-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gh74wlJJlEL24jN8CAzeuJYzTZi1bE1AuHqIECDgUohA4uQKM931zc3a6UICpDjq lltHJscoQ05NNWdjOaqWUg== 0000720498-98-000007.txt : 19981030 0000720498-98-000007.hdr.sgml : 19981030 ACCESSION NUMBER: 0000720498-98-000007 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19981029 EFFECTIVENESS DATE: 19981029 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MATRIX/LMH VALUE FUND CENTRAL INDEX KEY: 0000720498 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 222457376 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 002-84222 FILM NUMBER: 98733145 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-03758 FILM NUMBER: 98733146 BUSINESS ADDRESS: STREET 1: 560 HUDSON STREET CITY: HACKENSACK STATE: NJ ZIP: 07601 BUSINESS PHONE: 2016414960 MAIL ADDRESS: STREET 1: 560 HUDSON ST CITY: HACKENSACK STATE: NJ ZIP: 07601 FORMER COMPANY: FORMER CONFORMED NAME: LMH FUND LTD DATE OF NAME CHANGE: 19920703 485BPOS 1 MATRIX/LMH VALUE FUND POST-EFFECTIVE AMENDMENT Registration No. 2-84222 File No. 811-3758 - ----------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No. 18 [X] and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] Amendment No. 19 [X] (Check appropriate box or boxes) --------------------------- 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. Swidler Berlin Shereff Friedman, LLP 919 Third Avenue New York, New York 10022 (Name and Address of Agents for Service) Approximate date if proposed public offering: As soon as practicable after the effective date of this Registration Statement It is proposed that this filing will become effective (check appropriate box): [ ] Immediately upon filing [X] On October 31, 1998 pursuant pursuant to paragraph to paragraph (b) (b) [ ] 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. 747 THIRD AVE., 31ST FLOOR NEW YORK, NEW YORK 10017 (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 10 General Information 10 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 October 31, 1998 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. The SEC maintains an internet site (http://www.sec.gov) that contains the SAI, other material incorporated by reference and information about other companies that file electronically with the SEC. Prospectus dated October 31, 1998 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 0.23%* Total Fund Operating Expenses 1.23%* * The Fund's operating expense ratio for the fiscal year ended June 30, 1998 was 1.23%, after the Adviser's fee waivers and expense reimbursement. Without such waivers and reimbursements, operating expenses for the year would have been 1.80%. 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 $12 $39 $68 $149 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)
FOR THE YEARS ENDED JUNE 30, 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 Net asset value, beginning of year $29.39 $24.10 $20.98 $17.78 $18.45 $17.08 $15.79 $17.88 $21.75 $18.83 Income from investment operations: Net investment income 0.14 0.10 0.47 0.46 0.34 0.30 0.36 0.57 0.59 0.82 Net realized and unrealized gain (loss) on investments 3.54 5.52 3.12 3.13 (0.78) 1.44 1.36 (1.92) (1.38) 2.92 Total from investment operations 3.68 5.62 3.59 3.59 (0.44) 1.74 1.72 (1.35) (0.79) 3.74 Less distributions: Dividends from net investment income (0.17) (0.33) (0.47) (0.39) (0.23) (0.37) (0.43) (0.64) (0.72) (0.82) Distributions from net capital gains ?? 0.00 0.00 0.00 0.00 0.00 0.00 (0.10) (2.36) 0.00 Total distributions (0.17) (0.33) (0.47) (0.39) (0.23) (0.37) (0.43) (0.74) (3.08) (0.82) Net asset value, end of year $32.90 $29.39 $24.10 $20.98 $17.78 $18.45 $17.08 $15.79 $17.88 $21.75 Total return 12.56% 23.47% 17.16% 20.47% (2.44)% 10.30% 11.09% (7.15)% (4.08)% 20.46% Ratios/supplemental data: Net assets, end of period (millions) $10.0 $ 8.5 $ 6.6 $ 6.0 $ 5.7 $ 6.9 $ 7.7 $ 9.7 $26.7 $38.1 Ratio of expenses to average net assets: Before expense reimbursement 1.80% 1.92% 1.84% 2.35% 2.51% 2.55% 2.63% 2.39% 1.81% 1.55% After expense reimbursement 1.23% 1.42% 1.84% 2.35% 2.50% 2.50% 2.63% 2.39% 1.81% 1.55% Ratio of net investment income to average net assets: Before expense reimbursement (0.12)% (0.06)% 2.01% 2.27% 1.79% 1.52% 1.86% 2.61% 2.40% 3.65% After expense reimbursement 0.45% 0.44% 2.01% 2.27% 1.80% 1.58% 1.86% 2.61% 2.40% 3.65% Portfolio turnover rate 68% 129% 57% 34% 46% 53% 76% 133% 59% 26%
The above financial highlights, insofar as they pertain to each of the ten years in the period ended June 30, 1998 have been audited by PricewaterhouseCoopers 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 11. 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., 747 Third Avenue, New York, NY 10017, 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 747 Third Avenue, New York, NY 10017. 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 redeem shares, 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 8); 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 made 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 made 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 made 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 are valued using current market values if available. If no quotations are available for a security, 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 annually. 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. 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 from 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. 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. 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. Year 2000 Like other business organizations around the world, the Fund could be adversely affected if the computer systems used by its Advisor, and other service providers do not properly process and calculate information related to dates beginning January 1, 2000. This is commonly known as the "Year 2000 Issue." The Fund's Advisor is taking steps that it believes are reasonably designed to address the Year 2000 Issue with respect to its own computer systems, and it has obtained assurances from the Fund's other service providers that they are taking comparable steps. However, there can be no assurance that these actions will be sufficient to avoid any adverse impact on the Fund. 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. 747 Third Avenue, 31st Floor New York, NY 10017 (800) 366-6223 Custodian Star Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 Transfer Agent American Data Services, Inc. 150 Motor Parkway Hauppauge, NY 11788 (800) 385-7003 Independent Accountants PricewaterhouseCoopers LLP Legal Counsel Swidler Berlin Shereff Friedman, LLP Prospectus October 31, 1998 747 Third Avenue, 31st Floor New York, New York 10017 MATRIX/LMH VALUE FUND 444 Madison Ave., Ste. 302 New York, NY 10022 STATEMENT OF ADDITIONAL INFORMATION October 31, 1998 This Statement of Additional Information (SAI) dated October 31, 1998 contains information about the MATRIX/LMH VALUE FUND (the "Fund"), in addition to that contained in the Fund's prospectus, dated October 31, 1998. This SAI 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 of Contents Page B-2............................Investment Program B-3............................Investment Restrictions B-4............................Additional Investment Information B-4............................Directors, Officers and Principal Shareholders B-5............................Advisor B-7............................Portfolio and Brokerage Transactions B-7............................Additional Redemption Information B-8............................Additional Tax Information B-9............................Performance Information B-9............................Observed Holidays B-9............................Custodian and Transfer Agent B-9............................Counsel and Independent Accountants B-10... .......................Capital Stock B-10...........................Financial Statements B-1 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. B-2 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 11 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; B-3 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 net 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 net assets. If a percentage restriction described in the prospectus or this statement is adhered to at the time of investment, a subsequent increase or decrease in a percentage resulting from a change in the values of assets will not constitute a violation of that restriction, except for the policies regarding borrowing and illiquid securities or as otherwise specifically noted. 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. DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS The directors and officers of the Fund are as follows:
Name and Address and Principal Offices with the Fund Occupations During the Past Five Yrs. David A. Katz, CFA, Age 36* President, Secretary, and Treasurer 444 Madison Ave. New York, NY 10022 B-4 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 70 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. T. Michael Tucker, Age 55 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. Larry D. Kieszek, Age 47 Director 222 Northeast First Street Gainesville, FL 32601
