<PAGE>
PROSPECTUS August 1, 1999
JHAVERI VALUE FUND
18820 High Parkway
Cleveland, Ohio 44116
Jhaveri Value Fund is a mutual fund whose investment objective is long term
capital appreciation. The Fund seeks to achieve its objective by investing
primarily in a broad range of common stocks believed by its Adviser, Investments
Technology, Inc., to have above average prospects for appreciation, based on a
proprietary investment model developed by the Adviser.
The Fund is "no-load," which means there are no sales charges or
commissions. In addition, investors pay no 12b-1 fees, distribution expenses or
deferred sales charges.
For questions about investing in the Fund or For Information,
Shareholder Services and Requests:
(440) 356-1565
www.jhaverivaluefund.com
As with all mutual funds, the Securities and Exchange Commission has not
determined that the information in this prospectus is accurate or complete, nor
has it approved or disapproved the Fund's shares. It is a criminal offense to
state otherwise.
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TABLE OF CONTENTS
PAGE
ABOUT THE FUND 3
HOW THE FUND HAS PERFORMED 4
COSTS OF INVESTING IN THE FUND 5
HOW TO INVEST IN THE FUND 6
HOW TO REDEEM SHARES 8
SHARE PRICE CALCULATION 9
DIVIDENDS AND DISTRIBUTIONS 9
TAXES 9
MANAGEMENT OF THE FUND 9
OTHER INFORMATION ABOUT INVESTMENTS 10
YEAR 2000 ISSUE 10
FINANCIAL HIGHLIGHTS 11
<PAGE>
ABOUT THE FUND
Investment Objective
The investment objective of the Fund is to provide long term capital
appreciation.
Principal Strategies
The Fund invests primarily in a broad range of common stocks that its
Adviser believes are undervalued and have above average prospects for
appreciation, based on a proprietary investment model developed by the Adviser.
The investment model applies historical, fundamental and technical analyses to a
data base of approximately 1,000 companies to determine optimum buy and sell
ranges for the common stock of each of the companies in the data base. The
Adviser uses its investment model to screen the companies in the data base, then
selects stocks to provide industry and company diversification.
The Fund generally will be fully invested in common stocks regardless of
the movement of stock prices. The Fund normally will invest primarily in common
stocks of medium and large U.S. companies (average market capitalization of the
companies in the Fund's portfolio is expected to approximate $5 billion). The
Adviser seeks to limit investment risk by diversifying the Fund's investments
across a broad range of industries and companies.
Principal Risks of Investing in the Fund
All investments carry risks to some degree. The principal risks of
investing in the Fund are the stock market risks common to all equity
investments and the company risks associated with each individual investment in
the Fund's portfolio. Stock market risk means that Fund shares might decrease in
value in response to such things as general economic conditions and political
stability. Company risk means that Fund shares might decrease in value in
response to the activities and financial prospects of an individual company in
the Fund's portfolio. You could lose money by investing in the Fund.
In addition, the stocks of medium sized companies are subject to certain
risks including:
- - possible dependence on a limited product line, market,
financial resources or management group
- - less frequent trading and trading with smaller volume than larger stocks,
which may make it difficult for the Fund to buy or sell the stocks
- - greater fluctuation in value than larger, more established company stocks
Is this Fund Right for You?
The Fund is intended for investors with a long term wealthbuilding horizon.
You should invest in the Fund only if you are willing to accept price
fluctuation in your investment and the risks associated with common stock
investment.
<PAGE>
HOW THE FUND HAS PERFORMED
The bar chart and table below show the variability of the Fund's returns,
which is one indicator of the risks of investing in the Fund. The bar chart
shows changes in the Fund's returns from year to year since the Fund's
inception. The table shows how the Fund's average annual total returns over time
(net of fees and expenses) compare to those of a broad-based securities market
index. Of course, the Fund's past performance is not necessarily an indication
of its future performance.
Annual Total Returns as of December 31 of each year*
* The Fund's year-to-date return as of June 30, 1999 was 24.6%.
During the period shown, the highest return for a calendar quarter was 13.48%
in the 3rd quarter of 1997, and the lowest return was (23.60)% for the 3rd
quarter of 1996.
Average Annual Total Returns for the periods ending 12/31/98:
1 Year Since Inception*
The Fund (8.33)% 6.24%
S&P 500 Index 28.34% 27.99%
S&P Barra Value Index** 12.47% n/a
* May 1, 1995
**The S&P Barra Value Index is comprised of the 250 stocks of the S&P
500 with the lowest price to earnings ratios.
