As filed with the Securities and Exchange Commission on March 12, 1999
1940 Act Registration No. 811-6187
1933 Act File No. 33-36454
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /_/
Pre-Effective Amendment No. /_/ /_/
Post-Effective Amendment No. /11/ /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /X/
Amendment No. 11 /X/
(Check appropriate box or boxes)
ASM Index 30 Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
410 Park Avenue, 18th Floor, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
(212) 891-7900
Registrant's Telephone Number, Including Area Code
M. Fyzul Khan, Esq., 410 Park Avenue, 18th Floor, New
York, New York 10022
(Name and Address of Agent for Service)
Please send copies of communications to
Steven M. Felsenstein, Esq.
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
It is proposed that this filing will become effective immediately upon
filing pursuant to
/_/ immediately upon filing pursuant to paragraph (b)
/x/ on April 24, 1999 pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/_/ on ____________ pursuant to paragraph (a)(1)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on ____________ 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.
<PAGE>
ASM Index 30
Fund, Inc. Logo
ASM INDEX 30 FUND
410 Park Avenue
18th Floor
New York, New York 10022
(800) 333-4276
PROSPECTUS
DATED MARCH __, 1999
A DIVERSIFIED, PURE NO-LOAD MUTUAL FUND
Everything you need to open your account is inside, including:
Current Prospectus
New Account Application
New Account Information
How to Contact ASM Index 30 Fund
As with all mutual funds, the U.S. Securities and Exchange Commission has not
approved or disapproved these securities and does not guarantee the accuracy or
completeness of this Prospectus. It is a criminal offense to imply or state
otherwise.
<PAGE>
[Names of Companies that Comprise the Dow Jones Industrial
Average]
<PAGE>
Table of Contents Page Page
About the Fund 4
Performance 6 Selling Shares 11
Information
Fees and Expenses 7 Distribution and 12
Taxes
Management of the 8 Year 2000 12
Fund
Shareholder Recent 13
Investment Developments
Accounts 8 Legal Proceedings 13
Buying Shares 8 Financial 14
Highlights
<PAGE>
ABOUT THE FUND
Investment Objective --
The investment objective of the ASM Index 30 Fund, Inc.(the "Fund") is to
achieve total return through a combination of capital appreciation and current
income.
Investment Approach --
The Fund limits its investments to the common stocks of the 30 companies that
make up the well-known Dow Jones Industrial Average ("DJIA")*, all of which are
listed on the New York Stock Exchange. The stocks of these companies are widely
known and represent major American corporations engaged in a variety of
industries. The Fund is sold directly to investors at the current net asset
value without a sales charge or distribution (12b-1) charge.
The Fund invests at least 95% of the Fund's assets in an equal number of shares
of each of these 30 companies, without regard to the share prices of the
individual stocks, with the goal of tracking the total return of the DJIA. The
balance of any assets not invested in these companies is normally held in cash
or cash equivalents.
* "Dow Jones Industrial Average" and "DJIA" are the property of Dow Jones &
Company. The ASM Index 30 Fund, Inc. is neither affiliated with, nor
endorsed by, Dow Jones & Company.
Investment Risks --
There is no guarantee that the Fund will achieve its investment objective. Since
the Fund limits its investments to 30 widely followed stocks, any number of
factors, including market and economic conditions, can cause the Fund's
performance to be lower or greater than that of other funds which invest in
similar stocks. Because the prices of stocks fluctuate, your investment in the
Fund will fluctuate, which means that you could lose money. However, stocks have
historically been a popular choice of long term investors with specific
investment goals.
Some of the risks of investing in the Fund include:
Market Risk - Market risk is the risk that all or a majority of the
securities in a certain market like the stock or bond market - will decline
in value because of factors such as economic conditions, investor confidence
and future expectations.
Industry and Security Risk - Generally, this is the risk that the value of
securities in a particular industry or the value of an individual stock or
bond will decline because of changing expectations for the performance of
that industry or for the individual company issuing the stock or bond.
The risks make it possible that one or more of the stocks held by the Fund may
go down in value, which will affect the Fund's goal of increasing the total
value of Fund shares. However, by limiting the stocks held by the Fund to 30
well-known, major American corporations, the potential for risk, while not
eliminated, may be somewhat reduced. Please see the Statement of Additional
Information for further discussion of these risks and other risk factors.
The Fund may not achieve its investment goals and it is not intended to serve as
a complete investment program. An investment in the Fund is not a bank deposit
and it is not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or any other government agency.
<PAGE>
PERFORMANCE INFORMATION
The charts that follow help to show the returns and risks of investing in the
Fund. They show changes in the Fund's yearly performance over the life of the
Fund and compare the Fund's average annual returns for the past one-year,
five-year, and the life of the Fund to those of the DJIA during each period.
Investment performance also often reflects the risks associated with the Fund's
investment objective and policies. These factors should be considered when
comparing the Funds to other funds. You should keep in mind that the Fund's past
performance is not necessarily an indication of the Fund's future performance.
[OBJECT OMITTED]
Best Quarter: Q2 1997 17.08%
Worst Quarter: Q3 1998 -11.72%
The Fund's fiscal year end is October 31st. For the period from November 1, 1998
through January 31, 1999 the Fund's total return was 8.39%.
* Not annualized. Shares of the Fund were first sold on March 4, 1991.
Average Annual Total Returns (for the periods ending 12/31/98)
Since
Commencement
of
Operations
Past One Past Five March 4,
Year Years 1991
ASM Index 30 16.78% 18.71% 12.87%
Fund, Inc.
Dow Jones 18.13% 22.25% 18.79%
Industrial
Average++
++ The DJIA is a composite of the common stocks of 30 widely held, well-known
large capitalization domestic corporations. The DJIA's performance assumes
reinvestment of all dividends and distributions and does not reflect any
asset-based charges for investment management or other expenses.
FEES AND EXPENSES
The following table describes the fees and expenses that you would pay in
connection with an investment in the Fund. Annual Fund operating expenses are
deducted from the Fund's assets. The purpose of this table is to assist in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. The example should not be considered a
representation of past or future expenses and actual expense may be greater or
less than those shown.
------------------------------------
Shareholder Transaction Fees
(Fees paid directly from your
investment)
------------------------------------
Maximum Sales Charge None
(load) on Purchases (as a
percentage of offering
price)
Sales Charge on Reinvested None
Dividends
Redemption Fees None1
Exchange Fees None
------------------------------------
Annual Fund Operating Expenses
(Expenses that are deducted from
Fund assets)
------------------------------------
Advisory Fee 0.08%
Other Expenses 0.83%
Total Fund Operating 0.91%2
Expenses
------------------------------------
1 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. This fee, which is applicable only to such short-term
redemptions on certain accounts, is not reflected in the example below.
2 Extraordinary non-recurring expenses arising from recent events are
expected to result in a materially higher expense ratio during the current
period.
Expense Example --
This is an example of what you might pay in expenses over various time periods
and will help you to compare the cost of investing in the Fund with the cost of
investing in other mutual funds. It is based on the same hypothetical factors
used by other funds in their prospectuses: a $10,000 investment, 5% total return
each year and no change in Fund expense levels. This example is the same whether
you sold your shares at the end of the period or kept them. This example is for
comparison only since actual returns and expenses will be different.
One Year Three Five Ten Years
Years Years
Without Fee
Waiver or $93 $290 $504 $1,120
Expense
Limitation
MANAGEMENT OF THE FUND
The Fund is managed by the Board of Directors (the "Board") which is responsible
for protecting the interests of shareholders. The members of the Board are
experienced business persons who meet throughout the year to oversee the Fund's
activities, review contractual arrangements with companies that provide services
to the Fund, and review Fund performance.
The Board appoints an investment adviser to manage the day-to-day operations of
the Fund. The basis for this arrangement is detailed in an Investment Management
Agreement between the Fund and the investment adviser.
The Fund's investment adviser is required to manage the Fund in accordance with
its fundamental policy, which limits the Fund's investments to the common stocks
of the 30 companies that comprise the DJIA. In doing so, the investment adviser
is responsible for purchases and sales of the securities held by the Fund,
including the reinvestment of the Fund's assets. As such, the investment adviser
conducts the daily business affairs of the Fund and oversees investments in the
Fund in keeping with its investment objective, policies and restrictions.
On February 26, 1999, the Board appointed ORBITEX Management, Inc. ("ORBITEX"),
410 Park Avenue, New York, N.Y. 10022 to serve as the investment adviser to the
Fund for an interim period of up to 120 days. The Board also recommended that
shareholders approve (at a meeting to be called to consider this proposal) a
tax-free reorganization of the Fund as a new series of an existing fund managed
by ORBITEX.
SHAREHOLDER INVESTMENT ACCOUNTS
BUYING SHARES
You may purchase shares of the Fund without any sales charge directly from the
Fund or through an investment adviser, financial planner, broker, dealer or
other investment professional. You may buy shares at the Fund's Net Asset Value
("NAV"), which is calculated at the close of business (currently 4:00 pm Eastern
time) each day that the New York Stock Exchange is open. The NAV is determined
by dividing the value of the Fund's securities, cash and other assets, minus all
expenses and liabilities, by the number of shares outstanding. The Fund's
securities are valued each day at their market value, which usually means the
last quoted sale price on the security's principal exchange on that day. The
Fund reserves the right to reject large purchase orders its receives after 3:00
p.m. for purchasing on that day.
The following chart shows the minimum investments required to open an account:
Minimum Minimum
Initial Additional
Type of Account Investment Investment
Regular Accounts $1,000 $100
Automatic $1,000 $100
Investment Plan
Regular, Spousal,
Roth and $500 $100
Educational IRAs+
Only investments in U.S. dollars are accepted. Third party checks are not
acceptable. A fee may be charged for a check that does not clear and the Fund
reserves the right to refuse any investment.
+ For IRA accounts - Please call us at 1-800-333-4276 to obtain the required
forms to establish any of the IRAs currently available.
Share Exchange Privilege --
You may exchange shares you own (minimum, $2,500 initial, $100 per subsequent
investment) for shares of the Flex-Funds Money Market Fund, provided such shares
are offered in your state of residence. The exchange request may be made by
phone or by mail. Be sure to obtain and read the current prospectus of the
Flex-Funds Money Market Fund before you make the exchange. All new accounts
resulting from a share exchange will be subject to the same privileges as your
original account. Currently, there is no charge applicable for share exchanges.
Such exchange of shares, however, is considered a taxable event for IRS
purposes. The Fund may change, discontinue or temporarily suspend this exchange
privilege during unusual market conditions or upon 60 days' notice to
shareholders.
Automatic Investment Plan --
Shareholders may elect to automatically make investments in the Fund ($100
minimum per transaction) by completing the section of the account application
for this purpose. There is no charge for this service. However, the transfer
agent will impose a fee if sufficient funds are not available in your account at
the time of the automatic transaction.
Account Statements and Reports --
Every Shareholder will receive an account statement that describes transactions
processed in an account. In addition, every Shareholder will receive a statement
whenever the Fund declares a dividend or distribution. Shareholders will also
receive a year-end statement providing information for tax purposes as well as
Annual and Semi-Annual Reports for the Fund.
