Michael J. Meaney Writer's Direct Dial Number
(216) 363-4436
January 17, 1998
Brion R. Thompson, Esq.
Senior Counsel
Securities & Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Re: MaxFund Trust
File Nos. 333-41555 and 811-8499
Dear Mr. Thompson:
Enclosed is Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-1A of MaxFund Trust. The Amendment is marked to show the changes from the
original Form N-1A filed December 5, 1997.
This letter will explain our responses to your comment letter of December 18,
1997. The captions and paragraph numbers in this letter correspond to those in
your letter.
General
The Fund's investment adviser indicates that there are no Year 2000 issues which
would have an adverse effect on its ability to provide the services described in
the Registration Statement. Accordingly, all required information about Year
2000 issues has been included in the Registration Statement.
All required items of disclosure (including exhibits and financial statements)
have now been included in the Registration Statement.
Highlights
1. The caption to the second paragraph has been revised by deleting the word
"No".
<PAGE>
Brion R. Thompson, Esq.
January 17, 1998
Page 2
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES
Maxus Ohio Heartland Fund
2. Disclosure specifically describing the size of companies has been included.
RISKS AND OTHER CONSIDERATIONS
Maxus Ohio Heartland Fund
3. The Fund does not know of any existing risks associated with the Fund's
substantial investment in companies headquartered in the State of Ohio.
However, an example of the type of risk which might arise has been
included.
PART B - STATEMENT OF ADDITIONAL INFORMATION
COMPENSATION TABLE
4. The number of investment companies comprising the Maxus Funds has been
included.
MANAGEMENT OF THE FUND
The disclosure has been revised to indicate that the Fund has five Trustees,
three of whom are disinterested. Also, the former Vice President has been
replaced by a new individual.
If you have any questions, please call me at 216/363-4436.
Very truly yours,
/s/ Michael J. Meaney
<PAGE>
File Nos. 333-41555
and 811-8499
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. ___ [_]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 [X]
- --------------------------------------------------------------------------------
MAXFUND TRUST
(Exact name of registrant as specified in charter)
- --------------------------------------------------------------------------------
The Tower at Erieview, 36th Floor,
1301 East Ninth Street, Cleveland, Ohio 44114-1800
(Address of principal executive offices)
Registrant's Telephone Number: 216- 687-1000
- --------------------------------------------------------------------------------
Richard A. Barone, The Tower at Erieview, 36th Floor,
1301 East Ninth Street, Cleveland, Ohio 44114-1800
(Name and address of agent for service)
Copy to:
Michael J. Meaney, Esq.
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building, 200 Public Square, Cleveland, Ohio 44114
- --------------------------------------------------------------------------------
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
elected to register an indefinite number of shares of beneficial interest. The
amount of the registration fee pursuant to Rule 24f-2 of the Investment Company
Act of 1940 is $500.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
MAXFUND TRUST
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Part A
Item No. Caption Location
1. Cover Page Cover Page
2. Synopsis Highlights
3. Condensed Financial Information Not Applicable
4. General Description of Investment Objective and
Registrant Management Techniques,
General Information
5. Management of the Fund Investment Management
6. Capital Stock and Other Securities General Information
7. Purchase of Securities Being Offered Purchase of Shares
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings None
Part B
Item No. Caption Location
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information and
History
13. Investment Objectives and Policies Investment Objectives and
Policies
14. Management of the Fund Management of the Fund
15. Control Persons and Principal Ownership of Shares
Holders of Securities
16. Investment Advisory and Other Investment Advisory and
Services Other Services
<PAGE>
17. Brokerage Allocation Brokerage Allocation
18. Capital Stock and Other Securities Capital Stock and Other
Securities
19. Purchase, Redemption and Pricing Purchase, Redemption and
of Securities Being Offered Pricing of Securities Being
Offered
20. Tax Status Tax Status
21. Underwriters Distributor
22. Calculations of Performance Data Performance
23. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate Item, as numbered, in Part C to this Registration Statement.
<PAGE>
MAXUS OHIO HEARTLAND FUND The Tower at Erieview, 36th Floor
MAXUS AGGRESSIVE VALUE FUND 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 __, 1998
Investors are advised to read this Prospectus and to retain it for future
reference.
1
<PAGE>
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 been an investment adviser to individuals, retirement plans, corporations
and foundations. MAM is controlled by Richard A. Barone, Chairman of each Fund.
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.
2
<PAGE>
FEE TABLE
Annual Fund Operating Expenses (as a percentage of average net assets)
Maxus Ohio Maxus Aggressive
Heartland Fund Value Fund
- --------------------------------------------------------------------------------
Investor Institutional Investor Institutional
Class Class Class Class
- --------------------------------------------------------------------------------
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%
* 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.
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).
Example 1 year 3 years
------ -------
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
Example 1 year 3 years
------ -------
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
3
<PAGE>
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that an investor in any 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, 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
4
<PAGE>
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.
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;
5
<PAGE>
(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.
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.
6
<PAGE>
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.
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.
7
<PAGE>
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 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
MaxFund Trust, 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 MaxFund Trust 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 Authorization Form which is available from the
Fund. A confirmation will be mailed and payment must
8
<PAGE>
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 asset value per
share of each class of a Fund is calculated by determining the value of the
class's porportional 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.
9
<PAGE>
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 each Fund,
receives for its services as 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.
10
<PAGE>
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 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 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.
11
<PAGE>
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 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 its
officers. By virtue of the responsibilities assumed by MAM as investment adviser
(see below), 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 such Fund. Each Fund pays each Trustee who is not an
officer, director or employee of MAM or any of its affiliates a fee of $100 per
meeting attended and reimburses each such Trustee for travel and out-of-pocket
expenses.
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.
12
<PAGE>
Subject to the supervision and direction of each Fund's 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.
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 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).
13
<PAGE>
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.
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 Investors 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
14
<PAGE>
(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.
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 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.
15
<PAGE>
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 the 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.
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.
16
<PAGE>
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.
<PAGE>
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 OF CONTENTS Page
HIGHLIGHTS.....................................................................2
FEE TABLE......................................................................3
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES................................4
INVESTMENT POLICIES AND RESTRICTIONS...........................................5
RISKS AND OTHER CONSIDERATIONS.................................................6
PERFORMANCE....................................................................7
HOW TO PURCHASE SHARES.........................................................7
HOW TO REDEEM SHARES..........................................................10
SYSTEMATIC WITHDRAWAL PLAN....................................................12
INVESTMENT MANAGEMENT.........................................................12
DIVIDENDS, DISTRIBUTIONS AND TAXES............................................15
GENERAL INFORMATION...........................................................16
<PAGE>
Investors are advised to read
this Prospectus and to retain
it for future reference.
MAXUS OHIO HEARTLAND FUND
MAXUS AGGRESSIVE VALUE FUND
PROSPECTUS
January ___, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
January __, 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 ___,
1998.
<PAGE>
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>
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.
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.
1
<PAGE>
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.
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
2
<PAGE>
Income Fund, Maxus Equity Fund and Maxus Laureate Fund, three other open-end
management investment companies.
<TABLE>
<S> <C> <C>
Position Held Principal Occupation(s)
Name and Address With the Fund During Past 5 Years
- ---------------- ------------- -----------------------
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
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>
3
<PAGE>
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:
COMPENSATION TABLE
Aggregate Compensation Total Compensation From All Five
Name of Trustee from each Fund* Maxus Funds Paid to Trustees*
- --------------------------------------------------------------------------------
Ohio Heartland Aggressive Value
-------------- ----------------
Denis J. Amato $ 0 $ 0 $ 0
Richard A. Barone $ 0 $ 0 $ 0
Burton D. Morgan $ 800 $ 800 $3,600
Murlan J. Murphy $ 800 $ 800 $3,600
Michael A. Rossi $ 800 $ 800 $3,600
*Estimated fees for 1998.
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>
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 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.
5
<PAGE>
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.
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.
6
<PAGE>
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.
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
7
<PAGE>
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.
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
8
<PAGE>
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.
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.
9
<PAGE>
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>
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>
** 1 MAXFUND TRUST
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 15, 1998
Maxus Ohio Maxus Aggressive
Heartland Fund Value Fund
-------------- ----------------
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
See Accountants' Audit Report
12
<PAGE>
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>
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:
Maxus Ohio Maxus Aggressive
Heartland Fund Value Fund
-------------- ----------------
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
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
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
The Financial Statements filed as part of this
Registration Statement are as follows:
Statement of Assets and Liabilities as of January 15,
1998, together with Report of Independent Certified Public
Accountants dated January 16, 1998.
(b) Exhibits:
Exhibit
Number Description
- ------- -----------
1 Registrant's Declaration of Trust dated November 7, 1997.*
2 Registrant's By-Laws.*
3 None.
4 None.
5 Investment Advisory and Administration Agreement.*
6(a) Distribution Agreement.
7 None.
8 Custody Agreement.
9(a) Administration Agreement.
9(b) Accounting Services Agreement.
10 Opinion and consent.
11 Consent of Independent Auditors.
12 None.
C-1
<PAGE>
13 Subscription Agreement between the Trust and Resource Management
Inc.
14 Individual Retirement Account Documents.
15(a) Plan of Distribution Pursuant to Rule 12b-1.
27 Financial Data Schedule.
* Previously filed .
Item 25. Persons Controlled by or Under Common Control with Registrant.
The Fund, together with Maxus Income Fund, Maxus Equity Fund and
Maxus Laureate Fund (three other investment companies), may be
deemed to be under common control on the basis of the fact that
all officers and Trustees of the Fund are also officers and
Trustees of the other three funds.
In addition, the Fund and Resource Management Inc. (together with
its subsidiaries, MAM, MSC and MIS) may be deemed to be under
common control of Richard A. Barone, the Chairman of the Fund and
the President and controlling shareholder of Resource Management
Inc.
Item 26. Number of Holders of Securities.
As of the date of this Registration Statement, there was one
record holder of the Fund's Shares of Beneficial Interest.
Item 27. Indemnification.
Reference is made to Article VIII of the Registrant's Declaration
of Trust filed as Exhibit 1. The application of these provisions
is limited by Article 10 of the Registrant's By-laws filed as
Exhibit 2 and by the following undertaking set forth in the rules
promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to trustees,
officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by
a trustee, officer or controlling person of the registrant
in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities 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 such Act and will be
governed by the final adjudication of such issue.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser.
Reference is made to the section in the Prospectus entitled
"Investment Management".
Item 29. Principal Underwriters.
(a) Maxus Securities Corp, the distributor for the Fund, also
distributes securities for Maxus Income Fund, Maxus Equity Fund and Maxus
Laureate Fund.
(b) The following information is provided with respect to each
director and officer of Maxus Securities Corp:
Name and Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
Richard A. Barone President, Treasurer Chairman, Treasurer
The Tower at Erieview and Director and a Trustee
1301 East Ninth Street
Cleveland, Ohio 44114
Robert W. Curtin Senior Vice President Secretary
The Tower at Erieview and Secretary
1301 East Ninth Street
Cleveland, Ohio 44114
Item 30. Location of Accounts and Records.
All accounts, books and documents required to be maintained by
the Registrant pursuant to Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 through 31a-3 thereunder
are maintained at the office of the Registrant and the
Transfer Agent at The Tower at Erieview, 36th Floor, 1301 East
Ninth Street, Cleveland, Ohio 44114, except that all records
relating to the activities of the Fund's Custodian are
maintained at the office of the Custodian, Star Bank, N.A.,
425 Walnut Street, Cincinnati, Ohio 45201.
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
C-3
<PAGE>
The Registrant undertakes (1) to furnish a copy of the
Registrant's latest annual report, upon request and without
charge, to every person to whom a Prospectus is delivered, (2)
to file a post-effective amendment, using reasonably current
financial statements which need not be certified, without four
to six months from the effective date of Registrant's
Registration Statement under the Securities Act of 1933, and
(3) to call a meeting of shareholders for the purpose of
voting upon the question of removal of a trustee or trustees
when requesting in writing to do so by the holders of at least
10% of the Registrant's outstanding shares of beneficial
interest and in connection with such meeting to comply with
the provisions of Section 16(c) of the Investment Company Act
of 1940 relating to shareholder communications.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cleveland, State of Ohio, on the 16th day of
January, 1998.
MAXFUND TRUST
By: /s/ Richard A. Barone
Richard A. Barone, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
- --------------------------------------------------------------------------------
/s/ Richard A. Barone
Richard A. Barone Chairman, Treasurer January 16, 1998
(Principal Executive Officer, and Trustee
Financial Officer and Accounting
Officer)
/s/ Denis J. Amato
Denis J. Amato Trustee January 16, 1998
/s/ Burton D. Morgan
Burton D. Morgan Trustee January 16, 1998
/s/ Murlan J. Murphy, Jr.
Murlan J. Murphy, Jr. Trustee January 16, 1998
/s/ Michael A. Rossi
Michael A. Rossi, C.P.A. Trustee January 16, 1998
C-5
<PAGE>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 - MAXFUND TRUST
------------------ COMPARISON OF FOOTERS ------------------
- -FOOTER 1-
January 21, 1998 10:26am -- -- DEW
CLE2: 17035\6 -- 262821 Ver4
This redlined draft, generated by CompareRite - The Instant Redliner, shows the
differences between original document : M:\WPDOC\17035\262821.3B and revised
document: M:\WPDOC\17035\262821.4B
CompareRite found 87 change(s) and 1 move(s) in the text CompareRite found 3
change(s) in the notes
Deletions appear as a normal
Additions appear as double underlined text
C-6
<PAGE>
Exhibit 6(a)
DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the 19th day of November, 1997 by and between
MAXFUND TRUST (the "Trust"), a business trust established and existing under the
laws of the State of Ohio, and MAXUS SECURITIES CORP (the "Distributor"), a
corporation organized and existing under the laws of the State of Ohio.