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 (the "1940 Act"). 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, 1998, 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 October 7, 1998. ADVISOR Matrix Asset Advisors, Inc. (the "Advisor") serves as the Fund's Advisor under an Advisory Agreement, which provides that the Advisor 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 Advisor provides for B-5 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 Advisor presently serve as directors or officers of the Fund. The Advisor has retained, at its own expense, Investment Company Administration Corporation, 560 Hudson St., 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 Advisor 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 Advisor, 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 Advisor to the Fund from its inception until April 18, 1997, when shareholders approved the Investment Advisory Agreement with the Advisor. For the fiscal year ended June 30, 1998, investment advisory fees of $92,091 were incurred, of which $52,397 were waived by the Advisor. For the fiscal year ended June 30, 1997, investment advisory fees of $75,679 were incurred, of which $38,128 were waived by Heine Management and the Advisor. Heine Management received advisory fees of $64,214 for the year ended June 30, 1996. 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 Advisor 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 Advisor 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 Advisor is controlled by Mr. David A. Katz and Mr. Morley Goldberg. The Advisory Agreement provides that neither the Advisor, its directors, officers or employees, nor certain other persons performing specific functions for the Fund, shall be liable to B-6 the Fund, except for any loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard of duty. PORTFOLIO AND BROKERAGE TRANSACTIONS The Advisor 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 Advisor 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 Advisor 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 Advisor 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. For the fiscal years ended June 30, 1998, 1997 and 1996, the Fund paid brokerage commissions of $23,617, $38,079 and 12,064, respectively. All such commissions were paid to persons unaffiliated with the Fund or the Advisor. The Fund's portfolio turnover rate for the fiscal year ended June 30, 1997 was 129% which was attributable primarily to the repositioning of the Fund's portfolio as a consequence of the change in Fund management and advisory relationships. The Fund's portfolio turnover rate for the fiscal year ended June 30, 1998 was 68%. ADDITIONAL REDEMPTION INFORMATION The Fund may suspend the right of redemption: (a) for any period during which the New York Stock Exchange ("NYSE") is closed, or the Securities and Exchange Commission ("SEC") determines that trading on the NYSE is restricted; (b) when there is an emergency as determined by the SEC 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 SEC 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 1940 Act which obligates it to pay in cash all redemptions to any shareholder of record unless a shareholder requests a B-7 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. 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 to shares which are held by the shareholder for 45 days or less. Capital gain 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. The Fund is subject to a non-deductible 4% excise tax on the excess of required distributions over the amounts actually distributed by the Fund on a calendar year basis. 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 based on federal income tax laws and regulations is believed to be in effect B-8 on the date of this SAI. This discussion is not intended to be comprehensive and investors are urged to consult their tax advisors 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 reflects performance over a longer period of time. The Fund's average annual total return for the one, five and ten years ended September 30, 1998 was-1914%, 8.00% and 6.68%, respectively. Certain fees and expenses of the Fund have been reimbursed during this period. Accordingly, return figures are higher than they would have been had such fees and expenses not been reimbursed. OBSERVED HOLIDAYS The following is a list of holidays on which the NYSE 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, N.A. acts as custodian of the Fund's assets. These activities are performed at 425 Walnut Street, Cincinnati, OH 45202. American Data Services, Inc., P.O. Box 5536, Hauppauge, NY 11788-0132 is the Fund's transfer agent. COUNSEL AND INDEPENDENT ACCOUNTANTS Swidler Berlin Shereff Friedman, LLP, 919 Third Avenue, New York, NY 10022, serves as counsel to the Fund. PricewaterhouseCoopers LLP, 3100 Multifoods Tower, 33 South Sixth Street, Minneapolis, MN 55402 serves as the Fund's independent accountants. B-9 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 1940 Act 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 October 12, 1998, the following persons owned 5% or more of the Fund's outstanding voting securities: Charles Schwab & Co., Inc. Special Custody Account for Benefit of Customers, San Francisco, CA 94104-4122 - 24.29%. Star Bank, N.A. Custodian Robert H. Rahn IRA, Boca Raton, FL 33434 - 5.40% Fred R. Sullivan, Madison, NJ 07940-2336 - 5.05% Star Bank, N/A, Custodian P. S. Brooks IRA, Tarrytown, NY 10591 - 6.09% FINANCIAL STATEMENTS The annual report to shareholders for the Fund for the fiscal year ended June 30, 1998 is a separate document supplied with this SAI and the financial statements, accompanying notes and report of independent accountants appearing therein are incorporated by reference in this SAI. B-10 Part C Other Information Item 23. Exhibits. 1(a). Articles of Incorporation 1(b). Articles of Amendment(1) 2(a). By-laws (as amended through October 25, 1988) 2(b). Revised Sections 6.1, 6.7 and 6.8 of By- laws 3. Specimen Share Certificate 4. Investment Advisory Agreement(1) 5. Not applicable 6. Not applicable 7. Custody Agreement(1) 8. Transfer Agency and Accounting Services Agreement(1) 9. Opinion of Counsel 10(a). Consent of Independent Accountants 10(b). Powers of Attorney 11. Not applicable 12. No undertaking in effect 13. Not applicable 14. Financial Data Schedule (filed as Exhibit 27 for electronic filing purposes) 15. Not applicable (1) Incorporated by reference from Post-Effective Amendment No. 16 to the Registration Statement on Form N-1A filed on June 6, 1997. Item 24. Persons Controlled by or Under Common Control with Registrant. None Item 25. 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 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 26. 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 27. Principal Underwriter No person acts as principal underwriter to the Registrant. Item 28. 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 29. 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 30. Undertakings None EXHIBITS Exhibit No. Description 99.B1A Articles of Incorporation 99.B2A By-laws 99.B2B Revised sections of By-laws 99.B3 Specimen Share Certificate 99.B9 Opinion of Counsel 99.B10A Consent of Independent Accountants 99.B10B Powers of Attorney 27.1 Financial Data Schedule 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 20th day of October, 1998. /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 October 20, 1998. /S/ David A. Katz October 20, 1998 David A. Katz Chairman, President and Treasurer (Chief Financial and Accounting Officer) /S/ Robert M. Rosencrans October 20, 1998 Robert M. Rosencrans Director /S/ T. Michael Tucker October 20, 1998 T. Michael Tucker Director /S/ Larry D. Kieszek October 20, 1998 Larry D. Kieszek Director EX-99.B1A 2 ARTICLES OF INCORP. ARTICLES OF INCORPORATION OF LMH FUND, LTD. THIS IS TO CERTIFY THAT: FIRST: The undersigned, Donald P. Spencer, whose post office address is 919 Third Avenue, New York, New York 10022, being at least eighteen (18) years of age, hereby forms a corporation under the general laws of the State of Maryland. SECOND: The name of the corporation (which is hereinafter called the "Corporation") is: LMH FUND, LTD. THIRD: The purposes for which the Corporation is formed are as follows: (a) To operate and carry on business as an investment company, and, in connection therewith: (i) To subscribe for, purchase or otherwise acquire and invest and reinvest in, to hold for investment or otherwise, to sell, transfer, assign, negotiate, exchange, lend or otherwise dispose of, and to turn to account or realize upon and generally deal in and with, securities (which term, "securities," shall include without limitation any and all stocks, shares or other equity ownership interests; bills, notes, bonds, debentures or other obligations or evidences of indebtedness, certificates of deposit, bankers acceptances, commercial paper, repurchase agreements or other money market instruments; and warrants, options or other instruments representing rights to subscribe for, purchase, receive or otherwise acquire or to sell, transfer, assign or otherwise dispose of, and scrip, certificates, receipts or other instruments evidencing any ownership rights or interests in, any of the foregoing) created or issued by any individuals, firms, companies, corporations, syndicates, associations or trusts, any governments, political subdivisions or governmental authorities, agencies or instrumentalities, or by any other organizations or entities whatsoever, irrespective of their forms or the names by which they may be described, whether or not they be organized and operated for profit, and whether they be domestic or foreign with respect to the State of Maryland or the United States; (ii) To acquire and become the owner of or interested in any securities by delivering or issuing in exchange or payment therefor, in any lawful manner, any cash, securities or other assets of which the Corporation is the owner or any stock or other securities of which the Corporation is the issuer; and (iii) To exercise while the owner of any securities or interests therein any and all of the rights, powers and privileges of ownership of such securities or interests, including without limitation any and all voting rights and rights of assent, consent or dissent pertaining thereto, and to do any and all acts and things for the preservation, protection, improvement and enhancement in value thereof. (b) To operate and carry on any other lawful business whatsoever which is incidental to the operations and business of the Corporation as an investment company or which is calculated, directly or indirectly, to promote the interests of the Corporation or which is conducive to or expedient for the protection or benefit of the Corporation. (c) To do any and all such further Acts and things and to exercise any and all such further powers as may be necessary, appropriate or desirable for the accomplishment of any of the purposes or the exercise of any of the powers hereinabove set forth, either alone or in association with one or more other individuals, firms, corporations or other organizations or entities, provided the same be not inconsistent with the laws of the State of Maryland. The foregoing enumeration of the purposes, objects and business of the Corporation is made in furtherance and not in limitation of the powers conferred upon the Corporation by the laws of the State of Maryland, and it is not intended, by the mention of any particular purpose, object or business, to limit or restrict any other purpose, object or business mentioned, or to limit or restrict any of the powers of the Corporation, and