How to Open an Account --
---------------------------------------------
New Accounts Add to Accounts
---------------------------------------------
In Writing:
Complete and sign On the investment
the application and slip, fill in the
mail the amount you are
application along enclosing, write
with your check to: your account
number on your
check and mail to:
---------------------------------------------
ASM INDEX 30 FUND, INC.
c/o Mutual Funds Service Co., Inc.
P. O. Box 7177, 6000 Memorial Drive
Dublin, OH 43017
---------------------------------------------
By Phone - Federal
Funds Wire:
Call first to Instruct your bank
obtain an account to send your
number. Complete investment by wire
the required as follows:
information on the
application and
mail it to the
above address.
Instruct your bank
to wire your
investment to:
---------------------------------------------
Star Bank, N.A., Cinti/Trust, ABA #
0420-0001-3
Attn: ASM Index 30 Fund, Inc., Credit
Account # 480389436
Name(s) of registered Shareholder(s)
Personal Account Number (Your ASM Index 30
Fund, Inc. account number)
---------------------------------------------
Automatically:
Complete the Call us to request
required the appropriate
information on the forms and
application and instructions.
send it with your
initial investment
to:
---------------------------------------------
ASM INDEX 30 FUND, INC.
c/o Mutual Funds Service Co., Inc.
P. O. Box 7177, 6000 Memorial Drive
Dublin, OH 43017
---------------------------------------------
<PAGE>
SELLING SHARES
You may sell shares of the Fund that you own back to the Fund at any time. The
price per share will be the next NAV determined after you request is accepted in
good order by the Fund's transfer agent. A request for a sale of shares will be
processed promptly and you can generally expect to receive a check for the
proceeds within a week (7 days). No fees are imposed by the Fund when shares are
sold. You may redeem by telephone up to 3:00 p.m. EST.
How to Sell Your Shares --
In Writing: Mail to:
Send a written letter of
instruction signed by ASM Index 30 Fund,
all registered owners Inc.
indicating: c/o Mutual Fund
Service Co., Inc.
Your name(s) on the P.O. Box 7177
account 6000 Memorial Drive
Dublin, OH 43017
Your Account number
The dollar amount or the
number of shares you
wish to sell
How and where to send
the proceeds (including
signature guarantee(s)
and other documentation,
if required)
Please include
signature(s) and other
documentation, if
required.
By Phone:
Call us at 1-800-333-4276 with your request and a check will be sent to the
address of record.
By Wire:
Call us at 1-800-333-4276 with your request and a federal funds wire will be
transmitted to your bank based on the information you gave us on your account
application.
Certain written requests to sell shares require a signature guarantee. A
signature guarantee is used to help protect you and the Fund from fraud. A
signature guarantee for all registered owners is required under the following
circumstances: redemptions of $25,000 or more, all requests where the address of
record on the account was changed within the last 30 days, and when the proceeds
are to be sent to a different payee or address of record.
You can obtain a signature guarantee from most banks and securities dealers, but
not from a notary public. Please call the Fund to learn if a signature guarantee
is needed or to make sure that it is completed appropriately in order to avoid
any processing delays.
Additional Investment Information
The Fund reserves the right to make a "redemption in kind" (payment in portfolio
securities rather than cash) if the amount to be redeemed is large enough to
possibly affect Fund operations or if the redemption would otherwise disrupt the
Fund. For example, the Fund may redeem shares in-kind if the amount represents
more than 5% of the Fund's assets.
If you are selling shares recently purchased, your request may be delayed until
payment for those shares has been confirmed by the transfer agent, but not in
excess of 15 days.
DISTRIBUTIONS AND TAXES
In general, Fund distributions are taxable to you as either ordinary income or
capital gains. This is true whether you reinvest your distributions in
additional shares of the Fund or receive them in cash. Any capital gains the
Fund distributes are taxable to you as long-term capital gains no matter how
long you have owned your shares.
Every January you will receive a statement that shows the tax status of
distributions you received for the previous year. Distribution declared in
October, November and December but paid in January are taxable as if they were
paid in December.
When you sell your shares of the Fund, you may have a capital gain or loss. For
tax purposes, an exchange of your shares of the Fund for shares of The
Flex-Funds Money Market Fund is the same as a sale. The individual tax rate on
any gain from the sale or exchange of your shares depends on how long you have
held your shares.
By law, the Fund must withhold 31% of your taxable distributions and proceeds if
you do not provide your correct taxpayer identification number (TIN), or certify
that your TIN is correct, or if the IRS instructs the Fund to do so.
Fund distributions and gains from the sale or exchange of your shares will
generally be subject to state and local income tax. Non-U.S. investors may be
subject to U.S. withholding and estate tax. You should consult with your tax
adviser about the federal, state, local or foreign tax consequences of your
investment in the Fund.
YEAR 2000
As with other mutual funds, financial and business organizations and individuals
around the world, the Fund could be adversely affected if the computer systems
used by its service providers do not properly process and calculate data-related
information on or after January 1, 2000. This is commonly referred to as the
"Year 2000 Issue." The Fund is taking steps to obtain satisfactory assurances
that the Fund's major service providers are taking steps reasonably designed to
address the Year 2000 Issue with respect to the computer systems that such
service providers use. There can be no assurance that these steps will be
sufficient to avoid any adverse impact on the business of the Fund.
RECENT DEVELOPMENTS
The appointment of ORBITEX as the Fund's investment adviser was approved by the
Board to assure continuity of management upon the termination of the previous
adviser as of the close of business on February 28, 1999. The Board has also
proposed that shareholders approve a tax-free reorganization of the Fund with
another fund advised by ORBITEX.
LEGAL PROCEEDINGS
On February 8, 1999, a suit was filed against a former director and officer of
the Fund; the investment adviser of the Fund; and the Fund alleging that the
former officer of the Fund failed to invest in the Fund amounts purportedly paid
by the plaintiffs to the investment adviser of the Fund. The relief sought is
the recovery of the investment amounts and interest thereon, additional general,
consequential and incidental damages, legal costs and disbursements, and
declaratory and injunctive relief to preclude the Fund from transferring or
permitting the dissipation of its assets. With the possible exception of Steven
H. Adler, the former officer and director of the Fund, the Fund had no knowledge
that the amounts purportedly paid by the plaintiffs to the former investment
adviser were, as the plaintiffs have alleged, to be invested in the Fund. The
Fund and its counsel are investigating this matter and the possibility that
other unasserted claims or improprieties exist. At the present time, the
liability of the Fund, if any, is not readily determinable.
<PAGE>
FINANCIAL HIGHLIGHTS
The table below provides details of the Fund's performance for the fiscal years
ended October 31 from 1994 to the present. The line at the end of the first
section, "Total Return", shows the actual performance results experienced by the
Fund for each period and the percentage by which an investment in the Fund would
have increased (or decreased), assuming all distributions were reinvested each
year. All of these figures were audited by the Fund's independent auditors,
PricewaterhouseCoopers, LLP, or other accounting firms previously engaged by the
Fund. The report of PricewaterhouseCoopers, LLP, for the most recent fiscal year
and the Fund's financial statements, are included in the Fund's Statement of
Additional Information, which is available upon request.
<TABLE>
<CAPTION>
Years Ended October 31,
1998 1997 1996 1995<F4> 1994<F4>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $17.21 $14.13 $11.37 $9.78 $10.07
Investment operations:
Net investment income 0.32 0.18 0.08 0.00 0.56
Net gains (losses) from investments
(realized and unrealized) 2.54 3.34 2.76 1.77 -0.16
----- ----- ----- ----- -----
Total from investment operations 2.86 3.52 2.84 1.77 0.40
----- ----- ----- ----- -----
Distributions:
From net investment income -0.27 -0.18 -0.07 -0.05 -0.52
In excess of net investment income 0.00 -0.11 -0.01 -0.13 0.00
From net realized gains -0.78 -0.15 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 -0.17
----- ----- ----- ----- -----
Total Distributions -1.05 -0.44 -0.08 -0.18 -0.69
----- ----- ----- ----- -----
Net asset value, end of year $19.02 $17.21 $14.13 $11.37 $ 9.78
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return 17.13% 25.18% 25.01% 18.10% 3.97%
Ratios/supplemental data:
Net assets, end of year (000) $29,535 $21,127 $9,315 $9,704 $7,277
Ratio of expenses to average
net assets<F1> 0.18% 0.42% 1.86% 3.01%<F2> 0.75%
Ratio of net investment
income to average net assets<F1> 1.60% 1.51% 0.53% 0.04% 2.17%
Portfolio turnover rate<F3> 196% 265% 391% 340% 1193%
<FN>
<F1> Ratios are presented net of fees voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as follows: ratio
of expenses to average net assets would have been 0.91%, 1.05%, 2.59%,
5.77% and 2.94% for 1998, 1997, 1996, 1995, and 1994, respectively; ratio
of net investment income (loss) to average net assets would have been
0.87%, 0.88%, (0.20%), (2.72%) and (0.02%) for 1998, 1997, 1996, 1995 and
1994, respectively. As a result of certain tax adjustments necessitated by
the Fund's failure to qualify as a regulated investment company for the
years ended October 31, 1995 and 1994, as well as other adjustments, the
gross expense ratios previously reported for these periods have been
restated.
<F2> Includes $50,460 of interest expense not subject to the expense
reimbursement agreement.
<F3> The Fund continues to be as fully invested in equities as possible.
Therefore, portfolio turnover is higher than most equity mutual funds
because purchases and sales of securities are necessary for settlement of
transactions requested by Fund shareholders.
<F4> Audited by predecessor auditor.
</FN>
</TABLE>
<PAGE>
ASM Index 30
Fund, Inc. Logo
A Statement of Additional Information ("SAI") contains additional information
about the Fund and is incorporated by reference into this Prospectus. The Fund's
Annual and Semi-Annual Reports to shareholders contain additional information
about the Fund's investments. In the Fund's Annual Report, you will find a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during the fiscal year.
You may obtain a free copy of these documents by calling or writing the Fund:
BY TELEPHONE: 1-800-333-4276
BY MAIL: ASM Index 30 Fund, Inc.
410 Park Avenue
18th Floor,
New York, NY 10022
ASM Index 30 Fund, Inc.
c/o Mutual Funds Service Co., Inc.
6000 Memorial Drive
P. O. Box 7177
Dublin, OH 43017
You may review and copy the SAI and other information about the Fund by visiting
the Securities and Exchange Commission's Public Reference Room in Washington,
D.C. or by visiting the Commission's Internet site at http://www.sec.gov. Copies
of this information may also be obtained, upon payment of a duplicating fee, by
writing to the Public Reference Section of the Commission, Washington, D.C.
20549-6009. You may call the Commission at 1-800-SEC-0330 for information about
the operation of the public reference room.
(Investment Company Act No. 811-6187)
<PAGE>
ASM INDEX 30 FUND, INC.
Statement of Additional Information
March __, 1999
This Statement of Additional Information (SAI) relates to the ASM Index 30 Fund,
Inc., (the "Fund") which is a registered open-end management investment company,
commonly known as a mutual fund. This SAI is not a prospectus and should be read
in conjunction with the prospectus of the Fund dated March __, 1999.