W I T N E S S E T H:
In consideration of the mutual covenants hereinafter contained, the parties
hereto agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby appoints the
Distributor as its agent to arrange for the sale of shares of the Trust on the
terms and for the period set forth in this Agreement, and the Distributor hereby
accepts such appointment and agrees to act hereunder. It is acknowledged that
the Trust is authorized to issue shares in one or more series, with each series
representing shares of a separate investment portfolio of the Trust (a "Fund"),
and with the shares of each Fund being divided into Investor Shares and
Institutional Shares. The term "Shares" as used herein shall refer to shares of
each class of each Fund of the Trust.
Section 2. Services and Duties of the Distributor.
(a) The Distributor agrees to arrange to sell, as agent for the
Trust, from time to time during the term of this Agreement, Shares upon the
terms described in the Prospectus. As used in this Agreement, the term
"Prospectus" shall mean the prospectus included in the Trust's Registration
Statement most recently filed by the Trust with the Securities and Exchange
Commission and effective under the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended (the "1940
Act"), as such Registration Statement is amended by any amendments thereto
at the time in effect.
(b) Upon commencement of the continuous public offering of the
Shares of the Trust, the Distributor will hold itself available to receive
orders, satisfactory to the Distributor, for the purchase of Shares and
will accept such orders on behalf of the Trust as of the time of receipt of
such orders and will transmit such orders as are so accepted to the Trust's
Dividend and Transfer Agent as promptly as practicable. Purchase orders
shall be deemed effective at the time and in the manner set forth in the
Prospectus.
(c) The Distributor, as agent for the Trust and in its discretion,
may enter into agreements with such registered and qualified retail
broker-dealers as it may select pursuant to which such broker-dealers may
also arrange for the sale of Shares.
(d) The offering price of the Shares of each class of each Fund
shall be the net asset value (as described in the Prospectus, as amended
from time to time and determined as set forth in the Prospectus) per Share
of such class of such Fund next determined following receipt of an order.
The Trust shall furnish the Distributor with all possible promptness advice
of each computation of net asset value.
1
<PAGE>
(e) The Distributor shall not be obligated to sell any certain
number of Shares, and nothing herein contained shall prevent the
Distributor from entering into like distribution agreements with other
investment companies so long as the performance of its obligations
hereunder is not impaired thereby.
Section 3. Duties of the Trust.
(a) The Trust agrees to sell its Shares so long as it has Shares
available for sale and to cause its Dividend and Transfer Agent to issue,
if requested by the purchaser, certificates for Shares, registered in such
names and amounts as the Distributor has requested in writing, as promptly
as practicable after receipt by the Trust of the purchase price therefor
and thereof and written request of the Distributor therefor.
(b) The Trust shall keep the Distributor fully informed with
regard to its affairs and shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor
may reasonably request for use in connection with the distribution of
Shares of the Trust. This shall include, without limitation, one certified
copy of all financial statements of the Trust prepared by independent
accountants and such reasonable number of copies of its most current
Prospectus and annual and interim reports as the Distributor may request.
The Trust shall cooperate fully in the efforts of the Distributor to
arrange for the sale of the Shares and in the performance of the
Distributor under this Agreement.
(c) The Trust agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there may be
no untrue statement of a material fact in a Registration Statement or
Prospectus, or necessary in order that there may be no omission to state a
material fact in the Registration Statement or Prospectus which omission
would make the statements therein, in light of the circumstances under
which they were made, misleading.
(d) The Trust shall use its best efforts to qualify and maintain
the qualification of an appropriate number of its Shares for sale under the
securities laws of such states as the Distributor and the Trust may
approve, and, if necessary or appropriate in connection therewith, to
qualify and maintain the qualification of the Trust as a broker or dealer
in such states; provided that the Trust shall not be required to amend the
Declaration of Trust or its By-Laws to comply with the laws of any state,
to maintain an office in any state, to change the terms of the offering of
its Shares in any state from the terms set forth in its Registration
Statement and Prospectus, to qualify as a foreign corporation, business
trust or similar entity in any state or to consent to service of process in
any state other than with respect to claims arising out of the offering of
its Shares. The Distributor shall furnish such information and other
material relating to its affairs and activities as may be required by the
Trust in connection with such qualifications.
2
<PAGE>
Section 4. Compensation and Expenses.
(a) Except as set forth in this Section, (i) the Distributor shall
not receive any compensation for its services under this Agreement and (ii)
the Distributor shall not be required to bear any costs in connection with
the offering of Shares for sale to the public.
(b) The Trust shall bear all costs and expenses of the continuous
offering of its Shares, including: (i) fees and disbursements of its
counsel and auditors, (ii) the preparation, filing and printing of any
registration statements and/or prospectuses required by and under the
federal securities laws, (iii) the preparation and mailing of annual and
interim reports and proxy materials to shareholders and (iv) the
qualification of the Shares for sale and of the Trust as a broker or dealer
under the securities laws of such states or other jurisdictions as shall be
selected by the Trust and by the Distributor pursuant to Section 3(d)
hereof and the cost and expenses payable to each such state for continuing
qualification therein.
(c) The Distributor agrees to provide the services described in
the Trust's Distribution and Shareholder Servicing Plan (Investor Shares
Only) of even date herewith. In consideration for such services, the Trust
shall pay to the Distributor a fee at the annual rate of .50% of the
average daily net assets of the Investor Shares of each Fund.
Section 5. Indemnification. The Trust agrees to indemnify, defend and hold
the Distributor, its officers and directors and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act or Section 20 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees and expenses incurred in connection therewith)
which the Distributor, its officers, directors or any such controlling persons
may incur under the 1933 Act, the 1934 Act, or under common law or otherwise,
arising out of or based upon any untrue statement of a material fact contained
in the Registration Statement or Prospectus or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Trust for use in the Registration Statement
or Prospectus; provided, however, that this indemnity agreement, to the extent
that it might require indemnity of any person who is also an officer or trustee
of the Trust or who controls the Trust within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, shall not inure to the benefit of such
officer, trustee or controlling person unless a court of competent jurisdiction
shall determine, or it shall have been determined by controlling precedent, that
such result would not be against public policy as expressed in the 1933 Act; and
further provided, that in no event shall anything contained herein be so
construed as to protect the Distributor against any liability to the Trust or to
its security holders to which the Distributor would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations under
this Agreement. The Trust's agreement to indemnify the Distributor, its officers
and directors and any such controlling person as aforesaid is expressly
conditioned upon the Trust being promptly notified of any action brought against
the Distributor, its officers or directors, or any such controlling person, such
notification to be given by letter or telegram addressed to the Trust at its
principal business office. The Trust agrees promptly to notify the Distributor
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any of its
Shares.
3
<PAGE>
The Distributor agrees to indemnify, defend and hold the Trust, its
trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Trust, its trustees or officers or any such controlling person may incur under
the 1933 Act, the 1934 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Trust, its trustees or
officers or such controlling person resulting from such claims or demands shall
arise out of or be based upon (i) any alleged untrue statement of a material
fact contained in information furnished in writing by the Distributor to the
Trust for use in the Registration Statement or Prospectus; (ii) any failure of
the Distributor or any investor purchasing Shares of the Trust through the
Distributor to timely transmit good payment for the purchase of Trust Shares; or
(iii) any breach of the obligations of the Distributor under Section 6 of this
Agreement. The Distributor's agreement to indemnify the Trust, its trustees and
officers and any such controlling person as aforesaid, is expressly conditioned
upon the Distributor being promptly notified of any event giving rise to rights
of indemnification hereunder, including any action brought against the Trust,
its trustees or officers or any such controlling person, such notification being
given to the Distributor at its principal business office.
Section 6. Compliance with Securities Laws. The Trust represents that it is
registered as a diversified, open-end management investment company under the
1940 Act, and agrees that it will comply with all of the provisions of the 1940
Act and of the rules and regulations thereunder. The Trust and the Distributor
each agree to comply with all of the applicable terms and provisions of the 1940
Act, the 1933 Act and, subject to the provisions of Section 3(d), all applicable
state "Blue Sky" laws. The Distributor agrees to comply with all of the
applicable terms and provisions of the 1934 Act.
Section 7. Terms of Agreement; Termination. This Agreement shall commence
on the date first set forth above. This Agreement shall continue in effect for a
period more than two years from the date hereof only so long as such continuance
is specifically approved at least annually in conformity with the requirements
of the 1940 Act, including Rule 12b-1 thereunder.
This Agreement shall terminate automatically in the event of its assignment
(as defined by the 1940 Act). In addition, this Agreement may be terminated by
either party at any time, without penalty, on not more than sixty days' nor less
than thirty days' written notice to the other party.
Section 8. Notices. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (i) to the Distributor at Maxus Securities Corp, The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114 or (2) to
the Trust at MaxFund Trust, The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
4
<PAGE>
Section 9. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Ohio.
Section 10. Non-Liability of Shareholders, Trustees, Officers, Employees,
Representatives and Agents. It is expressly agreed that the obligation of the
Trust hereunder shall not be binding upon nor resort be had to the private
property of any of the trustees, Shareholders, nominees, officers, agents or
employees of the Trust, personally, but bind only the Trust property, as
provided in the Declaration of Trust. The execution and delivery of this
Agreement have been authorized by the trustees of the Trust and signed by the
officers of the Trust, acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officers shall be deemed to
have been made by any of them individually, or to impose any liability on any of
them personally, but shall bind only the Trust property as provided in the
Declaration of Trust.
Section 11. Use of Name. The Trust recognizes that directors, officers and
employees of the Distributor may from time to time serve as directors, officers
and employees of other corporations (including other investment companies) and
that such other corporations may include the name "Maxus" as part of their name,
and that the Distributor or its affiliates may enter into distribution or other
agreements with such other corporations. If the Distributor ceases to act as the
Trust's distributor of shares or if Maxus Asset Management Inc, an affiliate of
the Distributor, ceases to act as the Trust's investment adviser, the Trust
agrees that, at the Distributor's request, the Trust's license to use the word
"Maxus" will terminate and the Trust will take all necessary action to change
the name of all Funds of the Trust to a name not including the word "Maxus".
Section 12. Complete Agreement. This Agreement contains the complete
agreement with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or between the parties related
to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
MAXFUND TRUST
By:/s/ Richard A. Barone
Richard A. Barone, Chairman
MAXUS SECURITIES CORP
By:/s/ Richard A. Barone
Richard A. Barone
5
<PAGE>
Exhibit 8
CUSTODY AGREEMENT
This AGREEMENT, dated as of January 12, 1998, by and between the
MAXFUND TRUST (the "Trust"), a business trust organized under the laws of the
Ohio, acting with respect to Maxus Ohio Heartland Fund and Maxus Aggressive
Value Fund ( individually, a "Fund" and, collectively, the "Funds"), each of
them a series of the Trust and each of them operated and administered by the
Trust, and STAR BANK, N.A., a national banking association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Trust desires that the Funds' Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Fund and named in Appendix A hereto or in
such resolutions of the Board Of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1
<PAGE>
1.2 "Board Of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust computes
the net asset value of Shares of the Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name
of the Trust, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.7 "Officer" shall mean the Chairman, President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Trust shall cause
all Oral Instructions to be confirmed by Written Instructions prior to the end
of the next Business Day. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction, it shall
in no way affect the validity of the transaction or the authorization thereof by
the trust. If Oral Instructions vary from the Written Instructions which purport
to confirm them, the Custodian shall notify the trust of such variance but such
Oral Instructions will govern unless the Custodian has not yet acted.
2
<PAGE>
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company
and (provided that Custodian shall have received a copy of a resolution of the
Board Of Trustees, certified by an Officer, specifically approving the use of
such clearing agency as a depository for the Fund) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities or
other obligations, and any certificates, receipts, warrants or other instruments
or documents representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean, with respect to a Fund, the units of
beneficial interest issued by the trust on account of the Fund.
3
<PAGE>
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Funds based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately protected
against the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that
beneficial ownership for the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or administration;
(iv) that adequate records will be maintained identifying the assets as
belonging to the funds or as being held by a third party for the benefit of the
Funds; (v) that the Funds' independent public accountants will be given access
to those records or confirmation of the contents of those records; and (vi) that
the Funds will receive periodic reports with respect to the safekeeping of the
Funds' assets, including, but not limited to, notification of any transfer to or
from a Fund's account or a third party account containing assets held for the
benefit of the Fund. Such contract may contain, in lieu of any or all of the
provisions specified above, such other provisions that the Custodian determines
will provide, in their entirety, the same or a greater level of care and
protection for Fund assets as the specified provisions, in their entirety.
1.14 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board Of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
4
<PAGE>
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the possession
of the Fund at any time during the period of this Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth.
2.3 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the trust:
a. A copy of the Declaration of Trust of the Trust
certified by the Secretary;
b. A copy of the Bylaws of the Trust certified by the
Secretary;
c. A copy of the resolution of the Board Of Trustees of
the Trust appointing the Custodian, certified by the
Secretary;
d. A copy of the then current Prospectus of the Fund;
and
e. A certification of the Chairman and Secretary of the
Trust setting forth the names and signatures of the
current Officers of the Trust and other Authorized
Persons.
5
<PAGE>
2.4 Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent of the Fund.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open
and maintain in its trust department a custody account in the name of the Trust
coupled with the name of the Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash and
other assets of such Fund which are delivered to it.
