Registration No. 2-84222
File No. 811-3758
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 17 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [ ]
Amendment No. 18 [X]
(Check appropriate box or boxes)
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MATRIX/LMH VALUE FUND, INC.
(Formerly LMH Fund, Ltd.)
(Exact Name of Registrant as Specified in Charter)
444 Madison Ave., Ste. 302
New York, NY 10022
(Address of Principal Executive Office) (Zip Code)
Judith Shandling, Esq.
Shereff, Friedman, Hoffman & Goodman
919 Third Avenue
New York, New York 10022
(Name and Address of Agents for Service)
Approximate date if proposed public offering: Continuous
It is proposed that this filing will become effective (check appropriate box):
[X] Immediately upon filing [ ] On pursuant
pursuant to paragraph to paragraph (b), or
(b), or
[ ] 60 days after filing [ ] on pursuant
pursuant to paragraph to paragraph (a)(i)
(a)(i)
[ ] 75 days after filing [ ] on pursuant
pursuant to paragraph to paragraph (a)(ii) of
(a)(ii) Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Registrant has registered an indefinite number of shares of its Common
Stock, par value of $.01 per share, pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal year ended
June 30, 1997 was filed on August 26, 1997.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 495)
N-1A Item No. Location
Part A
Item 1. Cover Page........................... Cover Page
Item 2. Synopsis............................. Expense
Information
Item 3. Financial Highlights................. Financial
Highlights
Item 4. General Description of Registrant.... Investment
Program
Item 5. Management of the Fund............... Management
Item 5A Management's Discussion of Fund See Annual
Performance Reports to
Shareholders
Item 6. Capital Stock and Other Securities. . . Dividends
Distributions
and Taxes;
Net Asset
Value
Item 7. Purchase of Securities Being Offered . . How to
Purchase
Shares; Net
Asset Value
Item 8. Redemption or Repurchase. . . . . . . . How to Redeem
Shares
Item 9. Pending Legal Proceedings . . . . . . . N/A
Part B
Item 10. Cover Page ............................. Cover Page
<PAGE>
Item 11. Table of Contents....................... Table of
Contents
Item 12. General Information and History . . . . Not
Applicable
Item 13 Investment Objectives and Policies .... Investment
Program;
Investment
Restrictions;
Item 14. Management of the Fund................... Directors,
Officers and
Principal
Shareholders
Item 15. Control Persons and Principal Holders
of Securities........................... Directors,
Officers and
Principal
Shareholders
Item 16. Investment Advisory and Other Services.. Directors,
Officers and
Principal
Shareholders
Item 17. Brokerage Allocation................... Portfolio and
Brokerage
Transactions
Item 18. Capital Stock and Other Securities...... Capital
Stock
Item 19. Purchase, Redemption and Pricing of
Shares Being Offered.............. Additional
Redemption
Information
Item 20. Tax Status............................. Additional
Tax Infor-
mation
Item 21. Underwriters........................... Not
Applicable
Item 22. Performance Information................ Performance
Information
Item 23. Financial Statements.................. Financial
Statements
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Post-Effective Amendment to this
Registration Statement
<PAGE>
444 MADISON AVE., SUITE 302
NEW YORK, NEW YORK 10022
(800) 366-6223
(800) 385-7003 Account Information
Matrix/LMH Value Fund is a no-load, diversified mutual fund. The
investment objective of the Fund is to achieve a total rate of return
which is comprised of capital appreciation and current income. The Fund
selects equity securities for investment using the principles of value
investing.
Matrix Asset Advisors, Inc. is the Fund's investment advisor.
Table of Contents
Expense Information 2
Financial Highlights 3
Investment Program 4
Management 5
How To Purchase Shares 6
How To Redeem Shares 7
Exchange Privilege 8
Dividends, Distributions and Taxes 10
Transfer and Dividend Disbursing Agent 11
General Information 11
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this prospectus and retain it for future reference. It
sets forth concisely the information about the Fund a prospective
investor ought to know before investing.
Additional information about the Fund is contained in the Statement
of Additional Information dated September 12, 1997 filed with the
Securities and Exchange Commission. The Statement is hereby
incorporated by reference into this prospectus and is available upon
request and without charge by calling the number listed above or by
writing to the above address.
Prospectus dated September 12, 1997
EXPENSE INFORMATION
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 1.00%
12b-1 Fees None
Other Expenses 0.42%*
Total Fund Operating Expenses 1.42%*
* The Fund's operating expense ratio for the fiscal year ended June 30,
1997 was 1.42%, after the Adviser's fee waivers and expense
reimbursement. Without such waivers and reimbursements, operating
expenses for the year would have been 1.92%. See "Management" on page 5.
The purpose of the table is to assist the investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly or indirectly.
Example
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period.
1 year 3 years 5 years 10 years
$14 $45 $78 $172
This example should not be considered a representation of past or
future performance. Actual expenses may be greater or less than those
shown. In addition, federal regulations require the Example to assume a
5% annual return, but the Fund's actual return may be higher or lower.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $24.10 $20.98 $17.78 $18.45 $17.08 $15.79 $17.88 $21.75 $18.83 $25.49
Income from investment
operations:
Net investment income 0.10 0.47 0.46 0.34 0.30 0.36 0.57 0.59 0.82 1.61
Net realized and unrealized
gain (loss) on investments 5.52 3.12 3.13 (0.78) 1.44 1.36 (1.92) (1.38) 2.92 (2.78)
Total from investment operations 5.62 3.59 3.59 (0.44) 1.74 1.72 (1.35) (0.79) 3.74 (1.17)
Less distributions:
Dividends from net investment
income (0.33) (0.47) (0.39) (0.23) (0.37) (0.43) (0.64) (0.72) (0.82) (2.37)
Distributions from net
capital gains 0.00 0.00 0.00 0.00 0.00 0.00 (0.10) (2.36) 0.00 (3.12)
Total distributions (0.33) (0.47) (0.39) (0.23) (0.37) (0.43) (0.74) (3.08) (0.82) (5.49)
Net asset value, end of year $29.39 $24.10 $20.98 $17.78 $18.45 $17.08 $15.79 $17.88 $21.75 $18.83
Total return 23.47% 17.16% 20.47% (2.44)% 10.30% 11.09% (7.15)% (4.08)% 20.46% (20.52)%
Ratios/supplemental data:
Net assets, end of
period (millions) $ 8.5 $ 6.6 $ 6.0 $ 5.7 $ 6.9 $ 7.7 $ 9.7 $26.7 $38.1 $40.0
Ratio of expenses to
average net assets:
Before expense reimbursement 1.92% 1.84% 2.35% 2.51% 2.55% 2.63% 2.39% 1.81% 1.55% 1.44%
After expense reimbursement 1.42% 1.84% 2.35% 2.50% 2.50% 2.63% 2.39% 1.81% 1.55% 1.44%
Ratio of net investment income
to average net assets:
Before expense reimbursement (0.06)% 2.01% 2.27% 1.79% 1.52% 1.86% 2.61% 2.40% 3.65% 4.09%
After expense reimbursement 0.44% 2.01% 2.27% 1.80% 1.58% 1.86% 2.61% 2.40% 3.65% 4.09%
Portfolio turnover rate 129% 57% 34% 46% 53% 76% 133% 59% 26% 72%
Average commission rate
paid per share $.0576 - - - - - - - - -
*Unaudited.
