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MAXUS OHIO HEARTLAND FUND
MAXUS AGGRESSIVE VALUE FUND
THE TOWER AT ERIEVIEW, 36TH FLOOR
1301 EAST NINTH STREET
CLEVELAND, OHIO 44114
(216) 687-1000
Maxus Ohio Heartland Fund and Maxus Aggressive Value Fund (the "Funds") are two
separate diversified portfolios of MaxFund Trust, an open-end management
investment company (the "Trust").
MAXUS OHIO HEARTLAND FUND has an investment objective of obtaining a high total
return (a combination of income and capital appreciation). Under normal
circumstances, at least 80% of the value of this Fund's total assets will
consist of equity securities of companies headquartered in the State of Ohio.
MAXUS AGGRESSIVE VALUE FUND has an investment objective of obtaining capital
appreciation. Under normal circumstances, at least 80% of the value of this
Fund's total assets will consist of equity securities of companies whose equity
securities have a total market value of not less than $10,000,000 or more than
$200,000,000.
By this Prospectus, each Fund is offering Investor Shares and Institutional
Shares. Investor Shares are offered to the general public. Institutional Shares
are offered to certain institutions and other specified investors. See "How to
Purchase Shares." Investor Shares and Institutional Shares are identical, except
as to minimum investment requirements and the services offered to and expenses
borne by each class.
This Prospectus sets forth concisely the information about the Funds that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Funds has been filed with the Securities and Exchange Commission (the "SEC") in
a Statement of Additional Information dated the same date as this Prospectus and
is available upon request and without charge by calling the Funds at (216)
687-1000. Such additional information is hereby incorporated by reference into
this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS/January 30, 1998
Investors are advised to read this Prospectus and to retain it for future
reference.
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HIGHLIGHTS
INVESTMENT OBJECTIVES. Each Fund is a diversified fund. The investment objective
of Maxus Ohio Heartland Fund is to obtain a high total return (a combination of
income and capital appreciation). The investment objective of Maxus Aggressive
Value Fund is to obtain capital appreciation. No assurance can be given that
either Fund will achieve its objective. See "Investment Objectives and
Management Techniques."
SALES CHARGE. Each Fund sells and redeems its shares at net asset value without
any front-end sales charges or redemption charges. Investor Shares of each Fund
are subject to a plan for using as much as .50% of net assets annually to aid
the distribution of its shares. See "Distribution Plan (Investor Shares Only)."
LIQUIDITY. Each Fund continuously offers and redeems shares at the net asset
value next computed after receipt by the Fund's Transfer Agent of a purchase
order or redemption request in proper form. See "How to Purchase Shares" and
"How to Redeem Shares."
MINIMUM INVESTMENT. For Investor Shares, the minimum initial investment is
$1,000, with subsequent minimum investments of $100. For Institutional Shares,
the minimum initial investment is $1,000,000, with subsequent minimum
investments of $10,000. See "How to Purchase Shares." Each Fund has the right to
redeem the shares in an account and pay the proceeds to the shareholder if,
because of shareholder redemptions, the value of the account drops below $1,000
in the case of Investor Shares or $1,000,000 in the case of Institutional
Shares. See "How to Redeem Shares."
DIVIDENDS. Each Fund intends to pay dividends at least once annually to
shareholders. Unless otherwise directed, all dividends will be automatically
reinvested in additional shares. See "Dividends, Distributions and Taxes."
INVESTMENT ADVISER. Maxus Asset Management Inc. ("MAM" or the "Adviser") is the
investment adviser for each Fund. Its annual fee is 1% of the first $150,000,000
of the Fund's net assets and .75% of net assets in excess of $150,000,000. This
fee is higher than that paid by most other investment companies. Since 1976 MAM
has
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been an investment adviser to individuals, retirement plans, corporations and
foundations. MAM is controlled by Richard A. Barone, Chairman of the Trust. See
"Investment Management."
DISTRIBUTOR. Shares of each Fund are offered exclusively by Maxus Securities
Corp ("MSC"), an NASD broker-dealer, on a best efforts basis. MSC is controlled
by Richard A. Barone, Chairman of the Trust. See "Other Information Concerning
Purchase of Shares" and "Distribution Plan (Investor Shares Only)."
RISK FACTORS. Neither of the Funds is intended to provide a balanced investment
program to meet all requirements of every investor. The prices of equity
securities fluctuate based on changes in a company's activities and financial
condition and in overall market and financial conditions. There are special
risks associated with investments in the smaller companies in which each Fund
will invest. Also, since Maxus Ohio Heartland Fund concentrates its investments
in the State of Ohio, its assets may be at greater risk because of economic,
political or regulatory risks associated with that state.
FEE TABLE
Annual Fund Operating Expenses (as a percentage of average net assets)
<TABLE>
<CAPTION>
MAXUS OHIO MAXUS AGGRESSIVE
HEARTLAND FUND VALUE FUND
-------------------------- --------------------------
INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL
CLASS CLASS CLASS CLASS
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Management Fees............... 1.00% 1.00% 1.00% 1.00%
12b-1 Fees.................... 0.50% 0.00% 0.50% 0.00%
Other Expenses*............... 0.45% 0.45% 0.45% 0.45%
Total Fund Operating
Expenses*................... 1.95% 1.45% 1.95% 1.45%
</TABLE>
* Based on estimated expenses for the current fiscal year.
The 12b-1 fee in the foregoing table is an asset-based sales charge as
defined in the Rules of Fair Practice of the National Association of Securities
Dealers (the "Rules"). The existence of this charge may cause long-term
shareholders to pay more in total sales charges than the economic equivalent of
the maximum front-end sales charges permitted under those Rules.
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A shareholder who requests that the proceeds of a redemption be sent by wire
transfer will be charged for the cost of such wire, which is $10.00 as of the
date of this Prospectus (subject to change without notice).
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------------------------------------------------------- ------ -------
<S> <C> <C>
You would pay the following expenses on a $1,000
investment in Investor Shares of the Funds, assuming
(1) 5% annual return and (2) redemption at the end of
each time period:
Maxus Ohio Heartland Fund.............................. $ 20 $61
Maxus Aggressive Value Fund............................ $ 20 $61
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------------------------------------------------------- ------ -------
<S> <C> <C>
You would pay the following expenses on a $1,000
investment in Institutional Shares of the Funds,
assuming (1) 5% annual return and (2) redemption at
the end of each time period:
Maxus Ohio Heartland Fund............................ $ 15 $46
Maxus Aggressive Value Fund.......................... $ 15 $46
</TABLE>
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in either Fund will bear, directly
or indirectly. THE EXAMPLE SET FORTH IN THE FOREGOING TABLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF ACTUAL OR EXPECTED EXPENSES OR RETURNS. ACTUAL
EXPENSES OR RETURNS MAY BE GREATER OR LESSER THAN THOSE SHOWN.
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES
MAXUS OHIO HEARTLAND FUND
The investment objective of Maxus Ohio Heartland Fund is to obtain a high
total return (a combination of capital appreciation and income). This objective
is a fundamental policy of this Fund and may not be changed without approval of
a majority of the Fund's shares.
In seeking its objective, under normal conditions, this Fund will invest at
least 80% of its total assets in equity securities of companies headquartered in
the State of Ohio. Equity securities are common stocks and securities
convertible or exchangeable into common stocks. While investments may be made in
all types and sizes of companies headquartered in Ohio, the primary focus of
this Fund will be to invest in companies having annual revenues or a market
capitalization of less than $5 billion,
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many of which may be traded in the over-the-counter market. However, the Fund
will generally not invest in companies having annual revenues of less than
$25,000,000.
Under normal conditions, the Fund also may invest up to 20% of its total
assets in high-quality commercial paper (i.e., rated A-1 or A-2 by Standard &
Poor's) and other money market instruments, investment grade corporate debt
securities (i.e., rated BBB or better by Standard & Poor's), preferred stock and
equity securities of companies not headquartered in Ohio. In addition, when the
Adviser believes that market conditions warrant a temporary defensive posture,
the Fund may invest without limitation in high-quality commercial paper and
other money market instruments as described above. Please refer to Appendix A
for a description of these ratings.
MAXUS AGGRESSIVE VALUE FUND
The investment objective of Maxus Aggressive Value Fund is to obtain capital
appreciation. This objective is a fundamental policy of this Fund and may not be
changed without approval of a majority of the Fund's shares.
In seeking its objective, under normal conditions, the Fund will invest at
least 80% of its total assets in equity securities of companies whose equity
securities have a total market value of not less than $10,000,000 or more than
$200,000,000 as of the date of the investment. Equity securities are common
stocks and securities convertible or exchangeable into common stocks. The
primary focus of this Fund will be to invest in companies of this size which the
Adviser believes have businesses and/or assets which have a value in excess of
the current market price of the company's equity securities. In making this
determination, the Adviser will use one or a combination of the following
techniques: (1) balance sheet analysis, (2) cash flow analysis, and (3) analysis
of the likelihood of success of an effort to restructure the company's business.