<PAGE>
COSTS OF INVESTING IN THE FUND
Shareholder Fees (fees paid directly from your investment)
Sales Load Imposed on Purchases NONE
Sales Load Imposed on Reinvested Dividends NONE
Deferred Sales Load NONE
Redemption Fees NONE
Exchange Fees NONE
Annual Fund Operating Expenses (expenses that are deducted from Fund assets)1
Management Fees 2.50%
Distribution (12b-1) Fees NONE
Total Fund Operating Expenses 2.50%
1 The Fund's total operating expenses are equal to the management fee paid to
the Adviser because the Adviser pays all of the Fund's operating expenses.
Example:
The example below is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example uses the
same assumptions as other mutual fund prospectuses: a $10,000 initial investment
for the time periods indicated, 5% annual total return, constant operating
expenses, and sale of all shares at the end of each time period. Although your
actual expenses may be different, based on these assumptions your costs would
be:
1 year 3 years 5 years 10 years
Your costs: $253 $779 $1,331 $2,840
<PAGE>
HOW TO INVEST IN THE FUND
The minimum initial investment in the Fund is $10,000 ($2,000 for
retirement accounts) and minimum subsequent investments are $1,000. Your
purchase of shares of the Fund will be at the next share price calculated after
receipt of your investment.
Initial Purchase
By Mail - You may purchase shares of the Fund by completing and signing the
investment application form which accompanies this Prospectus and mailing it, in
proper form, together with a check made payable to Jhaveri Value Fund, and sent
to the P.O. Box listed below. If you prefer overnight delivery, use the
overnight address listed below.
U.S. mail: Jhaveri Value Fund Overnight: Jhaveri Value Fund
P.O. Box 640994 c/o Firstar Bank, N.A.
Cincinnati, Ohio 45264-0994 Mutual Fund Custody Dept.
425 Walnut St. M.L. 6118
Cincinnati, Ohio 45202
By Wire - You may also purchase shares of the Fund by wiring federal funds
from your bank, which may charge you a fee for doing so. To wire money, you must
call the Fund at 440-356-1565 to set up your account and obtain an account
number. You should be prepared to provide the information on the application to
the Fund. Then, provide your bank with the following information for purposes of
wiring your investment:
Firstar Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Jhaveri Value Fund
D.D.A. # 48360-9483
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You must mail a signed application to the Custodian at the above address in
order to complete your initial wire purchase. Wire orders will be accepted only
on a day on which the Fund, the Custodian and Mutual Shareholder Services, LLC,
the Fund's transfer agent (the "Transfer Agent") are open for business. A wire
purchase will not be considered made until the wired money is received and the
purchase is accepted by the Fund. Any delays which may occur in wiring money,
including delays which may occur in processing by the banks, are not the
responsibility of the Fund or the Transfer Agent. There is presently no fee for
the receipt of wired funds, but the Fund may charge shareholders for this
service in the future .
<PAGE>
Additional Investments
You may purchase additional shares of the Fund at any time (minimum of
$1,000) by mail or wire. Each additional mail purchase request must contain -
your name - the name of your account(s) - your account number(s) - a check made
payable to Jhaveri Value Fund.
Send your purchase request to the address above. A bank wire should be sent as
outlined above.
Tax Sheltered Retirement Plans
Since the Fund is oriented to longer term investments, shares of the Fund
may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified
retirement plans. Contact the Fund for the procedure to open an IRA or SEP plan
and more specific information regarding these retirement plan options. Please
consult with your attorney or tax adviser regarding these plans. You must pay
custodial fees of $8/year for your IRA by redemption of sufficient shares of the
Fund from the IRA unless the fees are paid directly to the IRA custodian. Call
the Fund for information about the IRA custodial fees.
Other Purchase Information
You may exchange securities that you own for shares of the Fund, provided
the securities meet the Fund's investment criteria and the Adviser believes they
are a desirable investment for the Fund. Any exchange will be a taxable event
and you may incur certain transaction costs relating to the exchange. Contact
the Fund for additional information.
The Fund may limit the amount of purchases and refuse to sell to any
person. If your check or wire does not clear, you will be responsible for any
loss incurred. If you are already a shareholder, the Fund can redeem shares from
any identically registered account in the Fund as reimbursement for any loss
incurred. You may be prohibited or restricted from making future purchases in
the Fund.
<PAGE>
HOW TO REDEEM SHARES
You may redeem any part of your account in the Fund at no charge by mail.
All redemptions will be made at the net asset value next determined after your
redemption request has been received by the Transfer Agent with the following
information:
- - your name
- - your account number(s)
- - the name of your account(s)
- - your address
- - the dollar amount or number of shares you wish to redeem, and
- - the signatures of all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered.
The Fund may require that signatures be guaranteed by a bank or member firm
of a national securities exchange. Signature guarantees are for your protection.
At the discretion of the Fund or the Transfer Agent, you may be required to
furnish additional legal documents to insure proper authorization.