+Annualized.
</TABLE>
The above financial highlights, insofar as they pertain to each of
the ten years in the period ended June 30, 1997 have been audited by
Price Waterhouse LLP, independent accountants, whose report thereon was
unqualified. This information should be read in conjunction with the
financial statements and notes thereto which appear in the annual report
and are incorporated by reference into the Statement of Additional
Information. Further information about the Fund's performance may be
included in its annual report which may be obtained without charge by
writing or calling the address or telephone number on the Prospectus
cover page.
INVESTMENT PROGRAM
Investment Objective
The investment objective of the Fund is to achieve a total rate of
return composed of capital appreciation and current income. The Fund
selects for investment only securities that are financially strong and
meet specific valuation criteria using the principles of value investing
based on Classic Valuation Analysis.
This investment objective is a fundamental policy that cannot be
changed without approval of the holders of a majority of the Fund's
shares, as defined on page 12. There is no assurance that the Fund will
achieve its investment objective.
Classic Valuation Analysis
Classic Valuation Analysis is an investment methodology based on
principles developed over 50 years ago by Benjamin Graham. The
underlying principle of Classic Valuation Analysis is "Buy value . . .
it will out." Companies are selected as suitable investments based on
objective criteria that require a strong financial position, as measured
by balance sheet data, and current low stock market valuation in
comparison to investment value, as measured by historic and current
earnings, dividends, return on equity and book values.
Once an equity investment has been purchased for the Fund's
portfolio, it generally is sold for one of two reasons: (1) the
security no longer represents a value, as determined by the Investment
Advisor, or (2) there has been a fundamental change in the issuer's
balance sheet or results of operations so that it no longer meets the
Fund's financial or valuation criteria. As is the case with all
investment methods, however, value investing using Classic Valuation
Analysis does not ensure profit or protect against loss in declining
markets. The Investment Advisor believes that the implementation of the
principles of value investing using Classic Valuation Analysis
constitutes a sound and conservative approach for seeking total return
over time.
Portfolio Management
The Fund invests primarily in common stocks, but may also invest in
preferred stocks and securities convertible into common stocks. The Fund
may purchase securities traded on national securities exchanges or
over-the-counter, and may purchase blocks of stock from principals in
privately negotiated transactions.
Consistent with the principles of Classic Valuation Analysis, the
Fund diversifies its portfolio over a range of companies and industries.
Not more than 5% of the Fund's total assets (determined at the time of
investment) will be invested in the securities of any one company. In
addition, the Fund is not permitted to invest more than 25% of its
assets at the time of investment in the securities of companies within
any one industry. The Fund does not attempt to weight particular
industries or segments. The Fund will not purchase any securities which
would cause the Fund at the time of such purchase to own more than 10%
of the outstanding voting securities of any class of any issuer, but
this limitation does not apply to obligations issued or guaranteed by
the U.S. government.
Decisions to sell the Fund's portfolio securities are generally
made solely on the basis of the criteria outlined under "Classic
Valuation Analysis" above, but the Fund may, in unusual circumstances,
sell a security at a time when the sale is not indicated by Classic
Valuation Analysis to avoid adverse tax consequences or to meet
abnormally heavy redemption requests. While the Fund invests primarily
in equity securities in a manner consistent with the principles of
Classic Valuation Analysis, it may elect to maintain a portion of its
assets in fixed income securities. Such investments, except as stated
below, will have a maturity of less than one year and will consist of
U.S. Government securities, certificates of deposit and bankers'
acceptances of U.S. banks, and commercial paper. All non-U.S. government
short-term investments will have received one of the two highest ratings
from a major rating service. In the case of direct obligations of the
U.S. Treasury, the Fund may invest in instruments of any maturity.
The Fund may invest up to 10% of its total assets in foreign
securities, but only if such securities are traded on national
securities exchanges or over-the-counter in the United States.
Investment in foreign securities may involve special risks, such as
changes in the administrative, economic, and monetary policies of
foreign governments.
The Fund may write (sell) covered call options on individual
securities and engage in related closing transactions. A covered call
option on a security is an agreement by the Fund, in exchange for a
premium, to sell a particular portfolio security if the option is
exercised at a specified price before a set date. Risks associated with
writing covered call options include the possible inability to effect
closing transactions at favorable prices or in a liquid market and an
appreciation limit on the securities set aside for settlement. The Fund
may also purchase and sell options in closing transactions.
The Fund has no present intentions of purchasing restricted
securities, and may not purchase such securities in amounts in excess of
5% of its total assets. The Fund may not borrow money, except for
temporary emergency purposes in amounts not in excess of 5% of the
Fund's total assets.
MANAGEMENT
The business and affairs of the Fund are managed by its Board of
Directors. Subject to the supervision of the Board, Matrix Asset
Advisors, Inc., 444 Madison Ave., New York, NY 10022, serves as the
Fund's investment advisor, and as such manages the Fund's portfolio and
administers its day-to-day affairs. Mr. David A. Katz is responsible
for management of the Fund's portfolio. Mr. Katz also is President,
Chief Investment and Financial Officer and Secretary of the Fund.
The Fund pays all the expenses of its operation except certain
expenses specifically assumed by the Investment Advisor. The Fund pays
the Investment Advisor an annual fee of 1% of the Fund's average daily
net assets.
Matrix Asset Advisors is a registered investment advisor which was
founded in 1986. Matrix provides investment advisory services to
individuals, endowment, and pension accounts with a value of over $450
million. The two principal shareholders of Matrix are Mr. David A. Katz
and Mr. Morley Goldberg. Matrix is located at 444 Madison Avenue, New
York, NY 10022. Matrix has undertaken to limit the Fund's annual ratio
of operating expenses to average net assets to no more than 1.65% for
the remainder of the current fiscal year. This undertaking is voluntary,
and may be withdrawn upon notice to shareholders. The Advisor has
retained the services of Investment Company Administration Corporation
("ICAC") to perform certain administrative functions for the Fund. ICAC
prepares various federal and state regulatory filings, reports and
returns for the Fund, prepares reports and materials to be supplied to
the directors, monitors the activities of the Fund's custodian, transfer
agent and accountants, and coordinates the preparation and payment of
Fund expenses and reviews the Fund's expense accruals.
HOW TO PURCHASE SHARES
The Fund offers its shares on a continuous basis at their net asset
value, which will fluctuate with the value of the Fund's investments. No
sales load or commission is charged. Brokers and other financial
intermediaries may charge a transaction fee if shares are purchased
through them.
The minimum initial purchase of shares of the Fund is $1,000 ($500
for IRA plan and automatic investment accounts). The minimum for
subsequent purchases is $100 for all accounts.