In addition, the Adviser will consider the purchase or sale of the company's
shares by insiders, other sophisticated investors or the company itself. The
above techniques are intended to identify undervalued companies rather than to
identify potential acquisition candidates.
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Under normal conditions, the Fund also may invest up to 20% of its total
assets in high-quality commercial paper (i.e., rated A-1 or A-2 by Standard &
Poor's) and other money market instruments, investment grade corporate debt
securities (i.e., rated BBB or better by Standard & Poor's), preferred stock and
equity securities of companies having a market value of more than $200,000,000.
In addition, when the Adviser believes that market conditions warrant a
temporary defensive posture, the Fund may invest without limitation in
high-quality commercial paper and other money market instruments as described
above. Please refer to Appendix A for a description of these ratings.
PORTFOLIO TURNOVER
The Funds are not restricted with regard to portfolio turnover and will make
changes in their investment portfolios from time to time as business and
economic conditions and market prices may dictate and their respective
investment policies may require. It is estimated that the portfolio turnover
rate generally will not exceed 50% for Maxus Ohio Heartland Fund and 150% for
Maxus Aggressive Value Fund. A high rate of portfolio turnover in any year will
increase brokerage commissions paid and could result in high amounts of realized
investment gain subject to the payment of taxes by shareholders. Any realized
net short-term investment gain will be taxed to shareholders as ordinary income.
See "Dividends, Distributions and Taxes" below.
INVESTMENT POLICIES AND RESTRICTIONS
Each Fund has adopted certain fundamental policies which may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities (as defined in the 1940 Act). Certain of these policies are
detailed below, while other policies are set forth in the Statement of
Additional Information.
Neither Maxus Ohio Heartland Fund nor Maxus Aggressive Value Fund may:
(1) invest more than 5% of the value of its total assets in the
securities of any one issuer (except obligations issued or guaranteed by the
United States Government, its agencies and instrumentalities);
(2) acquire more than 10% of the outstanding voting securities of any
one issuer;
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(3) invest more than 25% of the value of such Fund's total assets in
securities of companies in a particular industry (except obligations issued
or guaranteed by the United States Government, its agencies and
instrumentalities).
Changes in values of particular Fund assets or the assets of a Fund as a
whole will not cause a violation of the investment restrictions so long as
percentage restrictions are observed by the Fund at the time it purchases any
security. Other investment policies are discussed in the Statement of Additional
Information under the heading "Investment Policies and Restrictions."
RISKS AND OTHER CONSIDERATIONS
MAXUS OHIO HEARTLAND FUND AND
MAXUS AGGRESSIVE VALUE FUND
Neither of the Funds is intended to provide a balanced investment program to
meet all requirements of every investor. No assurance can be given that either
of the Funds will achieve its investment objective.
The prices of equity securities fluctuate based on changes in a company's
activities and financial condition and in overall market and financial
conditions. The smaller companies in which each Fund will invest are especially
sensitive to these factors and therefore may be subject to greater share price
fluctuations than other companies. Also, securities of these smaller companies
are often less liquid, thus possibly limiting the ability of the Fund to dispose
of such securities when the Adviser deems it desirable to do so. As a result of
these factors, securities of these smaller companies may expose shareholders of
each Fund to above average risk.
Both Funds may also invest in debt securities. In general, the prices of
debt securities rise when interest rates fall, and vice versa. Debt securities
have varying degrees of quality and varying levels of sensitivity to changes in
interest rates. Longer-term bonds are generally more sensitive to interest rate
changes than short-term bonds. Investment-grade debt securities are medium- and
high-quality securities. Some, however, possess speculative characteristics and
may be more sensitive to economic changes and to changes in the financial
condition of issuers.
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MAXUS OHIO HEARTLAND FUND
Since the Maxus Ohio Heartland Fund concentrates its investments in the
State of Ohio, its assets may be at greater risk because of economic, political
or regulatory risks which may become associated with the State. For example, if
adverse tax laws uniquely affecting Ohio-based companies were passed, such a
development could have an adverse effect upon this Fund. This Fund also is
subject to the additional risk that at certain times only a limited number of
securities meeting the Fund's investment criteria may be available.
PERFORMANCE
From time to time, the Funds may advertise performance data represented by a
cumulative total return or an average annual total return. Total returns are
based on the overall or percentage change in value of a hypothetical investment
in a Fund and assume all of the Fund's dividends and capital gain distributions
are reinvested. A cumulative total return reflects the Fund's performance over a
stated period of time. An average annual total return reflects the hypothetical
annually compounded return that would have produced the same cumulative total
return if the Fund's performance had been constant over the entire period.
Because average annual returns tend to smooth out variations in the Fund's
returns, it should be recognized that they are not the same as actual
year-by-year results.
Performance may be compared to well-known indices such as the Dow Jones
Industrial Average or alternative investments such as Treasury Bills. Also, the
Funds may include published editorial comments compiled by independent
organizations such as Lipper Analytical Services or Morningstar, Inc.
All performance information is historical in nature and is not intended to
represent or guarantee future results. The value of Fund shares when redeemed
may be more or less than their original cost.
Further information about the performance of each of the Funds is contained
in the Funds' Annual Report to Shareholders which may be obtained from the Fund
without charge.
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HOW TO PURCHASE SHARES
By this Prospectus, each Fund is offering Investor Shares and Institutional
Shares. Investor Shares and Institutional Shares are identical, except as to
minimum investment requirements and the services offered to and expenses borne
by each class.
INVESTOR SHARES
Investor Shares may be purchased by any investor without a sales charge. A
minimum initial investment of $1,000 is required to open an Investor Shares
account with subsequent minimum investments of $100. Investment minimums may be
waived at the discretion of each Fund.
INSTITUTIONAL SHARES
Institutional Shares may be purchased without a sales charge by (1)
financial institutions, such as banks, trust companies, thrift institutions,
mutual funds or other financial institutions, acting on their own behalf or on
behalf of their qualified fiduciary accounts, employee benefit or retirement
plan accounts or other qualified accounts, (2) securities brokers or dealers
acting on their own behalf or on behalf of their clients, (3) directors or
employees of the Funds or of the Adviser or its affiliated companies or by the
relatives of those individuals or the trustees of benefit plans covering those
individuals. These requirements for the purchase of Institutional Shares may be
waived in the sole discretion of the Funds.
A minimum initial investment of $1,000,000 is required to open an
Institutional Shares account with subsequent minimum investments of $10,000.
Investment minimums may be waived at the discretion of each Fund.
SHAREHOLDERS ACCOUNTS
When a shareholder invests in a Fund, Maxus Information Systems Inc., the
Transfer Agent for each Fund, will establish an open account to which all full
and fractional shares (to three decimal places) will be credited, together with
any dividends and capital gains distributions, which are paid in additional
shares unless the shareholder otherwise instructs the Transfer Agent. Stock
certificates will be issued
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for full shares only when requested in writing. Each shareholder is notified of
the status of his account following each purchase or sale transaction.
INITIAL PURCHASE
The initial purchase may be made by check or by wire in the following
manner:
BY CHECK. The Account application which accompanies this Prospectus should be
completed, signed, and, along with a check for the initial investment payable to
the applicable Fund, mailed to: Maxus Information Systems Inc., The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114.
BY WIRE. In order to expedite the investment of funds, investors may advise
their bank or broker to transmit funds via Federal Reserve Wire System to: Star
Bank, N.A. Cinti/Trust, ABA #0420- 0001-3, F/F/C Account No. 19-6201 Maxus
Mutual Funds DDA 483617213 (Star Bank Trust). Also provide the shareholder's
name and account number. In order to obtain this needed account number and
receive additional instructions, the investor may contact, prior to wiring
funds, Maxus Information Systems Inc., at (216) 687-1000. The investor's bank
may charge a fee for the wire transfer of funds.
SUBSEQUENT PURCHASES
Investors may make additional purchases in the following manner:
BY CHECK. Checks made payable to the applicable Fund should be sent, along with
the stub from a previous purchase or sale confirmation, to Maxus Information
Systems Inc., The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114.
BY WIRE. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
BY TELEPHONE. Investors may purchase shares up to an amount equal to 3 times the
market value of shares held in the shareholder's account in a Fund on the
preceding day for which payment has been received, by telephoning Maxus
Information Systems Inc., at (216) 687-1000 and identifying their account by
number. Shareholders wishing to available themselves of this privilege must
complete a Telephone Purchase
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Authorization Form which is available from the Fund. A confirmation will be
mailed and payment must be received within 3 business days of date of purchase.
