,327 Apr-95 $11,342 $19,327
20,098 May-95 $10,064 $20,098
20,565 Jun-95 $10,383 $20,565
21,246 Jul-95 $10,703 $21,246
21,299 Aug-95 $10,383 $21,299
22,198 Sep-95 $10,703 $22,198
22,118 Oct-95 $10,064 $22,118
23,088 Nov-95 $9,744 $23,088
23,533 Dec-95 $9,425 -30.59% $23,533 37.54%
24,333 Jan-96 $10,224 $24,333
24,559 Feb-96 $11,022 $24,559
24,796 Mar-96 $11,342 $24,796
25,161 Apr-96 $12,141 $25,161
25,809 May-96 $12,141 $25,809
25,907 Jun-96 $11,022 $25,907
24,763 Jul-96 $9,744 $24,763
25,286 Aug-96 $9,904 $25,286
26,708 Sep-96 $9,425 $26,708
27,445 Oct-96 $9,425 $27,445
29,517 Nov-96 $8,946 $29,517
28,933 Dec-96 $8,946 -5.08% $28,933 22.94%
30,739 Jan-97 $11,661 $30,739
30,981 Feb-97 $12,620 $30,981
29,710 Mar-97 $13,259 $29,710
31,482 Apr-97 $13,259 $31,482
33,398 May-97 $13,259 $33,398
34,893 Jun-97 $15,975 $34,893
37,669 Jul-97 $17,093 $37,669
35,560 Aug-97 $17,412 $35,560
37,506 Sep-97 $16,614 $37,506
36,255 Oct-97 $15,815 $36,255
37,932 Nov-97 $14,537 $37,932
38,583 Dec-97 $15,655 75.00% $38,583 33.35%
39,009 Jan-98 $13,578 $39,009
41,821 Feb-98 $12,939 $41,821
43,961 Mar-98 $12,620 $43,961
44,403 Apr-98 $13,259 $44,403
43,641 May-98 $14,856 $43,641
45,413 Jun-98 $12,141 $45,413
44,930 Jul-98 $13,578 $44,930
38,441 Aug-98 $7,828 $38,441
40,904 Sep-98 $7,987 $40,904
44,228 Oct-98 $7,668 $44,228
46,907 Nov-98 $7,029 $46,907
49,609 Dec-98 $6,070 -61.22% $49,609 28.58%
51,682 Jan-99 $5,272 $51,682
50,076 Feb-99 $5,431 $50,076
52,079 Mar-99 $5,112 $52,079
54,096 Apr-99 $4,633 $54,096
52,820 May-99 $4,473 $52,820
55,749 Jun-99 $4,153 $55,749
54,010 Jul-99 $3,994 $54,010
53,741 Aug-99 $3,355 $53,741
Sep-99 $0 $0
Oct-99 $0 $0
Nov-99 $0 $0
Dec-99 $0 $0
</TABLE>
Past performance does not predict future performance.
MANAGEMENT
American Heritage Management Corporation (AHMC ), 1370 Avenue of the Americas,
New York, New York 10019 has been our investment adviser since 1990. AHMC
provides continuous investment advice to us and places orders for purchases and
sales of our securities. AHMC also provides investment advice to American
Heritage Growth Fund, Inc
We make our investment decisions based upon advice furnished to us by AHMC.
For the fiscal year ended May 31, 1999, the investment advisory fee represented
1.25% of our average net assets.
Heiko H. Thieme is our portfolio manager and has been primarily responsible for
the day-to-day management of our portfolio since February 1990. Mr. Thieme also
renders investment advice to one other U.S. and two foreign investment companies
and is the Chief Executive Officer of a securities broker-dealer.
11
<PAGE> 14
PRICING OF SHARES
The price at which you buy and redeem our shares is the net asset value (NAV)
per share. The NAV represents the value of our total assets less our
liabilities. The NAV per share is generally calculated as of the close of the
regular trading session of the New York Stock Exchange. Our shares will not be
priced on the days when the New York Stock Exchange is closed for trading such
as weekends and certain national holidays. In calculating the NAV, portfolio
securities will be valued at market value when there is a reliable quotation
available for the securities. The value of all other assets will be determined
by our Board of Directors or members of a committee of our Board of Directors at
amounts which they think represent their fair value.
PROCEDURES FOR BUYING FUND SHARES
The minimum investment requirements for the Fund are:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Opening the Account Adding to the Account
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Regular Accounts $1,000 $500
- ---------------------------------------------------------------------------------------------------
IRAs, Custodian Accounts 500 500
and Keogh Accounts
- ---------------------------------------------------------------------------------------------------
</TABLE>
We may change these minimum investment amounts at any time and we can refuse any
purchase order that might adversely affect our operations.
Once we accept your order to purchase, the purchase price will be the next
calculated NAV per share. You pay no sales load for buying Fund shares.
You may buy Fund shares in any of these ways:
BY TELEPHONE
Call 1-800-828-5050 to buy shares of the Fund. We must receive your payment
within three business days of your order. To meet this deadline, you may send a
check by overnight mail or wire payment, or you may make an electronic transfer
through your bank.
BY MAIL
Mail your application and check to:
The American Heritage Fund, Inc.
Location 0637
Cincinnati, OH 45264-0637
If you purchase additional shares of the Fund, you must send a completed
investment slip
12
<PAGE> 15
together with a check that has your account number on it.
THROUGH CERTAIN BROKER-DEALERS
Shares of the Fund may be purchased through certain registered broker-dealers.
We impose no sales load or service charge, but the broker-dealers may make a
charge to investors for their services. The charge and services may vary in
amount among broker-dealers, some of which may impose higher initial or
subsequent investment requirements than those established by us.
BY COURIER
Deliver your application and check to:
The American Heritage Fund, Inc.
c/o Firstar Bank, N.A.
425 Walnut Street
Mutual Fund Custodian Department
Cincinnati, OH 45202
If you purchase additional shares of the Fund, you must send a completed
investment slip together with a check that has your account number on it.
PROCEDURES FOR REDEEMING FUND SHARES
Any shareholder may redeem his or her shares by making a written request
directly to our Transfer Agent, American Data Services, Inc., 150 Motor Parkway,
Suite 109, Hauppauge, New York 11788. Redemptions may be made by telephone upon
the request of certain financial institutions who are holders of record of
shares issued by the Fund, within our sole discretion. We have instructed our
Transfer Agent to confirm the authenticity of any such request for redemption by
telecopier and telephone. Proceeds of redemptions made by telephone will be sent
only to the respective financial institution making the request. In the event
that a telephone redemption which is honored by us is unauthorized or
fraudulent, we could sustain losses.