3.3 Appointment of Agents.
(a) In its discretion, the Custodian may appoint one or more
Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Funds and to
carry out such other provisions of this Agreement as it may
determine, provided, however, that the appointment of any such
agents and maintenance of any Securities and cash of the Fund
shall be at the Custodian's expense and shall not relieve the
Custodian of any of its obligations or liabilities under this
Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board
Of Trustees in connection with this Agreement, the Custodian
wishes to appoint other Sub-Custodians to hold property of the
Fund, it will so notify the Trust and provide it with
information reasonably necessary to determine any such new
Sub-Custodian's eligibility under Rule 17f-5 under the 1940
Act, including a copy of the proposed agreement with such
Sub-Custodian. The Trust shall at the meeting of the Board Of
Trustees next following receipt of such notice and information
give a written approval or disapproval of the proposed action.
6
<PAGE>
(c) The Agreement between the Custodian and each Sub-Custodian
acting hereunder shall contain the required provisions set
forth in Rule 17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall
provide written reports notifying the Board of Trustees of the
placement of the Securities and cash of the Funds with a
particular Sub-Custodian and of any material changes in the
Funds' arrangements. The Custodian shall promptly take such
steps as may be required to withdraw assets of the Funds from
any Sub-Custodian that has ceased to meet the requirements of
Rule 17f-5 under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3,
the Custodian hereby warrants to the Trust that it agrees to
exercise reasonable care, prudence and diligence such as a
person having responsibility for the safekeeping of property
of the Funds. The Custodian further warrants that a Fund's
assets will be subject to reasonable care, based on the
standards applicable to custodians in the relevant market, if
maintained with each Sub-Custodian, after considering all
factors relevant to the safekeeping of such assets, including,
without limitation: (i) the Sub-Custodian's practices,
procedures, and internal controls, for certificated securities
(if applicable), the method of keeping custodial records, and
the security and data protection practices; (ii) whether the
Sub-Custodian has the requisite financial strength to provide
reasonable care for Fund assets; (iii) the Sub-Custodian's
general reputation and standing and, in the case of a
Securities Depository, the Securities Depository's operating
history and number of participants; and (iv) whether the Fund
will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence
of any offices of the Sub-Custodian in the United States or
the Sub-Custodian's consent to service of process in the
United States.
7
<PAGE>
(f) The Custodian shall establish a system to monitor the
appropriateness of maintaining the Fund's assets with a
particular Sub-Custodian and the contract governing the Funds'
arrangements with such Sub-Custodian.
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or cause
to be delivered, to the Custodian all of the Funds' Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any
Securities Depository or Book-Entry System, the Trust shall
deliver to the Custodian a resolution of the Board Of
Trustees, certified by an Officer, authorizing and instructing
the Custodian on an on-going basis to deposit in such
Securities Depository or Book-Entry System all Securities
eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of collateral
consisting of Securities.
8
<PAGE>
(b) Securities of the Funds kept in a Book-Entry System or
Securities Depository shall be kept in an account ("Depository
Account") of the Custodian in such Book-Entry System or
Securities Depository which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for
customers.
(c) The records of the Custodian with respect to Securities of the
Fund maintained in a Book-Entry System or Securities
Depository shall, by book-entry, identify such Securities as
belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian
shall pay for such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that such
Securities have been transferred to the Depository Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account
of such Fund. If Securities sold by a Fund are held in a
Book-Entry System or Securities Depository, the Custodian
shall transfer such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that payment
for such Securities has been transferred to the Depository
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of such Fund.
9
<PAGE>
(e) The Custodian shall provide the Trust with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund are
kept) on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Trust for any loss or
damage to the Fund resulting (i) from the use of a Book-Entry
System or Securities Depository by reason of any negligence or
willful misconduct on the part of Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above or any
of its or their employees, or (ii) from failure of Custodian
or any such Sub-Custodian to enforce effectively such rights
as it may have against a Book-Entry System or Securities
Depository. At its election, the Trust shall be subrogated to
the rights of the Custodian with respect to any claim against
a Book-Entry System or Securities Depository or any other
person from any loss or damage to the Fund arising from the
use of such Book-Entry System or Securities Depository, if and
to the extent that the Funds has not been made whole for any
such loss or damage. 3.6 Disbursement of Moneys from Fund
Custody Account. Upon receipt of Proper Instructions, the
Custodian shall disburse moneys from the Fund Custody Account
but only in the following cases:
10
<PAGE>
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i) in
the case of Securities (other than options on Securities,
futures contracts and options on futures contracts), against
the delivery to the Custodian (or any Sub-Custodian appointed
pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below or in proper form for
transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in
accordance with the conditions set forth in Section 3.5 above;
(ii) in the case of options on Securities, against delivery to
the Custodian (or such Sub-Custodian) of such receipts as are
required by the customs prevailing among dealers in such
options; (iii) in the case of futures contracts and options on
futures contracts, against delivery to the Custodian (or such
Sub-Custodian) of evidence of title thereto in favor of the
Fund or any nominee referred to in Section 3.9 below; and (iv)
in the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member of
the Federal Reserve System or between the Trust and a primary
dealer in U.S. Government securities, against delivery of the
purchased Securities either in certificate form or through an
entry crediting the Custodian's account at a Book-Entry System
or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.7(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
11
<PAGE>
(e) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest; taxes; administration,
investment advisory, accounting, auditing, transfer agent,
custodian, trustee and legal fees; and other operating
expenses of the Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated
as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
(g) For transfer in accordance with the provision of any agreement
among the Trust, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
(i) For any other proper purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board Of Trustees, certified by an Officer, specifying the
amount and purpose of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
12
<PAGE>
3.7 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from the
Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor in cash, by certified
or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the
name of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees
of any of the foregoing, or (ii) for exchange for a different
number of certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new Securities are to be delivered to the
Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or
readjustment of the issuer of such Securities, or pursuant to
provisions for conversion contained in such Securities, or
pursuant to any deposit agreement, including surrender or
receipt of underlying Securities in connection with the
issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any,
are to be delivered to the Custodian;
13
<PAGE>
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon
the exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Trust, but only
against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Trust;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
14
<PAGE>
(m) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account
deposits in connection with transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt,
in addition to Proper Instructions, of a copy of a resolution
of the Board Of Trustees, certified by an Officer, specifying
the Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities held
for the Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect
on a timely basis the amount payable upon all Securities which
may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;
15
<PAGE>
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or
the laws or regulations of any other taxing authority now or
hereafter in effect, and prepare and submit reports to the
Internal Revenue Service ("IRS") and to the Trust at such
time, in such manner and containing such information as is
prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for the Fund
may be registered in the name of such Fund, the Custodian, or any Sub-Custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of a Fund.
16
<PAGE>
3.10 Records.
(a) The Custodian shall maintain, by Fund, complete and accurate
records with respect to Securities, cash or other property
held for the Fund, including (i) journals or other records of
original entry containing an itemized daily record in detail
of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in
physical possession, (C) monies and Securities borrowed and
monies and Securities loaned (together with a record of the
collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable
and interest receivable; and (iii) canceled checks and bank
records related thereto. The Custodian shall keep such other
books and records of the Funds as the Trust shall reasonably
request, or as may be required by the 1940 Act, including, but
not limited to, Section 31 of the 1940 Act and Rule 31a-2
promulgated thereunder.
(b) All such books and records maintained by the Custodian shall
(i) be maintained in a form acceptable to the Trust and in
compliance with rules and regulations of the Securities and
Exchange Commission, (ii) be the property of the Trust and at
all times during the regular business hours of the Custodian
be made available upon request for inspection by duly
authorized officers, employees or agents of the Trust and
employees or agents of the Securities and Exchange Commission,
and (iii) if required to be maintained by Rule 31a-1 under the
1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement and a summary of all transfers to or from each
Fund Custody Account on the day following such transfers. At least monthly and
from time to time, the Custodian shall furnish the Trust with a detailed
statement of the Securities and moneys held by the Custodian and the
Sub-Custodians for the Fund under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above.
17
<PAGE>
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials and
all notices relating to such Securities.
3.14 Information on Corporate Actions. The Custodian shall promptly
deliver to the Trust all information received by the Custodian and pertaining to
Securities being held by the Fund with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix B. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
18
<PAGE>
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities
for the Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any) or other units purchased, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person to whom such amount
is payable. The Custodian shall upon receipt of such Securities purchased by
such Fund pay out of the moneys held for the account of a Fund the total amount
specified in such Written Instructions to the person named therein. The
Custodian shall not be under any obligation to pay out moneys to cover the cost
of a purchase of Securities for the Fund, if in the Fund Custody Account there
is insufficient cash available to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for a Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Written Instructions to so pay in
advance, the Custodian shall be liable to the Fund for such Securities to the
same extent as if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
19
<PAGE>
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for the
foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the Fund Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Fund, and (iii) income from
cash, Securities or other assets of the Fund. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to facilitate
the settlement of a Fund's transactions in the Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
20
<PAGE>
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of the
Fund, the Custodian shall wire each amount specified in such Proper Instructions
to or through such bank as the Trust may designate with respect to such amount
in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under
any obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount paid by
the Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Trust and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund,
21
<PAGE>
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or in
connection with financial futures contracts (or options
thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by
the Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and
firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board Of Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
22
<PAGE>
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or any Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Trust of any action taken or omitted by
the Custodian pursuant to advice of counsel. The Custodian shall not be under
any obligation at any time to ascertain whether the Trust or the Fund is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or by-laws, or its investment objectives and policies
as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for,
or considered to be the custodian of, any cash belonging to a Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securitiesheld for the Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
23
<PAGE>
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply
necessary information to the entity or entities appointed by the Trust to keep
the books of account of the Funds and/or compute the value of the assets of the
Funds. The Custodian shall take all such reasonable actions as the Trust may
from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-1A and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
ARTICLE VIII INDEMNIFICATION 8.1 Indemnification by Trust. The Trust
shall indemnify and hold harmless the Custodian and any Sub-Custodian appointed
pursuant to Section 3.3 above, and any nominee of the Custodian or of such
Sub-Custodian, from and against any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability (including, without limitation,
liability arising under the Securities Act of 1933, the 1934 Act, the 1940 Act,
and any state or foreign securities and/or banking laws) or claim arising
directly or indirectly (a) from the fact that Securities are registered in the
name of any such nominee, or (b) from any action or inaction by the Custodian or
such Sub-Custodian (i) at the request or direction of or in reliance on the
advice of the Trust, or (ii) upon Proper Instructions, or (c) generally, from
the performance of its obligations under this Agreement or any sub-custody
agreement with a Sub-Custodian appointed pursuant to Section 3.3 above, provided
that neither the Custodian nor any such Sub-Custodian shall be indemnified and
held harmless from and against any such loss, damage, cost, expense, liability
or claim arising from the Custodian's or such Sub-Custodian's negligence, bad
faith or willful misconduct.
24
<PAGE>
8.2 Indemnification by Custodian. The Custodian shall indemnify and
hold harmless the Trust from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising from the negligence, bad faith or willful misconduct of the Custodian or
any Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such Sub-Custodian.
8.3 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8.4 Security. If the Custodian advances cash or Securities to the Fund
for any purpose, either at the Trust's request or as otherwise contemplated in
this Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement, any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence, bad faith or
willful misconduct), then, in any such event, any property at any time held for
the account of such Fund shall be security therefor, and should the Fund fail
promptly to repay or indemnify the Custodian, the Custodian shall be entitled to
utilize available cash of such Fund and to dispose of other assets of such Fund
to the extent necessary to obtain reimbursement or indemnification.
25
<PAGE>
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Funds in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
26
<PAGE>
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board Of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the Fund
and held by the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or for the benefit
of the Funds at the successor custodian, provided that the Trust shall have paid
to the Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian
is not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or corporation company of its own selection, which (a) is a
"bank" as defined in the 1940 Act and (b) has aggregate capital, surplus and
undivided profits as shown on its then most recent published report of not less
than $25 million, all Securities, cash and other property held by Custodian
under this Agreement and to transfer to an account of or for the Funds at such
bank or trust company all Securities of the Funds held in a Book-Entry System or
Securities Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and the Custodian
shall be relieved of all obligations under this Agreement.
27
<PAGE>
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Fund are set forth in Appendix C
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the property of
the Trust as provided in the Trust's Agreement and Articles of Incorporation, as
from time to time amended. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
corporation property of the Trust as provided in the above-mentioned Agreement
and Articles of Incorporation.
28
<PAGE>
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to the recipient at the address set forth after its name
hereinbelow: To the Trust:
MAXFUND TRUST
The Tower of Erieview
36th Floor
1301 E. Ninth Street
Cleveland, Ohio 44114
Telephone: (216)687-1000
Facsimile: (216)687-1009
To Custodian:
Star Bank, N.A.
425 Walnut Street, M.L. 6118
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-2608
Facsimile: (513) 632-3299
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
29
<PAGE>
14.2 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Trust shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
30
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: MAXFUND TRUST
/s/ Robert W. Curtin By:/s/ Richard A. Barone
Richard A. Barone
ATTEST: STAR BANK, N.A.
/s/ Lynette C. Gibson By:/s/ Marsha A. Croxton
Senior Vice President
31
<PAGE>
APPENDIX A
Authorized Persons Specimen Signature
------------------ --------------------
Chairman: Richard A. Barone /s/ Richard A. Barone
President: Richard A. Barone /s/ Richard A. Barone
Secretary: Robert W. Curtin /s/ Robert W. Curtin
Vice President: Robert J. Conrad /s/ Robert J. Conrad
Adviser Employees: Michele R. Fogarty /s/ Michele R. Fogarty
Transfer Agent/Fund
Accountant Employees: Gregory B. Getts /s/ Gregory B. Getts
Justine Marquit /s/ Justine Marquit
32
<PAGE>
APPENDIX B
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to compete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers
Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal.
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond
Source, Kenny Information Systems, Standard & Poor's Corporation, and DTC
Important Notices. Star Bank will not notify clients of optional put
opportunities.