Your request should be addressed to:
Jhaveri Value Fund
c/o Mutual Shareholder Services, LLC
1301 East 9th Street Suite 1005
Cleveland, Ohio 44114
Additional Information - If you are not certain of the requirements for a
redemption please call the Fund at (440) 356-1565. Redemptions specifying a
certain date or share price cannot be accepted and will be returned. We will
mail you the proceeds on or before the fifth business day following the
redemption. However, payment for redemption made against shares purchased by
check will be made only after the check has been collected, which normally may
take up to fifteen calendar days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, we may suspend redemptions or
postpone payment dates.
<PAGE>
SHARE PRICE CALCULATION
The price you pay for your shares is based on the Fund's net asset value
per share (NAV). The NAV is calculated at the close of trading (normally 4:00
p.m. Eastern time) on each day the New York Stock Exchange is open for business
(the Stock Exchange is closed on weekends, Federal holidays and Good Friday).
The NAV is calculated by dividing the value of the Fund's total assets
(including interest and dividends accrued but not yet received) minus
liabilities (including accrued expenses) by the total number of shares
outstanding.
The Fund's assets are generally valued at their market value. If market
prices are not available, or if an event occurs after the close of the trading
market that materially affects the values, assets may be valued at their fair
value.
DIVIDENDS AND DISTRIBUTIONS
The Fund typically distributes substantially all of its net investment
income in the form of dividends and taxable capital gains to its shareholders
every December. These distributions are automatically reinvested in the Fund
unless you request cash distributions on your application or through a written
request. The Fund expects that its distributions will consist primarily of
capital gains.
TAXES
In general, selling shares of the Fund and receiving distributions
(whether reinvested or taken in cash) are taxable events. Depending on the
purchase price and the sale price, you may have a gain or a loss on any shares
sold. Any tax liabilities generated by your transactions or by receiving
distributions are your responsibility. Because distributions of long term
capital gains are subject to capital gains taxes, regardless of how long you
have owned your shares, you may want to avoid making a substantial investment
when the Fund is about to make a long term capital gains distribution.
Early each year, the Fund will mail to you a statement setting forth the
federal income tax information for all distributions made during the previous
year. Dividends and capital gains distributions may also be subject to state and
local taxes. If you do not provide your taxpayer identification number, your
account will be subject to backup withholding.
The tax considerations described in this section do not apply to
tax-deferred accounts or other non-taxable entities. Because each investor's tax
circumstances are unique, please consult with your tax adviser about your Fund
investment.
<PAGE>
MANAGEMENT OF THE FUND
The Fund retains Investments Technology, Inc., 18820 High Parkway,
Cleveland, Ohio 44116 (the "Adviser") to manage the Trust's investments and its
business affairs. The Adviser is an Ohio-based company that has been providing
advisory services to clients since 1983. Ramesh C. Jhaveri and Saumil R. Jhaveri
have been primarily responsible for the day-to-day management of the portfolio
of the Fund since its inception. Ramesh C. Jhaveri is the Chairman of the Board,
Chief Executive Officer, and a Trustee of the Trust, and has served as the
President, Treasurer, and a Director of the Adviser since 1983. Saumil R.
Jhaveri is the President, Treasurer, Secretary and a Trustee of the Trust and
has served as the Vice President, Secretary, and a Director of the Adviser since
1991. Both are responsible for the development and refinement of the Adviser's
proprietary investment model, which they use in the management of investments
for individuals, corporations, pension plans, trusts, retirement plans and
charitable and endowment accounts.
During the fiscal year ended March 31, 1999 the Fund paid the Adviser a fee
equal to 2.50% of its average daily net assets. The Adviser pays all of the
operating expenses of the Fund except brokerage, taxes, interest and
extraordinary expenses. In this regard, it should be noted that most investment
companies pay their own operating expenses directly, while the Fund's expenses
except those specified above are paid by the Adviser.
OTHER INFORMATION ABOUT INVESTMENTS
The Fund may invest up to 20% of its assets in foreign equity securities
through the purchase of American Depository Receipts ("ADRs"). An ADR is a
certificate of ownership issued by a U.S. bank as a convenience to investors
instead of the underlying foreign security which the bank holds in custody. In
general, foreign investments involve higher risks than U.S. investments. Foreign
markets tend to be more volatile than those of the U.S. and bring increased
exposure to foreign economic, political and other events that can have a
negative effect on the value of issuers in a particular foreign country.
From time to time, the Fund may take temporary defensive positions that are
inconsistent with the Fund's principal investment strategies in attempting to
respond to adverse market, economic, political, or other conditions. For
example, the Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load mutual funds or repurchase agreements.