If payment is not received within 3 business days, the Fund reserves the right
to redeem the shares purchased by telephone, and if such redemption results in a
loss to the Fund, redeem sufficient additional shares from the shareholder's
account to reimburse the Fund for the loss. Payment may be made by check or by
wire. The Adviser has agreed to hold the Fund harmless from net losses resulting
from this service to the extent, if any, not reimbursed from the shareholder's
account. This telephone purchase option may be discontinued without notice.
SYSTEMATIC INVESTMENT PLAN
The Systematic Investment Plan permits investors to purchase shares of
either Fund at monthly intervals. Provided the investor's bank or other
financial institution allows automatic withdrawals, shares may be purchased by
transferring funds from the account designated by the investor. At the
investor's option, the account designated will be debited in the specified
amount, and shares will be purchased once a month, on or about the 15th day.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Investors desiring to
participate in the Systematic Investment Plan should call the Transfer Agent at
(216) 687-1000 to obtain the appropriate forms. The Systematic Investment Plan
does not assure a profit and does not protect against loss in declining markets.
PRICE OF SHARES
The price paid for shares of a certain class of a Fund is the net asset
value per share of such class of such Fund next determined after receipt by the
Transfer Agent of properly identified purchase funds, except that the price for
shares purchased by telephone is the net asset value per share next determined
after receipt of telephone instructions. Net asset value per share is computed
for each class of each Fund as of the close of business (currently 4:00 P.M.,
New York time) each day the New York Stock Exchange is open for trading and on
each other day during which there is a sufficient degree of trading in such
Fund's investments to affect materially net asset value of its redeemable
securities. For purposes of pricing sales and redemptions, net
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asset value per share of each class of a Fund is calculated by determining the
value of the class's proportional interest in the assets of such Fund, less (i)
such class's proportional share of general liabilities and (ii) the liabilities
allocable to such class, and dividing such amount by the number of shares of
such class outstanding.
For purposes of computing the net asset value per share, securities listed
on a national securities exchange or on the NASDAQ National Market System will
be valued on the basis of the last sale of the date on which the valuation is
made or, in the absence of sales, at the closing bid price. Over-the-counter
securities will be valued on the basis of the bid price at the close of business
on each day or, if market quotations are not readily available, at fair value as
determined in good faith by the Board of Trustees. Unless the particular
circumstances (such as an impairment of the credit-worthiness of the issuer)
dictate otherwise, the fair value of short-term securities with maturities of 60
days or less shall be their amortized cost. All other securities and other
assets of each such Fund will be valued at their fair value as determined in
good faith by the Board of Trustees.
OTHER INFORMATION CONCERNING PURCHASE OF SHARES
Each Fund reserves the right to reject any order, to cancel any order due to
non-payment and to waive or lower the investment minimums with respect to any
person or class of persons. If an order is canceled because of non-payment or
because your check does not clear, you will be responsible for any loss that the
Fund incurs. If you are already a shareholder, the Fund can redeem shares from
your account to reimburse it for any loss. The Adviser has agreed to hold each
Fund harmless from net losses to that Fund resulting from the failure of a check
to clear to the extent, if any, not recovered from the investor. For purchases
of $50,000 or more, each Fund may, in its discretion, require payment by wire or
cashier's or certified check.
Shares of each Fund are offered exclusively, on a best efforts basis, by the
Funds' Distributor, Maxus Securities Corp ("MSC"), an NASD broker-dealer.
Purchases of the Fund's shares through MSC will be transmitted promptly to the
Transfer Agent so that the investor's purchase order receives the net asset
value next determined following receipt of the order by MSC. The address of MSC
is The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114. MSC, which is controlled by Richard A. Barone, Chairman of the Trust,
receives for its services as
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Distributor an annual distribution fee of .50% of average net assets of Investor
Shares. See "Distribution Plan (Investor Shares Only)." Certain employees of MSC
may receive compensation under the Distribution Plan.
HOW TO REDEEM SHARES
All shares of each class of each Fund offered for redemption will be
redeemed at the net asset value per share of such class of that Fund next
determined after receipt of the redemption request, if in good order, by the
Transfer Agent. See "Price of Shares." Because the net asset value of each
Fund's shares will fluctuate as a result of changes in the market value of
securities owned, the amount a stockholder receives upon redemption may be more
or less than the amount paid for the shares. Redemption proceeds will be mailed
to the shareholder's registered address of record or, if $5,000 or more, may be
transmitted by wire, upon request, to the shareholder's pre-designated account
at a domestic bank. The shareholder will be charged for the cost of such wire.
If shares have been purchased by check and are being redeemed, redemption
proceeds will be paid only after the check used to make the purchase has cleared
(usually within 15 days after payment by check). This delay can be avoided if,
at the time of purchase, the shareholder provides payment by certified or
cashier's check or by wire transfer.
REDEMPTION BY MAIL
Shares may be redeemed by mail by writing directly to the Funds' Transfer
Agent, Maxus Information Systems Inc., The Tower at Erieview, 36th Floor, 1301
East Ninth Street, Cleveland, Ohio 44114. The redemption request must be signed
exactly as the shareholder's name appears on the registration form, with the
signature guaranteed, and must include the account number. If shares are owned
by more than one person, the redemption request must be signed by all owners
exactly as the names appear on the registration.
If a shareholder is in possession of the stock certificate, these
certificates must accompany the redemption request and must be endorsed as
registered with a signature guarantee. Additional documents may be required for
registered certificates owned by corporations, executors, administrators,
trustees or guardians. A request for
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redemption will not be processed until all of the necessary documents have been
received in proper form by the Transfer Agent. A shareholder in doubt as to what
documents are required should contact Maxus Information Systems Inc. at (216)
687-1000.
You should be able to obtain a signature guarantee from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association. A notary public is not
an acceptable guarantor. A Fund may in its discretion waive the signature
guarantee in certain instances.
REDEMPTION BY TELEPHONE
Shares may be redeemed by telephone by calling Maxus Information Systems
Inc. at (216) 687-1000 between 9:00 A.M. and 4:00 P.M. eastern time on any day
the New York Stock Exchange is open for trading. An election to redeem by
telephone must be made on the initial application form or on other forms
prescribed by the Fund which may be obtained by calling the Funds at (216)
687-1000. This form contains a space for the shareholder to supply his own four
digit identification number which must be given upon request for redemption. A
Fund will not be liable for following instructions communicated by telephone
that the Fund reasonably believes to be genuine. If a Fund fails to employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, the Fund may be liable for any losses due to unauthorized or fraudulent
instructions. Any changes or exceptions to the original election must be made in
writing with signature guaranteed, and will be effective upon receipt by the
Transfer Agent. The Transfer Agent and each Fund reserve the right to refuse any
telephone instructions and may discontinue the aforementioned redemption option
without notice. The minimum telephone redemption is $1,000.
OTHER INFORMATION CONCERNING REDEMPTION
Each Fund reserves the right to take up to seven days to make payment if, in
the judgment of the Fund's Investment Adviser, such Fund could be affected
adversely by immediate payment. In addition, the right of redemption for a Fund
may be suspended or the date of payment postponed (a) for any period during
which the NYSE is closed (other than for customary week-end and holiday
closings), (b) when trading
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in the markets that the Fund normally utilizes is restricted, or when an
emergency, as defined by the rules and regulations of the SEC, exists, making
disposal of that Fund's investments or determination of its net asset value not
reasonably practicable, or (c) for any other periods as the SEC by order may
permit for protection of that Fund's shareholders.
Due to the high cost of maintaining accounts, each Fund has the right to
redeem, upon not less than 30 days written notice, all of the shares of any
shareholder if, through redemptions, the shareholder's account has a net asset
value of less than $1,000 in the case of Investor Shares or $1,000,000 in the
case of Institutional Shares. A shareholder will be given at least 30 days
written notice prior to any involuntary redemption and during such period will
be allowed to purchase additional shares to bring his account up to the
applicable minimum before the redemption is processed.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares of a Fund valued at $15,000 or more may elect to
receive a monthly or quarterly check (or direct deposit to the shareholder's
checking account) in a stated amount (minimum amount is $100 per month or
quarter). Shares will be redeemed at net asset value as may be necessary to meet
the withdrawal payments. If withdrawal payments exceed reinvested dividends and
distributions, the investor's shares will be reduced and eventually depleted. A
withdrawal plan may be terminated at any time by the shareholder or the
applicable Fund. Costs associated with a withdrawal plan are borne by the
applicable Fund. Additional information regarding systematic withdrawal plans
may be obtained by calling Maxus Information Systems Inc. at (216) 687-1000.
