ASM FUND, INC.
Supplement dated January 16, 1997
to Prospectus Dated March 1, 1996
Revised April 1, 1996
The following items 1, 3, 4 and 5 supplement and should be read in
conjunction with the Prospectus cover, and pages 3, 4, 5 and 6
of the Prospectus. Item 2 replaces the current Table of Fees and
Expenses on pages 3 and 4 of the Prospectus.
1. The Fund has adopted a non-fundamental policy that its investment
advisor shall limit investments to the equity securities of the thirty
(30) companies that comprise the Dow Jones Industrial Average. The Dow
Jones Industrial Average is a trademark of Dow Jones & Company, Inc.
The Fund is neither sponsored by, nor affiliated with, Dow Jones &
Company, Inc.
2. TABLE OF FEES AND EXPENSES
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases. . . . . . . . . . . . None
Maximum Sales Load Imposed on Reinvested
Dividends and Capital Gains . .. . . . . . . . . . . . . . . None
Deferred Sales Load . .. . . . . . . . . . . . . . . . . . . . None
Redemption Fees . .. . . . . . . . . . . . . . . . . . . up to 0.75%a
Annual Fund Operation Expenses
(as a percentage of average net assets)b
Management Fees
(after expense reimbursements) c. . . . . . . . . . . . . . .0.00%
12b-1 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . None
Other Expenses. . . . . . . . . . . . . . . . . . . . . . . . .0.18%
Total Fund Operating Expenses d... . . . .. . . . . . . . . .0.18%
a The Fund will deduct a redemption fee of up to 0.75% of the value
of shares redeemed only if they are redeemed more than six (6)
times per year. However, the redemption fee will not be
applicable to shares held in omnibus accounts. See page 9. This
fee, which is applicable only to such short-term redemption on
certain accounts, is not reflected in the example below.
b The percentages expressing annual fund operation expenses reflect
the Advisor's obligation effective January 15, 1997 to reimburse
the Fund for expenses in excess of 0.18% of its net asset value
("NAV") for the current fiscal year. Prior thereto, the Advisor
reimbursed the Fund for expenses in excess of 1.86% from November
1, 1995 until October 31, 1996. For the period from November 1,
1996 until January 14, 1997, the Advisor reimbursed the Fund
for expenses in excess of 2.19%. Without the reimbursement of
$89,199, the ratio of expenses to average net assets for the
fiscal year ended October 31, 1996 would have been 2.59%.
c It is anticipated that the Fund's Board of Directors will
recommend for shareholder approval at the 1997 meeting of the Fund
an investment management agreement with the Advisor. The Fund
expects that such management agreement would authorize the payment
of a management fee of 0.08% of the Fund's average net assets,
subject to a waiver of the fee to the extent necessary to comply
with the expense limitation commitment set forth above to limit
the Total Fund Operating Expenses to 0.18%.
d In addition to these costs, the Fund assesses at the beginning of
each calendar quarter an account maintenance fee of $2.50. This
fee will be waived for shareholders with an account balance of
$10,000 or more.
The table above sets forth the various costs and expenses that a
shareholder in the Fund will bear directly or indirectly. The Annual
Fund Operation Expenses shown above are based in part on the agreement
of the Fund's advisor, Vector Index Advisors, Inc. (the "Advisor") to
reimburse the Fund for expenses incurred. See also, "Management of the
Fund."
Example:
You would pay the following expenses on a $1,000 investment
assuming: (1) a 5% annual return; and (2) a redemption at the end
of each time period:
1 year 3 years 5 years 10 years
$2 $6 $11 $26
The amounts listed in this example should not be considered as
representative of past or future expenses and actual expenses may be
greater or less than those indicated. Moreover, while the example
assumes a 5% annual return, the Fund's actual performance will vary and
may result in an actual return greater or less than 5%.
The example takes into account the fact that the Advisor has
agreed to limit the Fund's annual operating expenses to 0.18% of the
Fund's average net assets. Prior to January 15, 1997, the Advisor was
obligated to reimburse the Fund for expenses incurred in excess of 2.5%
of the Fund's average net assets. Consequently, the expenses reflected
in this table are less than you would have paid during the prior
period.
3. The following table represents interest amounts charged to the
Fund by the Fund's custodian bank as a result of early settlement of Fund
redemptions. The amounts shown were not subject to any volunary expense
reimbursement by the Advisor, and are treated as bank loans to the Fund.
(1) (2) (3) (4) (5)
Average Number
Fiscal Average Amount of Registrant's Average Amount
Year Amount of Debt of Debt Shares of Debt Per
(11/1 Outstanding at Outstanding Outstanding Share During
- -10/31) End of Period During the Period(b) During the Period the Period
1991(a) $0.00 $ 113 23,700 $0.004752
1992 $0.00 $222,943 461,227 $0.483369
1993 $0.00 $474,902 901,865 $0.526577
1994 $0.00 $385,752 693,241 $0.556447
1995 $0.00 $ 93 747,877 $0.000124
(a) Inception 3/4/91.
(b) Sum of debt outstanding each day divided by 365 (366 in fiscal year 1992).
4. The Fund's investments are supervised by Vector Index Advisors,
Inc., (the "Advisor"). The Advisory Agreement described in the
Prospectus between the Fund and the Advisor terminated on April 15,
1995. The Advisor continues to provide its services to the Fund, and
will continue to do so until other arrangements, such as approval by
the Fund of a new agreement between the Fund and the Advisor, can be
completed. The Advisor has not retained any management fee from the
Fund during the period from April 15, 1995 to the present, and will not
collect any advisory fee from the Fund until a new advisory agreement
is approved. The Advisor has agreed in writing to continue to fulfill
its commitment to limit the Fund expenses until that time.
5. The Fund may not have qualified as a regulated investment company
under the subchapter M of the Internal Revenue Code of 1986 during
certain prior periods. If the Fund becomes obligated to pay any
additional taxes, interest and/or penalties with respect to any prior
period, the Advisor has committed in writing to the Fund that it will
pay such amounts on behalf of the Fund to assure that the Fund does not
incur any financial impact as a result of this development.
IMPORTANT ANNOUNCEMENT
(To be read in conjunction with the supplement
beginning below)
AS OF JANUARY 15, 1997
THE EXPENSE RATIO FOR THE ASM FUND HAS BEEN LOWERED TO
0.18%*
SAME INVESTMENT POLICY:
INDEX THE DOW JONES INDUSTRIAL AVERAGE (THE "DOW").
* Accounts less than $10,000 will be charged an administration
fee of $2.50 per quarter.
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