If the Fund invests in shares of another mutual fund, the shareholders of the
Fund generally will be subject to duplicative management fees. As a result of
engaging in these temporary measures, the Fund may not achieve its investment
objective. The Fund may also invest in such instruments at any time to maintain
liquidity or pending selection of investments in accordance with its policies.
The investment objective of the Fund may be changed without shareholder
approval.
<PAGE>
YEAR 2000 ISSUE
Like other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the Adviser or the Fund's various service providers do
not properly process and calculate date-related information and data from and
after January 1, 2000. This is commonly known as the "Year 2000 Issue."
The Adviser has taken steps that it believes are reasonably designed to
address the Year 2000 Issue with respect to computer systems that are used and
to obtain reasonable assurances that comparable steps are being taken by the
Fund's major service providers. At this time, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact on the Fund. In
addition, the Adviser cannot make any assurances that the Year 2000 Issue will
not affect the companies in which the Fund invests or worldwide markets and
economies.
<PAGE>
FINANCIAL HIGHLIGHTS
The following table is intended to help you better understand the
Fund's financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns represent the rate
you would have earned (or lost) on an investment in the Fund, assuming
reinvestment of all dividends and distributions. This information has been
audited by McCurdy & Associates CPA's, Inc., whose report, along with the Fund's
financial statements, are included in the Fund's annual report, which is
available upon request.
For a share outstanding throughout each period:
For year For year For year For period
ended ended ended 5/1/95* through
3/31/99 3/31/98 3/31/97 3/31/96
Net asset value - beginning of period $14.07 $12.64 $12.38 $12.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.17) (.09) (.11) .00
Net gain on investments both
realized and unrealized (2.33) 3.97 1.27 .79
Total from investment operations (2.50) 3.88 1.16 .79
LESS DISTRIBUTIONS
Dividends from net investment income 0.00 0.00 0.00 (.04)
Dividends from capital gains (.21) (2.45) (.90) (.37)
Net asset value - end of period $11.36 $14.07 $12.64 $12.38
Total Return (17.66)% 33.74% 9.23% 7.45%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) 12,227 16,174 11,104 9,124
Ratio of expenses to average net assets 2.50% 2.50% 2.50% 2.50%**
Ratio of net investment income (loss)
to average net assets (1.43)% (.70)% (.87)% (.02)%**
Portfolio turnover rate 83.09% 58.92% 54.48% 45.23%
*Commencement of Operations
**Annualized
<PAGE>
Investment Adviser
Investments Technology, Inc.
18820 High Parkway
Cleveland, Ohio 44116
Custodian (all initial and subsequent purchases) Auditors
Firstar Bank, N.A. McCurdy & Associates CPA's, Inc.
P.O. Box 640994 27955 Clemens Road
Cincinnati, Ohio 45264-0994 Westlake, Ohio 44145
Transfer Agent (all redemption requests) Legal Counsel
Mutual Shareholder Services, LLC Brown, Cummins & Brown Co., LPA
1301 East 9th Street Suite 1005 3500 Carew Tower
Cleveland, Ohio 44114 Cincinnati, Ohio 45202
<PAGE>
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference into this
Prospectus, contains detailed information on Fund policies and operation.
Shareholder reports contain management's discussion of market conditions,
investment strategies and performance results as of the Fund's latest
semi-annual or annual fiscal year end.
Call the Fund collect at 440-356-1565 to request free copies of the SAI and
the Fund's annual and semi-annual reports, to request other information about
the Fund and to make shareholder inquiries.
You may also obtain information about the Fund (including the SAI and other
reports) from the Securities and Exchange Commission on their Internet site at
http://www.sec.gov or at their Public Reference Room in Washington, D.C. Call
the SEC at 800-SEC-0330 for room hours and operation. You may also obtain Fund
information by sending a written request and duplicating fee to the Public
Reference Section of the SEC, Washington, D.C. 20549-6609.
Investment Company Act # 811-8718
<PAGE>
JHAVERI VALUE FUND
a series of
The Jhaveri Trust
STATEMENT OF ADDITIONAL INFORMATION
August 1, 1999
This Statement of Additional Information ("SAI") is not a Prospectus. It
should be read in conjunction with the Prospectus of Jhaveri Value Fund dated
August 1, 1999. This SAI incorporates by reference the financial statements and
independent auditor's report from the Fund's Annual Report to Shareholders for
the fiscal year ended March 31, 1999 ("Annual Report"). A free copy of the
Prospectus and Annual Report can be obtained by writing the Transfer Agent at
1301 East 9th Street, Suite 1005, Cleveland, Ohio 44114, or by calling the Fund
collect at 440-356-1565.
