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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. ___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[ ]
Amendment No. 1 [X]
LONGBOAT TRUST
(Exact name of registrant as specified in charter)
(Formerly named "OTI Trust")
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.
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.
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LONGBOAT 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 Registrant
Investment Objective and Management
Techniques, General Information,
Risks and Other Considerations
5. Management of the Fund Investment Management
6. Capital Stock and Other
Securities General Information
7. Purchase of Securities
Being Offered How to Purchase Shares
8. Redemption or Repurchase How to Redeem 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 General Information and History
History
13. Investment Objectives and Investment Objective and Policies
Policies
14. Management of the Fund Management of the Fund
15. Control Persons and
Principal Holders of Ownership of Shares
Securities
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16. Investment Advisory and Investment Advisory and Other
Other Services Services
17. Brokerage Allocation Brokerage Allocation
18. Capital Stock and Other Capital Stock and Other Securities
Securities
19. Purchase, Redemption and Purchase, Redemption and Pricing of
Pricing Securities Being Offered
20. Tax Status Tax Status
21. Underwriters Distributors
22. Calculation of Performance Performance
Data
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. OTI
SPECIAL OPPORTUNITIES FUND The Tower at Erieview, 36th Floor Class B Shares 1301
East Ninth Street Class C Shares Cleveland, Ohio 44114 Class D Shares (216)
687-1000
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OTI SPECIAL OPPORTUNITIES FUND THE TOWER AT ERIEVIEW, 36TH FLOOR
Class B Shares 1301 East Ninth Street
Class C Shares Cleveland, Ohio 44114
Class D Shares (216) 687-1000
OTI Special Opportunities Fund (the "Fund") is a diversified portfolio of
Longboat Trust, an open-end management investment company (the "Trust").
The Fund has an investment objective of obtaining capital appreciation. Under
normal circumstances, at least 80% of the value of this Fund"s total assets
(other than money market investments) will consist of equity securities.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Fund 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 Fund 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/April __, 1999
Investors are advised to read this Prospectus and to retain it for future
reference.
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HIGHLIGHTS
Investment Objective. The Fund is a diversified fund. The investment objective
of the Fund is to obtain capital appreciation. No assurance can be given that
the Fund will achieve its objective. See "Investment Objective and Management
Techniques."
Sales Charges. The Fund sells and redeems its shares at net asset value without
any front-end sales charges. Class B Shares are subject to a deferred sales
charge payable upon redemption. See "How to Purchase Shares." Class B Shares
and Class C Shares are subject to distribution and service (12b-1) fees to aid
the distribution of such shares. See "Distribution Plans."
Liquidity. The 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 Class B and Class C Shares, the minimum initial
investment is $1,000, with subsequent minimum investments of $100. For Class D
Shares, the minimum initial investment is $1,000,000, with subsequent minimum
investments of $10,000. See "How to Purchase Shares." The 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 Class B or Class C Shares or $1,000,000 in the case of Class D
Shares. See "How to Redeem Shares."
Dividends. The 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 the Fund. Its annual fee is 1% of the Fund"s average
daily net assets. 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 the Fund. See "Investment Management."
Sub-Adviser. The Fund"s Sub-Adviser is Morton H. Sachs & Company. The Sub-
Adviser obtains and performs fundamental research, performs analysis and makes
recommendations to the Adviser with respect to the purchase or sale of specific
investments. The Adviser pays the Sub-Adviser a sub-advisory fee at the rate of
.50% of the Fund"s average daily net assets. See "Investment Management."
Distributor. Shares of the Fund are offered by Maxus Securities Corp ("MSC")
and by the Sub-Adviser, each 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 Plans."
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Risk Factors. The Fund is not 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.
The Fund is expected to have a high rate of portfolio turnover relative to
other mutual funds, which may result in the Fund paying more brokerage
commissions and having higher amounts of realized investment gain subject to the
payment of taxes by shareholders. See "Risks and Other Considerations."
FEE TABLE
Shareholder transaction expenses
Class B Class C Class D
Maximum sales charge (load) on none none none
purchases
Maximum deferred sales charge 5.00% none none
(load) as a % of purchase or sale
price, whichever is less
Annual Fund Operating Expenses (as a percentage of average net assets)
Class B Class C Class D
Management Fees 1.00% 1.00% 1.00%
12b-1 Fees 1.00% 0.60% 0.00%
Other Expenses* 1.25% 1.25% 1.25%
Total Fund Operating 3.25% 2.85% 2.25%
Expenses*
*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).
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Examples
You would pay the following expenses on a $1,000 investment in the Fund
over the following time periods, assuming a 5% annual return:
1 Year 3 Years
Class B
o With redemption $83 $130
o Without $33 $100
redemption
Class C $29 $88
Class D $23 $70
The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in the 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 OBJECTIVE AND MANAGEMENT TECHNIQUES
Investment Objective
The investment objective of the Fund is to obtain capital appreciation.
This objective is a fundamental policy of the 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 (other than "money market investments" as defined
below) in equity securities and certain other mutual funds as described below.
Equity securities are common stocks and preferred stocks and securities
convertible or exchangeable into common stocks or preferred stocks. The Fund
seeks to maximize capital appreciation by investing in equity securities that
represent excellent value in relation to companies" cash-generating ability, net
assets, and perceived future earning power, thus providing an excellent
opportunity for achieving capital appreciation. The words "Special Opportunity"
in the Fund"s name refer to this strategy.
The Fund implements this strategy through a two-step stock selection
process that consists of trend analysis and fundamental research. The Fund uses
a proprietary stock price indicator obtained through the Sub-Adviser to the
Fund. (See "Investment Management -- Investment Adviser and Sub-Adviser"). This
indicator incorporates technical, statistical, analytical and mathematical
factors to estimate the most probable future price movements for each of 9000
stocks and for the equity markets in general. To those equity securities which
this indicator suggests are particularly likely to appreciate within a given
time period, the Adviser will apply fundamental research and analysis
(considering fundamental company-specific factors such as price-to-earnings
ratio, debt-to-equity ratio, price-to-sales ratio, cash flow and insider
transactions) to select for investment securities which the Adviser believes
represent excellent value.
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Money Market Investments
Under normal conditions, the Fund also may invest up to 20% of its total
assets in cash, high-quality commercial paper (i.e., rated A-1 or A-2 by
Standard & Poor"s), other money market instruments and money market mutual funds
(collectively, "money market investments"), investment grade corporate debt
securities (i.e., rated BBB or better by Standard & Poor"s), U. S. Government
Securities and U.S. Government agency securities. In addition, when the Adviser
believes that market conditions warrant a temporary defensive posture, the Fund
may invest without limitation in money market investments. Please refer to
Appendix A for a description of these ratings.
Investments in Other Funds
The Fund may also seek to achieve its objective by investing in other
mutual funds, including mutual funds whose investment objectives are to provide
investment results which either (i) generally correspond to the performance of a
recognized stock price index ("index funds"), (ii) generally correspond to a
specified multiple of the performance of a recognized stock price index
("leveraged index funds"), (iii) generally correspond to the inverse (opposite)
of the performance of a recognized stock price index ("bear funds") or (iv)
generally correspond to a specified multiple of the inverse (opposite) of the
performance of a recognized stock price index ("leveraged bear funds").
The Fund may invest in index funds and/or leveraged index funds when the
proprietary stock price indicator utilized by the Fund indicates that equity
prices in general are likely to rise in the near term. Investments in index
funds and leveraged index funds are designed to allow the Fund to seek to profit
from anticipated increases in the indexes to which such funds generally are
correlated. For example, on a day when the S&P 500 Index increases by 1%, an
index fund which seeks investment results that correspond generally to the
performance of the S&P 500 Index should experience a gain in net asset value of
approximately 1%. Conversely, if the S&P 500 Index were to decrease by 1% on a
particular day, the net asset value of the same fund should decrease
approximately 1%. These results (whether positive or negative) would be
magnified in the case of a leveraged index fund. For example, a leveraged index
fund which seeks investments results that correspond generally to twice the
performance of the S&P 500 Index should experience a gain in net asset value of
approximately 2% on a day when the S&P 500 Index increases by 1%, but should
experience a loss in net asset value of approximately 2% on a day when the S&P
500 Index decreases by 1%. Due to the nature of index funds and leveraged index
funds, the Fund could experience substantial losses on such investments during
periods of declining equity prices.
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The Fund may invest in bear funds and/or leveraged bear funds when the
stock price indicator utilized by the Fund indicates that equity prices in
general are likely to decline in the near term. Investments in bear funds and
leveraged bear funds are designed to allow the Fund to seek to profit from
anticipated decreases in the indexes to which such funds generally are inversely
correlated. For example, on a day when the S&P 500 Index decreases by 1%, a bear
fund which seeks investment results that correspond to the inverse of the
performance of the S&P 500 Index should experience a gain in net asset value of
approximately 1%. Conversely, if the S&P 500 Index were to increase by 1% on a
particular day, the net asset value of the same fund should decrease
approximately 1%. These results (whether positive or negative) would be
magnified in the case of a leveraged bear fund. For example, a leveraged bear
fund which seeks investments results that correspond to twice the inverse
(opposite) of the performance of the S&P 500 Index should experience a gain in
net asset value of approximately 2% on a day when the S&P 500 Index decreases by
1%, but should experience a loss in net asset value of approximately 2% on a day
when the S&P 500 Index increases by 1%. Due to the nature of bear funds and
leveraged bear funds, the Fund could experience substantial losses on such
investments during periods of rising equity prices.
In addition, the Fund may invest in Standard & Poor"s Depository Receipts
("SPDRs"), which are shares of certain unit investment trusts traded on the
American Stock Exchange. Each SPDR represents a proportionate interest, in
substantially the same weighting, in the stocks that make up a particular stock
index published by Standard & Poor"s Corporation. The Fund may also invest in
similar securities representing proportionate interests in stocks making up
certain other stock indices. Due to the nature of SPDRs and similar securities,
the Fund could experience substantial losses on such investments during periods
of declining equity prices.
Portfolio Turnover
The Fund is not restricted with regard to portfolio turnover and will make
changes in its 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 500%. 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
The 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.
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The Fund may not:
(1) acquire more than 10% of the outstanding voting securities of any
one issuer;
(2) 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 the Fund as a
whole will not cause a violation of the investment restrictions so long as such
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
In General
The Fund is not intended to provide a balanced investment program to meet
all requirements of every investor. No assurance can be given that the Fund 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 value of an investment in the Fund may sometimes decrease
instead of increase.
Portfolio Turnover
The Fund is expected to have a high rate of portfolio turnover relative to
other mutual funds, which may result in the Fund paying more brokerage
commissions and having higher amounts of realized investment gain subject to the
payment of taxes by shareholders.
Investments in Smaller Companies
A portion of the Fund"s assets will be invested in securities of smaller
companies. These smaller companies 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
the Fund to above average risk.
Investments in Other Mutual Funds
The following risks are related to the Fund"s possible investment in other
mutual funds:
Index and Leveraged Index Funds. The Fund may invest in "index funds" or
"leveraged index funds." If equity prices generally decline while the Fund is
invested in an index fund or funds, the Fund could experience substantial
losses. Such losses would be magnified to the extent the Fund is invested in a
leveraged index fund or funds.
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Bear and Leveraged Bear Funds. The Fund may also invest in "bear funds" or
"leveraged bear funds." If equity prices generally rise while the Fund is
invested in a bear fund or funds, the Fund could experience substantial losses.
Such losses would be magnified to the extent the Fund is invested in a leveraged
bear fund or funds.
