Registration No. 811-04144
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 16 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 19 X
(Check appropriate box or boxes)
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MAXUS INCOME FUND
(Exact Name of Registrant as Specified in Charter)
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(Address of Principal Executive Offices) (ZIP Code)
Registrant's Telephone Number, Including Area Code (216) 687-1000
RICHARD A. BARONE
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(Name and Address of Agent for Service)
Copy to:
MICHAEL J. MEANEY, ESQ.
Benesch, Friedlander, Coplan & Aronoff LLP
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Exhibit Index at C-1
<PAGE>
It is proposed that this filing will become effective (check appropriate
box):
immediately upon filing pursuant to paragraph (b) of Rule 485.
on (date) pursuant to paragraph (b) of Rule 485.
X 60 days after filing pursuant to paragraph (a) of Rule 485.
on (date) pursuant to paragraph (a) of Rule 485.
<PAGE>
MAXUS INCOME FUND
MAXUS EQUITY FUND
MAXUS LAUREATE FUND
MAXUS OHIO HEARTLAND FUND
MAXUS AGGRESSIVE VALUE FUND
Investor Shares
Institutional Shares
Maxus Income Fund has an investment objective of obtaining the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in
income-producing securities.
Maxus Equity Fund has an investment objective of obtaining a total return, a
combination of capital appreciation and income. The Fund pursues this objective
by investing primarily in equity securities.
Maxus Laureate Fund has an investment objective of achieving a high total
return, a combination of capital appreciation and income, consistent with
reasonable risk. This Fund pursues its objective by investing primarily in other
mutual funds which invest on a global basis.
Maxus Ohio Heartland Fund has an investment objective of obtaining a high total
return (a combination of income and capital appreciation). The Fund pursues this
objective by investing primarily in equity securities of companies headquartered
in the State of Ohio.
Maxus Aggressive Value Fund has an investment objective of obtaining capital
appreciation. The Fund pursues this objective by investing primarily in equity
securities of companies whose equity securities have a total market value of
between $10,000,000 and $200,000,000.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
PROSPECTUS/April 30, 1999
<PAGE>
MAXUS INCOME FUND
RISK/RETURN SUMMARY
Investment Objective and Main Investment Strategies
The investment objective of Maxus Income Fund is to obtain the highest
total return, a combination of income and capital appreciation, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in
income-producing securities (such as debt securities, preferred stocks and
common and preferred shares of closed-end investment companies (also known as
"closed-end funds") having portfolios consisting primarily of income-producing
securities). Certain of the debt securities and preferred stocks in which the
Fund invests may be convertible into common shares. To a lesser degree, the Fund
will invest directly in common shares bearing high dividends.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
Main Risks
Volatility. The value of securities in Maxus Income Fund's portfolio will
go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Debt Securities Risks. The Fund's portfolio will also be exposed to the
following additional risks in connection with its investments in debt securities
and in closed-end funds which invest primarily in debt securities:
o Prices of debt securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise,
prices of debt securities fall. The net asset value of the Fund may
decrease during periods of rising interest rates.
o An issuer of debt securities may default (fail to repay interest and
principal when due). If an issuer defaults or the risk of such default
is perceived to have increased, the Fund will lose all or part of its
investment. The net asset value of the Fund may fall during periods of
economic downturn when such defaults or risk of defaults increase.
o Securities rated below investment grade, also known as junk bonds,
generally entail greater risks than investment grade securities. For
example, their prices are more volatile, their values are more
negatively impacted by economic downturns, and their trading market
may be more limited.
Closed-End Funds. The closed-end funds in which the Fund invests typically
pay an advisory fee for the management of their portfolios, as well as other
expenses. Therefore, the investment by the Fund in closed-end funds often
results in a duplication of advisory fees and other expenses, thereby increasing
the overall change to the net asset value of the Fund's shares.
<PAGE>
Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Income Fund by showing changes in the Fund's performance from
year to year over a 10-year period and by showing how the Fund's average annual
returns for one, five, and ten years compare to those of a broad-based
securities market index. How the Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.
Maxus Income Fund
Investor Shares
[Bar Chart]
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
11.4% 1.7% 19.3% 7.9% 8.7% -4.5% 16.4% 9.2% 11.5% 3.5%
During the 10-year period shown in the bar chart, the highest return for a
quarter was 7.79% (quarter ending March 31, 1991) and the lowest return for a
quarter was -3.76% (quarter ending March 31, 1994).
Average Annual Total Returns Past Past Past
(for the periods ending December One Year 5 Years 10 Years
31, 1998)
Maxus Income Fund 3.49% 6.98% 8.31%
Ryan Labs Treasury Index* 10.72% 7.13% 9.05%
* The Ryan Labs Treasury Index is a total return, equal weighted portfolio of
treasury notes and bonds.
<PAGE>
MAXUS EQUITY FUND
RISK/RETURN SUMMARY
Investment Objective and Main Strategies
The investment objective of Maxus Equity Fund is to obtain a total return,
a combination of capital appreciation and income. This Fund pursues this
objective by investing primarily in equity securities. Equity securities consist
of common stock, preferred stock and securities convertible into common stock.
The Fund emphasizes a "value" style of investing. In deciding which securities
to buy and which to sell, the Adviser will give primary consideration to
fundamental factors such as the relationship of share price to book value, net
asset value, earnings and cash flow. Additionally, the Adviser will give
secondary consideration to insider transactions and the growth of earnings.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
Main Risks
Volatility. The value of securities in Maxus Equity Fund's portfolio will
go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Smaller Companies. The smaller companies in which the Fund will invest are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
<PAGE>
Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Equity Fund by showing changes in the Fund's performance from
year to year over a 10-year period and by showing how the Fund's average annual
returns for one, five, and ten years compare to those of a broad-based
securities market index. How the Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.
Maxus Equity Fund
Investor Shares
[Bar Chart]
1990 1991 1992 1993 1994 1995 1996 1997 1998
- -10.8% 36.4% 13.6% 24.5% 0.6% 22.4% 19.1% 28.2% -8.7%
During the 9-year period shown in the bar chart, the highest return for a
quarter was 27% (quarter ending March 31, 1991) and the lowest return for a
quarter was -21.06% (quarter ending September 30, 1998).