Investment by Mail
New investors may order shares by mailing a completed account
application, together with payment for the order, to the Fund,
Matrix/LMH Value Fund, P.O. Box 641220, Cincinnati, OH 45264-1220.
Checks should be made payable to "Matrix/LMH Value Fund". Additional
account applications are available by calling 1-800-385-7003. Subsequent
investments can be made by mailing a check to the Fund along with either
(a) the detachable form which accompanies confirmation of a prior
investment, or (b) a letter indicating the dollar value of shares to be
purchased and identifying the Fund, the account number and account
registration.
Investment by Wire
Investors may invest in the Fund by wire by first contacting the
Fund's custodian bank at 1-800-385-7003 and then wiring the amount to be
invested, in care of the Fund's custodian bank, at the following
address:
Star Bank, N.A., Cinti/Trust
ABA 0420-0001-3
Attn: Matrix/LMH Value Fund
DDA #486447501
Account # (shareholder account number)
At the same time the investor should mail an application form to
the Fund at the following address:
Matrix/LMH Value Fund
P.O. Box 641220
Cincinnati, OH 45264-1220
Payment and Terms of Offering
All orders must be accompanied by payment by check or money order
on a U.S. bank, bank wire or federal funds wire. The Fund may reject
orders paid for by checks drawn on foreign banks. Checks should be made
payable to "Matrix/LMH Value Fund"
Orders are priced at the net asset value determined as of the close
of the New York Stock Exchange on the day the order is received by the
Fund's transfer agent, provided the order is received before the close
of the Exchange on a day the Exchange is open. Orders received after
the close of the Exchange, or on a day the Exchange is not open are
priced as of the close of the Exchange on its next business day. The
Fund reserves the right to require payment by certified or official bank
check or wire transfer for orders of $50,000 or more. Orders are applied
to the purchase of full or fractional shares to three decimal places.
The Transfer Agent will mail a confirmation of each completed purchase
to the shareholder. A shareholder will not receive a share certificate
for his shares unless he requests one in writing.
The Fund reserves the right to reject any order at its sole
discretion. A purchase order is not binding until it is confirmed by the
Transfer Agent. If an order to purchase shares is canceled because an
investor's check does not clear, the investor will be liable for any
loss incurred by the Fund, the Investment Advisor, or the Transfer
Agent.
Retirement Plans
The Fund makes available an IRA plan for those investors who wish
to make contributions of Fund shares to such a plan. Information
regarding eligibility for the IRA plan, and the necessary plan
documents, are available from the Transfer Agent or the Fund. Investors
should consult their tax or legal Advisors before determining to adopt
an IRA plan.
Automatic Investments
Investors who wish to make regular additional monthly investments
in the Fund may establish an Automatic Investment Plan, with a reduced
minimum initial investment of $500. Under this Plan, each month the Fund
will draft the investor's bank account in the amount specified - which
must be at least $100 - and have the proceeds invested in shares of the
Fund at the applicable net asset value determined on the date of the
draft. To use this plan, investors must complete the Automatic
Investment Plan application, which is available by calling the Transfer
Agent at (800) 385-7003.
HOW TO REDEEM SHARES
The Fund will redeem its shares at any time at their net asset
value next determined after the Transfer Agent receives a proper
redemption request.
To effect a redemption, send the following to Matrix/LMH Value
Fund, P.O. Box 5536, Hauppauge, NY 11788-0132; (1) a written request for
redemption, signed by the registered owner(s) exactly as the shares are
registered, which sets forth the account number and states the dollar
value of the shares to be redeemed; (2) if stock certificates have been
issued for any shares to be redeemed, the stock certificates; (3)
signature guarantees, if required (see "Signature Guarantees" on page
9); and (4) for a corporation, executor, administrator, trustee or
guardian, documents evidencing authority to act. In the case of joint
owners of shares, both must sign.
Payment and Terms
Redemption requests may not contain any special conditions or
specify a future date for effecting redemptions; requests containing
such terms or dates will be rejected and will be of no effect.
Redemptions are effected at net asset values next determined after
the Transfer Agent receives a redemption request in proper form.
Redemption requests received before the close of the New York Stock
Exchange on a day the Exchange is open will be effected at net asset
value determined as of the close of the Exchange on that day; requests
received after the close of the Exchange or on a day the Exchange is not
open are effected at net asset value as of the close of the Exchange on
the next day the Exchange is open. The Transfer Agent will normally mail
a redeeming shareholder a check for the redemption proceeds within seven
days after a redemption request is received in proper form. The Fund may
also from time to time accept telephone redemption orders from
investors, generally broker-dealers and institutions, who have been
approved previously by the Fund. If a shareholder requests redemption of
shares which were purchased by check within 15 days before the
redemption request is received, the redemption will be processed as
described above, but the Fund may delay mailing a check for the
redemption proceeds until the earlier of the expiration of the 15 days
or the receipt by the Transfer Agent or confirmation that the check has
cleared. The Fund reserves this right to protect against losses from
checks that do not clear. If a shareholder anticipates redeeming shares
before 15 days have elapsed, it is suggested that the shares be paid for
by wire transfer.
Mandatory Redemption at the Option of the Fund
If, as a result of a redemption, a shareholder's account balance is
reduced below $1,000, the Fund may notify the shareholder that, unless
additional investments are made which bring the account up to $1,000
within 60 days, the account will be closed by redeeming the remaining
shares. This does not apply to IRA accounts.
Signature Guarantees
Signature guarantees are required to (a) redeem shares having a net
asset value of more than $5,000 by mail; (b) request that the bank
account to which redemption proceeds are sent be changed; (c) authorize
transmission of redemption proceeds by bank wire; (d) issue shares in
certificate form; or (e) transfer shares to another person.
Signature(s) on the redemption request must be guaranteed by an
"eligible guarantor institution" as defined in the federal securities
laws; these institutions include banks, broker-dealers, credit unions
and savings institutions. A broker-dealer guaranteeing signatures must
be a member of a clearing corporation or maintain net capital of at
least $100,000. Credit unions must be authorized to issue signature
guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee
program. A notary public is not an acceptable guarantor.
EXCHANGE PRIVILEGE
Shareholders may exchange shares (in amounts of $1,000 or more) of
the Fund for shares in the Star Treasury Fund ("Star Fund"), a money
market fund affiliated with the Fund's Custodian, if such shares are
offered in your state of residence. Prior to making such exchange, you
should obtain and carefully read the prospectus for the Star Fund. The
exchange privilege does not constitute an offering or recommendation on
the part of the Fund or Advisor of an investment in the Star Fund.
To make a telephone exchange, the Exchange Privilege Authorization
option must have been selected on the Account Application form when the
account was opened. Otherwise an Exchange Privilege Application form
must be completed with signature(s) guaranteed and sent to the Transfer
Agent prior to making telephone exchanges. To make an exchange, simply
call the Transfer Agent at 1-800-385-7003 prior to 4:00 p.m. Eastern
Time. Your exchange will take effect as of the next determination of
net asset value per share of each fund involved (usually at the close of
business on the same day). Once an exchange request is made, either in
writing or by telephone, it may not be modified or canceled.