Duplication of Expenses. An investor in the Fund will bear not only his
proportionate share of the expenses of the Fund but also indirectly similar
expenses of the underlying mutual funds in which the Fund invests. These
expenses consist of advisory fees, expenses related to the distribution of
shares, brokerage commissions, accounting, pricing and custody expenses,
printing, legal and audit expenses and other miscellaneous expenses.
Concentration. Through its investment in underlying funds, the Fund
indirectly may invest more than 25% of its assets in one industry. Such indirect
concentration of the Fund"s assets may subject the shares of the Fund to greater
fluctuation in value than would be the case in the absence of such
concentration.
Investment Restrictions. The Fund, together with any "affiliated persons"
(as defined in the 1940 Act) may purchase only up to 3% of the total outstanding
securities of any underlying fund. For this purpose, shares of underlying funds
held by private discretionary investment advisory accounts managed by the
Adviser or the Sub-Adviser will be aggregated with those held by the Fund.
Accordingly, when affiliated persons and other accounts managed by the Adviser
or the Sub-Adviser hold shares of any of the underlying funds, the Fund"s
ability to invest fully in shares of those funds is restricted, and the Adviser
must then in some instances, select alternative investments that would not have
been its first preference.
Redemption Limitations. In the event the Fund holds more than one percent
(1%) of an underlying fund"s shares, the 1940 Act provides that the underlying
fund will be obligated to redeem only 1% of the underlying fund"s outstanding
shares during any period of less than 30 days. To the extent that, due to this
restriction, the Fund is unable at its discretion to dispose of shares of an
underlying fund, the Fund would not be able to protect itself against a decline
in value of such shares during the period such restrictions remain in effect.
Any shares of an underlying fund held by the Fund in excess of 1% of the
underlying fund"s outstanding shares will be considered not readily marketable
securities that, together with other such securities, may not exceed 15% of the
Fund"s net assets.
PERFORMANCE
From time to time, the Fund 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 the 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.
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Performance may be compared to well-known indices such as the Dow Jones
Industrial Average or alternative investments such as Treasury Bills. Also, the
Fund 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 the Fund is contained in the
Fund"s Annual Report to Shareholders which may be obtained from the Fund without
charge.
HOW TO PURCHASE SHARES
By this Prospectus, the Fund is offering Class B Shares, Class C Shares and
Class D Shares. All shares are identical, except as to minimum investment
requirements and the services offered to and expenses borne by each class.
Class B Shares
Class B Shares may be purchased by any investor with no front-end sales
charge. Distribution and service (12b-1) fees are 1.00% per year. A minimum
initial investment of $1,000 is required to open a Class B Shares account with
subsequent minimum investments of $100. Approximately eight years after the date
of purchase, Class B Shares will convert automatically to [Class C Shares], thus
reducing future annual expenses.
You may be charged a contingent deferred sales charge ("CDSC") on shares
you sell within a certain time after you bought them, as described in the table
below. There is no CDSC on shares acquired through reinvestment of dividends.
The CDSC is based on the original purchase cost or the current market value of
the shares being sold, whichever is less. The CDSC is as follows:
Years after CDSC
purchase
1st year 5.00%
2nd year 4.00%
3rd year 3.00%
4th year 3.00%
5th year 2.00%
6th year 1.00%
After 6 years none
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For purposes of the CDSC, all purchases made during a calendar month are counted
as having been made on the first day of that month.
CDSC calculations are based on the number of shares involved, not on the
value of your account. To keep your CDSC as low as possible, each time you place
a request to sell shares we will first sell any shares in your account that
carry no CDSC. If there are not enough of these to meet your request, we will
sell those shares that have the lowest CDSC.
As long as one of the Distributors is notified at the time you sell, the
CDSC will generally be waived in the following cases:
o to make payments through certain systematic withdrawal plans
o to make certain distributions from a retirement plan
o because of shareholder death or disability
If you think you may be eligible for a CDSC waiver, contact your financial
representative or one of the Distributors, or consult the SAI (see the front
cover of this prospectus).
Class C Shares
Class C Shares may be purchased by any investor without a front-end or a
deferred sales charge. A minimum initial investment of $1,000 is required to
open a Class C Shares account with subsequent minimum investments of $100.
Investment minimums may be waived at the discretion of the Fund. Distribution
and service (12b-1) fees are .60% per year.
Class D Shares
Class D Shares may be purchased without a front-end or a deferred 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 Fund 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 Class D Shares may be waived
in the sole discretion of the Fund. There are no distribution or service fees.
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A minimum initial investment of $1,000,000 is required to open a Class D
Shares account with subsequent minimum investments of $10,000. Investment
minimums may be waived at the discretion of the Fund.
Shareholders Accounts
When a shareholder invests in the Fund, Maxus Information Systems Inc., the
Transfer Agent for the 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
OTI Special Opportunities Fund, mailed to: Maxus Information Systems Inc., The
Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114.
By Wire. In order to expedite the investment of funds, investors may advise
their bank or broker to transmit funds via Federal Reserve Wire System to: Star
Bank, N.A. Cinti/Trust, ABA #0420-0001-3, [F/F/C Account No. _____________ Maxus
Mutual Funds DDA ___________ (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 OTI Special Opportunities Fund should be sent,
along with the stub from a previous purchase or sale confirmation, to Maxus
Information Systems Inc., The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
By Wire. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
By Telephone. Investors may purchase shares up to an amount equal to 3 times the
market value of shares held in the shareholder"s account in the 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 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.
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Systematic Investment Plan
The Systematic Investment Plan permits investors to purchase shares of the
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 the Fund is the net asset
value per share of such class of the 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 the 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 the 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 the Fund is calculated by determining the value of the class"s
proportional interest in the assets of the 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 the Fund will be valued at their fair value as determined in good
faith by the Board of Trustees.
<PAGE>
Other Information Concerning Purchase of Shares.
The 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 the
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, the Fund may, in its discretion, require payment by wire or
cashier"s or certified check.
Shares of the Fund are offered, on a best efforts basis by the Fund"s
Distributors, Maxus Securities Corp ("MSC") (an affiliate of the Adviser) and
the Sub-Adviser, each 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 either Distributor. The address of MSC is The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114. The address
of the Sub-Adviser is 1346 S. Third Street, Louisville, Kentucky 40208.
HOW TO REDEEM SHARES
All shares of each class of the Fund offered for redemption will be
redeemed at the net asset value per share of such class of the Fund next
determined after receipt of the redemption request, if in good order, by the
Transfer Agent, minus (in the case of Class B Shares) any applicable CDSC.
Because the net asset value of the 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 Fund"s 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.
<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. The 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 Fund 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. The
Fund will not be liable for following instructions communicated by telephone
that the Fund reasonably believes to be genuine. If the 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 the 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.
The Fund reserves the right to take up to seven days to make payment if, in
the judgment of the Fund"s Investment Adviser, the Fund could be affected
adversely by immediate payment. In addition, the right of redemption for the
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 the 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 the Fund"s shareholders.
<PAGE>
Due to the high cost of maintaining accounts, the 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 Class B or Class C Shares or $1,000,000
in the case of Class D Shares. A shareholder will be given at least 30 days
written notice prior to any involuntary redemption and during such period will
be allowed to purchase additional shares to bring his account up to the
applicable minimum before the redemption is processed.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares of the 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 Fund.
Costs associated with a withdrawal plan are borne by the 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 the Fund are managed under the direction of the
Board Trustees of the Trust, as required by Ohio law. The day-to-day operations
of the 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 Fund has 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 the Fund. No officer, director or employee of MAM or any of its
affiliates receives any compensation from the Fund for serving as a Trustee or
officer of the Fund. The Fund pays each Trustee who is not an officer, director
or employee of MAM, the Sub-Adviser or any of their affiliates a fee for each
meeting attended and reimburses each such Trustee for travel and out-of-pocket
expenses.
Investment Adviser and Sub-Adviser.
The 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.
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"), an NASD broker/dealer through which shares of the 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. Mr. Barone is the
person primarily responsible for the management of the portfolio of the Fund. He
has been President of MAM since 1976.
<PAGE>
Subject to the supervision and direction of the Trustees, MAM, as
investment adviser, manages the Fund"s portfolio in accordance with the stated
policies of the Fund. Based upon recommendations of the Sub-Adviser as explained
below, MAM makes investment decisions for the 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 Fund
and, subject to the direction of the Trust"s 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.
The Adviser has retained Morton H. Sachs & Company (the "Sub-Adviser"),
1346 S. Third Street, Louisville, Kentucky 40208, as the Sub-Adviser of the
Fund. The Sub-Adviser obtains and performs fundamental research, performs
analysis of such research and makes recommendations to the Adviser with respect
to the purchase or sale of specific investments. A key component of the
fundamental research utilized by the Sub-Adviser is a proprietary stock price
indicator service provided to the Sub-Adviser by OTI Equity Research Inc.
("OTI"). All final investment decisions are made by the Adviser.
The Sub-Adviser is an investment management organization founded in 1974.
The Sub-Adviser is actively engaged in providing discretionary investment
management services to institutional and individual clients and is registered
under the Investment Advisors Act of 1940. The Sub-Adviser is also an NASD
broker-dealer through which shares of the Fund are being offered.
Advisory Fee, Sub-Advisory Fee and Other Expenses.
The Adviser receives from the Fund as compensation for its services to the
Fund a fee at the annual rate of 1% of the Fund"s average daily net assets. The
Adviser pays the Sub-Adviser a sub-advisory fee at the annual rate of .50% of
the Fund"s average daily net assets. The Adviser also reimburses the Sub-
Adviser for a portion of the amounts paid by the Sub-Adviser to obtain research
from OTI.
The Fund pays all expenses not assumed by the Adviser, including brokerage
fees and commissions, fees of Trustees not affiliated with MAM or the
Sub-Adviser, 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, and costs pursuant to the Fund"s plan of distribution described below.
<PAGE>
Distribution Plans
Under plans adopted by the Board of Trustees pursuant to Rule 12b-1 under
the 1940 Act (the "Plans"), the Fund pays each of its Distributors, MSC and the
Sub-Adviser, shareholder servicing and distribution fees at the annual rate of
1.00% for Class B Shares and .60% for Class C Shares of the average daily net
assets attributable to shares of that class which were sold through such
Distributor. Such fees will be used to reimburse MSC and the Sub-Adviser for
administration, shareholder services and distribution assistance, including, but
not limited to (i) compensation to securities dealers for selling Class B
Shares, (ii) compensation to securities dealers and other persons and
organizations ("Service Organizations") for providing distribution assistance
with respect to Class B and Class C Shares, (iii) compensation to Service
Organizations for providing administration, accounting and other shareholder
services with respect to Class B and Class C Shares, and (iv) otherwise
promoting the sale of Class B and Class C 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
and the Sub-Adviser under the Plans are payable without regard to actual
expenses incurred. Third parties also may charge fees to their clients who are
beneficial owners of Class B and Class C Shares in connection with their
clients" accounts. These fees would be in addition to any amounts which may be
received by them from MSC or the Sub-Adviser under the Plans.
Execution of Portfolio Transactions.
Orders for transactions in portfolio securities for the 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 (i) MSC, an affiliate of the Fund and of the Adviser and (ii)
the Sub-Adviser, but is not required to do so in either case.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The 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 the 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 Plans to Class B and Class C Shares, the
amount of dividends on Class D Shares will exceed the amount of dividends on
Class B and Class C Shares.
<PAGE>
The Fund will be treated as a separate entity for federal income tax
purposes. The 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 the Fund"s investments the sole
responsibility of the shareholders. Continued qualification requires the 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 the Fund must distribute for each calendar year an amount equal to the sum
of (1) at least 98% of its calendar year net ordinary income, (2) at least 98%
of the excess of its capital gains over capital losses (adjusted for certain
ordinary losses) realized during the one-year period ending December 31 of such
year, and (3) 100% of any undistributed net ordinary income and net capital
gains for previous years. A distribution will be treated as paid on December 31
of the calendar year if it is declared by the Fund in December of that year with
a record date in December and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received. The Fund will notify shareholders
of the tax status of dividends and distributions.