The redemption price will be the NAV per share next determined by us following
receipt of a proper request for redemption. There is no redemption charge
imposed by us. We intend to make payment for shares redeemed in cash to the
extent that we are reasonably able to do so although we reserve the right to
make payment in kind.
Payment for shares redeemed will normally be made within seven days after
receipt of a proper written request. Payment will not be mailed before clearance
of the purchaser's check. The determination of the NAV and the right of
redemption may be suspended or the payment date postponed when: (a) trading on
the New York Stock Exchange is restricted as determined by the Securities and
Exchange Commission or the Exchange is closed for other than customary weekend
and holiday closings; (b) when an emergency exists, as determined by the
Securities
13
<PAGE> 16
and Exchange Commission, as a result of which disposal by us of securities owned
by us is not reasonably practicable, or it is not reasonably practicable for us
to fairly determine the value of our net assets; or (c) when the Securities and
Exchange Commission by Order so permits for the protection of our shareholders.
All requests for redemption of shares must be signed by all registered owners
exactly as registered, including fiduciary titles, if any, with signatures
guaranteed by a member of a national securities exchange or a United States
commercial bank or a foreign bank having a New York City correspondent.
DISTRIBUTIONS AND TAXES
We intend to distribute as dividends our net investment income, if any, and
distribute any net capital gains that we realize once a year. Your distributions
will be reinvested in the Fund unless you instruct us otherwise in writing.
There are no fees or sales charges on reinvestments. Dividends and distributions
are taxable to most investors (unless your investment is in an IRA or other
tax-advantaged account). The tax status of any distribution is the same
regardless of how long you have been in the Fund and whether you reinvest your
distributions or take them in cash.
The tax status of your dividends and distributions will be detailed in your
annual tax statement from the Fund. Because everyone's tax situation is unique,
always consult your tax professional about federal, state and local tax
consequences.
Except in tax-advantaged accounts, any redemption, sale or exchange of Fund
shares may generate a tax liability.
SHAREHOLDER SERVICES
We offer the following shareholder services. For further details, please write
or call us.
EXCHANGE PRIVILEGE
A shareholder of the Fund has the privilege of exchanging shares of the Fund for
shares of American Heritage Growth Fund, Inc. (AHGF) by written notice to our
Transfer Agent subject to the following:
- Shares of AHGF must be eligible for sale in the state of residence of
the shareholder.
- Shareholders may only exchange between accounts that are registered in
the same name, address, and have the same taxpayer identification
number.
- A shareholder must have received a current Prospectus of AHGF before
the exchange.
- Both the Fund and AHGF reserve the right to temporarily or permanently
14
<PAGE> 17
terminate the exchange privilege.
Exchanges may have tax consequences and you may wish to consult with your tax
advisor before making any exchange.
AUTOMATIC WITHDRAWAL PLAN
With an Automatic Withdrawal Plan, a shareholder can arrange for automatic
distributions to be made monthly or quarterly in amounts not less than $1,000.
An Automatic Withdrawal Plan may neither be opened nor maintained by a
shareholder holding shares of the Fund having a value of less than $50,000.
IRA AND KEOGH PLANS
A prototype defined contribution retirement plan and individual retirement
account is available. Charges are imposed by Firstar Bank, N.A. and American
Data Services, Inc. and shareholders should carefully review all documents
provided in connection with a plan or account.
LEGAL PROCEEDINGS
On October 5, 1994, a shareholder of the Fund on behalf of himself and a
purported class of others brought an action against the Fund, AHMC, Heiko H.
Thieme and Richard K. Parker in the United States District Court for the
Southern District of New York. Although the Fund cannot now determine the exact
amount of the losses incurred by members of the purported class, the Fund
believes that the losses do not exceed $25 million and could be less. The amount
of outstanding shares of the Fund has generally rapidly diminished since early
1994.
The Complaint, as amended, alleges that certain registration statements and
prospectuses of the Fund failed to disclose certain risks regarding the Fund's
investments in illiquid securities and that the Fund invested in illiquid
securities in concentrations which exceeded the Fund's own investment
restrictions and that the Fund improperly valued its illiquid securities. The
amended Complaint also alleges that the other defendants breached their
fiduciary duties in connection with the Fund's investments in and valuation of
illiquid securities and by the receipt of AHMC of substantial compensation for
investment advice and that the Fund breached its own limitations with respect to
illiquid securities and that the Fund changed investment policies without
obtaining a shareholder vote.
The Plaintiff made a motion to permit the action to proceed as a class action
and in which the Plaintiff would serve as the sole class representative of all
persons who acquired shares of the Fund from July 1, 1993 through August 31,
1994. On August 1, 1997, the Court denied the Plaintiff's Motion.
The Fund, after conferring with its special counsel, has concluded that the
substantive allegations of the amended compliant are without merit. Although
there can be no assurance of the outcome of the action, based upon the Fund's
belief, the Fund has not established a reserve for potential
15
<PAGE> 18
losses other than the expense of its defense. The Fund has vigorously defended
the action and intends to continue to do so if the Plaintiff proceeds.
The Plaintiff is seeking rescission or compensatory damages and pre-judgment
interest and the costs and expense of the litigation and such other and further
relief as the Court may deem just and proper. The Fund's officers and directors
are entitled to be indemnified by the Fund to the full extent permitted by law.
CUSTODIAN AND TRANSFER AGENT
Firstar Bank, N.A. 425 Walnut Street, Cincinnati, Ohio 45202 is the Custodian of
the portfolio securities and monies of the Fund.
American Data Services, 150 Motor Parkway, Hauppauge, New York 11788 is our
Transfer Agent.
Neither the Custodian nor the Transfer Agent performs any managerial or
policy-making functions for the Fund.
16
<PAGE> 19
THE AMERICAN HERITAGE FUND, INC.
- --------------------------------------------------------------------------------
Mail to: The American Heritage Fund, Inc., Location 0637, Cincinnati, Ohio
45264-0637
(DO NOT USE THIS FORM FOR IRA PLANS. Please request separate forms)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Complete only the applicable sections which will tell us how your account should
be registered.
<TABLE>
<S> <C> <C>
ACCOUNT [ ] Individual
REGISTRATION
-----------------------------------------------------------------------------------
First Name Middle Name Last Name
[ ] Joint Tenant
-----------------------------------------------------------------------------------
First Name Middle Name Last Name
[ ] Gifts to Minors
------------------------------------ As Custodian For -----------------------------
Name of Custodian (only 1 permitted) Name of Minor (only 1 permitted)
UNDER THE -------------------------- UNIFORM GIFT TO MINORS
State
[ ]Corporations, ---------------------------------------------------------------
Trusts & Name of corporation or partnership. If a trust,
Others include the name(s) of trustees in which account will
be registered and the date of the trust investment. An
account for a pension or profit sharing plan or trust
may be registered in the name of the plan or trust
itself.
