SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 3 [X]
Post-Effective Amendment No. ___ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [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.
McDonald, Hopkins, Burke & Haber Co. L.P.A.
2100 Bank One Center
600 Superior Avenue, E.
Cleveland, Ohio 44114
Approximate date of proposed public offering: As soon as practicable after the
effective date of the Registration Statement.
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MAXUS DARWINIAN FUND
MAXUS FINANCIAL CONSOLIDATION FUND
MAXUS FOUNDERS FUND
MAXUS INTERNATIONAL EQUITY FUND
OTI FUND
Investor Shares
Institutional Shares
Maxus Darwinian Fund has an investment objective of obtaining capital
appreciation. The Fund pursues this objective by investing primarily in equity
securities of companies whose business involves the development and use of
technology.
Maxus Financial Consolidation Fund has an investment objective of obtaining
capital appreciation. The Fund pursues this objective by investing primarily in
equity securities of financial institutions, insurance companies, asset
management companies and broker/dealers.
Maxus Founders Fund has an investment objective of obtaining the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in
equity securities, including common stock, preferred stock, securities
convertible into common stock or preferred stock, shares of real estate
investment trusts, and common and preferred shares of closed-end investment
companies (also known as "closed-end funds") having portfolios consisting
primarily of either income-producing securities or equity securities.
Maxus International Equity Fund has an investment objective of obtaining capital
appreciation. The Fund pursues this objective by investing primarily in foreign
equity securities and closed end investment companies whose portfolios consist
primarily of foreign securities.
OTI Fund has an investment objective of obtaining capital appreciation. Under
normal circumstances, at least 80% of the value of the Fund's total assets
(other than money market investments) will consist of equity securities.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
PROSPECTUS/ _____________, 2000
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MAXUS DARWINIAN FUND
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the Fund is to obtain capital appreciation.
Principal Investment Strategies
Maxus Darwinian Fund pursues its investment objective by investing
primarily in equity securities of companies whose business involves the
development and use of technology. Equity securities consist of common stock and
securities convertible into common stock. The Fund emphasizes a "growth" style
of investing. In deciding which securities to buy and which to sell, the Adviser
will give primary consideration to investing in companies which the Adviser
believes offer the potential for accelerated earnings or revenue growth, using a
fundamental analysis of each company's financial condition, industry position
and market and economic factors.
The Adviser will periodically review the securities held by the Fund.
Securities in the Fund's portfolio will be ranked according to revenue growth
and market performance, among other criteria. A security will sold when, based
upon these factors, the security is found to be inferior to the other securities
in the Fund's portfolio.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
Principal Risks
Volatility. The value of securities in Maxus Darwinian Fund's portfolio
will go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Growth Stock Risks. There is no assurance that the Fund's "growth"
style of investing will achieve its desired result. In fact, this Fund may
decline in value as a result of emphasizing this style of investing. "Growth"
stocks generally are more expensive relative to their earnings or assets than
other types of stocks. Consequently, these stocks are more volatile than other
types of stocks. In particular, growth stocks are very sensitive to changes in
their earnings. Negative developments in this regard could cause a stock to
decline dramatically, resulting in a decrease in this Fund's share price.
Technology Sector Risks. Because of its narrow sector focus, the Fund's
performance is closely tied to, and affected by, the sector in which it invests.
Companies in the same or similar sectors are often faced with the same
obstacles, issues or regulatory burdens, and their securities may react
similarly and move in unison to these and other market conditions. Competitive
pressures and changing demand may have a significant effect on the financial
condition of companies in the technology sector. Such companies spend heavily on
research and development and are especially sensitive to the risk of product
obsolescence. As a result of these factors, shares of the Fund may be more
volatile than shares of mutual funds that do not have a narrow sector focus.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
and financial conditions. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
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Unit Investment Trusts. The Fund may invest in shares of certain unit
investment trusts ("UITs") traded on the American Stock Exchange. Each UIT
represents a proportionate interest, in substantially the same weighting, in the
stocks that make up a particular stock index. The Fund may also invest in
similar securities representing proportionate interests in stocks making up
certain other stock indices. Due to the nature of UITs and similar securities,
the Fund could experience substantial losses on such investments during periods
of declining equity prices.
Investments in Other Mutual Funds. The following risks are related
to the Fund's investment in other mutual funds:
$ Index and Leveraged Index Funds. The Fund may invest in Aindex
funds@ or Aleveraged 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.
$ 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. However, the Fund
will not invest in shares of underlying mutual funds which
charge sales loads and the Advisor will not receive any
distribution (12b-1) fees in respect of the sale of such
shares to the Fund.
$ 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.
Portfolio Turnover. Maxus Darwinian Fund is not restricted with regard
to portfolio turnover and will make changes in its investment portfolio 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 _____%. 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.
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MAXUS FINANCIAL CONSOLIDATION FUND
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the Fund is to obtain capital appreciation.
Principal Investment Strategies
Maxus Financial Consolidation Fund pursues its investment objective by
investing primarily in equity securities of financial institutions, insurance
companies, asset management companies and broker/dealers. The Fund emphasizes a
"value" style of investing. In deciding which securities to buy and which to
sell, the Adviser will give primary consideration to fundamental factors. For
example, securities having relatively low ratios of share price to book value,
net asset value, earnings and cash flow will generally be considered attractive
investments. Additionally, the Adviser will give secondary consideration to the
possibility that a particular institution could be the target of an acquiring
financial services company.
The equity securities in which the Fund invests may consist of common
stocks, preferred stocks and debt securities that are convertible into common
stocks or preferred stocks.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
Principal Risks.
Volatility. The value of securities in the Fund's portfolio will go up
and down. The Fund's portfolio will reflect changes in the prices of individual
portfolio securities or general changes in securities valuations. Consequently,
the Fund's share price may decline and you could lose money.
Sector Risks. Because of its narrow sector focus, Maxus Financial
Consolidation Fund's performance is closely tied to, and affected by, the sector
in which it invests. Companies in the same or similar sectors are often faced
with the same obstacles, issues or regulatory burdens, and their securities may
react similarly and move in unison to these and other market conditions. As a
result of these factors, shares of the Fund may be more volatile than shares of
mutual funds that do not have a narrow sector focus.
Investments in Financial Industry. The concentration of the Fund's
investments in the banking and financial institution industry will subject to
the Fund to risks in addition to those that apply generally to equity
investments, including the risk that legislative and regulatory developments may
significantly affect the banking and financial institution industry as a whole
and subject the Fund to greater market fluctuations than a fund that does not
concentrate in a particular industry. For example, federal and state banking
laws and regulations may restrict the ability of banks or financial institutions
to compete geographically or engage in certain activities. In addition, the
Federal Reserve may adjust interest rates, and adversely affect the price of a
security of a bank or financial institution.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
and financial conditions. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
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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 ______%. 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.
Debt Securities Risks. The Fund's portfolio will also be exposed to the
following additional risks in connection with its investments in debt securities
Prices of debt securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest
rates rise, prices of debt securities fall. The net asset value of
the Fund may decrease during periods of rising interest rates.
An issuer of debt securities may default (fail to repay interest
and principal when due). If an issuer defaults or the risk of such
default is perceived to have increased, the Fund will lose all or
part of its investment. The net asset value of the Fund may fall
during periods of economic downturn when such defaults or risk of
defaults increase.
Securities rated below investment grade, also known as junk
bonds, generally entail greater risks than investment grade
securities. For example, their prices are more volatile, their
values are more negatively impacted by economic downturns, and
their trading market may be more limited.
<PAGE>
MAXUS FOUNDERS FUND
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the Fund is to obtain the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk.
Principal Investment Strategies
Maxus Founders Fund pursues its investment objective by investing
primarily in equity securities, including common stock, preferred stock,
securities convertible into common stock or preferred stock, shares of real
estate investment trusts, and common and preferred shares of closed-end
investment companies (also known as "closed-end funds") having portfolios
consisting primarily of either income-producing securities or equity securities.
The Fund may also invest in debt securities, principally in securities rated BBB
or better by Standard & Poor's Corporation rating service, known as investment
grade quality securities. To a lesser degree, the Fund may also invest in
securities rated below investment grade quality, sometimes referred to as "junk
bonds," if the Advisor believes that there is an opportunity for exceptional
capital gains. Please refer to Appendix A of this Prospectus for a description
of these ratings.
The Fund emphasizes a "value" style of investing. In deciding which
securities to buy and which to sell, the Adviser will give primary consideration
to fundamental factors. For example, securities having relatively low ratios of
share price to book value, net asset value, earnings and cash flow will
generally be considered attractive investments.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
Principal Risks.
Volatility. The value of securities in the Fund's portfolio will go up
and down. The Fund's portfolio will reflect changes in the prices of individual
portfolio securities or general changes in securities valuations. Consequently,
the Fund's share price may decline and you could lose money.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company=s activities and financial condition and in overall market
and financial conditions. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
Debt Securities Risks. The Fund's portfolio will also be exposed to the
following additional risks in connection with its investments in debt securities
and in closed-end funds which invest primarily in debt securities:
Prices of debt securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest
rates rise, prices of debt securities fall. The net asset value of
the Fund may decrease during periods of rising interest rates.
An issuer of debt securities may default (fail to repay interest
and principal when due). If an issuer defaults or the risk of such
default is perceived to have increased, the Fund will lose all or
part of its investment. The net asset value of the Fund may fall
during periods of economic downturn when such defaults or risk of
defaults increase.
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Securities rated below investment grade, also known as junk
bonds, generally entail greater risks than investment grade
securities. For example, their prices are more volatile, their
values are more negatively impacted by economic downturns, and
their trading market may be more limited.
Closed-End Funds. The closed-end funds in which the Fund invests
typically pay an advisory fee for the management of their portfolios, as well as
other expenses. Therefore, the investment by the Fund in closed-end funds often
results in a duplication of advisory fees and other expenses, thereby resulting
in a lower return for the Fund than would be the case in the absence of such
duplication.
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. The Fund may make investments for
very short periods, including day trades, and therefore it is estimated that the
portfolio turnover rate the portfolio turnover rate of the Fund is much higher
than that of most other funds with similar objectives. The higher the portfolio
turnover rate, the greater will be the custodial transaction charges borne by
the Fund. Also, a high rate of portfolio turnover will 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.
<PAGE>
MAXUS INTERNATIONAL EQUITY FUND
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the Fund is to obtain capital appreciation.