Any dividend or distribution paid by the 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.
The 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 the Fund in their particular
circumstances.
In accordance with the Code, the 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.
<PAGE>
GENERAL INFORMATION
The Fund is a diversified portfolio of Longboat Trust (the "Trust"). The
Trust (formerly named "OTI 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 September 15, 1998. 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. Each share represents an equal proportionate interest in an
investment portfolio 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 portfolio as are declared at the discretion of the
Trustees. All consideration received by the Trust for shares of one of the
portfolios and all assets in which such consideration is invested will belong to
that portfolio and will be subject to the liabilities relating thereto.
Presently, only a single series of shares has been authorized, that is, the
shares in the Fund.
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 Class B and Class C 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
series 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
series 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 series 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 series.
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 Fund 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 the Fund and that every agreement, obligation or instrument
entered into or executed by the Fund shall contain a provision to the effect
that the shareholders are not personally liable thereunder.
In order to provide the initial capital for the Trust, RMI and Sachs each
have purchased 5,000 Class D Shares of the Fund at $10.00 per share for a total
purchase price of $50,000 each. As long as RMI or Sachs 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.
<PAGE>
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, is the
custodian for the Fund"s securities and cash. Maxus Information Systems Inc.
("MIS"), The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland,
Ohio 44114, is the 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 Fund.
Benesch, Friedlander, Coplan & Aronoff LLP, 2300 BP America Building, 200
Public Square, Cleveland, Ohio 44114, is legal counsel to the Fund 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.
<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 OBJECTIVE AND MANAGEMENT TECHNIQUES 4
INVESTMENT POLICIES AND RESTRICTIONS 6
RISKS AND OTHER CONSIDERATIONS 7
PERFORMANCE 8
HOW TO PURCHASE SHARES 9
HOW TO REDEEM SHARES 13
SYSTEMATIC WITHDRAWAL PLAN 14
INVESTMENT MANAGEMENT 15
DIVIDENDS, DISTRIBUTIONS AND TAXES 17
GENERAL INFORMATION 18
<PAGE>
Investors are advised to read
this Prospectus and to retain
it for future reference.
OTI SPECIAL OPPORTUNITIES FUND
PROSPECTUS
April __, 1999
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
April __, 1999
OTI SPECIAL OPPORTUNITIES FUND
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
OTI Special Opportunities Fund (the "Fund") is a diversified portfolio of
Longboat Trust, an open-end management investment company. The investment
objective of the Fund is to obtain capital appreciation. This Statement of
Additional Information relating to the Fund is not a prospectus and should be
read in conjunction with the Fund"s prospectus. A copy of the Fund"s prospectus
can be obtained from one of the Fund"s distributors, Maxus Securities Corp, The
Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114,
telephone number (216) 687-1000 or Morton H. Sachs & Company, 1346 S. Third
Street, Louisville, Kentucky 40208, telephone number (502) 636-5282. 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 April __, 1999.
<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 6 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 8 How to Purchase Shares
Tax Status 8 Dividends, Distributions
and Federal Taxes
Distributors 9 Investment Management
Sales Compensation 10 How to Purchase Shares
Contingent Deferred Sales 11 How to Redeem Shares
Charges
Financial Statements 14 Not Applicable
<PAGE>
GENERAL INFORMATION AND HISTORY
OTI Special Opportunities Fund (the "Fund") is a diversified portfolio of
Longboat Trust (the "Trust"), an open-end management investment company. The
Fund seeks capital appreciation. The Trust (formerly named "OTI Trust") was
organized as a business trust under the laws of the State of Ohio pursuant to a
Declaration of Trust dated September 15, 1998.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are briefly described in
the Prospectus under the heading "Investment Objective And Management
Techniques." The 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 the Fund (as defined in the Prospectus
under "GENERAL INFORMATION"). The Fund may not:
1. Invest in securities of any registered closed-end investment
company, if immediately after such purchase or acquisition the Fund would
own more than 3% of the total outstanding voting stock of such company.
2. Invest more than 15% 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.
3. 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.
4. Borrow money except (a) from a bank, provided that immediately
after such borrowing there is an asset coverage of 300% for all borrowings
of the Fund; or (b) from a bank or other persons for temporary purposes
only, provided that such temporary borrowings are in an amount not
exceeding 5% of the Fund"s total assets at the time when the borrowing is
made.
5. 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.
6. 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.
<PAGE>
7. 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.
8. Issue senior securities. This limitation is not applicable to
activities that may be deemed to involve the issuance or sale of a senior
security by the Fund, provided that the Fund"s engagement in such
activities is consistent with or permitted by the Investment Company Act of
1940, as amended, the rules and regulations promulgated thereunder or
interpretations of the Securities and Exchange Commission or its staff.
The following investment policies are not fundamental. They may be changed
without shareholder approval. These non-fundamental policies are as follows:
1. The Fund will not invest more than 5% of its assets in repurchase
agreements. A repurchase agreement is an instrument under which the Fund
acquires ownership of an obligation but the seller agrees, at the time of
sale, to repurchase the obligation at a mutually agreed-upon time and
price. The resale price is in excess of the purchase price and reflects an
agreed-upon market rate unrelated to the interest rate on the purchased
security. The Fund will make payments for repurchase agreements only upon
physical delivery or evidence of book entry transfer to the account of the
custodian or bank acting as agent. In the event of bankruptcy or other
default of a seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying securities and losses including:
(a) possible decline in the value of the underlying securities during the
period while the Fund seeks to enforce its rights thereto; (b) possible
subnormal levels of income and lack of access to income during this period;
and (c) expenses of enforcing its rights.
2. The Fund will not 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.
3. The Fund will not 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.
4. The Fund will not purchase securities subject to restrictions on
disposition under the Securities Act of 1933.
5. The Fund will not 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).
<PAGE>
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.
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. Richard A. Barone is also a Trustee of Maxus Income Fund, Maxus
Equity Fund, Maxus Laureate Fund and MaxFund Trust, four other open-end
management investment companies.
Name and Address Position Held Principal
With the Fund Occupation(s)
During Past 5 Years
Richard A. Barone* Chairman, President of Maxus
The Tower at Erieview, Treasurer and Securities Corp
36th Fl Trustee (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)
Morton H. Sachs* Trustee President of Morton H.
1346 S. Third Street Sachs & Company
Louisville, Kentucky (investment advisor)
40208
Boyce F. Martin III Trustee Attorney, Brown, Todd
400 West Market & Heyburn, Louisville,
Street, Kentucky
32nd Floor
Louisville, Kentucky
40202
Raphael Owens Nystrand Trustee Dean, School of
PhD. Education, University
School of Education of Louisville
University of
Louisville
Louisville, Kentucky
40292-0001
Raj Aggarwal PhD. Trustee Professor of Finance
John Carroll John Carroll
University University
20700 North Park Blvd.
University Heights, OH
44118
Robert Fritz Trustee Retired
12613 West Lake Road
Vermillion, OH 44089
<PAGE>
Name and Address Position Held Principal
With the Fund Occupation(s)
During Past 5 Years
Robert J. Conrad Vice President Vice President,
The Tower at Erieview, Resource Management
36th Fl Inc.; formerly Vice
1301 East Ninth Street President, American
Cleveland, Ohio 44114 Income Plus
Robert W. Curtin Secretary Senior Vice President
The Tower at Erieview, and Secretary, Maxus
36th Fl Securities Corp;
1301 East Ninth Street formerly Executive
Cleveland, Ohio 44114 Vice President,
Roulston & Company,
Inc.
No officer, director or employee of Maxus Asset Management Inc. ("MAM" or
the "Investment Adviser") or of Morton H. Sachs & Company ("Sachs" or the "Sub-
Adviser") 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 or
Sachs will receive from the 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 CompensationTotal Compensation From All
Name of Trustee from Fund* Maxus Funds Paid to Trustees*
Richard A. Barone $ 0 $ 0
Morton H. Sachs $ 0 $ 0
Boyce F. Martin III $ 800 $ 800
Raphael Owens Nystrand $ 800 $ 800
Raj Aggarwal $ 800 $ 800
Robert Fritz $ 800 $ 800
*Estimated fees for current fiscal year.
<PAGE>
OWNERSHIP OF SHARES
As of April _____, 1999, 50% of the outstanding shares of the Fund were
owned by Resource Management, Inc. The Tower at Erieview, 36th Floor, 1301 East
Ninth Street, Cleveland, Ohio 44114 and 50% of the outstanding shares were owned
by Morton H. Sachs & Company, 1346 S. Third Street, Louisville, Kentucky 40208.
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. Resource Management, Inc. is controlled by Richard A.
Barone, the Chairman of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser and Sub-Adviser.
The information appearing in the Prospectus under the captions "Investment
Management - The Investment Adviser and Sub-Adviser" and "Investment Management
- - Advisory Fee, Sub-Advisory Fee and Other Expenses" is hereby
incorporated by reference.
The Investment Advisory and Administration Agreement (the "Advisory
Agreement") and Sub-Advisory Agreement each are subject to annual approval by
(i) the Board of Trustees or (ii) vote of a majority (as defined in the Act) of
the outstanding voting securities of the 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 or Sachs 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 Advisory Agreement and the Sub-
Advisory Agreement at a meeting held on April __, 1999. The Advisory Agreement
and the Sub-Advisory Agreement are terminable 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 or
Sachs, as the case may be. The Advisory Agreement and the Sub-Advisory Agreement
each will terminate automatically in the event of its assignment.
Distribution Plans.
The Fund has Plans of Distribution (the "Plans") pursuant to Rule 12b-1
under the Act, pursuant to which the Fund pays each of Maxus Securities Corp
("MSC") and the Sub-Adviser shareholder services and distribution fees at the
annual rate of 1.00% for Class B Shares and .60% for Class C Shares of average
net assets attributable to shares of that class which were sold through such
Distributor. See "Investment Management -- Distribution Plans" in the Fund"s
Prospectus.
The Trustees believe that the Plans will benefit the Fund and its holders
of Class B and Class C 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.
<PAGE>
Other Agreements.
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
the Fund"s Transfer, Redemption and Dividend Disbursing Agent. As such, MIS
maintains the Fund"s official record of shareholders and is responsible for
crediting dividends to shareholders" accounts. In consideration of such
services, the 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 the Fund is registered under such state"s securities laws, plus
out-of-pocket expenses. In addition, the 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 the 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 the Fund. In such capacity, McCurdy & Associates
C.P.A."s, Inc. periodically reviews the accounting and financial records of the
Fund and examines its financial statements.
BROKERAGE ALLOCATION
Decisions to buy and sell securities for the Fund are made by MAM subject
to the overall supervision and review by the Board of Trustees. Portfolio
security transactions for the Fund are effected by or under the supervision of
MAM.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. There is generally no stated commission in the case of securities
traded in the over-the-counter markets, but the price of those securities
includes an undisclosed commission or markup. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer"s markup or markdown.
In executing portfolio transactions and selecting brokers and dealers, it
is the Fund"s policy to seek the best overall terms available. The Advisory
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 Advisory Agreement authorizes MAM, in
selecting brokers or dealers to execute a particular transaction, and, in evalu
ating 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.
<PAGE>
The Board of Trustees periodically reviews the commissions paid by the 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, the Fund may
be the primary beneficiary of services received as a result of portfolio
transactions effected for other accounts. MAM"s fee under the Advisory 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 if the sale
is effected on a securities exchange. 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 commis
sions paid during the preceding quarter were in compliance with these
procedures.