Average Annual Total Returns Past Past Life
(for the periods ending December One Year 5 Years of Fund
31, 1998)
Maxus Equity Fund -8.74% 11.41% 12.56%
Lipper Flexible Portfolio Index* 16.52% 13.59% 12.31%
* The Lipper Flexible Portfolio Index is a portfolio of funds which allocates
its investments across various asset classes, with a focus on total return.
<PAGE>
MAXUS LAUREATE FUND
RISK/RETURN SUMMARY
Investment Objective and Main Investment Strategy
The investment objective at Maxus Laureate Fund is to achieve a high total
return, a combination of capital appreciation and income, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in other
mutual funds which invest on a global basis. The Fund will structure its
portfolio of mutual funds by (1) identifying certain global investment themes
(for example, global telecommunication or emerging markets) which are expected
to provide a favorable return over the next six to twelve months and (ii)
selecting one or more mutual funds with management styles or investment
concentrations which represent each theme. As market conditions change, the Fund
will exit those investment themes which appear to have run their course and
replace them with more attractive opportunities. The Fund also will look for
opportunities caused by market-moving events (such as political events, currency
devaluations and natural disasters) that cause a disequilibrium between
securities prices and their underlying intrinsic values.
The Fund may also seek to achieve its objective by investing in mutual
funds whose investment objectives are to provide investment results which either
(i) generally correspond to the performance of a recognized stock price index
("index funds"), (ii) generally correspond to a specified multiple of the
performance of a recognized stock price index ("leveraged index funds"), (iii)
generally correspond to the inverse (opposite) of the performance of a
recognized stock price index ("bear funds") or (iv) generally correspond to a
specified multiple of the inverse (opposite) of the performance of a recognized
stock price index ("leveraged bear funds").
The Fund may invest in index funds and/or leveraged index funds when the
Adviser believes that equity prices in general are likely to rise in the near
term. Investments in index funds and leveraged index funds are designed to allow
the Fund to seek to profit from anticipated increases in the indexes to which
such funds generally are correlated. The Fund may invest in bear funds and/or
leveraged bear funds when the Adviser believes that equity prices in general are
likely to decline in the near term. Investments in bear funds and leveraged bear
funds are designed to allow the Fund to seek to profit from anticipated
decreases in the indexes to which such funds generally are inversely correlated.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
Because the Fund reallocates fund investments across potentially numerous
asset subclasses as evolving economic and financial conditions warrant, the
portfolio turnover rate of the Fund is much higher than that of most other funds
with similar objectives. Although the Fund invests exclusively in underlying
funds that do not charge front-end or deferred sales loads, a sub-custodian of
the Fund does impose a small transaction charge for each purchase or sale of
underlying fund shares. The higher the portfolio turnover rate, the greater will
be the custodial transaction charges borne by the Fund. Also, a high rate of
portfolio turnover will result in high amounts of realized investment gain
subject to the payment of taxes by shareholders. Any realized net short-term
investment gain will be taxed to shareholders as ordinary income. See
"Dividends, Distributions and Taxes" below.
<PAGE>
Main Risks
Volatility. The value of securities in Maxus Laureate Fund's portfolio will
go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Foreign Exposure. Many of the underlying funds in which this Fund invests
have substantial investments in foreign markets. Foreign securities, foreign
currencies, and securities issued by U.S. entities with substantial foreign
operations can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include fluctuations in
foreign currencies; withholding or other taxes; trading, settlement, custodial
and other operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. All of these factors can make
foreign investments, especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market. If these factors cause the net asset
values of the underlying funds to decline, the Funds share price will decline.
Index and Leveraged Index Funds. The Fund may invest in "index funds" or
"leveraged index funds." If equity prices generally decline while the Fund is
invested in an index fund or funds, the Fund could experience substantial
losses. Such losses would be magnified to the extent the Fund is invested in a
leveraged index fund or funds.
Bear and Leveraged Bear Funds. The Fund may also invest in "bear funds" or
"leveraged bear funds." If equity prices generally rise while the Fund is
invested in a bear fund or funds, the Fund could experience substantial losses.
Such losses would be magnified to the extent the Fund is invested in a leveraged
bear fund or funds.
Duplication of Expenses. An investor in the Fund will bear not only his
proportionate share of the expenses of the Fund but also indirectly similar
expenses of the underlying mutual funds in which the Fund invests. These
expenses consist of advisory fees, expenses related to the distribution of
shares, brokerage commissions, accounting, pricing and custody expenses,
printing, legal and audit expenses and other miscellaneous expenses.
Industry Concentration. Through its investment in underlying funds, the
Fund indirectly may invest more than 25% of its assets in one industry. Such
indirect concentration of the Fund's assets may subject the shares of the Fund
to greater fluctuation in value than would be the case in the absence of such
concentration.
<PAGE>
Bar Chart and Performance Table
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Laureate Fund by showing changes in the Fund's performance
from year to year over the life of the Fund and by showing how the Fund's
average annual returns for one and five year periods and the life of the Fund
compare to those of a broad-based securities market index. How the Fund has
performed in the past is not necessarily an indication of how the Fund will
perform in the future.
Maxus Laureate Fund
Investor Shares
[Bar Chart]
1994 1995 1996 1997 1998
-3.4% 14.4% 21.0% 5.5% 35.1%
During the 5-year period shown in the bar chart, the highest return for a
quarter was 21.10% (quarter ending December 31, 1998) and the lowest return for
a quarter was -11.99% (quarter ending September 30, 1998).
Average Annual Total Returns Past Past Life
(for the periods ending December One Year 5 Years of Fund
31, 1998)
Maxus Laureate Fund 35.14% 13.78% 13.71%
Morgan Stanley Capital 24.34% 15.68% 15.25%
International World Index*
* The Morgan Stanley Capital International World Index is a total return market
capitalization weighted index of the equity markets of 23 developed countries.
<PAGE>
MAXUS OHIO HEARTLAND FUND
RISK/RETURN SUMMARY
Investment Objective and Main Investment Strategies
The investment objective of Maxus Ohio Heartland Fund is to obtain a high
total return (a combination of income and capital appreciation). The Fund
pursues this objective primarily by investing in equity securities of companies
headquartered in the State of Ohio. Equity securities consist of common stock,
preferred stock and securities convertible into common stock. In selecting such
companies, the Fund emphasizes a "value" style of investing. In deciding which
securities to buy and which to sell, the Adviser will give primary consideration
to fundamental factors such as the relationship of share price to book value,
net asset value, earnings and cash flow.