Principal Investment Strategies
Maxus International Equity Fund pursues its investment objective by
investing at least 80% of its assets in (1) equity securities (consisting of
common or preferred stocks) which both (a) trade on markets in countries other
than the United States ("U.S.") and (b) are issued by companies domiciled in
countries other than the U.S. or derive at least 50% of either their revenues or
pre-tax income from activities outside of the U.S. (collectively, "Foreign
Securities"), (2) securities representing underlying Foreign Securities such as
American Depositary Receipts ("ADRs"), and (3) shares of closed-end and no-load
open-end investment companies (i.e. mutual funds) that invest in Foreign
Securities. The Fund may invest up to 20% of its assets in domestic securities.
The Fund emphasizes a "value" style of investing. In deciding which
securities to buy and which to sell, the Adviser will give primary consideration
to fundamental factors. For example, securities having relatively low ratios of
share price to book value, net asset value, earnings and cash flow will
generally be considered attractive investments.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
Principal Risks.
Volatility. The value of securities in the Fund's portfolio will go up
and down. The Fund's portfolio will reflect changes in the prices of individual
portfolio securities or general changes in securities valuations. Consequently,
the Fund's share price may decline and you could lose money.
Foreign Securities Risks. The Fund invests, directly or through ADRs or
investment companies primarily in Foreign Securities, which can carry higher
returns but involve more risks than those associated with domestic investments.
Foreign investments may be affected favorably or unfavorably by changes in
currency rates and exchange control regulations. There may be less information
available about a foreign company than about a U.S. company and foreign
companies may not be subject to reporting standards and requirements comparable
to those applicable to U.S. companies. Foreign securities may not be as liquid
as U.S. securities. Securities of foreign companies may involve greater market
risk than securities of U.S. companies, and foreign brokerage commissions and
custody fees are generally higher than in the United States. Investments in
foreign securities may also be subject to local economic or political risks,
political instability and possible nationalization of issuers. All of these
factors can make foreign investments, especially those in emerging markets, more
volatile and potentially less liquid, reducing the Adviser's ability to buy and
sell shares.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company=s activities and financial condition and in overall market
and financial conditions. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
Investments in Other Mutual Funds. The following risks are related to
the Fund's investment in other mutual funds:
<PAGE>
$ 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. However, the Fund
will not invest in shares of underlying mutual funds which
charge sales loads and the Advisor will not receive any
distribution (12b-1) fees in respect of the sale of such
shares to the Fund.
$ 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.
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 ____%. 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.
<PAGE>
OTI FUND
RISK/RETURN SUMMARY
Investment Objective
The investment objective of the Fund is to obtain capital appreciation.
Principal Investment Strategies
The Fund pursues its objective by investing, under normal conditions,
at least 80% of its total assets in the securities described below.
Equity Securities. 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 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. 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 ration,
price-to-sales ratio, cash flow and insider transactions) to select for
investment securities which the Adviser believes represent excellent value. A
portion of the Fund's assets will be invested in securities of smaller
companies.
Mutual Funds. The Fund may invest 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 (Aindex funds@), (ii) generally correspond to a specified multiple of the
performance of a recognized stock price index (Aleveraged index funds@), (iii)
generally correspond to the inverse (opposite) of the performance of a
recognized stock price index (Abear funds@) or (iv) generally correspond to a
specified multiple of the inverse (opposite) of the performance of a recognized
stock price index (Aleveraged bear funds@).
<PAGE>
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.
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.
SPDRs. In addition, the Fund may invest in Standard & Poor=s Depository
Receipts (ASPDRs@), 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.
Money Market Investments and Debt Securities. Under normal conditions,
the Fund also may invest up to 20% of its total assets in cash, high-quality
commercial paper, other money market instruments and money market mutual funds
(collectively, Amoney market investments@), investment grade corporate debt
securities, U.S. Government Securities and U.S. Government agency securities. In
addition, when the Adviser believes that market conditions warrant a temporary
defensive position, the Fund may invest without limitation in money market
investments. The taking of such a temporary defensive position may adversely
affect the ability of the Fund to achieve its investment objective.
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.
Principal Risks.
Volatility. The value of securities in the Fund's portfolio will go up
and down. The Fund's portfolio will reflect changes in the prices of individual
portfolio securities or general changes in securities valuations. Consequently,
the Fund's share price may decline and you could lose money.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company=s activities and financial condition and in overall market
and financial conditions. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
Investments in Other Mutual Funds and SPDRs. The following risks are
related to the Fund's investment in other mutual funds and SPDRs:
<PAGE>
$ Index and Leveraged Index Funds. The Fund may invest in Aindex
funds@ or Aleveraged 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.
$ Bear and Leveraged Bear Funds. The Fund may also invest in
Abear funds@ or Aleveraged 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. However, the Fund
will not invest in shares of underlying mutual funds which
charge sales loads and the Advisor will not receive any
distribution (12b-1) fees in respect of the sale of such
shares to the Fund.
$ 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.
$ SPDRs. The Fund may invest in SPDRs and similar securities.
Due to the nature of SPDRs and similar securities, the Fund
could experience substantial losses on such investments during
periods of declining equity prices.
<PAGE>
FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and hold
shares of a Fund.
Annual Fund Operating Expenses (expenses that are deducted from Fund).
<TABLE>
<CAPTION> Maxus
Maxus Darwinian Maxus Financial Maxus Founders International
Fund Consolidation Fund Fund Equity Fund OTI Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investor Insti- Investor Insti- Investor Insti- Investor Insti- Investor Insti
Class tutional Class tutional Class tutional Class tutional Class tution
Class Class Class Class Class
Management Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution
and/or Service 0.60% 0.00% 0.60% 0.00% 0.60% 0.00% 0.60% 0.00% 0.60% 0.00%
(12b-1) Fees
Other Expenses 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Total Annual Fund 2.85% 2.25% 2.85% 2.25% 2.85% 2.25% 2.85% 2.25% 2.85% 2.25%
Operating Expenses
</TABLE>
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 $20.00 as of the
date of this Prospectus (subject to change without notice).
Examples: These Examples are intended to help you compare the cost of investing
in a Fund with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Examples also assume that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Investor Shares 1 year 3 years 5 years 10 years
------ ------- ------- --------
Maxus Darwinian Fund
Maxus Financial Consolidation Fund
Maxus Founders Fund
Maxus International Equity Fund
OTI Fund
Institutional Shares
Maxus Darwinian Fund
Maxus Financial Consolidation Fund
Maxus Founders Fund
Maxus International Equity Fund
OTI Fund
<PAGE>
HOW TO PURCHASE SHARES
By this Prospectus, each Fund is offering Investor Shares and Institutional
Shares. Investor Shares and Institutional Shares are identical, except as to
minimum investment requirements and the services offered to and expenses borne
by each class.
Investor Shares
Investor Shares may be purchased by any investor without a sales
charge. A minimum initial investment of $1,000 is required to open an Investor
Shares account with subsequent minimum investments of $100. Investment minimums
may be waived at the discretion of each Fund.
Institutional Shares
Institutional Shares may be purchased without a sales charge by (1)
financial institutions, such as banks, trust companies, thrift institutions,
mutual funds or other financial institutions, acting on their own behalf or on
behalf of their qualified fiduciary accounts, employee benefit or retirement
plan accounts or other qualified accounts, (2) securities brokers or dealers
acting on their own behalf or on behalf of their clients, (3) directors or
employees of the Funds or of the Adviser or its affiliated companies or by the
relatives of those individuals or the trustees of benefit plans covering those
individuals. These requirements for the purchase of Institutional Shares may be
waived in the sole discretion of the Funds.
A minimum initial investment of $1,000,000 is required to open an
Institutional Shares account with subsequent minimum investments of $10,000.
Investment minimums may be waived at the discretion of each Fund.
Shareholders' Accounts
When a shareholder invests in a Fund, Mutual Shareholder Services
("Mutual Shareholder Services"), the Transfer Agent for each Fund, will
establish an open account to which all full and fractional shares (to three
decimal places) will be credited, together with any dividends and capital gains
distributions, which are paid in additional shares unless the shareholder
otherwise instructs the Transfer Agent. Stock certificates will be issued for
full shares only when requested in writing. Each shareholder is notified of the
status of his account following each purchase or sale transaction.
Initial Purchase
The initial purchase may be made by check or by wire in the following manner:
By Check. The Account Application which accompanies this Prospectus should be
completed, signed, and, along with a check for the initial investment payable to
Maxus Darwinian Fund, Maxus Financial Consolidation Fund, Maxus Founders Fund,
Maxus International Equity Fund or OTI Fund, mailed to: Mutual Shareholder
Services, The Tower at Erieview, Suite 1005, 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:
Firstar, N.A. Cinti/Trust, ABA #0420-0001-3, F/F/C Account No. _________ Maxus
Mutual Funds DDA ____________ (Firstar 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, Mutual Shareholder Services, at (216) 736-3500. 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:
<PAGE>
By Check. Checks made payable to Maxus Darwinian Fund, Maxus Financial
Consolidation Fund, Maxus Founders Fund, Maxus International Equity Fund or OTI
Fund should be sent, along with the stub from a previous purchase or sale
confirmation, to Mutual Shareholder Services, The Tower at Erieview, Suite 1005,
1301 East Ninth Street, Cleveland, OH 44114.
By Wire. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
By Telephone. Investors may purchase shares up to an amount equal to 3 times the
market value of shares held in the shareholder's account in a Fund on the
preceding day for which payment has been received, by telephoning Mutual
Shareholder Services, at (216) 736-3500 and identifying their account by number.
Shareholders wishing to avail 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.
Systematic Investment Plan
The Systematic Investment Plan permits investors to purchase shares of
any 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 Mutual Shareholder
Services at (216) 736-3500 to obtain the appropriate forms. The Systematic
Investment Plan does not assure a profit and does not protect against loss in
declining markets.
Price of Shares
The price paid for shares of a certain class of a Fund is the net asset
value per share of such class of such Fund next determined after receipt by the
Transfer Agent of your investment in proper form, except that the price for
shares purchased by telephone is the net asset value per share next determined
after receipt of telephone instructions. Net asset value per share is computed
for each class of each Fund as of the close of business (currently 4:00 P.M.,
New York time) each day the New York Stock Exchange is open for trading and on
each other day during which there is a sufficient degree of trading in such
Fund's investments to affect materially net asset value of its redeemable
securities. The assets of the Funds are valued primarily on the basis of market
quotations.
Other Information Concerning Purchase of Shares
Each Fund reserves the right to reject any order, to cancel any order
due to non-payment and to waive or lower the investment minimums with respect to
any person or class of persons. If an order is canceled because of non-payment
or because your check does not clear, you will be responsible for any loss that
the Fund incurs. If you are already a shareholder, the Fund can redeem shares
from your account to reimburse it for any loss. The Adviser has agreed to hold
each Fund harmless from net losses to that Fund resulting from the failure of a
check to clear to the extent, if any, not recovered from the investor. For
purchases of $50,000 or more, each Fund may, in its discretion, require payment
by wire or cashier's or certified check.