INVESTMENT MANAGEMENT
TRUSTEES AND OFFICERS
The business and affairs of each Fund are managed under the direction of the
Board of Trustees of the Trust, as required by Ohio law. The day-to-day
operations of each Fund are conducted through or under the direction of the
officers of the Trust. By virtue of the responsibilities assumed by MAM as
investment adviser (see below),
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the Funds have no executive employees other than their officers, each of whom is
employed by MAM or its affiliates and none of whom devotes full time to the
affairs of any Fund. No officer, director or employee of MAM or any of its
affiliates receives any compensation from any Fund for serving as a Trustee or
officer of the Trust. Each Fund pays each Trustee who is not an officer,
director or employee of MAM or any of its affiliates a fee for each meeting
attended and reimburses each such Trustee for travel and out-of-pocket expenses.
See "Management of the Funds" in the Statement of Additional Information.
THE INVESTMENT ADVISER
Each Fund has retained as its investment adviser Maxus Asset Management Inc
("MAM" or the "Adviser"), The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114, an investment management organization founded in
1976. The Adviser is actively engaged in providing discretionary investment
management services to institutional and individual clients and is registered
under the Investment Advisers Act of 1940. The Adviser has not been sponsored,
recommended or approved, nor have its abilities or qualifications been passed
upon, by the Securities and Exchange Commission or any other government agency.
MAM is a wholly owned subsidiary of Resource Management Inc, dba Maxus
Investment Group ("RMI"), an Ohio corporation with interests primarily in the
financial services industry. RMI also owns all of the shares of Maxus Securities
Corp ("MSC"), the NASD broker/dealer through which shares of each Fund are being
offered. Mr. Richard A. Barone is the president and controlling shareholder of
RMI and, therefore, is deemed to be in control of MAM and MSC.
Subject to the supervision and direction of the Board of Trustees, MAM, as
investment adviser, manages each Fund's portfolio in accordance with the stated
policies of that Fund. MAM makes investment decisions for each Fund and places
the purchase and sale orders for portfolio transactions. In addition, MAM or its
affiliates furnishes office facilities and clerical and administrative services,
pays the salaries of all officers and employees who are employed by both it and
the Funds and, subject to the direction of the Trust's Board of Trustees, is
responsible for the overall management of the business affairs of each Fund,
including the provision of personnel for recordkeeping, the preparation of
governmental reports and responding to shareholder communications.
16
<PAGE> 17
Denis J. Amato is the person primarily responsible for the management of the
portfolio of the Maxus Ohio Heartland Fund. Mr. Amato has been Chief Investment
Officer of Gelfand.Maxus Asset Management Inc, a subsidiary of RMI, since 1997.
Previously, he was Managing Director of Gelfand Partners Asset Management since
1991.
Richard A. Barone is the person primarily responsible for the management of
the portfolio of Maxus Aggressive Value Fund. Mr. Barone has been President of
MAM since 1976.
ADVISORY FEE
The Adviser receives from each Fund as compensation for its services to each
Fund an annual fee of 1% on the first $150,000,000 of each Fund's net assets,
and 0.75% of each Fund's net assets in excess of $150,000,000. This fee is
higher than that paid by most other investment companies. The fee is paid
monthly and calculated on the basis of that month's net assets.
EXPENSES BORNE BY EACH FUND
Each Fund pays all expenses not assumed by the Adviser, including brokerage
fees and commissions, fees of Trustees not affiliated with MAM, expenses of
registration of the Fund and of the shares of the Fund with the Securities and
Exchange Commission and the various states, charges of the custodian, dividend
and transfer agent, outside auditing and legal expenses, liability insurance
premiums on property or personnel (including officers and trustees), maintenance
of trust existence such as the filing of reports required by state law, any
taxes payable by the Fund, interest payments relating to Fund borrowings, costs
of preparing, printing and mailing registration statements, prospectuses,
periodic reports and other documents furnished to shareholders and regulatory
authorities, fees and expenses of legal counsel, and costs of printing share
certificates, portfolio pricing services and shareholder meetings,
reimbursements to RMI for organizational expenses, and costs pursuant to each
Fund's plan of distribution described below.
RMI, the parent company of the Adviser, paid the organizational expenses of
each Fund incurred prior to the initial offering of that Fund's shares,
including
17
<PAGE> 18
expenses involved in preparing, printing and mailing registration statements and
prospectuses to potential investors. Each Fund agreed to reimburse RMI for such
expenses. Such reimbursed expenses were deferred and are being amortized by each
Fund on a straightline basis over a period of five years from the date of
commencement of operations.
DISTRIBUTION PLAN (INVESTORS SHARES ONLY)
Under a plan adopted by the Board of Trustees pursuant to Rule 12b-1 under
the 1940 Act (the "Plan"), each Fund pays MSC a shareholder servicing and
distribution fee at the annual rate of .50% of the average daily net assets of
the Investor Shares of such Fund. Such fee will be used by MSC to make payments
for administration, shareholder services and distribution assistance, including,
but not limited to (i) compensation to securities dealers and other persons and
organizations ("Service Organizations") for providing distribution assistance
with respect to Investor Shares, (ii) compensation to Service Organizations for
providing administration, accounting and other shareholder services with respect
to Investor Shares, and (iii) otherwise promoting the sale of Investor Shares,
including paying for the preparation of advertising and sales literature and the
printing and distribution of such materials to prospective investors. The fees
paid to MSC under the Plan are payable without regard to actual expenses
incurred. Third parties also may charge fees to their clients who are beneficial
owners of Investor Shares in connection with their clients' accounts. These fees
would be in addition to any amounts which may be received by them from MSC under
the Plan.
EXECUTION OF PORTFOLIO TRANSACTIONS
Orders for transactions in portfolio securities for each Fund are placed by
the Adviser with securities broker-dealers with the objective of obtaining the
best available price, investment services and execution. Cost of execution
(commissions) is an important consideration but may not be the overriding
determinant. Based upon this consideration the Adviser makes substantial use of
the services of MSC, an affiliate of each Fund and of the Adviser, but is not
required to do so.
18
<PAGE> 19
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund will declare and pay, at least annually, dividends to shareholders
of substantially all of its net investment income, if any, earned during the
year from investments, and will distribute net realized capital gains, if any,
once each year. All dividends and distributions will be reinvested automatically
at net asset value in additional shares of a Fund unless the shareholder has
notified such Fund in writing of his election to receive distributions in cash.
As a result of the application of the Distribution Plan to Investor Shares only,
the amount of dividends on Institutional Shares will exceed the amount of
dividends on Investor Shares.
Each Fund will be treated as a separate entity for federal income tax
purposes. Each Fund intends to qualify continually as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). Such
qualification removes from the Fund any liability for federal income taxes upon
the portion of its income distributed to shareholders and makes federal income
tax upon such distributed income generated by such Fund's investments the sole
responsibility of the shareholders. Continued qualification requires each Fund
to distribute to its shareholders each year substantially all of its income and
capital gains. In addition, amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible four percent (4%) excise tax. To prevent imposition of the excise
tax each Fund must distribute for each calendar year an amount equal to the sum
of (1) at least 98% of its calendar year net ordinary income, (2) at least 98%
of the excess of its capital gains over capital losses (adjusted for certain
ordinary losses) realized during the one-year period ending December 31 of such
year, and (3) 100% of any undistributed net ordinary income and net capital
gains for previous years. A distribution will be treated as paid on December 31
of the calendar year if it is declared by the Fund in December of that year with
a record date in December and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received. Each Fund will notify shareholders
of the tax status of dividends and distributions.
19
<PAGE> 20
Any dividend or distribution paid by a Fund has the effect of reducing the
net asset value per share on the ex-dividend date by the amount of the dividend
or distribution. Therefore, a dividend or distribution paid shortly after a
purchase of shares by an investor would represent, in substance, a return of
capital to the shareholder, even though subject to income taxes.
Each Fund may also, from time to time, pay dividends in excess of net income
and net realized capital gains. Any such excess dividends would constitute a
non-taxable return of capital to the shareholder.
Depending on the residence of the shareholder for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes. Shareholders should consult their own tax advisers as to the
tax consequences of ownership of shares of a Fund in their particular
circumstances.
In accordance with the Code, each Fund may be required to withhold a portion
of dividends or redemptions or capital gains paid to a shareholder and remit
such amount to the Internal Revenue Service if the shareholder fails to furnish
the Fund with a correct taxpayer identification number, if the shareholder fails
to supply the Fund with a tax identification number altogether, if the investor
fails to make a required certification that his taxpayer identification number
is correct and that he is not subject to backup withholding, or if the Internal
Revenue Service notifies the Fund to withhold a portion of such distributions
from a shareholder's account.