The Fund reserves the right to limit the number of exchanges or to
otherwise prohibit or restrict shareholders from making exchanges at any
time, without notice to shareholders, should the Directors determine
that it would be in the best interest of our shareholders to do so.
Shareholders would be given at least 60 days written notice prior to
changing the fee for an exchange. The Fund will use reasonable
procedures, such as assigned personal identification numbers, in an
attempt to verify the identity of a person making a telephone exchange
request. The Fund reserves the right to refuse a telephone request if it
believes that the person making the request is neither the record owner
of the shares nor otherwise authorized by the shareholder to request the
exchange. Shareholders will be promptly notified of any refused request
for a telephone exchange. Neither the Fund nor its agents will be liable
for any loss, liability, or cost which results from acting upon
instructions of a person believed to be a shareholder with respect to
the telephone exchange privilege.
An exchange, for tax purposes, constitutes the sale of the shares
of one fund and the purchase of those of another; consequently, the sale
will usually involve either a capital gain or loss to the shareholder
for Federal income tax purposes. During drastic economic and market
changes, telephone exchange services may be difficult to implement. The
exchange privilege is only available in states which the exchange may
legally be made.
Shareholders of the Star Fund may request that redemption proceeds
of $1,000 or more be wired directly to a bank account. Shares purchased
by check within 15 days before the redemption request is received will
not be redeemed by wire transfer. Unless the shareholder has authorized
redemption by wire on the account application or by subsequently filling
an authorization with the Star Fund, the signature on a request for wire
transmission of redemption proceeds must be guaranteed.
Net Asset Value
The net asset value of Fund shares is determined as of the close of
business of the New York Stock Exchange on each day on which there is a
sufficient degree of trading in the Fund's portfolio securities to
affect its net asset value. This determination is made by subtracting
the Fund's liabilities from the market value of the Fund's investments
and the value of its other assets, and dividing the result by the number
of Fund shares outstanding.
Portfolio securities which are traded on national securities
exchanges are valued at the last sale price on such exchange as of the
close of the New York Stock Exchange on the day the calculation is made.
If there were no transactions in a security on that day, the security is
generally valued at the last reported bid price. Securities traded
over-the-counter are generally valued at the latest bid price. If no
quotations are available for a security or if the Board of Directors (or
a committee of the Board of Directors appointed for that purpose)
believes that the latest bid price of a security which has not been
traded on the date in question does not fairly reflect its market value,
it is valued in a manner determined in good faith by the Directors, or
their delegates, to reflect its fair value.
Performance Information
From time to time the Fund may include its average annual total
return for various specified time periods in advertisements or
information furnished to present or prospective shareholders.
Average annual total return quotations for the specified periods
will be computed by finding the average annual compounded rates of
return (based on net investment income and any realized and unrealized
capital gains or losses on portfolio investments over such periods) that
would equate the initial amount invested to the redeemable value of such
investment at the end of each period. Average annual total return will
be computed assuming all dividends and distributions are reinvested.
The Fund also may quote aggregate total return performance data for
various specified time periods. Such data will be calculated
substantially as described above, except that the rates of return
calculated will not be average annual rates, but rather, aggregate rates
of return. Aggregate total return data generally will be higher than
average annual total return since the aggregate rates of return reflect
performance over a longer period of time.
Total return figures are based on the Fund's historical performance
and are not intended to indicate future performance. The Fund's total
return will vary depending on market conditions, the securities
comprising the Fund's portfolio, the Fund's operating expenses and the
amount of realized and unrealized net capital gains or losses during the
period. The value of an investment in the Fund will fluctuate and an
investor's shares, when redeemed, may be worth more or less than their
original cost.
The Fund may compare its performance to the Standard & Poor's 500
Composite Stock Price Index, Standard & Poor's Industrials Stock Price
Index, the Dow Jones Industrial Average, or performance data published
by Lipper Analytical Services, Inc. As with other performance data,
performance comparisons should not be considered representative of the
Fund's relative performance for any future period. Further performance
information is contained in the Fund's annual report, which may be
obtained without cost.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Any distributions by the Fund to shareholders are classified
normally as ordinary income dividends or capital gains distributions.
The Fund intends to distribute each year substantially all of its net
investment income and net profits received from the sale of portfolio
securities, after offsetting against these profits any available capital
loss carryforwards. Any dividends and distributions from capital gains
are expected to be made following the end of each of the Fund's fiscal
years. The Fund will be subject to a non-deductible 4% excise tax on
the excess of certain required distributions over the amounts actually
distributed by the Fund. The Fund expects to declare and pay such
distributions of net investment income and capital gains as may be
necessary to avoid the application of this excise tax.
Unless a shareholder indicates otherwise on the account
application, any dividends and distributions will be reinvested in
additional Fund shares credited to the shareholder's account. Dividends
and distributions will be reinvested in Fund shares at their net asset
value determined as of the close of business on the date (no earlier
than the record date nor later than the payment date) determined by the
Board of Directors, and the cost basis of shares so purchased will be
their net asset value as of such date. Shareholders can elect to receive
dividends and distributions in cash by sending a written request to the
Transfer Agent at least three days before the record date for the
dividend or distribution. Reinvestment of dividends and distribution in
shares of the Fund is considered a sale of shares under securities laws
of certain states. Consequently, if a shareholder changes his or her
residence to a state in which the Fund's shares are not registered, the
shareholder may be required to accept dividends and distributions in
cash. If a shareholder elects to have dividends and distributions paid
in cash, the Transfer Agent will mail a check to the shareholder's last
address of record.
The Fund must generally withhold 31% of taxable dividends and
certain other payments to a shareholder who fails to furnish the Fund
with the correct taxpayer identification number, or who is notified by
the Internal Revenue Service that he or she is subject to such
withholding. For Federal income tax purposes, income dividends and
distributions form net short-term capital gains are taxable to
shareholders as ordinary income, whether the distribution is received in
cash or additional shares. Net long-term capital gains distributions,
if any, will be taxable as long-term capital gains, whether the
distribution is received in cash or additional Fund shares and
regardless of how long the Fund shares have been held. In general,
capital gains will be taxed at the rate applicable to a taxpayer's
ordinary income. Dividends and distributions may also be subject to
state or local taxes.
The Fund will advise shareholders within 60 days after the end of
each fiscal year as to the Federal income tax status of any dividends
and distributions made during the year.
At June 30, 1997, the Fund had a capital loss carryforward of
$1,365,764 of which $259,402 expires in fiscal 1999 and $1,106,362
expires in fiscal 2000. To the extent that these deferred losses and
carryforward are used to offset capital gains it is probable that the
gains so offset will not be distributed to shareholders.