<PAGE>
HOW TO REDEEM SHARES
All shares of each class of each Fund offered for redemption will be
redeemed at the net asset value per share of such class of that Fund next
determined after receipt of the redemption request, if in good order, by the
Transfer Agent. See "Price of Shares." Because the net asset value of each
Fund's shares will fluctuate as a result of changes in the market value of
securities owned, the amount a stockholder receives upon redemption may be more
or less than the amount paid for the shares. Redemption proceeds will be mailed
to the shareholder's registered address of record or, if $5,000 or more, may be
transmitted by wire, upon request, to the shareholder's pre-designated account
at a domestic bank. The shareholder will be charged for the cost of such wire.
If shares have been purchased by check and are being redeemed, redemption
proceeds will be paid only after the check used to make the purchase has cleared
(usually within 15 days after payment by check). This delay can be avoided if,
at the time of purchase, the shareholder provides payment by certified or
cashier's check or by wire transfer.
Redemption by Mail
Shares may be redeemed by mail by writing directly to the Funds'
Transfer Agent, Mutual Shareholder Services, The Tower at Erieview, Suite 1005,
1301 East Ninth Street, Cleveland, Ohio 44114. The redemption request must be
signed exactly as the shareholder's name appears on the registration form, with
the signature guaranteed, and must include the account number. If shares are
owned by more than one person, the redemption request must be signed by all
owners exactly as the names appear on the registration.
If a shareholder is in possession of the stock certificate, these
certificates must accompany the redemption request and must be endorsed as
registered with a signature guarantee. Additional documents may be required for
registered certificates owned by corporations, executors, administrators,
trustees or guardians. A request for 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
Mutual Shareholder Services at (216) 736-3500.
You should be able to obtain a signature guarantee from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association. A notary public is not
an acceptable guarantor. A Fund may in its discretion waive the signature
guarantee in certain instances.
Redemption by Telephone
Shares may be redeemed by telephone by calling Mutual Shareholder
Services at (216) 736-3500 between 9:00 A.M. and 4:00 P.M. eastern time on any
day the New York Stock Exchange is open for trading. An election to redeem by
telephone must be made on the initial application form or on other forms
prescribed by the Fund which may be obtained by calling the Funds at (216)
687-1000. This form contains a space for the shareholder to supply his own four
digit identification number which must be given upon request for redemption. A
Fund will not be liable for following instructions communicated by telephone
that the Fund reasonably believes to be genuine. If a Fund fails to employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, the Fund may be liable for any losses due to unauthorized or fraudulent
instructions. Any changes or exceptions to the original election must be made in
writing with signature guaranteed, and will be effective upon receipt by the
Transfer Agent. The Transfer Agent and each Fund reserve the right to refuse any
telephone instructions and may discontinue the aforementioned redemption option
without notice. The minimum telephone redemption is $1,000.
Other Information Concerning Redemption
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 $20.00 as of
the date of this Prospectus (subject to change without notice).
Each Fund reserves the right to take up to seven days to make payment
if, in the judgment of the Fund's Investment Adviser, such Fund could be
affected adversely by immediate payment. In addition, the right of redemption
for a Fund may be suspended or the date of payment postponed (a) for any period
during which the NYSE is closed (other than for customary week-end and holiday
closings), (b) when trading in the markets that the Fund normally utilizes is
restricted, or when an emergency, as defined by the rules and regulations of the
SEC, exists, making disposal of that Fund's investments or determination of its
net asset value not reasonably practicable, or (c) for any other periods as the
SEC by order may permit for protection of that Fund's shareholders.
<PAGE>
Due to the high cost of maintaining accounts, each Fund has the right
to redeem, upon not less than 30 days written notice, all of the shares of any
shareholder if, through redemptions, the shareholder's account has a net asset
value of less than $1,000 in the case of Investor Shares or $1,000,000 in the
case of Institutional Shares. A shareholder will be given at least 30 days
written notice prior to any involuntary redemption and during such period will
be allowed to purchase additional shares to bring his account up to the
applicable minimum before the redemption is processed.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares of a Fund valued at $15,000 or more may
elect to receive a monthly or quarterly check in a stated amount (minimum check
amount is $100 per month or quarter). Shares will be redeemed at net asset value
as may be necessary to meet the withdrawal payments. If withdrawal payments
exceed reinvested dividends and distributions, the investor's shares will be
reduced and eventually depleted. A withdrawal plan may be terminated at any time
by the shareholder or the applicable Fund. Costs associated with a withdrawal
plan are borne by the applicable Fund. Additional information regarding
systematic withdrawal plans may be obtained by calling Mutual Shareholder
Services at (216) 736-3500.
INVESTMENT MANAGEMENT
Each Fund has retained as its investment advisor Maxus Asset
Management Inc. (the AAdviser@), 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.
Subject to the supervision of the Funds= Board of Trustees, the
Adviser manages the Funds' assets, including buying and selling portfolio
securities. The Adviser also furnishes office space and certain administrative
services to the Funds.
A key component of the fundamental research utilized by the Adviser
in managing the assets of OTI Fund is a proprietary stock price indicator
service provided to the Adviser by OTI Equity Research Inc. (AOTI@). All final
investment decisions are made by the Adviser.
The Adviser receives from each Fund as compensation for its services
an annual fee of 1% of such Fund's net assets. The Advisor may, from time to
time, agree to reimburse the Funds for management fees and other expenses above
a specified limit. The Advisor retains the ability to be repaid by a Fund if
expenses fall below the specified limit prior to the end of the fiscal year.
Reimbursement arrangements, which may be terminated by the Advisor at any time,
can decrease such Fund's expenses and boost its performance.
Portfolio Manager
Richard A. Barone has been the portfolio manager of Maxus Founders Fund,
Maxus International Equity Fund and OTI Fund since their inception in 2000.
Mr. Barone has been President of the Adviser since 1976.
Alan Miller has been the portfolio manager of Maxus Darwinian Fund and
Maxus International Equity Fund since their inception in 2000. Mr. Miller has
been a portfolio manager with the Adviser since 1994.
Robert Conrad has been the portfolio manager of Maxus Darwinian Fund
since its inception in 2000. Mr. Conrad has been employed with the Adviser
since 1994.
<PAGE>
Rule 12b-1 Plan (Investor Shares Only)
Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay
marketing and servicing fees to the Distributor for the sale, distribution and
customer servicing of each Fund's Investor Shares. Such fees are payable at the
annual rate of .50% of the average daily net assets of the Investor Shares of
each Fund. Because Investor Shares pay marketing and servicing fees on an
ongoing basis, your investment cost may be higher over time than other shares
with different sales charges and fees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund declares and pays any dividends annually to shareholders.
Dividends are paid to all shareholders invested in the Fund on the record date.
The record date is the date on which a shareholder must officially own shares in
order to earn a dividend.
In addition, each Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or
capital gain distribution, you will pay the full price for the Shares and then
receive a portion of the price back in the form of a distribution, whether or
not you reinvest the distribution in Shares. Therefore, you should consider the
tax implications of purchasing Shares shortly before a Fund declares a dividend
or capital gain. Contact your investment professional or the Fund for
information concerning when dividends and capital gains will be paid.
Each Fund sends an annual statement of your account activity to assist
you in completing your federal, state and local tax returns. Fund distributions
of dividends and capital gains are taxable to you whether paid in cash or
reinvested in a Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time a Fund holds
its assets.
Fund distributions may be both dividends and capital gains. Generally,
distributions from the Funds are expected to be primarily capital gains
distributions. Redemptions and exchanges are taxable sales. Please consult your
tax adviser regarding your federal, state, and local tax liability.
GENERAL INFORMATION
Shares of each Fund are offered exclusively by the Funds'
Distributor, Maxus Securities Corp. an affiliate of the Adviser. The
Distributor's address is The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
Firstar, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, is the
custodian for each Fund's securities and cash. Mutual Shareholder Services (an
affiliate of the Advisor), The Tower at Erieview, Suite 1005, 1301 East Ninth
Street, Cleveland, Ohio 44114, is each Fund's Transfer, Redemption and Dividend
Distributing Agent.
McCurdy & Associates C.P.A.'s, Inc., 27955 Clemons Road, Westlake,
Ohio 44145, have been appointed as independent accountants for the Funds.
McDonald, Hopkins, Burke & Haber Co., L.P.A., 2100 Bank One Center,
600 Superior Avenue, E., Cleveland, Ohio 44114, is legal counsel to the Funds
and to the Adviser.
<PAGE>
APPENDIX A
Description of Bond Ratings*
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 effects 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.
BB, 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.
*As described by Standard & Poor's Corporation.
<PAGE>
TABLE OF CONTENTS
RISK/RETURN SUMMARY........................................................ 2
FEES AND EXPENSES OF THE FUNDS............................................. 5
HOW TO PURCHASE SHARES..................................................... 6
HOW TO REDEEM SHARES....................................................... 7
SYSTEMATIC WITHDRAWAL PLAN................................................. 9
INVESTMENT MANAGEMENT...................................................... 9
DIVIDENDS, DISTRIBUTIONS AND TAXES......................................... 9
GENERAL INFORMATION........................................................ 10
A Statement of Additional Information (SAI) dated ________________,
2000 is incorporated by reference into this prospectus. Additional information
about the Funds' investments is available in the Funds' annual and semi-annual
reports to shareholders. The annual report discusses market conditions and
investment strategies that significantly affected the Funds' performance during
its last fiscal year. To obtain the SAI, the annual report, semi-annual report
and other information without charge and to make shareholder inquiries, call the
Funds at ______________________.
Information about each Fund (including the SAI) can be reviewed and
copied at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Reports and other information about the Fund are available on
the Commission's Internet site at http://www.sec.gov and copies of this
information may be obtained, upon payment of a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
Longboat Trust
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
Investment Company Act File No: 811-
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
_____________, 2000
MAXUS DARWINIAN FUND
MAXUS FINANCIAL CONSOLIDATION FUND
MAXUS FOUNDERS FUND
MAXUS INTERNATIONAL EQUITY FUND
OTI FUND
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
Maxus Darwinian Fund, Maxus Financial Consolidation Fund, Maxus
Founders Fund, Maxus International Equity Fund, and OTI Fund (the "Funds") are
separate diversified portfolios of Longboat Trust (the "Trust"), an open-end
management investment company. The investment objective of the Funds is to
obtain capital appreciation. This Statement of Additional Information relating
to the Funds is not a prospectus. A copy of the Funds' prospectus can be
obtained from the Funds' distributor, Maxus Securities Corp, The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114, telephone
number (216) 687-1000.