the Corporation shall have, enjoy and exercise all of the powers and rights now or hereafter conferred by such laws upon corporations. FOURTH: The address of the principal office of the Corporation in the State of Maryland is 32 South Street, Baltimore, Maryland 21202. FIFTH: The Resident Agent of the Corporation in the State of Maryland is The Corporation Trust Incorporated, whose address is 32 South Street, Baltimore, Maryland 21202. Said Resident Agent is a corporation of the State of Maryland. SIXTH: (a) The total number of shares of stock which the Corporation, by resolution or resolutions of the Board of Directors, shall have authority to issue is one Thousand (1,000) shares, par value One Cent ($0.01) per share, such shares having an aggregate par value of Ten Dollars ($10.00). All of such shares shall be issued as shares of a class designated Common Stock. SEVENTH: No holder of stock or other securities of any class of the Corporation shall have any preemptive right to subscribe to, purchase, receive or otherwise acquire any unissued or treasury stock of the Corporation, or any securities convertible into, exchangeable for or carrying the right to subscribe to, purchase, receive or otherwise acquire any such stock which may at any time be issued, sold or offered for sale by the Corporation. EIGHTH: The Corporation shall initially have a Board of Directors consisting of one (1) Director. The number of Directors may be increased or decreased in accordance with the By-Laws of the Corporation, provided that the number thereof shall never be less than the minimum number required by the provisions of the General Corporation Law of the State of Maryland or any successor statute thereto, nor more than fifteen (15). The name of the Director who shall act as such until the first annual meeting of the Stockholders of the Corporation and until his successors are duly elected and qualify are: Leonard M. Heine, Jr. NINTH: In furtherance and not in limitation of the powers conferred by the laws of the State of Maryland or by the Charter or By-Laws of the Corporation, as from time to time amended, the powers of the Corporation and of the Directors and Stockholders shall include the following: (a) The Corporation reserves the right, from time to time, to make any amendment of its Charter, now or hereafter authorized by law, including any amendment which alters the contract rights, as expressly set forth in its Charter, of any outstanding stock. (b) The business and affairs of the Corporation shall be managed under the direction of its Board of Directors, which shall have and may exercise all the powers of the Corporation, except such as are by law or by the Charter or the By-laws of the Corporation, as from time to time amended, conferred upon or reserved to the Stockholders. Additionally, the Board of Directors of the Corporation is hereby specifically authorized and empowered from time to time in its discretion: (i) To make By-laws for the Corporation and from time to time to alter, amend or repeal any Bylaws, but any By-laws made by the Board of Directors may be altered, amended or repealed by the Stockholders at any annual or special meeting, if notice of such proposed alteration, amendment or repeal is included in the notice of such meeting; (ii) To determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books of the Corporation (other than the stock ledger) or any of them shall be open to the inspection of Stockholders; and no Stockholder shall have any right to inspect any account, book or document of the Corporation except as may be expressly conferred by statute, unless authorized by a resolution of the Stockholders or the Board of Directors. (iii) Subject to Article SIXTH hereof, to authorize the issuance and sale, from time to time, of stock of the Corporation, for cash or for such other consideration as the Board of Directors may deem advisable in the manner and to the extent now or hereafter permitted by the laws of the State of Maryland and by the Charter of the Corporation, as from time to time amended. (iv) Subject to Article SIXTH hereof, to declare and pay dividends out of surplus or other funds, if any, legally available therefor in such amounts, in such manner and to the Stockholders of record as of such date as the Board of Directors may from time to time determine; and such dividends may be paid in cash, in corporate securities, or in stock of the Corporation, as the Board of Directors shall from time to time determine. (v) To authorize payment of compensation to directors for services to the Corporation, including fees for attendance at meetings of the Board of Directors and of committees, and to determine the amounts of such compensation and fees. (c) Any member of the Board of Directors may be removed from office at any time, with or without cause assigned therefor, by the affirmative vote of a majority of the Stockholders having voting power, at any special meeting called in accordance with the provisions of the By-laws of the Corporation, as from time to time amended. TENTH: Notwithstanding any provision of the laws of the State of Maryland requiring a greater proportion than a majority of the votes of all classes or of any class of stock entitled to be cast to take or authorize any action, such action may, subject to other applicable provisions of law and of the Charter and the By-laws of the Corporation, as from time to time amended, be taken or authorized upon the concurrence of a majority of the aggregate number of the votes entitled to be cast thereon. ELEVENTH: (a) Upon each sale of its stock, the Corporation shall receive, in cash or in other assets as hereinafter set forth, an amount at least equal to the greater of the par value of such stock and the current net asset value of such stock next determined after receipt of an unconditional purchase order for such stock. The time of receipt of such a purchase order shall be the time it is first received by the Corporation, the distributor of its stock, if any, or the custodian, depository or other agent it has designated for such purpose. (b) In connection with the acquisition of all or substantially all of the assets of another entity, whether by purchase, exchange, merger or otherwise, the Corporation may issue its stock and accept in payment therefor, in lieu of cash, such assets at their market value, either with or without adjustment for contingent costs or liabilities, provided that it would then be lawful for the Corporation to invest its funds in such assets. (c) The Corporation may issue its stock in exchange for other securities valued at their market value at the time the exchange is effected, provided such other securities accepted in exchange are acceptable to the Board of Directors or their duly authorized delegates. (d) The Corporation shall not sell or issue any of its stock, except stock previously contracted to be sold and stock representing payment of a dividend payable solely in stock to the Stockholders, during any period when the redemption of stock of the Corporation is suspended pursuant to Article TWELFTH hereof. TWELFTH: The outstanding stock of the Corporation shall be redeemable, and, upon proper application made by the registered holder at the office of the Corporation or its agent designated for such purpose, shall be redeemed by the Corporation, subject to and upon the following terms and conditions: (a) The Board of Directors shall, by resolution, from ti me to time prescribe the form of and the accompanying documents, if any, required for a proper application for redemption of stock; provided, that such application shall be accompanied by the certificate or certificates, if any, issued to evidence such stock. (b) Stock which is the subject of a proper application shall be redeemed by the Corporation for an amount equal to the current net asset value of such stock next determined after receipt of a proper application for redemption at the office of the Corporation or its designated agent. Except as hereinafter set forth, payment for stock so redeemed by the Corporation shall be made to the registered holder within such period after the date on which a proper application for redemption thereof is received as shall be prescribed by applicable laws and regulations. Such payment shall be made in cash or other assets of the Corporation, or both, as the Board of Directors shall prescribe. For such purpose, the value of any assets other than cash delivered in payment for stock redeemed shall be determined in the same manner as the value of such assets are determined for purposes of determining the current net asset value applicable to such stock, as of the same time that the current net asset value applicable to such stock is determined. (d) The Board of Directors may, by resolution, suspend the right of redemption conferred upon the Stockholders and postpone the date of payment for stock redeemed from Stockholders pursuant to this Article TWELFTH for the whole or any part of any period: during which the New York Stock Exchange is closed (other than customary weekend and holiday closings); or (ii) during which trading on the New York Stock Exchange is restricted; or (iii) during which an emergency exists as a result of which (A) disposal by the Corporation of securities owned by it is not reasonably practicable or (B) it is not reasonably practicable for the Corporation fairly to determine the value of its net assets; or (iv) for which the Securities and Exchange Commission, or any successor thereto, may by order permit for the protection of security holders of the Corporation; provided that applicable rules and regulations of the Securities and Exchange Commission, or any successor thereto, shall govern as to whether the conditions prescribed in (ii) or (iii) exist. Any suspension and postponement shall become effective at such time as the Board of Directors shall specify in such resolution, but not later than the close of business on"the business day next succeeding the adoption of such resolution, and shall terminate at such time as the Board of Directors shall, by resolution, declare such suspension and postponement to be terminated, but'not later than the close of business on the first business day on which none of the conditions specified above shall exist. (e) If the right of redemption is suspended with respect to any stock for which a proper application for redemption has been made but in respect of which the redemption price has not been