The Fund"s Board of Trustees has determined that any portfolio transaction
for the Fund may be effected through MSC or the Sub-Adviser if, in MAM"s
judgment, the use of MSC or the Sub-Adviser is likely to result in price and
execution at least as favorable as those of other qualified brokers, and if, in
the transaction, MSC or the Sub-Adviser charges the Fund a commission rate
consistent with those charged by MSC or the Sub-Adviser to comparable
unaffiliated customers in similar transactions. Each quarter, the Trustees
review a report comparing the commissions charged the Fund by MSC and the Sub-
Adviser to industry norms for similar sized transactions both (i) with
proprietary research or other valuable services being provided and (ii) without
such services being provided. Based upon such review, the Board of Trustees
determines on a quarterly basis whether the commissions charged by MSC or the
Sub-Adviser meet the requirements of the Act. MSC and the Sub-Adviser will not
participate in commissions from brokerage given by the Fund to other brokers or
dealers. Over-the-counter purchases and sales are transacted through brokers and
dealers with principal market makers. The Fund will in no event effect principal
transactions with MSC or the Sub-Adviser in over-the-counter securities in which
MSC or the Sub-Advisor 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 or the Sub-Adviser may not execute
transactions for the 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 or the Sub-
Adviser. MSC or the Sub-Adviser 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. The Fund has been advised by MSC and the
Sub-Adviser that on most transactions, the floor brokerage generally constitutes
from 10% to 40% of the total commissions paid.
<PAGE>
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 the
Fund may also be made by those other accounts. When the 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 the Fund"s
shares appearing in the Prospectus under the captions "How To Purchase Shares"
and "How To Redeem Shares" is hereby incorporated by reference. See also "Sales
Compensation" and "Contingent Deferred Sales Charges" below.
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
The Fund will be treated as a separate entity for federal income tax
purposes. The Fund"s policy is to distribute at least annually, prior to the end
of the calendar year, dividends sufficient to satisfy excise tax requirements of
the Internal Revenue Service and to distribute annually, after the end of the
calendar year, any remaining net investment income and net realized capital
gains. Unless a shareholder elects otherwise, dividends and capital gains
distributions are paid in additional shares that are credited to the
shareholder"s account with such Fund.
<PAGE>
As a result of the application of the Distribution Plan to Class B and
Class C Shares only, the amount of dividends on Class D Shares will exceed the
amount of dividends on Class B and Class C Shares.
The 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 the Fund"s paying no taxes on
net income and net realized capital gains distributed to shareholders. To
qualify for this treatment, the 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 the 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.
<PAGE>
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.
DISTRIBUTORS
Shares of the Fund are offered on a best-efforts basis by Maxus Securities
Corp ("MSC") and the Sub-Adviser, each a registered NASD broker-dealer. MSC is a
wholly-owned subsidiary of RMI, which is controlled by Richard A. Barone,
Chairman of the Fund. The Sub-Adviser is controlled by Morton Sachs, a Trustee
of the Fund.
Pursuant to Distribution Agreements between the Trust and each of MSC and
the Sub-Adviser, each of MSC and the Sub-Adviser has agreed to hold itself
available to receive orders for the purchase of Shares of the Fund, to accept
such orders on behalf of the 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.
As authorized by the Plans described under "Investment Advisory and Other
Services - Distribution Plans," MSC and the Sub-Adviser receive certain
distribution fees for distributing and marketing the Class B and Class C Shares
of the Fund. Certain employees of MSC or the Sub-Adviser may receive
compensation under the Plans. See "Investment Advisory and Other Services."
The Distribution Agreements provide that each of MSC and the Sub-Adviser
shall arrange to sell the Fund"s Shares as agent for the Fund and may enter into
agreements with registered broker-dealers ("Selling Brokers") as it may select
to arrange for the sale of such shares. MSC and the Sub-Adviser are not
obligated to sell any certain number of shares.
SALES COMPENSATION
Each Distributor pays compensation to Selling Brokers that sell Class B
Shares of the Fund. Selling Brokers typically pass along a portion of this
compensation to your financial representative.
Compensation payments originate from 12b-1 fees and from contingent
deferred sales charges ("CDSCs") payable with respect to the Class B Shares,
each as detailed in the prospectus. The CDSC is paid to the Distributor through
which Class B Shares were originally sold. CDSC revenues will be used to
reimburse such Distributor for sales commissions paid by such Distributor.
Whenever you make an investment in the Fund, the Selling Broker receives a
commission, as described below. The Selling Broker also receives the first
year"s service fee at this time. Beginning with the second year after an
investment is made, the Selling Broker receives an annual service fee of 0.25%
of net assets attributable to Class B Shares owned by clients of such Selling
Broker. This fee is paid quarterly in arrears.
<PAGE>
Maximum commission First year service Maximum total
(% of offering fee compensation
price) (% of offering (% of offering
price) price)
3.75% 0.25% 4.00%
CONTINGENT DEFERRED SALES CHARGES
Class B Shares which are redeemed within six years of purchase will be
subject to a contingent deferred sales charge ("CDSC") at the rates set forth in
the Prospectus as a percentage of the dollar amount subject to the CDSC. The
charge will be assessed on an amount equal to the lesser of the current market
value or the original purchase cost of the Class B Shares being redeemed. No
CDSC will be imposed on increases in account value above the initial purchase
prices, including all shares derived from reinvestment of dividends or capital
gains distributions.
The amount of the CDSC, if any, will vary depending on the number of years
from the time of payment for the purchase of Class B Shares until the time of
redemption of such shares. Solely for the purpose of determining the number of
years from the time of any payment for the purchase of Class B Shares, all
payments during a month will be aggregated and deemed to have been made on the
first day of the month.
In determining whether a CDSC applies to a redemption, the calculation will
be determined in a manner that results in the lowest possible rate being
charged. It will be assumed that your redemption comes first from shares you
have held beyond the six-year CDSC redemption period or those you acquired
through dividend and capital gain reinvestment, and next from the shares you
have held the longest during the six-year period. When a share that has
appreciated in value is redeemed during the CDSC period, a CDSC is assessed only
on its initial purchase price.
When requesting a redemption for a specific dollar amount please indicate
if you require the proceeds to equal the dollar amount requested. If not
indicated, only the specified dollar amount will be redeemed from your account
and the proceeds will be less any applicable CDSC.
Example
You have purchased 100 shares at $10 per share. The second year after your
purchase, your investment"s net asset value per share has increased by $2 to
$12, and you have gained 10 additional shares through dividend reinvestment. If
you redeem 50 shares at this time your CDSC will be calculated as follows:
<PAGE>
Proceeds of 50 shares redeemed at $12 per share $ 600.00
(50 x 12)
*Minus Appreciation ($12 - $10) x 100 shares (200.00)
Minus proceeds of 10 shares not subject to CDSC
(dividend reinvestment) (120.00)
Amount subject to CDSC $ 280.00
*The appreciation is based on all 100 shares in the lot, not just the shares
being redeemed.
Proceeds from the CDSC are paid to the Distributor through which the shares
were sold and are used in whole or in part by such Distributor to defray its
expenses related to providing distribution-related services to the Fund in
connection with the sale of the Class B Shares, such as the payment of
compensation to Selling Brokers for selling Class B Shares.
Waiver of Contingent Deferred Sales Charge. The CDSC will be waived on
redemptions of Class B Shares in the circumstances defined below:
For all account types:
o Redemptions made pursuant to the Fund"s right to liquidate your account
if you own shares worth less than $1,000.
o Redemptions made under certain liquidation, merger or acquisition
transactions involving other investment companies or personal holding
companies.
o Redemptions due to death or disability. (Does not apply to trust
accounts unless trust is being dissolved.)
o Redemptions of Class B Shares made under a periodic withdrawal plan, or
redemptions for fees charged by planners or advisors for advisory
services, as long as your annual redemptions do not exceed 12% of your
account value, including reinvested dividends, at the time you
established your periodic withdrawal plan and 12% of the value of
subsequent investments (less redemptions) in that account at the time
you notify the Fund.
For Retirement Accounts (such as Traditional, Roth and Education IRAs, SIMPLE
IRA, SIMPLE 401(k), Rollover IRA, TSA, 457, 403(b), 401(k), Money Purchase
Pension Plan, Profit-Sharing Plan and other plans as described in the Internal
Revenue Code) unless otherwise noted.
o Redemptions made to effect mandatory distributions under the Internal
Revenue Code.
o Returns of excess contributions made to these plans.
<PAGE>
o Redemptions made to effect distributions to participants or
beneficiaries from employer sponsored retirement plans under section
401(a) of the Code (such as 401(k), Money Purchase Pension Plan and
Profit-Sharing Plan).
Please see the following matrix for reference.
<PAGE>
CDSC Waiver Matrix for Class B Shares
Type of 401(a) 403(b) 457 IRA, IRA Non-
Distribut Plan Rollover Retirement
ion (401(k),
MPP, PSP)
Death or Waived Waived Waived Waived Waived
Disability
Over 70 1/2 Waived Waived Waived Waived for 12% of account
mandatory value annually
distributions in periodic
or 12% of payments
account
value
annually
in periodic
payments
Between Waived Waived Waived Waived 12% of
59 1/2 for Life account
and Expectancy value
70 1/2 or 12% annually
of in
account periodic
value payments
annually
in
periodic
payments
Under Waived Waived Waived Waived 12% of
59 1/2 for for for for account
annuity annuity annuity annuity value
payments payments payments payments annually
(72t) or (72t) or (72t) or (72t) or in
12% of 12% of 12% of 12% of periodic
account account account account payments
value value value value
annually annually annually annually
in in in in
periodic periodic periodic periodic
payments payments payments payments
Loans Waived Waived N/A N/A N/A
Termination Not Not Not Not N/A
of Plan Waived Waived Waived Waived
Hardships Waived Waived Waived N/A N/A
Return Waived Waived Waived Waived N/A
of Excess
If you qualify for a CDSC waiver under one of these situations, you or your
financial representative must notify one of the Distributors at the time you
make your redemption. The waiver will be granted once the Distributor has
confirmed that you are entitled to the waiver.
<PAGE>
To The Shareholders and Trustees
Longboat Trust
We have audited the accompanying statement of assets and liabilities of Longboat
Trust (comprised of the OTI Special Opportunity Fund) as of March 29, 1999. 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 misstate- ment. 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 March 29, 1999, 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
Longboat Trust which is comprised of the OTI Special Opportunity Fund as of
March 29, 1999, in conformity with generally accepted accounting principles.
McCurdy & Associates CPA"s, Inc.
Westlake, Ohio 44145
March 29, 1999
<PAGE>
LONGBOAT TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 29, 1999
OTI Special
Opportunity Fund
ASSETS:
Cash in Bank $100,000
Total Assets 100,000
LIABILITIES:
Total Liabilities 0
NET ASSETS $100,000
NET ASSETS CONSIST OF:
Capital Paid In $100,000
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value:
Class B Shares 0
Class C Shares 0
Class D Shares 10,000
NET ASSET VALUE PER SHARE:
Class B Shares 0.00
Class C Shares 0.00
Class D Shares $10.00
OFFERING PRICE PER SHARE:
Class B Shares $10.00
Class C Shares $10.00
Class D Shares $10.00
MAXIMUM REDEMPTION PRICE PER SHARE:
Class B Shares $ 9.50
Class C Shares $10.00
Class D Shares $10.00
See Accountants" Audit Report
<PAGE>
LONGBOAT TRUST
NOTES TO FINANCIAL STATEMENTS
March 29, 1999
1. ORGANIZATION
Longboat 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 September 15, 1998. 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 one series of shares, for the OTI Special Opportunity Fund. The Fund
is offering Class B Shares, Class C Shares, and Class D Shares. Each class
of shares is identical, except as to minimum investment requirements and
the services offered to and expenses borne by each class.