While investments may be made in all types and sizes of companies
headquartered in Ohio, the primary focus of this Fund will be to invest in
companies having annual revenues or a market capitalization of less than $5
billion, many of which may be traded in the over-the-counter market. However,
the Fund will generally not invest in companies having annual revenues less than
$25,000,000.
When the Adviser believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality short-term
debt securities and money market instruments. The taking of such a temporary
defensive posture may adversely affect the ability of the Fund to achieve its
investment objective.
Main Risks
Volatility. The value of securities in Maxus Ohio Heartland Fund's portfolio
will go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Geographic Concentration. Since this Fund concentrates its investments in the
State of Ohio, its assets may be at greater risk because of economic, political
or regulatory risk which may become associated with the State. For example, if
adverse tax laws uniquely affecting Ohio-based companies were passed, such a
development could have an adverse effect upon this Fund. This Fund also is
subject to the additional risk that at certain times only a limited number of
securities meeting the Fund's investment criteria may be available.
Smaller Companies. The smaller companies in which the Fund will invest are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
Bar Chart and Performance Table
A bar chart and performance table is not provided for Maxus Ohio Heartland
Fund since this Fund has not had annual total returns for a full calendar year.
<PAGE>
MAXUS AGGRESSIVE VALUE FUND
RISK/RETURN SUMMARY
Investment Objective and Main Investment Strategies
The investment objectives of Maxus Aggressive Value Fund is to obtain capital
appreciation. The Fund pursues this objective by investing primarily in equity
securities of companies whose equity securities have a total market value of
between $10,000,000 and $200,000,000. Equity securities consist of common stock,
preferred stock and securities convertible into common stock. The Fund
emphasizes a "value" style of investing. In deciding which securities to buy and
which to sell, the Adviser will give primary consideration to fundamental
factors such as the relationship of share price to book value, net asset value,
earnings and cash flow. Additionally, the Adviser will give secondary
consideration to insider transactions and the growth of earnings.
When the Adviser believes that market conditions warrant a temporary defensive
posture, the Fund may invest up to 100% of its assets in high-quality short-term
debt securities and money market instruments. The taking of such a temporary
defensive posture may adversely affect the ability of the Fund to achieve its
investment objective.
Main Risks
Volatility. The value of securities in Maxus Aggressive Value Fund's portfolio
will go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Smaller Companies. The smaller companies in which the Fund will invest are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
Bar Chart and Performance Table
A bar chart and performance table is not provided for Maxus Aggressive Value
since this Fund has not had annual total returns for a full calendar year.
<PAGE>
FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund.
Annual Fund Operating Expenses (expenses that are deducted from Fund).
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maxus Ohio Maxus Aggressive
Maxus Income Fund Maxus Equity Fund Maxus Laureate Fund Heartland Fund Value Fund
Investor Institutional Investor Institutional Investor Institutional Investor Institutional Investor Institutional
Class Class Class Class Class Class Class Class Class Class
Management 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Fees
Distribution
and/or 0.50% 0.00% 0.50% 0.00% 0.50% 0.00% 0.50% 0.00% 0.50% 0.00%
Service
(12b-1)
Fees
Other 0.37% 0.37% 0.30% 0.30% 1.13% 1.13% 1.74% 1.74% 1.19% 1.19%
Expenses
Total
Annual 1.87% 1.37% 1.80% 1.30% 2.63% 2.13% 3.24% 2.74% 2.69% 2.19%
Fund
Operating
Expenses
</TABLE>
Examples: These Examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The Examples assume that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Examples also assume that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
1 year 3 years 5 years 10 years
Investor Shares
Maxus Income Fund $19 $ 59 $101 $219
Maxus Equity Fund $18 $ 57 $ 97 $212
Maxus Laureate Fund $27 $ 82 $140 $296
Maxus Ohio Heartland Fund $23 $100 $169 $354
Maxus Aggressive Value Fund $27 $ 84 $142 $302
Institutional Shares
Maxus Income Fund $14 $ 43 $ 75 $165
Maxus Equity Fund $13 $ 41 $ 71 $157
Maxus Laureate Fund $22 $ 67 $114 $246
Maxus Ohio Heartland Fund $28 $ 85 $145 $307
Maxus Aggressive Value Fund $22 $ 69 $117 $252
<PAGE>
HOW TO PURCHASE SHARES
By this Prospectus, each Fund is offering Investor Shares and Institutional
Shares. Investor Shares and Institutional Shares are identical, except as to
minimum investment requirements and the services offered to and expenses borne
by each class.
Investor Shares
Investor Shares may be purchased by any investor without a sales charge. A
minimum initial investment of $1,000 is required to open an Investor Shares
account with subsequent minimum investments of $100. Investment minimums may be
waived at the discretion of each Fund.
Institutional Shares
Institutional Shares may be purchased without a sales charge by (1)
financial institutions, such as banks, trust companies, thrift institutions,
mutual funds or other financial institutions, acting on their own behalf or on
behalf of their qualified fiduciary accounts, employee benefit or retirement
plan accounts or other qualified accounts, (2) securities brokers or dealers
acting on their own behalf or on behalf of their clients, (3) directors or
employees of the Funds or of the Adviser or its affiliated companies or by the
relatives of those individuals or the trustees of benefit plans covering those
individuals. These requirements for the purchase of Institutional Shares may be
waived in the sole discretion of the Funds.
A minimum initial investment of $1,000,000 is required to open an
Institutional Shares account with subsequent minimum investments of $10,000.
Investment minimums may be waived at the discretion of each Fund.
Shareholders Accounts
When a shareholder invests in a Fund, Maxus Information Systems Inc., the
Transfer Agent for each Fund, will establish an open account to which all full
and fractional shares (to three decimal places) will be credited, together with
any dividends and capital gains distributions, which are paid in additional
shares unless the shareholder otherwise instructs the Transfer Agent. Stock
certificates will be issued for full shares only when requested in writing. Each
shareholder is notified of the status of his account following each purchase or
sale transaction.