TABLE OF CONTENTS PAGE
Fund History 3
Description of the Fund and its
investments and risks 3
Investment Restrictions 5
Portfolio Turnover 7
Management of the Fund 7
Control Persons and Principal
Holders of Securities 9
Investment Advisory and Other Services 10
Brokerage Allocation and Other Practices 12
Purchases, Redemptions and Pricing
of Shares 13
Taxation of the Fund 14
Underwriters 16
Calculation of Performance Data 16
Financial Statements 20
Appendix A - Standard & Poor's
Bond Ratings 32
Appendix B - Moody's Bond Ratings 33
<PAGE>
FUND HISTORY
The Fund was organized in the State of Maryland on April 25, 1990. The Fund is a
diversified, open-end management investment company.
It is not contemplated that regular annual meetings of shareholders will be
held. There normally will be no meetings of shareholders for the purpose of
electing directors unless and until such time as less than a majority of the
directors holding office have been elected by shareholders, at which time the
directors then in office will call a shareholders' meeting for the election of
directors. The Fund has undertaken to afford shareholders certain rights,
including the right to call a meeting of shareholders for the purpose of voting
on the removal of one or more directors. Such removal can be effected upon the
action of two-thirds of the outstanding shares of the Fund. The directors are
required to call a meeting of shareholders for the purpose of voting on the
question of removal of any director when requested in writing to do so by
shareholders of record of not less than 10% of the Fund's outstanding shares. In
addition, ten of the Fund's shareholders holding the lesser of $25,000 worth or
one percent of the Fund's shares may advise the directors in writing that they
wish to communicate with other shareholders for the purpose of requesting a
meeting to remove a director. The directors will then, if requested by the
Applicants, mail at the Applicants' expense the Applicants' communication to all
other shareholders.
DESCRIPTION OF THE FUND AND ITS INVESTMENTS AND RISKS
The following information supplements the discussion of the Fund's investment
objectives and policies.
The investment objective of the Fund is to provide total return through a
combination of capital appreciation and current income. The Fund's investment
policies are described in the Fund's prospectus.
SHORT-TERM INVESTMENTS
With respect to no more than 5% of the Fund's total assets, the Fund may invest
in the following:
Repurchase Agreements
Repurchase agreements are transactions in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon date and price reflecting
a market rate of interest unrelated to the coupon rate or maturity of the
purchased security. The Fund maintains custody of the underlying securities
prior to their repurchase; thus the obligation of the bank or dealer to pay the
repurchase price on the date agreed to is, in effect, secured by such underlying
securities. If the value of such securities is less than the repurchase price,
the other party to the agreement will provide additional collateral so that at
all times the collateral is at least equal to the repurchase price.
Although repurchase agreements carry certain risks not associated with direct
investments in securities, the Fund intends to enter into repurchase agreements
only with banks and dealers believed by the Adviser to present minimum credit
risks in accordance with guidelines established by the Board. The Adviser will
review and monitor the creditworthiness of such institutions under the Board's
general supervision. To the extent that the proceeds from any sale of collateral
upon a default in the obligation to repurchase were less than the repurchase
price, the Fund would suffer a loss. If the other party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there might be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under such Code that would allow it immediately to resell the collateral.
Commercial Paper
The Fund may invest in commercial paper which are short-term promissory notes
issued by companies to finance their, or their affiliates', current obligations.
The Fund may purchase only high quality obligations that ORBITEX Management,
Inc. (the "Adviser") believes present minimal credit risks. To be considered
high quality, a security must be (i) an obligation issued by the U.S.
government; (ii) with respect to commercial paper other than obligations issued
by the U.S. government, rated in accordance with applicable rules in one of the
two highest rating categories for short-term obligations by at least two
nationally recognized statistical rating organizations (each referred to as an
"NRSRO") (or by one NRSRO, if only one has rated the security); or (iii) if
unrated, judged by the Adviser to be of equivalent quality to short-term
obligations rated in one of the two highest rating categories for short-term
obligations by at least two NRSROs. The rating categories of two NRSROs are
included in Appendices to this SAI.
U.S. Government Securities and Obligations
The Fund may invest in U.S. government securities, which include direct
obligations of the U.S. Treasury (such as U.S. Treasury bills, notes and bonds)
and obligations directly issued or guaranteed by U.S. government agencies or
instrumentalities. Some obligations issued or guaranteed by agencies or
instrumentalities of the U.S. government are backed by the full faith and credit
of the U.S. government (such as Government National Mortgage Association bonds),
others are backed only by the right of the issuer to borrow from the U.S.
Treasury (such as securities of Federal Home Loan Banks), and others are backed
only by the credit of the instrumentality.
Eurodollar Bank Obligations
The Fund may invest in Eurodollar bank obligations that the Adviser believes
present minimal credit risks. Eurodollar bank obligations are dollar-denominated
certificates of deposit or time deposits issued outside the U.S. capital markets
by foreign branches of U.S. banks and by foreign banks. The Eurodollar bank
obligations are subject to certain sovereign risks. One such risk is the
possibility that a foreign government might prevent dollar-denominated funds
from flowing across its borders. Other risks include: adverse political and
economic developments in a foreign country; the extent and quality of government
regulation of financial markets and institutions; the imposition of foreign
withholding taxes; and expropriation or nationalization of foreign issuers.
Star Treasury Fund Shares
The Fund may also invest in shares of the Star Treasury Fund. Star Treasury Fund
is a series of a Massachusetts business trust registered as an open-end
investment management company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and is managed by the Fund's custodian, Star Bank. The
Fund's investments in such shares shall be limited to investments pursuant to
sweep arrangements for the overnight investment of assets of the Fund that are
not otherwise invested at the end of a given day.
INVESTMENT RESTRICTIONS
The Fund has adopted the following restrictions (in addition to those indicated
in its prospectus) as fundamental policies, which may not be changed without the
favorable vote of the holders of a "majority," as defined in the 1940 Act, of
the Fund's outstanding voting securities. Under the 1940 Act, the vote of the
holders of a majority of a Fund's outstanding voting securities means the vote
of the holders of the lesser of (i) 67% of the shares of the Fund represented at
a meeting at which the holders of more than 50% of its outstanding shares are
represented or (ii) more than 50% of the outstanding shares.
The Fund may not:
1. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions.
2. Make short sales of securities or maintain a short position.
3. Issue senior securities, borrow money or pledge its assets, except that the
Fund may borrow on an unsecured basis from banks for temporary or emergency
purposes or for the clearance of transactions in amounts not exceeding 10%
of its total assets (not including the amount borrowed) and will not make
investments while borrowings in excess of 5% of the value of the Fund's
total assets are outstanding.
4. Buy or sell commodities or commodity futures contracts, or buy or sell real
estate, real estate limited partnership interests or other interests in
real estate (although it may purchase and sell securities which are secured
by real estate and securities of companies which invest or deal in real
estate).
5. Make loans (except for purchases of publicly-traded debt securities
consistent with the Fund's investment policies).
6. Make investments for the purpose of exercising control or management.
7. Act as underwriter (except to the extent the Fund may be deemed to be an
underwriter in connection with the sale of securities in the Fund's
investment portfolio).
8. Invest 25% or more of its total assets (calculated at the time of purchase
and taken at market value) in any one industry.
9. As to 75% of the value of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer (other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities), or purchase more than 10% of all outstanding voting
securities of any one issuer.
The Fund observes the following restrictions as a matter of operating but not
fundamental policy, pursuant to positions taken by federal and state regulatory
authorities:
The Fund may not:
10. Purchase any security if as a result the Fund would then hold more than 10%
of any class of securities of an issuer (taking all common stock issues as
a single class, all preferred stock issues as a single class, and all debt
issues a single class).
11. Invest in securities of any issuer if, to the knowledge of the Fund, any
officer or director of the Fund or of the Adviser owns more than 1/2 of 1%
of the outstanding securities of such issuer, and such directors who own
more than 1/2 of 1% own in the aggregate more than 5% of the outstanding
securities of such issuer.
12. Invest more than 5% of the value of its net assets in warrants (included in
that amount, but not to exceed 2% of the value of the Fund's net assets,
may be warrants which are not listed on the New York or American Stock
Exchange).
13. Invest in any security if as a result the Fund would have more than 5% of
its total assets invested in securities of companies which together with
any predecessor have been in continuous operation for fewer than three
years.
14. Invest in oil, gas or mineral related programs, partnerships or leases.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate for each of the fiscal years ending October
31, 1997 and 1998 was 265% and 196%, respectively. The Fund continues to be 100%
invested in equities. Therefore, almost all Fund portfolio turnover is a result
of purchases and sale of securities necessary for settlement of transactions
requested by Fund shareholders. High portfolio turnover may involve additional
brokerage or tax consequences to the Fund and its shareholders. See
"Distribution and Taxes" in the Fund's Prospectus.
MANAGEMENT OF THE FUND
The overall management of the business and affairs of the Fund is vested with
its Board of Directors (the "Board"). The Board approves all significant
agreements between the Fund and persons or companies furnishing services to it,
including the Fund's agreement with its Adviser, Custodian, Transfer Agent,
Accounting and Administrative providers. The day to day operations of the Fund
are delegated to its officers, subject to the investment objectives and policies
of the Fund and to general supervision by the Board. The directors and officers
of the Fund and of the Adviser, their age, business addresses and principal
occupations during the past five years are:
Directors & Position with Principal
Officers Fund Occupation
During the
Past 5 Years
W. Keith Schilit Director; Faculty
Age 44 Chair, Audit Member, Univ.
Catalyst Ventures Committee of South
4928 Bay Way Florida;
Drive President,
Tampa, FL 33629 Catalyst
Ventures
Daniel Calabria Director Retired;
Age 62 formerly
7068 So. Shore Executive Vice
Drive So. President, Wm.
South Pasadena, R. Hough &
FL 33707 Co.; formerly
President,
Templeton Fund
Management
Corp.;
Trustee, IDEX
Mutual Funds;
Trustee,
Florida
TaxFree Funds
Jerome P. Director President,
Feltenstein, American
Age 64 Business
61 Mimosa Drive Associates,
Cos Cob, CT 06807 Inc.
Arthur Salzfass Director Consultant,
Age 64 Micro Info;
98 Paulding Drive Director, SBM
Chappaqua, NY Inc.;
10514 President,
Rutledge
Books, Inc.;
Chief
Operating
Officer,
Honi-Corp,
Inc.; Chief
Executive
Officer and
President,
U.S. Fibercom,
Inc.
S. Cash Ulmer Acting Chief Employee of
(1), (2) Executive the Fund;
Age 35 Officer and student,
Vice President Stetson University
College of Law
and MBA
program.
M. Fyzul Khan Compliance Legal Counsel
(1), (3) Officer and and 1940 Act
Age 27 Secretary Compliance
Officer, and currently
Corporate Secretary,
of the Adviser, March 1998
to present; Corporate
Secretary of ORBITEX Group
of Funds; formerly in-house
attorney at CIBC Oppenheimer
from August 1997 to March 1998,
and law student at Widener
University School
of Law from September 1994 to
June 1997.
(1) Interested person of the Fund under the 1940 Act.
(2) On December 11, 1998, S. Cash Ulmer was appointed by the Board of the Fund
to serve as acting Chief Executive Officer of the Fund. In connection with
the Adviser's appointment as investment adviser of the Fund and the
proposed reorganization of the Fund, the Board, acting on March 6, 1999,
has retained S. Cash Ulmer as a consultant for several months and accepted
his resignation from his position as an officer with the Fund, both actions
effective on March 31, 1999.