- -----------------------------------------------------------------------------------------------------
ADDRESS
---------------------------------------------------------------
Street
( )
---------------------------------------------------------------
City Home Phone Number
( )
---------------------------------------------------------------
State Zip Code Business Phone Number
- -----------------------------------------------------------------------------------------------------
INVESTMENT $ (Minimum initial $2,500 or, in the case of an IRA
--------------------- account, $2,000. Subsequent Investments of $250 or
more.) Make checks payable to The American Heritage
Fund, Inc. Application is not needed for subsequent
investments.
- -----------------------------------------------------------------------------------------------------
DISTRIBUTIONS Reinvest all income and capital gain distributions in additional shares of the
Fund unless this box is checked.
[ ] Pay dividends and capital gain distributions in cash. If any dividend or
capital gain distribution check addressed and sent to (me)(us) is returned to
you, you hereby are authorized to invest the proceeds of that check in Fund
shares at the net asset value next determined after receipt by you of the
returned check. In such event (I)(we) understand and agree that all subsequent
dividend and capital gain distributions automatically will be reinvested in
Fund shares unless and until (I)(we) have signed and filed with you a new
request to receive dividends and capital gain distributions in cash.
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 20
TAX IDENTIFICATION CERTIFICATION
Because of important changes made to the Internal Revenue Code in 1983, we
must be certain that we have a record of your correct Social Security or
other Taxpayer Identification Number. If you have not certified that you
have provided us with the correct number, your account will be subject to
special Federal income tax withholding of 20% of dividends and other
payments. To avoid this, please fill in your Social Security or Taxpayer
Identification Number.
<TABLE>
<S> <C>
[ ][ ][ ][ ][ ][ ][ ][ ][ ]
------------------------------------------------- ---------------------------------
Social Security or Taxpayer Identification Number Citizenship--If other than U.S.A.
If appropriate, check one of the following boxes:
[ ] I have been notified by the IRS that I am subject to backup withholding
for failure to report all interest or dividends.
[ ] I do not have a Social Security Number or Taxpayer Identification
Number, but I have applied for or intend to apply for one. I understand
that if I do not provide this number within 60 days, the required 20%
withholding will begin.
[ ] I am exempt because I am a Non-Resident Alien (not a U.S. citizen or
U.S. resident), a foreign corporation, partnership, estate or trust,
and, as a result, I am not required to submit a number.
[ ] I am an exempt recipient (see explanation below)
If you are an exempt recipient, you must certify your Tax Identification
Number as well as your exempt status to prevent withholding. A partial
listing of exempt recipients follows. For further information, see Internal
Revenue Code Sec. 3452 or consult your tax advisor.
</TABLE>
<TABLE>
<S> <C>
- Retirement Plans - Common Trust Funds
- Corporations - Financial Institutions
- Colleges, Churches, Charitable Organizations - Registered Securities Dealers
- Agents, Fiduciaries, Middlemen
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SIGNATURE I understand and agree that:
(1) This application is subject to your acceptance or
rejection.
(2) All shares will be purchased at the net asset value next
determined after receipt and acceptance.
(3) The Fund has the right to redeem shares held in my
account to reimburse the Fund for any loss it has sustained
if my check for the purchase of or subscription for the
Fund shares is dishonored, regardless of whether the
undersigned was already an existing shareholder at the
time of such purchase or subscription.
(4) Under penalties of perjury, I certify that the
information I have provided in this application under the
caption TAX IDENTIFICATION CERTIFICATION is true,
correct, and complete.
I acknowledge receipt of your Prospectus and I understand
that all of its terms and provisions are incorporated herein
by reference.
</TABLE>
X
- --------------------------------------------------------------------------------
Signature of Individual and Joint Tenant or Custodian, Corporate Officer or
Trustee.
- ------------------------------------------------ ------------------
Title of Corporate Officer or Trustee Date
WHERE DID YOU FIRST LEARN ABOUT THE AMERICAN HERITAGE FUND? ------------------
- --------------------------------------------------------------------------------
/00
<PAGE> 21
PROSPECTUS
THE AMERICAN HERITAGE FUND, INC.
Our Statement of Additional Information (SAI) includes additional information
about us. Additional information about our investments is available in our
annual and semi-annual reports to shareholders. The SAI and the annual and
semi-annual reports are available, without charge, upon request. You may call us
at 1-800-828-5050 to request the SAI; to request our annual report; to request
our semi-annual report; to request other information about us; and to make
shareholder inquiries.
The SAI, including the annual report, is incorporated by reference into this
prospectus.
Information about us, including the SAI, can be reviewed and copied at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
Information on the operation of the public reference room may be obtained by
calling the Commission at 1-202-942-8090. Reports and other information about us
are available on the EDGAR database on the Commission's Internet site at
http:/www.sec.gov. Copies of this information may be obtained, after paying a
duplicating fee, by electronic request at the following E-mail address:
[email protected], or by writing to the Commission's Public Reference Section,
Washington, D.C. 20549-0102.
, 2000
Our Investment Company Act of 1940 file number is 811-601.
<PAGE> 22
PART B
<PAGE> 23
THE AMERICAN HERITAGE FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information, which is not a prospectus,
relates to the prospectus of The American Heritage Fund, Inc dated *_______*,
2000 as it may be revised from time to time. To obtain a free copy of the
prospectus, please write to us at 1370 Avenue of the Americas, New York, NY
10019 or call us at 1-800-828-5050.
Our most recent Annual Report and Semi-Annual Report to Shareholders are
separate documents supplied with this Statement of Additional Information unless
the information has been previously delivered in a shareholder report. The
shareholder reports are available, without charge, upon request by calling us at
1-800-828-5050. The financial statements, accompanying notes and report of
independent auditors appearing in the Annual Report are incorporated by
reference into this Statement of Additional Information.
*_______*, 2000
<PAGE> 24
TABLE OF CONTENTS
Description of the Fund B-3
Certain Investments, Techniques and Risks B-3
Certain Investment Restrictions B-6
Management B-8
Brokerage Allocations and Other Practices B-10
Control Persons and Principal Holders of Securities B-12
Investment Advisory and Other Services B-14
Returns B-15
Custodian B-15
Independent Accountants B-15
Transfer Agent B-15
Information About the Fund B-16
Financial Statements B-16
<PAGE> 25
DESCRIPTION OF THE FUND
The American Heritage Fund, Inc., a New York corporation organized on
December 28, 1951, is a non-diversified, open-end management investment company.