GENERAL INFORMATION
The Funds are separate, diversified portfolios of MaxFund Trust (the
"Trust"). The Trust is an open-end management investment company, organized as a
business trust under the laws of the State of Ohio by a Declaration of Trust
dated November 7, 1997. The Declaration of Trust provides for an unlimited
number of authorized shares of beneficial interest, which may, without
shareholder approval, be divided into an unlimited number of series of such
shares, and which are presently divided into two series of shares, one for Maxus
Ohio Heartland Fund and one for Maxus Aggressive Value Fund. Each share
represents an equal proportionate interest in a Fund with other shares of the
same series and class, and is entitled to such dividends and distributions out
of the income earned on the assets belonging to that Fund as are
20
<PAGE> 21
declared at the discretion of the Trustees. All consideration received by the
Trust for shares of one of the Funds and all assets in which such consideration
is invested will belong to that Fund and will be subject to the liabilities
relating thereto.
Shareholders are entitled to one vote per share (with proportional voting
for fractional shares) on such matters as shareholders are entitled to vote.
Shareholders vote in the aggregate and not by series or class on all matters
except that (i) shares shall be voted by individual series or class when
required by the 1940 Act or when the Trustees have determined that the matter
affects only the interests of a particular series or class, and (ii) only the
holders of Investor Shares will be entitled to vote on matters submitted to
shareholder vote with regard to the Distribution Plan applicable to such class.
As used in this Prospectus and in the Statement of Additional Information, a
"vote of a majority of the outstanding Shares" of the Trust or a particular Fund
means the affirmative vote, at a meeting of shareholders duly called, of the
lesser of (a) 67% or more of the votes of shareholders of the Trust or such Fund
present at such meeting at which the holders of more than 50% of the votes
attributable to the shareholders of record of the Trust or such Fund are
represented in person or by proxy, or (b) the holders of more than 50% of the
outstanding votes of shareholders of the Trust or such Fund.
Although he Trust is not required to hold annual meetings of the
shareholders, shareholders holding at least 10% of the Trust's outstanding
shares have the right to call a meeting to elect or remove one or more of the
Trustees of the Trust.
Upon issuance and sale in accordance with the terms of this Prospectus, each
share will be fully paid and non-assessable. Shares of the Funds have no
preemptive, subscription or conversion rights and are redeemable as set forth
under "How to Redeem Shares." The Declaration of Trust also provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of such Fund and that every agreement, obligation or instrument
entered into or executed by such Fund shall contain a provision to the effect
that the shareholders are not personally liable thereunder. Although each Fund
is offering its own shares, it is possible that one Fund may become liable for
any misstatement in this Prospectus about one of the other Funds.
21
<PAGE> 22
In order to provide the initial capital for the Trust, MAM has purchased a
total of (i) 10,000 Institutional Shares of Maxus Ohio Heartland Fund at $10.00
per share for an aggregate purchase price of $100,000 and (ii) 20,000
Institutional Shares of Maxus Aggressive Value Fund at $5.00 per share for an
aggregate purchase price of $100,000. As long as MAM owns more than 25% of the
Trust's shares, it will be deemed to be in "control" of the Trust as that term
is defined in the 1940 Act.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, is the custodian
for each Fund's securities and cash. Maxus Information Systems Inc. ("MIS"), The
Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114, is
each Fund's Transfer, Redemption and Dividend Distributing Agent. MIS is a
subsidiary of RMI, the parent company of the Adviser.
McCurdy & Associates C.P.A.'s, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been appointed as independent accountants for the Funds.
Benesch, Friedlander, Coplan & Aronoff LLP, 2300 BP America Building, 200
Public Square, Cleveland, Ohio 44114, is legal counsel to the Funds and to the
Adviser.
Shareholder inquiries should be directed to the Secretary of the Trust at
The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114.
22
<PAGE> 23
APPENDIX A
DESCRIPTION OF BOND AND COMMERCIAL PAPER RATINGS*
STANDARD & POOR'S CORPORATION
BONDS
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA: Bonds rated AA have very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effect of
changes in circumstances and economic conditions than bonds in the higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit 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
bonds in this category than for the bonds in higher rated categories.
BBB, B, CCC AND CC: Bonds rated BB, B, CCC and CC are regarded on balance as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC 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.
COMMERCIAL PAPER
A-1: Commercial paper rated A-1 indicates that the degree of safety
regarding timely payment is very strong.
A-2: Commercial paper rated A-2 indicates that the capacity for timely
payment is strong. However, the relative degree of safety is not as overwhelming
as for issues designated A-1.
- ---------------
* As described by Standard & Poor's Corporation.
23
<PAGE> 24
No dealer, salesman, or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Funds or the Adviser. This
Prospectus does not constitute an offering in any state in which such offering
may not lawfully be made.
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- ----------------------------------------------------------------- ----
<S> <C>
HIGHLIGHTS....................................................... 2
FEE TABLE........................................................ 3
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES.................. 4
INVESTMENT POLICIES AND RESTRICTIONS............................. 6
RISKS AND OTHER CONSIDERATIONS................................... 7
PERFORMANCE...................................................... 8
HOW TO PURCHASE SHARES........................................... 9
HOW TO REDEEM SHARES............................................. 13
SYSTEMATIC WITHDRAWAL PLAN....................................... 15
INVESTMENT MANAGEMENT............................................ 15
DIVIDENDS, DISTRIBUTIONS AND TAXES............................... 19
GENERAL INFORMATION.............................................. 20
</TABLE>
24
<PAGE> 25
Investors are advised to read
this Prospectus and to retain
it for future reference.
MAXUS OHIO HEARTLAND FUND
MAXUS AGGRESSIVE VALUE FUND
PROSPECTUS
JANUARY 30, 1998
<PAGE> 26
STATEMENT OF ADDITIONAL INFORMATION
January 30, 1998
MAXUS OHIO HEARTLAND FUND
MAXUS AGGRESSIVE VALUE FUND
THE TOWER AT ERIEVIEW, 36TH FLOOR
1301 EAST NINTH STREET
CLEVELAND, OHIO 44114
(216) 687-1000
Maxus Ohio Heartland Fund and Maxus Aggressive Value Fund (the "Funds")
are separate diversified portfolios of MaxFund Trust, an open-end management
investment company. The investment objective of Maxus Ohio Heartland Fund is to
obtain a high total return (a combination of capital appreciation and income).
The investment objective of Maxus Aggressive Value Fund is to obtain capital
appreciation. This Statement of Additional Information relating to the Funds is
not a prospectus and should be read in conjunction with the Funds' prospectus. A
copy of the Funds' prospectus can be obtained from the Fund's distributor, Maxus
Securities Corp, The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114, telephone number (216) 687- 1000. The prospectus to which
this Statement relates is dated the same date as this Statement of Additional
Information.
The date of this Statement of Additional Information is January 30,
1998.
<PAGE> 27
TABLE OF CONTENTS
CAPTION PAGE LOCATION IN PROSPECTUS
- ------- ---- ----------------------
General Information and History 1 General Information
Investment Objective and Policies 1 Investment Objectives
and Management Techniques
Management of the Fund 3 Investment Management
Ownership of Shares 4 Not Applicable
Investment Advisory and Other 5 Investment Management
Services
Brokerage Allocation 7 Execution of Portfolio
Transactions
Capital Stock and Other Securities 8 General Information
Purchase, Redemption and Pricing of 8 How to Purchase Shares/
Securities Being Offered How to Redeem Shares
Determination of Net Asset Value 9 How to Purchase Shares
Tax Status 9 Dividends, Distributions
and Federal Taxes
Distributor 10 Investment Management
Financial Statements 11 Not Applicable
<PAGE> 28
GENERAL INFORMATION AND HISTORY
Maxus Ohio Heartland Fund and Maxus Aggressive Value Fund (the "Funds")
are diversified portfolios of MaxFund Trust (the "Trust"), an open-end
management investment company. Maxus Ohio Heartland Fund seeks a high total
return (a combination of income and capital appreciation). Maxus Aggressive
Value Fund seeks capital appreciation. The Trust was organized as a business
trust under the laws of the State of Ohio pursuant to a Declaration of Trust
dated November 7, 1997.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of each Fund are briefly
described in the Prospectus under the heading "Investment Objective And
Management Techniques." Each Fund has also adopted the following fundamental
investment policies and restrictions in addition to the fundamental investment
policies described in the Prospectus under the subheading "Investment
Restrictions." These policies cannot be changed without approval by the holders
of a majority of the outstanding voting securities of such Fund (as defined in
the Prospectus under "GENERAL INFORMATION"). Each Fund may not:
1. Invest in securities of other registered investment
companies, except by purchase in the open market involving only
customary brokerage commissions, or except as part of a merger,
consolidation, reorganization or acquisition; or
2. Invest in securities of any registered closed-end
investment company, if immediately after such purchase or acquisition
such Fund would own more than 3% of the total outstanding voting stock
of such closed-end company.