(3) On March 6, 1999, the Board acted to appoint M. Fyzul Khan as the only
officer of the Fund beginning on April 1,1999.
The following table shows the compensation paid by the Fund to the Directors of
the Fund during the fiscal year ended October 31, 1998:
COMPENSATION TABLE
- ----------------------------------------------------------------------------
Pension Total
orn Compensation
Retirement From
Benefits Estimate Fund and
Aggregate Accrued Annual Fund
Name of Compensation as Part Benefits Complex
Person, from of Fund Upon Paid to
Position Fund Expenses Retirement Directors
- ---------------------------------------------------------------------------
Steven H. None None None None
Adler*,
Former
President
W. Keith $5,500 None None $5,500
Schilit,
Director
Daniel $5,500 None None $5,500
Calabria,
Director
Jerome P. $5,500 None None $5,500
Feltenstein,
Director
Arthur $5,500 None None $5,500
Salzfass,
Director
The Fund pays fees of $4,000 per year plus $500 for each meeting attended by
directors who are not "interested persons" of the Fund. Such directors are
reimbursed for any expenses incurred in attending meetings. During the fiscal
period ended October 31, 1998, directors' fees and expenses totaled $22,000.
* In connection with the termination of Vector Index Advisors, Inc.
("Vector") as investment adviser of the Fund, the Board of the Fund
accepted as of February 28, 1999, the resignation of Steven H. Adler,
Chairman and Present of Vector as a director and officer of the Fund.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
(a) As of March 9, 1999, there were no control persons of the Fund.
(b) Principal Holders
As of March 9 1999, the following persons held of record 5% or more of the
outstanding shares of common stock of the Fund:
Name & Address % Ownership
Donaldson Lufkin & 5.9%
Jenrette
Pershing Division
P.O. Box 2052
Jersey City, NJ
7303-2052
National Financial 12.6%
Services Corp.
Church Street Station,
5th Floor
P.O. Box 3908
New York, NY 10008-3908
National Investor 7.3%
Services
For the Exclusive
Benefit of Our Customers
55 Water Street
New York, NY 10041
FTC & Co. 16.3%
Attn: Datalynx
House Account
P.O. Box 173736
Denver, CO 80217-3736
As of March 9, 1999, the officers and directors of the Fund owned less than 1%
of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
THE MANAGEMENT AGREEMENT
Subject to the supervision of the Board, current investment advisory and
management services are provided to the Fund by ORBITEX Management, Inc., (the
"Adviser") pursuant to an Investment Management Agreement dated as of February
28, 1999 (the "Agreement"). The Adviser is a New York corporation that is owned
by a Zurich parent founded in 1986. The ORBITEX Group of Companies currently
manages approximately $1.2 billion of assets.
The Agreement was approved by the Board and by a majority of the directors who
neither are interested persons of the Fund nor have any direct or indirect
financial interest in the Agreement or any other agreement related thereto
("Independent Directors") on February 26, 1999. The Agreement will continue in
effect until the earlier of July 1, 1999 or the vote of shareholders either
approving or disapproving a new management agreement with the Adviser.
Under the Agreement, the Adviser provides a continuous investment program for
the Fund and makes decisions and places orders to buy, sell or hold particular
securities. The Adviser also supervises all matters relating to the operation of
the Fund and obtains for it corporate officers, clerical staff, office space,
equipment and services. Under the Agreement, the Adviser is entitled to receive
a monthly fee at an annual rate of 0.08 of 1% of the Fund's average daily net
assets for services provided to the Fund. In addition to the fee payable to the
Adviser, the Fund is responsible for its operating expenses, including: (i)
interest and taxes; (ii) brokerage and futures commissions; (iii) insurance
premiums; (iv) compensation and expenses of Directors other than those
affiliated with the Adviser; (v) legal and audit expenses; (vi) fees and
expenses of the custodian, shareholder, service or transfer agent; (vii) fees
and expenses for registration or qualification of the Fund and its shares under
federal or state securities laws; (viii) expenses of preparing, printing and
mailing reports and notices and proxy material to shareholders; (ix) other
expenses incidental to holding any shareholder meetings; (x) dues or assessments
of or contributions to the Investment Company Institute or any successor; and
(xi) such non-recurring expenses as may arise, including litigation affecting
the Fund and the legal obligations with respect to which the Fund may have to
indemnify its officers and Directors.
The Adviser will not continue the waiver of fees and reimbursement of expenses
arrangements that the previous investment adviser had with the Fund.
For the fiscal year ended 1998, the Fund's previous adviser waived fees and
reimbursed the Fund for expenses in the amount of $242,280 which included
management fees of $26,302. For fiscal years ended 1996 and 1997 the previous
adviser was not entitled to any fees, and reimbursed the Fund for expenses in
the amount of $89,199 and $180,781, respectively.
Under the terms of the Agreement, the Adviser will continue to use the
administrative services of the present administrator for the Fund. The services
provided under the Agreement are subject to the supervision of the officers and
directors of the Fund, and include the day-to-day administration of matters
related to the corporate existence of the Fund, maintenance of its records,
preparation of reports, and assistance in the preparation of the Fund's
registration statements under Federal and State laws.
The cost of distributing shares of the Fund is borne by the Adviser.
Unaffiliated registered broker-dealers act as, or will act as distributor of
Fund shares at no cost to the Fund.
The Agreement is terminable by vote of the Board or by the holders of a majority
of the outstanding voting securities of the Fund at any time without penalty, on
60 days' written notice to the Adviser. The Agreement may also be terminated by
the Adviser on 60 days written notice to the Fund. On December 23, 1998, the
Board voted to approve the termination of the previous adviser effective at the
close of business on February 28, 1999. The previous adviser served as
investment adviser to the Fund until that date.
OTHER SERVICE PROVIDERS
PricewaterhouseCoopers LLP, 200 South Biscayne Boulevard, Suite 1900, Miami,
Florida 33131 have been chosen to be independent auditors for the Fund.
The Fund employs Mutual Funds Service Co., P.O. Box 7177, 6000 Memorial Drive,
Dublin, OH 43017 to provide fund administrative, accounting and transfer agency
services. For the administrative, accounting and transfer agency services
provided, Mutual Funds Service Co., received $36,409, $52,791 and $76,464 for
1996, 1997, and 1998, respectively.
In addition, Star Bank, N.A., located at 425 Walnut Street, Cincinnati, Ohio
45201, serves as the Fund's Custodian.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Agreement states that in connection with its duties to arrange for the
purchase and the sale of securities held in the portfolio of the Fund by placing
purchase and sale orders for the Fund, the Adviser shall select such
broker-dealers ("brokers") as shall, in its judgment, achieve the policy of
"best execution," i.e., prompt and efficient execution at the most favorable
securities price. In making such selection, the Adviser is authorized in the
Agreement to consider the reliability, integrity and financial condition of the
broker. The Adviser also is authorized by Agreement to consider whether the
broker provides research or statistical information to the Fund and/or other
accounts of the Adviser.
The Agreement states that the commissions paid to brokers may be higher than
another broker would have charged if a good faith determination is made by the
Adviser that the commission is reasonable in relation to the services provided,
viewed in terms of either that particular transaction or the Adviser's overall
responsibilities as to the accounts as to which it exercises investment
discretion and that the Adviser shall use its judgment in determining that the
amount of commissions paid are reasonable in relation to the value of brokerage
and research services provided and need not place or attempt to place a specific
dollar value on such services or on the portion of commission rates reflecting
such services. The Agreement provides that to demonstrate that such
determinations were in good faith, and to show the overall reasonableness of
commissions paid, the Adviser shall be prepared to show that commissions paid
(i) were for purposes contemplated by the Agreement; (ii) were for products or
services which provide lawful and appropriate assistance to its decision-making
process; and (iii) were within a reasonable range as compared to the rates
charged by brokers to other institutional investors as such rates may become
known from available information.
The research services discussed above may be in written form or through direct
contact with individuals and may include information as to particular companies
and securities as well as market, economic or institutional areas and
information assisting the Fund in the valuation of its investments. The research
which the Adviser receives for the Fund's brokerage commissions, whether or not
useful to the Fund, may be useful to it in managing the accounts of its other
advisory clients, if any. Similarly, the research received for the commissions
of such accounts may be useful to the Fund.
During the fiscal years ended October 31, 1996, 1997 and 1998, the Fund paid a
total of $124,142, $83,760 and $77,797 in brokerage commissions, respectively.
CAPITAL STOCK
The Fund is authorized to issue 1,000,000,000 shares of common stock, $.001 per
value (the "Common Stock"). Shares of the Fund, when issued, are fully
transferable and redeemable at the option of the holder. Shares are also
redeemable at the option of the Fund in certain circumstances as described in
the Fund's Prospectus under "Selling Shares." All Fund shares are equal as to
earnings assets and voting privileges. There are no conversion, preemption or
other subscription rights. Under the Fund's Articles of Incorporation, the Board
may authorize the creation of additional series of common stock, with such
preferences, privileges, limitations and voting and dividend rights as the Board
may determine. Each share of the Fund outstanding is entitled to share equally
in dividends and other distributions and in the net assets of the Fund on
liquidation. Accordingly, in the event of liquidation, each share of the Fund's
common stock is entitled to its portion of all the Fund's assets after all debts
and expenses have been paid. The shares of the Fund do not have cumulative
voting rights for the election of Directors.
PURCHASES, REDEMPTIONS AND PRICING OF SHARES
NET ASSET VALUE
The net asset value of the Fund's shares will fluctuate and is determined as of
the close of trading on the New York Stock Exchange (NYSE) (currently 4:00 p.m.
Eastern time) on each day the NYSE is open. The Fund is open for business on
days when the NYSE is open. Currently, the NYSE observes the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, the Exchange may close on days not included above.
The net asset value per share is computed by dividing the value of the
securities held by the Fund plus any cash or other assets (including interest
and dividends accrued but not yet received) minus all liabilities (including
accrued expenses) by the total number of Fund shares outstanding at such time.
Portfolio securities that are principally traded on a national securities
exchange are valued at their last sale on the exchange on which they are
principally traded prior to the close of the NYSE or, in the absence of recorded
sales, at their current bid price on such exchanges. Securities listed on the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
are valued at the last available sale price on NASDAQ prior to the time of
valuation. Securities that are principally traded in securities markets, but not
principally traded on securities exchanges or NASDAQ, are valued at the current
bid price prior to the close of the NYSE. Other securities and assets for which
market quotations are not readily available are valued at fair value as
determined in good faith using methods approved by the Board.
REDEMPTION IN KIND
If the Board determines that it would be detrimental to the best interests of
the remaining shareholders of the Fund to make payment wholly in cash, the Fund
may pay the redemption price in part by a distribution in kind of securities
from the portfolio of the Fund, in lieu of cash. The Fund has elected to be
governed by Rule 18f-1 under the 1940 Act pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of $250,000 or one
percent of the net asset value of the Fund during any 90 day period for any one
shareholder. Should redemptions by any shareholder exceed such limitation, the
Fund will have the option of redeeming the excess in cash or in kind. If shares
are redeemed in kind, the redeeming shareholder would incur brokerage costs in
converting the assets into cash.
TAXATION OF THE FUND
Distribution of net investment income. The Fund receives income generally in the
form of dividends and interest on its investments. This income, less expenses
incurred in the operation of the Fund, constitutes the Fund's investment income
from which dividends may be paid to you. Any distributions by the Fund from such
income will be taxable to you as ordinary income, whether you take them in cash
or in additional shares. The Fund distributes dividends to you on a quarterly
basis.