Initial Purchase
The initial purchase may be made by check or by wire in the following
manner:
By Check. The Account Application which accompanies this Prospectus should be
completed, signed, and, along with a check for the initial investment payable to
Maxus Income Fund, Maxus Equity Fund or Maxus Laureate Fund, mailed to: Maxus
Information Systems Inc., The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
<PAGE>
By Wire. In order to expedite the investment of funds, investors may advise
their bank or broker to transmit funds via Federal Reserve Wire System to: Star
Bank, N.A. Cinti/Trust, ABA #0420-0001-3, F/F/C Account No. 19-6201 Maxus Mutual
Funds DDA 483617213 (Star Bank Trust). Also provide the shareholder's name and
account number. In order to obtain this needed account number and receive
additional instructions, the investor may contact, prior to wiring funds, Maxus
Information Systems Inc., at (216) 687-1000. The investor's bank may charge a
fee for the wire transfer of funds.
Subsequent Purchases
Investors may make additional purchases in the following manner:
By Check. Checks made payable to Maxus Income Fund, Maxus Equity Fund or Maxus
Laureate Fund should be sent, along with the stub from a previous purchase or
sale confirmation, to Maxus Information Systems Inc., The Tower at Erieview,
36th Floor, 1301 East Ninth Street, Cleveland, OH 44114.
By Wire. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
By Telephone. Investors may purchase shares up to an amount equal to 3 times the
market value of shares held in the shareholder's account in a Fund on the
preceding day for which payment has been received, by telephoning Maxus
Information Systems Inc., at (216) 687-1000 and identifying their account by
number. Shareholders wishing to avail themselves of this privilege must complete
a Telephone Purchase Authorization Form which is available from the Fund. A
confirmation will be mailed and payment must be received within 3 business days
of date of purchase. If payment is not received within 3 business days the Fund
reserves the right to redeem the shares purchased by telephone, and if such
redemption results in a loss to the Fund, redeem sufficient additional shares
from the shareholder's account to reimburse the Fund for the loss. Payment may
be made by check or by wire. The Adviser has agreed to hold the Fund harmless
from net losses resulting from this service to the extent, if any, not
reimbursed from the shareholder's account. This telephone purchase option may be
discontinued without notice.
Systematic Investment Plan
The Systematic Investment Plan permits investors to purchase shares of any
Fund at monthly intervals. Provided the investor's bank or other financial
institution allows automatic withdrawals, shares may be purchased by
transferring funds from the account designated by the investor. At the
investor's option, the account designated will be debited in the specified
amount, and shares will be purchased once a month, on or about the 15th day.
Only an account maintained at a domestic financial institution which is an
Automated Clearing House member may be so designated. Investors desiring to
participate in the Systematic Investment Plan should call the Transfer Agent at
(216) 687-1000 to obtain the appropriate forms. The Systematic Investment Plan
does not assure a profit and does not protect against loss in declining markets.
<PAGE>
Price of Shares
The price paid for shares of a certain class of a Fund is the net asset
value per share of such class of such Fund next determined after receipt by the
Transfer Agent of properly identified purchase funds, except that the price for
shares purchased by telephone is the net asset value per share next determined
after receipt of telephone instructions. Net asset value per share is computed
for each class of each Fund as of the close of business (currently 4:00 P.M.,
New York time) each day the New York Stock Exchange is open for trading and on
each other day during which there is a sufficient degree of trading in such
Fund's investments to affect materially net asset value of its redeemable
securities.
The assets of the Funds (except Maxus Laureate Fund) are valued primarily
on the basis of market quotations. The assets of Maxus Laureate Fund are valued
primarily on the basis of the reported net asset values of the underlying mutual
funds in which this Fund invests.
Other Information Concerning Purchase of Shares
Each Fund reserves the right to reject any order, to cancel any order due
to non-payment and to waive or lower the investment minimums with respect to any
person or class of persons. If an order is canceled because of non-payment or
because your check does not clear, you will be responsible for any loss that the
Fund incurs. If you are already a shareholder, the Fund can redeem shares from
your account to reimburse it for any loss. The Adviser has agreed to hold each
Fund harmless from net losses to that Fund resulting from the failure of a check
to clear to the extent, if any, not recovered from the investor. For purchases
of $50,000 or more, each Fund may, in its discretion, require payment by wire or
cashier's or certified check.
HOW TO REDEEM SHARES
All shares of each class of each Fund offered for redemption will be
redeemed at the net asset value per share of such class of that Fund next
determined after receipt of the redemption request, if in good order, by the
Transfer Agent. See "Price of Shares." Because the net asset value of each
Fund's shares will fluctuate as a result of changes in the market value of
securities owned, the amount a stockholder receives upon redemption may be more
or less than the amount paid for the shares. Redemption proceeds will be mailed
to the shareholder's registered address of record or, if $5,000 or more, may be
transmitted by wire, upon request, to the shareholder's pre-designated account
at a domestic bank. The shareholder will be charged for the cost of such wire.
If shares have been purchased by check and are being redeemed, redemption
proceeds will be paid only after the check used to make the purchase has cleared
(usually within 15 days after payment by check). This delay can be avoided if,
at the time of purchase, the shareholder provides payment by certified or
cashier's check or by wire transfer.
Redemption by Mail
Shares may be redeemed by mail by writing directly to the Funds' Transfer
Agent, Maxus Information Systems Inc., The Tower at Erieview, 36th Floor, 1301
East Ninth Street, Cleveland, Ohio 44114. The redemption request must be signed
exactly as the shareholder's name appears on the registration form, with the
signature guaranteed, and must include the account number. If shares are owned
by more than one person, the redemption request must be signed by all owners
exactly as the names appear on the registration.
<PAGE>
If a shareholder is in possession of the stock certificate, these
certificates must accompany the redemption request and must be endorsed as
registered with a signature guarantee. Additional documents may be required for
registered certificates owned by corporations, executors, administrators,
trustees or guardians. A request for redemption will not be processed until all
of the necessary documents have been received in proper form by the Transfer
Agent. A shareholder in doubt as to what documents are required should contact
Maxus Information Systems Inc. at (216) 687-1000.
You should be able to obtain a signature guarantee from a bank,
broker-dealer, credit union (if authorized under state law), securities exchange
or association, clearing agency or savings association. A notary public is not
an acceptable guarantor. A Fund may in its discretion waive the signature
guarantee in certain instances.