TABLE OF CONTENTS
PAGE
DESCRIPTION OF THE TRUST AND FUND 1
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS 1
INVESTMENT LIMITATIONS 2
THE INVESTMENT ADVISER 4
TRUSTEES AND OFFICERS 5
PORTFOLIO TRANSACTIONS AND BROKERAGE 6
DETERMINATION OF SHARE PRICE 8
INVESTMENT PERFORMANCE 8
CUSTODIAN 9
TRANSFER AGENT, ADMINISTRATOR AND FUND ACCOUNTANT 9
ACCOUNTANTS 9
DISTRIBUTOR 9
FINANCIAL STATEMENTS 9
<PAGE>
DESCRIPTION OF THE TRUST AND FUND
The Jhaveri Trust (the "Trust") is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated January 18, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. Shares of one series have been authorized,
which shares constitute the interests in Jhaveri Value Fund (the "Fund"). The
Fund (a diversified series of the Trust) was organized on January 18, 1995, and
commenced operations on May 1, 1995. The investment adviser to the Fund is
Investments Technology, Inc. (the "Adviser").
Each share of a series represents an equal proportionate interest in the
assets and liabilities belonging to that series with each other share of that
series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.
Any Trustee of the Trust may be removed by vote of the shareholders holding
not less than two-thirds of the outstanding shares of the Trust. The Trust does
not hold an annual meeting of shareholders. When matters are submitted to
shareholders for a vote, each shareholder is entitled to one vote for each whole
share he owns and fractional votes for fractional shares he owns. All shares of
the Fund have equal voting rights and liquidation rights.
Upon sixty days prior written notice to shareholders, the Fund may make
redemption payments in whole or in part in securities or other property if the
Trustees determine that existing conditions make cash payments undesirable. Each
share of the Fund is subject to redemption at any time if the Board of Trustees
determines in its sole discretion that failure to so redeem may have materially
adverse consequences to all or any of the shareholders of the Fund.
The Fund intends to qualify each year as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended. By so qualifying, the Fund
will not be subject to federal income taxes to the extent that it distributes
substantially all of its net investment income and any realized capital gains.
As of May 27, 1999, the following persons may be deemed to beneficially own
five percent (5%) or more of the Fund: Ramesh C. Jhaveri and Nalini R. Jhaveri,
M.D. (including the shares owned by Triad-Erisa Partnership) 18820 High Pkwy.,
Rocky River, Ohio 44116 - 37.73% Margaret A. Weekley, 1420 W. Bagley Road,
Berea, Ohio 44017 - 8.80%; Chonilal K. Lalwani and Vidya C. Lalwani, M.D., 4410
Valley Forge Drive, Fairview Park, Ohio 44126 - 8.08%; Shah Investments Limited
Partnership, 1726 East Knox Road, Tempe, AZ 85284 -- 5.78%.
As of May 27, 1999, the Triad-Erisa Partnership (a partnership controlled
by Ramesh C. Jhaveri), Ramesh C. Jhaveri and Nalini R. Jhaveri, M.D. (the wife
of Ramesh C. Jhaveri) may be deemed to control the Fund as a result of their
respective beneficial ownership of the shares of the Fund. As the controlling
shareholders, they would control the outcome of any proposal submitted to the
shareholders for approval, including changes to the Fund's fundamental policies
or the terms of the management agreement with the Fund's adviser. As of May 27,
1999, the officers and trustees as a group may be deemed to beneficially own
41.87% of the Fund.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the investments
the Fund may make and some of the techniques it may use, as described in the
Prospectus (see "Investment Objectives and Strategies" and "Investment Policies
and Techniques and Risk Considerations").
A. Equity Securities. The Fund may invest in common stocks and closed-end
investment companies which invest primarily in common stocks. The Fund may hold
warrants and rights issued in conjunction with common stock, but in general will
sell any such warrants or rights as soon as practicable after they are received.
Warrants are options to purchase equity securities at a specified price valid
for a specific time period. Rights are similar to warrants, but normally have a
short duration and are distributed by the issuer to its shareholders.
<PAGE>
Equity securities include common stocks of domestic real estate investment
trusts and other companies which operate as real estate corporations or which
have a significant portion of their assets in real estate. The Fund will not
acquire any direct ownership of real estate.
B. Repurchase Agreements. A repurchase agreement is a short-term
investment in which the purchaser (i.e., the Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which the Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with the Custodian, other banks
with assets of $1 billion or more and registered securities dealers determined
by the Adviser (subject to review by the Board of Trustees) to be creditworthy.
The Adviser monitors the creditworthiness of the banks and securities dealers
with which the Fund engages in repurchase transactions, and the Fund will not
invest more than 5% of its net assets in repurchase agreements.