Distributions of capital gains. The Fund may derive capital gains and losses in
connection with the sales or other dispositions of its portfolio securities.
Distributions from net short-term capital gains will be taxable to you as
ordinary income. Distributions from net long-term capital gains will be taxable
to you as long-term capital gain, regardless of how long you have held your
shares in the Fund. Any net capital gains realized by the Fund generally will be
distributed once each year, and may be distributed more frequently, if
necessary, in order to reduce or eliminate excise or income taxes on the Fund.
Information on the tax character of distributions. The Fund will inform you of
the amount of your ordinary income dividends and capital gains distributions at
the time they are paid, and will advise you of their tax status for federal
income tax purposes shortly after the close of each calendar year. If you have
not held Fund shares for a full year, the Fund may designate and distribute to
you as ordinary income or capital gain a percentage of income that is not equal
to the actual amount of such income earned during the period of your investment
in the Fund.
Election to be taxed as a regulated investment company. The Fund has elected to
be treated as a regulated investment company under Subchapter M of the Internal
Revenue Code, has qualified as such for its most recent fiscal year, and intends
to so qualify during the current fiscal year. As a regulated investment company,
the Fund generally pays no federal income tax on the income and gains it
distributed to you. The Board reserves the right not to maintain the
qualification of the Fund as a regulated investment company if it determined
such course of action to be beneficial to shareholders. In such case, the Fund
will be subject to federal, and possibly state, corporate taxes on its taxable
income and gains, and distributions to you will be taxed as ordinary dividend
income to the extent of the Fund's earnings and profits.
Excise tax distributions requirements. To avoid federal excise taxes, the
Internal Revenue Code requires the Fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. The Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.
Redemption of Fund shares. Redemptions and exchanges of Fund shares are taxable
transactions for federal and state income tax purposes. If you redeem your Fund
shares, or exchange your Fund shares for shares of The Flex-Funds Money Market
Fund, the IRS will require that you report a gain or loss on your redemption or
exchange. If you hold your shares as a capital asset, the gain or loss that you
realize will be capital gain or loss and will be long-term or short-term,
generally depending on how long you hold your shares. Any loss incurred on the
redemption or exchange of shares held for six months or less will be treated as
a long-term capital loss to the extent of any long-term capital gains
distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in the Fund
(through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to
your tax basis in the new shares you buy.
Dividends-received deduction for corporations. As a corporate shareholder, you
should note that 19.6% of the dividends paid by the Fund for the most recent
fiscal year qualified for the dividends-received deduction. You will be
permitted in some circumstances to deduct these qualified dividends, thereby
reducing the tax that you would otherwise be required to pay on these dividends.
The dividends-received deduction will be available only with respect to
dividends designated by the Fund as eligible for such treatment. All dividends
(including the deducted portion) must be included in your alternative minimum
taxable income calculations.
UNDERWRITERS
The costs of distributing shares of the Fund is borne by the Adviser.
Unaffiliated registered broker-dealers act as, or will act as, distributor of
Fund shares at no cost to the Fund.
CALCULATION OF PERFORMANCE DATA
From time to time the Fund may quote its average annual total return
("standardized return") in advertisements or promotional materials.
Advertisements and promotional materials reflecting standardized return
("performance advertisements") will show percentage rates reflecting the average
annual change in the value of an assumed initial investment in the Fund of
$1,000 at the end of one, five and ten year periods. If such periods have not
yet elapsed, data will be given as of the end of a shorter period corresponding
to the duration of the Fund. Standardized return assumes the reinvestment of all
dividends and capital gain distributions.
The Fund also may refer in advertising and promotional materials to its yield.
The Fund's yield shows the rate of income that it earns on its investments,
expressed as a percentage of the net asset value of Fund shares. The Fund
calculates yield by determining the interest income it earned from its portfolio
investments for a specified thirty day period (net of expenses), dividing such
income by the average number of Fund shares outstanding, and expressing the
result as an annualized percentage based on the net assets value at the end of
that thirty day period. Yield accounting methods differ from the methods used
for other accounting purposes; accordingly, the Fund's yield may not equal the
dividend income actually paid to investors or the income reported in the Fund's
financial statements.
In addition to standardized return, performance advertisements may also include
other total return performance data ("non-standardized return").
Non-standardized return may be quoted for the same or different periods as those
for which standardized return is quoted and may consist of aggregate or average
annual percentage rate of return, actual year by year rates or any combination
thereof.
All data included in performance advertisements will reflect past performance
and will not necessarily be indicative of future results. The investment return
and principal value of an investment in the Fund will fluctuate, and an
investor's proceeds upon redeeming Fund shares may be more or less than the
original cost of the shares.
Total return. Average annual total return quotations used in the Fund's
advertising and promotional materials are calculated according to the following
formula:
n
P (1 + T) = ERV
Where:
P equals a hypothetical initial payment of $1000.
T equals average annual total return.
n equals the number of years.
ERV equals the ending redeemable value at the end of the period of
a hypothetical $1,000 payment made at the beginning of the
1-, 5-, or 10-year periods at the end of the 1-, 5-, or 10-year
periods (or fractional portion).
Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication. Average annual total
return, or "T" in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value. Average annual total return assumes the
reinvestment of all dividends and distributions.
Average Annual Total Returns
For the Periods Ended October 31, 1998
From March 4,
1991 to October
Past One Year Past 5 Years 31, 1998
17.13% 17.70% 12.29%
Yield. Annualized yield quotations used in the Fund's advertising and
promotional materials are calculated by dividing the Fund's interest income for
a specified thirty-day period, net of expenses, by the average number of shares
outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. A portfolio's yield is a way of showing the rate of
income the portfolio earns on its investments as a percentage of the portfolio's
share price. Yield quotations are calculated according to the following formula:
YIELD = + 1 )6 - 1 ]
2 [ (a-b
----
cd
Where
a = dividends and interest earned during the period.
b = expenses accrued for the period, net of reimbursements.
c = the average daily number of shares outstanding during the
period that are entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Except as noted below, in determining net investment income earned during the
period ("a" in the above formula), the Fund calculates interest earned on each
debt obligation held by it during the period by (1) computing the obligation's
yield to maturity, based on the market value of the obligation (including actual
accrued interest) on the last business day of the period or, if the obligation
was purchased during the period, the maturity by 360 and multiplying the
resulting quotient by the market value of the obligation (including actual
accrued interest). Once interest earned is calculated in this fashion for each
debt obligation held by the Fund, net investment income is then determined by
totaling all such interest earned.
For purposes of these calculations, the maturity of an obligation with one or
more call provisions is assumed to be the next date on which the obligation
reasonably can be expected to be called or, if none, the maturity date. For the
30-day period ended October 31, 1998, the yield of the Fund was 1.7625%.
Other information. The Fund's performance data quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in
the Fund will fluctuate, and an investor's redemption proceeds may be more or
less than the original investment amount. In advertising and promotional
materials the Fund may compare its performance with data published by Lipper
Analytical Services, Inc. ("Lipper") or CDA Investment Technologies, Inc.
("CDA"). The Fund also may refer in such materials to mutual fund performance
rankings and other data, such as comparative asset, expense and fee levels,
published by Lipper or CDA. Advertising and promotional materials also may refer
to comparisons of the Fund and comparative mutual fund data and ratings reported
in independent periodicals including, but not limited to, The Wall Street
Journal, Money Magazine, Forbes, Business Week, Financial World, and Barron's.
<PAGE>
FINANCIAL STATEMENTS
PricewaterhouseCoopers, LLP serves as independent public accountants for the
Fund, and in its capacity as such, audits the financial statements contained in
the Fund's Annual Report. The Fund's Statement of Assets and Liabilities,
Statement of Operations, Statement of Changes in Net Assets, Financial
Highlights and Notes to Financial Statements, as well as the unqualified report
of PricewaterhouseCoopers, LLP for the fiscal year ended October 31, 1998 are
included in the Fund's Annual Report to shareholders. You may request a copy of
the Annual Report, without charge, by writing to the Fund or calling (800)
333-4276. The foregoing Financial Highlights and financial statements, as
supplemented by the addition of Notes 6 and 7 and the unqualified Report of
Independent Accountants, dated December 30, 1998, except for Notes 6 and 7, as
to which the date is March 9, 1999, are included on the following pages of this
SAI.
<PAGE>
ASM INDEX 30 FUND, INC,
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1998
Percent of Total
Net Assets
Shares Value
COMMON STOCKS:
AEROSPACE
Boeing Co. 13,900 $ 521,250
United Technologies Corp. 13,900 1,323,975
6.2% 1,845,225
ALUMINUM
Aluminum Company of America 3.7% 13,900 1,101,575
AUTO AND TRUCK
General Motors Corp. 3.0% 13,900 876,569
BANKING
J. P. Morgan Corp. 4.4% 13,900 1,310,075
BEVERAGE
Coca-Cola Co. 3.2% 13,900 939,988
CHEMICAL
E.I. du Pont Nemours & Co. 13,900 799,250
Union Carbide Corp. 13,900 535,150
4.5% 1,334,400
COMPUTER & PERIPHERALS
International Business 13,900 2,063,281
Machines Corp. 7.0%
CONSUMER PRODUCTS
Procter & Gamble Co. 4.2% 13,900 1,235,362
DIVERSIFIED
AlliedSignal, Inc. 13,900 541,231
Minnesota Mining & Manufacturing Co. 13,900 1,112,000
5.6% 1,653,231
DRUG
Merck & Co, Inc. 6.4% 13,900 1,879,975
ELECTRICAL EQUIPMENT
General Electric Corp. 4.1% 13,900 1,216,250
FINANCIAL SERVICES
American Express Co. 4.2% 13,900 1,228,413
HEALTH
Johnson & Johnson 3.8% 13,900 1,132,850
INSURANCE
Citigroup, Inc. 2.2% 13,900 654,169
MACHINERY
Caterpillar Inc. 2.1% 13,900 625,500
MULTIMEDIA
The Walt Disney Co. 1.3% 13,900 374,431
OFFICE AUTOMATION & EQUIPMENT
Hewlett-Packard Co. 2.8% 13,900 836,606
OIL/GAS
Chevron Corp. 13,900 1,132,850
Exxon Corp. 13,900 990,375
7.2% 2,123,225
PAPER & FOREST PRODUCTS
International Paper Co. 2.2% 13,900 645,481
PHOTOGRAPHIC EQUIPMENT AND SUPPLIES
Eastman Kodak Co. 3.6% 13,900 1,077,250
RESTAURANT
McDonald's Corp. 3.1% 13,900 929,563
RETAIL STORE
Sears, Roebuck & Co. 13,900 624,631
Wal-Mart Stores, Inc. 13,900 959,100
5.4% 1,583,731
TELECOMMUNICATION SERVICES
American Telephone & Telegraph 13,900 865,275
Corp. 2.9%
TIRE AND RUBBER
The Goodyear Tire & Rubber Co. 2.5% 13,900 748,863
TOBACCO
Philip Morris Companies, Inc. 2.4% 13,900 710,637
TOTAL COMMON STOCKS
(Cost $26,626,247) 98.2%* 28,991,925
REPURCHASE AGREEMENT:
Star Bank
4.70%, entered into 10/30/98, due 11/02/98 591,000 591,000
Collateralized by $605,000 GNMA 6.625%, 9/20/22
with market value of $607,620
TOTAL REPURCHASE AGREEMENT 2.0% 591,000
(Cost $591,000)
TOTAL INVESTMENTS 100.2% 29,582,925
(Cost $27,217,247)
LIABILITIES IN EXCESS OF
OTHER ASSETS -0.2% (47,864)
TOTAL NET ASSETS 100.0% $29,535,061
* Total consists of individual percentages which have been rounded.