Any securities delivered free to Star Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Star Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this Standards of
Service Guide is subject to change. Should any
changes be made Star Bank will provide you with an
updated copy of its Standards of Service Guide.
33
<PAGE>
Star Bank Security Settlement Standards
<TABLE>
<S> <C> <C>
Transaction Type Instructions on Deadlines* Delivery Instructions
- -------------------------------------- ---------------------------- ---------------------
DTC 1:30 P.M. on Settlement Date DTC Participant #2219
Agent Bank ID 27895
Institutional #_______________
For Account #_______________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of Cinti/Trust
for Star Bank, N.A. ABA# 042000013
For Account #_______________
Federal Reserve Book Entry (Repurchase 1:00 P.M. on Settlement Date Federal Reserve Bank of Cinti/Spec
Agreement Collateral Only) for Star Bank, N.A. ABA# 042000013
For Account #_______________
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BTRST/CUST
(GNMA Book Entry) Sub Account: Star Bank, N.A. #090334
Physical Securities 9:30 A.M. EST on Settlement Date Bankers Trust Company
(for Deliveries, by 4:00 P.M. 16 Wall Street 4th Floor, Window 43
on Settlement Date minus 1) for Star Bank Account #090334
CEDEL/EURO-CLEAR 11:00 A.M. on Settlement Date Euroclear Via Cedel Bridge
minus 2 In favor of Bankers Trust Comp
Cedel 5335
For Star Bank Account #501526354
Cash Wire Transfer 3:00 P.M. Star Bank, N.A. Cinti/Trust ABA# 042000013
Credit Account #9901877
Further Credit to _______________
Account #_______________
</TABLE>
* All times listed are Eastern Standard Time.
34
<PAGE>
Star Bank Payment Standards
- --------------------------------------------------------------------------------
Security Type Income Principal
- --------------------------------------------------------------------------------
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMO's*
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date Payable Date
Certificates of Deposit* Payable Date Payable Date
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment will
be made on the immediately following business day.
35
<PAGE>
Star Bank Corporate Reorganization Standards
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Type of Action Notification to Client Deadline for Client Instructions Transaction Posting
- ------------------------------------------------------------------------------------------------------------------------------------
Rights, Warrants, and Optional Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Mergers expiration or receipt of notice
Mandatory Puts with Option to Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Retain expiration or receipt of notice
Class Actions 10 business days prior to 5 business days prior to expiration Upon receipt
expiration date
Voluntary Tenders, Exchanges, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
and Conversions expiration or receipt of notice
Mandatory Puts, Defaults, At posting of funds or securities None Upon receipt
Liquidations, Bankruptcies, received
Stock Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days prior to None Upon receipt
expiration or receipt of notice
</TABLE>
NOTE: Fractional shares/par amounts resulting from any of the above will be sold
36
<PAGE>
APPENDIX C
Star Bank, N.A.
Domestic Custody Fee Schedule
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
(a) For each repurchase agreement trade not
executed by Star Bank, N.A. $7.00
(b) For each portfolio transaction processed
through DTC or Federal Reserve $9.00
(c) For each portfolio transaction processed
through our New York custodian $25.00
(d) For each GNMA/Amortized Security $16.00
Purchase
(e) For each GNMA Prin/Int Paydown, $8.00
GNMA Sales
(f) For each option/future contract written,
exercised or expired $40.00
(g) For each Cedel/Euroclear Transaction $80.00
(h) For each Disbursement (Fund expenses $5.00
only)
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. Market Value Fee (Collective for all funds)
Based upon an annual rate of: Million
.0004 (4 Basis Points) on First $10
.0003 (3 Basis Points) on First $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee-Per Fund
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be
shipping fees or transfer fees.
37
<PAGE>
V. Earnings Credits
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against any cash management service
fees generated. Earnings credits are based on a Cost of Funds Tiered
Earnings Credit Rate.
38
<PAGE>
Star Bank, N.A.
Management Fee Schedule
Business Checking Fees Unit Cost Monthly Cost
- ---------------------- --------- ------------
D.D.A. Account Maintenance $14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Deposited Items Returned 6.00
International Returned Items 10.00
NSF Returned Check 25.00
Stop Payments 22.00
Cash Management Fees
- --------------------
Balance Reporting - P.C. Access 50.00 1st Acct.
35.00 each add
ACH Transaction .095
ACH Maintenance 40.00
ACH Additions, Deletions, Changes 3.50
Issued Items .015
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture* .10
Wires Incoming
Domestic: 10.00
International: 10.00
39
<PAGE>
Business Checking Fees Unit Cost Monthly Cost
- ---------------------- --------- ------------
Wires Outgoing
Domestic:
Repetitive 12.00
Non Repetitive 13.00
International:
Repetitive 35.00
Non Repetitive 40.00
PC - Initiated Wires
Domestic:
Repetitive 9.00
Non Repetitive 9.00
International:
Repetitive 25.00
Non Repetitive 25.00
Uncollected Charge
Star Bank assesses a penalty of prime rate plus 4% on any combined relationship
with average uncollected balances for the month.
40
<PAGE>
Exhibit 9(a)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made and entered into this 12th day of January, 1998,
by and between MaxFund Trust, an Ohio business trust (the "Fund"), and Maxus
Information Systems, Inc., an Ohio corporation ("MIS").
RECITALS:
A. The Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
B. The Fund desires to appoint MIS as its transfer agent and dividend
disbursing and redemption agent, and MIS desires to accept such appointment.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. DUTIES OF MIS.
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby employs and appoints MIS to act, and MIS agrees to act, as
transfer agent for the Fund's authorized and issued shares of beneficial
interest of each class of each portfolio of the Fund (the "Shares), and as
dividend disbursing and redemption agent for the Fund.
1.02 MIS agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and MIS, MIS shall:
(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefore to the Custodian of the Fund
authorized by the Board of Directors of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation therefore to the Custodian;
1
<PAGE>
(iv) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(vii) Maintain records of account for and advise the Fund
and its Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of the total
number of shares of the Fund which are authorized, based upon
data provided to it by the Fund, and issued and outstanding.
MIS shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition, MIS shall perform all of the customary
services of a transfer agent, dividend disbursing and redemption agent,
including but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect
to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and provide a system and reports which
will enable the Fund to monitor the total number of Shares sold in each
State.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and MIS.
2. FEES AND EXPENSES
2.01 In consideration of the services to be performed by MIS pursuant
to this Agreement, the Fund agrees to pay MIS the fees set forth in the fee
schedule attached hereto as Exhibit "A".
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse MIS for out-of-pocket expenses or advances incurred by MIS
in connection with the performance of its obligations under this Agreement. In
addition, any other expenses incurred by MIS at the request or with the consent
of the Fund will be reimbursed by the Fund.
2
<PAGE>
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to MIS by the Fund at least seven days
prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF MIS
MIS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Ohio.
3.02 It is duly qualified to carry on its business in the State of
Ohio.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 MIS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF The Fund
The Fund represents and warrants to MIS that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Ohio.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company
registered under the 1940 Act.
3
<PAGE>
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 MIS shall not be responsible for, and the Fund shall indemnify and
hold MIS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of MIS or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without gross negligence or willful
misconduct.
(b) The Fund's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Fund's lack good faith, gross
negligence or willful misconduct or which arise out of the breach of
any representation or warranty of the Fund hereunder.
(c) The reliance on or use by MIS or its agents or
subcontractors of information, records and documents which (i) are
received by MIS or its agents or subcontractors and furnished to it by
or on behalf of the Fund, and (ii) have been prepared and/or maintained
by the Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by MIS or its agents
or subcontractors of, any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with respect
to the offer or sale of such Shares in such state.
5.02 MIS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by MIS as a result of MIS's lack of good faith, gross negligence
or willful misconduct.
5.03 At any time MIS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by MIS under this
Agreement, and MIS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. MIS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided MIS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. MIS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
4
<PAGE>
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 Upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE FUND AND MIS
6.01 The Fund shall promptly furnish to MIS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
MIS and the execution and delivery of this Agreement.
6.02 MIS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 MIS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, as amended, and the Rules thereunder,
MIS agrees that all such records prepared or maintained by MIS relating to the
services to be performed by MIS hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.04 MIS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
5
<PAGE>
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, MIS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. MIS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERM OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three years; provided, however, that each
party to this Agreement have the option to terminate the Agreement without
penalty, upon 90 days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, MIS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. MISCELLANEOUS
8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by eithero party without the written consent of the other party.
This Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
8.02 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
8.03 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Ohio as at the time in
effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of Ohio, or any of the provisions here in, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
8.04 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
8.05 All notices and other communications hereunder shall be in
writing, shall be deemed to have been given when received or when sent by telex
or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
6
<PAGE>
To the Fund: To MIS:
MaxFund Trust Maxus Information Systems, Inc.
The Tower at Erieview, 36th Floor The Tower at Erieview, 36th Floor
1301 East Ninth Street 1301 East Ninth Street
Cleveland, OH 44114 Cleveland, OH 44114
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MAXFUND TRUST MAXUS INFORMATION SYSTEMS, INC.
By: /s/ Richard A. Barone By: /s/ Richard A. Barone
Richard A. Barone Richard A. Barone
President Its: President
7
<PAGE>
EXHIBIT "A"
FEE SCHEDULE
The following fees will be paid in respect of each portfolio of the Fund:
$6.75 per shareholder account per annum, payable monthly, subject to a
$775 minimum per month.*
plus:
$12.00 per month for each state in which a portfolio is registered
under the blue sky laws of such state.*
- ------------------
*Notwithstanding the foregoing, if for any month the average net assets of a
portfolio are less than $10,000,000, all of the above dollar amounts will be
reduced based on the proportion which such average net assets bears to
$10,000,000.
<PAGE>
Exhibit 9(b)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this 12th day of January, 1998,
by and between MaxFund Trust, an Ohio business trust (the "Fund"), and Maxus
Information Systems, Inc., an Ohio corporation ("MIS").
RECITALS:
A. The Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
B. MIS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
C. The Fund desires to avail itself of the experience, assistance and
facilities of MIS and to have MIS perform the Fund certain services appropriate
to the operations of the Fund, and MIS is willing to furnish such services in
accordance with the terms hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. DUTIES OF MIS.
MIS will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for the
Fund:
(a) Timely calculate and transmit to NASDAQ the daily net
asset value of each class of shares of each portfolio of the Fund, and
communicate such value to the Fund and its transfer agent;
(b) Maintain and keep current all books and records of the
Fund as required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"), that
are applicable to the fulfillment of MIS's duties hereunder, as well as
any other documents necessary or advisable for compliance with
applicable regulations as may be mutually agreed to between the Fund
and MIS. Without limiting the generality of the foregoing, MIS will
prepare and maintain the following records upon receipt of information
in proper form from the Fund or its authorized agents:
o Cash receipts journal
o Cash disbursements journal
o Dividend record
1
<PAGE>
o Purchase and sales - portfolio securities
journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and
collateral therefore
o Foreign currency journals
o Trial balances
(c) Provide the Fund and its investment adviser with daily
portfolio valuation, net asset value calculation and other standard
operational reports as requested from time to time.
(d) Provide all raw data available from its fund accounting
system for the preparation by the Fund or its investment advisor of the
following:
1. Semi-annual financial statements; 2. Semi-annual
form N-SAR; 3. Annual tax returns; 4. Financial data
necessary to update form N-1A; 5. Annual proxy
statement.
(e) Provide facilities to accommodate annual audit and any
audits or examinations conducted by the Securities and Exchange
Commission or any other governmental or quasi-governmental entities
with jurisdiction.
MIS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. FEES AND EXPENSES.
(a) In consideration of the services to be performed by MIS
pursuant to this Agreement, the Fund agrees to pay MIS the fees set
forth in the fee schedule attached hereto as Exhibit A.
(b) In addition to the fees paid under paragraph (a) above,
the Fund agrees to reimburse MIS for out-of-pocket expenses or advances
incurred by MIS in connection with the performance of its obligations
under this Agreement. In addition, any other expenses incurred by MIS
at the request or with the consent of the Fund will be reimbursed by
the Fund.
2
<PAGE>
(c) The Fund agrees to pay all fees and reimburseable expenses
within five days following the receipt of the respective billing
notice.
3. LIMITATION OF LIABILITY OF MIS.
(a) MIS shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall not be liable
to the Fund for any action taken or omitted by it in good faith without
gross negligence, bad faith, willful misconduct or reckless disregard
of its duties hereunder. It shall be entitled to rely upon and may act
upon the accounting records and reports generated by the Fund, advice
of the Fund, or of counsel for the Fund and upon statements of the
Fund's independent accountants, and shall not be liable for any action
reasonably taken or omitted pursuant to such records and reports or
advice, provided that such action is not, to the knowledge of MIS, in
violation of applicable federal or state laws or regulations, and
provided further that such action is taken without gross negligence,
bad faith, willful misconduct or reckless disregard of its duties.
(b) Nothing herein contained shall be construed to protect MIS
against any liability to the Fund to which MIS shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence
in the performance of its duties to the Fund, reckless disregard of its
obligations and duties under this Agreement or the willful violation of
any applicable law.
(c) Except as may otherwise be provided by applicable law,
neither MIS nor its stockholders, officers, directors, employees or
agents shall be subject to, and the Fund shall indemnify and hold such
persons harmless from and against, any liability for and any damages,
expenses or losses incurred by reason of the inaccuracy of information
furnished to MIS by the Fund or its authorized agents.
4. REPORTS.
(a) The Fund shall provide to MIS on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to MIS during the preceding quarter was true,
complete and correct in all material respects. MIS shall not be
responsible for the accuracy of any information furnished to it by the
Fund or its authorized agents, and the Fund shall hold MIS harmless in
regard to any liability incurred by reason of the inaccuracy of such
information.