determined, then: (i) The registered holder of such stock may, during,the period of such suspension, by written notice to the Corporation's office or agent where such application was made, revoke such application and withdraw any stock certificate or certificates that accompanied it; and (ii) If such application is not revoked, such stock shall be redeemed at its net asset value next determined after the termination of such suspension, and payment therefor shall be made within a period determined by adding to the number of days that the redemption of such stock was suspended the number of days within which payment must be made for stock redeemed pursuant to applicable laws and regulations. THIRTEENTH: (a) The Corporation shall have the right, at any time and without prior notice to the registered holder: (i) To redeem all of the stock held in any account registered in the name of such holder for its current net asset value if such stock has an aggregate net asset value of less than such amount as the Board of Directors may from time to time determine; or (ii) To redeem stock held in any account registered in the name of such holder for its current net asset value, if and to the extent that such redemption shall be necessary to reimburse the Corporation for any loss it has sustained by reason of the failure of such holder to make full payment for stock of the Corporation purchased by such holder; in each case subject to and upon such terms and conditions as the Board of Directors may from time to time prescribe and subject to the Corporation's giving general notice of its intention to avail itself of such right in such form and manner as the Board of Directors shall from time to time determine. (b) The Corporation may repurchase its stock, directly or through an agent designated by it for the purpose, by agreement with the registered holder of such stock, at a price not exceeding the net asset value of such stock as of the time as of which net asset value is next determined. FOURTEENTH: The Board of Directors shall have the power and duty to cause the net asset value of stock of the Corporation to be determined from time to time in such manner, consistent with applicable laws and regulations, as the Board of Directors shall have by resolution theretofore prescribed. The Board of Directors may delegate the power and duty to determine net asset value of stock to one or more of the directors or officers of the Corporation or to a custodian, depository or other agent appointed for such purpose. Net asset value of stock shall be determined at such times as may be prescribed by resolution of the Board of Directors, or, in the absence of such resolution, as of the close of trading on the New York Stock Exchange on each day for all or part of which the New York Stock Exchange is open for unrestricted trading. FIFTEENTH: If at a time when the Corporation is registered as an investment company under the federal Investment Company Act of 1940 (the 'Act"), any of the provisions of the Charter or the By-Laws of the Corporation, as from time to time amended, or of the General Corporation Law of the State of Maryland or any successor statute thereto, shall conflict or be inconsistent with any applicable provision of the Act or of any rule, regulation or order thereunder., the applicable provision of the Act or rule, regulation or order thereunder shall be controlling and the Corporation shall not take any action which is in conflict or inconsistent therewith. Without limiting the generality of the foregoing, any applicable provision of the Act or rule, regulation or order thereunder which requires, with respect to any matter requiring action by. the Stockholders, the Board of Directors, a committee of the Board, or a specified group of directors of the Corporation, the affir mative vote of a greater number of shares of stock or of directors than would otherwise be required under the General Corporation Law of the State of P4aryland or any successor statute thereto, or under the Charter or the By-Laws of the Corporation, as from time to time amended, shall be controlling. IN WITNESS WHEREOF., I have signed these Articles of Incorporation, and I acknowledge the same to be my act this 28th day of April, 1983. /s/Donald P. Spencer EX-99.B2A 3 BY-LAWS LMH FUND, LTD. (A Maryland Corporation) BY-LAWS (As amended through October 25, 1988) ARTICLE I OFFICES Section 1.1. PRINCIPAL OFFICE. The principal office of the corporation in the State of Maryland shall be located at the address where the corporation's resident agent maintains its principal place of business in said State. Section 1.2. ADDITIONAL OFFICES. The corporation may have additional offices at such places within or without the State of Maryland as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 2.1. TIME AND PLACE. All meetings of stockholders shall be held at such time and at such place within the United States as the Board of Directors may from time to time determine in accordance with any applicable provisions of law, the Articles of Incorporation and these By-Laws. Section 2.2. ANNUAL MEETING. So long as the corporation is registered as an investment company under the Investment Company Act of 1940 (the "1940 Act," such term to include the rules and regulations promulgated under the 1940 Act, unless otherwise specified or the context otherwise requires), annual meetings of the stockholders shall not be held, except when required to be held by the Maryland General Corporation Law or when called by the Board of Directors or by an officer or officers authorized to take such action by the Board of Directors. If in any calendar year the corporation is required or elects to hold an annual meeting, the meeting shall be held on such day, not a Saturday, Sunday or legal holiday, as the Board of Directors or the officer or officers calling the meeting may prescribe. At each such annual meeting, the stockholders shall elect a Board of Directors and transact such other business as may properly come before the meeting. The provisions of these By-Laws which contemplate the holding of an annual meeting of stockholders shall be suspended during any calendar year in which no annual meeting of stockholders is held. Section 2.3. SPECIAL MEETINGS. The chairman of the board, if there be one, the president, or the Board of Directors may call special meetings of the stockholders. Special meetings of the stockholders shall also be called by the Secretary upon the written request of the holders of shares entitled to cast not less than 25% of all the votes entitled to be cast at such meeting. In the case of a meeting called upon the request of stockholders, the request of stockholders for such meeting shall state the purpose of such meeting and the matters proposed to be acted on at such meeting and the Secretary shall inform the stockholders who made the request of the reasonably estimated cost of preparing and mailing a notice of-the meeting. On payment of such costs to the corporation, the Secretary shall give notice to each stockholder entitled to notice of the meeting. Unless requested by stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a special meeting need not be called to consider any matter which is substantially the same as a matter voted on at any special meeting of the stockholders held during the preceding twelve months. Section 2.4. NOTICE OF MEETINGS. Not less than ten (10) nor more than ninety (90) days before each meeting of stockholders, the Secretary shall give to each stockholder entitled to vote at such meeting or entitled to notice of such meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by statute, the purpose for which the meeting is called, either by mail or by presenting it to such stockholder personally or by leaving it at his residence or usual place of business. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his post office address as it appears on the records of the corporation, with postage thereon prepaid. Section 2.5. SCOPE OF NOTICE. No business shall be transacted at a special meeting of stockholders except that specifically designated in the notice or in a duly executed waiver of notice of such meeting. Any business of the corporation nay be transacted at any annual meeting of stockholders without being specifically designated in the notice of such meeting, except such business as is required by law to be stated in such notice. Section 2.6. QUORUM; ADJOURNMENTS. Except as otherwise required by applicable law or the Articles of Incorporation or By-Laws, at any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast one-third of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any applicable requirement of law or the Articles of Incorporation for the vote necessary for the adoption of any measure. If, however, such quorum shall not be present at any meeting of the stockholders, the stockholders entitled to vote at such meeting, present in person or by proxy, shall have power to adjourn the meeting from time to time without notice other than announcement at the meeting until such quorum shall be present; Provided, however, that no meeting shall be adjourned without further notice to a date more than 120 days after the record date originally scheduled with respect to such meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Section 2.7. VOTING. At any meeting of stockholders at which a quorum is present, any election of a director or directors shall be determined by a plurality of the votes cast and a majority of the votes cast shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by law or the Articles of Incorporation for the approval of such matter. Unless otherwise provided in the Articles of Incorporation, each outstanding share of stock, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Fractional shares of stock shall be entitled to fractional votes. Section 2.8. PROXIES. A stockholder may vote the shares of stock owned of record by him, either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Section 2.9. INSPECTORS. At any meeting of stockholders, the chairman of the meeting may, or upon the request of any stockholder shall, appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and report the number of shares represented at the meeting, including those stockholders represented by proxy based upon the inspectors' determination of the validity and effect of proxies, count all votes, report the results and perform such other acts as are proper to conduct the