C. Loans of Portfolio Securities. The Fund may make short and long term
loans of its portfolio securities. Under the lending policy authorized by the
Board of Trustees and implemented by the Adviser in response to requests of
broker-dealers or institutional investors which the Adviser deems qualified, the
borrower must agree to maintain collateral, in the form of cash or U.S.
government obligations, with the Fund on a daily mark-to-market basis in an
amount at least equal to 100% of the value of the loaned securities. The Fund
will continue to receive dividends or interest on the loaned securities and may
terminate such loans at any time or reacquire such securities in time to vote on
any matter which the Board of Trustees determines to be serious. With respect to
loans of securities, there is the risk that the borrower may fail to return the
loaned securities or that the borrower may not be able to provide additional
collateral.
D. Illiquid Securities. The portfolio of the Fund may contain illiquid
securities. Illiquid securities generally include securities which cannot be
disposed of promptly and in the ordinary course of business without taking a
reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. The Fund will
not invest more than 5% of its net assets in illiquid securities.
E. Other Investment Companies. The Fund is permitted to invest in other
investment companies at any time. The Fund will not purchase more than 3% of the
outstanding voting stock of any investment company. If the Fund acquires
securities of another investment company, the shareholders of the Fund may be
subject to duplicative management fees.
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted
by the Trust with respect to the Fund and are fundamental ("Fundamental"), i.e.,
they may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and the Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment practices which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").
<PAGE>
1. Borrowing Money. The Fund will not 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. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not 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 (a) 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 and (b) as described in the Prospectus and the Statement
of Additional Information.
3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that a significant portion of
their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total assets in
a particular industry. This imitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
With respect to the percentages adopted by the Trust as maximum limitations
on its investment policies and limitations, an excess above the fixed percentage
will not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken. This paragraph does not apply to the borrowing policy set forth in
paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.
<PAGE>
iii. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities unless
it owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles.
vi. Repurchase Agreements. The Fund will not invest more than 5% of its
net assets in repurchase agreements.
vii. Loans of Portfolio Securities. The Fund will not make a loan of
portfolio securities which would cause the value of all such loans outstanding
to exceed 5% of the Fund's net assets.
viii. Illiquid Investments. The Fund will not invest more than 5% of its
net assets in securities for which there are legal or contractual restrictions
on resale and other illiquid securities.
THE INVESTMENT ADVISER
The Trust's investment adviser is Investments Technology, Inc., 18820
HighParkway, Cleveland, Ohio 44116. Ramesh C. Jhaveri and Saumil R. Jhaveri may
be deemed to be controlling persons and affiliates of the Adviser due to their
ownership of its shares and their positions as officers and directors of the
Adviser. They, because of such affiliation, may receive benefits from the
management fees paid to the Adviser.
Under the terms of the management agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage, taxes, interest and
extraordinary expenses. As compensation for its management services and
agreement to pay the Fund's expenses, the Fund is obligated to pay the Adviser a
fee computed and accrued daily and paid monthly at an annual rate of 2.50% of
the average daily net assets of the Fund. The Adviser may waive all or part of
its fee, at any time, and at its sole discretion, but such action shall not
obligate the Adviser to waive any fees in the future. For the fiscal years ended
March 31, 1999, 1998 and 1997, the Fund paid fees to the Adviser of $333,778,
$344,408 and $261,501, respectively.
The Adviser retains the right to use the name "Jhaveri" in connection with
another investment company or business enterprise with which the Adviser is or
may become associated. The Trust's right to use the name "Jhaveri" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Adviser on ninety days written notice.
The Adviser may make payments to banks or other financial institutions that
provide shareholder services and administer shareholder accounts. The Glass-
Steagall Act prohibits banks from engaging in the business of underwriting,
selling or distributing securities. Although the scope of this prohibition under
the Glass-Steagall Act has not been clearly defined by the courts or appropriate
regulatory agencies, management of the Fund believes that the Glass- Steagall
Act should not preclude a bank from providing such services. However, state
securities laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law. If a bank were prohibited from
continuing to perform all or a part of such services, management of the Fund
believes that there would be no material impact on the Fund or its shareholders.
Banks may charge their customers fees for offering these services to the extent
permitted by applicable regulatory authorities, and the overall return to those
shareholders availing themselves of the bank services will be lower than to
those shareholders who do not. The Fund may from time to time purchase
securities issued by banks which provide such services; however, in selecting
investments for the Fund, no preference will be shown for such securities.
<PAGE>
TRUSTEES AND OFFICERS
The Board of Trustees supervises the business activities of the Trust. The
names of the Trustees and executive officers of the Trust are shown below. Each
Trustee who is an "interested person" of the Trust, as defined in the Investment
Company Act of 1940, is indicated by an asterisk.