The date of this Statement of Additional Information and of the
prospectus to which it relates is _________, 2000.
<PAGE>
TABLE OF CONTENTS
CAPTION PAGE LOCATION IN PROSPECTUS
History of the Funds Not Applicable
Investments and Risks Maxus Darwinian Fund-
Risk/Return Summary
Maxus Financial Consolidation Fund-
Risk/Return Summary
Maxus Founders Fund-
Risk/Return Summary
Maxus International Equity Fund-
Risk/Return Summary
OTI Fund-
Risk/Return Summary
Management of the Fund Investment Management
Ownership of Shares Not Applicable
Investment Advisory
and Other Services Investment Management
Brokerage Allocation Not Applicable
Capital Stock and
Other Securities Not Applicable
Purchase, Redemption
and Pricing of Shares How to Purchase Shares/
How to Redeem Shares
Taxation of Fund Dividends, Distributions
and Taxes
Distributor Investment Management
Performance Not Applicable
<PAGE>
HISTORY OF THE FUNDS
Maxus Darwinian Fund, Maxus Financial Consolidation Fund, Maxus
Founders Fund, Maxus International Equity Fund and OTI Fund (the "Funds") are
separate diversified portfolios of Longboat Trust (the "Trust"), which was
organized as a Trust under the laws of the State of Ohio pursuant to a
Declaration of Trust dated October 20, 1998.
INVESTMENTS AND RISKS
Classification
Each of the Funds is a diversified portfolio of the Trust, an open-end
management investment company.
Investment Strategies and Risks
The principal investment strategies used by each Fund to pursue its
investment objective, together with the principal risks of investing in such
Fund, are described in the Prospectus under the headings "Maxus Darwinian Fund -
Risk/Return Summary," "Maxus Financial Consolidation Fund - Risk/Return
Summary," "Maxus Founders Fund - Risk/Return Summary," "Maxus International
Equity Fund Risk/Return Summary," and "OTI Fund - Risk/Return Summary."
Described below are certain other investment strategies (including
strategies to invest in particular types of securities) which are not principal
strategies:
Options. Maxus Financial Consolidation Fund may invest up to 5% of its
assets in put and call options which trade on securities exchanges. Such options
may be on individual securities or on indexes. A put option gives the Fund, in
return for the payment of a premium, the right to sell the underlying security
or index to another party at a fixed price. If the market value of the
underlying security or index declines, the value of the put option would be
expected to rise. If the market value of the underlying security or index
remains the same or rises, however, the put option could lose all of its value,
resulting in a loss to the Fund.
A call option gives the Fund, in return for the payment of a premium,
the right to purchase the underlying security or index from another party at a
fixed price. If the market value of the underlying security or index rises, the
value of the call option would also be expected to rise. If the market value of
the underlying security or index remains the same or declines, however, the call
option could lose all of its value, resulting in a loss to the Fund.
Closed-End Funds. Maxus Financial Consolidation Fund and Maxus Founders
Fund each may also invest in closed-end investment companies (also known as
"closed-end funds"). Typically, the common shares of closed-end funds are
offered to the public in a one-time initial public offering by a group of
underwriters who retain a spread or underwriting commission. Such securities are
then listed for trading on a national securities exchange or in the
over-the-counter markets. Because the common shares of closed-end funds cannot
be redeemed upon demand to the issuer like the shares of an open-end investment
company (such as the Fund), investors seek to buy and sell common shares of
closed-end funds in the secondary market. The common shares of many closed-end
funds, after their initial public offering, frequently trade at a price per
share which is less than the net asset value per share, the difference
representing the "market discount" of such common shares. The Funds purchase
common shares of closed-end funds which trade at a market discount and which the
Adviser believes presents the opportunity for capital appreciation or increased
income due in part to such market discount.
<PAGE>
However, there can be no assurance that the market discount on common
shares of any closed-end fund will ever decrease. In fact, it is possible that
this market discount may increase and the Fund may suffer realized or unrealized
capital losses due to further decline in the market price of the securities of
such closed-end funds, thereby adversely affecting the net asset value of the
Fund's shares. Similarly, there can be no assurance that the common shares of
closed-end funds which trade at a premium will continue to trade at a premium or
that the premium will not decrease subsequent to a purchase of such shares by
the Fund. The Fund may also invest in preferred shares of closed-end funds.
The Fund will structure its investments in the securities of closed-end
funds to comply with applicable provisions of the Investment Company Act of 1940
(the "Act"). The presently applicable provisions require that (i) the Fund and
affiliated person of such Fund not own together more than 3% of the total
outstanding stock of any one investment company, (ii) the Fund not offer its
shares at a public offering price that includes a sales load of more than 1 1/2%
and (iii) the Fund either seek instructions from its shareholders, with regard
to the voting of all proxies with respect to its investment in the securities of
closed-end funds and vote such proxies with respect to its investment in the
securities of closed-end funds and vote such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of such
securities. The Fund intends to vote the shares of any closed-end fund held by
it in the same proportion as the vote of all other holders of such fund's
securities. The effect of such "mirror" voting will be to neutralize the Fund's
influence on corporate governance matters regarding the closed-end funds in
which such Fund invests.
The Fund may retain the securities of a closed-end investment company
that has converted to an open-end fund status subsequent to the Fund's
investment in the securities of such closed-end fund. Generally, shares of an
open-end investment company can be redeemed, at their net asset value, upon
demand to the issuer. However, pursuant to applicable provisions of the Act, the
Fund may not redeem more than 1% of the outstanding redeemable securities of an
open-end investment company during any period of 30 days or less. Consequently,
if the Fund should own more than 1% of the outstanding redeemable securities of
an open-end investment company after such fund's conversion from closed-end fund
status, the amount in excess of 1% may be treated as an investment in illiquid
securities. Because the Fund may not hold at any time more than 10% of the value
of its net assets in illiquid securities (e.g. securities that are not readily
marketable within seven days), the Fund may seek to divest itself, prior to any
such conversion, of securities in excess of 1% of the outstanding redeemable
securities of a converting fund. The Fund may, however, retain such securities
and any amount in excess of 1% of the open-end fund and thereby subject to the
limits on redemption would be treated as an investment in illiquid securities
subject to the aggregate limit of 10% of the Fund's total assets.
The Fund may invest in the securities of closed-end funds which (i)
concentrate their portfolios in issuers in specific industries or in specific
geographic areas and (ii) are non-diversified for purposes of the Act. However,
because the Fund does not intend to concentrate their investments in any single
industry and because the closed-end funds in which the Fund invests generally
satisfy the diversification requirements applicable to a regulated investment
company under the Internal Revenue Code, the Funds do not believe that their
investments in closed-end funds which concentrate in specific industries or
geographic areas or which are non-diversified for purposes of the Act will
represent special risks to the shareholders of the Fund. The Fund will treat its
entire investment in the securities of a closed-end fund that concentrates in a
specific industry as an investment in securities of an issuer in such industry.
Some of the closed-end funds in which the Fund invests may incur more
risks than others. For example, some of these closed-end funds may have policies
that permit them to invest up to 100% of their assets in securities of foreign
issuers and to engage in foreign currency transactions with respect to their
investments; invest up to 100% of their assets in corporate bonds which are not
considered investment grade bonds by Standard & Poor's Corporation or Moody's
Investor Services, Inc., or which are unrated; invest some portion of their net
assets in illiquid securities; invest some portion of their net assets in
warrants; lend their portfolio securities; sell securities short; borrow money
in amounts upon to some designated percentage of their assets for investment
purposes; write (sell) or purchase call or put options on securities or on stock
indexes; concentrate 25% or more of their total assets in one industry; enter
into future contracts; and write (sell) or purchase options on futures
contracts.
<PAGE>
Like the Fund, closed-end funds frequently pay an advisory fee for the
management of their portfolios, as well as other expenses. Therefore, investment
by the Fund in such funds often results in a "duplication" of advisory fees and
other expenses, thereby increasing the overall charge to the net asset value of
the Fund's shares.
Fund Policies
Each Fund has adopted the following fundamental investment policies and
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 Act, the "vote of a majority of the outstanding voting securities" of the
Fund means the lesser of the vote of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund. The Fund
may not:
1. Acquire more than 5% of the voting securities of any bank
or bank holding company or more than 10% of the outstanding voting
securities of any other issuer.
2. 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.
3. 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.
4. Lend money or securities, provided that the making of
interest-bearing deposits with banks and the purchase of debt
securities in accordance with its objective and policies are not
prohibited.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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), except that Maxus Financial
Consolidation Fund may invest more than 25% of its total assets in
securities of banks, financial institutions, insurance companies, asset
management companies and broker/dealers.
11. Invest more than 25% of its total assets in the securities
of mutual funds (Aunderlying funds") which concentrate (i.e., invest
more than 25% of their assets) in the same industry, provided that
through its investment in underlying funds, the Fund indirectly may
invest more than 25% of its assets in one industry.
<PAGE>
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).
Defensive Investments
When the Adviser believes that market conditions warrant a temporary
defensive posture, each Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments, such as money market
mutual funds, commercial paper, certificates of deposit and bank or savings and
loan association interest-bearing demand accounts. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
Portfolio Turnover
The Funds are 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 its investment policies
may require. A high rate of portfolio turnover in any year will increase
custodial transaction charges paid and could result in high amounts of realized
investment gain subject to the payment of taxes by shareholders.
<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees is responsible for managing the Trust's business
affairs and for exercising all the Trust's powers except those reserved for the
shareholders. The day-to-day operations of the Trust are conducted by its
officers. 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 Trust, as defined in the Act, is
indicated by an asterisk.
<TABLE>
<CAPTION>
Position Held Principal Occupation(s)
Name and Address With the Fund During Past 5 Years
---------------- ------------- ---------------------
<S> <C> <C>
Richard A. Barone* Chairman, President of Maxus Securities
The Tower at Erieview, 36th Floor Treasurer Corp (broker-dealer), Maxus
1301 East Ninth Street and Trustee Asset Management Inc. (invest-
Cleveland, Ohio 44114 ment adviser) and Resource
Management Inc., dba Maxus
Investment Group (financial services)
Raj Aggarwal PhD. Trustee Professor of Finance
John Carroll University John Carroll University
20700 North Park Blvd.
University Heights, Ohio 44118
Denis J. Amato* Trustee Chief Investment Officer, Gelfand.