election and voting. Each report of an inspector shall be in writing and signed by him or by a majority of them if there be more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof. Section 2.10. INFORMAL ACTION BY STOCKHOLDERS. Any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting if a consent in writing, setting forth such action, is signed by each stockholder entitled to vote on the matter, and such consent is filed with the minutes of proceedings of the stockholders. Section 2.11. VOTING BY BALLOT. Voting on any question or in any election shall be by ballot if requested by any stockholder entitled to vote, but, unless such a request is made, may be conducted in any manner determined by the chairman of the meeting. ARTICLE III DIRECTORS Section 3.1 FUNCTION AND POWERS. The business and affairs of the corporation shall be managed under the direction of its Board of Directors. All powers of the corporation may be exercised by or under authority of the Board of Directors, except as conferred on or reserved to any specified group of directors or to the stockholders by law or by the Articles of Incorporation or these By-Laws. Section 3.2. NUMBER, ELECTION AND TENURE. The first Board of Directors shall consist of the number of directors named in the Articles of Incorporation. Thereafter, the number of directors constituting the entire Board of Directors shall be fixed from time to time by resolution adopted by a majority of the entire Board but shall not be less than three (3) nor more than fifteen (15). No decrease in such number of directors shall shorten the tenure of office of any incumbent director. Each director named in the Articles of Incorporation or elected at an annual meeting of stockholders held pursuant to Section 2.3 or as provided in Sections 3.3 or 3.5 shall hold office until his successor is duly elected and qualifies or until his earlier displacement from office by resignation, removal or otherwise. Section 3.3. VACANCIES. Any vacancy on the Board of Directors for any cause other than an increase in the number of directors may be filled by vote of a majority of the remaining directors, although such majority is less than a quorum. Any vacancy on the Board of Directors by reason of an increase in the number of directors may be filled by vote of a majority of the entire Board of Directors. The stockholders may fill any vacancy resulting from their removal by stockholders of any director in the manner provided in Section 3.5. Section 3.4. COMPENSATION. The Board of Directors shall determine and from time to time fix by resolution the compensation payable to directors for their services to the corporation in that capacity. Such compensation may consist of a fixed annual fee or a fixed fee for attendance at meetings of the Board of Directors or of any committee of the Board of which the directors receiving such fees are members, or a combination of a fixed annual fee and a fixed fee for attendance. In addition, the Board of Directors may authorize the reimbursement of directors for their expenses for attendance at meetings of the Board or of any committee of the Board of which they are members. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Section 3.5. RESIGNATION AND REMOVAL OF DIRECTORS. Any director may resign at any time by written notice to the corporation. The stockholders may, at any time, remove any director, with or without cause, by the affirmative vote of a majority of all the votes entitled to be cast for the election of directors and may elect a successor to fill any resulting vacancy for the balance of the tenure of office of the removed director. Section 3.6. ANNUAL MEETINGS. The directors shall hold an annual meeting for the purposes of electing officers, appointing committees and transacting such other business as may properly come before the meeting. Each annual meeting of directors shall be held at such place within or without the State of Maryland, as the Board of Directors shall prescribe in advance of such annual meeting, and no other notice shall be necessary in order lawfully to convene and conduct such annual meeting of directors, provided a quorum shall be present. Section 3.7. REGULAR MEETINGS. The Board of Directors may hold regular meetings at such time and place, within or without the State of Maryland, as shall from time to time be fixed in advance by the Board, and no other notice of such meetings shall be required. Section 3.8. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, if there be one, the president, or a majority of the directors then in office. The person or persons by whom or at whose request a special meeting is called may fix the time and place, within or without the State of Maryland, for holding such meeting. Section 3.9. NOTICE. Notice of any special meeting shall be given by written notice delivered personally, telegraphed or mailed to each director at his business or residence address. Notices personally delivered or given by telegram shall be given at least two days prior to the meeting. Notice by mail shall be given at least five days prior to the, meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be given when the telegram is delivered to the telegraph company. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by law, the Articles of Incorporation or these By-Laws. Section 3.10. QUORUM; ADJOURNMENTS. One-third of the number of directors constituting the entire Board of Directors (but not less than three directors) shall constitute a quorum for transaction of business at any meeting of the Board, provided, that, if less than one-third of such number of directors are present at any such meeting, a majority of the directors or the sole director present may adjourn the meeting from time to time without further notice until a quorum is present. The Board of Directors may at any time or from time to time suspend or reinstate the operation of the next preceding sentence of this By-Law, in each case by resolution adopted by a majority of the entire Board; and, during any period that the operation thereof is suspended, a majority of the number of directors constituting the entire Board shall constitute a quorum, Provided, that, if less than a majority of such number of directors is present at any such meeting, a majority of the directors or the sole director present may adjourn the meeting from time to time without further notice until a quorum is present. Section 3.11. VOTING. The action of the majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a great proportion or of any specified group of directors is required for such action by law, the Articles of Incorporation or these By-Laws. Section 3.12. PARTICIPATION IN MEETINGS BY TELEPHONE. Members of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting for all purposes except compliance with provisions of the 1940 Act or of rules thereunder requiring that votes of directors be cast in person at a meeting. I Section 3.13. INFORMAL ACTION BY DIRECTORS. Except as otherwise prescribed by or under the 1940 Act, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing to such action is signed by each director and such written consent is filed with the minutes of proceedings of the Board of Directors. ARTICLE IV COMMITTEES AND ADVISORY BOARD Section 4.1. EXECUTIVE AND OTHER COMMITTEES. The Board of Directors may appoint from among its members one or more committees, each consisting of two (2) or more directors and having such title as the Board may consider to be properly descriptive of its function, except that not more than one committee shall be designated as the Executive Committee. Each such committee shall serve at the pleasure of the Board of Directors. Section 4.2. POWERS: MINUTES: PROCEDURES. The Board of Directors may delegate to any of the committees appointed under Section 4.1 any of the powers of the Board of Directors, except the power to: (1) declare dividends or distributions on stock; (2) issue stock except pursuant to a general formula or method specified by the Board of Directors by resolution or by adoption of a stock option or other plan; (3) recommend to the stockholders any action which requires stockholder approval; (4) amend the By-Laws; or (5) approve any merger or share exchange which does not require stockholder approval. Each committee shall keep minutes or other appropriate written evidence of its meetings or proceedings and shall report the same to the Board of Directors as and when requested by the Board, and shall observe such other procedures with respect to its meetings and proceedings as are prescribed in these By-Laws, or, to the extent not prescribed herein, as may be fixed by the Board of Directors or by such committee under authority granted by the Board. Section 4.3. ALTERNATE MEMBERS OF COMMITTEES. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint a director to act in the place of such absent member. Section 4.4. PARTICIPATION IN MEETINGS TELEPHONE. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting for all purposes except compliance with provisions of the 1940 Act or of rules thereunder requiring that votes of directors be cast in person at a meeting. Section 4.5. INFORMAL ACTION BY COMMITTEES. Except as otherwise prescribed by or under the 1940 Act, any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing to such action is signed by each member of the committee and such written consent is filed with the minutes of proceedings of such committee. Section 4.6. ADVISORY BOARD. The Board of Directors may appoint an advisory board, which shall be composed of persons who do not serve the corporation in any other capacity and which shall have advisory functions with respect to the investments of the corporation; provided, however, that such advisory board shall have no power to determine that any security or other investment shall be purchased, sold or otherwise disposed of by the corporation. The number of persons constituting any such advisory board shall be determined from time to time by the Board of Directors. The Board of Directors shall determine and from time to time fix by resolution the compensation payable to members of the advisory board for their services to the corporation in that capacity. Such compensation may consist of a fixed annual fee or a fixed fee for attendance at meetings of the advisory board or meetings of the Board of Directors, or a combination of a fixed annual fee and a fixed fee for attendance at meetings. In addition, the Board of Directors may authorize the reimbursement of members of the advisory board for the expenses of attendance at meetings of the advisory board or meetings of the Board of Directors. ARTICLE V WAIVER OF NOTICE Whenever any notice is required to be given pursuant to law, the Articles of Incorporation or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to such notice, or, in the case of any waiver of notice of any meeting of stockholders, signed by the proxy for a person entitled to notice thereof, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by law, the Articles of Incorporation or these By-Laws. The attendance of any person at any meeting in person, or, in the case of a meeting of stockholders, by proxy, shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE VI OFFICERS Section 6.1. EXECUTIVE OFFICERS. The executive officers of the Corporation shall be a president and a treasurer. If the Board of Directors shall elect a chairman of the board pursuant to Section 6.7, then the chairman of the board shall also be an executive officer of the Corporation. The chairman of the board, if there be one, shall be elected from among the directors, but no other executive officer need be a member of the Board of Directors. The Board of Directors may by resolution designate additional officers of the Corporation as executive officers. Any two or more executive offices, except those of president and vice-president, may be held by the same person. A person holding more than one office may not act in more than one capacity to execute, acknowledge or verify on behalf of the corporation an instrument required by law to be executed, acknowledged or verified by more than one officer. The executive officers of the corporation shall be elected by the Board of Directors at the annual meeting of the Board. Section 6.2. OTHER OFFICERS AND AGENTS. The Board of Directors may also elect or may delegate to the president authority to appoint, remove, or fix the duties, compensation or terms of office of one or more assistant vice-presidents, assistant secretaries and assistant treasurers, and such other officers and agents as the Board shall at any time and from time to time deem to be advisable. Section 6.3. TENURE, RESIGNATION AND REMOVAL. Each officer of the corporation shall hold office until his successor is elected or appointed or until his earlier displacement from office by resignation, removal or otherwise; provided that if the term of office of any officer elected or appointed pursuant to Section 6.2 shall have been fixed by the Board of Directors or by the president acting under authority delegated by the Board, such officer shall cease to hold such office no later than the date of expiration of such term, regardless of whether any other person shall have been elected or appointed to succeed him. Any officer of the corporation may resign at any time by written notice to the corporation. Any officer or agent of the corporation may be removed at any tine by the Board of Directors or by the president acting under authority delegated by the Board pursuant to Section 6.2 if in its or his judgment the best interests of the corporation would be served thereby. Election or appointment of an officer or agent shall not of itself create contract rights between the corporation and such officer or agent. Section 6.4. VACANCIES. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors or by the president acting under authority delegated by the Board pursuant to Section 6.2. Each officer elected or appointed to fill a vacancy shall hold office for the balance of the term for which his predecessor was elected or appointed. Section 6.5. COMPENSATION. The compensation, if any, of all officers of the corporation shall be fixed by the Board of Directors or by the president acting under authority delegated by the Board pursuant to Section 6.2. Section 6.6. AUTHORITY AND DUTIES. All officers as between themselves and the corporation shall have such powers, perform such duties and be subject to such restrictions, if any, in the management of the corporation as may be provided in these By-Laws, or, to the extent not so provided, as may be prescribed by the Board of Directors or by the president acting under authority delegated by the Board pursuant to Section 6.2. Section 6.7. CHAIRMAN OF THE BOARD. When and if the Board of Directors deems such action to be necessary or appropriate, the Board may elect a chairman of the board from among its members. The chairman of the board shall preside at meetings of the stockholders and of the Board of Directors and shall have such other powers and duties as may be prescribed by the Board. The chairman of the board shall in the absence or disability of the president exercise the powers and perform the duties of the president. Section 6.8. PRESIDENT. The president shall be the chief executive officer of the corporation. He shall have general and active management of the business of the corporation, shall see to it that all orders, policies and resolutions of the Board of Directors are carried into effect, and in connection therewith shall be authorized to delegate-to any vice-president of the corporation such of his powers and duties as president and at such times and in such manner as he shall deem advisable. In the absence or disability of the chairman of the board, or if there be no chairman of the board, the president shall preside at all meetings of the stockholders and of the Board of Directors; and he shall have such other powers and perform such other duties as are incident to the office of a corporate president and as the Board of Directors may from time to time prescribe. Section 6.9. VICE PRESIDENTS. The vice-president, if any, or, if there be more than one, the vice-presidents, shall assist the president in the management of the business of the corporation and the implementation of orders, policies and resolutions of the Board of Directors at such times and in such manner as the president may deem to be advisable. If there be more than one vice-president, the Board of Directors shall designate the order of relative seniority among vice-presidents, and the Board may also grant to the vice-presidents such titles as shall be descriptive of their respective functions or indicative of their relative seniority. In the absence or disability of both the president and the chairman of the board, or in the absence or disability of the president, if there be no chairman of the board, the vice-president, or, if there be more than one, the vice-presidents in the order of their relative seniority, shall exercise the powers and perform the duties of those officers; and the vice-president or vice-presidents shall have such other powers and perform such other duties as from time to time may be prescribed by the president or by the Board of Directors. Section 6.10. ASSISTANT VICE-PRESIDENT. The assistant vice-president, if any, or if there be more than one, the assistant vice-presidents, shall perform such duties as may from time to time be prescribed by the Board of Directors or by the president acting under authority delegated by the Board pursuant to Section 6.2. Section 6.11. SECRETARY. The secretary shall (a) keep the minutes of the meetings and proceedings and any written consents evidencing actions of the stockholders, the Board of Directors and any committees of the Board in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-Laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation, and, when authorized by the Board of Directors, cause the corporate seal to be affixed to any document requiring it, and when so affixed attested by his signature as Secretary or by the signature of an assistant secretary; and (d) in general, perform such other duties as from time to time nay be assigned to him by the president or by the Board of Directors or by the Chairman of the Board. Except as otherwise provided by law or by the Articles of Incorporation , any of the duties of the secretary may be performed by or under the supervision of the secretary. Section 6.12. ASSISTANT SECRETARIES. The assistant secretary, if any, or, if there be more than one, the assistant secretaries in the order determined by the Board of Directors or by the president, shall in the absence or disability of the Secretary exercise the powers and perform the duties of the Secretary, and he or they shall perform such other duties as the Board of Directors, the president or the secretary may from time to time prescribe. Section 6.13. TREASURER. The treasurer shall be the chief financial officer of the corporation. The treasurer shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation, shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors, and shall render to the president and Board of Directors, at the regular meetings of the Board or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation. If required by the Board of Directors, the treasurer shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Except as otherwise provided by law or by the Articles of Incorporation, any of the duties of the treasurer may be performed by or under the supervision of the treasurer. Section 6.14. ASSISTANT TREASURERS. The assistant treasurer, if any, or, if there be more than one, the assistant treasurers in the order determined by the Board of Directors or by the president, shall in the absence or disability of the treasurer exercise the powers and perform the duties of the treasurer, and he or they shall perform such other duties as the Board of Directors, the president or the treasurer may from time to time prescribe. ARTICLE VII CONTRACTS, CHECKS, DEPOSITS AND REPORTS Section 7.1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name and on behalf of the corporation, and such authority may be general or confined to specific instances. Section 7.2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by the Board of Directors. Section 7.3. ANNUAL REPORT. The president or another executive officer of the corporation shall prepare or cause to be prepared annually a full and correct statement of the affairs of the corporation, including a balance sheet and a statement of the results of operations for the preceding fiscal year, which shall be submitted at the annual meeting of the stockholders and filed within 20 days thereafter at the principal office of the corporation in the State of Maryland. ARTICLE VIII SHARES OF STOCK Section 8.1. CERTIFICATES OF STOCK. Each stockholder shall be entitled to a certificate or certificates which shall represent and certify the number of full shares of each class of stock held by him in the corporation; provided, however, that the corporation need not issue a certificate to any stockholder until and unless demand for a certificate or certificates shall be made upon the corporation or its transfer agent. Each certificate shall be signed by the chairman, if there be one, the president or a vice-president and countersigned by the secretary or an assistant secretary or the treasurer or an assistant treasurer and nay be sealed with the corporate seal and shall contain such recitals as may be required by statute. The signatures on a certificate may be either manual or facsimile. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. A full record of the issuance of each certificate and the identifying number assigned thereto shall be made on the books of the corporation usually kept for that purpose or required by statute. Section 8.2. TRANSFERS OF STOCK. Upon surrender to the corporation or the transfer agent of the corporation of a stock certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Shares of stock of the corporation not represented by certificate shall be transferred by recording the transaction on the books of the corporation by the transfer agent of the corporation upon presentation of proper evidence of succession, assignment or authority to transfer. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland. Section 8.3. LOST CERTIFICATES. The Board of Directors may establish procedures pursuant to which a new stock certificate or certificates may be issued in place of any certificate or certificates theretofore issued by the corporation which have been mutilated or which are alleged to have been lost, stolen or destroyed, upon presentation of each such mutilated certificate, or the making by the person claiming any such certificate to have been lost, stolen or destroyed of an affidavit as to the fact and circumstances of the loss, theft or destruction thereof. The Board of Direct6rs, in its discretion and as a condition precedent to the issuance of any new certificate, may include among such procedures a requirement that the owner of any certificate alleged to have been lost, stolen or destroyed, or his legal representative, furnish the corporation with a bond, in such sun and with such surety or sureties as it may direct, as indemnity against any claim that may be made against the corporation in respect of such lost, stolen or destroyed certificate. Section 8.4. FIXING OF RECORD DATE. The Board of Directors may set a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders, or stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date may not be prior to the close of business on the day such date is fixed. Such date, in any case, shall be not more than ninety (90) days, and in case of a meeting of stockholders not less than ten (10) days, before the date on which the meeting or particular action requiring such determination of stockholders is to be held or taken. If no record date is fixed (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the later of: (i) the close of business on the day on which the notice of meeting is first mailed to any stockholder; or (ii) the 30th day before the meeting; and (b) the record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any other rights shall be at the close of business on the day on which the resolution of the Board of Directors, declaring the dividend or allotment of rights, is adopted. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof. Section 8.5. STOCK LEDGER The corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate stock ledger containing the name and address of each stockholder and the number of shares of stock of each class held by such stockholder. ARTICLE IX FISCAL YEAR The Board of Directors shall have the power, from time to time, to fix the fiscal year of the corporation by a duly adopted resolution. ARTICLE X DIVIDENDS Dividends upon the shares of stock of the corporation may be declared by the Board of Directors, subject to the provisions of law and the Articles of Incorporation. Dividends may be paid in cash, property or shares of the corporation, subject to the provisions of law, the Articles of Incorporation and these By-Laws. ARTICLE XI CORPORATE SEAL Section 11.1. FORM OF SEAL The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the word "Corporate Seal Maryland". The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. Section 11.2. AFFIXING SEAL. Whenever the corporation is required to affix its corporate seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a corporate seal to place the word "(seal)' adjacent to the signature of the authorized officer. ARTICLE XII INDEMNIFICATION AND INSURANCE Section 12.1. The corporation shall indemnify any individual who is a present or former director or officer of the corporation who, by reason of his position was, is or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding,,whether civil, criminal, administrative or investigative (hereinafter collectively referred to as a "Proceeding") against judgments, penalties, fines, settlements and reasonable expenses actually incurred by such director or officer in connection with such Proceeding, to the fullest extent that such indemnification may be lawful under Section 2-418 of the General Corporation Law of Maryland or any provision enacted as a successor thereto (hereinafter called the "applicable Maryland statutory provision"). The corporation may pay any reasonable expenses so incurred by any director or officer in defending a Proceeding in advance of the final disposition thereof to the fullest extent that such advance payment may be lawful under the applicable Maryland statutory provision. Any payment of indemnification or advance payment of expenses shall be made subject to and in accordance with the procedures set forth in the applicable Maryland statutory provision. Any payment of indemnification or advance payment of expenses shall be made subject to and in Accordance with the procedures set forth in the applicable Maryland statutory provision. However, nothing contained in this Section 12.1 shall protect or purport to protect any director or officer of the corporation against any liability to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office (any such conduct being hereinafter called "Disabling Conduct"). Section 12.2. Anything in Section 12.1 to the contrary notwithstanding, no indemnification shall be made by the I corporation to any director or officer unless: (a)there is a final decision on the merits by a court or other body before whom the action or Proceeding was brought that the director or officer to be indemnified was not liable by reason of Disabling Conduct; or (b)in the absence of such a decision, there is a reasonable determination, based upon a review of the facts, that the director or officer to be indemnified was not liable by reason of Disabling Conduct, which determination shall be made by: (i) the vote of a majority of a quorum of directors who are neither "interested persons" of the corporation as defined in section 2(a)(19) of the Investment Company Act of 1940, nor parties to the Proceeding; or (ii)an independent legal counsel in written opinion. Section 12.3. Anything in Section 12.1 to the contrary notwithstanding, any advance payment of expenses by the corporation to any director or officer of the corporation shall be made only upon the undertaking by such director or officer to repay the advance unless it is ultimately determined that he is entitled to indemnification as above provided, and only if one of the following conditions is met: (a) the director or officer to be indemnified provides a security for his undertaking; or (b) the corporation shall be insured against losses arising by reason of any lawful advances; or (c) there is a determination, based on a review of readily available facts, that there is reason to believe that the director or officer to be indemnified ultimately will be entitled to indemnification, which determination shall be made by: (i) a majority of a quorum of directors who are neither "interested persons" of the corporation, as defined in section 2(a)(IL9) of the Investment Company Act of 1940, nor parties to the Proceeding; or (ii) an independent legal counsel in a written opinion. Section 12.4. To the fullest extent permitted by the applicable Maryland statutory provision and Section 17(h) of the Investment Company Act of 1940, the corporation may purchase and maintain insurance on behalf of any officer or director of the corporation, against any liability asserted against him and incurred by him in and arising out of his position, whether or not the corporation would have the power to indemnify him against such liability. ARTICLE XIII FEDERAL SUPREMACY If at a time when the corporation is registered as an investment company under the federal Investment Company Act of 1940 (the "Act"), any of the foregoing provisions of these By-Laws or of the Articles of Incorporation of the corporation or the General Corporation Law of Maryland shall conflict or be inconsistent with any applicable provision of the Act or of any rule, regulation or order thereunder, the-applicable provision of the Act or rule, regulation or order thereunder shall be controlling and the corporation shall not take any action thereunder which is in conflict or inconsistent therewith. Without limiting the generality of the foregoing, if any applicable provision of the Act or rule or regulation thereunder which requires, with respect to any matter requiring action by the stockholders, the Board of Directors, a committee of the Board, or a specified group of directors of the corporation, the affirmative vote of a greater number of shares or directors than would otherwise be required under the General Corporation Law of Maryland, the Articles of Incorporation of the corporation or these By-Laws, then that provision of the 1940 Act or order thereunder shall be controlling. ARTICLE XIV AMENDMENT OF BY-LAWS These By-Laws may be amended or repealed, and new By-Laws may be adopted, by vote of the stockholders or by the Board of Directors; provided, that the Board of Directors shall not have authority to alter or repeal any By-Law, or to take any action inconsistent with any By-Law, which by its terms may be altered or repealed only by the stockholders. EX-99.B2B 4 REVISED SECTIONS OF