3. Invest more than 10% of the Fund's net assets in securities
for which market quotations are not readily available and repurchase
agreements maturing in more than seven days.
4. Lend money or securities, provided that the making of
interest-bearing demand deposits with banks and the purchase of debt
securities in accordance with its objective and policies are not
prohibited.
5. Borrow money except for temporary or emergency purposes
from banks (but not for the purpose of purchase of investments) and
then only in an amount not to exceed 5% of the Fund's net assets; or
pledge the Fund's securities or receivables or transfer or assign or
otherwise encumber them in an amount exceeding the amount of the
borrowings secured thereby.
6. Make short sales of securities, or purchase any securities
on margin except to obtain such short-term credits as may be necessary
for the clearance of transactions.
<PAGE> 29
7. Write (sell) put or call options, combinations thereof or
similar options; nor may it purchase put or call options if more than
5% of the Fund's net assets would be invested in premiums on put and
call options, combinations thereof or similar options.
8. Purchase or retain the securities of any issuer if any of
the officers or Trustees of the Trust or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
9. Invest for the purpose of exercising control or management
of another issuer.
10. Invest in commodities or commodity futures contracts or in
real estate, although it may invest in securities which are secured by
real estate and securities of issuers which invest or deal in real
estate.
11. Invest in interests in oil, gas or other mineral
exploration or development programs, although it may invest in the
securities of issuers which invest in or sponsor such programs.
12. Underwrite securities issued by others except to the
extent the Fund may be deemed to be an underwriter, under the federal
securities laws, in connection with the disposition of portfolio
securities.
13. Issue senior securities as defined in the Act.
14. Purchase securities subject to restrictions on disposition
under the Securities Act of 1933.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.
The Fund will not invest more than 5% of its assets in repurchase
agreements. A repurchase agreement is an instrument under which the Fund
acquires ownership of an obligation but the seller agrees, at the time of sale,
to repurchase the obligation at a mutually agreed-upon time and price. The
resale price is in excess of the purchase price and reflects an agreed-upon
market rate unrelated to the interest rate on the purchased security. The Fund
will make payments for repurchase agreements only upon physical delivery or
evidence of book entry transfer to the account of the custodian or bank acting
as agent. In the event of bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses including: (a) possible decline in the value of
the underlying securities during the period while the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack of access to
income during this period; and (c) expenses of enforcing its rights.
2
<PAGE> 30
MANAGEMENT OF THE FUND
The following table provides biographical information with respect to
each current Trustee and officer of the Trust. Each Trustee who is or may be
deemed to be an "interested person" of the Fund, as defined in the Act, is
indicated by an asterisk. Each Trustee of the Fund is also a Trustee of Maxus
Income Fund, Maxus Equity Fund and Maxus Laureate Fund, three other open-end
management investment companies.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING PAST 5 YEARS
- ---------------- ------------- -------------------
<S> <C> <C>
Richard A. Barone* Chairman, Treasurer President of Maxus Securities
The Tower at Erieview, 36th Fl and Trustee Corp (broker-dealer), Maxus
1301 East Ninth Street Asset Management Inc.
Cleveland, Ohio 44114 (Investment adviser) and
Resource Management Inc, dba
Maxus Investment Group
(financial services)
Denis J. Amato* Trustee Chief Investment Officer,
The Tower at Erieview, 36th Fl Gelfand.Maxus Asset
1301 East Ninth Street Management, Inc. (investment
Cleveland, Ohio 44114 adviser) since 1997; previously,
Managing Director, Gelfand
Partners Asset Management
(investment adviser)
Burton D. Morgan Trustee Chairman, Morgan Bank (bank);
Park Place President, Basic Search, Inc.
10 West Streetsboro Road (venture capital); Chairman,
Hudson, Ohio 44236 Multi-Color Corporation
(printing); Chairman Morgan
Funshares, Inc. (mutual fund)
Murlan J. Murphy, Jr. Trustee Independent Investor
11249 Lake Forest Drive
Chesterland, Ohio 44026
Michael A. Rossi, C.P.A. Trustee Certified Public Accountant
6559 Wilson Mills Road
Highland Heights, Ohio 44143
Robert J. Conrad Vice President Vice President, Resource
The Tower at Erieview, 36th Fl Management Inc.; formerly Vice
1301 East Ninth Street President, American Income Plus
Cleveland, Ohio 44114
</TABLE>
3
<PAGE> 31
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH THE FUND DURING PAST 5 YEARS
- ---------------- ------------- -------------------
<S> <C> <C>
Robert W. Curtin Secretary Senior Vice President and
The Tower at Erieview, 36th Fl Secretary, Maxus Securities
1301 East Ninth Street Corp; formerly Executive Vice
Cleveland, Ohio 44114 President, Roulston & Company,
Inc.
</TABLE>
No officer, director or employee of Maxus Asset Management Inc. ("MAM"
or the "Investment Adviser") or of any parent or subsidiary receives any
compensation from the Trust for serving as an officer or Trustee of the Trust.
Each Trustee who is not an interested person of MAM will receive from each Fund
the following fees for each Board or shareholders meeting attended: $100 per
meeting if net assets of such fund are under $10,000,000; $200 per meeting if
net assets of such Fund are between $10,000,000 and $50,000,000; or $300 per
meeting if net assets of such Fund are over $50,000,000. The estimated fees
payable to the Trustees for the current fiscal year, which are the only
compensation or benefits payable to Trustees, are summarized in the following
table:
<TABLE>
<CAPTION>
COMPENSATION TABLE
Aggregate Compensation Total Compensation From All Five
Name of Trustee from each Fund* Maxus Funds Paid to Trustees*
- --------------- --------------- -----------------------------
Ohio Heartland Aggressive Value
-------------- ----------------
<S> <C> <C> <C>
Denis J. Amato $ 0 $ 0 $ 0
Richard A. Barone $ 0 $ 0 $ 0
Burton D. Morgfan $ 800 $ 800 $3,600
Murlan J. Murphy $ 800 $ 800 $3,600
Michael A. Rossi $ 800 $ 800 $3,600
<FN>
*Estimated fees for 1998.
</TABLE>
OWNERSHIP OF SHARES
As of January 16, 1998, all of the outstanding shares of each Fund were
owned by Maxus Asset Management, Inc., The Tower at Erieview, 36th Floor, 1301
East Ninth Street, Cleveland, Ohio 44114. A shareholder who beneficially owns,
directly or indirectly, more than 25% of the Fund's voting securities may be
deemed a "control person" (as defined in the 1940 Act) of the Fund. Maxus
Management, Inc. is controlled by Richard A. Barone, the Chairman of the Fund.
4
<PAGE> 32
INVESTMENT ADVISORY AND OTHER SERVICES
Maxus Asset Management, Inc. ("MAM"), each Fund's investment adviser,
is a wholly-owned subsidiary of RMI. MAM is registered as an investment adviser
under the Investment Advisers Act of 1940. MAM has not been sponsored,
recommended or approved, nor have its abilities or qualifications been passed
upon, by the Securities and Exchange Commission or any other governmental
agency.
As compensation for MAM's services rendered to each Fund, such Fund
pays a fee, computed and paid monthly, at an annual rate of 1% of the average
value of the first $150,000,000 of the Fund's daily net assets and .75% of
average daily net assets in excess of $150,000,000. This fee is higher than that
paid by most other investment companies.
MAM acts as investment adviser to the Fund pursuant to an Investment
Advisory and Administration Agreement dated November 19, 1997. Subject to the
supervision and direction of the Board of Trustees, MAM, as investment adviser,
manages the Fund's portfolio in accordance with the stated policies of the Fund.
MAM makes investment decisions for each Fund and places the purchase and sale
orders for portfolio transactions. In addition, MAM furnishes office facilities
and clerical and administrative services, and pays the salaries of all officers
and employees who are employed by both it and each Fund and, subject to the
direction of the Board of Trustees, is responsible for the overall management of
the business affairs of the Fund, including the provision of personnel for
recordkeeping, the preparation of governmental reports and responding to
shareholder communications.
Other expenses are borne by each Fund and include brokerage fees and
commissions, fees of Trustees not affiliated with MAM, expenses of registration
of the Fund and of the shares of the Fund with the Securities and Exchange
Commission (the "SEC") and the various states, charges of the custodian,
dividend and transfer agent, outside auditing and legal expenses, liability
insurance premiums on property or personnel (including officers and trustees),
maintenance of business trust existence, any taxes payable by the Fund, interest
payments relating to Fund borrowings, costs of preparing, printing and mailing
registration statements, prospectuses, periodic reports and other documents
furnished to shareholders and regulatory authorities, reimbursement to RMI for
organizational expenses, including costs of printing share certificates,
portfolio pricing services and Fund meetings, and costs incurred pursuant to the
Distribution Plan (Investor Shares only) described below.