(b) Whenever, in the course of performing its duties under
this Agreement, MIS determines, on the basis of information supplied to
MIS by the Fund or its authorized agents, that a violation of
applicable law has occurred or that, to its knowledge, a possible
violation of applicable law may have occurred or, with the passage of
time, would occur, MIS shall promptly notify the Fund and its counsel
of such violation.
3
<PAGE>
5. ACTIVITIES OF MIS.
The services of MIS under this Agreement are not to be deemed
exclusive, and MIS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by MIS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved.
MIS agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. MIS shall assist
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records. MIS shall
preserve the accounts and records as they are required to be maintained and
preserved by Rule 31a-1.
7. CONFIDENTIALITY.
MIS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
8. TERM OF AGREEMENT.
(a) This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three years; provided, however, that each
party to this Agreement have the option to terminate the Agreement, without
penalty, upon 90 days prior written notice.
(b) Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movements of records and material will be borne by
the Fund. Additionally, MIS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. MISCELLANEOUS.
(a) Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
(b) The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of Ohio as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of Ohio, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
(c) This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
4
<PAGE>
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
(e) All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To MIS:
MaxFund Trust Maxus Information Systems, Inc.
The Tower at Erieview, 36th Floor The Tower at Erieview, 36th Floor
1301 East Ninth Street 1301 East Ninth Street
Cleveland, OH 44114 Cleveland, OH 44114
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MAXFUND TRUST MAXUS INFORMATION
SYSTEMS, INC.
By: /s/ Richard A. Barone By: /s/ Richard A. Barone
Richard A. Barone, Richard A. Barone
President Its: President
5
<PAGE>
EXHIBIT A
FEE SCHEDULE
The following fees will be paid in respect of each portfolio of the Fund:
ANNUAL FEE
AVERAGE PORTFOLIO (payable monthly at
NET ASSETS the end of each month)
- --------------------------------------------------------------------------------
First $25 Million in Assets $17,400.00*
Next $25 Million in Assets 8,500.00
Each Additional $25 Million in Assets 4,750.00
*Notwithstanding the foregoing, if the average net asset value of the portfolio
for the month is less than $10,000,000, the portfolio will pay an annual fee
(payable monthly) equal to .174% of average net assets for the month.
<PAGE>
Exhibit 10
January 12, 1998
MaxFund Trust
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Gentlemen:
We have acted as counsel for MaxFund Trust, an Ohio business trust (the "Trust")
in connection with the filing by the Trust of a Registration Statement on Form
N-1A pursuant to the Securities Act of 1933 and the Investment Company Act of
1940 (the "Registration Statement") with respect to the proposed sale of an
indefinite number of shares (the "Shares") of the classes designated Investor
Shares and Institutional Shares of each of (i) the Maxus Ohio Heartland Series,
a series of shares of beneficial interest of the Trust representing the
beneficial interest of shareholders in the Maxus Ohio Heartland Fund, a separate
investment portfolio of the Trust, and (ii) the Maxus Aggressive Value Series, a
series of shares of beneficial interest of the Trust representing the beneficial
interest of shareholders in the Maxus Aggressive Value Fund, a separate
investment portfolio of the Trust.
We have examined and relied upon originals or copies, certified or otherwise
identified to our satisfaction as being true copies, of all such records of the
Trust, all such agreements, certificates of officers of the Trust, public
officials and others, and such other documents, certificates and other records
as we have deemed necessary as a basis for the opinions expressed in this
letter, including, without limitation, the Declaration of Trust of the Trust
(the "Declaration of Trust"), the By-laws of the Trust and the records of
proceedings of the Trustees and shareholder of the Trust from the date of
formation.
In our examination, we have assumed the genuineness of all signatures, the legal
capacity of all natural persons, the authenticity of all documents submitted to
us as originals, and the conformity to original documents of all documents
submitted to us as certified or photostatic copies.
We have investigated such questions of law for the purpose of rendering the
opinions expressed in this letter as we have deemed necessary. We express no
opinion in this letter concerning any law other than the law of the State of
Ohio and the federal law of the United States of America.
This opinion is being rendered to you as of January 12, 1998. The opinion
expressed herein assumes that there is no change in the facts, circumstances and
law in effect on the date of this opinion, particularly as they relate to trust
authority and the Trust's good standing under Ohio law.
<PAGE>
MaxFund Trust
January 12, 1998
Page 2
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued pursuant to the terms, provisions and conditions
set forth in the Declaration of Trust and in the Registration Statement, and
upon receipt of full authorized consideration therefor in cash, will be validly
issued, fully paid and non-assessable by the Trust.
This opinion is rendered only to the Trust in connection with the filing of the
Registration Statement. We consent to the filing of this opinion as Exhibit 10
to the Registration Statement. This letter may not be paraphrased, quoted or
summarized, nor may it be duplicated or reproduced in part.
/s/ Benesch, Friedlander, Copan & Aronoff LLP
BENESCH, FRIEDLANDER,
COPLAN & ARONOFF LLP
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Pre-Effective Amendment No. 1 to the Registration Statement for MaxFund Trust of
all references to our firm included in or made a part of this Amendment.
/s/ McCurdy & Associates CPA's, Inc.
McCurdy & Associates CPA's, Inc.
January 16, 1998
<PAGE>
Exhibit 13
MAXUS ASSET MANAGEMENT INC.
28601 Chagrin Boulevard
Cleveland, Ohio 44122
November 18, 1997
MaxFund Trust
28601 Chagrin Boulevard
Cleveland, OH 44122
Re: Purchase Agreement for Initial Capital
Gentlemen:
We are purchasing from you today (i) 10,000 Institutional Shares of
Maxus Ohio Heartland Fund, a portfolio of MaxFund Trust, an Ohio business trust
(the "Trust"), at a price of $10.00 per share, and (ii) 20,000 Institutional
Shares of Maxus Aggressive Value Fund, a separate portfolio of the Trust, at a
price of $5.00 per share, for an aggregate price of $200,000, to provide the
initial capital you require pursuant to Section 14 of the Investment Company Act
of 1940 in order to make a public offering of shares of the Fund.
We hereby represent that we are acquiring said shares for investment
and not for distribution or resale to the public.
In the event that we redeem any such shares during the five-year period
beginning with the commencement of operations of the Trust, the net asset value
payable in respect to such shares will be reduced by the pro-rata share (based
on the proportion of original shares being redeemed to the total number of
original shares) of the then unamortized deferred organization expense as of the
date of such redemption.
Very truly yours,
MAXUS ASSET MANAGEMENT INC.
By: /s/ Richard A. Barone
Richard A. Barone, President
<PAGE>
Exhibit 14
IRA
A Retirement Plan
for Individuals
MAXUS
F U N D S
<PAGE>
- ----------------- THE MAXUS FUNDS -----------------
Shareholder Copy| | Date
Do not send to | o Income o Equity | Broker/Dealer
Maxus | o Ohio Heartland o Aggressive Value | Agent
- ----------------- o Laureate | Number
-----------------
IRA APPLICATION
PLEASE PRINT, PREFERABLY WITH BLACK INK. For help with this application, or for
more information, call us toll free: 1-800-44-MAXUS (800-446-2987)
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
Name_______________________ Date of Birth___________ Soc. Sec. No.____________
Address____________________ City____________________ State____________ ZIP____
Home Phone_________________ Business Phone__________ Account Number___________
- --------------------------------------------------------------------------------
CONTRIBUTION INFORMATION
For Tax
Year (if
Account Type: Initial Contribution: Date:____ Amount applicable)
o Regular o Regular ______ ___________
o Rollover (Attach check)
(commingle contribution) o Spousal IRA ______ ___________
o Spousal IRA (Attach check)
o Rollover o Rollover ______ ___________
(do not commingle) (Attach check)
o SEP/IRA o Direct Rollover ______ ___________
o Transfer (Attach Request to
Transfer/Direct
Rollover Form.)
o Transfer ______ ___________
(Attach Request to
Transfer/Direct
Rollover Form.)
o SEP/IRA ______ ___________
(Attach check)
- --------------------------------------------------------------------------------
INVESTMENT INFORMATION
o Enclosed is a check for $__________ payable to Maxus Asset Management to
be invested as follows:*
Fund Name Amount Percentage
If investing in more Maxus Income Fund __________ __________
than one fund, indicate Maxus Equity Fund __________ __________
the amount or percentage Maxus Laureate Fund __________ __________
for each fund Maxus Ohio Heartland Fund __________ __________
Maxus Aggressive Value Fund __________ __________
========== ==========
Total Total
* There is a $250 minimum deposit per fund per account.
- --------------------------------------------------------------------------------
PERSONAL FINANCIAL DATA
Investment Objectives: o Aggressive Growth o Long-Term Growth o Income
Risk Tolerance: o Aggressive o Moderate o Conservative
- --------------------------------------------------------------------------------
DESIGNATION OF BENEFICIARY
In the event of my death, pay my IRA balance to the primary beneficiary(ies)
listed below or whoever survives me.
Soc. Sec. No. or
Full Name Taxpayer's I.D. No. Relationship Date of Birth %*
_______________________ ___________________ ____________ _____________ _____
_______________________ ___________________ ____________ _____________ _____
_______________________ ___________________ ____________ _____________ _____
100
=====
Total
If all of the primary beneficiary(ies) die before me pay my IRA balance to the
contingent beneficiary(ies) named below, or whoever survives me.
_______________________ ___________________ ____________ _____________ _____
_______________________ ___________________ ____________ _____________ _____
100
=====
Total
*If no percentage rate is indicated, the beneficiaries will share equally.
- --------------------------------------------------------------------------------
SIGNATURES AND CERTIFICATIONS
I certify under the penalty of perjury that my social security number stated
above is correct, that I am of legal age in my state of residence and I agree
that the designation of the tax year for my deposit and my election to treat a
deposit as a rollover (if applicable) are irrevocable. By signing this
application, I hereby authorize and appoint Star Bank N.A. to act as Custodian
of my account. I indemnify Star Bank N.A. when making distributions in
accordance with my beneficiary designation on file or in accordance with the
Custodial Account Agreement absent any such designation. I acknowledge that I
have received the IRA Disclosure Statement and the IRA Custodial Account
Agreement at least seven days prior to the date I signed this application. I
have read both, which are incorporated in this application by reference, and I
accept and agree to be bound by the terms and conditions contained in the IRA
Custodial Account Agreement. I also certify that I have received and read the
current Prospectus and understand that mutual fund shares are not obligations of
or guaranteed by a bank, nor are they insured by the FDIC.
- -------------------------------------------------------
Individual's Signature Date
- -------------------------------------------------------
Star Bank N.A. Date
Star Bank N.A. accepts this application and agrees to act as Custodian of the
account.
A confirmation will be sent to you regarding the above transaction(s) and will
serve as notification of the Custodian's acceptance.
Complete only if required by state law.
Spousal Consent: I am the spouse of the IRA Owner and I approve and consent to
the naming of a beneficiary other than myself. I transmute (transfer) any
community property interest I have in this IRA into the separate property of my
spouse.
- ------------------------------------------------------------------
Spouse's Signature Date
<PAGE>
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
Form 5305-A (Rev. October 1992) Department of the Treasury Internal Revenue
Service The Depositor and the Custodian make the following agreement:
DO NOT File with |_| Amendment
Internal Revenue Service
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles
(within the meaning of section 408(m)) except as otherwise permitted by section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
<PAGE>
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, (April 1
following the calendar year end in which the Depositor reaches age 70 1/2). By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or
substantially equal monthly, quarterly, or annual
payments over the life of the Depositor.
(c) An annuity contract that provides equal or
substantially equal monthly, quarterly, or annual
payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a
specified period that may not be longer than the
Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a
specified period that may not be longer than the
joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is
distributed to him or her, the entire remaining interest will be distributed as
follows:
(a) If the Depositor dies on or after distribution of his
or her interest has begun, distribution must continue
to be made in accordance with paragraph 3.
(b) If the Depositor dies before distribution of his or
her interest has begun, the entire remaining interest
will, at the election of the Depositor or, if the
Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the
year containing the fifth anniversary of
the Depositor's death, or
(ii) Be distributed in equal or substantially
equal payments over the life or life
expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the
year following the year of the Depositor's
death. If, however, the beneficiary is the
Depositor's surviving spouse, then this
distribution is not required to begin before
December 31 of the year in which the
Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity
meeting the requirements of section 408(b)(3) and its
related regulations has irrevocably commenced,
distributions are treated as having begun on the
Depositor's required beginning date, even though
payments may actually have been made before that
date.
<PAGE>
(d) If the Depositor dies before his or her entire
interest has been distributed and if the beneficiary
is other than the surviving spouse, no additional
cash contributions or rollover contributions may be
accepted in the account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the Custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life expectancy
of the designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and last
survivor expectancy) using the attained ages of the Depositor and designated
beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2.
In the case of a distribution in accordance with paragraph 4(b)(ii), determine
life expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
and Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue
Service and the Depositor prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) and the
related regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
<PAGE>
Article VIII Definitions.
8.1 "Code." The term "Code" shall mean the Internal Revenue Code.
8.2 "Custodial Account." Your IRA shall be referred to as the
"custodial account" or "account."
8.3 "IRA." IRA shall mean Individual Retirement Account within the
meaning of Section 408 of the Code.
8.4 "IRS." The term "IRS" shall mean the Internal Revenue Service.
8.5 "We." The IRS selected the term "Custodian" to describe us, your
financial organization. In other parts of this agreement, the "Custodian" will
be referred to as "us," "we," "our," or the "Custodian."
8.6 "You." The IRS selected the term "Depositor" to describe "you," the
IRA Owner. In other parts of this agreement, you will be referred to as "you,"
"your," or "IRA Owner."
8.7 "Fund(s)." The "Fund(s)" shall mean the mutual funds identified in
the IRA Application used to establish this IRA.