The accompanying notes are an integral part of these financial statements.
<PAGE>
ASM INDEX 30 FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
Assets:
Investments in common stocks, at market value $28,991,925
(cost $26,626,247)
Repurchase agreements, at cost 591,000
Cash 531
Interest and dividends receivable 20,808
Receivable from adviser 92,872
Prepaid expense and other assets 34,602
Total Assets 29,731,738
Liabilities:
Payable for capital shares redeemed 129,780
Accrued expenses 66,897
Total Liabilities 196,677
Net Assets $29,535,061
Components of Net Assets:
Capital paid-in $26,449,017
Accumulated undistributed net realized gains from
investment transactions 720,366
Net unrealized appreciation of investments 2,365,678
Total Net Assets $29,535,061
Capital Shares Outstanding
($0.001 par value, 1,000,000,000 shares authorized) 1,552,908
Net Asset Value - - Offering and Redemption Price
Per Share $19.02
The accompanying notes are an integral part of these financial statements.
<PAGE>
ASM INDEX 30 FUND, INC.
STATEMENT OF OPERATIONS
OCTOBER 31, 1998
Investment Income:
Dividends $547,620
Interest 37,229
Total investment income 584,849
Expenses:
Management fees 26,302
Professional fees 45,900
Custodian fees 33,291
Trustee fees 24,000
Legal expense 42,822
Administrative fees 24,167
Registration and filing fes 30,016
Transfer agent and accounting fees 52,297
Printing and postage 14,084
Other expenses 7,154
Total expenses 300,033
Less:
Reimbursement of expenses by adviser (242,280)
Total expenses - net 57,753
Investment income - net 527,096
Realized and Unrealized Gains from Investments:
Net realized gains from investment
transactions 3,568,516
Change in unrealized appreciation
of investments 592,550
Net realized and unrealized gains from
investments 4,161,066
Net Increase in Net Assets Resulting
from Operations $4,688,162
The accompanying notes are an integral part of these financial statements.
<PAGE>
ASM INDEX 30 FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Year Year
Ended Ended
October 31, October 31,
1998 1997
Increase in net assets:
Operations:
Net investment income $ 527,096 $ 430,876
Net realized gains from investment
transactions 3,568,516 5,534,868
Change in unrealized appreciation
of investments 592,550 1,680,860
Net increase in net assets resulting from
operations 4,688,162 7,646,604
Distributions to shareholders:
From net investment income (453,542) (430,876)
In excess of net investment income --- (63,140)
From net realized gains (1,846,825) (208,768)
Net decrease in net assets resulting from
distribution to shareholders (2,300,367) (702,784)
Capital share transactions:
Proceeds from shares issued 79,003,347 77,870,255
Reinvestment of distributions 1,766,644 590,838
Cost of shares redeemed (74,749,547) (73,593,574)
Net increase in net assets resulting
from capital share transactions 6,020,444 4,867,519
Total increase in net assets 8,408,239 11,811,339
Net assets - beginning of period 21,126,822 9,315,483
Net assets - end of period $29,535,061 $21,126,822
Changes in shares outstanding:
Shares issued 4,211,829 4,853,861
Shares issued in connection with
reinvestment of distributions 99,745 36,286
Shares redeemed (3,986,563) (4,321,722)
Net increase in shares outstanding 325,011 568,425
The accompanying notes are an integral part of these financial statements.
<PAGE>
ASM INDEX 30 FUND, INC.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended October 31,
1998 1997 1996 1995<F4> 1994<F4>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $17.21 $14.13 $11.37 $9.78 $10.07
Investment operations:
Net investment income 0.32 0.18 0.08 0.00 0.56
Net gains (losses) from investments
(realized and unrealized) 2.54 3.34 2.76 1.77 -0.16
----- ----- ----- ----- -----
Total from investment operations 2.86 3.52 2.84 1.77 0.40
----- ----- ----- ----- -----
Distributions:
From net investment income -0.27 -0.18 -0.07 -0.05 -0.52
In excess of net investment income 0.00 -0.11 -0.01 -0.13 0.00
From net realized gains -0.78 -0.15 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 -0.17
----- ----- ----- ----- -----
Total Distributions -1.05 -0.44 -0.08 -0.18 -0.69
----- ----- ----- ----- -----
Net asset value, end of year $19.02 $17.21 $14.13 $11.37 $ 9.78
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return 17.13% 25.18% 25.01% 18.10% 3.97%
Ratios/supplemental data:
Net assets, end of year (000) $29,535 $21,127 $9,315 $9,704 $7,277
Ratio of expenses to average
net assets<F1> 0.18% 0.42% 1.86% 3.01%<F2> 0.75%
Ratio of net investment
income to average net assets<F1> 1.60% 1.51% 0.53% 0.04% 2.17%
Portfolio turnover rate<F3> 196% 265% 391% 340% 1193%
<FN>
<F1> Ratios are presented net of fees voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as follows: ratio
of expenses to average net assets would have been 0.91%, 1.05%, 2.59%,
5.77% and 2.94% for 1998, 1997, 1996, 1995, and 1994, respectively; ratio
of net investment income (loss) to average net assets would have been
0.87%, 0.88%, (0.20%), (2.72%) and (0.02%) for 1998, 1997, 1996, 1995 and
1994, respectively. As a result of certain tax adjustments necessitated by
the Fund's failure to qualify as a regulated investment company for the
years ended October 31, 1995 and 1994, as well as other adjustments, the
gross expense ratios previously reported for these periods have been
restated.
<F2> Includes $50,460 of interest expense not subject to the expense
reimbursement agreement.
<F3> The Fund continues to be as fully invested in equities as possible.
Therefore, portfolio turnover is higher than most equity mutual funds
because purchases and sales of securities are necessary for settlement of
transactions requested by Fund shareholders.
<F4> Audited by predecessor auditor.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
ASM INDEX 30 FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
ASM Index 30 Fund, Inc. (the "Fund") was incorporated in Maryland on April
25, 1990 and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a no-load, diversified, open-end management investment
company. The Fund has an investment objective of providing total return through
a combination of capital appreciation and current income.
1. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. Preparation of the
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period.
SECURITY VALUATION
Portfolio securities are listed on a national securities exchange and are
stated at the last reported sales price on the day of valuation.
SECURITY TRANSACTIONS
The Fund records purchases of investments one business day after trade date
and sales of investments on the trade date. Realized gains and losses from sales
of investments are calculated on the specific identification basis. Interest
income is recognized on the accrual basis, and dividend income is recorded on
the ex-dividend date.
REPURCHASE AGREEMENTS
Repurchase agreements are transactions in which the Fund purchases
securities from a bank or recognized securities dealer and simultaneously
commits to resell that security to the bank or dealer at an agreed-upon date and
price reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased security. The Fund may invest in repurchase agreements
with institutions believed by Vector Index Advisors, Inc. (the "Adviser") to
present minimum credit risk. Each repurchase agreement is recorded at cost. The
Fund requires that the securities purchased in a repurchase agreement be
transferred to the custodian in a manner sufficient to enable the Fund to obtain
those securities in the event of a counterparty default. The seller, under the
repurchase agreement, is required to maintain the value of the securities at
least equal to the repurchase price, including accrued interest.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on deposit with the custodian.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date. On a
quarterly basis, the Fund declares and pays dividends from net investment
income, if any. On an annual basis, the Fund declares and pays net capital gain
dividends, if any.
Dividends from net investment income and net capital gain dividends are
determined in accordance with federal income tax regulations which may differ
from generally accepted accounting principles. These differences are primarily
due to deferrals of certain losses and the Fund's use of the accounting practice
of tax equalization, whereby a portion of the costs of capital shares redeemed
is attributable to distributions to shareholders. Permanent book and tax basis
differences have been reclassified among the components of net assets.
FEDERAL INCOME TAXES
The Fund intends to continue to comply with the requirements of the
Internal Revenue Code that are applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders.
2. INVESTMENT ADVISORY FEES
The Fund operates under an investment management agreement (the
"Agreement") with the Adviser. The Agreement provides for compensation to the
Adviser at an annual rate of 0.08% of the Fund's average daily net assets.
Pursuant to the Agreement, the Adviser provides continuous supervision of the
investment portfolio and pays the cost of compensation of the officers of the
Fund, and occupancy and certain clerical and administrative costs involved in
portfolio management. The Fund bears all other costs and expenses.
Certain officers and directors of the Fund are also officers and directors
of the Adviser. Commencing January 15, 1997, the Adviser voluntarily agreed to
limit expenses of the Fund to 0.18% of the Fund's average daily net assets.
Pursuant to commitments made to the Fund by the Adviser, the Adviser reimbursed
the Fund $242,280 for the year ended October 31, 1998. The Board of Directors of
the Fund has obtained confirmation that the Adviser has made arrangements to
assure availability of funds to discharge the Fund's obligations. All amounts
due under statutory and voluntary expense limitations were paid by the Adviser
within 30 days of the end of the fiscal year.
3. INVESTMENT TRANSACTIONS
For the year ended October 31, 1998, purchases and sales of investment
securities (excluding short-term securities) were $65,649,422 and $61,747,953,
respectively. As of October 31, 1998, the aggregate cost basis of investments
for Federal income tax purposes was $28,005,998 and net unrealized appreciation
of investments for Federal income tax purposes was comprised of the following:
Gross unrealized appreciation of investments$ 3,162,749
Gross unrealized depreciation of investments (1,585,822)
Net unrealized appreciation of investments$ 1,576,927
4. FINANCIAL HIGHLIGHTS RESTATEMENT
During the year ended October 31, 1996, the Fund, in consultation with its
auditors and legal counsel, determined, based on information available at the
time, that the Fund did not qualify as a regulated investment company under the
Internal Revenue Code for the years ended October 31, 1995 and 1994. As such,
the Fund would be subject to accrued Federal income taxes and interest of
approximately $1,312. The Adviser has agreed to pay these costs.
Also, advisory fees in the amount of $23,443 for the period from April 16,
1995 to October 31, 1995 should not have been accrued by the Fund nor reimbursed
by the Adviser. As a result, the expense ratios before reimbursement in the
Financial Highlights have been restated to reflect these changes. Prior to
restatement, such ratios were 5.94% and 2.55% for the years ended October 31,
1995 and 1994, respectively. All amounts discussed above as well as amounts due
under statutory and voluntary expense limitations are reflected in the
receivable from adviser on the Statement of Assets and Liabilities.