The Tower at Erieview, 36th Floor Maxus Asset Management, Inc. (invest-
1301 East Ninth Street ment adviser) since 1997; previously,
Cleveland, Ohio 44114 Managing Director, Gelfand Partners
Asset Management (investment adviser)
Kent W. Clapp Trustee Chairman, Medical Mutual of Ohio
2060 East Ninth Street (health insurer)
Cleveland, Ohio 44114
Robert H. Fritz Trustee Retired
12613 West Lake Road
Vermillion, Ohio 44089
Stephen M. Kasarnich Trustee President/Business Manager, Northeast
47 Alice Drive Ohio District Council of Carpenters;
Akron, Ohio 44319 Executive Secretary-Treasurer, Ohio
State Council of Carpenters
Burton D. Morgan Trustee Chairman, Morgan Bank (bank);
Park Place President, Basic Search, Inc.
10 West Streetsboro Road (venture capital); Chairman,
Hudson, Ohio 44236 Multi-Color Corporation (printing);
Chairman, Morgan Funshares, Inc.
(mutual fund)
Michael A. Rossi, C.P.A. Trustee Certified Public Accountant
6559 Wilson Mills Road
Highland Heights, Ohio 44143
<PAGE>
Joseph H. Smith Trustee Chief Financial Officer, Diocese of
1404 East Ninth Street Cleveland
8th Floor
Cleveland, Ohio 44114
Robert J. Conrad Vice President Vice President, Resource Management,
The Tower at Erieview, 36th Floor Inc.; formerly Vice President, American
1301 East Ninth Street Income Plus
Cleveland, Ohio 44114
Robert W. Curtin Secretary Senior Vice President and Secretary,
The Tower at Erieview, 36th Floor Maxus
Securities Corp; formerly 1301 East
Ninth Street Executive Vice President,
Cleveland, Ohio 44114 Roulston & Company, Inc.
</TABLE>
No officer, director or employee of Maxus Asset Management Inc. (AMAM@
or the AInvestment Adviser@) or of any parent or subsidiary receives any
compensation from the Trust for serving as an officer or Trustee of the Trust.
Each Trustee who is not an interested person in MAM will receive from each Fund
the following fees for each Board or shareholders meeting attended: $100 per
meeting if net assets of the Fund are under $10,000,000; $200 per meeting if net
assets of the Fund are between $10,000,000 and $50,000,000; and $300 per meeting
if net assets of the 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
Name of Trustee Aggregate Compensation from Total Compensation Fund
each Fund* Complex**
Payable to Trustees
Richard A. Barone $ 0 $ 0
Denis J. Amato $ 0 $ 0
Raj Aggarwal $400 $
Kent W. Clapp $400 $
Robert H. Fritz $400 $
Stephen M. Kasarnich $400 $
Burton D. Morgan $400 $
Michael A. Rossi $400 $
Joseph H. Smith $400 $
*Estimated fees for current fiscal year.
**Fund complex includes all funds managed by Maxus Asset Management Inc., the
Fund's Adviser.
<PAGE>
OWNERSHIP OF SHARES
As of the date of this Statement of Additional Information, 100% of the
outstanding shares of each Fund were owned by Resource Management, Inc., The
Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114. A
shareholder who beneficially owns, directly or indirectly, more than 25% of a
Fund's voting securities may be deemed a Acontrol person@ (as defined in the
1940 Act) of such Fund. Resource Management, Inc. is controlled by Richard A.
Barone, the Chairman of the Trust. Accordingly, as of the date of this Statement
of Additional Information, 100% of the outstanding shares of each Fund may be
deemed to be owned beneficially by all Trustees and officers as a group.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisor
Maxus Asset Management, Inc. (AMAM@), the Funds' investment adviser, is
a wholly-owned subsidiary of Resource Management Inc., d/b/a Maxus Investment
Group, an Ohio corporation (ARMI@) with interests primarily in the financial
services industry. RMI also owns all of the shares of Maxus Securities Corp.
(AMSC@), the NASD broker/dealer through which shares of the Funds are offered.
Mr. Richard A. Barone is the president and majority shareholder of RMI and,
therefore, is deemed to be in control of MAM and MSC.
MAM is registered as an investment adviser under the Investment
Advisers Act of 1940. MAM has not been sponsored, recommended or approved, nor
have its abilities or qualifications been passed upon, by the Securities and
Exchange Commission or any other governmental agency.
As compensation for MAM=s services rendered to each Fund, each Fund
pays a fee, computed and paid monthly, at an annual rate of 1% of the average
value of the first $150,000,000 of such Fund's daily net assets and .75% of
average daily net assets in excess of $150,000,000.
MAM acts as investment adviser to the Funds pursuant to an Investment
Advisory and Administration Agreement. Subject to the supervision and direction
of the Funds' Trustees, MAM, as investment adviser, manages each Fund's
portfolio in accordance with the stated policies of such Fund. MAM makes
investment decisions for each Fund and places the purchase and sale orders for
portfolio transactions. In addition, MAM furnishes office facilities and
clerical and administrative services, and pays the salaries of all officers and
employees who are employed by both it and the Funds and, subject to the
direction of the Funds' Board of Trustees, is responsible for the overall
management of the business affairs of the Funds, including the provision of
personnel for recordkeeping, the preparation of governmental reports and
responding to shareholder communications.
Other expenses are borne by the Funds and include brokerage fees and
commissions, fees of Trustees not affiliated with MAM, expenses of registration
of the Funds and of the shares of the Funds with the Securities and Exchange
Commission (the ASEC@) and the various states, charges of the custodian,
dividend and transfer agent, outside auditing and legal expenses, liability
insurance premiums on property or personnel (including officers and trustees),
maintenance of business trust existence, any taxes payable by the Funds,
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, costs of
printing share certificates, portfolio pricing services and Fund meetings, and
costs incurred pursuant to the Funds' Plan of Distribution described below.
Distribution Plan
The Trust has a Distribution and Shareholder Servicing Plan (the
APlan@) pursuant to Rule 12b-1 under the Act, pursuant to which each Fund pays
Maxus Securities Corp (AMSC@) 0.60% of average net assets of Investor Shares
annually for the costs of activities intended to result in the sale of Investor
Shares, regardless of the amount of expenses actually incurred by MSC.
<PAGE>
The Trustees believe that the Plan will benefit the Funds and holders
of Investor Shares. Among these benefits are: (1) reductions in the per share
expenses of each Fund as a result of increased assets in such Fund; (2)
reductions in the cost of executing portfolio transactions and the possible
ability of the Investment Advisor 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.
Other Service Providers
The Trust has entered into an Administration Agreement with Mutual
Shareholder Services (AMSS@), The Tower at Erieview, Suite 1005, Floor, 1301
East Ninth Street, Cleveland, Ohio 44114, pursuant to which MSS has agreed to
act as the Funds' Transfer, Redemption and Dividend Disbursing Agent. As such,
MSS maintains the Funds' official record of shareholders and is responsible for
crediting dividends to shareholders= accounts. In consideration of such
services, each Fund pays MSS an annual fee, paid monthly, equal to $6.75 per
shareholder account (with a monthly minimum of $775) plus $12 per month for each
state in which such Fund is registered under such state=s securities laws, plus
out-of-pocket expenses. In addition, the Trust has entered into an Accounting
Services Agreement with MSS, pursuant to which MSS 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.
MSS is an affiliate of RMI, the parent company of the Investment Adviser.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, serves as
the Funds' custodian. As custodian, Star Bank maintains custody of the Funds'
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 Funds. In such capacity, McCurdy & Associates
C.P.A.=s, Inc. periodically reviews the accounting and financial records of the
Funds and examines its financial statements.
BROKERAGE ALLOCATION
Decisions to buy and sell securities for the Funds are made by MAM
subject to the overall supervision and review by the Funds' Trustees. Portfolio
security transactions for the Funds 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 Funds' policy to seek the best overall terms available. The Investment
Advisory and Administration Agreement between the Funds and MAM provides that,
in assessing the best overall terms available for any transaction, MAM shall
consider the factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In addition, the
Investment Advisory and Administration Agreement authorizes MAM, in selecting
brokers or dealers to execute a particular transaction, and, in evaluating the
best overall terms available, to consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Funds and/or other accounts over which MAM exercises
investment discretion.
<PAGE>
The Funds' Board of Trustees periodically reviews the commissions paid
by the Funds to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits inuring to the Funds. 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 Funds may be the primary beneficiary of services received as a result of
portfolio transactions effected for other accounts. MAM's fee under the
Investment Advisory and Administration Agreement is not reduced by reason of
MAM's receiving such brokerage and research services.
Under the Act, with respect to transactions effected on a securities
exchange, a mutual fund may not pay brokerage commissions to an affiliate which
exceed the usual and customary broker's commissions. A commission is deemed as
not exceeding the usual and customary broker's commission if (i) the commission
is reasonable and fair compared to the commission received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time and (ii) the Board of
Trustees, including a majority of the Trustees who are not interested persons of
the mutual fund, have adopted procedures reasonably designed to provide that
such commission is consistent with the above-described standard, review these
procedures annually for their continuing appropriateness and determine quarterly
that all commissions paid during the preceding quarter were in compliance with
these procedures.
The Funds' Board of Trustees has determined that any portfolio
transaction for the Funds may be effected through MSC if, in MAM's judgment, the
use of MSC is likely to result in price and execution at least as favorable as
those of other qualified brokers, and if, in the transaction, MSC charges the
Fund a commission rate consistent with those charged by MSC to comparable
unaffiliated customers in similar transactions. Each quarter, the Trustees
review a report comparing the commissions charged each Fund by MSC to 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 meet the requirements of the Act. MSC
will not participate in commissions from brokerage given by the Fund to other
brokers or dealers. Over-the-counter purchases and sales are transacted through
brokers and dealers with principal market makers. The Funds will in no event
effect principal transactions with MSC in over-the-counter securities in which
MSC makes a market. MSC is a wholly owned subsidiary of RMI, a corporation
controlled by Richard A. Barone, Chairman of the Funds. Richard A. Barone is,
therefore, considered to control MSC.
Even though investment decisions for the Funds are made independently
from those of the other accounts managed by MAM, investments of the kind made by
the Funds may also be made by those other accounts. When the Funds 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 Funds or the
size of the position obtained for or disposed of by the Funds.
Under the rules adopted by the SEC, MSC may not execute transactions
for the Funds on the floor of any national securities exchange, but may effect
transactions for the Funds by transmitting orders for execution, providing for
clearance and settlement, and arranging for the performance of those functions
by members of the exchange not associated with MSC. MSC will be required to pay
fees charged by those persons performing the floor brokerage elements out of the
brokerage compensation it receives from the Funds. The Funds have been advised
by MSC that on most transactions, the floor brokerage generally constitutes from
10% to 40% of the total commissions paid.