TRANSFER AND DIVIDEND DISBURSING AGENT
American Data Services acts as the Fund's transfer and dividend
disbursing agent. Inquiries may be directed to the Transfer Agent at
P.O. Box 5536, Hauppauge, NY 11788-0132.
GENERAL INFORMATION
Organization and Capitalization
The Fund is a Maryland corporation organized on May 4, 1983. It is
registered under the Investment Company Act of 1940 as an open-end,
diversified, investment company.
The Fund's authorized capital stock consists of a single class
designated "Common Stock" in the Fund's Articles of Incorporation. Each
full share outstanding is entitled to one vote at all meetings of
shareholders and to share equally in the Fund's assets in liquidation.
Each full share participates equally in dividends and distributions
declared by the Board of Directors. Shares of the Fund do not have
cumulative voting rights for the election of directors. The Fund does
not intend to hold annual meetings of shareholders unless otherwise
required by law.
Vote of Majority of Shares
As used in this Prospectus, the term "vote of the holders of a
majority of the Fund's shares" means an affirmative vote of (i) at least
a majority of all outstanding shares, or (ii) at least 67% of the shares
represented at a shareholder meeting at which the holders of more than
50% of the outstanding shares are represented.
Brokerage Allocation
Subject to the supervision of the Fund's Board of Directors, the
Advisor selects the brokers and dealers to effect the Fund's portfolio
transactions. It is the policy of the Fund to select brokers and dealers
who will provide the Fund the best price and execution of orders.
Subject to this requirement, the Fund may execute some or all of the
Fund's transactions through brokers who have assisted investors in
effecting purchases of Fund shares or who have recommended the purchase
of Fund shares to investors.
Reports and Inquiries
The Fund will send to its shareholders semi-annual reports
containing unaudited financial statements and annual financial
statements with a report thereon by the Fund's independent accountants.
Each report will show the Fund's investments and the market values
thereof, and will provide other information about the Fund's operations.
Shareholder inquiries should be directed to the Fund or, for
account information the Transfer Agent, at 1-800-385-7003. Their
addresses are set forth on the back cover of this prospectus.
Investment Advisor
Matrix Asset Advisors, Inc.
444 Madison Avenue, 3rd Floor
New York, NY 10022
(800) 366-6223
o
Custodian
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
o
Transfer Agent
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
(800) 385-7003
o
Independent Accountants
Price Waterhouse LLP
o
Legal Counsel
Shereff, Friedman, Hoffman & Goodman
Prospectus
MATRIX / LMH
VALUE FUND
September 12, 1997
560 Hudson Street
Hackensack, New Jersey 07601
<PAGE>
MATRIX/LMH VALUE FUND
444 Madison Ave., Ste. 302
New York, NY 10022
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information dated September 10, 1997
contains information about the MATRIX/LMH VALUE FUND (the "Fund"), in addition
to that contained in the Fund's prospectus, dated September 10, 1997. This
Statement is not a prospectus, and should be read in conjunction with the Fund's
prospectus, which may be obtained by calling (212) 486-2004 or (800) 385-7003.
<TABLE>
Table of Contents
<CAPTION>
Page
<C> <S>
2........................................................................................................Investment Program
3...................................................................................................Investment Restrictions
4.........................................................................................Additional Investment Information
5............................................................................Directors, Officers and Principal Shareholders
6........................................................................................................Investment Adviser
7..................................................................................... Portfolio and Brokerage Transactions
8.........................................................................................Additional Redemption Information
8................................................................................................Additional Tax Information
9...................................................................................................Performance Information
10........................................................................................................Observed Holidays
10.............................................................................................Custodian and Transfer Agent
10......................................................................................Counsel and Independent Accountants
10............................................................................................................Capital Stock
11.....................................................................................................Financial Statements
</TABLE>
<PAGE>
INVESTMENT PROGRAM
The following information supplements the discussion of the Fund's
investment program beginning on page 4 of the prospectus.
Options on Securities
The Fund may write (sell) covered call options on its portfolio
securities ("covered options") in an attempt to enhance gain, although it has no
present intention to do so and may only do so to the extent of up to 5% of its
net assets.
When the Fund writes a covered call option, it gives the purchaser of
the option the right, upon exercise of the option, to buy the underlying
security at the price specified in the option (the "exercise price") at any time
during the option period, generally ranging up to nine months. If the option
expires unexercised, the Fund will realize income to the extent of the amount
received for the option (the "premium"). If the call option is exercised, a
decision over which the Fund has no control, the Fund must sell the underlying
security to the option holder at the exercise price. By writing a covered
option, the Fund forgoes, in exchange for the premium less the commission ("net
premium") the opportunity to profit during the option period from an increase in
the market value of the underlying security above the exercise price.
The Fund may terminate its obligation as writer of a call option by
purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction."
Closing purchase transactions enable the Fund immediately to realize
gains or minimize losses on its options positions. There is no assurance that a
liquid secondary market on an options exchange will exist for any particular
option, or at any particular time, and for some options no secondary market may
exist. In addition, stock index prices may be distorted by interruptions in the
trading of securities of certain companies or of issuers in certain industries,
which could disrupt trading in option positions on such indices and preclude the
Fund from closing out its options positions. If the Fund is unable to effect a
closing purchase transaction with respect to options it has written, it will not
be able to terminate its obligations or minimize its losses under such options
prior to their expiration.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements may take place in the underlying markets that cannot be
reflected in the options markets.
2
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions, which are
"fundamental policies" which cannot be changed without approval of the holders
of a majority of the Fund's shares, as defined on page 13 of the prospectus. The
Fund may not:
1. Purchase any securities which would cause more than 5% of the Fund's
total assets at the time of such purchase to be invested in the securities of
any issuer, but this limitation does not apply to obligations issued or
guaranteed by the U.S. Government;
2. Purchase any securities which would cause the Fund at the time of
such purchase to own more than 10% of the outstanding voting securities of any
class of any issuer, but this limitation does not apply to obligations issued or
guaranteed by the U.S. Government;
3. Purchase any securities which would cause more than 25% of the
Fund's total assets at the time of such purchase to be concentrated in the
securities of issuers engaged in any one industry;
4. Invest in companies for the purpose of exercising management or
control;
5. Purchase or sell real estate, although the Fund may invest in the
readily marketable securities of companies whose business involves the purchase
or sale of real estate;
6. Purchase or sell commodities or commodities contracts;
7. Purchase the securities of any investment company, except (I) in the
open market where no profit to a sponsor or dealer other than customary
brokerage commissions results from such purchases or (ii) if acquired in
connection with a plan of reorganization;
8. Purchase securities on margin;
9. Effect short sales of any securities;
10. Make loans, except by the acquisition of a portion of an issue of
publicly traded bonds, debentures, notes, and other debt securities;
11. Borrow money, except for temporary emergency purposes in amounts
not in excess of 5% of the Fund's total assets;
12. Mortgage, pledge or hypothecate securities;
13. Act as an underwriter of securities except insofar as the Fund
might technically be deemed an underwriter for purposes of the Securities Act of
1933 upon the disposition of certain securities;
3
<PAGE>
14. Purchase or retain the securities of any issuer if the Fund's
officers or directors, or those of the Advisor, who each own .5% of the
outstanding securities of such issuer, together own beneficially more than 5% of
such securities; or
15. Issue any class of securities senior to any other class of
securities.