The investment objective of the Fund is capital appreciation.
The Fund uses an independent custodian. No transactions other than those
relating to organizational matters and the sale of 10,000 Class D Shares
have taken place to date.
2. RELATED PARTY TRANSACTIONS
As of March 29, 1999, 50% of the outstanding shares are owned by Resource
Management, Inc. ("RMI") and 50% of the outstanding shares are owned by The
Sachs Company. 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. Resource Management, Inc.
is controlled by Richard A. Barone, the Chairman of the Fund. The Sachs
Company is controlled by Morton H. Sachs, a trustee of the Fund.
Maxus Asset Management, Inc. (MAM), the 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. The Sachs Company, the Fund"s sub-adviser, is registered under the
Investment Advisers Act of 1940.
As compensation for MAM"s services rendered to the Fund, such Fund pays a
fee, computed and paid monthly, at an annual rate of 1% of the average
value of the Fund"s daily net assets. MAM pays The Sachs Company 0.50% of
the Fund"s average daily net assets.
Maxus Information Systems, Inc. ("MIS") is the Fund"s Transfer, Redemption
and Dividend Distributing Agent. MIS has also entered into administration
and accounting services agreement with the Fund. MIS is a subsidiary of
RMI, the parent company of the Adviser.
The Fund has adopted a distribution and service plan pursuant to Rule 12b-1
under the Act. Maxus Securities Corp., a wholly owned subsidiary of
Resource Management, Inc., and The Sachs
<PAGE>
LONGBOAT TRUST
NOTES TO FINANCIAL STATEMENTS (CONT"D)
March 29, 1999
2. RELATED PARTY TRANSACTIONS
Company have entered into distribution agreements with the Fund to serve as
distributors of the Fund"s shares. Each distributor will be entitled to a
distribution fee equal to 0.60% of the Fund"s average daily net assets of
Class C shares which were sold through such distributor and 1.00% of the
average daily net assets of the Class B shares which were sold through such
distributor.
3. CAPITAL STOCK AND DISTRIBUTION
At March 29, 1999, an unlimited number of shares were authorized and paid
in capital amounted to $100,000 each for the OTI Special Opportunity Fund.
Transactions in capital stock were as follows:
OTI Special
Opportunity Fund
Shares Sold:
Class B Shares 0
Class C Shares 0
Class D Shares 10,000
Shares Redeemed:
Class B Shares 0
Class C Shares 0
Class D Shares 0
Net Increase:
Class B Shares 0
Class C Shares 0
Class D Shares 10,000
Shares Outstanding:
Class B Shares 0
Class C Shares 0
Class D Shares 10,000
<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 March 29, 1999,
together with Report of Independent Certified Public Accountants
dated March 29, 1999.
(b) Exhibits:
Exhibit
Number Description
1 Registrant"s Declaration of Trust.*
2 Registrant"s By-Laws.*
3 None.
4 None.
5(a) Investment Advisory and Administration Agreement.
5(b) Sub-Advisory Agreement
6(a) Distribution Agreement with Maxus Securities Corp.
6(b) Distribution Agreement with Morton H. Sachs &
Company.
6(c) Form of Soliciting Dealer Agreement
7 None.
8 Custody Agreement.
9(a) Administration Agreement.*
9(b) Accounting Services Agreement.*
10 Opinion and consent.**
<PAGE>
11 Consent of Independent Auditors.
12 None.
13 Subscription Agreements between the Trust and
(a) Resource Management Inc. and (b) Morton H.
Sachs & Company
15(a) Plan of Distribution pursuant to Rule 12b-1
(Class B Shares).
15(b) Plan of Distribution pursuant to Rule 12b-1
(Class C Shares).
27 Financial Data Schedule.
*Previously filed.
**To be filed by amendment.
Item 25. Persons Controlled by or Under Common Control with Registrant.
The Fund, together with Maxus Income Fund, Maxus Equity Fund, Maxus
Laureate Fund and MaxFund Trust (four other investment companies), may
be deemed to be under common control on the basis of the fact that
Richard A. Barone, the Chairman of the Fund, is also Chairman of the
other four investment companies.
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 were two record
holders 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:
<PAGE>
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.
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, Maxus
Laureate Fund and MaxFund Trust.
(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
<PAGE>
The following information is provided with respect to each director and
officer of Morton H. Sachs & Company.
Name and Principal Positions & Offices Positions & Offices
Business Address* with Underwriter with Registrant
Morton H. Sachs President Trustee
Royden P. Durham Vice President N/A
Charles M. O"Neill Vice President N/A
Christopher A. Nunnelley Vice President N/A
Jennifer Sachs Dobbins Vice President N/A
Thomas A. Douglas Jr. Vice President N/A
* The principal business address of each such person is 1346 S. Third
Street, Louisville, Kentucky 40208.
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.
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, and (2) 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.
<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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cleveland, State of Ohio, on the 29th day of March,
1999.
LONGBOAT 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 and Trustee March 29, 1999
(Principal Executive Officer,
Financial Officer and Accounting
Officer)
/s/ Morton H. Sachs
Morton H. Sachs Trustee March 29, 1999
Exhibit 5(a)
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
________________, 1999
Maxus Asset Management Inc.
The Tower at Erieview - 36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Dear Sirs:
OTI Trust, an Ohio business trust (the "Trust"), herewith confirms its
agreement with you ("MAM") as follows:
The Trust desires to employ its capital by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
in its Prospectus as from time to time in effect, copies of which have been or
will be submitted to MAM, and in such manner and to such extent as may from time
to time be approved by the Board of Trustees of the Trust. The Trust desires to
employ MAM to act as the investment adviser and administrator for its investment
portfolio OTI Special Opportunities Fund and such other investment portfolios as
the Trust may from time to time create (individually, a "Fund" or collectively,
the "Funds").
Subject to the supervision and approval of the Board of Trustees, MAM will
provide investment management of each Fund's portfolio in accordance with each
Fund's investment objective and policies as stated in its most recent Prospectus
delivered to MAM, upon which MAM shall be entitled to rely. In connection
therewith, MAM will provide investment research and supervision of each Fund's
investments and conduct a continuous program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. MAM will furnish to the
Trust such statistical information with respect to the investments which each
Fund may hold or contemplate purchasing as the Trust may reasonably request. The
Board wishes to be kept in touch with important developments materially
affecting its portfolio and shall expect MAM, on its own initiative, to furnish
to the Board from time to time such information as MAM may believe appropriate
for this purpose.
In providing investment management services to the Trust, MAM shall give
primary consideration to securing the most favorable price and efficient
execution. In so doing, MAM may consider the financial responsibility, research
and investment information and other services provided by brokers or dealers who
may effect or be a party to any such transaction or other transactions to which
other clients of MAM may be a party. The Trust recognizes that it is desirable
that MAM have access to supplemental investment and market research and security
and economic analyses provided by brokers and that such brokers may execute
brokerage transactions at a higher cost to the Trust than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and efficient execution. Therefore, MAM is authorized to pay higher
brokerage commissions for the purchase and sale of securities for each Fund to
brokers who provide such research and analyses, subject to review by the Board
of Trustees from time to time with respect to the extent and continuation of
this practice. It is understood that the services provided by such brokers may
be useful to MAM in connection with its services to other clients.
<PAGE>
On occasions when MAM deems the purchase or sale of a security to be in the
best interest of each Fund as well as other clients, MAM, to the extent
permitted by applicable laws and regulations, may aggregate the securities to be
sold or purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by MAM in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such other clients.
MAM shall provide the Trust with such office facilities and clerical and
administrative services necessary to manage the business affairs of the Trust.
In addition, MAM will prepare and file various returns, reports and
registrations required by Federal and state law and respond to shareholder
communications. Subject to the direction of the Board of Trustees, MAM shall be
responsible for the overall management of the business affairs of the Trust.
MAM shall exercise its best judgment in rendering to the Trust the services
described above and the Trust agrees as an inducement to MAM's undertaking the
same that MAM shall not be liable hereunder for any mistake of judgment or in
any other event whatsoever, provided that nothing herein shall be deemed to
protect or purport to protect MAM against any liability to the Trust or to its
security holders to which MAM would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties
hereunder, or by reason of MAM's reckless disregard of its obligations and
duties hereunder.
MAM shall, at its own expense, maintain such staff and employ or retain
such personnel and consult with such other persons as it shall from time to time
determine to be necessary or useful to the performance of its obligations under
this Agreement. Without limiting the generality of the foregoing, the staff and
personnel of MAM shall be deemed to include persons employed or otherwise
retained by MAM to furnish statistical and other factual data, advice regarding
economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
MAM may desire. MAM shall, as agent for the Trust, maintain the Trust's records
and books of account (other than those maintained by the Fund's transfer agent,
registrar, custodian and other agencies), including records of portfolio
transactions. All such books and records so maintained shall be the property of
each Fund and, upon request therefore, MAM shall surrender to such Fund such of
the books and records so requested.
<PAGE>
MAM shall bear the cost of rendering the investment management, supervisory
and administrative services to be performed by it under this Agreement, and
shall, at its own expense, pay the compensation of the officers and employees,
if any, of the Trust who are employees of MAM, and provide such office space,
facilities and equipment, such clerical help and accounting, data processing,
bookkeeping and internal auditing services as the Trust shall reasonably require
in the conduct of its business and the cost of telephone service, heat, light,
power and other utilities provided to the Trust. The Trust shall bear all other
expenses to be incurred in the operation of the Trust, including charges and
expenses of any registrar, custodian, stock transfer and dividend disbursing
agent; brokerage commissions; taxes; engraving and printing stock certificates,
if any; registration costs of the Trust and its shares under Federal and state
securities laws; the cost and expense of printing, including typesetting, and
distributing prospectuses of the Trust and supplements thereto to the Trust's
shareholders; all expenses of shareholders' and trustees' meetings and of
preparing, printing and mailing proxy statements and reports to shareholders;
fees and travel expenses of trustees' or members of any advisory board or
committee who are not employees of MAM or any corporate affiliate of MAM; all
expenses incident to any dividend, withdrawal or redemption options; charges and
expenses of any outside service used for pricing of each Fund's portfolio
securities; fees and expenses of legal counsel, including counsel to the
trustees who are not interested persons of the Trust or of MAM and independent
accountants; membership dues of industry associations; interest on Fund
borrowings; postage; liability insurance premiums on property or personnel
(including officers and trustees) of the Trust which inure to their benefit; and
extraordinary expenses (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification relating thereto).
In consideration of services rendered pursuant to this Agreement, the Trust
will pay MAM on the first business day of each month a fee at the annual rate of
one percent (1%) of the average value of each Fund's daily net assets. Net asset
value shall be computed at least once each business day. The fee for the period
from the date the initial registration statement of the Fund is declared
effective by the Securities and Exchange Commission to the end of the month
during which such initial registration shall have been declared effective by the
Securities and Exchange Commission shall be prorated according to the proportion
which such period bears to the full monthly period, and upon any termination of
this Agreement before the end of any month, such fee for such part of a month
shall be prorated according to the proportion which such period bears to the
full monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to MAM, the value of each
Fund's net assets shall be computed in the manner specified in such Fund's
Prospectus for the computation of the value of such net assets.
The Trust understands that MAM now acts and will continue to act as
investment adviser to various fiduciary or other managed accounts, and the Trust
has no objection to MAM's so acting. In addition, it is understood that the
persons employed by MAM to assist in the performance of its duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of MAM or any affiliate of MAM to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
The Trust understands that MAM now acts and may in the future act as
investment adviser to one or more other investment companies, and the Trust has
no objection to MAM's so acting, provided that when two or more companies
managed by MAM have available funds for investment in money market instruments,
available money market investments will be allocated in accordance with a
formula believed to be equitable to each company. It is recognized that in some
cases this procedure may adversely affect the size of the position obtainable
for the Funds.