The Investment Advisory and Administration Agreement is subject to
annual approval as to each Fund by (i) the Board of Trustees or (ii) vote of a
majority (as defined in the Act) of the outstanding voting securities of such
Fund, provided that in either event the continuance is also approved by a
majority of the Trustees who are not "interested persons" (as defined in the
Act) of such Fund or MAM by vote cast in person at a meeting called for the
purpose of voting on such approval. The Board of Trustees, including a majority
of the Trustees who are not "interested persons," voted to approve the
Investment Advisory and Administration Agreement at a meeting held on November
19, 1997. The Investment Advisory and Administration Agreement is terminable
5
<PAGE> 33
as to either Fund without penalty, on not less than 60 days' notice, by the
Board of Trustees or by vote of the holders of a majority of such Fund's shares
or, upon not less than 90 days' notice, by MAM. The Investment Advisory and
Administration Agreement will terminate automatically in the event of its
assignment.
Each Fund has a Plan of Distribution (the "Plan") pursuant to Rule
12b-1 under the Act, pursuant to which the Fund pays Maxus Securities Corp
("MSC") up to .50% of average net assets of Investor Shares annually for the
costs of activities intended to result in the sale of Investor Shares. See
"Investment Management--Distribution Plan" in the Fund's Prospectus.
The Trustees believe that the Plan will benefit each Fund and its
holders of Investor Shares. Among these benefits are: (1) reductions in the per
share expenses of the Fund as a result of increased assets in the Fund; (2)
reductions in the cost of executing portfolio transactions and the possible
ability of the Investment Adviser in some cases to negotiate lower purchase
prices for securities, due to the potentially larger blocks of securities which
may be traded by the Fund as its net assets increase in size; and (3) a more
predictable flow of cash which may provide investment flexibility in seeking the
Fund's investment objective and may better enable the Fund to meet redemption
demands without liquidating portfolio securities at inopportune times.
The Trust has entered into an Administration Agreement with Maxus
Information Systems Inc. ("MIS"), The Tower at Erieview, 36th Floor, 1301 East
Ninth Street, Cleveland, Ohio 44114, pursuant to which MIS has agreed to act as
each Fund's Transfer, Redemption and Dividend Disbursing Agent. As such, MIS
maintains each Fund's official record of shareholders and is responsible for
crediting dividends to shareholders' accounts. In consideration of such
services, each Fund pays MIS an annual fee, paid monthly, equal to $6.75 per
shareholder account (with a monthly minimum of $775) plus $12 per month for each
state in which such Fund is registered under such state's securities laws, plus
out-of-pocket expenses. In addition, each Fund has entered into an Accounting
Services Agreement with MIS, pursuant to which MIS has agreed to provide
portfolio pricing and related services, for the payment of an annual fee of
$17,400 for the first $25,000,000 in net assets, $8,500 for the next $25,000,000
in net assets and $4,750 for each additional $25,000,000 in net assets, plus
out-of-pocket expenses. Notwithstanding the foregoing, if for any month the
average net assets of a Fund are less than $10,000,000, all of the above amounts
will be reduced based on the proportion which such average net assets bears to
$10,000,000.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, serves as
the Fund's custodian. As custodian, Star Bank maintains custody of the Fund's
cash and portfolio securities.
McCurdy & Associates C.P.A.'s, Inc., independent certified public
accountants located at 27955 Clemens Road, Westlake, Ohio 44145, has been
selected as auditors for each Fund. In such capacity, McCurdy & Associates
C.P.A.'s, Inc. periodically reviews the accounting and financial records of each
Fund and examines its financial statements.
6
<PAGE> 34
BROKERAGE ALLOCATION
Decisions to buy and sell securities for each Fund are made by MAM
subject to the overall supervision and review by the Board of Trustees.
Portfolio security transactions for each Fund are effected by or under the
supervision of MAM.
Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. There is generally no stated commission in the case of
securities traded in the over-the-counter markets, but the price of those
securities includes an undisclosed commission or markup. The cost of securities
purchased from underwriters includes an underwriting commission or concession,
and the prices at which securities are purchased from and sold to dealers
include a dealer's markup or markdown.
In executing portfolio transactions and selecting brokers and dealers,
it is each Fund's policy to seek the best overall terms available. The
Investment Advisory and Administration Agreement provides that, in assessing the
best overall terms available for any transaction, MAM shall consider the factors
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In addition, the Investment
Advisory and Administration Agreement authorizes MAM, in selecting brokers or
dealers to execute a particular transaction, and, in evaluating the best overall
terms available, to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
the Fund and/or other accounts over which MAM exercises investment discretion.
The Board of Trustees periodically reviews the commissions paid by each
Fund to determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits inuring to the Fund. It is possible
that certain of the services received will primarily benefit one or more other
accounts for which investment discretion is exercised. Conversely, a Fund may be
the primary beneficiary of services received as a result of portfolio
transactions effected for other accounts. MAM's fee under the Investment
Advisory and Administration Agreement is not reduced by reason of MAM's
receiving such brokerage and research services.
Under the Act, a mutual fund may not pay brokerage commissions to an
affiliate which exceed the usual and customary broker's commissions. A
commission is deemed as not exceeding the usual and customary broker's
commission if (i) the commission is reasonable and fair compared to the
commission received by other brokers in connection with comparable transactions
involving similar securities being purchased or sold during a comparable period
of time and (ii) the Board of Trustees, including a majority of the Trustees who
are not interested persons of the mutual fund, have adopted procedures
reasonably designed to provide that such commission is consistent with the
above-described standard, review these procedures annually for their continuing
appropriateness and determine quarterly that all commissions paid during the
preceding quarter were in compliance with these procedures.
7
<PAGE> 35
The Fund's Board of Trustees has determined that any portfolio
transaction for a Fund, including in certain instances over-the-counter
purchases and sales, may be effected through MSC if, in MAM's judgment, the use
of MSC is likely to result in price and execution at least as favorable as those
of other qualified brokers, and if, in the transaction, MSC charges the Fund a
commission rate consistent with those charged by MSC to comparable unaffiliated
customers in similar transactions. Each quarter, the Trustees review a report
comparing the commissions charged each Fund by MSC to the commissions which
would have been charged for the same transactions by a national discount
brokerage firm and a full-service brokerage firm at its institutional rates.
Based upon such review, the Board of Trustees determines on a quarterly basis
whether the commissions charged by MSC meet the requirements of the Act. MSC
will not participate in commissions from brokerage given by the Fund to other
brokers or dealers. Over-the-counter purchases and sales are transacted through
brokers and dealers with principal market makers. A Fund will in no event effect
principal transactions with MSC in over-the-counter securities in which MSC
makes a market. MSC is a wholly owned subsidiary of RMI, a corporation
controlled by Richard A. Barone, Chairman of the Fund. Richard A. Barone is,
therefore, considered to control MSC.
Under the rules adopted by the SEC, MSC may not execute transactions
for a Fund on the floor of any national securities exchange, but may effect
transactions for a Fund by transmitting orders for execution, providing for
clearance and settlement, and arranging for the performance of those functions
by members of the exchange not associated with MSC. MSC will be required to pay
fees charged by those persons performing the floor brokerage elements out of the
brokerage compensation it receives from the Fund. Each Fund has been advised by
MSC that on most transactions, the floor brokerage generally constitutes from
10% to 40% of the total commissions paid.
Even though investment decisions for the Fund are made independently
from those of the other accounts managed by MAM, investments of the kind made by
a Fund may also be made by those other accounts. When a Fund and one or more
accounts managed by MAM are prepared to invest in, or desire to dispose of, the
same security, available investments or opportunities for sales will be
allocated in a manner believed by MAM to be equitable. In some cases, this
procedure may adversely affect the price paid or received by the Fund or the
size of the position obtained for or disposed of by the Fund.
CAPITAL STOCK AND OTHER SECURITIES
See "General Information" in the Fund's prospectus.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
The information pertaining to the purchase and redemption of each
Fund's shares appearing in the Prospectus under the captions "How To Purchase
Shares" and "How To Redeem Shares" is hereby incorporated by reference.
8
<PAGE> 36
DETERMINATION OF NET ASSET VALUE
The information pertaining to the determination of net asset value
appearing in the Prospectus under the caption "How to Purchase Shares -- Price
of Shares" is hereby incorporated by reference.