CERTAIN INVESTMENTS, TECHNIQUES AND RISKS
Convertible securities may be converted at either a stated price or stated
rate into underlying shares of common stock. Convertible securities have
characteristics similar to both fixed-income and equity securities. Convertible
securities may be subordinate to other similar but non-convertible securities of
the same issuer, although convertible bonds, as corporate debt obligations,
enjoy seniority in right of payment to all equity securities, and convertible
preferred stock is senior to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities typically have lower
ratings than similar non-convertible securities.
Although to a lesser extent than with fixed-income securities, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible securities tends to vary
with fluctuations in the market value of the underlying common stock. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.
There can be no assurance of current income from convertible securities
because the issuers of the convertible securities may default on their
obligations. A convertible security, in addition to providing fixed income,
offers the potential for capital appreciation through the conversion feature,
which enables the holder to benefit from increases in the market price of the
underlying common stock. There can be no assurance of capital appreciation,
however, because securities prices fluctuate. Convertible securities generally
offer lower interest or dividend yields than non-convertible securities of
similar quality because of the potential for capital appreciation.
The Fund may purchase high yield debt securities which are not investment
grade, including securities referred to as "junk bonds." An economic downturn or
increase in interest rates is likely to have an adverse effect on the high yield
securities market. The widespread expansion of government, consumer and
corporate debt within the United States economy has made the corporate sector,
especially cyclically sensitive industries, more vulnerable to economic
downturns or increased interest rates. The prices of high yield securities have
been found to be less sensitive to interest rate changes than are those of
higher rated investments, but more sensitive to adverse economic changes or
individual corporate developments. During an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may
<PAGE> 26
experience financial stress which would adversely affect the ability to service
their principal and interest payment obligations, to meet projected business
goals, and to obtain additional financing. In periods of economic uncertainty
and change, increased volatility of market prices of high yield securities can
be expected. To the extent that there is no established retail secondary market,
there may be thin trading of high yield securities. In the absence of readily
available market quotations, the valuation of high yield securities held by the
Fund will be determined by the Fund's Board of Directors. The fulfillment of
such responsibility may become difficult and judgment will play a greater role
in valuation because there may be less reliable, objective data available.
The Fund may invest in securities issued by other investment companies to
the extent consistent with its investment objective. Under the Investment
Company Act of 1940 (the "1940 Act"), the Fund's investment in such securities,
subject to certain exceptions, currently is limited to (a) 3% of the total
voting stock of any one investment company, (b) 5% of the Fund's total assets
with respect to any one investment company and (c) 10% of the Fund's total
assets in the aggregate. Investments in the securities of other investment
companies may involve duplication of advisory fees and certain other expenses.
The Fund will place in a segregated account (not with the broker) cash or
United States Government securities equal to the difference between (a) the
market value of securities sold short at the time they were sold short, and (b)
any cash or United States Government securities required to be deposited as
collateral with the broker in connection with the short sale (not including the
proceeds from the short sale). In addition, until the Fund replaces the borrowed
securities, it must daily maintain the segregated account at such level that (1)
the amount deposited in it plus the amount deposited with the broker as
collateral will equal the current market value of the securities sold short, and
(2) the amount deposited in it plus the amount deposited with the broker as
collateral will not be less than the market value of the securities at the time
they were sold short. Deposits to the segregated account do not diminish the
risk of loss to the Fund with respect to short sales. The foregoing requirements
do not apply to securities sold short "against the box," which is a short sale
to the extent that the Fund contemporaneously has or has the right to obtain at
no added cost securities identical to those sold short.
Generally, short sales will result in a gain if the price of the securities
declines between the date of the short sale and the date upon which the
securities are purchased to replace those borrowed; conversely, a loss will
result if the security increases in price during such period or if the security
becomes unavailable so that the Fund cannot cover its short position. The gain
is decreased and the loss is increased by the amount of any premium, dividends,
interest or brokerage commission the Fund may be required to pay with respect to
such short sale. Any income from short sales generally is, when distributed,
taxable to shareholders at ordinary income tax rates.
The Fund may purchase and sell put and call options for purposes of hedging
or to seek capital growth. The Fund may hedge its investments by combining puts
and calls with other investment techniques. For example, the Fund may sell short
securities for which it holds a call or the Fund may purchase securities for
which it holds a put. Any puts and calls which the Fund
<PAGE> 27
purchases will be listed for trading on one or more domestic securities
exchanges. From time to time, the Fund may obtain a put option from the seller
of securities purchased by the Fund or an affiliate of such seller in connection
with a purchase of securities by the Fund. Generally, no market will exist for
any such option. The Fund intends to purchase put and call options when
Management believes that such purchase will result in an opportunity for capital
appreciation based upon specific facts and circumstances A call option permits
the holder thereof to purchase the securities of an issuer at a predetermined
price. Call options can be expected to increase in value if the value of such
securities increases, and, conversely, call options can be expected to decrease
in value if the value of such securities decreases. A put option permits the
holder to sell the securities of an issuer at a predetermined price. Put
options, can be expected to increase in value if the value of such securities
decreases. Put and call options can be purchased and sold by the Fund without
limitation. In order for the Fund to realize a profit from purchase of a put
option, the value of the security underlying the option must decrease below the
exercise price of the option by an amount which is greater than the option
premium paid by the Fund plus transaction costs. In order for the Fund to
realize a profit from purchase of a call option, the value of the security
underlying such option must increase above the exercise price of the option by
an amount which is greater than the option premium paid by the Fund plus
transaction costs.
The Fund may write listed put and call options. The Fund will not write a
call option unless, at the time of the sale, the Fund:
(1) owns the securities (or securities convertible into the securities
without additional consideration) against which the call option is written and
will continue to own such securities during the time that the Fund is obligated
under the option; or
(2) purchases a call option on the same securities upon the same terms; or
(3) establishes and maintains for the term of the option a segregated
account consisting of cash, U.S. Government securities or high-grade debt
securities, equal to the fluctuating market value of the optioned securities.
The account will be adjusted at least once daily to reflect changes in the
market value of the optioned securities.
The Fund will not write a put option unless, at the time of the sale, the
Fund:
(1) purchases a put option on the same securities upon the same terms; or
(2) establishes a segregated account consisting of cash, U.S. Government
securities or high-grade debt securities equal to the option price, i.e., the
price at which the securities underlying the option may be sold to the Fund; or
(3) makes a corresponding short sale, although, if the short position is
closed out before the put option expires, then the requirements of (1) or (2)
above must be met.