CAPITAL STOCK AND OTHER SECURITIES
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 five series of shares, one each for Maxus Darwinian Fund,
Maxus Financial Consolidation Funds, Maxus Founders Fund and OTI Fund. Each
share represents an equal proportionate interest in a Fund with other shares of
the same series and class, and is entitled to such dividends and distributions
out of the income earned on the assets belonging to the Fund as are declared at
the discretion of the Trustees. All consideration received by the Trust for
shares of one of the Funds and all assets in which such consideration is
invested will belong to that Fund and will be subject to the liabilities
relating thereto.
<PAGE>
Shareholders are entitled to one vote per share (with proportional
voting for fractional shares) on such matters as shareholders are entitled to
vote. Shareholders vote in the aggregate and not by class on all matters except
that (i) shares shall be voted by individual class when required by the 1940 Act
or when the Trustees have determined that the matter affects only the interests
of a particular class, and (ii) only the holders of Investor Shares will be
entitled to vote on matters submitted to shareholder vote with regard to the
Distribution Plan applicable to such class.
Whenever the approval of a majority of the outstanding shares of the
Trust or of a particular Fund is required in connection with shareholder
approval of an investment advisory contract, changes in the investment objective
and policies or the investment restrictions, or approval of a distribution
expense plan, a "majority" shall mean the vote of (i) 67% or more of the shares
of the Trust or such Fund present at a meeting, if the holders of more than 50%
of the outstanding shares of the Trust or such Fund are present in person or by
proxy, or (ii) more than 50% of the outstanding shares of the Trust or such
Fund, whichever is less.
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 the Prospectus,
each share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights. 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 a Fund shall contain a provision to the
effect that the shareholders are not personally liable thereunder.
PURCHASE, REDEMPTION AND PRICING OF SHARES
The information pertaining to the purchase and redemption of the Funds'
shares appearing in the Prospectus under the captions "How To Purchase Shares"
and "How To Redeem Shares" is hereby incorporated by reference.
The price paid for shares of a certain class of a Fund is the net asset
value per share of such class 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 a 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 a 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 a class of a Fund is calculated by determining the value of the class's
proportional interest in the assets of a Fund, less (i) such class's
proportional share of general liabilities and (ii) the liabilities allocable
only 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 of a Fund,
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 market 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>
TAXATION OF THE FUND
Each Fund intends to qualify each year as a "regulated investment
company" under the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). Qualification as a regulated investment company
will result in each Fund's paying no taxes on net income and net realized
capital gains distributed to shareholders. If these requirements are not met,
such Fund will not receive special tax treatment and will pay federal income
tax, thus reducing the total return of such Fund.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually by the Funds' transfer agent. Shareholders
are urged to consult their own tax advisers regarding specific questions as to
Federal, state or local taxes.
Income received by a Fund from a mutual fund in such Fund's portfolio
(including dividends and distributions of short-term capital gains), as well as
interest received on cash held in the Custodian's money market deposit account
and net short-term capital gains received by such Fund on the sale of mutual
fund shares, will be distributed by such Fund (net of expenses incurred by such
Fund) and will be taxable to shareholders as ordinary income. Because each Fund
is actively managed and can realize taxable net short-term capital gains by
selling shares of an underlying fund with unrealized portfolio appreciation,
investing in a Fund rather than directly in the underlying funds may result in
increased tax liability to the shareholder, since each Fund must distribute its
gain in accordance with the rules of the Code.
Distributions of net capital gains received by each Fund from
underlying mutual funds, as well as net long-term capital gains realized by each
Fund from the purchase and sale of underlying mutual fund shares held by each
Fund for more than one year, will be distributed by each Fund and will be
taxable to shareholders as long-term capital gains (even if the shareholder has
held the shares for less than one year). However, if a shareholder who has
received a capital gains distribution suffers a loss on the sale of his shares
not more than six months after purchase, the loss will be treated as a long-term
capital loss to the extent of the capital gains distribution received.
For purposes of determining the character of income received by a Fund
when an underlying fund distributes net capital gains to such Fund, such Fund
will treat the distribution as a long-term capital gain, even if it has held
shares of the mutual fund for less than one year. However, any loss incurred by
a Fund on the sale of that underlying fund's shares held for six months or less
will be treated as a long-term capital loss only to the extent of the gain
distribution. The tax treatment of distributions from a Fund is the same whether
the distributions are received in additional shares or in cash. Shareholders
receiving distributions in the form of additional shares will have a cost basis
for federal income tax purposes in each share received equal to the net asset
value of a share of a Fund on the reinvestment date.
Each Fund may invest in underlying funds with capital loss
carry-forwards. If such an underlying fund realizes capital gains, it will be
able to offset the gains, it will be able to offset the gains to the extent of
its loss carrying forwards in determining the amount of capital gains which must
be distributed to its shareholders.
DISTRIBUTOR
Shares of the Funds are offered on a best-efforts basis by MSC, a
registered NASD broker-dealer. MSC is a wholly-owned subsidiary of RMI, which is
controlled by Richard A. Barone, Chairman of the Trust.
Pursuant to the Distribution Agreement between the Funds and MSC, MSC
has agreed to hold itself available to receive orders, satisfactory to MSC, for
the purchase of the Funds' shares, to accept such orders on behalf of the Funds
as of the time of receipt of such orders and to transmit such orders to the
Funds' transfer agent as promptly as practicable. MSC does not receive any
commissions or other compensation for the sale of shares of the Funds. However,
pursuant to the Plan, MSC receives an annual distribution fee of .60% of average
net assets of Shares. Certain employees of MSC may receive compensation under
the Plan. See "Investment Advisory and Other Services - Distribution Plan."
<PAGE>
The Distribution Agreement provides that MSC shall arrange to sell the
Funds' Shares as agent for the Funds and may enter into agreements with
registered broker-dealers as it may select to arrange for the sale of such
shares. MSC is not obligated to sell any certain number of shares.
PERFORMANCE
From time to time, the Funds may advertise performance data represented
by a cumulative total return or an average annual total return. Total returns
are based on the overall or percentage change in value of a hypothetical
investment in a Fund and assume all of such Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects a 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 a Fund's performance had been constant over
the entire period. Because average annual returns tend to smooth out variations
in a Fund's returns, it should be recognized that they are not the same as
actual year-by-year results.
Performance may be compared to well-known indices such as the Dow Jones
Industrial Average or alternative investments such as Treasury Bills. Also, the
Funds may include published editorial comments compiled by independent
organizations such as Lipper Analytical Services or Morningstar, Inc.
All performance information is historical in nature and is not intended
to represent or guarantee future results. The value of Fund shares when redeemed
may be more or less than their original cost.
Further information about the performance of the Funds is contained in
the Funds' Annual Report to Shareholders which may be obtained from the Funds
without charge.
FINANCIAL STATEMENTS
[To be filed by Amendment].
<PAGE>
PART C
OTHER INFORMATION
Item 23.
Exhibit
Number Description
------ -----------
a Declaration of Trust*
b Amended and Restated By-Laws*
c None.
d Investment Advisory and
Administration Agreement
e Distribution Agreement
f None.
g Custody Agreement*
h(1) Administration Agreement
h(2) Accounting Services Agreement
i Opinion and consent**
j Consent of Independent Auditors.**
k None.
l Subscription Agreement between the Fund
and Resource Management Inc.
m Distribution and Shareholder
Servicing Plan
n Rule 18f-3 Plan**
p Code of Ethics**
q Financial Data Schedule**
*Previously filed.
** To be filed by Amendment.
Item 24. Persons Controlled by or Under Common Control with Registrant.
The Trust, 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 all officers and Trustees of the Trust
are also officers and Trustees of the other three funds.
<PAGE>
In addition, the Trust and Resource Management Inc. (together
with its subsidiaries, MAM, MSC and MSS) may be deemed to be
under common control of Richard A. Barone, the Chairman of the
Trust and the President and controlling shareholder of
Resource Management Inc.
Item 25. Indemnification
Reference is made to Article VIII of the Registrant=s Amended and
Restated Declaration of Trust filed as Exhibit 1. The application of
these provisions is limited by Article 10 of the Registrant=s Amended
and Restated By-laws filed as Exhibit 2 and by the following
undertaking set forth in the rules promulgated by the Securities and
Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a trustee, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in such Act and will be
governed by the final adjudication of such issue.
Item 26. Business and Other Connections of the Investment Adviser.
The directors of Maxus Asset Management, Inc. (AMAM@) are
Richard A. Barone, N. Lee Dietrich and Sanford A. Fox. The
business and employment of Mr. Barone is described in the
Statement of Additional Information under AManagement of the
Funds.@ Mr. Dietrich is retired and Dr. Fox is an
endodontist in private practice.
The officers of MAM are Mr. Barone and Robert W. Curtin. The
employment of Mr. Curtin is described in the Statement of
Additional Information under AManagement of the Funds.@
Item 27. Principal Underwriters.
(a) Maxus Securities Corp, the distributor for the
Funds, 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:
<PAGE>
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
36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
Robert W. Curtin Senior Vice President, Secretary
The Tower at Erieview Secretary and Director
36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Robert F. Pincus Vice President and None
The Tower at Erieview Director
36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Item 28. 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, Suite 1005, 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 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cleveland, State of Ohio, on the ____ day of
_________, 2000.
LONGBOAT TRUST
By:
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
-----------------
Richard A. Barone Chairman, Treasurer ______________, 2000
and Trustee (Principal
Executive Officer,
Financial Officer and
Accounting Officer)
<PAGE>
Exhibit D
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
________________, 2000
Maxus Asset Management Inc.
The Tower at Erieview - 36th Floor
1301 East Ninth Street
Cleveland, OH 44114
Dear Sirs:
Longboat 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 the
investment portfolios listed on Schedule I and such other investment portfolios
as the Trust may from time to time create (individually, a AFund@ or
collectively, the AFunds@).
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.
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.
<PAGE>
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.
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 the first $150,000,000 of each
Fund's daily net assets and 0.75% of average daily net assets in excess of
$150,000,000. 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.
<PAGE>
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.
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 on 60
days written notice to the Fund. 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,
LONGBOAT TRUST
By:_________________________
Accepted: Richard A. Barone, Chairman
MAXUS ASSET MANAGEMENT INC.
By:______________________________
<PAGE>
SCHEDULE I
Maxus Darwinian Fund
Maxus Financial Consolidation Fund
Maxus Founders Fund
Maxus International Equity Fund
OTI Fund
<PAGE>
Exhibit E
DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the ____ day of ______________, 2000 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:
WHEREAS, the parties desire to enter into this Agreement whereby the
Distributor will acts as the Distributor of the Trust;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby appoints
the Distributor as its agent to arrange for the sale of shares of the Trust on
the terms and for the period set forth in this Agreement, and the Distributor
hereby accepts such appointment and agrees to act hereunder. It is acknowledged
that the Trust is authorized to issue shares in one or more series, with each
series representing shares of a separate investment portfolio of the Trust (a
"Fund"), and with the shares of each Fund being divided into Investor Shares and
Institutional Shares. The term "Shares" as used herein shall refer to shares of
each class of each Fund of the Trust.