5. INVESTMENT ADVISER EVENTS
The Fund had received a commitment from its Adviser (the "expense
commitment") that the Adviser would waive payment of its advisory fee, or would
otherwise pay to the Fund amounts by which the actual expenses of the Fund
exceed eighteen basis points of the Fund's average net assets. Subsequent to
October 31, 1998, the Fund was reimbursed by the Adviser for all expenses owed
through that date. Recently, the Board of Directors of the Fund was advised by
its Adviser of financial information which required the Board to consider
whether the Adviser would be able to continue to fulfill the expense commitment
in the future. Absent the expense commitment, the expense ratio for the Fund
would be materially higher than the Fund had to bear under the terms of the
expense commitment.
The Chairman and President of the Adviser, who is also a Director and
Officer of the Fund, requested and has received approval for a leave of absence
for personal reasons from all positions with the Fund, and from the day to day
operation of the Adviser with respect to the Fund. Other officers and employees
of the Adviser and the Fund continue to operate the Fund under the supervision
of the independent directors of the Fund.
On December 23, 1998, at a meeting of the independent members of the Board
of Directors, the directors voted to notify the Adviser of the termination of
the present investment advisory agreement effective sixty days after delivery of
notice of termination of the agreement. During this sixty-day period, the Board
will solicit proposals from other funds and advisers, and will consider
alternative arrangements. Such alternatives include a recommendation that
shareholders vote to approve a new investment advisory relationship with another
adviser, or vote to reorganize the Fund with another fund in a tax free
reorganization or, in the absence of such options, vote to terminate the Fund
and distribute its assets to the shareholders. Subsequent to October 31, 1998,
the Board has established a reserve for the expense of implementing such
alternatives.
Pending resolution of these concerns, the Board is confident that the
custodian bank, transfer agent, accounting services agent, independent
accountants and counsel for the Fund can continue to provide the services
required for the conduct of the Fund's business.
6. LEGAL PROCEEDINGS
On February 8, 1999, a suit was filed against a former director and officer
of the Fund; the investment adviser of the Fund; and the Fund alleging that the
former officer of the Fund failed to invest in the Fund amounts purportedly paid
by the plaintiffs to the investment adviser of the Fund. The relief sought is
the recovery of the investment amounts and interest thereon, additional general,
consequential and incidental damages, legal costs and disbursements, and
declaratory and injunctive relief to preclude the Fund from transferring or
permitting the dissipation of its assets. With the possible exception of Steven
H. Adler, the former officer and director of the Fund, the Fund had no knowledge
that the amounts purportedly paid by the plaintiffs to the former investment
adviser were, as the plaintiffs have alleged, to be invested in the Fund. The
Fund and its counsel are investigating this matter and the possibility that
other unasserted claims or improprieties exist. At the present time, the
liability of the Fund, if any, is not readily determinable.
7. NEW INVESTMENT ADVISER AND REORGANIZATION
On February 26, 1999, the Board of Directors of the Fund approved an
interim investment management contract ("Interim Contract") naming ORBITEX
Management, Inc. ("ORBITEX") as the new investment adviser of the Fund. The Fund
and ORBITEX entered into the Interim Contract effective on March 1, 1999,
following the termination of the previous investment adviser. The terms and
conditions of the Interim Contract are substantially the same as the management
contract that was terminated, but that ORBITEX will not limit the Fund's
expenses to 0.18% of the average daily net assets of the Fund beginning on March
1, 1999. The Interim Contract will remain in effect until the earlier of July 1,
1999 or the vote of the shareholders at a special shareholder meeting approving
or disapproving a new investment management contract between the Fund and
ORBITEX. The Board has also recommended that the shareholders of the Fund
approve a tax-free reorganization between the Fund and an investment company
managed by ORBITEX.
FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For the taxable year ended October 31, 1998, 19.6% of the income dividends
paid by the Fund qualified for the dividends received deduction available to
corporations, and distributions from long-term capital gains for the Fund were
$4,126,336.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
ASM Index 30 Fund, Inc. (the "Fund")
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Fund at October 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years then ended and the financial highlights for each of
the five years then ended, in conformity with generally accepted accounting
principals. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. The financial highlights before restatement for
the years ended October 31, 1995 and 1994 were audited for other auditors, whose
report dated December 27, 1995 expressed an unqualified opinion. We also audited
the adjustments described in Note 4 that were applied to restate the expense
ratios included in the financial highlights for the years ended October 31, 1995
and 1994. In our opinion such adjustments are appropriate and have been properly
applied. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principals used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe our audits, which include confirmation of securities owned at October
31, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
As disclosed in Notes 5 and 7 to the financial statements, the Board of
Directors of the Fund voted to notify the Fund's investment adviser of the
termination of the present investment advisory agreement and has entered into
alternative arrangements for managing the Fund under a new investment advisory
agreement. Pursuant to the new investment advisory agreement, the Fund's annual
expenses, effective March 1, 1999, will not be limited to .18% of the average
daily net assets of the Fund. In addition, the Board has recommended that
shareholders approve reorganizing the Fund with another fund in a tax-free
reorganization. In the absence of such a reorganization, the Board would
consider terminating the Fund and distributing its assets to the shareholders.
Any of these alternatives could result in further material changes in the Fund's
future investment objectives, operations, or expense ratios. No adjustments have
been made to the financial statements as a result of this matter.
As disclosed in Note 6 to the financial statements, on February 8, 1999 a suit
was filed alleging that a former officer of the Fund failed to invest in the
Fund amounts paid by the plaintiffs to the former investment adviser of the
Fund. The relief sought is recovery of the investment amounts and interest
thereon, other consequential and incidental damages, and declaratory and
injunctive relief to preclude the Fund from transferring or permitting the
dissipation of its assets. At the present time, the liability of the Fund, if
any, is not readily determinable nor is it readily determinable whether other
individuals may file additional suits or make additional claims alleging similar
improprieties. No adjustments have been made to the financial statements as a
result of this matter.
December 30, 1998, except for Note 6 and Note 7 as to which the date is March 9,
1999
<PAGE>
APPENDIX A
DEFINITIONS OF STANDARD & POOR'S BOND RATINGS
Standard & Poor's Ratings Group gives ratings to bonds that range from AAA to D.
The Fund may invest in bonds with ratings of CC above. Definitions of these
ratings are set forth below.
AAA Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A Debt rated A has a strong capacity to pay interest and principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
BB, Debt rated BB, B, CCC and CC is regarded, on balance, as predominantly
B, speculative with respect to capacity to pay interest and repay principal in
CCC accordance with the terms of the obligation. BB indicates the lowest degree
Cc of speculation and C the highest degree of speculation. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
D Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
APPENDIX B
MOODY'S BOND RATINGS
Moody's Investors Service, Inc. give ratings to bonds that range from Aaa to D.
Definitions of these ratings are set forth below. The Fund may invest in bonds
with any ratings of Caa or better.
Aaa - These bonds are judged to be of the best quality. They carry the
smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
Aa - These bonds are judged to be of high quality by all standards. They
are rated lower than the best bonds because margins of protection may
not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than
in Aaa securities.
A - These are bonds which possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa - These bonds are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Ba - These are bonds judged to have speculative elements; their future
cannot be considered as well assured. Uncertainty of position
characterizes bonds in this class.
B - These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa - These are bonds of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or
interest.
Ca - These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other market
shortcomings.
C - These are the lowest rated class of bonds and issues so rated can be
regarded as having extremely poor prospects of ever attaining
any real investment standing.
<PAGE>
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS.
(a) Articles of Amendment*
(b) By-laws*
(c) Not Applicable.
(d) Management Agreement between ASM Index 30
Fund, Inc. and ORBITEX Management, Inc.
dated February 28, 1999 filed herewith as
Exhibit EX-99.B5.
(e) Not Applicable.
(f) Not Applicable.
(g) Custodian Agreement*
(h) (1) Transfer Agency Agreement*
(2) Accounting Agreement*
(i) Opinion concerning the legality of shares*
(j) (1) Consent of auditors is filed herewith
as Exhibit No. EX-99.B11.
(k) Not Applicable.
(l) Not Applicable.
(m) Not Applicable.
(n) Financial Data Schedule for the ASM Index 30
Fund is filed herewith as Exhibit EX-27.
(o) Not Applicable.
* Previously filed and incorporated by reference
from Registration Statement on Form N-1A, File
No. 33-36454, and Amendment Nos. 1. 2, 3 and 4.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON
CONTROL WITH REGISTRANT.
See "Management of the Fund" in Part A of this Registration Statement.
ITEM 25. INDEMNIFICATION.
As permitted by Section 17(h) and (i) of the Investment Company Act of
1940 (the "1940 Act") and pursuant to Article Tenth of the Fund
Articles of Incorporation (Exhibit 1 to the Registration Statement) and
section 2-418 of the Maryland General Corporation Law, officers and
directors of the Registrant may be indemnified against liabilities in
connection with the Registration, unless it is proved that (i) the act
or omission of the director or officer was material to the cause of
action adjudicated in the proceeding and was committed in bad faith or
with active and deliberate dishonesty, (ii) the director actually
received an improper personal benefit in money, property or services,
or (iii)in the case of a criminal proceedings, the director had
reasonable cause to believe that the act of omission was unlawful. As
permitted by Section 17(i) of the 1940 Act, pursuant to the
Distribution Agreement (Exhibit 6 to the Registration Statement), the
Distributor of the Registrant may be indemnified against liabilities
which it may incur except liabilities arising from bad faith, gross
negligence, willful misfeasance or reckless disregard of duties.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("Securities Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that the
public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in connection with the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
Section 2(d) of the Management Agreement limits the liability of
ORBITEX Management, Inc. to losses resulting from a breach of fiduciary
duty with respect to their receipt of compensation for services (in
which case any award of damages shall be limited to the period and
amount set forth in section 36(b) of the 1940 Act) or losses resulting
from willful misfeasance, bad faith or gross negligence in performance
of its duties and obligation under the Management Agreement.
The Registrant undertakes to apply the indemnification provisions of
its Articles of Incorporation and the Investment Management Agreement
in a manner consistent with the provisions of Sections 17(h) and (i) of
the Investment Company Act.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISER.
Reference is made to Part A of this Registration Statement and to Form
ADV filed under the Investment Advisers Act of 1940, as amended, by
ORBITEX Management, Inc.
(File No. 801-52312).
ITEM 27. PRINCIPAL UNDERWRITER
Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and rules promulgated thereunder are in the possession of
Registrant and Registrant's custodian and shareholder service agent, as
follows: the documents required to be maintained by paragraphs (4),
(5), (6), (7), (10) and (11) of Rule 31a-1(b) will be maintained by the
Registrant, and all other records will be maintained by the Custodian
and Shareholder Service Agent.
ITEM 29. MANAGEMENT SERVICES.
All management-related service contracts are discussed in Parts A or B
of this Registration Statement.
ITEM 30. UNDERTAKINGS.
Registrant hereby undertakes to conduct its operations in accord with
the director removal and shareholder assistance provisions of Section
16(c) of the Investment Company Act of 1940.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest Annual Report to
shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
under Rule 485(b) under the Securities Act of 1933, as amended, and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Tampa, and State of Florida on the
9th day of March, 1999.
ASM Index 30 Fund, Inc.
Registrant
By /s/ S. Cash Ulmer
S. Cash Ulmer
Acting 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
/s/ Jerome Feltenstein Director March 9, 1999
Jerome Feltenstein
/s/ W. Keith Schilit Director March 9, 1999
W. Keith Schilit
/s/ Daniel Calabria Director March 9, 1999
Daniel Calabria
____________________ Director March ___, 1999
Arthur Salzfass
/s/ S. Cash Ulmer Acting Chief March 9, 1999
S. Cash Ulmer Executive Officer &
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
FORM N-1A EXHIBIT EDGAR EXHIBIT
NO. NO.