As a matter of operating but not fundamental policy, which can be
changed without shareholder approval, the Fund may not purchase any securities
which would cause more than 5% of the Fund's total assets at the time of such
purchase to be invested in securities which may not be publicly sold without
registration under the Securities Act of 1933 or are otherwise not readily
marketable. If such policy were to be changed, such investments would be limited
to no more than 15% of total assets.
The Fund is required to comply with all of the above fundamental and
operating investment restrictions only at the time the relevant action is taken.
The Fund need not liquidate an existing position solely because a change in the
market value of an investment, or a change in the value of the Fund's net or
total assets, cause it to not comply with the restrictions at some future date.
ADDITIONAL INVESTMENT INFORMATION
While the Fund intends to invest primarily in equity securities, it
will purchase such securities only when suitable investments can be found.
During periods when suitable investments cannot be found, and as an interim
measure pending investment in equity securities, the Fund may elect to maintain
a portion of its assets in fixed income securities. Such investments, except as
stated below, will have a maturity of less than one year and will consist of
U.S. Government securities, certificates of deposit and bankers' acceptances of
U.S. banks and commercial paper. All non-U.S. Government short-term investments
will have received one of the two highest ratings from a major rating service.
In the case of direct obligations of the U.S. Treasury, the Fund may invest in
instruments of any maturity.
The Fund has the authority to invest up to 10% of its total assets in
foreign securities, but only if such securities are traded on national
securities exchanges or in the over-the-counter market in the United States.
Investment in foreign securities may involve special risks, such as changes in
the administrative, economic and monetary policies of foreign governments.
For the year ended June 30, 1997 and June 30, 1996, the Fund's
portfolio turnover rates were 129% and 57%, respectively.
4
<PAGE>
DIRECTORS, OFFICERS and PRINCIPAL SHAREHOLDERS
The directors and officers of the Fund are as follows:
<TABLE>
Name and Address and Principal Offices with the Fund
Occupations During the Past Five Yrs.
<CAPTION>
<S> <C>
David A. Katz, CFA, Age 35* President, Secretary, and Treasurer
444 Madison Ave.
New York, NY 10022
Mr. Katz is President and Chief Investment Officer of Matrix Asset Advisors, the
Fund's Advisor, and portfolio manager of the Fund. He has been associated with
the Advisor and its predecessor since its founding in 1986.
Robert M. Rosencrans, Age 69 Director
331 Round Hill Rd.
Greenwich, CT 06830
Mr. Rosencrans has been President of Columbia International, Inc. since 1984. From 1962 to 1984
he was President and Chief Executive Officer of United Artists Cablesystems Corporation.
Mr. T. Michael Tucker, Age 54 Director
218 South Pear Street
Blountstown, FL 32424
Mr. Tucker is the owner of T. Michael Tucker, a certified public accounting firm which he
established in 1977.
Mr. Larry D. Kieszek, Age 46 Director
222 Northeast First Street
Gainesville, FL 32602
Mr. Kieszek is Managing Partner of Purvis, Gray & Company, a certified public
accounting firm with which he has been associated since 1974.
- -----------------
*Mr. Katz is an "interested person" of the Fund within the meaning of the Investment Company Act
of 1940.
</TABLE>
5
<PAGE>
All directors who are not interested persons receive a fee of $500 per
meeting plus expenses of attending Board of Directors meetings. With respect to
meetings held during the fiscal year ended June 30, 1997, the Directors did not
receive fees or expense reimbursement.
The directors and officers of the Fund as a group may be deemed to own
beneficially less than 1% of Fund shares outstanding as of September 1, 1997.
INVESTMENT ADVISER
Matrix Asset Advisers, Inc. (the "Adviser") serves as the Fund's
Investment Adviser under an Advisory Agreement, which provides that the Adviser
will obtain and evaluate information relating to the economy, industries,
businesses, securities markets and securities, formulate a continuing program
for the management of the Fund's assets in a manner consistent with its
investment objective, and implement this program by selecting on a discretionary
basis the securities to be purchased or sold by the Fund and placing orders for
such purchases and sales. In addition, the Adviser provides for the Fund's
office needs, supervises the maintenance of the Fund's books and records,
provides the Fund with persons competent to perform all of these executive and
administrative functions, supervises and coordinates the activities of the
Fund's institutional and other agents (e.g., custodian, transfer agent,
independent accountants, outside legal counsel), and permits its officers and
employees to serve as directors and officers of the Fund, all without additional
cost to the Fund. Certain directors and officers of the Adviser presently serve
as directors or officers of the Fund. The Adviser has retained, at its own
expense, Investment Company Administration Corporation, 560 Hudson Street,
Hackensack, NJ 07601, to assist it in providing the Fund with certain
administrative services.
The Fund pays all other expenses incurred in the operation of the Fund,
except as provided below, including taxes, fees and commissions, bookkeeping
expenses, share issuance expenses, expenses of redemption of shares, charges of
its custodian and transfer agent, costs of preparing and printing reports and
prospectuses for the Fund's existing shareholders, registration fees, auditing
and legal expenses, and expenses and fees of outside directors.
The Adviser also has agreed to pay the fees and expenses of printing
and distributing reports or prospectuses prepared for the Fund in connection
with the offering or sale of its shares, of preparing and setting in type,
printing and mailing all advertising and sales literature and all other expenses
in connection with the offer and sale of Fund shares not specifically allocated
to the Fund.
The Fund has agreed to pay the Adviser, as compensation for all
services rendered, staff and facilities provided and expenses paid or assumed
(excluding organizational costs), an annual fee, payable monthly, of 1% of the
Fund's average daily net assets. Heine Management Group, Inc. served as
Investment Adviser to the Fund from its inception until April 18, 1997, when
shareholders approved the Investment Advisory Agreement with the Adviser. For
the fiscal year ended June 30, 1997, investment advisory fees of $75,679 were
incurred, of which $38,128 were waived by Heine
6
<PAGE>
Management and the Advisor. Heine Management received advisory fees of $64,214
for the year ended June 30, 1996, and $58,499 for the year ended June 30, 1995.
The Advisory Agreement continues in effect from year to year, if such
continuation is specifically approved at least annually by the Fund's Board of
Directors at a meeting called for that purpose, or by vote of the holders of a
majority of the Fund's shares, and in either case, also by a vote of a majority
of the Fund's shares and in either case, also by a vote of a majority of
directors who are not "interested persons" of the Adviser or the Fund within the
meaning of the Investment Company Act of 1940. The Advisory Agreement is subject
to termination by either party without penalty on 60 days' written notice to the
other and terminates automatically in the event of its assignment.