Redemption by Telephone
Shares may be redeemed by telephone by calling Maxus Information Systems
Inc. at (216) 687-1000 between 9:00 A.M. and 4:00 P.M. eastern time on any day
the New York Stock Exchange is open for trading. An election to redeem by
telephone must be made on the initial application form or on other forms
prescribed by the Fund which may be obtained by calling the Funds at (216)
687-1000. This form contains a space for the shareholder to supply his own four
digit identification number which must be given upon request for redemption. A
Fund will not be liable for following instructions communicated by telephone
that the Fund reasonably believes to be genuine. If a Fund fails to employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, the Fund may be liable for any losses due to unauthorized or fraudulent
instructions. Any changes or exceptions to the original election must be made in
writing with signature guaranteed, and will be effective upon receipt by the
Transfer Agent. The Transfer Agent and each Fund reserve the right to refuse any
telephone instructions and may discontinue the aforementioned redemption option
without notice. The minimum telephone redemption is $1,000.
Other Information Concerning Redemption
A shareholder who requests that the proceeds of a redemption be sent by
wire transfer will be charged for the cost of such wire, which is $10.00 as of
the date of this Prospectus (subject to change without notice).
Each Fund reserves the right to take up to seven days to make payment if,
in the judgment of the Fund's Investment Adviser, such Fund could be affected
adversely by immediate payment. In addition, the right of redemption for a Fund
may be suspended or the date of payment postponed (a) for any period during
which the NYSE is closed (other than for customary week-end and holiday
closings), (b) when trading in the markets that the Fund normally utilizes is
restricted, or when an emergency, as defined by the rules and regulations of the
SEC, exists, making disposal of that Fund's investments or determination of its
net asset value not reasonably practicable, or (c) for any other periods as the
SEC by order may permit for protection of that Fund's shareholders.
Due to the high cost of maintaining accounts, each Fund has the right to
redeem, upon not less than 30 days written notice, all of the shares of any
shareholder if, through redemptions, the shareholder's account has a net asset
value of less than $1,000 in the case of Investor Shares or $1,000,000 in the
case of Institutional Shares. A shareholder will be given at least 30 days
written notice prior to any involuntary redemption and during such period will
be allowed to purchase additional shares to bring his account up to the
applicable minimum before the redemption is processed.
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares of a Fund valued at $15,000 or more may elect
to receive a monthly or quarterly check in a stated amount (minimum check amount
is $100 per month or quarter). Shares will be redeemed at net asset value as may
be necessary to meet the withdrawal payments. If withdrawal payments exceed
reinvested dividends and distributions, the investor's shares will be reduced
and eventually depleted. A withdrawal plan may be terminated at any time by the
shareholder or the applicable Fund. Costs associated with a withdrawal plan are
borne by the applicable Fund. Additional information regarding systematic
withdrawal plans may be obtained by calling Maxus Information Systems Inc. at
(216) 687-1000.
INVESTMENT MANAGEMENT
The Investment Adviser
Each Fund has retained as its investment adviser Maxus Asset Management Inc
(the "Adviser"), The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114, an investment management organization founded in 1976.
The Adviser is actively engaged in providing discretionary investment management
services to institutional and individual clients.
Subject to the supervision of each Fund's Board of Trustees, the Adviser
manages each Fund's assets, including buying and selling portfolio securities.
The Adviser also furnishes office space and certain administrative services to
the Fund.
During 1998, the Adviser received from each Fund as compensation for its
services an annual fee of 1% of such Fund's net assets.
Portfolio Managers
Richard A. Barone has been the portfolio manager of Maxus Income Fund,
Maxus Equity Fund and Maxus Aggressive Value Fund since the inception of each
Fund. Mr. Barone has been President of the Adviser since 1976.
Alan Miller has been the portfolio manager of Maxus Laureate Fund since
January 1, 1995. Mr. Miller has been a portfolio manager with the Adviser since
1994.
Denis J. Amato has been the portfolio manager of the Maxus Ohio Heartland
Fund since its inception. Mr. Amato has been Chief Investment Officer of Gelfand
Maxus Asset Management Inc., a subsidiary of RMI, since 1997. Previously, he was
Managing Director of Gelfand Partners Asset Management since 1991.
<PAGE>
Rule 12b-1 Plan (Investor Shares Only)
Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing
and servicing, fees to the Distributor for the sale, distribution and customer
servicing of each Fund's Investor Shares. Because Investor Shares pay marketing
and servicing fees on an ongoing basis, your investment cost may be higher over
time than other shares with different sales charges and fees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund declares and pays any dividends annually to shareholders.
Dividends are paid to all shareholders invested in the Fund on the record date.
The record date is the date on which a shareholder must officially own shares in
order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or capital
gain distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
Each Fund sends an annual statement of your account activity to assist you
in completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.
Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales. Please consult your tax adviser
regarding your federal, state, and local tax liability.
THE YEAR 2000 PROBLEM
Many computer systems were designed using only two digits to designate
years. These systems may not be able to distinguish the Year 2000 from the Year
1900 (commonly known as the "Year 2000 Problem"). The Funds could be adversely
affected if the computer systems used by the Adviser or other Fund service
providers do not properly address this problem before January 1, 2000. The
Adviser expects to have addressed this problem before then, and does not
anticipate that the services it provides will be adversely affected. The Fund's
other service providers have told the Adviser that they also expect to resolve
the Year 2000 Problem, and the Adviser will continue to monitor the situation as
the Year 2000 approaches. However, if the problem has not been fully addressed,
the Funds could be negatively affected. The Year 2000 Problem could also have a
negative impact on the companies in which the Funds invest, and this could hurt
the Funds' investment returns.
<PAGE>
GENERAL INFORMATION
Maxus Laureate Fund is not available to residents of the State of Montana.
Shares of each Fund are offered exclusively by the Fund's Distributor,
Maxus Securities Corp. an affiliate of the Adviser. The Distributor's address is
The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, is the
custodian for each Fund's securities and cash. Maxus Information Systems Inc.
("MIS"), The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland,
Ohio 44114, is each Fund's Transfer, Redemption and Dividend Distributing Agent.
MIS is a subsidiary of RMI, the parent company of the Adviser.