Name Position
*Ramesh C. Jhaveri Chairman of the Board, Chief Executive Officer
and Trustee
*Saumil R. Jhaveri President, Treasurer, Secretary and Trustee
Mukul M. Mehta Trustee
James F. Mueller Trustee
David R. Zavagno Trustee
The principal occupations of the executive officers and Trustees of the
Trust during the past five years are set forth below:
Ramesh C. Jhaveri, 18820 High Parkway, Cleveland, Ohio 44116, is the
president of Investments Technology, Inc., an investment counseling firm which
he founded in 1983. He is licensed at Financial America Securities, Inc., an
NASD broker-dealer, as an account executive, options principal and general
securities principal.
Saumil R. Jhaveri, 18820 High Parkway, Cleveland, Ohio 44116, is the vice
president of Investments Technology, Inc., where he has been working full time
since 1991. He received his Bachelor of Science degree in Finance from Ohio
State University in 1991. He is the son of Ramesh C. Jhaveri.
Mukul M. Mehta, 11000 Cedar Avenue, Cleveland, Ohio 44106, is the founder
and president of Quality Sciences, Inc., a consulting and software development
firm assisting chemical industry clientele including Fortune 500 companies.
Prior to May, 1992, he was an employee of BF Goodrich Company, where he managed
a consulting group using computer applications for solving technical and
business problems.
James F. Mueller, P.O. Box 280, Amherst, Ohio 44001, is advertising
director for Ed Mullinax Ford, a car dealer.
David R. Zavagno, 30325 Bainbridge Road, Solon, Ohio 44139, is the founder
and president of Universal Medical Systems, Inc., a company specializing in
diagnostic imaging equipment design, sales and installation.
<PAGE>
The Board of Trustees supervises the business activities of the Trust.
Like other mutual funds, the Trust retains various organizations to perform
specialized services. The compensation paid to the Trustees of the Trust for the
fiscal year ended March 31, 1999 is set forth in the following table:
Total Compensation from
Name Age Trust (the Trust is not
in a Fund Complex)1
Ramesh C. 61 0
Jhaveri
Saumil R. 29 0
Jhaveri
Mukul M. 52 $800
Mehta
James F. 55 $800
Mueller
David R. 43 $800
Zavagno
1 Trustee fees are Trust expenses. However, because the management agreement
obligates the Adviser to pay all of the operating expenses of the Trust (with
limited exceptions), the Adviser makes the actual payment.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the
Adviser is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In placing portfolio transactions, the Adviser
seeks the best qualitative execution for the Fund, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received. Consistent with
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc., and subject to its obligation of seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Trust as a factor in
the selection of brokers and dealers to execute portfolio transactions.
The Adviser is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Adviser exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Adviser determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by brokers through whom the Fund effects securities transactions may
also be used by the Adviser in servicing all of its accounts. Similarly,
research and information provided by brokers or dealers serving other clients
may be useful to the Adviser in connection with its services to the Fund.
Although research services and other information are useful to the Fund and the
Adviser, it is not possible to place a dollar value on the research and other
information received. It is the opinion of the Board of Trustees and the Adviser
that the review and study of the research and other information will not reduce
the overall cost to the Adviser of performing its duties to the Fund under the
Agreement.
While The Fund does not deem it practicable and in its best interests to
solicit competitive bids for commission rates on each transaction, consideration
is regularly given to posted commission rates as well as other information
concerning the level of commissions charged on comparable transactions by
qualified brokers.
<PAGE>
The Fund has no obligation to deal with any broker or dealer in the
execution of its transactions. However, it is contemplated that Financial
America Securities, Inc., in its capacity as a registered broker-dealer, will
effect substantially all securities transactions which are executed on a
national securities exchange and over-the-counter transactions conducted on an
agency basis. Such transactions will be executed at competitive commission rates
through RPR Clearing Services, Inc., a division of Rauscher Pierce Refsnes, Inc.
Financial America Securities, Inc., a registered broker-dealer of which Mr.
Ramesh Jhaveri is an account executive, receives brokerage commissions from the
Fund. Mr. Jhaveri receives no compensation from Financial America Securities,
Inc. as a result of those commissions. The Adviser (not the Fund) may pay fees
to certain fund consultants based on investments made and maintained by
investors such consultants have referred to the Fund.
Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers, if the same or a better price, including
commissions and executions, is available. Purchases made directly through a
market maker may include the spread between the bid and asked prices.
Under the Investment Company Act of 1940, persons affiliated with an
affiliate of the Adviser (such as Financial America Securities, Inc.) may be
prohibited from dealing with the Fund as a principal in the purchase and sale of
securities. Therefore, Financial America Securities, Inc. will not serve as the
Fund's dealer in connection with over-the-counter transactions. However,
Financial America Securities, Inc. may serve as the Fund's broker in
over-the-counter transactions conducted on an agency basis and will receive
brokerage commissions in connection with such transactions. Such agency
transactions will be executed through RPR Clearing Services, Inc., a division of
Rauscher, Pierce Refsnes, Inc.