<PAGE>
MAM shall not be liable for any error of judgment or mistake of law or for
any loss suffered by any Fund in connection with the matters to which this
Agreement relates, except for a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement. Any
person, even though also an officer, partner, employee, or agent of MAM who may
be or become an officer, trustee, employee or agent of the Trust, shall be
deemed, when rendering services to the Trust or acting on any business of the
Trust, to be rendering such services to, or acting solely for, the Fund and not
as an officer, partner, employee, or agent or one under the control or direction
of MAM even though paid by it.
This Agreement shall become effective on the date hereof and shall continue
in force for a period of two (2) years and from year to year thereafter,
provided such continuance is specifically approved at least annually by (i) the
Board of Trustees or (ii) as to any Fund, by a vote of a majority (as defined in
the Investment Company Act of 1940, as amended) of such Fund's outstanding
voting securities; provided that in either event the continuance is also
approved by a majority of the Trustees who are not "interested persons" (as
defined in said Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable without penalty, at any time by (i) the Board of Trustees on 60 days
written notice to MAM or (ii) as to any Fund, by vote of holders of a majority
of such Fund's shares on 60 days written notice to MAM or by (iii) MAM. This
Agreement will also terminate automatically in the event of its assignment (as
defined in said Act).
Neither the Trustees, shareholders, officers, employees or agents of the
Trust shall be personally liable upon, nor shall resort be had to their private
property for the satisfaction of, any obligations of the Trust hereunder, and
MAM shall look solely to the property of the Trust for the satisfaction of any
claim hereunder.
If the foregoing is in accordance with your understanding, kindly so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
OTI TRUST
By:__________________________________
Accepted: Richard A. Barone, Chairman
MAXUS ASSET MANAGEMENT INC.
By:______________________________
Exhibit 5(b)
SUB-ADVISORY AGREEMENT
, 1999
Morton H. Sachs & Company
1346 S. Third Street
Louisville, Kentucky 40208
Ladies and Gentlemen:
This will confirm the agreement by and among Maxus Asset Management Inc.
(the "Adviser"), Longboat Trust (the "Trust") and Morton H. Sachs & Company (the
"Sub-Adviser") as follows:
1. The Trust is a registered open-end management investment company
currently consisting of one investment portfolio, OTI Special Opportunities Fund
(the "Fund"). The Trust engages in the business of investing and reinvesting the
assets of the Fund in the manner and in accordance with the investment objective
and restrictions specified in the Trust"s Registration Statement, as amended
from time to time (the "Registration Statement"), filed by the Trust under the
Investment Company Act of 1940 (the "Company Act") and the Securities Act of
1933.
2. The Trust has engaged the Adviser to manage the investing and
reinvesting of the Fund"s assets and to provide the advisory services specified
elsewhere in the Investment Advisory and Administration Agreement (the "Advisory
Agreement") between the Trust and the Adviser, subject to the overall
supervision of the Board of Trustees of the Trust (the "Board of Trustees").
3. The Adviser hereby employs the Sub-Adviser to perform for the Fund
certain advisory services and the Sub-Adviser hereby accepts such employment.
Each business day, the Sub-Adviser shall furnish the Adviser with
recommendations with respect to the purchase and sale of investments for the
Fund in accordance with (i) the investment objectives, policies and restrictions
of the Fund as set forth in the Registration Statement and (ii) any other
limitations or requirements established by the Board of Trustees from time to
time as communicated in writing to the Sub-Adviser. The Sub-Adviser shall also
furnish such additional reports and information as the Adviser or the Board of
Trustees shall reasonably request. The Adviser shall retain the responsibility
for determining whether the recommended transactions shall be executed and for
effecting such transactions.
4. The Adviser shall be responsible for the fees paid to the Sub-Adviser
for its services. The Sub-Adviser agrees that it shall have no claim against the
Trust or the Fund respecting compensation under this Agreement. In consideration
of the services to be rendered by the Sub-Adviser under this Agreement, the
Adviser shall pay the Sub-Adviser on the first business day of each month a fee
at the annual rate of .50 percent of the average value of the Fund"s daily net
assets. Net asset value will be calculated in the manner set forth in the
Advisory Agreement.
<PAGE>
5. It is understood that to assist the Sub-Adviser in performing its duties
under this Agreement, Sub-Adviser will contract to obtain a proprietary stock
price indicator service from OTI Research Inc. ("OTI"). The Adviser agrees to
reimburse Sub-Adviser for a percentage of the amounts paid by Sub- Adviser to
OTI, such percentage to be agreed upon from time to time by Adviser and
Sub-Adviser. Any such contract between Sub-Adviser and OTI (i) shall be subject
to the prior approval of Adviser which approval shall not be unreasonably
withheld (ii) shall provide that the Adviser is a third-party beneficiary of
such contract and that the Adviser shall succeed to all rights of Sub-Adviser
under such contract if this Sub-Advisory Agreement is terminated for any reason,
(iii) shall continue in effect for so long as the Adviser is the investment
adviser to the Fund, and (iv) shall provide that all reports and analyses which
presently are or may in the future be produced by OTI which OTI and the Adviser
jointly determine are relevant to the Fund"s portfolio shall be transmitted to
the Adviser and the Sub-Adviser at least one hour before such reports and
analyses are transmitted to any other party and that such reports and analyses
shall not be transmitted to any other party before 10:00 a.m.
Cleveland time.
6. Sub-Adviser represents, warrants and agrees as follows:
(a) Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
(b) Sub-Adviser shall maintain all licenses and registrations
necessary to perform its duties hereunder in good order.
(c) Sub-Adviser shall conduct its responsibilities under this
Agreement at all times in conformance with the Advisers Act, the
Company Act, and any other applicable state and/or
self-regulatory organization regulations.
(d) Sub-Adviser shall be responsible for providing the personnel,
office space and equipment necessary to fulfill its obligations
under this Agreement and, except as specifically set forth in
Paragraph 5, shall pay all expenses incurred by it in fulfilling
such obligations.
7. The Adviser and the Trust understand that Sub-Adviser now acts and will
continue to act as investment adviser to various fiduciary or other managed
accounts, and the Adviser and the Trust have no objection to Sub-Adviser so
acting. In addition, it is understood that the persons employed by Sub-Adviser
to assist in the performance of its duties hereunder will not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of Sub-Adviser or any affiliate of Sub-Adviser to engage in
and devote time and attention to other businesses or to render services of
whatever kind or nature. The Adviser and the Trust understand that Sub-Adviser
now acts and may in the future act as investment adviser to one or more other
investment companies, and the Advisor and the Trust have no objection to
Sub-Adviser so acting.
8. Sub-Adviser shall exercise its best judgment in rendering to the Adviser
and the Trust the services described above and the Adviser and the Trust agree
as an inducement to Sub-Adviser"s undertaking the same that Sub-Adviser shall
not be liable hereunder for any mistake of judgment or in any other event
whatsoever, provided that nothing herein shall be deemed to protect or purport
to protect Sub-Adviser against any liability to the Adviser or the Trust or to
the Trust"s security holders to which Sub-Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder, or by reason of Sub-Adviser"s reckless disregard of its
obligations and duties hereunder.
<PAGE>
9. Sub-Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Adviser or the Fund in connection with the
matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
partner, employee, or agent of Sub-Adviser who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust, to be rendering
such services to, or acting solely for, the Trust and not as an officer,
partner, employee, or agent or one under the control or direction of Sub-Adviser
even though paid by it.
10. This Agreement shall become effective on the date hereof and shall
continue in force for so long as the Adviser is the investment adviser to the
Trust, provided that this Agreement shall continue in force for a period of more
than two years from the date hereof only so long as such continuance is
specifically approved at least annually by (i) the Board of Trustees or (ii) by
a vote of a majority (as defined in the Company Act) of the Fund"s outstanding
voting securities; 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 Company Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable without penalty, at any time by (i) the Board of
Trustees or (ii) by vote of holders of a majority of the Fund"s outstanding
voting securities on 60 days written notice to Sub-Adviser. This Agreement will
also terminate automatically in the event of its assignment (as defined in the
Company Act).
11. Neither Adviser nor Sub-Adviser shall take any action which would cause
a termination of the Advisory Agreement or this Agreement without the consent of
the other, which consent shall not be unreasonably withheld.
12. Adviser and Sub-Adviser shall for all purposes herein be deemed to be
independent contractors and, unless expressly authorized to do so, shall have no
authority to act for or represent the Trust, the Fund, or each other in any way,
or in any way be deemed an agent for the Trust, the Fund, or each other.
13. This contract shall be governed by and construed in accordance with the
laws of the State of Ohio.
14. Neither the Trustees, shareholders, officers, employees or agents of
the Trust shall be personally liable upon, nor shall resort be had to their
private property for the satisfaction of, any obligations of the Trust, and the
Adviser and the Sub-Adviser shall look solely to the property of the Trust for
the satisfaction of any claim.
<PAGE>
If the foregoing correctly sets forth the agreement by and among the Trust,
the Adviser and the Sub-Adviser, please so indicate by signing and returning to
the Company the enclosed copy hereof.
Very truly yours,
MAXUS ASSET MANAGEMENT INC.
By:
Richard A. Barone, President
Accepted and Agreed:
MORTON H. SACHS & COMPANY
By:
Morton H. Sachs, President
LONGBOAT TRUST
By:
Richard A. Barone, Chairman
Exhibit 6(a)
DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the _____ day of , 1999 by and between LONGBOAT
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 Class B Shares, Class C
Shares and Class D Shares. The term "Shares" as used herein shall refer to
shares of each class of each Fund of the Trust. It is also acknowledged that
this appointment is not exclusive, and that the Trust may appoint other persons
as distributors for its Shares.
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.
<PAGE>
(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.
(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.
<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.
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.
<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. Term 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.
This Agreement shall terminate automatically in the event of its assignment
(as defined by the 1940 Act).
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.
<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. 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.
LONGBOAT TRUST
By:
Richard A. Barone, Chairman
MAXUS SECURITIES CORP
By:
Exhibit 6(b)
DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the ______ day of , 1999 by and between LONGBOAT
TRUST (the "Trust"), a business trust established and existing under the laws of
the State of Ohio, and MORTON H. SACHS & COMPANY (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 Class B Shares, Class C
Shares and Class D Shares. The term "Shares" as used herein shall refer to
shares of each class of each Fund of the Trust. It is also acknowledged that
this appointment is not exclusive, and that the Trust may appoint other persons
as distributors for its Shares.
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.
<PAGE>
(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.
(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.
<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.
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.
<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. Term 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.
This Agreement shall terminate automatically in the event of its assignment
(as defined by the 1940 Act).
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 Morton H. Sachs & Company, 1346 South
Third Street, Louisville, Kentucky 40208 or (ii) to the Trust at OTI Trust, The
Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114.
<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 "OTI" 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
"OTI" 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 "OTI".
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.
LONGBOAT TRUST
By:
Richard A. Barone, Chairman
MORTON H. SACHS & COMPANY
By:
Exhibit 6(c)
OTI SPECIAL OPPORTUNITIES FUND
SOLICITING DEALER AGREEMENT
Date ___________, 19____
Maxus Securities Corp. ("the Distributor") is a principal distributor of
the shares of beneficial interest (the "securities") of OTI Special
Opportunities Fund (the "Fund"). You represent that you are a member of the
National Association of Securities Dealers, Inc. (the "NASD"), and, accordingly,
we invite you to become a non-exclusive soliciting dealer to distribute the
securities of the Fund and you agree to solicit orders for the purchase of the
securities on the following terms. Securities are offered pursuant to the Fund"s
prospectus and statement of additional information, as such prospectus and
statement of additional information may be amended from time to time. To the
extent that the prospectus or statement of additional information contains
provisions that are inconsistent with the terms of this Agreement, the terms of
the prospectus or statement of additional information shall be controlling.