Article IX Fees and Expenses.
9.1 Fees. You agree to pay any fees we establish pursuant to the
Application or a separate fee schedule which we will publish from time to time.
Such fees may include, without limitation, establishment fees, annual
administration fees, termination fees, transfer fees, transaction fees, legal
fees, investment commissions, and such other fees as we determine applicable.
You agree to pay such fees either by a separate billing or direct deduction from
the custodial account; the method of payment is at our discretion. Some fees,
such as brokerage commissions, must be deducted from the custodial account. The
Custodian shall have the right to liquidate sufficient shares in the custodial
account to pay such fees. In the case of a third party receiving payments, such
as brokerage fees and commissions, we may receive a portion of these fees in
return for services provided in completing these transactions. We agree to give
you at least 30 days prior written notice prior to changing a fee or imposing a
new fee.
9.2 Expenses. You agree to pay any income, transfer, and other taxes of
any kind that may be levied or assessed upon the custodial account, and all
other administrative expenses reasonably incurred by us in the performance of
our duties. These expenses may include legal, or other professionals hired by us
in connection with your custodial account. You agree to reimburse us for any
reasonable expenses incurred in the administration of the account. The Custodian
shall have the right to liquidate sufficient shares in the custodial account to
pay such expenses.
Article X Amendments.
We may amend your custodial account at any time to comply with
necessary laws and regulations or for any other reason. Amendments may be made
retroactively when required to meet a law or regulatory change. You are deemed
to have automatically consented to any amendment 30 days after we mail you a
copy of the amendment. Your actual written or verbal consent is not required to
amend. We shall send you a copy of such amendment within 30 days of the
amendment's effective date.
<PAGE>
Article XI Limited Liability.
11.1 Hold Harmless. You agree to hold us harmless, to indemnify, and to
defend us against any and all claims arising from and liabilities incurred by
reason of any action taken by us, except to the extent such liability arises
from the willful misconduct or gross negligence of the Custodian.
11.2 No Investment Discretion. You agree that all contributions shall
be invested according to your sole discretion in whole or fractional shares of
the Fund(s) identified in the IRA Application. All dividends and capital gain
distributions received on shares of the Fund(s) shall be reinvested in the
shares of the same Fund(s) which shall be credited to the custodial account. We
shall not be responsible or liable for any investment decisions or
recommendations with respect to the investment, reinvestment, or sale of assets
in the custodial account. We shall not be responsible for reviewing any assets
held in the custodial account and shall not be responsible for questioning any
of your investment decisions. We shall not be responsible for any loss resulting
from any failure to act because of the absence of directions from you. In the
event we determine your investment instructions are unclear, then we shall act
as soon as practical to obtain clarification of such instructions. Pending
clarification, we shall hold without investing all or any portion of the
contribution, without liability for loss of income or appreciation and without
liability for interest of dividends.
11.3 Transaction Responsibility. We are not responsible for inquiring
into the nature or amount of any contribution made by you, nor into the amount
or timing of any distribution requested. This includes, without limitation, that
you are solely responsible for all your required minimum distributions. We have
no responsibility to notify you of any required minimum distribution nor do we
have any responsibility to determine the correct minimum amount for you. You
shall have full responsibility for determining your required minimum
distributions as well as for any tax or investment consequences of all
contributions to and distributions from the custodial account. We shall not be
bound to take any action on behalf of you, except upon receipt of written
instructions from you. We shall have no obligation to inquire into the
genuineness of any such written instruction without liability for any action
taken pursuant thereto, so long as we act in good faith. You shall bear sole
responsibility for assuring the deductibility of any deposits to the custodial
account.
11.4 No Assumed Responsibilities. We assume no responsibilities and
agree only to provide the administrative and custodial services required under
IRC Section 408 and applicable regulations.
Article XII Default Provisions (70 1/2 and Death).
12.1 70 1/2 Distributions. If you fail to make a written election of
payment by your required beginning date, the minimum required distribution will
be calculated using the joint life expectancy of you and your designated
beneficiary. If no beneficiary exists or a beneficiary other than a natural
person is named (except certain trusts), your single life expectancy will be
used for this calculation. See section 11.3 above. The recalculation method will
be used to the extent allowed.
<PAGE>
12.2 Death Distributions. If you die before your required beginning
date, then your designated beneficiary must elect a method of distribution under
Article IV-4(b)(i) and (b)(ii) by the earlier of December 31 of the calendar
year in which the life expectancy distributions must begin under Article
IV-4(b)(ii) or December 31 of the calendar year which contains the fifth
anniversary of the date of your death. If you use the designation of beneficiary
form provided in the Application then the following rules apply (i) the
designation in the Application revokes all previously made designations, (ii) if
any of the beneficiaries dies before you, the deceased beneficiary's share will
be reallocated to the surviving beneficiaries on a pro rata basis, and (iii) if
none of the beneficiaries survive you, or if the Custodian cannot locate your
beneficiary(ies) after a reasonable search, any balance in your IRA will be paid
to your estate. The Custodian may refuse to accept a designation not made on its
standard form. You agree to release the Custodian from and indemnify it for any
and all claims arising from the Custodian's actions under your designation of
beneficiary.
Article XIII Reports and Records.
We shall keep accurate and detailed records of all contributions,
receipts, investments, distributions, disbursements, and other transactions
relating to the custodial account. We shall provide reports to the IRS and to
you as required by law and regulations. Unless you file a written statement with
us within 60 days after you receive a statement, we shall be relieved and
discharged from all liability to you (including any of your beneficiaries) with
respect to all matters set forth in such report.
Article XIV Powers.
We shall have the right to hire attorneys or other professionals if we
deem it necessary for the proper administration of your custodial account. This
includes the right to have a party affiliated with the Fund to perform
administrative duties. We shall also have the power to request a judicial
settlement of your account or to enter into a lawsuit for your account. We shall
also have the power to do whatever else we determine necessary for the proper
administration of your account.
Article XV Resignation or Removal of Us as Custodian.
We may resign as Custodian without your consent and you may remove us
as Custodian without our consent. We must provide notice to you of any
resignation 30 days prior to the effective date of the resignation. In the event
of resignation by us, you shall appoint a qualified successor Custodian. Upon
our receipt of a written acceptance of such appointment by the successor
Custodian, we shall transfer and pay over the assets of the custodial account to
the successor Custodian. If after 30 days from notice of resignation, you have
not appointed a successor Custodian or we have not received a written acceptance
of such appointment by the successor Custodian, we shall have the right to
transfer the assets remaining in the custodial account to a successor Custodian
that we choose in our sole discretion or we may liquidate the assets and
distribute the cash proceeds, or we may make an in-kind distribution, or we may
otherwise distribute to you the assets remaining in the custodial account. We
are authorized, however, to reserve such funds as we deem advisable for payment
of any liabilities constituting a charge against the assets of the custodial
account or against us, with any balance of such reserve remaining after payment
of all such items to be paid over the successor Custodian.
<PAGE>
Article XVI Termination.
In the event the balance of the custodial account is less than the
minimum value prescribed from time to time by the appropriate Fund(s), we may
liquidate the custodial account by making a distribution in cash or in-kind of
the assets in the account less any fees owing. If we terminate for any reason,
we shall not be liable for any loss or penalty incurred upon termination and
liquidation of the custodial account. Upon liquidation of the custodial account
this Agreement shall terminate and we shall be relieved of all further duties
and any liability relative to this Agreement, the custodial account, and the
assets distributed hereunder.
Article XVII Custodian's Responsibilities.
We shall act as an agent for you, we shall receive funds and invest
them at your direction and in accordance with this Agreement. All shares of the
Fund(s) shall be held in our name as Custodian or our nominee's name. The
parties do not intend to confer any fiduciary responsibilities upon the
Custodian and none shall be implied. We shall deliver, or cause to be executed
or delivered to you all notices, prospectuses, financial statements, proxies and
proxy solicitation materials relative to shares of the appropriate Fund(s) held
in the custodial account. The Custodian shall vote such shares only in
accordance with your written instructions.
Article XVIII Contributions.
The Custodian is under no duty to compel you to make any contributions
and shall have no duty to assure that such contributions are appropriate in
amount. You have sole responsibility for assuring the deductibility of any
contributions. We may request additional information in the case of rollovers
and direct rollovers. We may request a Transfer Form, or other forms prior to a
transfer.
Article XIX Miscellaneous
19.1 Notice. Any notice, payment, report, or other material mailed to
you shall be deemed delivered and effective three days after the date mailed by
us to you. We shall send such material to your last address you provided and we
shall assume no obligation to ascertain the actual address or whereabouts of
you. Any notice you send us shall be deemed delivered when actually received by
us. Except as otherwise permitted by us, all instructions to us must be in
writing.
19.2 Headings. The headings and articles of this agreement are for
convenience of reference only, and shall have no substantive effect on
provisions of this agreement.
19.3 Singular Form. Throughout this agreement, the singular form
includes the plural where applicable.
19.4 State Law. This agreement shall be construed and interpreted in
accordance with the laws of the state in which our principal office is located,
except to the extent superseded by federal law.
19.5 Disqualifying Provision. Any provision of this agreement which
would disqualify the custodial account as an IRA shall be disregarded to the
extent necessary to make the custodial account an IRA.
19.6 Interpretation. If any question arises as to the meaning of any
provision of this agreement, then we shall be authorized to interpret any such
provision, and our interpretation shall be binding upon all parties.
<PAGE>
19.7 Additional Provisions. Additional provisions to this agreement may
be attached on a separate sheet.
- --------------------------------------------------------------------------------
General Instructions
(Section references are to the Internal Revenue Code unless otherwise noted.)
Purpose of Form
Form 5305-A is a model custodial account agreement that meets the
requirements of section 408(a) and has been automatically approved by the IRS.
An individual retirement account (IRA) is established after the form is fully
executed by both the individual (Depositor) and the Custodian and must be
completed no later than the due date of the individual's income tax return for
the tax year (without regard to extensions). This account must be created in the
United States for the exclusive benefit of the Depositor or his or her
beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to
the extent specified in those regulations.
Do not file Form 5305-A with the IRS, instead, keep it for your
records.
For more information on IRAs, including the required disclosure you can
get from your Custodian, get Pub. 590, Individual Retirement Arrangements
(IRAs).
Definitions
Custodian.- The Custodian must be a bank or savings and loan
association, as defined in section 408(n), or any person who has the approval of
the IRS to act as Custodian.
Depositor.- The Depositor is the person who establishes the custodial
account.
Identifying Number
The depositor's social security number will serve as the identification
number of his or her IRA. An employer identification number is required only for
an IRA for which a return is filed to report unrelated business taxable income.
An employer identification number is required for a common fund created for
IRAs.
<PAGE>
IRA for Nonworking Spouse
Form 5305-A may be used to establish the IRA custodial account for a
nonworking spouse.
Contributions to an IRA custodial account for a nonworking spouse must
be made to a separate IRA custodial account established by the nonworking
spouse.
Specific Instructions
Article IV.- Distributions made under this article may be made in a
single sum, periodic payment, or a combination of both. The distribution option
should be reviewed in the year the Depositor reaches age 70 1/2 to ensure that
the requirements of section 408(a)(6) have been met.
Article VIII.- Article VIII and any that follow it may incorporate
additional provisions that are agreed to by the depositor and Custodian to
complete the agreement. They may include, for example, definitions, investment
powers, voting rights, exculpatory provisions, amendment and termination,
removal of the Custodian, Custodian's fees, state law requirements, beginning
date of distributions, accepting only cash, treatment of excess contributions,
prohibited transactions with the depositor, etc. Use additional pages if
necessary and attach them to this form.
Note: Form 5305-A may be reproduced and reduced in size for adoption to passbook
purposes.
<PAGE>
IRA DISCLOSURE STATEMENT
1. Right to Revoke the Account. You have the right to revoke this
Individual Retirement Account (IRA) within seven days of receiving this
Disclosure Statement. To revoke your IRA account, simply notify our
representative who signed your IRA agreement. You may notify us in
person, in writing, or by telephone. Written notice must be sent by
first-class mail at the address listed on the application and will be
accepted as of the date such notice is postmarked. If you revoke your
IRA account, we will refund your entire IRA contribution. If you do not
use this right within seven days of the date you receive this
Disclosure Statement, you have accepted the terms and conditions of the
IRA agreement and may no longer revoke the IRA account.
2. Definitions. In this Disclosure Statement the terms "you," "your," or
"IRA Owner" means the person who established the IRA. The terms
"Custodian," "our," "us," or "we" shall mean the financial organization
acting as the Custodian of your IRA. The term "IRS" shall refer to the
Internal Revenue Service. The term "IRA" shall mean Individual
Retirement Account within the meaning of section 408 of the Code and
shall also refer to your Custodial Account. The term "Code" shall mean
the Internal Revenue Code.
3. Account Growth. Your IRA is self-directed, we will not take any action
except at your written direction. Earnings and capital appreciation on
investments chosen by you will depend on overall economic conditions
and the success of that particular investment. Earnings on these
investments are not guaranteed by the Custodian and may or may not be
reasonably projected. For example, if the initial investment is a
passbook, time deposit or money market account, the account projection
can be made based on the current rate of earnings paid. On the other
hand, if the initial investment is an investment security (stocks,
bonds, or mutual funds), the rate of growth of the earnings on these
types of investments cannot be reasonably projected.
4. Eligibility for IRAs.
A. Regular Contributions. You must be under the age 70 1/2and
have "earned income" in order to contribute to an IRA. For tax
years during or after which you reach the age 70 1/2you are
not allowed to contribute to an IRA. "Earned income" includes
compensation received as wages, tips, bonuses, as well as
other compensation received for personal services.