McCurdy & Associates C.P.A.'s, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been appointed as independent accountants for the Funds.
Benesch, Friedlander, Coplan & Aronoff, 2300 BP America Building, 200
Public Square, Cleveland, Ohio 44114, is legal counsel to the Funds and to the
Adviser.
<PAGE>
MAXUS INCOME FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McCurdy & Associates C.P.A.'s, Inc., whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
Investor Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
<TABLE>
<S> <C> <C> <C> <C> <C>
01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
to to to to to
12/30/98 12/31/97 12/31/96 12/31/95 12/31/94
Net Asset Value -
Beginning of Period 11.31 10.78 10.54 9.73 10.94
Net Investment Income 0.72 0.67 0.70 0.72 0.74
Net Gains or Losses on Securities
(realized and unrealized) (0.33) 0.53 0.24 0.81 (1.22)
Total from Investment Operations 0.39 1.20 0.94 1.53 (0.48)
Distributions
Net investment income (0.72) (0.67) (0.70) (0.72) (0.73)
Capital gains (0.37) - - - -
Return of capital - - - - -
Total Distributions (1.09) (0.67) (0.70) (0.72) (0.73)
Net Asset Value -
End of Period $10.61 $11.31 $10.78 $10.54 $9.73
Total Return 3.49% 11.47% 9.20% 16.15% -4.39%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 39,650 38,620 35,728 37,387 33,425
Ratio of expenses to average net assets 1.87% 1.91% 1.92% 1.90% 1.81%
Ratio of net income to average net assets 6.52% 6.08% 6.50% 7.01% 7.10%
Portfolio turnover rate 59% 70% 78% 121% 138%
</TABLE>
Institutional Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
02/01/98
to
12/31/98
Net Asset Value -
Beginning of Period 11.31
Net Investment Income 0.33
Net Gains or Losses on Securities
(realized and unrealized) (0.50)
Total from Investment Operations (0.17)
Distributions
Net investment income (0.33)
Capital gains (0.19)
Return of capital -
Total Distributions (0.52)
Net Asset Value-
End of Period $10.62
Total Return 3.54%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 426
Ratio of expenses to average net assets * 1.37%
Ratio of net income to average net assets * 7.02%
Portfolio turnover rate 59%
* Annualized
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
MAXUS EQUITY FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McCurdy & Associates C.P.A.'s, Inc., whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
Investor Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
<TABLE>
<S> <C> <C> <C> <C> <C>
01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
to to to to to
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
Net Asset Value -
Beginning of Period 18.23 16.00 14.57 12.95 13.60
Net Investment Income 0.20 0.15 0.27 0.30 0.25
Net Gains or Losses on Securities
(realized and unrealized) (1.80) 4.33 2.50 2.60 (0.17)
Total from Investment Operations (1.60) 4.48 2.77 2.90 0.08
Distributions
Net investment income (0.20) (0.15) (0.27) (0.27) (0.22)
Capital gains (0.51) (2.10) (1.07) (1.01) (0.51)
Return of capital - - - - -
Total Distributions (0.71) (2.25) (1.34) (1.28) (0.73)
Net Asset Value -
End of Period $15.92 $18.23 $16.00 $14.57 $12.95
Total Return -8.74% 28.16% 19.13% 22.43% 0.59%
Ratios/Supplemental Data:
Net Assets at end of
period (thousands) 53,279 55,637 38,765 31,576 17,018
Ratio of expenses to
average net assets 1.80% 1.87% 1.90% 1.96% 2.00%
Ratio of net income to
average net assets 1.15% 1.80% 1.71% 2.01% 1.82%
Portfolio turnover rate 118% 89% 111% 173% 184%
</TABLE>
Institutional Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
02/01/98
to
12/31/98
Net Asset Value -
Beginning of Period 15.92
Net Investment Income -
Net Gains or Losses on Securities
(realized and unrealized) -
Total from Investment Operations -
Distributions
Net investment income -
Capital gains -
Return of capital -
Total Distributions -
Net Asset Value -
End of Period $15.92
Total Return 0.00%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 0
Ratio of expenses to average net assets * 1.30%
Ratio of net income to average net assets * 1.65%
Portfolio turnover rate 118%
* Annualized
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
MAXUS LAUREATE FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McCurdy & Associates C.P.A.'s, Inc., whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
Investor Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
<TABLE>
<S> <C> <C> <C> <C> <C>
01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
to to to to to
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
Net Asset Value -
Beginning of Period 10.38 10.82 9.82 9.62 9.96
Net Investment Income (0.12) 0.52 (0.08) (0.19) (0.08)
Net Gains or Losses on Securities
(realized and unrealized) 3.76 0.07 2.14 1.57 (0.26)
Total from Investment Operations 3.64 0.59 2.06 1.38 (0.34)
Distributions
Net investment income - (0.52) - - -
Capital gains (0.73) (0.51) (1.06) (1.18) -
Return of capital - - - - -
Total Distributions (0.73) (1.03) (1.06) (1.18) -
Net Asset Value -
End of Period $13.29 $10.38 $10.82 $9.82 $9.62
Total Return 35.14% 5.49% 21.03% 14.41% -3.41%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 8,059 3,395 3,156 1,510 1,998
Ratio of expenses to average net assets 2.63% 2.49% 3.92% 3.85% 3.60%
Ratio of net income to average net assets -1.10% 4.19% -0.73% -1.69% -0.87%
Portfolio turnover rate 2792% 1511% 1267% 1377% 469%
</TABLE>
Institutional Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
02/01/98
to
12/31/98
Net Asset Value -
Beginning of Period 10.38
Net Investment Income (0.11)
Net Gains or Losses on Securities
(realized and unrealized) 3.76
Total from Investment Operations 3.65
Distributions
Net investment income -
Capital gains (0.73)
Return of capital -
Total Distributions (0.73)
Net Asset Value -
End of Period $13.30
Total Return 35.24%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 9
Ratio of expenses to average net assets * 2.13%
Ratio of net income to average net assets * -0.60%
Portfolio turnover rate 2792%
* Annualized
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
MAXUS OHIO HEARTLAND FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by McCurdy & Associates
C.P.A.'s, Inc., whose report, along with the Fund's financial statements, are
included in the SAI, which is available upon request.