The Adviser is a registered investment advisor which was founded in
1986. It provides investment advisory services to individuals, endowment and
pension accounts with a value of over $400 million. The Adviser is controlled by
Mr. David A. Katz and Mr. Morley Goldberg.
The Advisory Agreement provides that neither the Adviser, its
directors, officers or employees, nor certain other persons performing specific
functions for the Fund, shall be liable to the Fund, except for any loss
resulting from willful misfeasance, bad faith, gross negligence or reckless
disregard of duty.
PORTFOLIO AND BROKERAGE TRANSACTIONS
The Investment Adviser is responsible for the selection of brokers and
dealers to effect the Fund's portfolio transactions, subject to the supervision
of the Fund's Board of Directors. It is the policy of the Fund to select brokers
and dealers who will provide the Fund with the best price and execution of
orders. Commission rates are a component of price and are considered together
with other relevant factors.
Purchases and sales of securities not traded on a national securities
exchange are generally executed with primary market makers, except when it is
determined that a better price or execution may otherwise be obtained. The Fund
may purchase securities from, or sell securities to, dealers acting as
principals on a net basis.
The Fund is permitted by law to place orders with brokers or dealers
who may charge a higher commission than other brokers may charge, if the
Investment Adviser determines in good faith that the commission is reasonable in
relation to the value of the brokerage service and research information provided
the Fund. The Investment Adviser expects to rely predominantly on its own
research and not use research services supplied by brokers.
Subject to the requirements of obtaining the best price and execution,
the Investment Adviser may execute a portion of the Fund's transactions through
brokers who have assisted investors in effecting purchases of Fund shares or who
have recommended the purchase of Fund shares to investors. The Fund paid in
brokerage commissions $38,079 for the year ended June 30, 1997,
7
<PAGE>
12,064 for the year ended June 30, 1996 and $8,432 for the year ended June 30,
1995. All such commissions were paid to persons unaffiliated with the Fund or
the Investment Adviser.
ADDITIONAL REDEMPTION INFORMATION
The Fund may suspend the right of redemption: (a) for any period during
which the New York Stock Exchange is closed, or the Securities and Exchange
Commission determines that trading on the Exchange is restricted; (b) when there
is an emergency as determined by the Commission as a result of which it is not
practicable for the Fund to dispose of its securities; or (C) for such other
period as the Commission may by order permit for the protection of the Fund's
shareholders.
The Fund has made an election pursuant to Rule 18f-1 under the
Investment Company Act which obligates it to pay in cash all redemptions to any
shareholder of record unless a shareholder requests a redemption, within a 90
day period, of shares having a value in excess of (I) $250,000, or (ii) 1% of
the Fund's net asset value, whichever is less. In this case, the Fund is
permitted to pay the redemption price in whole or in part by a distribution of
securities from its portfolio. In that event, the value of the securities
distributed would be equal to the amount redeemed, determined at the same time,
and in the same manner, as the redemption price is determined. Shareholders who
receive redemption payments in securities may incur brokerage costs in
converting the securities they receive into cash.
ADDITIONAL TAX INFORMATION
Tax Status of the Fund. The Fund intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, and, as
such, will pay no Federal income taxes on net income or net realized capital
gains distributed to shareholders. Consistent with requirements for
qualification as a regulated investment company, the Fund intends to distribute
each year substantially all of its net investment income and net profits
received from sales of portfolio securities, after offsetting against these
profits any available capital loss carryforwards. The availability of net income
for dividends is dependent on the level of the Fund's income and expenses, and
the actual amount and timing of any dividend or distribution is subject to the
discretion of the Fund's Board of Directors. Another requirement for
qualification as a regulated investment company is that the Fund derive less
than 30% of its gross income from the sale or other disposition of securities
held by it for less than three months.
Taxation of Distributions. Under current law, ordinary income dividends received
by corporate shareholders may be eligible for the 70% dividends-received
deduction for corporations. The dividends-received deduction for corporations
will apply to that portion of the ordinary income dividend designated by the
Fund as qualifying for the dividends-received deduction. Any distributions made
by the Fund will not be eligible for the dividends-received deduction with
respect
8
<PAGE>
to shares which are held by the shareholder for 45 days or less. Capital gains
distributions do not qualify for the dividends-received deduction.
Investors should carefully consider the impact of buying Fund shares
just before the declaration of an income dividend or capital gains distribution.
Any such dividend or distribution paid shortly after a purchase of shares will
reduce the net asset value of the shares by the amount of the dividend or
distribution. The dividend or distribution, though in effect a return of
capital, would be taxable as ordinary income.
Investors will recognize gain or loss upon the redemption of shares of
the Fund. Such gain or loss will be capital gain or loss if the shares were held
as capital assets by the investor. Such capital gain or loss will be long-term
or short-term depending upon the investor's holding period for such shares. In
addition, if a shareholder sells shares of the Fund held for less than six
months at a loss, the loss will be treated as long-term to the extent of any
capital gains distributions received on such shares.
The Fund will be subject to a non-deductible 4% excise tax on the
excess of certain required distributions over the amounts actually distributed
by the Fund. The Fund expects to declare and pay such distributions of net
investment income and capital gains as may be necessary to avoid the application
of this excise tax. The foregoing is a summary discussion of the federal income
tax consequences is based on federal income tax laws and regulations believed to
be in effect on the date of this Statement. This discussion is not intended to
be comprehensive and investors are urged to consult their tax advisers
concerning specific questions regarding federal, state and local taxation.
PERFORMANCE INFORMATION
As indicated in the prospectus, from time to time the Fund may include
its average total return and other total return data in advertisements or
information furnished to present or prospective shareholders. Total return
figures are based on the Fund's historical performance and are not intended to
indicate future performance.
Average annual total return quotations for the specified periods are
computed rates of return ("T") (based on net investment income and any realized
and unrealized capital gains or losses on portfolio investments over such
periods) that would equate the initial amount invested ("P") to the redeemable
value of such investment at the end of each period ("ERV"), over a period of
time ["n"], according to the following formula:
n
P (1 + T) = ERV
The Fund may also quote aggregate total return performance data.
Aggregate total return data generally will be higher than average annual total
return data since the aggregate rate of return
9
<PAGE>
reflects performance over a longer period of time. The Fund's average annual
total return for the fiscal year ended June 30, 1997 was 23.47%.
OBSERVED HOLIDAYS
The following is a list of holidays on which the New York Stock
Exchange is closed and therefore, shares of the Fund will not be traded: New
Years Day; Martin Luther King, Jr. Day, Presidents' Day; Good Friday; Memorial
Day; Independence Day; Labor Day; Thanksgiving Day; Christmas Day.
CUSTODIAN AND TRANSFER AGENT
Star Bank acts as custodian of the Fund's assets and serves as the
Fund's transfer agent. These activities are performed at 425 Walnut Street,
Cincinnati, OH 45202. American Data Services, P.O. Box 5536, Hauppauge, NY
11788-0132 is the Fund's transfer agent.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Shereff, Friedman, Hoffman & Goodman LLP, 919 Third Avenue, New York,
NY 10022, serves as counsel to the Fund. Price Waterhouse LLP, 100 E. Wisconsin
Ave., Milwaukee, WI 53202 serves as the Fund's independent accountants.