Section 2. Services and Duties of the Distributor.
(a) The Distributor agrees to arrange to sell, as agent for
the Trust, from time to time during the term of this Agreement, Shares
upon the terms described in the Prospectus. As used in this Agreement,
the term "Prospectus" shall mean the prospectus included in the Trust's
Registration Statement most recently filed by the Trust with the
Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act"), as such Registration
Statement is amended by any amendments thereto at the time in effect.
(b) Upon commencement of the continuous public offering of the
Shares of the Trust, the Distributor will hold itself available to
receive orders, satisfactory to the Distributor, for the purchase of
Shares and will accept such orders on behalf of the Trust as of the
time of receipt of such orders and will transmit such orders as are so
accepted to the Trust's Dividend and Transfer Agent as promptly as
practicable. Purchase orders shall be deemed effective at the time and
in the manner set forth in the Prospectus.
(c) The Distributor, as agent for the Trust and in its
discretion, may enter into agreements with such registered and
qualified retail broker-dealers as it may select pursuant to which such
broker-dealers may also arrange for the sale of Shares.
(d) The offering price of the Shares of each class of each
Fund shall be the net asset value (as described in the Prospectus, as
amended from time to time and determined as set forth in the
Prospectus) per Share of such class of such Fund next determined
following receipt of an order. The Trust shall furnish the Distributor
with all possible promptness advice of each computation of net asset
value.
(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.
<PAGE>
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.
Section 4. Compensation and Expenses.
(a) Except as set forth in this Section, (i) the Distributor
shall not receive any compensation for its services under this
Agreement and (ii) the Distributor shall not be required to bear any
costs in connection with the offering of Shares for sale to the public.
(b) The Trust shall bear all costs and expenses of the
continuous offering of its Shares, including: (i) fees and
disbursements of its counsel and auditors, (ii) the preparation, filing
and printing of any registration statements and/or prospectuses
required by and under the federal securities laws, (iii) the
preparation and mailing of annual and interim reports and proxy
materials to shareholders and (iv) the qualification of the Shares for
sale and of the Trust as a broker or dealer under the securities laws
of such states or other jurisdictions as shall be selected by the Trust
and by the Distributor pursuant to Section 3(d) hereof and the cost and
expenses payable to each such state for continuing qualification
therein.
(c) The Distributor agrees to provide the services described
in the Trust=s Distribution and Shareholder Servicing Plan (Investor
Shares Only). In consideration for such services, the Trust shall pay
to the Distributor a fee at the annual rate of 0.60% of the average
daily net assets of the Investor Shares of each Fund.
<PAGE>
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 A1934 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.
The Distributor agrees to indemnify, defend and hold the Trust, its
trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Trust, its trustees or officers or any such controlling person may incur under
the 1933 Act, the 1934 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Trust, its trustees or
officers or such controlling person resulting from such claims or demands shall
arise out of or be based upon (i) any alleged untrue statement of a material
fact contained in information furnished in writing by the Distributor to the
Trust for use in the Registration Statement or Prospectus; (ii) any failure of
the Distributor or any investor purchasing Shares of the Trust through the
Distributor to timely transmit good payment for the purchase of Trust Shares; or
(iii) any breach of the obligations of the Distributor under Section 6 of this
Agreement. The Distributor's agreement to indemnify the Trust, its trustees and
officers and any such controlling person as aforesaid, is expressly conditioned
upon the Distributor being promptly notified of any event giving rise to rights
of indemnification hereunder, including any action brought against the Trust,
its trustees or officers or any such controlling person, such notification being
given to the Distributor at its principal business office.
Section 6. Compliance with Securities Laws. The Trust represents that
it is registered as a diversified, open-end management investment company under
the 1940 Act, and agrees that it will comply with all of the provisions of the
1940 Act and of the rules and regulations thereunder. The Trust and the
Distributor each agree to comply with all of the applicable terms and provisions
of the 1940 Act, the 1933 Act and, subject to the provisions of Section 3(d),
all applicable state "Blue Sky" laws. The Distributor agrees to comply with all
of the applicable terms and provisions of the 1934 Act.
Section 7. Terms of Agreement; Termination. This Agreement shall
commence on the date first set forth above. This Agreement shall continue in
effect for a period more than two years from the date hereof only so long as
such continuance is specifically approved at least annually in conformity with
the requirements of the 1940 Act, including Rule 12b-1 thereunder.
<PAGE>
This Agreement shall terminate automatically in the event of its
assignment (as defined by the 1940 Act). In addition, this Agreement may be
terminated by either party at any time, without penalty, on not more than sixty
days= nor less than thirty days= written notice to the other party.
Section 8. Notices. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (i) to the Distributor at Maxus Securities Corp, The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114 or (2) to
the Trust at Longboat Trust, The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
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 AOTI@ 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 AOTI@ 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 AOTI@.
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: /s/ Richard A. Barone
Richard A. Barone, Chairman
MAXUS SECURITIES CORP
By: /s/ Richard A. Barone
<PAGE>
EXHIBIT (h)(1)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of __________,
2000, by and between Longboat Trust, an Ohio business trust (the AFund@), and
Mutual Shareholder Services (AMSS@).
RECITALS:
A. The Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the A1940 Act@); and
B. The Fund desires to appoint MSS as its transfer agent and dividend
disbursing and redemption agent, and MSS desires to accept such appointment.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. DUTIES OF MSS.
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby employs and appoints MSS to act, and MSS agrees to act, as
transfer agent for the Fund's authorized and issued shares of beneficial
interest of each class of each portfolio of the Fund (the AShares), and as
dividend disbursing and redemption agent for the Fund.
1.02 MSS agrees that it will perform the following services:
(a)In accordance with procedures established from time to time by
agreement between the Fund and MSS, MSS shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
therefore to the Custodian of the Fund authorized by the Board of
Directors of the Fund (the ACustodian@);
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefore to
the Custodian;
(iv) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(v) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(vii) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and
<PAGE>
(viii) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number of
shares of the Fund which are authorized, based upon data provided
to it by the Fund, and issued and outstanding. MSS shall also
provide the Fund on a regular basis with the total number of
shares which are authorized and issued and outstanding and shall
have no obligation, when recording the issuance of shares, to
monitor the issuance of such shares or to take cognizance of any
laws relating to the issue or sale of such shares, which
functions shall be the sole responsibility of the Fund.
(b) In addition, MSS shall perform all of the customary services
of a transfer agent, dividend disbursing and redemption agent,
including but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect
to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and provide a system and reports which
will enable the Fund to monitor the total number of Shares sold in each
State.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and MSS.
2. FEES AND EXPENSES
2.01 In consideration of the services to be performed by MSS pursuant
to this Agreement, the Fund agrees to pay MSS the fees set forth in the fee
schedule attached hereto as Exhibit AA@.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse MSS for out-of-pocket expenses or advances incurred by MSS
in connection with the performance of its obligations under this Agreement. In
addition, any other expenses incurred by MSS at the request or with the consent
of the Fund will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to MSS by the Fund at least seven days
prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF MSS
MSS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Ohio.
3.02 It is duly qualified to carry on its business in the State of
Ohio.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
<PAGE>
3.06 MSS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF The Fund
The Fund represents and warrants to MSS that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Ohio.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company
registered under the 1940 Act.
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 MSS shall not be responsible for, and the Fund shall indemnify and
hold MSS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a)All actions of MSS or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without gross negligence or willful misconduct.
(b)The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack good faith, gross
negligence or willful misconduct or which arise out of the breach of
any representation or warranty of the Fund hereunder.
(c)The reliance on or use by MSS or its agents or subcontractors
of information, records and documents which (i) are received by MSS or
its agents or subcontractors and furnished to it by or on behalf of the
Fund, and (ii) have been prepared and/or maintained by the Fund or any
other person or firm on behalf of the Fund.
(d)The reliance on, or the carrying out by MSS or its
agents or subcontractors of, any instructions or requests of the Fund.
(e)The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in such
state or in violation of any stop order or other determination or
ruling by any federal agency or any state with respect to the offer or
sale of such Shares in such state.
5.02 MSS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by MSS as a result of MSS=s lack of good faith, gross negligence
or willful misconduct.
<PAGE>
5.03 At any time MSS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by MSS under this
Agreement, and MSS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. MSS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided MSS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. MSS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 Upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party=s prior written consent.
6. COVENANTS OF THE FUND AND MSS
6.01 The Fund shall promptly furnish to MSS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
MSS and the execution and delivery of this Agreement.
6.02 MSS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 MSS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, as amended, and the Rules thereunder,
MSS agrees that all such records prepared or maintained by MSS relating to the
services to be performed by MSS hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.04 MSS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, MSS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. MSS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
<PAGE>
7. TERM OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three years; provided, however, that each
party to this Agreement have the option to terminate the Agreement without
penalty, upon 90 days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, MSS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. MISCELLANEOUS
8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either@party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
8.02 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
8.03 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Ohio as at the time in
effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of Ohio, or any of the provisions here in, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
8.04 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
8.05 All notices and other communications hereunder shall be in
writing, shall be deemed to have been given when received or when sent by telex
or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To MSS:
LongboatTrust Mutual Shareholder Services
The Tower at Erieview, 36th Floor The Tower at Erieview, Suite 1005
1301 East Ninth Street 1301 East Ninth Street
Cleveland, OH 44114 Cleveland, OH 44114
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LONGBOAT TRUST MUTUAL SHAREHOLDER SERVICES
By: By:
------------------------------- ---------------------------------
Richard A. Barone
President
Its:
-------------------------------
<PAGE>
EXHIBIT AA@
FEE SCHEDULE
The following fees will be paid in respect of each portfolio of the Fund:
$6.75 per shareholder account per annum, payable monthly, subject to a
$775 minimum per month.*
plus:
$12.00 per month for each state in which a portfolio is registered under
the blue sky laws of such state.*
------------------
*Notwithstanding the foregoing, if for any month the average net assets of a
portfolio are less than $10,000,000, all of the above dollar amounts will be
reduced based on the proportion which such average net assets bears to
$10,000,000.
<PAGE>
EXHIBIT (h)(2)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of __________,
1998, by and between Longboat Trust, an Ohio business trust (the AFund@), and
Mutual Shareholder Services (AMSS@).