The Fund anticipates that most of the options written by it will be for a
duration of not exceeding nine months. The Fund will not write any options with
respect to which it is required
<PAGE> 28
to maintain a segregated account or make any short sales (except short sales
against the box) during any time that the total of (a) the amount required to be
deposited in any such segregated account, and (b) the amount required to be
deposited in a segregated account in connection with any short sales made by the
Fund, exceeds 35% of the value of the Fund's net assets. All the options written
by the Fund will be listed for trading on one or more domestic securities
exchanges. The writing of options by the Fund may be deemed to be inconsistent
with its investment objective.
CERTAIN INVESTMENT RESTRICTIONS
The Fund's investment objective is a fundamental policy. Fundamental
policies cannot be changed without approval by the holders of the lesser of (a)
67% or more of the voting securities of the Fund present at a meeting, if the
holders of more than 50% of the outstanding securities of the Fund are present
or represented by proxy, or (b) more than 50% of the outstanding voting
securities of the Fund. In addition, the Fund has adopted investment
restrictions numbered 1 through 18 as fundamental policies. The other investment
restrictions are not fundamental policies and may be changed by the Fund without
shareholder approval. The Fund may not:
- - Issue any of its securities (a) for services, or (b) for property other
than cash or securities (including securities of which the Fund is the
issuer), except as a dividend or distribution to its security holders or in
connection with a reorganization;
- - Issue senior securities, except that the Fund may borrow from any bank;
- - Invest in companies for the purpose of exercising control or management;
- - Purchase or sell commodities or commodity contracts, including futures
contracts;
- - Borrow money in excess of 33-1/3% of the value of the Fund's assets
(including the amount of the borrowing), less its liabilities (not
including any borrowings, but including the fair market value at the time
of computation of any securities with respect to which there are open short
positions);.
- - Loan money to other persons, except that the Fund may (a) invest up to 15%
of the value of its total assets in debentures, bonds or similar
governmental or corporate obligations of types commonly distributed
publicly or privately to financial institutions and (b) purchase debt
securities which are convertible into equity securities of an issuer
without regard to whether the securities are types commonly distributed
publicly or privately to financial institutions.
- - Invest in oil, gas and other mineral leases, but the Fund shall not be
prohibited from investing in marketable securities of companies investing
in such leases;
- - Invest in real estate or real estate mortgage loans, but the Fund shall not
be prohibited
<PAGE> 29
from investing in marketable securities of companies engaged in real estate
activities or investments.
- - Effect a short sale transaction which will, at the time of making and after
giving effect to the sale, cause the aggregate dollar amount of the total
deposits and deferred charges on short sales to exceed 35% of the value of
the Fund's net assets;
- - Invest in restricted and other illiquid securities if, as a result of such
investment, the value of the Fund's illiquid assets would exceed 15% of the
value of the Fund's net assets. Restricted securities eligible for resale
under Rule 144A under the Securities Act of 1933 that have been determined
to be liquid by the Fund's Board of Directors based upon trading markets
for the securities and any other restricted securities that become
registered under the Securities Act of 1933 or that may be otherwise freely
sold without registration thereunder are not subject to the foregoing
limitation, unless they are otherwise illiquid.
- - Underwrite securities of other issuers or participate in any underwriting
or selling group in connection with the public distribution of other's
securities except that it may acquire restricted securities;
- - Invest more than 25% of the value of its total assets in securities of
companies engaged in a particular industry;
- - Purchase options written by others.
- - Invest more than 35% of the value of its total assets in securities issued
by foreign companies.
- - Acquire time deposits if more than 10% of the value of the Fund's net
assets will be invested in time deposits or the time deposits cannot be
liquidated within seven days.
- - Purchase securities (other than securities issued or guaranteed by domestic
or foreign governments or political subdivisions thereof) if, as a result
of such purchase, more than 5% of the value of the Fund's total assets
would be represented by issuers that, including predecessors, have then
been in continuous operation for less than three years.
- - Purchase securities of other investment companies unless purchased on the
open market without the payment of any fee or charge other than regular
brokerage commissions.
- - With respect to 50% of the value of the Fund's total assets, acquire more
than (a) 5% of the value of its total assets in the securities of any one
issuer (not including securities of the federal government or any
instrumentality thereof) and (b) 10% of the outstanding voting securities
of any one issuer.
- - Invest more than 5% of the value of its assets in debt securities which are
not "investment
<PAGE> 30
grade" or which are not convertible into equity securities;
- - Invest more than 10% of the value of its net assets in warrants.
All of the foregoing percentages are applicable only at the time of investment.
A later increase or decrease in percentage resulting from a change in values or
net assets will not constitute a violation of any restriction.
MANAGEMENT
The Fund's Board of Directors is responsible for the management of the
Fund. The following table sets forth certain information with respect to each
member of the Fund's Board of Directors and each officer of the Fund. The Fund
does not have an advisory board.
<PAGE> 31
<TABLE>
<CAPTION>
Positions Held With Principal Occupation(s) During
Name and Address Age the Fund the Past Five Years
- ---------------- --- -------- -------------------
<S> <C> <C> <C>
Heiko H. Thieme* 56 Chairman of the Board Chairman of the Board of Directors, Chief Executive
1370 Avenue of the of Directors, Chief Officer and Secretary of the Fund and American Heritage
Americas Executive Officer and Growth Fund, Inc. Chief Executive Officer of American
New York, NY Secretary Heritage Management Corporation and Thieme Associates,
Inc. (investment advisor). Chief Executive Officer of
Thieme Securities, Inc. (broker-dealer) and Thieme
Consulting, Inc. Chief Executive Officer of Thieme Fonds
International (foreign investment company) and The
Global Opportunity Fund Limited (foreign investment
company) and their respective investment advisors.
Stephen Swope 63 Director Mr. Swope has been retired for more than five years.
75 Club Road
Riverside, CT
Eugene Sarver 56 Director Sole proprietor of Sarver International (financial and
241 W. 97th St. economic consulting) and Associate of Intercap
New York, NY Investments, Inc. since 1996. Prior to that time,
Associate Professor of Finance of Lubin School of
Business - Graduate Division, Pace University.
</TABLE>
* An "interested person" as defined in the Investment Company Act of 1940.
Dr. Sarver and Mr. Thieme have served as members of the Board of Directors
since February 1990. Mr. Swope became a member of the Board of Directors in
November 1999. Each of the Fund's Directors is also a member of the Board of
Directors of American Heritage Growth Fund, Inc. (AHGF).