Compensation also includes taxable alimony. (If you are
self-employed, compensation is your net earnings from your
trade or business reduced by your deduction for contributions
made on your behalf to retirement plans and the deduction
allowed for one-half of your self-employment taxes.) If you
meet the above eligibility requirements, you may contribute up
to 100% of your compensation or $2,000, whichever is less.
Regular and spousal IRA contributions must be made by your tax
filing due date excluding extensions.
<PAGE>
B. Spousal Contributions. You may make a contribution into your
spouse's IRA if you meet the special spousal IRA rules. You
must be married, file a joint federal income tax return, and
the spouse receiving the spousal contribution must be under 70
1/2 during the entire tax year. Additionally, the spouse
receiving the spousal contribution cannot have any
compensation during the tax year or must elect to be treated
as having no compensation. (The spousal IRA is generally
designed to benefit a nonworking spouse.) The total combined
contribution you can make each year to your IRA and a spousal
IRA is the smaller of $2,250 or your earned income for the
year. You can divide your total IRA contribution between your
IRA and the spousal IRA in any way you choose, as long as you
do not contribute more than $2,000 to either IRA. You are not
allowed to make a spousal contribution for the tax year during
which you are divorced or legally separated.
C. Rollover, Transfer, and SEP Contributions. You may be eligible
to roll over, directly roll over, or transfer your existing
IRA or qualified plan assets. The rules covering rollovers and
transfers are discussed later in this disclosure statement.
Simplified Employee Pension (SEP) plan contributions may also
be made to this IRA. Your employer is responsible for
verifying the SEP eligibility requirements and determining the
contribution amount. The IRS or your employer can provide
additional information concerning SEP eligibility.
5. Deductibility. You may or may not be allowed to deduct your IRA
contribution on your income tax return. Whether or not you may deduct
your contribution depends upon whether you or your spouse are active
participants in an employer-maintained retirement plan, your income
level, and your filing status.
A. Active Participant. You are an "active participant" for a year
if you, or your spouse, are covered by a retirement plan. For
example, if you are covered under a profit sharing plan, a
401(k) plan, a tax-sheltered annuity plan (403(b)), certain
government plans, a Simplified Employee Pension (SEP) plan, or
a plan which promises you a retirement benefit which is based
upon the number of years of service you have with the
employer, you are likely to be an active participant. The W-2,
Wage and Tax Statement, includes a box (the "Pension Plan"
box) to indicate whether or not you are covered for the plan
year. If you are not certain whether or not you are covered
(an "active participant") you should ask your employer or tax
advisor. If you are not an active participant, you may fully
deduct your IRA contribution regardless of your compensation.
B. Adjusted Gross Income. If you are an active participant in a
retirement plan, your ability to deduct your IRA contribution
begins to be phased out when your federal adjusted gross
income exceeds certain limits.
<PAGE>
- --------------------------------------------------------------------------------
AGI (For Active Married, Filing Married, Filing
Participants) Single Jointly Separately
- --------------------------------------------------------------------------------
$10,000 or less Full Deduction Full Deduction Phaseout*
$10,001 - $25,000 Full Deduction Full Deduction No Deduction
$25,001 - $35,000 Phaseout* Full Deduction No Deduction
$35,001 - $40,000 No Deduction Full Deduction No Deduction
$40,001 - $50,000 No Deduction Phaseout* No Deduction
$50,001 - or over No Deduction No Deduction No Deduction
*If subject to phaseout of deductibility, please see part C. Phaseout
Calculation.
C. Phaseout Calculation. If you are an active participant and your
income falls within the phaseout limits from the previous
chart, you can determine your deductible amount according to
the deduction formula below.
<PAGE>
FILING STATUS
DEDUCTION
FORMULA
Single and Qualifying Married,
Married, Filing Married, Filing Filing
Separately Jointly Separately
- --------------------------------------------------------------------------------
A. Adjusted gross $35,000 $50,000 $10,000
income (AGI)
limit*
- --------------------------------------------------------------------------------
B. Your adjusted $__________ $__________ $__________
gross income*
- --------------------------------------------------------------------------------
C. Subtract B from A $__________ $__________ $__________
- --------------------------------------------------------------------------------
Line C multiplied by .2
equals the amount you x.2 x.2 .x2
may deduct.**
- --------------------------------------------------------------------------------
Deductible Amount $__________ $__________ $__________
- --------------------------------------------------------------------------------
With a Spousal IRA, x.255
Line C multiplied by
.225 equals the amount $__________
you may deduct.***
- --------------------------------------------------------------------------------
* AGI from IRS Forms 1040 or 1040A
** In computing the maximum deduction limit, if the adjusted dollar
deduction limit is not a multiple of ten, it is rounded up to the next
highest $10 increment. If your partial deduction is less than $200 but
greater than $0, you are allowed to claim an IRA deduction of $200.
*** To calculate the maximum deductible Spousal IRA contribution, you must
use a two-step process. First, the adjusted dollar deduction limit for
the Spousal IRA contribution is calculated using the factor .225.
Second, to determine the maximum deductible Spousal IRA contribution to
a single account, the calculation is made using the factor .2.
You are still allowed to contribute up to the lesser of $2,000 or 100% of your
earned income; however, if your contribution exceeds your maximum deductible
amount, the remainder will be treated as a nondeductible contribution.
6. Rollovers, Transfers, and Direct Rollovers. Distributions from IRAs,
qualified plans or tax-sheltered annuity programs may be eligible for a
tax-free rollover or transfer into an IRA. Transfer and rollover
contributions are not deductible and will not be applied against the
$2,000 or $2,250 annual contribution limits mentioned above.
A. Rollovers and Transfers from IRAs. Assets in IRAs may be
directly transferred or rolled over to another IRA. A rollover
occurs when you take a distribution of the assets and roll them
into an IRA within 60 calendar days from the date of receipt.
If you retain the assets for any period of time beyond the 60
days, the rollover is no longer allowed. An additional
restriction on rollovers is that you are only allowed one
rollover for each 12-month period.
<PAGE>
B. Rollovers and Direct Rollovers From Qualified Plans. An
eligible rollover distribution from a qualified retirement plan
or tax-sheltered annuity program may be rolled over or directly
rolled over to an IRA. Generally, an eligible rollover
distribution is any distribution except: (1) one of a series of
substantially equal periodic payments over the single or joint
life expectancy of the employee and beneficiary or for a
specific period of ten years or more, (2) a nontaxable
distribution, or (3) a required distribution for an employee
age 70 1/2or older. To complete a direct rollover you would
instruct your employer to deliver the funds directly to the IRA
Custodian. To complete a rollover, you would take control of
the assets and would have 60 calendar days from the date of
receipt to roll over the taxable portion of the distribution to
an IRA.
7. Required Distributions After Age 70 1/2. After you reach age 70 1/2, the
rules require you to take minimum distributions from your IRA each year.
The distribution for your first year, the year in which you reach age 70
1/2, must be made no later than April 1 of the following year.
Distributions for subsequent years must be taken by December 31 of each
year.
You must elect a method to receive your distributions in a manner which
distributes the funds at least as rapidly as the minimum required
distributions. Unless you elect otherwise, the minimum required
distribution for each year is determined by dividing your ending account
balance for the previous year (adjusted by any outstanding rollovers) by
your joint life expectancy with the appropriate beneficiary. If no
beneficiary exists or a beneficiary other than a natural person is named
(except certain trusts), your single life expectancy must be used for
this calculation.
For years after the first distribution year, you may elect to annually
recalculate your life expectancy and/or your spouse's life expectancy.
If you do not choose a method, it is presumed that recalculation is
elected. If recalculation is elected, a new life expectancy factor is
determined each year based upon the ages of you and/or your spouse as of
your birthdays during the year. If the person whose life is being
recalculated dies, the life expectancy for that individual becomes zero.
If recalculation is not chosen, the life expectancy is calculated by
determining the life expectancy at the end of the first distribution
year and subtracting 1 for each year which has elapsed since. If no
recalculation is elected, the death of the IRA Owner or the beneficiary
is disregarded.
The joint life expectancy of you and a beneficiary other than your
spouse is limited by the Minimum Distribution Incidental Benefit (MDIB)
tables. The tables give life expectancies for the IRA Owner and a
beneficiary ten years younger. If this factor is less than your joint
life expectancy with the applicable beneficiary, the factor from the
MDIB table must be used to calculate the minimum distribution.
If you have more than one IRA at the same or different financial
institution(s), the minimum distribution must be calculated separately
for each IRA. However, the minimum distribution from each IRA can be
withdrawn from any one or more of your IRAs.
<PAGE>
8. Distributions After Death.
A. Death After the Required Beginning Date._If you die after the
date when payments must have begun (after you reach age 70
1/2), the payments to your beneficiary or estate must continue
so that the funds will be distributed at least as rapidly as
they would have been distributed if the death had not occurred.
A spouse beneficiary may elect to roll over a distribution
(other than a required minimum distribution) into his or her
own IRA.
B. Death Before the Required Beginning Date._If you die before the
required beginning date, your beneficiary has the following
options:
(1) Five Year Option._The beneficiary may withdraw the
entire account balance in any manner so that the IRA is
depleted by December 31 of the fifth year following the
year of death.
(2) Life Expectancy Option._The beneficiary may withdraw
the funds in a series of payments over a period which
does not exceed the beneficiary's life expectancy.
These payments must begin by December 31 of the year
following the year of death if the beneficiary is not
your spouse, or December 31 of the year you would have
been age 70 1/2 (if later), if the beneficiary is your
spouse.
(3) Spouse Treat as Own Option._A spouse beneficiary may
elect to roll over a distribution into his/her own
account or to treat the IRA as his/her own.
If you die before your required beginning date, your spouse
beneficiary must make his/her election of payment by the
earlier of December 31 of the fifth year after the year of your
death or December 31 of the year you would have attained age 70
1/2. If you die before your required beginning date, your
nonspouse beneficiary must make his/her election of payment no
later than December 31 of the year following the year of your
death.
9. Income Tax Status of Distributions. IRA distributions are generally
fully taxable as ordinary income. IRAs are not eligible for the special
tax treatment (five and ten year tax averaging and capital gains
treatment) available to certain distributions from pension and profit
sharing plans.
A. Nondeductible Contributions. If you have made nondeductible
contributions to an IRA, a certain percentage of your
distributions will be nontaxable. The nontaxable portion of
your distributions is calculated as follows:
Total Nondeductible Contributions
Nontaxable Distributions = Less Previous Nontaxable Distributions X
Distributions During the Year
Total Account Balance of All IRAs at Year
End Plus Total Distributions During the
Year
<PAGE>
B. Estate Tax Status of Distributions. All funds held within your
IRA will be included in your gross estate for estate tax
purposes, regardless of the named beneficiary or manner of
distribution. There is no specific estate tax exclusion for
funds held within an IRA.
C. Gift Tax Status of IRA Contributions and Distributions. For
gift tax purposes, irrevocable beneficiary designations will
not be treated as gifts.
10. Federal Penalties. In addition to the taxes imposed on IRAs,
distributions from IRAs are also potentially subject to a wide variety
of penalties (excise taxes).
A. Penalty for Premature Distribution. Generally, if you take a
distribution from your IRA before you reach the age 59 1/2 you
will owe, in addition to regular income taxes a 10% excise tax
on the taxable amount of the distribution. Exceptions to the
10% excise tax exist in the case of disability, death, or if
you agree to take a series of substantially equal periodic
payments made over your life expectancy or the joint life
expectancy of yourself and your designated beneficiary.
B. Penalty for Excess Contributions. If you contribute more to
your IRA than allowed it is called an "excess contribution" and
you may be penalized. The government imposes a 6% penalty
(excise tax) per year for any excess amount you allow to remain
in your IRA. You must pay the penalty by filing a special IRS
form along with your income tax return. You can avoid the 6%
penalty by removing your excess contribution plus any earnings
on the excess amount prior to the due date for filing your
Federal income tax return for the year, plus extensions. You
are not allowed to deduct an excess contribution and would not
be able to avoid the 6% excise tax if you took a deduction for
the contribution. Any earnings you receive along with a
distribution of the excess is taxable income in the tax year
the excess contribution was made.
The 6% excess contribution penalty may be eliminated for future
tax years by withdrawing the excess contribution from the IRA
before the end of the tax year or by under-contributing for
that year by an amount equal to the excess contribution. The
excess contribution being returned will not be subject to
income tax nor will the 10% premature withdrawal penalty as
discussed below be assessed provided the contribution for the
year during which the excess contribution was made did not
exceed $2,250 (excluding rollover contributions) and no
deduction was allowed for the excess.
C. Excess Distribution Penalty. If you receive more than $150,000
subject to cost-of-living adjustments you will be subject to a
15% tax on the amount of the excess. Special rules may apply to
you and you should consult your tax adviser with questions
concerning the excess distribution penalty.
D. Excess Accumulation Penalty. An excess accumulation penalty may
be imposed on your estate if you die with an excess
accumulation in your IRA. You should consult with your tax
adviser concerning excess accumulation penalties.
<PAGE>
E. Penalty for Insufficient or Late Distribution. You will owe a
penalty of 50% of the amount of any minimum distribution you
fail to take. As discussed above, minimum distributions are
required when you reach age 70 1/2and beneficiaries may also be
required to take minimum distributions. You are responsible for
paying this tax and reporting it on your income tax return.
This 50% penalty is in addition to the regular income tax that
may be payable on distributions from IRAs. The tax imposed is
equal to 50% of the amount by which the minimum required
distribution exceeds the amount actually distributed during the
year.
F. Penalty for Prohibited Transactions. If you engage in a
prohibited transaction, the IRA loses its tax exemption as of
the first day of the year. You must include the Fair Market
Value of the IRA in your gross income for the year during which
the prohibited transaction occurred and pay all applicable
taxes and penalties.