OFFERINGS
1. You agree to abide by the Rules of Fair Practice of the NASD and to all
other rules and regulations that are now or may become applicable to
transactions hereunder.
2. As a principal distributor of the Fund, we shall have full authority to
take such action as we deem advisable in respect of all matters pertaining to
the distribution. This offer of shares of the Fund to you is made only in such
jurisdictions in which we may lawfully sell such shares of the Fund.
3. You shall not make any representation concerning the Fund or its
securities except those contained in the then-current prospectus or statement of
additional information for the Fund.
4. With the exception of listings of product offerings, you agree not to
furnish or cause to be furnished to any person or display, or publish any
information or materials relating to the Fund (including, without limitation,
promotional materials, sales literature, advertisements, press releases,
announcements, posters, signs and other similar materials), except such
information and materials as may be furnished to you by the Distributor or the
Fund. All other materials must receive written approval by the Distributor
before distribution or display to the public. Use of all approved advertising
and sales literature materials is restricted to appropriate distribution
channels.
5. You are not authorized to act as our agent. Nothing shall constitute you
as a syndicate, association, joint venture, partnership, unincorporated
business, or other separate entity or otherwise partners with us, but you shall
be liable for your proportionate share of any tax, liability or expense based on
any claim arising from the sale of shares of the Fund under this Agreement. We
shall not be under any liability to you, except for obligations expressly
assumed by us in this Agreement and liabilities under Section 11(f) of the
Securities Act of 1933, and no obligations on our part shall be implied or
inferred herefrom.
<PAGE>
6. DEALER COMPLIANCE/SUITABILITY (CLASS B, CLASS C and CLASS D SHARES) -
The Fund is being offered with three classes of shares. Refer to the Fund
prospectus for availability and details. It is essential that the following
minimum compliance/suitability standards be adhered to in offering and selling
shares of the Fund to investors. All dealers offering shares of the Fund and its
associated persons agree to comply with these general suitability and compliance
standards.
SUITABILITY
With two classes of shares of the Fund available to individual investors
(Class B and Class C), it is important that each investor purchases not only the
fund that best suits his or her investment objective but also the class of
shares that offers the most beneficial distribution financing method for the
investor based upon his or her particular situation and preferences. Fund share
recommendations and orders must be carefully reviewed by you and your registered
representatives in light of all the facts and circumstances, to ascertain that
the class of shares to be purchased by each investor is appropriate and
suitable. These recommendations should be based on several factors, including
but not limited to:
(A) the amount of money to be invested initially and over a period of
time;
(B) the current level of deferred sales load imposed by the Fund on Class
B Shares;
(C) the period of time over which the client expects to retain the
investment;
(D) any other relevant circumstances.
COMPLIANCE
Your supervisory procedures should be adequate to assure that an
appropriate person review and approves transactions entered into pursuant to
this Soliciting Dealer Agreement for compliance with the foregoing standards. In
certain instances, it may be appropriate to discuss the purchase with the
registered representatives involved or to review the advantages and
disadvantages of selecting one class of shares over another with the client. The
Distributor will not accept orders for Class B Shares in any Fund from you for
accounts maintained in street name. Trades for Class B Shares will only be
accepted in the name of the shareholder.
7. CLASS D SHARES - The Fund is offered with Class D Shares. Refer to each
Fund prospectus for availability and details. Class D shares are designed for
institutional investors and are sold without any sales charge or 12b-1 fee.
<PAGE>
SALES
8. Orders for securities received by you from investors will be for the
sale of the securities at the public offering price, which will be the net asset
value per share as determined in the manner provided in the Fund"s prospectus,
as now in effect or as amended from time to time, next after receipt by us (or
the Fund"s transfer agent) of the purchase application and payment for the
securities (the "Public Offering Price"). The procedures relating to the
handling of orders shall be subject to our instructions which we will forward
from time to time to you. All orders are subject to acceptance by us, and we
reserve the right in our sole discretion to reject any order.
In addition to the foregoing, you acknowledge and agree to the initial and
subsequent investment minimums, which may vary from year to year, as described
in the then-current prospectus for the Fund.
9. You agree to sell the securities only (a) to your customers at the
public offering price then in effect, or (b) back to the Fund at the currently
quoted net asset value.
10. We shall pay a commission on sales of Class B Shares, as set forth in
the Fund"s then-current prospectus or statement of additional information, on
all purchases made by your customers pursuant to orders accepted by us (a) where
an order for the purchase of securities is obtained by a registered
representative in your employ and remitted to us promptly by you, (b) where a
subsequent investment is made to an account established by a registered
representative in your employ or (c) where a subsequent investment is made to an
account established by a broker/dealer other than you and is accompanied by a
signed request from the account shareholder that your registered representative
receive the commission for that investment and/or for subsequent investments
made in such account. If for any reason a purchase transaction is reversed, you
shall not be entitled to receive or retain any part of the commission received
by you in connection with any such purchase. We may withhold and retain from the
amount of the commission due you a sum sufficient to discharge any amount due
and payable by you to us.
11. The Fund has adopted a plan under Investment Company Act Rule 12b-1
with respect to the Class B Shares as described in the prospectus. To the extent
you provide distribution and marketing services in the promotion of the sale of
shares of the Fund, including furnishing services and assistance to your
customers who invest in and own shares of the Fund and including, but not
limited to, answering routine inquiries regarding the Fund and assisting in
changing distribution options, account designations and addresses, you may be
entitled to receive compensation from us as set forth in Schedule A hereto. All
compensation, including 12b-1 fees, shall be payable to you only to the extent
that funds are received and in the possession of the Distributor.
12. We will advise you as to the jurisdictions in which we believe the
shares have been qualified for sale under the respective securities or "blue
sky" laws of such jurisdictions, but we assume no responsibility or obligations
as to your right to sell the shares of the Funds in any state or jurisdiction.
<PAGE>
13. Orders may be placed through:
Maxus Securities Corp.
The Tower at Erieview
36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
SETTLEMENT
14. Settlements for wire orders shall be made within five business days
after our acceptance of your order to purchase shares of the Fund. Certificates,
when requested, will be delivered to you upon payment in full of the sum due for
the sale of the shares of the Fund. If payment is not so received or made, we
reserve the right forthwith to cancel the sale, or, at our option, to liquidate
the shares of the Fund subject to such sale at the then prevailing net asset
value, in which latter case you will agree to be responsible for any loss
resulting to the Fund or to us from your failure to make payments as aforesaid.
15. The parties to this agreement hereby agree to indemnify and hold
harmless each other, their officers and directors, and any person who is or may
be deemed to be a controlling person of each other, from and against any claims,
damages, liabilities or expenses (including reasonable fees of counsel), whether
joint or several, to which any such person or entity may become subject insofar
as such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon, (a) any untrue statement or alleged
untrue statement of material fact, or any omission or alleged omission to state
a material fact made or omitted by it herein, or (b) any willful misfeasance or
gross misconduct by it in the performance of its duties and obligations
hereunder.
16. NSCC INDEMNITY - SHAREHOLDER AND HOUSE ACCOUNTS - In consideration of
the Distributor liquidating, exchanging, and/or transferring unissued shares of
the Fund for your customers without the use of original or underlying
documentation supporting such instructions (e.g., a signed stock power or
signature guarantee), you hereby agree to indemnify the Distributor and the Fund
against any losses, including reasonable attorney"s fees, that may arise from
such liquidation, exchange, and/or transfer of unissued shares upon your
direction. This indemnification shall apply only to the liquidation, exchange
and/or transfer of unissued shares in shareholder and house accounts executed as
wire orders transmitted via NSCC"s Fund/SERVsystem. You represent and warrant to
the Fund and the Distributor that all such transactions shall be properly
authorized by your customers.
The indemnification in this Section 16 shall not apply to any losses
(including attorney"s fees) caused by a failure of the Distributor or the Fund
to comply with any of your instructions governing any of the above-transactions,
or any negligent act or omission of the Distributor or the Fund, or any of their
directors, officers, employees or agents. All transactions shall be settled upon
your confirmation through NSCC transmission to the Distributor.
<PAGE>
The Distributor or you may revoke the indemnity contained in this Section
16 upon prior written notice to each of the other parties hereto, and in the
case of such revocation, this indemnity agreement shall remain effective as to
trades made prior to such revocation.
MISCELLANEOUS
17. We will supply to you at our expense additional copies of the
prospectus and statement of additional information for the Fund and any printed
information supplemental to such material in reasonable quantities upon request.
18. Any notice to you shall be duly given if mailed or telegraphed to you
at your address as registered from time to time with the NASD.
19. Miscellaneous provisions, if any, are attached hereto and incorporated
herein by reference.
20. This agreement, which shall be construed in accordance with the laws of
the State of Ohio, may be terminated by any party hereto at any time upon
written notice.
Name of Organization
By:
Authorized Signature of Soliciting Dealer
Please Print or Type Name
Title
Print or Type Address
Telephone Number
Date:
In order to service you efficiently, please provide the following information on
your Mutual Funds Operations Department:
OPERATIONS MANAGER:
ORDER ROOM MANAGER:
<PAGE>
OPERATIONS ADDRESS:
TELEPHONE: FAX:
TO BE COMPLETED BY:
MAXUS SECURITIES CORP.
BY:
TITLE
DEALER NUMBER:
<PAGE>
SCHEDULE A
TO THE SOLICITING DEALER AGREEMENT
RELATING TO SHARES OF OTI SPECIAL OPPORTUNITIES FUND
FIRST YEAR SERVICE FEES
Pursuant to the Distribution Plan applicable to the Class B Shares of the
Fund, the Distributor will advance to you a First Year Service Fee related to
the purchase of Class B Shares of the Fund sold by your firm. This Service Fee
will be compensation for your personal service and/or the maintenance of
shareholder accounts ("Customer Servicing") during the twelve-month period
immediately following the purchase of such shares, in the amount not to exceed
.25 of 1% of net assets invested in Class B Shares of the Fund, as the case may
be, owned by your customers.
SERVICE FEE SUBSEQUENT TO THE FIRST YEAR
Pursuant to the Distribution Plan applicable to the Class B shares of the
Fund, the Distributor will pay you quarterly, in arrears, a Service Fee
commencing at the end of the twelve month period immediately following the
purchase of Class B Shares sold by your firm, for Customer Servicing, in an
amount not to exceed .25 of 1% of the average daily net assets attributable to
the Class B Shares of the Fund owned by your customers, provided your firm has
under management with the Fund combined average daily net assets for the
preceding quarter of no less than $100,000.
Exhibit 11
McCurdy & Associates
CPA"s, Inc.
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 Longboat Trust of
all references to our firm included in or made a part of this Amendment.
McCurdy & Associates CPA"s, Inc.
March 29, 1999
Exhibit 13(a)
RESOURCE MANAGEMENT INC.
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
March 29, 1999
Longboat Trust
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Re: Purchase Agreement for Initial Capital
Gentlemen:
We are purchasing from you today 5,000 Class D Shares of OTI Special
Opportunities Fund, a portfolio of Longboat Trust (formerly named "OTI Trust"),
an Ohio business trust (the "Trust"), at a price of $10.00 per share, for an
aggregate price of $50,000, 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.
Very truly yours,
RESOURCE MANAGEMENT INC.