The Fund will not effect any brokerage transactions in its portfolio
securities with Financial America Securities, Inc. if such transactions would be
unfair or unreasonable to Fund shareholders, and the commissions will be paid
solely for the execution of trades and not for any other services. The Agreement
provides that affiliates of affiliates of the Adviser may receive brokerage
commissions in connection with effecting such transactions for the Fund. In
determining the commissions to be paid to Financial America Securities, Inc., it
is the policy of the Fund that such commissions will, in the judgment of the
Trust's Board of Trustees, be (a) at least as favorable to the Fund as those
which would be charged by other qualified brokers having comparable execution
capability and (b) at least as favorable to the Fund as commissions
contemporaneously charged by Financial America Securities, Inc. on comparable
transactions for its most favored unaffiliated customers, except for customers
of Financial America Securities, Inc. considered by a majority of the Trust's
disinterested Trustees not to be comparable to the Fund. The disinterested
Trustees from time to time review, among other things, information relating to
the commissions charged by Financial America Securities, Inc. to the Fund and
its other customers, and rates and other information concerning the commissions
charged by other qualified brokers.
The Agreement does not provide for a reduction of the Adviser's fee by the
amount of any profits earned by Financial America Securities, Inc. or Mr. Ramesh
C. Jhaveri from brokerage commissions generated from portfolio transactions of
the Fund.
While the Fund contemplates no ongoing arrangements with any other
brokerage firms, brokerage business may be given from time to time to other
firms. Financial America Securities, Inc. will not receive reciprocal brokerage
business as a result of the brokerage business placed by the Fund with others.
To the extent that the Trust and another of the Adviser's clients seek to
acquire the same security at about the same time, the Trust may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Trust may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made by random client selection.
For the fiscal years ended March 31, 1999, 1998 and 1997, the Fund paid
brokerage commissions of $44,759, $44,602, and $32,296, respectively, to
Financial America Securities, Inc. for effecting 100% of the Fund's commission
transactions.
<PAGE>
DETERMINATION OF SHARE PRICE
The price (net asset value) of the shares of the Fund is determined as of
4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day, Martin
Luther King, Jr. Day, President's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return."
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
(over the one and five year periods and the period from initial public offering
through the end of the Fund's most recent fiscal year) that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000 investment made
at the beginning of the applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the S & P 500 Stock Index, the S&P Barra Value Index or the Dow Jones Industrial
Average.
In addition, the performance of the Fund may be compared to other groups of
mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.
The average annual total return for the Fund for the fiscal year ended
March 31, 1999 and for the period from May 1, 1995 (the Fund's inception)
through March 31, 1999, was 1.43% and 6.63%, respectively.
<PAGE>
CUSTODIAN
Firstar Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is Custodian
of the Fund's investments. The Custodian acts as the Fund's depository,
safekeeps its portfolio securities, collects all income and other payments with
respect thereto, disburses funds at the Fund's request and maintains records in
connection with its duties.
TRANSFER AGENT, ADMINISTRATOR AND FUND ACCOUNTANT
Mutual Shareholder Services, LLC, The Tower at Erieview, 1301 East Ninth
Street, Suite 1005, Cleveland, Ohio 44114 ("MSS") acts as the Fund's transfer
agent and administrator and, in such capacity, maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service and administrative functions. For its services as transfer agent and
administrator, MSS receives a monthly fee of $800 from the Adviser. In addition,
MSS provides fund accounting services to the Fund including maintaining the
Fund's accounts, books and records and calculating the daily net asset value.
For its services as fund accountant, MSS receives a monthly fee of $3,000 from
the Adviser. For each fiscal years ended March 31, 1999 and 1998, MSS received
$45,600 for its services as transfer agent, administrator and fund accountant.
Maxus Investment Group owns a minority interest in MSS and owns all of Maxus
Securities Corp., the Fund's Distributor.
ACCOUNTANTS
The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake, Ohio
44145, has been selected as independent public accountants for the Trust for the
fiscal year ending March 31, 2000. McCurdy & Associates performs an annual audit
of the Fund's financial statements and provides financial, tax and accounting
consulting services as requested.
DISTRIBUTOR
Maxus Securities Corp., The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114, is an agent for distribution of shares of the
Fund in certain states. The distributor is obligated to sell the shares of the
Fund on a best efforts basis only against purchase orders for the shares. Shares
of the Fund are offered to the public on a continuous basis.
FINANCIAL STATEMENTS
The financial statements and independent auditors' report required to be
included in this Statement of Additional Information are incorporated herein by
reference to the Trust's Annual Report to Shareholders for the fiscal year ended
March 31, 1999. The Funds will provide the Annual Report without charge at
written request or request by telephone.
<PAGE>