23(d)(1) Management EX-99.B5
Agreement
23(j)(1) Consent of EX-99.B11
Auditors
23(n) Financial Data EX-27
Schedule
EX-99.B5
ASM INDEX 30 FUND, INC.
MANAGEMENT AGREEMENT
AGREEMENT made this 28th day of February, 1999 by and between ASM Index 30
Fund, Inc. (the "Fund'), a Maryland corporation, and ORBITEX Management, Inc.
(the "Manager"), a New York corporation.
WITNESSETH:
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and between the parties hereto as follows:
1. In General.
The Fund hereby appoints the Manager to act as investment adviser. The
Manager agrees, all as more fully set forth herein, to provide professional
investment management with respect to the investment of the assets of the Fund
and to supervise and arrange the purchase and sale of securities held in the
portfolio of the Fund and generally administer the affairs of the Fund.
2. Duties and Obligations of the Manager with respect to Management of the
Fund.
(a) Subject to the succeeding provisions of this section and subject
to the direction and control of the Board of Directors of the Fund,
the Manager shall:
(i) Decide what securities shall be purchased or sold by the
Fund and when; and
(ii) Arrange for the purchase and sale of securities for the
portfolio of the Fund by placing purchase and sale orders for
theFund.
(b) Any investment purchases or sales made by the Manager shall at
all times conform to, and be in accordance with, any requirements
imposed by:
(1) the provisions of the Investment Company Act of 1940, as
amended (the "Act"), and of any rules or regulations in
force thereunder;
(2) any other applicable provisions of law;
(3) the provisions of the Articles of Incorporation and By-Laws of
the Fund as amended from time to time;
(4) any policies and determinations of the Board of Directors of
the Fund of which the Manager has been notified; and
(5) the fundamental policies of the Fund, as reflected in its
registration statement under the Act, or as amended by
the shareholders of the Fund.
(c) The Manager shall also administer the affairs of the Fund and, in
connection therewith, shall be responsible for (i) maintaining the
Fund's books and records, (other than financial or accounting books
and records maintained by the Fund's custodian or transfer agent);
(ii) overseeing the Fund's insurance relationships; (iii) preparing
for the Fund (or assisting counsel and/or auditors in the preparation
of) all required tax returns, proxy statements and reports to the
Fund's shareholders and Directors and reports to and other filings
with the Securities and Exchange Commission and any other
governmental agency (the Fund agreeing to supply or cause to be
supplied to the Manager all necessary financial and other information
in connection with the foregoing); (iv) preparing such applications
and reports as may be necessary to register or maintain the Fund's
registration and/or the registration of the shares of the Fund under
the securities or "blue sky" laws of the various states selected by
the Fund's Distributor (the Fund agreeing to pay all filing fees or
other similar fees in connection therewith); (v) responding to all
inquiries or other communications of shareholders, if any, which are
directed to the Manager, or if any such inquiry or communication is
more properly to be responded to by the Fund's custodian, transfer
agent or accounting services agent, overseeing their response
thereto; (vi) overseeing all relationships between the Fund and its
custodian(s), transfer agent(s) and accounting services agent(s),
including the negotiation of agreements and the supervision of the
performance of such agreements; and (vii) authorizing and directing
any of the Manager's directors, officers and employees who may be
elected as Directors or officers of the Fund to serve in the
capacities in which they are elected. All services to be furnished by
the Manager under this Agreement may be furnished through the medium
of any such directors, officers or employees of the Manager.
(d) The Manager shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties ("disabling conduct") hereunder on the part of
the Manager (and its officers, directors, agents, employees,
controlling persons, shareholders and any other persons or entity
affiliated with the Manager) the Manager shall not be subject to
liability to the Fund or to any shareholder of the Fund for any act
or omission in the course of, or connected with rendering services
hereunder, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection
with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to the receipt
of compensation for services. Except in the case of disabling conduct
by the Manager, the Fund shall indemnify the Manager (and its
officers, directors, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the
Manager) from any liability arising from the Manager's conduct under
this Agreement except as prohibited by the Articles of Incorporation
and applicable law.
(e) Nothing in this Agreement shall prevent the Manager or any
affiliated person (as defined in the Act) of the Manager from acting
as investment adviser or manager and/or principal underwriter for any
other person, firm or corporation and shall not in any way limit or
restrict the Manager or any such affiliated person from buying,
selling or trading any securities for its or their own accounts or
the accounts of others for whom it or they my be acting.
(f) It is agreed that the Manager shall have no responsibility or
liability for the accuracy or completeness of the Fund's Registration
Statement under the Act or the Securities Act of 1933, as amended,
except for information supplied by the Manager in writing for
inclusion therein.
3. Broker-Dealer Relationships.
In connection with its duties set forth in Section 2(a) (ii) of this
Agreement to arrange for the purchase and the sale of securities held by the
Fund by placing purchase and sale orders for the Fund, the Manager shall select
such broker-dealers (each, a "broker") as shall, in the Manager's judgment,
implement the policy of the Fund to achieve "best execution", i.e., prompt and
efficient execution at the most favorable securities price. In making such
selection, the Manager is authorized to consider the reliability, integrity and
financial condition of the broker. The Manager is also authorized to consider
whether the broker provides brokerage and/or research services to the Fund
and/or other accounts of the Manager. The commissions paid to such brokers, may
be higher than another broker would have charged if a good faith determination
is made by the Manager that the commission is reasonable in relation to the
services provided, viewed in terms of either that particular transaction or the
Manager's overall responsibilities as to the accounts as to which it exercises
investment discretion.
The Manager shall use its judgment in determining that the amount of
commissions paid are reasonable in relation to the value of brokerage and
research services provided and need not place or attempt to place a specific
dollar value on such services or on the portion of commission rates reflecting
such services or on the portion of commission rates reflecting such services. To
demonstrate that such determinations were in good faith, and to show the overall
reasonableness of commissions paid, the Manager shall be prepared to show that
commissions paid (i) were for purposes contemplated by this Agreement; (ii)
provide lawful and appropriate assistance to the Manager in the performance of
its decision-making responsibilities; and (iii) were within a reasonable range
as compared to the rates charged by qualified brokers to other institutional
investors as such rates may become known from available information. The Fund
recognizes that, on any particular transaction, a higher than usual commission
may be paid due to the difficulty of the transaction in question. The Manager
also is authorized to consider sales of shares as a factor in the selection of
brokers to execute brokerage and principal transaction, subject to the
requirements of "best execution," as defined above.
4. Allocation of Expenses.
The Manager agrees that it will furnish the Fund, at the Manager's
expense, with all office space and facilities, and equipment and clerical
personnel necessary for carrying out its duties under this Agreement. The
Manager will also pay all compensation of all Directors, officers and employees
of the Fund who are affiliated persons of the Manager. All costs and expenses
not expressly assumed by the Manager under this agreement shall be paid by the
Fund, including, but not limited to (i) interest and taxes; (ii) brokerage
commissions; (iii) insurance premiums; (iv) compensation and expenses of its
Directors other than those affiliated with the Manager; (v) legal and audit
expenses; (vi) fees and expenses of the Fund's custodian, shareholder servicing
or transfer agent and accounting services agent; (vii) expenses incident to the
issuance of its shares, including stock certificates and issuance of shares on
the payment of, or reinvestment of, dividends; (viii) fees and expenses incident
to the registration or qualification under Federal or state securities laws of
the Fund or its shares; (ix) expenses of preparing, printing and mailing
reports, notices, proxy material and prospectuses to shareholders of the Fund;
(x) all other expenses incidental to holding meeting of the Fund's shareholders;
(xi) dues or assessments of or contributions to the Investment Company Institute
or any successor or other industry association; (xii) such non-recurring
expenses as may arise, including litigation affecting the Fund and the legal
obligations which the Fund may have to indemnify its officers and Directors with
respect thereto; and (xiii) all expenses which the Fund agrees to bear in any
distribution agreement or in any plan adopted by the Fund pursuant to Rule 12b-1
under the Act.
Organizational expenses will be borne by the Fund. It is agreed that these
expenses are to be deferred and amortized over a five-year period from the
commencement of operations utilizing the straight-line method of amortization.
5. Compensation of the Manager.
(a) The Fund agrees to pay the Manager and the Manager agrees to
accept as full compensation for all services rendered by the Manager
as such, an annual management fee, payable monthly and computed on
the value of the net assets of the Fund as of the close of business
each business day at the annual rate of 0.08 of 1% of such net assets
of the Fund.
6. Duration and Termination.
(a) This Agreement shall go into effect on the date set forth above
and shall, unless terminated as hereinafter provided, continue in
effect until the earlier of (i) July 1, 1999; (ii) the date on which
the shareholders of the Fund have voted in a special shareholders'
meeting to approve the adoption of this Agreement in accordance with
the Act and the rules thereunder and the reorganization of the Fund
with a Delaware business trust advised by the Manager has been
consummated (the "Reorganization"); or (iii) the date on which the
shareholders of the Fund have voted in a special shareholders'
meeting to disapprove the adoption of this Agreement or the
Reorganization.
(b) This Agreement may be terminated by the Manager at any time
without penalty upon giving the Fund sixty (60) days' written notice
(which notice may be waived by the Fund) and may be terminated by the
Fund at any time without penalty upon giving the Manager sixty (60)
days' written notice (which notice may be waived by the Manager),
provided that such termination by the Fund shall be directed or
approved by the vote of a majority of all of its Directors in office
at the time or by the vote of the holders of a majority (as defined
in the Act) of the voting securities of the Fund. This Agreement
shall automatically terminate in the event of its assignment (as
defined in the Act).
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by duly authorized persons and their seals to be
hereunto affixed, all as of the day and year first above written.
ASM INDEX 30 FUND, INC
By: /S/ S. CASH ULMER
Name: S. Cash Ulmer
Title: Acting Chief Executive Officer
ATTEST:
/S/ W. KEITH SCHILIT
Name: W. Keith Schilit
Title: Director
ORBITEX Management, Inc.
By: /S/ RICHARD E. STIERWALT
Name: Richard E. Stierwalt
Title: President and CEO
ATTEST:
/S/ M. FYZUL KHAN
Name: M. Fyzul Khan, Esq.
Title: Vice President
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of ASM Index 30 Fund, Inc.
We hereby consent to the inclusion in Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A (File No. 33-36454, hereafter the
"Registration Statement") of ASM Index 30 Fund, Inc. of our report dated
December 30, 1998, except for Note 6 and Note 7 as to which the date is March 9,
1999, on our audit of the financial statements and financial highlights of the
ASM Index 30 Fund, Inc. appearing in the October 31, 1998 Annual Reports to
Shareholders of the Fund, which financial statements and financial highlights
and report of independent accountants are incorporated by reference in
Post-Effective Amendment No. 11 to the Registration Statement. We also consent
to the reference to our Firm under the caption "Financial Highlights" in the
Prospectus and "Financial Statements" in the Fund's Statement of Additional
Information.
/S/PRICEWATERHOUSECOOPERS, LLP
PricewaterhouseCoopers, LLP
Miami, Florida
March 9, 1999
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