Selected data for a share of capital stock
outstanding throughout the period indicated
Ohio Heartland Fund
2/1/98^ to 12/31/98
Investor Institutional
Net Asset Value -
Beginning of Period 10.00 10.00
Net Investment Income (0.05) (0.03)
Net Gains or Losses on Securities
(realized and unrealized) (1.79) (1.79)
Total from Investment Operations (1.84) (1.82)
Distributions
Net investment income - -
Capital gains - -
Return of capital - -
Total Distributions - -
Net Asset Value -
End of Period $8.16 $8.18
Total Return -18.40% -18.20%
Ratios/Supplemental Data:
Net Assets at end
of period (thousands) 1,234 753
Ratio of expenses to
average net assets * 3.24% 2.74%
Ratio of net income to
average net assets * -0.88% -0.38%
Portfolio turnover rate 6.82% 6.82%
* Annualized
^ Commencement of operations.
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
MAXUS AGGRESSIVE VALUE FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
Fund's financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by McCurdy & Associates
C.P.A.'s, Inc., whose report, along with the Fund's financial statements, are
included in the SAI, which is available upon request.
Selected data for a share of capital stock
outstanding throughout the period indicated
Aggressive Value Fund
2/1/98^ to 12/31/98
Investor Institutional
Net Asset Value -
Beginning of Period 5.00 5.00
Net Investment Income (0.07) (0.05)
Net Gains or Losses on Securities
(realized and unrealized) (0.09) (0.09)
Total from Investment Operations (0.16) (0.14)
Distributions
Net investment income - -
Capital gains (0.04) (0.04)
Return of capital - -
Total Distributions (0.04) (0.04)
Net Asset Value -
End of Period $4.80 $4.82
Total Return -3.27% -2.87%
Ratios/Supplemental Data:
Net Assets at end
of period (thousands) 3,159 1,156
Ratio of expenses to
average net assets * 2.69% 2.19%
Ratio of net income to
average net assets * -1.33% -0.83%
Portfolio turnover rate 108.60% 108.60%
* Annualized
^ Commencement of operations.
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
<PAGE>
TABLE OF CONTENTS Page
RISK/RETURN SUMMARY 2
HOW TO PURCHASE SHARES 12
HOW TO REDEEM SHARES 14
SYSTEMATIC WITHDRAWAL PLAN 16
INVESTMENT MANAGEMENT 16
DIVIDENDS, DISTRIBUTIONS AND TAXES 17
GENERAL INFORMATION 18
FINANCIAL HIGHLIGHTS 19
A Statement of Additional Information (SAI) dated April 30, 1999, is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Fund's annual report to shareholders. The
annual report discusses market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year. To
obtain the SAI, the annual report, semi-annual report and other information
without charge call the Fund at 1-800-44-MAXUS.
You can obtain information about the Fund (including the SAI) by visiting
or writing the Public Reference Room of the Securities and Exchange Commission
in Washington, DC 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.
The Maxus Funds
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
Investment Company Act File Nos:
Income Fund: 811-4144
Equity Fund: 811-5865
Laureate Fund: 811-7516
Ohio Heartland and
Aggressive Value Funds: 811-8499
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION April 30, 1999
MAXUS INCOME FUND
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
Maxus Income Fund (the "Fund") is a diversified, open-end management
investment company with an investment objective of obtaining the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. This Statement of Additional Information is not a prospectus. A
copy of the Fund's prospectus can be obtained from the Fund's distributor, Maxus
Securities Corp, The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114, telephone number (216) 687-1000.
The date of this Statement of Additional Information and of the prospectus
to which it relates is April 30, 1999.
<PAGE>
TABLE OF CONTENTS
CAPTION PAGE LOCATION IN PROSPECTUS
Fund History 3 Not Applicable
Investments and Risks 3 Maxus Income Fund - Risk/
Return Summary
Management of the Fund 9 Investment Management
Ownership of Shares 11 Not Applicable
Investment Advisory and
Other Services 11 Investment Management
Brokerage Allocation 13 Not Applicable
Capital Stock and Other Securities 15 Not Applicable
Purchase, Redemption and Pricing 16 How to Purchase Shares/
of Shares How to Redeem Shares
Taxation of Fund 17 Dividends, Distributions
and Taxes
Distributor 17 Investment Management
Performance 17 Not Applicable
Financial Statements 18 Maxus Income Fund - Financial
Highlights
<PAGE>
FUND HISTORY
Maxus Income Fund (the "Fund") was organized as a Trust under the laws of
the State of Ohio pursuant to a Declaration of Trust dated October 31, 1984.
INVESTMENTS AND RISKS
Classification
The Fund is a diversified, open-end management investment company.
Investment Strategies and Risks
The Fund has an investment objective of obtaining the highest total return,
a combination of income and capital appreciation. The principal investment
strategies used by the Fund to pursue this objective, together with the
principal risks of investing in the Fund, are described in the Prospectus under
the heading "Maxus Income Fund - Risk/Return Summary."
Described below are (i) certain other investment strategies (including
strategies to invest in particular types of securities) which are not principal
strategies and (ii) the risks of those strategies:
Equity Securities. The Fund may invest in equity securities, including
common stock, preferred stock, convertible preferred stock and convertible
bonds. In selecting equity securities for the Fund, the Adviser will utilize
both fundamental research and technical analysis to identify securities whose
downside risk appears small relative to the potential for capital appreciation.
In doing so this Fund anticipates that the majority of its equity investments
will be made in convertible bonds and convertible preferred stock, since these
securities generally have a higher yield and a lesser risk of capital
depreciation than the common stocks into which they are convertible. While these
securities will generally be chosen for their ability to pay dividends, there
can be no assurance that the dividends will be continued. Also, individual
market values of these securities will fluctuate based on individual corporate
developments as well as general economic conditions. As a result of these
factors, the share price of the Fund could decline to the extent that the Fund
is invested in such equity securities.
Options. The Fund may invest up to 5% of its assets in put and call options
which trade on securities exchanges. Such options may be on individual
securities or on indexes. A put option gives the Fund, in return for the payment
of a premium, the right to sell the underlying security or index to another
party at a fixed price. If the market value of the underlying security or index
declines, the value of the put option would be expected to rise. If the market
value of the underlying security or index remains the same or rises, however,
the put option could lose all of its value, resulting in a loss to the Fund.