Thieme Consulting, Inc., which is wholly owned by Mr. Thieme, has provided
consulting services to companies whose securities are held by the Fund for
compensation. Similar
<PAGE> 32
arrangements may be made with other companies whose securities may become held
by the Fund.
During the fiscal year ended May 31, 1999, no compensation was paid by the
Fund to its officers. Each of the Fund's Directors who were not interested
persons of the Fund received compensation of $5,000.
From time to time, the Fund, American Heritage Management Corporation, the
Fund's investment advisor (AHMC), AHGF, two foreign investment companies and
other clients of affiliated persons of AHMC may hold securities issued by the
same company. When the Fund and those investors are engaged in the purchase or
sale of the same security, the prices and amounts will be allocated in a manner
considered by management to be fair to each of them.
BROKERAGE ALLOCATIONS AND OTHER PRACTICES
AHMC places orders with brokers and dealers for the purchase and sale of
securities for the Fund's portfolio. In performing this service, AHMC is
required to place orders with the primary objective of obtaining the most
favorable price and a reasonable execution for the Fund. Subject to this
consideration, the brokers selected include those that supplement AHMC's
research with statistical data, investment information, economic facts and
opinions or provide quotation services. Information so received is in addition
to and not in lieu of services required to be performed by AHMC and AHMC's fee
is not reduced as a consequence of the receipt of supplemental information. Such
information may be useful to AHMC in serving both the Fund and AHGF and,
conversely, supplemental information obtained by the placement of orders for
AHGF maybe useful to AHMC in carrying out its obligation to the Fund. Brokers
may also be selected based upon their sales of shares of the Fund. Normally,
over-the-counter transactions will be executed on a principal basis with a
broker-dealer who makes a market in or is otherwise a traditional source of the
security traded except in those cases in which the Fund can obtain a better
price or execution on an agency basis. Transactions executed on an agency basis
involve the payment of a brokerage commission.
Section 28(e) of the Securities Exchange Act of 1934 permits an investment
advisor, under certain circumstances, to cause an account to pay a broker or
dealer which supplies brokerage and research services a commission for effecting
a securities transaction in excess of the amount of the commission another
broker or dealer would have charged for effecting the transaction. Brokerage and
research services include (a) furnishing advice as to the value of securities
and the availability of securities or purchasers or sellers of securities, (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy and the performance of accounts,
and (c) effecting securities transactions and performing functions incidental
thereto, such as clearance, settlement and custody.
AHMC may cause the Fund to incur brokerage commissions in an amount higher
than the lowest available rate in return for such services. Research services so
received by AHMC may be used by AHMC for the benefit of the Fund or any other
client of AHMC. AHMC is of the opinion that the continued receipt of
supplemental investment research services from
<PAGE> 33
broker-dealers will be essential to its provision of portfolio management
services to the Fund. AHMC has represented that such commissions will not be
paid by the Fund unless (a) AHMC determines in good faith that the amount is
reasonable in relation to the services in terms of the particular transaction,
(b) such payment is made in compliance with Section 28(e) and other applicable
state and federal laws, and (c) in the opinion of AHMC, the total commissions
paid by the Fund are reasonable in relation to the benefits to the Fund over the
long term. The overall reasonableness of brokerage commissions paid is evaluated
by AHMC based upon its knowledge of available information as to the general
level of commissions paid by other institutional investors for comparable
services.
It is anticipated that a substantial portion of the Fund's portfolio
transactions will be allocated to Thieme Securities, Inc. (TSI). Heiko H. Thieme
is the Chief Executive Officer and sole shareholder of TSI. Except for executing
portfolio transactions, TSI is not in any other respect associated with the Fund
or responsible for any investment advice or other service provided to the Fund
by Mr. Thieme personally or AHMC.
During the fiscal years ended May 31, 1997, 1998 and 1999, the Fund paid
brokerage commissions of $379,644, $990,836 and $444,766, respectively, to TSI.
During the fiscal year ended May 31, 1999, the commissions paid by the Fund to
TSI represented approximately 94% of the total brokerage commissions paid by the
Fund that year. During the same year, approximately 95% of the Fund's aggregate
dollar transactions involving the payment of brokerage commissions was effected
through TSI.
Richard K. Parker is a Managing Director of Bear, Stearns & Co. Inc. (BSI).
Prior to December 31, 1998, Mr. Parker owned 10% of the outstanding capital
stock of AHMC. During the fiscal years ended May 31 1997, 1998 and 1999 during
the time Mr. Parker held his shares of AHMC, the Fund paid brokerage commissions
of $62,510, $136,527 and $14,520, respectively to BSI. From June 1, 1998 until
December 31, 1999, the commissions paid by the Fund to BSI represented
approximately 3% of the total brokerage commissions paid by the Fund during that
period. During the same period, approximately 4% of the Fund's aggregate dollar
transactions involving the payment of brokerage commissions was effected through
BSI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
On December 31, 1999 Charles Schwab & Co. Inc., 101 Montgomery Street, San
Francisco, CA and National Financial Services Corp., P.O. Box 3908, New York, NY
10008 94104 each owned of record shares of the Fund's capital stock which
represented approximately 7% of the Fund's outstanding capital stock. As of such
date, no other person owned of record or was known to the Fund to own
beneficially 5% or more of the Fund's outstanding capital stock and the Fund's
officers and directors as a group owned less than 1% of such capital stock.
On December 31, 1999, the Fund's officers and directors as a group owned
less than 1% of the Fund's equity securities.
<PAGE> 34
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund believes that for the fiscal year ended May 31, 1999 it qualified
as a "regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"). The Fund intends to continue to so qualify if
qualification is in the best interests of its shareholders. Qualification
relieves the Fund of any liability for Federal income taxes to the extent its
net investment income and net realized capital gains are distributed in
accordance with the applicable provisions of the Code. To qualify as a regulated
investment company, the Fund must distribute at least 90% of its net income
(consisting of net investment income and net short-term capital gain) to its
shareholders, and meet certain asset diversification and other requirements. If
the Fund did not qualify as a regulated investment company, it would be treated
for tax purposes as an ordinary corporation subject to Federal income tax. The
term "regulated investment company" does not imply the supervision of management
or investment practices or policies by any government agency.
If you elect to receive dividends and distributions in cash, and your
dividend and distribution check is returned to the Fund as undeliverable or
remains uncashed for six months, the Fund reserves the right to reinvest the
dividend or distribution and all future dividends and distributions payable to
you in additional Fund shares at net asset value. No interest will accrue on
amounts represented by uncashed distribution or redemption checks.