CAPITAL STOCK
The Fund's shares are denominated "Common Stock, $.01 par value."
Shares have no pre-emptive rights and are fully paid and non-assessable. Shares
have non-cumulative voting rights, which means the holders of more than 50% of
the shares voting for the election of directors can elect all of the directors
if they choose to do so, in which event the holders of the remaining less than
50% of the shares voting for the election of directors will not be able to elect
any directors.
Shareholders are entitled to one vote for each share held and
fractional votes for fractional shares held and will vote on any matter
submitted to a shareholder vote. The Fund does not intend to hold meetings of
shareholders in any year in which the Investment Company Act of 1940 does not
require shareholders to act upon any of the following matters: (I) election of
directors; (ii) approval of an investment advisory agreement; (iii) approval of
a distribution agreement; (iv) ratification of selection of independent
accountants.
On September 8, 1997, the following persons owned 5% or more of the
Fund's outstanding voting securities:
10
<PAGE>
Charles Schwab & Co., Inc. Special Custody Account for Benefit of
Customers, San Francisco, CA 94104-4122: 10.81%.
Richton International Corp., F. R. Sullivan, Madison, NJ 07940-2336:
9.88%.
Star Bank, N/A, Custodian P. S. Brooks IRA, Tarrytown, NY 10591: 6.89%
Andrew Levitt, P. Whalen Levitt, Jt.Ten., Greensboro, NC 27403: 5.41%
FINANCIAL STATEMENTS
The annual report to shareholders for the Fund for the fiscal year
ended June 30, 1997 is a separate document supplied with this Statement of
Additional Information and the financial statements, accompanying notes and
report of independent accountants appearing therein are incorporated by
reference in this Statement of Additional Information.
11
<PAGE>
Part C
Other Information
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Part A: Financial Highlights
The Financial Statements incorporated by reference
from the annual report and semi-annual report to
shareholders into this post-effective amendment are
as follows:
Part B: Schedule of Investments at June 30, 1997
Statement of Assets and Liabilities at
June 30, 1997
Statement of Operations for the year
ended June 30, 1997
Statement of Changes in Net Assets for the
year ended June 30, 1997 and June 30, 1996.
Financial Highlights
Report of Independent Accountants
All other statements and schedules are omitted as they are not
applicable or required or the required information is included in
the financial statements or notes thereto.
(b) Exhibits:
Exhibit
Number Description
1. Articles of Amendment to Articles of
Incorporation. Incorporated by Reference tgo
PEA No. 16.
2(a). By-laws (as amended through October 25,
1988). Incorporated by reference to PEA
No. 6.
2(b). Revised Sections 6.1, 6.7 and 6.8 of By-
laws. Incorporated by reference to PEA
No. 9.
3. None
4. Specimen Share Certificate. Incorporated
by reference to PEA No. 9
5. Investment Advisory Agreement.
Incorporated by Reference to PEA No. 16.
6. None
7. None
8. Custody Agreement. Incorporated by Reference to
PEA No. 16.
9. Transfer Agency and Accounting Services
Agreements. Incorporated by Reference to
PEA No. 16.
10. Opinion of Shereff, Friedman, Hoffman &
Goodman. Incorporated by reference to
PEA No. 1.
11. Consent of Independent Accountants.
12. None.
13. Investment letter of Heine Management
Group, Inc. Incorporated by reference
to PEA No. 1.
14. IRA plan materials. Incorporated by
reference to PEA No. 1.
15. None
16. Schedule for computation of performance
quotations. Incorporated by reference
to PEA No. 6.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
None
Item 26. Number of Holders of Securities
As of September 10, 1997:
Title of Class Number of Record Holders
Common stock, $.01 par value 225
Item 27. Indemnification
Reference is made to Article XI of Registrant's By-Laws (Exhibit 2 to this
Registration Statement) and Section 10 of the Investment Advisory Agreement
(Exhibit 5 to this Registration Statement) The Fund maintains a policy of
insurance in favor of the Fund, its directors, officer and employees, against
liability arising from certain acts, errors and omissions. The policy will not
insure any director, officer, or employee against liability found to be caused
by the director's, officer's or employee's wilful misfeasance, bad faith, gross
negligence or reckless disregard of duty.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the 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 director, officer or controlling person in connection with the
successful defense of any action, suit or proceeding) is asserted the registrant
by such director, officer or controlling
<PAGE>
person in connection with the shares being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The registrant hereby undertakes that it will apply the indemnification
provisions of its By-laws in a manner consistent with Release No. 11330 under
the Investment Company Act of 1940 as long as the interpretation of Section
17(h) and (i) of suchAct expressed in that Release remains in effect.
Item 28. Business and Other Connections of Investment Adviser
Reference is made to Part B of this Registration Statement and to the Form
ADV filed under the Investment Advisers Act of 1940 by the Advisor (File No.
801-36872).
Item 29. Principal Underwriter
No person acts as principal underwriter to the Registrant.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained at the
office of the Custodian and Shareholder Service Agent, except for securities
trading journals, Articles of Incorporation, By-laws and minutes of shareholders
and Board of Directors' meetings, which are maintained at the offices of the
Advisor.
Item 31. Management Services
Other than as set forth in the Prospectus constituting Part A of this
Registration Statement, Registrant is not a party to any management related
service contract.
Item 32. Undertakings
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the city of New York, State of
New York, on the 9th day of September, 1997.
/S/ David A. Katz
- ---------------------
David A. Katz
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of Form N-1A of
Matrix/LMH Value Fund, Inc., has been signed below by the following persons in
the capacities indicated on September 9, 1997.
/S/ David A. Katz September 9, 1997
David A. Katz
Chairman, President and Treasurer
(Chief Financial and Accounting Officer)
/S/ Robert M. Rosencrans September 9, 1997
Robert M. Rosencrans
Director
/S/ T. Michael Tucker September 9, 1997
T. Michael Tucker
Director
/S/ Larry D. Kieszek September 9, 1997
Larry D. Kieszek
Director
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the references to our firm in the Post-Effective Amendment No. 17
to the Registration Statement on Form N-1A of MATRIX/LMH Value Fund ("Fund") and
to the use of our report dated August 15, 1997 on the statements of assets and
liabilities which appears in the Fund's Statement of Additional Information.
Price Waterhouse, LLP
September 12, 1997
Minneapolis, MN
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<CIK> 0000720498
<NAME> MATRIX/LMH VALUE FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 7,265,132
<INVESTMENTS-AT-VALUE> 8,590,507
<RECEIVABLES> 8,726
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<DISTRIBUTIONS-OF-INCOME> 97,339
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<NUMBER-OF-SHARES-SOLD> 61,715
<NUMBER-OF-SHARES-REDEEMED> 50,683
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