By: ______________________________
Richard A. Barone, President
Exhibit 13(b)
MORTON H. SACHS & COMPANY
1346 South Third Street
Louisville, Kentucky 40208
March 29, 1999
Longboat Trust
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Re: Purchase Agreement for Initial Capital
Gentlemen:
We are purchasing from you today 5,000 Class D Shares of OTI Special
Opportunities Fund, a portfolio of Longboat Trust (formerly named "OTI Trust"),
an Ohio business trust (the "Trust"), at a price of $10.00 per share, for an
aggregate price of $50,000, 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.
Very truly yours,
MORTON H. SACHS & COMPANY
By: ______________________________
Morton H. Sachs, President
Exhibit 15(a)
OTI SPECIAL OPPORTUNITIES FUND
Distribution Plan
Class B Shares
Article I. The Plan
This Distribution Plan (the "Plan") sets forth the terms and conditions
under which Longboat Trust (the "Trust"), on behalf of OTI Special Opportunities
Fund (the "Fund"), a series portfolio of the Trust, on behalf of its Class B
shareholders, will, after the effective date hereof, pay certain amounts to
Maxus Securities Corp. and Morton H. Sachs & Company (individually a
"Distributor" and collectively, the "Distributors") in connection with the
provision by the Distributors of certain services to the Fund and its Class B
shareholders, as set forth herein. Certain of such payments by the Fund may,
under Rule 12b-1 of the Securities and Exchange Commission, as from time to time
amended (the "Rule"), under the Investment Company Act of 1940, as amended (the
"Act"), be deemed to constitute the financing of distribution by the Fund of its
shares. This Plan describes all material aspects of such financing as
contemplated by the Rule and shall be administered and interpreted, and
implemented and continued, in a manner consistent with the Rule.
Article II. Distribution and Service Expenses
The Fund shall pay to the Distributors a fee in the amount specified in
Article III hereof. Such fee may be spent by the Distributors on any activities
or expenses primarily intended to result in the sale of Class B Shares of the
Fund, including, but not limited to the payment of Distribution Expenses (as
defined below) and Service Expenses (as defined below). Distribution Expenses
include but are not limited to, (i) compensation to selected broker-dealers for
selling Class B Shares, (ii) compensation to securities dealers and other
persons and organizations ("Service Organizations") for providing distribution
assistance with respect to Class B Shares, and (iii) otherwise promoting the
sale of Class B 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 under the Plan are payable without regard
to actual expenses incurred.
Service expenses include payments made to, or on account of, Service
Organizations and account executives of selected broker-dealers (including
affiliates of the Distributors) and others who furnish personal and shareholder
account maintenance services to Class B shareholders of the Fund.
<PAGE>
Article III. Amount of Expenditures
To cover Distribution Expenses and Service Expenses, the Fund shall pay to
each Distributor a fee at the annual rate of 1.00% of the average daily net
asset value (determined in accordance with the Fund"s prospectus as from time to
time in effect) of the Class B Shares of the Fund which were sold through such
Distributor, provided that the portion of such fees used to cover Service
Expenses shall not exceed an annual rate of 0.25% of the average daily net asset
value of the Class B Shares of the Fund which were sold through such
Distributor. Shares sold by the Fund in response to unsolicited calls by
investors will be allocated so that 50% of such shares will be deemed to have
been sold through each Distributor. Such expenditures shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trustees shall
determine.
Article IV. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Trust, the Fund and
its investment adviser, Maxus Asset Management, Inc. (the "Adviser"), shall bear
the respective expenses to be borne by them under the Investment Advisory and
Administration Agreement of even date herewith as from time to time continued
and amended (the "Advisory Agreement"), and under the Fund"s current prospectus
as it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Trust and the Fund shall not, directly or indirectly, engage in
financing any activity which is primarily intended to or should reasonably
result in the sale of shares of the Fund.
Article V. Approval by Trustees, etc.
This Plan shall not take effect until it has been approved, together with
any related agreements, by votes, cast in person at a meeting called for the
purpose of voting on this Plan or such agreements, of a majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Act or the rules and regulations thereunder) of (a) all of the Trustees of the
Fund and (b) those Trustees of the Fund who are not "interested persons" of the
Fund, as such term may be from time to time defined under the Act, and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Independent Trustees").
Article VI. Continuance
This Plan and any related agreements shall continue in effect for so long
as such continuance is specifically approved at least annually in advance in the
manner provided for the approval of this Plan in Article V.
Article VII. Information
Each Distributor shall furnish the Fund and its Trustees quarterly, or at
such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Services Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Trustees may request.
<PAGE>
Article VIII. Termination
This Plan may be terminated (a) at any time by vote of a majority of the
Trustees, a majority of the Independent Trustees, or a majority of the Fund"s
outstanding voting Class B Shares, or (b) as to either Distributor, by such
Distributor on 60 days" notice in writing to the Fund.
Article IX. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at
any time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the Fund"s then
outstanding Class B Shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
Article X. Amendments
This Plan may not be amended to increase the maximum amount of the fees
payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class B Shares of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article V.
Article XI. Limitation of Liability
The names "Longboat Trust" and "OTI Special Opportunities Fund" are the
designations of the Trustees under the Declaration of Trust, dated September 15,
1998, as amended from time to time. The Declaration of Trust has been filed with
the Secretary of State of the State of Ohio. The obligations of the Trust and
the Fund are not personally upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund"s property shall be bound. No series of the Trust
shall be responsible for the obligations of any other series of the Trust.
IN WITNESS WHEREOF, the Trust has executed this Distribution Plan effective
as of the ____ day of March, 1999.
LONGBOAT TRUST - OTI MAXUS SECURITIES CORP.
SPECIAL OPPORTUNITIES FUND
By By
Richard A. Barone, Richard A. Barone,
Chairman President
<PAGE>
MORTON H. SACHS & COMPANY
By
Morton H. Sachs,
President
Exhibit 15(b)
OTI SPECIAL OPPORTUNITIES FUND
Distribution Plan
Class C Shares
Article I. The Plan
This Distribution Plan (the "Plan") sets forth the terms and conditions
under which Longboat Trust (the "Trust"), on behalf of OTI Special Opportunities
Fund (the "Fund"), a series portfolio of the Trust, on behalf of its Class C
shareholders, will, after the effective date hereof, pay certain amounts to
Maxus Securities Corp. and Morton H. Sachs & Company (individually a
"Distributor" and collectively, the "Distributors") in connection with the
provision by the Distributors of certain services to the Fund and its Class C
shareholders, as set forth herein. Certain of such payments by the Fund may,
under Rule 12b-1 of the Securities and Exchange Commission, as from time to time
amended (the "Rule"), under the Investment Company Act of 1940, as amended (the
"Act"), be deemed to constitute the financing of distribution by the Fund of its
shares. This Plan describes all material aspects of such financing as
contemplated by the Rule and shall be administered and interpreted, and
implemented and continued, in a manner consistent with the Rule.
Article II. Distribution and Service Expenses
The Fund shall pay to the Distributors a fee in the amount specified in
Article III hereof. Such fee may be spent by the Distributors on any activities
or expenses primarily intended to result in the sale of Class C Shares of the
Fund, including, but not limited to the payment of Distribution Expenses (as
defined below) and Service Expenses (as defined below). Distribution Expenses
include but are not limited to, (i) compensation to securities dealers and other
persons and organizations ("Service Organizations") for providing distribution
assistance with respect to Class C Shares, and (ii) otherwise promoting the sale
of Class C 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 under the Plan are payable without regard to actual
expenses incurred.
Service expenses include payments made to, or on account of, Service
Organizations and account executives of selected broker-dealers (including
affiliates of the Distributors) and others who furnish personal and shareholder
account maintenance services to Class C shareholders of the Fund.
Article III. Amount of Expenditures
To cover Distribution Expenses and Service Expenses, the Fund shall pay to
each Distributor a fee at the annual rate of .60% of the average daily net asset
value (determined in accordance with the Fund"s prospectus as from time to time
in effect) of the Class C Shares of the Fund which were sold through such
Distributor, provided that the portion of such fees used to cover Service
Expenses shall not exceed an annual rate of 0.25% of the average daily net asset
value of the Class C Shares of the Fund which were sold through such
Distributor. Shares sold by the Fund in response to unsolicited calls by
investors will be allocated so that 50% of such shares will be deemed to have
been sold through each Distributor. Such expenditures shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trustees shall
determine.
<PAGE>
Article IV. Expenses Borne by the Fund
Notwithstanding any other provision of this Plan, the Trust, the Fund and
its investment adviser, Maxus Asset Management Inc. (the "Adviser"), shall bear
the respective expenses to be borne by them under the Investment Advisory and
Administration Agreement of even date herewith as from time to time continued
and amended (the "Advisory Agreement"), and under the Fund"s current prospectus
as it is from time to time in effect. Except as otherwise contemplated by this
Plan, the Trust and the Fund shall not, directly or indirectly, engage in
financing any activity which is primarily intended to or should reasonably
result in the sale of shares of the Fund.
Article V. Approval by Trustees, etc.
This Plan shall not take effect until it has been approved, together with
any related agreements, by votes, cast in person at a meeting called for the
purpose of voting on this Plan or such agreements, of a majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Act or the rules and regulations thereunder) of (a) all of the Trustees of the
Fund and (b) those Trustees of the Fund who are not "interested persons" of the
Fund, as such term may be from time to time defined under the Act, and have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Independent Trustees").
Article VI. Continuance
This Plan and any related agreements shall continue in effect for so long
as such continuance is specifically approved at least annually in advance in the
manner provided for the approval of this Plan in Article V.
Article VII. Information
Each Distributor shall furnish the Fund and its Trustees quarterly, or at
such other intervals as the Fund shall specify, a written report of amounts
expended or incurred for Distribution Expenses and Services Expenses pursuant to
this Plan and the purposes for which such expenditures were made and such other
information as the Trustees may request.
Article VIII. Termination
This Plan may be terminated (a) at any time by vote of a majority of the
Trustees, a majority of the Independent Trustees, or a majority of the Fund"s
outstanding voting Class C Shares, or (b) as to either Distributor, by such
Distributor on 60 days" notice in writing to the Fund.
<PAGE>
Article IX. Agreements
Each agreement with any person relating to implementation of this Plan
shall be in writing, and each agreement related to this Plan shall provide:
(a) That, with respect to the Fund, such agreement may be terminated at
any time, without payment of any penalty, by vote of a majority of the
Independent Trustees or by vote of a majority of the Fund"s then
outstanding Class C Shares.
(b) That such agreement shall terminate automatically in the event of its
assignment.
Article X. Amendments
This Plan may not be amended to increase the maximum amount of the fees
payable by the Fund hereunder without the approval of a majority of the
outstanding voting Class C Shares of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article V.
Article XI. Limitation of Liability
The names "Longboat Trust" and "OTI Special Opportunities Fund" are the
designations of the Trustees under the Declaration of Trust, dated September 15,
1998, as amended from time to time. The Declaration of Trust has been filed with
the Secretary of State of the State of Ohio. The obligations of the Trust and
the Fund are not personally upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees or agents of
the Fund, but only the Fund"s property shall be bound. No series of the Trust
shall be responsible for the obligations of any other series of the Trust.
IN WITNESS WHEREOF, the Trust has executed this Distribution Plan effective
as of the ____ day of March, 1999.
LONGBOAT TRUST - OTI MAXUS SECURITIES CORP.
SPECIAL OPPORTUNITIES FUND
By By
Richard A. Barone, Richard A. Barone,
Chairman President
MORTON H. SACHS & COMPANY
By
Morton H. Sachs,
President
<PAGE>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
<PAGE>
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<S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 100000
<INVESTMENTS-AT-VALUE> 100000
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<PER-SHARE-NAV-BEGIN> 10
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</TABLE>