G. Penalty for Pledging the Account as Security. If you pledge
your IRA as security for a loan, the portion pledged is treated
as a distribution to you in that year. The portion pledged is
fully taxable and subject to all penalties.
11. Miscellaneous Provisions.
A. Your Custodian. Your Custodian must be a bank, savings and loan
association, credit union, or other entity that is permitted to
accept IRA contributions.
B. Cash Contributions. All contributions to your IRA must be in
cash except for rollover and transfer contributions.
C. Contribution Limit. You are not allowed to contribute more than
$2,000 as a regular contribution and no more than $2,250 in the
case when you are making a contribution both to your IRA and to
the IRA of your spouse under the Spousal IRA rules.
D. Life Insurance. You may not invest your IRA in life insurance
contracts.
E. Nonforfeitable. Your interest in your IRA balance is
nonforfeitable.
F. No Commingling. The assets of the IRA will not be commingled
with other property except in a common trust or investment
fund.
G. Collectibles. No part of the funds can be invested in
collectibles, including any work of art, rug or antique, metal
or gem, stamp or coin, alcoholic beverage, or any other
tangible property specified by the IRS. The acquisition of
certain U.S. government-issued gold and silver coins and
certain state-issued coins are permitted as investments in an
IRA.
12. IRS Approval of Forms. The Custodial Agreement used to establish this
IRA is the IRS Model Custodial Agreement (Form 5305-A). This agreement
has been approved as to form by the Internal Revenue Service. You are
responsible to ensure you follow the terms and conditions of this
agreement. This approval is not an endorsement of the investment
instruments used by the Custodian.
13. Provisions Regarding Amendments to the Plan. The Custodian of this IRA
may amend (change or terminate) the IRA at any time. The Custodian shall
furnish copies of any such amendments to the IRA Owner within 30 days of
the date the amendments are to become effective.
<PAGE>
14. Fees. The Custodian may charge service fees for the administration of
the IRA. If a fee is charged at the time the IRA is first opened, the
IRA Owner will be notified of the amount charged, either on the IRA
Application, or otherwise. If fees will be charged in the future, the
Custodian will furnish the IRA Owner with a written notice stating the
nature and amount of such fees at least 30 days before charging any
fees.
15. Annual Statements. Each year the Custodian will furnish you and the IRS
with statements reflecting the activity in your IRA. You will receive an
annual report, the IRS Form 5498 or a substitute form, which will
indicate your Fair Market Value of the account as of the end of the
previous calendar year. This will give the amount of your contribution
to the IRA and will indicate any rollovers or transfers into the
account. Another statement, the IRS Form 1099-R, will reflect your
distributions for the year. The information is also sent by your
Custodian to the IRS.
16. Other IRS Forms. You may be required to file IRS Form 5329 with the IRS
for each taxable year in which you are assessed a Federal penalty as
discussed above. If you only owe the 10% premature distribution penalty,
you may be able to pay the penalty on your income tax return alone and
no Form 5329 would be required. You must also file IRS Form 8606
(Nondeductible IRA Contributions IRA Basis, and Nontaxable
Distributions) for each taxable year you make nondeductible
contributions or receive nontaxable distributions.
FURTHER INFORMATION REGARDING INDIVIDUAL RETIREMENT ACCOUNTS CAN BE OBTAINED
FROM ANY DISTRICT OFFICE OF THE IRS OR FROM IRS PUBLICATION 590.
<PAGE>
- ---------------------------- THE MAXUS FUNDS ---------------
Mail to: | | Date
Maxus Asset Management | o Income o Equity | Broker/Dealer
Mutual-Shareholder Services| o Ohio Heartland o Aggressive | Agent
Corp. | o Laureate Value | Number
The Tower at Erieview | ---------------
36th Floor |
1301 East Ninth Street |
Cleveland, Ohio 44114 |
- ----------------------------
IRA APPLICATION
PLEASE PRINT, PREFERABLY WITH BLACK INK. For help with this application, or for
more information, call us toll free: 1-800-44-MAXUS (800-446-2987)
- --------------------------------------------------------------------------------
ACCOUNT INFORMATION
Name_______________________ Date of Birth___________ Soc. Sec. No.____________
Address____________________ City____________________ State____________ ZIP____
Home Phone_________________ Business Phone__________ Account Number___________
- --------------------------------------------------------------------------------
CONTRIBUTION INFORMATION
For Tax
Year (if
Account Type: Initial Contribution: Date:____ Amount applicable)
o Regular o Regular ______ ___________
o Rollover (Attach check)
(commingle contribution) o Spousal IRA ______ ___________
o Spousal IRA (Attach check)
o Rollover o Rollover ______ ___________
(do not commingle) (Attach check)
o SEP/IRA o Direct Rollover ______ ___________
o Transfer (Attach Request to
Transfer/Direct
Rollover Form.)
o Transfer ______ ___________
(Attach Request to
Transfer/Direct
Rollover Form.)
o SEP/IRA ______ ___________
(Attach check)
- --------------------------------------------------------------------------------
INVESTMENT INFORMATION
o Enclosed is a check for $__________ payable to Maxus Asset Management to
be invested as follows:*
Fund Name Amount Percentage
If investing in more Maxus Income Fund __________ __________
than one fund, indicate Maxus Equity Fund __________ __________
the amount or percentage Maxus Laureate Fund __________ __________
for each fund Maxus Ohio Heartland Fund __________ __________
Maxus Aggressive Value Fund __________ __________
========== ==========
Total Total
* There is a $250 minimum deposit per fund per account.
- --------------------------------------------------------------------------------
PERSONAL FINANCIAL DATA
Investment Objectives: o Aggressive Growth o Long-Term Growth o Income
Risk Tolerance: o Aggressive o Moderate o Conservative
- --------------------------------------------------------------------------------
DESIGNATION OF BENEFICIARY
In the event of my death, pay my IRA balance to the primary beneficiary(ies)
listed below or whoever survives me.
Soc. Sec. No. or
Full Name Taxpayer's I.D. No. Relationship Date of Birth %*
_______________________ ___________________ ____________ _____________ _____
_______________________ ___________________ ____________ _____________ _____
_______________________ ___________________ ____________ _____________ _____
100
=====
Total
If all of the primary beneficiary(ies) die before me pay my IRA balance to the
contingent beneficiary(ies) named below, or whoever survives me.
_______________________ ___________________ ____________ _____________ _____
_______________________ ___________________ ____________ _____________ _____
100
=====
Total
*If no percentage rate is indicated, the beneficiaries will share equally.
- --------------------------------------------------------------------------------
SIGNATURES AND CERTIFICATIONS
I certify under the penalty of perjury that my social security number stated
above is correct, that I am of legal age in my state of residence and I agree
that the designation of the tax year for my deposit and my election to treat a
deposit as a rollover (if applicable) are irrevocable. By signing this
application, I hereby authorize and appoint Star Bank N.A. to act as Custodian
of my account. I indemnify Star Bank N.A. when making distributions in
accordance with my beneficiary designation on file or in accordance with the
Custodial Account Agreement absent any such designation. I acknowledge that I
have received the IRA Disclosure Statement and the IRA Custodial Account
Agreement at least seven days prior to the date I signed this application. I
have read both, which are incorporated in this application by reference, and I
accept and agree to be bound by the terms and conditions contained in the IRA
Custodial Account Agreement. I also certify that I have received and read the
current Prospectus and understand that mutual fund shares are not obligations of
or guaranteed by a bank, nor are they insured by the FDIC.
- -------------------------------------------------------
Individual's Signature Date
- -------------------------------------------------------
Star Bank N.A. Date
Star Bank N.A. accepts this application and agrees to act as Custodian of the
account.
A confirmation will be sent to you regarding the above transaction(s) and will
serve as notification of the Custodian's acceptance.
Complete only if required by state law.
Spousal Consent: I am the spouse of the IRA Owner and I approve and consent to
the naming of a beneficiary other than myself. I transmute (transfer) any
community property interest I have in this IRA into the separate property of my
spouse.
- ------------------------------------------------------------------
Spouse's Signature Date
<PAGE>
INSTRUCTIONS FOR OPENING YOUR MAXUS IRA
This booklet contains all of the forms you need to open an IRA with The Maxus
Funds. Included in this booklet are:
1) Two copies of the IRA Application-- one copy to be completed and
returned to Maxus and your copy on the backside of the front cover;
2) the IRA Plan Agreement and Disclosure; and
3) a return envelope.
To Open Your Maxus IRA
Step 1 Please complete the Application on the other side of this page.
Step 2 Separate it at the perforation and send it back to The Maxus Funds in
the return envelope.
Step 3 Include a check for the amount of your IRA contribution.
Step 4 Retain your copy of the Application and the IRA Plan Agreement and
Disclosure.
(C) Bankers Systems, Inc., St. Cloud, MN Form MAX-IRA 6/1/96
<PAGE>
Exhibit 15(a)
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
(Investor Shares Only)
WHEREAS, MaxFund Trust (the "Trust") engages in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust is comprised of the series set forth on Schedule 1,
as such schedule is revised from time to time (each, a "Portfolio"); and
WHEREAS, the shares of each Portfolio are divided into two classes,
namely, Investor Shares and Institutional Shares; and
WHEREAS, the Trust desires to adopt this Plan pursuant to Rule 12b-1
under the Act, and the Trust's Board has determined that there is a reasonable
likelihood that adoption of this Plan will benefit the Portfolios and holders of
the Investor Shares; and
WHEREAS, the Trust engages Maxus Securities Corp. (the "Distributor")
as distributor for the Portfolios' shares (the "Shares") pursuant to a
Distribution Agreement dated as of the date hereof.
NOW, THEREFORE, the Trust hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan in accordance with Rule 12b-1 under the Act on
the following terms and conditions:
1. (a) Each Portfolio shall pay the Distributor a
shareholder servicing and distribution fee at the
annual rate of .50% of the average daily net assets
of the Investor Shares of such Portfolio.
(b) Such fee will be used by the Distributor to make
payments for administration, shareholder services and
distribution assistance for holders of Investor
Shares, including, but not limited to (i)
compensation to securities dealers and other persons
and organizations (collectively, "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 Distributor shall determine the
amounts to be paid to third parties and the basis on
which such payments will be made. Payments to a third
party are subject to compliance by the third party
with the terms of any related Plan agreement between
the third party and the Distributor.
(c) For the purposes of determining the fees payable
under this Plan, the value of each Portfolio's net
assets shall be computed in the manner specified in
the Trust's charter documents as then in effect for
the computation of the value of such Portfolio's net
assets.
1
<PAGE>
2. As respects each Portfolio, this Plan shall not take effect
until it, together with any related agreement, has been
approved by vote of a majority of both (a) the Trust's Board
and (b) those Trustees who are not "interested persons" of the
Trust (as defined by the Act) and who have no direct or
indirect financial interest in the operation of this Plan or
any agreements related to it (the "Rule 12b-1 Trustees") cast
in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related Agreements.
3. As respects each Portfolio, this Plan shall remain in effect
until December 31, 1998 and shall continue in effect
thereafter so long as such continuance is specifically
approved at least annually in the manner provided for approval
of this Plan in paragraph 2.
4. The Distributor shall provide to the Trust's Board and the
Board shall review, at least quarterly, a written report of
amounts paid hereunder and the purposes for which they were
made.
5. As respects each Portfolio, this Plan may be terminated at any
time by vote of a majority of the Rule 12b-1 Trustees or by a
vote of a majority of the outstanding Investor Shares of such
Portfolio.
6. This Plan may not be amended as to any Portfolio to increase
materially the amount of compensation payable pursuant to
paragraph 1 hereof unless such amendment is approved by a vote
of at least a majority (as defined in the Act) of the
outstanding Investor Shares of such Portfolio. No material
amendment to the Plan shall be made unless approved in the
manner provided in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of
the Trustees who are not interested persons (as defined in the
Act) of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons.
8. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 4
hereof, for a period of not less than six years from the date
of this Plan, any such agreement or any such report, as the
case may be, the first two years in an easily accessible
place.
9. This Plan may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument. The name Maxfund Trust is the designation of the
Trustees for the time being under a Declaration of Trust dated
November 7, 1997, as amended from time to time, and all
persons dealing with the Trust must look solely to the
property of the Trust for enforcement of any claims against
the Trust as neither the Trustees, officers, agents or
shareholders assume any personal liability for obligations
entered into on behalf of the Trust.
<PAGE>
IN WITNESS WHEREOF, the Trust, on behalf of the Portfolios, and the
Distributor have executed this Plan as of the date set forth below.
Dated: November 19, 1997
MAXFUND TRUST
By: /s/ Richard A. Barone, Chairman
MAXUS SECURITIES CORP.
By: /s/ Richard A. Barone, Chairman
3
<PAGE>
SCHEDULE 1
Name of Series
Maxus Ohio Heartland Fund
Maxus Aggressive Value Fund
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MAXUS OHIO HEARTLAND FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JAN-15-1998
<INVESTMENTS-AT-COST> 100000
<INVESTMENTS-AT-VALUE> 100000
<RECEIVABLES> 0
<ASSETS-OTHER> 15215
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115215
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15215
<TOTAL-LIABILITIES> 15215
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100000
<SHARES-COMMON-STOCK> 10000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100000
<PER-SHARE-NAV-BEGIN> 10
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MAXUS AGGRESSIVE VALUE FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JAN-15-1998
<INVESTMENTS-AT-COST> 100000
<INVESTMENTS-AT-VALUE> 100000
<RECEIVABLES> 0
<ASSETS-OTHER> 15215
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 115215
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 15215
<TOTAL-LIABILITIES> 15215
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100000
<SHARES-COMMON-STOCK> 20000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 20000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 100000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100000
<PER-SHARE-NAV-BEGIN> 5
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 5
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