Any dividend or distribution paid shortly after an investor's purchase may
have the effect of reducing the aggregate net asset value of his shares below
the cost of the investment. Such a dividend or distribution would be a return of
investment in an economic sense, although taxable. In addition, the Code
provides that if a shareholder holds shares of a Fund for six months or less and
has received a capital gain distribution with respect to the shares, any loss
incurred on the sale of the shares will be treated as long-term capital loss to
the extent of the capital gain distribution received.
Depending upon the composition of the Fund's income, if any, the entire
amount or a portion of the dividends from net investment income may qualify for
the dividends received deduction allowable to qualifying U.S. corporate
shareholders. In general, dividend income from the Fund distributed to
qualifying corporate shareholders will be eligible for the dividends received
deduction only to the extent that the Fund's income consists of dividends paid
by U.S. corporations. However, Section 246(c) of the Code provides that if a
qualifying corporate shareholder has disposed of Fund shares not held for less
than 46 days, which 46 days generally must be during the 90-day period
commencing 45 days before the shares become ex-divided, and has received a
dividend from net investment income with respect to such shares, the portion
designated by the Fund as qualifying for the dividends received deduction will
not be eligible for such shareholder's dividends received deduction. In
addition, the Code provides other limitations with respect to the ability of a
qualifying corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares.
Ordinarily, gains or losses realized from portfolio transactions will be
treated as capital gains or losses. However, a portion of the gain or loss
realized from the disposition of certain
<PAGE> 35
non-U.S. dollar denominated securities (including debt instruments) may be
treated as ordinary income or loss under Section 988 of the Code. In addition,
all or a portion of the gain realized from the disposition of certain market
discount bonds will be treated as ordinary income under Section 1276 of the
Code. Finally, all or a portion of the gains realized from engaging in
"conversion transactions" may be treated as ordinary income under Section 1258
of the Code. "Conversion transactions" include certain transactions marketed or
sold to produce capital gains, or transactions described in Treasury regulations
to be issued in the future.
Under Section 1256 of the Code, any gain or loss realized by the Fund from
certain options transactions will be treated as 60% long-term capital gain or
loss and 40% short-term capital gain or loss. Gain or loss will arise upon
exercise or lapse of the options as well as from closing transactions. In
addition, any such option remaining unexercised at the end of the Fund's taxable
year will be treated as sold for its then fair market value, resulting in
additional gain or loss to the Fund characterized in the manner described above.
Offsetting positions held by the Fund involving certain futures options
transactions may be considered, for tax purposes, to constitute straddles.
Straddles are defined to include offsetting positions in actively traded
personal property. The tax treatment of straddles is governed by Sections 1092
and 1258 of the Code, which, in certain circumstances, overrides or modifies the
provisions of Sections 988 and 1256 of the Code. As such, all or a portion of
any short or long-term capital gain from certain "straddle" and/or conversion
transactions may be recharacterized as ordinary income.
If the Fund were treated as entering into straddles by reason of its
engaging in certain options transactions, such straddles could be characterized
as mixed straddles if the options transactions comprising a part of such
straddles were governed by Section 1256 of the Code. The Fund may make one or
more elections with respect to "mixed straddles." Depending upon which election
is made, if any, the results to the Fund may differ. If no election is made, to
the extent the straddle rules apply to positions established by the Fund, losses
realized by the Fund will be deferred to the extent of unrealized gain in any
offsetting positions. Moreover, as a result of the straddle and conversion
transaction rules, short-term capital loss on straddle positions may be
recharacterized as long-term capital loss, and long-term capital gain may be
recharacterized as short-term capital gain or ordinary income.
INVESTMENT ADVISORY AND OTHER SERVICES
Heiko H. Thieme may be deemed to control AHMC by virtue of his record and
beneficial ownership of 90% of the outstanding capital stock thereof. Mr. Thieme
is the Chairman of the Board of Directors and the Chief Executive Officer of
AHMC. See "Management."
In connection with the Fund's Investment Advisory Agreement with AHMC, AHMC
provides the Fund with continuous investment advice. AHMC bears the expenses of
the Fund's trading operations. All other expenses of the Fund are borne by the
Fund. The Fund pays AHMC a fee which, on an annual basis, amounts to one and
one-quarter percent (1.25%) of the first $100 million of the value of average
daily net assets of the Fund and one percent (1%) of the
<PAGE> 36
value of any additional net assets.
During the fiscal years ended May 31, 1997 and 1998 and 1999, the Fund
incurred investment advisory fees to AHMC of $206,091, $250,628 and $103,112,
respectively.
The Fund reimburses AHMC for office space and administrative personnel
utilized by the Fund. See Notes to the Financial Statements in the Fund's Annual
Report for the fiscal year ended May 31, 1999.
The Fund has entered into an agreement with American Data Services,
Inc.(ADS) whereby ADS maintains certain books, records and other documents that
the Fund is required to keep and calculates the Fund's daily net asset value.
The Fund has agreed to pay ADS a monthly fee of 1/12th of.1% of the first
$25,000,000 of the Fund's average monthly net assets, plus 1/12th of .05% of the
next $25,000,000 of the Fund's average monthly net assets, plus 1/12th of .02%
of any additional average monthly net assets. to maintain certain books, records
and other documents that the Fund is required to keep and calculate the Fund's
daily net asset value.
RETURNS
Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"-th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result. Total return is calculated by subtracting the
amount of the Fund's net asset value per share at the beginning of a stated
period from the net asset value per share at the end of the period (after giving
effect to the reinvestment of dividends and distributions during the period),
and dividing the result by the net asset value per share at the beginning of the
period.
Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., the Dow Jones Industrial Average, Morningstar, Inc.,
Standard & Poor's 500 Composite Stock Price Index and other industry
publications. From time to time, advertising materials for the Fund may provide
historical information about the Fund, AHMC and Heiko H. Thieme.
From time to time, advertising materials for the Fund may refer to or
discuss current or past business, political, economic or financial conditions,
such as any U.S. monetary or fiscal policies. In addition, from time to time,
advertising materials for the Fund may include information concerning retirement
and investing for retirement.
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio is the Fund's
Custodian. The Custodian maintains custody of the Fund's cash and securities.
<PAGE> 37
INDEPENDENT ACCOUNTANTS
Mathieson Aitken Jemison, LLP are the Fund's independent certified public
accountants. The financial statements included herein have been examined by such
firm to the extent set forth in their report.