BY-LAWS Revised Sections 6.1, 6.7 and 6.8 of By-Laws as adopted by the Board of Directors on August 23, 1990 ARTICLE VI OFFICERS Section 6.1. EXECUTIVE OFFICERS. The executive officers of the Corporation shall be a chairman of the board ("chairman"), a president and a treasurer. The chairman of the board, if there be one, shall be elected from among the directors, but no other executive officer need be a member of the Board of Directors. The Board of Directors may by resolution designate additional officers of the Corporation as executive officers. Any two or more executive offices, except those of president and vice-president or chairman and vice-president, may be held by the same person. A person holding more than one office may not act in more than one capacity to execute, acknowledge or verify on behalf of the corporation an instrument required by law to be executed, acknowledged or verified by more than one officer. The executive officers of the corporation shall be elected by the Board of Directors at the annual meeting of the Board. Section 6.7 CHAIRMAN OF THE BOARD. The chairman shall be the chief executive officer of the corporation and shall preside at meetings of the stockholders and, of the Board of Directors. He shall have general and active management of the business of the corporation, shall see to it that all orders, policies and resolutions of the Board of Directors are carried into effect, and in connection therewith shall be authorized to delegate to the president or to any vice-president of the corporation, such of his powers and duties as chairman and at such times and in such manner as he shall deem advisable. Section 6.8. PRESIDENT. The president shall be the chief operating officer of the corporation. He shall have such powers and duties as may be assigned to him by the Board or the Chairman. In the absence or disability of the chairman, or if there be no chairman, the president shall preside at all meetings of the stockholders and of the Board of Directors. EX-99.B3 5 EXHIBIT--SPECIMEN SHARE CERTIFICATE MATRIX/LMH VALUE FUND, INC. (A Maryland Corporation) SHARES OF CAPITAL STOCK ACCOUNT NO. THIS CERTIFIES THAT CUSIP is the owner of shares of capital stock in the MATRIX/LMH VALUE FUND, INC. (the "Fund"), fully paid and nonassessable, the said shares being issued and held subject to the provisions of the Articles of Incorporation of the Fund, and all amendments thereto. The said owner by accepting this certificate agrees to and is bound by all of the said provisions. The shares represented hereby are transferable in writing by the owner thereof in person or by attorney upon surrender of this certificate to the Fund properly endorsed for transfer. This certificate is executed on behalf of the Directors of the Fund as Directors and not individually and the obligations hereof are not binding upon any of the Directors, officers or shareholders individually but are binding only upon the assets and property of the Fund. Dated, SEAL TREASURER PRESIDENT For value received, ______________________ hereby sell, assign and transfer unto (Please print or typewrite name and address, including zip code, of assignee) Shares of capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said shares on the books of MATRIX/LMH VALUE FUND, INC. with full power of substitution in the premises. Dated, _________________ Owner Signature guaranteed by: NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. EX-99.B9 6 OPINION OF COUNSEL SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN 919 THIRD AVENUE NEW YORK 10022 CABLE: SHERFRIED (212) PLAZA 8-9500 TELEX: 237328 September 9, 1983 LMH Fund, Ltd. 19 Compo Road South Westport, Connecticut 06881 Dear Sirs: LMH Fund, Ltd. (the "Corporation") proposes to issue and sell an indefinite number of shares (the "Shares") of its Common Stock, par value $.01per share, (the "Common Stock") in the manner and on the terms set forth in its Registration Statement on Form N-1 filed-with the Securities and Exchange Commission (File No. 2-84222). We have, as counsel, participated in various corporate and other proceedings relating to the Corporation and to the Shares. We have examined copies, either certified or otherwise proved to our satisfaction to be genuine, of its Articles of Incorporation and By-Laws, as now in effect, and other documents relating to its organization and operation. We have also reviewed the above-mentioned Registration Statement and the documents filed as exhibits thereto. 'We are generally familiar with the corporate affairs of the Corporation. Based upon the foregoing, it is our opinion that: 1. The Corporation has been duly organized and is legally existing under the laws of the State of Maryland. 2. The Corporation is authorized to issue thirty million (30,000,000) shares of Common Stock. Under Maryland law, shares of Common Stock which are issued and subsequently redeemed by the Corporation will be, by virtue of such redemption, restored to the status of authorized and unissued shares. 3. Subject to the effectiveness of the abovementioned Registration Statement, upon the issuance of the Shares for a consideration not less than the par value thereof as required by the laws of Maryland, and not less than the net asset value thereof as required by the Articles of Incorporation of the Corporation, such shares will be legally issued and outstanding and fully paid and nonassessable. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as a part of the above-mentioned Registration Statement, and to the reference to our firm as counsel in the prospectus filed as a part thereof. In giving this consent we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended. Very truly yours, /s/Shereff, Friedman, Hoffman & Goodman Shereff, Friedman, Hoffman & Goodman EX-99.B10A 7 CONSENT OF ACCOUNTANTS CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference into the Prospectus and Statement of Additional Information constituting parts of this Post-Effective Amendment No. 18 to the registration statement on Form N-1A of our report dated August 20, 1998, relating to the financial statements and financial highlights appearing in the June 30, 1998 Annual Report to Shareholders of the Matrix/LMH Value Fund, which is also incorporated by reference into the Registration Statement. We also consent to the references to us under the heading "Financial Highlights" in the Prospectus and under the heading "Counsel and Independent Accountants" in the Statement of Additional Information. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Minneapolis, Minnesota October 15, 1998 EX-99.B10B 8 POWERS OF ATTORNEY MATRIX/LMH VALUE FUND Power of Attorney KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director of Matrix/LMH Value Fund hereby appoints David A. Katz his true and lawful attorney to execute in his name, place and stead and on his behalf a Registration Statement on Form N-1A for the registration pursuant to the Securities Act of 1933 and the Investment Company Act of 1940 of shares of beneficial interest of said Maryland corporation and any and all amendments to said Registration Statement (including post-effective amendments), and all instruments necessary or incidental in connection therewith and to file the same with the Securities and Exchange Commission. Said attorney shall have full power and authority to do and perform in the name and on behalf of the undersigned every act whatsoever requisite or desirable to be done in the premises, as fully and to all intents and purposes as the undersigned might or could do, the undersigned hereby ratifying and approving all such acts of said attorney. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of October, 1998. ------------------------ Robert M. Rosencrans MATRIX/LMH VALUE FUND Power of Attorney KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director of Matrix/LMH Value Fund hereby appoints David A. Katz his true and lawful attorney to execute in his name, place and stead and on his behalf a Registration Statement on Form N-1A for the registration pursuant to the Securities Act of 1933 and the Investment Company Act of 1940 of shares of beneficial interest of said Maryland corporation and any and all amendments to said Registration Statement (including post-effective amendments), and all instruments necessary or incidental in connection therewith and to file the same with the Securities and Exchange Commission. Said attorney shall have full power and authority to do and perform in the name and on behalf of the undersigned every act whatsoever requisite or desirable to be done in the premises, as fully and to all intents and purposes as the undersigned might or could do, the undersigned hereby ratifying and approving all such acts of said attorney. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of October, 1998. ------------------------ T. Michael Tucker MATRIX/LMH VALUE FUND Power of Attorney KNOW ALL MEN BY THESE PRESENTS that the undersigned officer and/or director of Matrix/LMH Value Fund hereby appoints David A. Katz his true and lawful attorney to execute in his name, place and stead and on his behalf a Registration Statement on Form N-1A for the registration pursuant to the Securities Act of 1933 and the Investment Company Act of 1940 of shares of beneficial interest of said Maryland corporation and any and all amendments to said Registration Statement (including post-effective amendments), and all instruments necessary or incidental in connection therewith and to file the same with the Securities and Exchange Commission. Said attorney shall have full power and authority to do and perform in the name and on behalf of the undersigned every act whatsoever requisite or desirable to be done in the premises, as fully and to all intents and purposes as the undersigned might or could do, the undersigned hereby ratifying and approving all such acts of said attorney. IN WITNESS WHEREOF, the undersigned has executed this instrument this 20th day of October, 1998. ------------------------ Larry D. Kieszel EX-27.1 9 FDS
6 0000720498 MATRIX/LMH VALUE FUND 1 US DOLLARS YEAR JUN-30-1998 JUL-01-1997 JUN-30-1998 1 9248148 10045251 17106 101632 0 10163989 139432 0 23880 163312 0 8991943 303937 290451 17945 0 193686 0 797103 1000677 133015 21984 0 113434 41565 1559450 (528272) 1072743 0 49203 0 0 84762 72880 1604 13486 26186 (1365764) 0 0 92091 0 165831 9209112 29.39 0.14 3.54 (0.17) 0 0 32.90 1.23 0 0
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