TAX STATUS
Each Fund will be treated as a separate entity for federal income tax
purposes. Each Fund's policy is to distribute at least annually, prior to the
end of the calendar year, dividends sufficient to satisfy excise tax
requirements of the Internal Revenue Service and to distribute annually, after
the end of the calendar year, any remaining net investment income and net
realized capital gains. Unless a shareholder elects otherwise, dividends and
capital gains distributions are paid in additional shares that are credited to
the shareholder's account with such Fund.
As a result of the application of the Distribution Plan to Investor
Shares only, the amount of dividends on Institutional Shares will exceed the
amount of dividends on Investor Shares.
Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code").
Qualification as a regulated investment company will result in a Fund's paying
no taxes on net income and net realized capital gains distributed to
shareholders. To qualify for this treatment, a Fund must derive at least 90% of
its gross income from dividends, interest, and gains from the sale or other
disposition of securities; derive less than 30% of its gross income from the
sale or other disposition of securities held for fewer than three months; invest
in securities within certain limits; and distribute to its shareholders at least
90% of its net taxable income earned in any year.
Dividends derived from a Fund's net investment income, whether received
in additional shares or in cash, will be taxable to shareholders as ordinary
income, but a portion may be eligible for the 70% dividends received deduction
available to corporations.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to a shareholder in the year in which
received (except as set forth in the next paragraph), whether those
distributions are accepted in cash or in additional shares, and regardless of
the length of time the shareholder has held his Fund shares. These
distributions, like dividends, may also be subject to state and local taxes.
In addition to any dividends paid within the calendar year, dividends
and capital gain distributions declared in December and paid the following
January will be taxable in the year they are declared.
9
<PAGE> 37
Investors should consider carefully the tax implications of purchasing
shares of a Fund just prior to the record date of a dividend or capital gains
distribution. Although a dividend or distribution paid shortly after shares have
been purchased is in effect a return of investment, it is subject to taxation as
described above, and a sale at a loss of shares held not more than six months
will be long-term capital loss to the extent of any long-term capital gain
dividends received within that period.
Shareholders must furnish the Fund with their correct Taxpayer
Identification Number to avoid being subject to a 20% federal backup withholding
tax on dividend distributions. Investors also must certify on the Account
Application that the stated Tax Identification Number is correct and that the
Investor is not subject to 20% backup withholding for previous under-reporting
to the IRS. Shareholders not subject to income taxation do not have to pay an
income tax on the dividend or capital gain distributions.
Shareholders shall upon demand disclose to the Fund in writing such
information with respect to direct and indirect ownership of Shares of the Fund
as the Trustees of the Fund deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other taxing
authority.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually by the Fund's transfer agent. Shareholders
are urged to consult their own tax advisers regarding specific questions as to
Federal, state or local taxes.
DISTRIBUTOR
Shares of the Fund are offered on a best-efforts basis by Maxus
Securities Corp, a registered NASD broker-dealer. MSC is a wholly-owned
subsidiary of RMI, which is controlled by Richard A. Barone, Chairman of the
Fund.
Pursuant to the Distribution Agreement between the Trust and MSC with
respect to Investor Shares, MSC has agreed to hold itself available to receive
orders, satisfactory to MSC, for the purchase of Shares of each Fund, to accept
such orders on behalf of each Fund as of the time of receipt of such orders and
to transmit such orders to the Fund's transfer agent as promptly as practicable.
MSC receives an annual distribution fee of .50% of average net assets for
distributing and marketing the Investor Shares of the Fund. Certain employees of
MSC may receive compensation under the Distribution Plan. See "Investment
Advisory and Other Services."
The Distribution Agreement provides that MSC shall arrange to sell the
Fund's Shares as agent for the Fund and may enter into agreements with
registered broker-dealers as it may select to arrange for the sale of such
shares. MSC is not obligated to sell any certain number of shares.
10
<PAGE> 38
To The Shareholders and Trustees
MaxFund Trust
We have audited the accompanying statement of assets and liabilities of MaxFund
Trust (comprising, respectively, the Maxus Ohio Heartland Fund and Maxus
Aggressive Value Fund), as of January 15, 1998. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of January 15, 1998, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Maxus
Ohio Heartland Fund and Maxus Aggressive Value Fund constituting MaxFund Trust
as of January 15, 1998, in conformity with generally accepted accounting
principles.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
January 16, 1998
11
<PAGE> 39
MAXFUND TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 15, 1998
<TABLE>
<CAPTION>
Maxus Ohio Maxus Aggressive
Heartland Fund Value Fund
---------------- ----------------
<S> <C> <C>
ASSETS:
Cash in Bank $100,000 $100,000
Organization Costs 15,215 15,215
-------- --------
Total Assets 115,215 115,215
-------- --------
LIABILITIES:
Note Payable 15,215 15,215
-------- --------
Total Liabilities 15,215 15,215
-------- --------
NET ASSETS $100,000 $100,000
-------- --------
NET ASSETS CONSIST OF:
Capital Paid In $100,000 $100,000
-------- --------
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value:
Investor Shares 0 0
Institutional Shares 10,000 20,000
NET ASSET VALUE PER SHARE:
Investor Shares -- --
Institutional Shares $10 $5
OFFERING PRICE PER SHARE:
Investor Shares $10 $5
Institutional Shares $10 $5
</TABLE>
See Accountants' Audit Report
12
<PAGE> 40
MAXFUND TRUST
NOTES TO FINANCIAL STATEMENTS
January 15, 1998
1. ORGANIZATION
MaxFund Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the State of
Ohio by a Declaration of Trust dated November 7, 1997. The Declaration
of Trust provides for an unlimited number of authorized shares of
beneficial interest, which may, without shareholder approval, be
divided into an unlimited number of series of such shares, and which
are presently divided into two series of shares, one for Maxus Ohio
Heartland Fund and one for Maxus Aggressive Value Fund. Each Fund is
offering Investor Shares and Institutional Shares. Investor Shares and
Institutional Shares are identical, except as to minimum investment
requirements and the services offered to and expenses borne by each
class.
The Fund uses an independent custodian. No transactions other than
those relating to organizational matters and the sale of 10,000
Institutional Shares of Maxus Ohio Heartland Fund and 20,000
Institutional Shares of Maxus Aggressive Value Fund have taken place to
date.
2. RELATED PARTY TRANSACTIONS
As of January 15, 1998, all of the outstanding shares of each Fund were
owned by Maxus Asset Management, Inc. ("MAM"). A shareholder who
beneficially owns, directly or indirectly, more than 25% of the Fund's
voting securities may be deemed a "control person" (as defined in the
1940 Act) of the Fund. Maxus Asset Management, Inc. is controlled by
Richard A. Barone, the Chairman of the Fund.
Maxus Asset Management, Inc., each Fund's investment adviser, is a
wholly-owned subsidiary of Resource Management, Inc. ("RMI"). MAM is
registered as an investment adviser under the Investment Advisers Act
of 1940.
As compensation for MAM's services rendered to each Fund, such Fund
pays a fee, computed and paid monthly, at an annual rate of 1% of the
average value of the first $150,000,000 of the Fund's daily net assets
and .75% of average daily net assets in excess of $150,000,000. This
fee is higher than that paid by most other investment companies.
Maxus Information Systems, Inc. ("MIS") is each Fund's Transfer,
Redemption and Dividend Distributing Agent. MIS is a subsidiary of RMI,
the parent company of the Adviser.
13
<PAGE> 41
3. CAPITAL STOCK AND DISTRIBUTION
At January 15, 1998, an unlimited number of shares were authorized and
paid in capital amounted to $100,000 each for Maxus Ohio Heartland Fund
and Maxus Aggressive Value Fund. Transactions in capital stock were as
follows:
<TABLE>
<CAPTION>
Maxus Ohio Maxus Aggressive
Heartland Fund Value Fund
-------------- ----------
<S> <C> <C>
Shares Sold:
Investor shares 0 0
Institutional shares 10,000 20,000
Shares Redeemed:
Investor shares 0 0
Institutional shares 0 0
Net Increase:
Investor shares 0 0
Institutional shares 10,000 20,000
Shares Outstanding:
Investor shares 0 0
Institutional shares 10,000 20,000
</TABLE>
4. NOTE PAYABLE
Note payable consists of a note payable to Resource Management, Inc. at
9% payable monthly for five years for each Fund.
These notes are stated at cost. The Funds do not believe it is
practicable to estimate fair value as the cost to provide such value
would exceed the benefit.
The principle due for the next five years for each Fund.
1998 $ 3,043
1999 3,043
2000 3,043
2001 3,043
2002 3,043
-------
$15,215
-------
5. ORGANIZATION COSTS
Organization costs are being amortized on a straight line basis over a
five-year period.
14