TRANSFER AGENT
American Data Services, Inc., 150 Motor Parkway, Suite 109, Hauppauge, New
York 11788 is the Fund's transfer agent. The transfer agent maintains the Fund's
capital stock records, effects issuances and transfers of capital stock, handles
all correspondence with respect to shareholder accounts and processes
redemptions.
INFORMATION ABOUT THE FUND
Each Fund share has one vote, and when issued and paid for in accordance
with the terms of the offering, is fully paid and nonassessable. Fund shares are
of one class and have equal rights as to dividends and in liquidation. Shares
have no preemptive, subscription or conversion rights and are freely
transferable.
The Fund is intended to be a long-term investment vehicle and is not
designed to provide investors with a means of speculating on short-term market
movements. A pattern of frequent purchases and exchanges can be disruptive to
efficient portfolio management and, consequently, can be detrimental to the
Funds' performance and its shareholders. Accordingly, if the Fund determines
that an investor is following a market timing strategy or is otherwise engaging
in excessive trading, the Fund, with or without prior notice, may temporarily or
permanently reject in whole or part any purchase, with respect to such
investor's account.
The Fund sends annual and semi-annual financial statements to all its
shareholders.
FINANCIAL STATEMENTS
The Fund's most recent Annual Report and Semi-Annual Report to Shareholders
are separate documents supplied with this Statement of Additional Information.
The financial statements, accompanying notes and report of independent auditors
appearing in the Annual Report are incorporated by reference into this Statement
of Additional Information.
<PAGE> 38
PART C
<PAGE> 39
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Certificate of Incorporation, as amended. Exhibit 1 to the
Registrant's Post Effective Amendment No. 64 on Form N-1A is hereby
incorporated by reference.
(b) By-Laws, as amended. Exhibit 2 to the Registrant's Post Effective
Amendment No. 64 on Form N-1A is hereby incorporated by reference.
Exhibit 2 to the Registrant's Post Effective Amendment 64 on Form N-1A
is hereby incorporated by reference.
(c) Specimen Common Stock Certificate. Exhibit 4 to the Registrant's Post
Effective Amendment No. 64 on Form N-1A is hereby incorporated by
reference.
(d) Form of Investment Advisory Agreement by and between the Registrant
and American Heritage Management Corporation. Exhibit A to the
Registrant's definitive Proxy Statement for its Special Meeting of
Shareholders held on December 16, 1993 is hereby incorporated by
reference.
(e) Not Applicable.
(f) Not Applicable.
(g) Custodian Agreement of December 29, 1993 by and between the Registrant
and Star Bank, N.A. Exhibit 8 to the Registrant's Post Effective
Amendment No. 64 on Form N-1A is hereby incorporated by reference.
(h) (1) Shareholder Servicing Agent Agreement of December 9, 1993 by and
between the Registrant and American Data Services, Inc. Exhibit
9(a) to the Registrant's Post Effective Amendment No. 64 on Form
N-1A is hereby incorporated by reference.
(2) Fund Accounting Service Agreement of April 10, 1991 by and
between the Registrant and American Data Services, Inc. Exhibit 9
to the Registrant's Post Effective Amendment No.60 on Form N-1A
is hereby incorporated by reference
(i) Not applicable.
(j) Consent of Mathieson Aitken Jemison, LLP.
(k) Not Applicable.
(l) Not Applicable.
<PAGE> 40
(m) Not Applicable.
(n) Not Applicable.
(o) Financial Data Schedule.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Not applicable.
ITEM 25. INDEMNIFICATION
Pursuant to the Registrant's Certificate of Incorporation and By-Laws, each
director, officer and employee of the Registrant shall be indemnified by the
Registrant in connection with any proceeding in which he has been made a party
by reason of such capacity other than for liabilities resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. Pursuant to a contract of insurance,
which the Registrant proposes to obtain, each of the Registrant's directors,
officers and employees and its investment advisor will be insured against claims
based upon any breach of duty, neglect, error, misstatement, misleading
statement, omission or act wrongfully done or attempted other than actual or
alleged fraud, dishonesty criminal or malicious acts or omissions unless such
allegations are subsequently disproved.
ITEM 26. PRINCIPAL UNDERWRITERS
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
As used herein, the term "records" refers to accounts, books or other
documents.
The Registrant maintains physical possession of each record set forth in
Rule 31a-1(b)(1) under the Investment Company Act of 1940 (the "Act") at 1370
Avenue of the Americas, New York, New York 10019, except that records relating
to receipts and deliveries of portfolio securities are in the physical
possession of Firstar Bank, N.A., 425 Walnut Street, ML 5127, Cincinnati, Ohio
45202 and records relating to securities issued by the Registrant are in the
physical possession of American Data Services, Inc., 150 Motor Parkway, Suite
109, Hauppauge, New York 11788 ("ADS").
The records referred to in Rule 31a-1(b)(2)(i)(a), (b) and (c) under the
Act are in the physical possession of Firstar Bank, N.A.
The records referred to in Rule 31a-1(a) and Rule 31a-1(b)(2)(i)(d), (e)
and (f) under the Act are in the physical possession of ADS.
The records referred to in Rule 31a-1(b)(2)(ii), (iii) and (iv) and Rule
31a-1(b)(3) and (8)
<PAGE> 41
under the Act are in the physical possession of ADS.
The records referred to in Rule 31a-1(b)(2)(iv) and Rule 31a-1(b)(11) under
the Act are in the physical possession of ADS.
The records referred to in Rule 31a-1(b)(4), (5), (6), (7), (9),(10) and
(11) under the Act will be in the physical possession of the Registrant.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable.
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York and the State of New York on the 13th day of January, 2000.
THE AMERICAN HERITAGE FUND, INC.
By: /s/ Heiko H. Thieme
------------------------------------
Heiko H. Thieme, Chief Executive Officer
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.
Signature Title Date
--------- ----- ----
Heiko H. Thieme Chief Executive January 13, 2000
- --------------------------- Officer, Principal
Heiko H. Thieme Financial and
Accounting Officer
and Director
Eugene Sarver Director January 13, 2000
- ---------------------------
Eugene Sarver
Director , 2000
- ---------------------------
Stephen Swope
<PAGE> 1
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion by reference to Post-Effective Amendment No. 70
under the Securities Act of 1933 and Post-Effective Amendment No. 26 under the
Investment Company Act of 1940, on Form N-1A of American Heritage Fund, Inc.,
of our report dated July 30, 1999, on our examination of the Financial
Statements of such company. We also consent to the reference to our firm in
such Registration Statement.
/s/ MATHIESON AITKEN JEMISON, LLP
MATHIESON AITKEN JEMISON, LLP
January 18, 2000