RECITALS:
A. The Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the A1940 Act@); and
B. MSS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
C. The Fund desires to avail itself of the experience, assistance and
facilities of MSS and to have MSS perform the Fund certain services appropriate
to the operations of the Fund, and MSS is willing to furnish such services in
accordance with the terms hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. DUTIES OF MSS.
MSS will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for the
Fund:
(a)Timely calculate and transmit to NASDAQ the daily net asset
value of each class of shares of each portfolio of the Fund, and
communicate such value to the Fund and its transfer agent;
(b)Maintain and keep current all books and records of the Fund as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time (ARule 31a-1@), that
are applicable to the fulfillment of MSS=s duties hereunder, as well as
any other documents necessary or advisable for compliance with
applicable regulations as may be mutually agreed to between the Fund
and MSS. Without limiting the generality of the foregoing, MSS will
prepare and maintain the following records upon receipt of information
in proper form from the Fund or its authorized agents:
! Cash receipts journal
! Cash disbursements journal
! Dividend record
! Purchase and sales - portfolio securities journals
! Subscription and redemption journals
! Security ledgers
! Broker ledger
! General ledger
! Daily expense accruals
! Daily income accruals
! Securities and monies borrowed or loaned and
collateral therefore
! Foreign currency journals
! Trial balances
<page
(c)Provide the Fund and its investment adviser with daily
portfolio valuation, net asset value calculation and other standard
operational reports as requested from time to time.
(d)Provide all raw data available from its fund accounting system
for the preparation by the Fund or its investment advisor of the
following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1A;
5. Annual proxy statement.
(e)Provide facilities to accommodate annual audit and any audits
or examinations conducted by the Securities and Exchange Commission or
any other governmental or quasi-governmental entities with
jurisdiction.
MSS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. FEES AND EXPENSES.
(a)In consideration of the services to be performed by MSS
pursuant to this Agreement, the Fund agrees to pay MSS the fees set
forth in the fee schedule attached hereto as Exhibit A.
(b)In addition to the fees paid under paragraph (a) above, the
Fund agrees to reimburse MSS for out-of-pocket expenses or advances
incurred by MSS in connection with the performance of its obligations
under this Agreement. In addition, any other expenses incurred by MSS
at the request or with the consent of the Fund will be reimbursed by
the Fund.
(c)The Fund agrees to pay all fees and reimburseable expenses
within five days following the receipt of the respective billing
notice.
3. LIMITATION OF LIABILITY OF MSS.
(a)MSS shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall not be liable
to the Fund for any action taken or omitted by it in good faith without
gross negligence, bad faith, willful misconduct or reckless disregard
of its duties hereunder. It shall be entitled to rely upon and may act
upon the accounting records and reports generated by the Fund, advice
of the Fund, or of counsel for the Fund and upon statements of the
Fund's independent accountants, and shall not be liable for any action
reasonably taken or omitted pursuant to such records and reports or
advice, provided that such action is not, to the knowledge of MSS, in
violation of applicable federal or state laws or regulations, and
provided further that such action is taken without gross negligence,
bad faith, willful misconduct or reckless disregard of its duties.
(b)Nothing herein contained shall be construed to protect MSS
against any liability to the Fund to which MSS shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence
in the performance of its duties to the Fund, reckless disregard of its
obligations and duties under this Agreement or the willful violation of
any applicable law.
(c)Except as may otherwise be provided by applicable law, neither
MSS nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons
harmless from and against, any liability for and any damages, expenses
or losses incurred by reason of the inaccuracy of information furnished
to MSS by the Fund or its authorized agents.
4. REPORTS.
<PAGE>
(a)The Fund shall provide to MSS on a quarterly basis a report of
a duly authorized officer of the Fund representing that all information
furnished to MSS during the preceding quarter was true, complete and
correct in all material respects. MSS shall not be responsible for the
accuracy of any information furnished to it by the Fund or its
authorized agents, and the Fund shall hold MSS harmless in regard to
any liability incurred by reason of the inaccuracy of such information.
(b)Whenever, in the course of performing its duties under this
Agreement, MSS determines, on the basis of information supplied to MSS
by the Fund or its authorized agents, that a violation of applicable
law has occurred or that, to its knowledge, a possible violation of
applicable law may have occurred or, with the passage of time, would
occur, MSS shall promptly notify the Fund and its counsel of such
violation.
5. ACTIVITIES OF MSS.
The services of MSS under this Agreement are not to be deemed
exclusive, and MSS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by MSS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved.
MSS agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. MSS shall assist
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records. MSS shall
preserve the accounts and records as they are required to be maintained and
preserved by Rule 31a-1.
7. CONFIDENTIALITY.
MSS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
8. TERM OF AGREEMENT.
(a) This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three years; provided, however, that each
party to this Agreement have the option to terminate the Agreement, without
penalty, upon 90 days prior written notice.
(b) Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movements of records and material will be borne by
the Fund. Additionally, MSS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. MISCELLANEOUS.
(a) Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
(b) The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of Ohio as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of Ohio, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
(c) This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
<PAGE>
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
(e) All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To MSS:
Longboat Trust Mutual Shareholder Services
The Tower at Erieview, 36th Floor The Tower at Erieview, Suite 1005
1301 East Ninth Street 1301 East Ninth Street
Cleveland, OH 44114 Cleveland, OH 44114
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LONGBOAT TRUST MUTUAL SHAREHOLDER SERVICES
By: By:
----------------------------- -----------------------------------
Richard A. Barone, President Its:
-----------------------------------
<PAGE>
EXHIBIT A
FEE SCHEDULE
The following fees will be paid in respect of each portfolio of the Fund:
ANNUAL FEE
AVERAGE PORTFOLIO (payable monthly at
NET ASSETS the end of each month)
First $25 Million in Assets $17,400.00*
Next $25 Million in Assets $ 8,500.00
Each Additional $25 Million in Assets $ 4,750.00
*Notwithstanding the foregoing, if the average net asset value of the portfolio
for the month is less than $10,000,000, the portfolio will pay an annual fee
(payable monthly) equal to .174% of average net assets for the month.
<PAGE>
Exhibit L
RESOURCE MANAGEMENT INC.
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
___________, 2000
Longboat Trust
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
Re: Purchase Agreement for Initial Capital
Gentlemen:
We are purchasing from you today ___________________ of Longboat Trust
(formerly named AOTI Trust@), an Ohio business trust (the ATrust@), at a price
of $10.00 per share, for an aggregate price of $100,000, 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
<PAGE>
Exhibit M
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
(Investor Shares Only)
WHEREAS, Longboat Trust (the ATrust@) engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the AAct@); and
WHEREAS, the Trust is comprised of the series set forth on Schedule 1,
as such schedule is revised from time to time (each, a APortfolio@); and
WHEREAS, the shares of each Portfolio are divided into two classes,
namely, Investor Shares and Institutional Shares; and
WHEREAS, the Trust desires to adopt this Plan pursuant to Rule 12b-1
under the Act, and the Trust=s Board has determined that there is a reasonable
likelihood that adoption of this Plan will benefit the Portfolios and holders of
the Investor Shares; and
WHEREAS, the Trust engages Maxus Securities Corp. (the ADistributor@)
as distributor for the Portfolios= shares (the AShares@) pursuant to a
Distribution Agreement dated as of the date hereof.
NOW, THEREFORE, the Trust hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan in accordance with Rule 12b-1 under the Act on
the following terms and conditions:
1. (a) Each Portfolio shall pay the Distributor a
shareholder servicing and distribution fee at the
annual rate of 0.60% of the average daily net assets
of the Investor Shares of such Portfolio.
(b) Such fee will be used by the Distributor to make
payments for administration, shareholder services and
distribution assistance for holders of Investor
Shares, including, but not limited to (i)compensation
to securities dealers and other persons and
organizations (collectively, AService Organizations@),
for providing distribution assistance with respect
to Investor Shares, (ii) compensation to Service
Organizations for providing administration, accounting
and other shareholder services with respect to
Investor Shares, and (iii) otherwise promoting the
sale of Investor Shares, including paying for the
preparation of advertising and sales literature and
the printing and distribution of such materials to
prospective investors. The Distributor shall determine
the amounts to be paid to third parties and the basis
on which such payments will be made. Payments to a
third party are subject to compliance by the third
party with the terms of any related Plan agreement
between the third party and the Distributor.
(c) For the purposes of determining the fees payable
under this Plan, the value of each Portfolio=s net
assets shall be computed in the manner specified in
the Trust=s charter documents as then in effect for
the computation of the value of such Portfolio=s net
assets.
2. As respects each Portfolio, this Plan shall not take effect
until it, together with any related agreement, has been
approved by vote of a majority of both (a) the Trust=s Board
and (b) those Trustees who are not Ainterested persons@ of the
Trust (as defined by the Act) and who have no direct or
indirect financial interest in the operation of this Plan or
any agreements related to it (the ARule 12b-1 Trustees@) cast
in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related Agreements.
<PAGE>
3. As respects each Portfolio, this Plan shall remain in effect
until May 31, 2001 and shall continue in effect thereafter so
long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in
paragraph 2.
4. The Distributor shall provide to the Trust=s Board and the
Board shall review, at least quarterly, a written report of
amounts paid hereunder and the purposes for which they were
made.
5. As respects each Portfolio, this Plan may be terminated at any
time by vote of a majority of the Rule 12b-1 Trustees or by a
vote of a majority of the outstanding Investor Shares of such
Portfolio.
6. This Plan may not be amended as to any Portfolio to increase
materially the amount of compensation payable pursuant to
paragraph 1 hereof unless such amendment is approved by a vote
of at least a majority (as defined in the Act) of the
outstanding Investor Shares of such Portfolio. No material
amendment to the Plan shall be made unless approved in the
manner provided in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of
the Trustees who are not interested persons (as defined in the
Act) of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons.
8. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 4
hereof, for a period of not less than six years from the date
of this Plan, any such agreement or any such report, as the
case may be, the first two years in an easily accessible
place.
9. This Plan may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument. The name Longboat Trust is the designation of the
Trustees for the time being under an Amended and Restated
Declaration of Trust dated September 15, 1998, as amended from
time to time, and all persons dealing with the Trust must look
solely to the property of the Trust for enforcement of any
claims against the Trust as neither the Trustees, officers,
agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of each Portfolio, and the
Distributor have executed this Plan as of the date set forth below.
Dated: ________________, 2000
LONGBOAT TRUST
By:/s/ Richard A. Barone
MAXUS SECURITIES CORP.
By:/s/ Richard A. Barone
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SCHEDULE 1
Name of Series
Maxus Darwinian Fund
Maxus Financial Consolidation Fund
Maxus Founders Fund
Maxus International Equity Fund
OTI Fund
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REGISTRATION STATEMENT -- OTI Fund/Longboat Trust