<PAGE>
A call option gives the Fund, in return for the payment of a premium, the
right to purchase the underlying security or index from another party at a fixed
price. If the market value of the underlying security or index rises, the value
of the call option would also be expected to rise. If the market value of the
underlying security or index remains the same or declines, however, the call
option could lose all of its value, resulting in a loss to the Fund.
Closed-End Funds. The Fund may invest in closed-end investment companies
(also known as "closed-end funds"). Typically, the common shares of closed-end
funds are offered to the public in a one-time initial public offering by a group
of underwriters who retain a spread or underwriting commission. Such securities
are then listed for trading on a national securities exchange or in the
over-the-counter markets. Because the common shares of closed-end funds cannot
be redeemed upon demand to the issuer like the shares of an open-end investment
company (such as the Fund), investors seek to buy and sell common shares of
closed-end funds in the secondary market. The common shares of many closed-end
funds, after their initial public offering, frequently trade at a price per
share which is less than the net asset value per share, the difference
representing the "market discount" of such common shares. The Funds purchase
common shares of closed-end funds which trade at a market discount and which the
Adviser believes presents the opportunity for capital appreciation or increased
income due in part to such market discount.
However, there can be no assurance that the market discount on common
shares of any closed-end fund will ever decrease. In fact, it is possible that
this market discount may increase and the Fund may suffer realized or unrealized
capital losses due to further decline in the market price of the securities of
such closed-end funds, thereby adversely affecting the net asset value of the
Fund's shares. Similarly, there can be no assurance that the common shares of
closed-end funds which trade at a premium will continue to trade at a premium or
that the premium will not decrease subsequent to a purchase of such shares by
the Fund. The Fund may also invest in preferred shares of closed-end funds.
The Fund will structure its investments in the securities of closed-end
funds to comply with applicable provisions of the Investment Company Act of 1940
(the "Act"). The presently applicable provisions require that (i) the Fund and
affiliated person of such Fund not own together more than 3% of the total
outstanding stock of any one investment company, (ii) the Fund not offer its
shares at a public offering price that includes a sales load of more than 1 1/2%
and (iii) the Fund either seek instructions from its shareholders, with regard
to the voting of all proxies with respect to its investment in the securities of
closed-end funds and vote such proxies with respect to its investment in the
securities of closed-end funds and vote such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of such
securities. The Fund intends to vote the shares of any closed-end fund held by
it in the same proportion as the vote of all other holders of such fund's
securities. The effect of such "mirror" voting will be to neutralize the Fund's
influence on corporate governance matters regarding the closed-end funds in
which such Fund invests.
<PAGE>
The Fund will not invest directly in the securities of open-end investment
companies. However, the Fund may retain the securities of a closed-end
investment company that has converted to an open-end fund status subsequent to
the Fund's investment in the securities of such closed-end fund. Generally,
shares of an open-end investment company can be redeemed, at their net asset
value, upon demand to the issuer. However, pursuant to applicable provisions of
the Act, the Fund may not redeem more than 1% of the outstanding redeemable
securities of an open-end investment company during any period of 30 days or
less. Consequently, if the Fund should own more than 1% of the outstanding
redeemable securities of an open-end investment company after such fund's
conversion from closed-end fund status, the amount in excess of 1% may be
treated as an investment in illiquid securities. Because the Fund may not hold
at any time more than 10% of the value of its net assets in illiquid securities
(e.g. securities that are not readily marketable within seven days), the Fund
may seek to divest itself, prior to any such conversion, of securities in excess
of 1% of the outstanding redeemable securities of a converting fund. The Fund
may, however, retain such securities and any amount in excess of 1% of the
open-end fund and thereby subject to the limits on redemption would be treated
as an investment in illiquid securities subject to the aggregate limit of 10% of
the Fund's total assets.
The Fund may invest in the securities of closed-end funds which (i)
concentrate their portfolios in issuers in specific industries or in specific
geographic areas and (ii) are non-diversified for purposes of the Act. However,
because the Fund does not intend to concentrate their investments in any single
industry and because the closed-end funds in which the Fund invests generally
satisfy the diversification requirements applicable to a regulated investment
company under the Internal Revenue Code, the Funds do not believe that their
investments in closed-end funds which concentrate in specific industries or
geographic areas or which are non-diversified for purposes of the Act will
represent special risks to the shareholders of the Fund. The Fund will treat its
entire investment in the securities of a closed-end fund that concentrates in a
specific industry as an investment in securities of an issuer in such industry.
Some of the closed-end funds in which the Fund invests may incur more risks
than others. For example, some of these closed-end funds may have policies that
permit them to invest up to 100% of their assets in securities of foreign
issuers and to engage in foreign currency transactions with respect to their
investments; invest up to 100% of their assets in corporate bonds which are not
considered investment grade bonds by Standard & Poor's Corporation or Moody's
Investor Services, Inc., or which are unrated; invest some portion of their net
assets in illiquid securities; invest some portion of their net assets in
warrants; lend their portfolio securities; sell securities short; borrow money
in amounts upon to some designated percentage of their assets for investment
purposes; write (sell) or purchase call or put options on securities or on stock
indexes; concentrate 25% or more of their total assets in one industry; enter
into future contracts; and write (sell) or purchase options on futures
contracts.
Like the Fund, closed-end funds frequently pay an advisory fee for the
management of their portfolios, as well as other expenses. Therefore, investment
by the Fund in such funds often results in a "duplication" of advisory fees and
other expenses, thereby increasing the overall charge to the net asset value of
the Fund's shares.
<PAGE>
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities (principally to
broker-dealers) without limit where such loans are callable at any time and are
continuously secured by collateral (cash or government securities) equal to no
less than the market value, determined daily, of the securities loaned. As an
operating policy which may be changed without shareholders vote, the Adviser
will limit such lending to not more than one-third of the value of the Fund's
total assets. The Fund will receive amounts equal to dividends or interest on
the securities loaned. It will also earn income for having made the loan. Any
cash collateral pursuant to these loans will be invested in money market
instruments. Where voting or consent right with respect to loaned securities
pass to the borrower, management will follow the policy of calling the loan, in
whole or in part as may be appropriate, to permit the exercise of such voting or
consent rights if the issues involved have a material effect on the Fund's
investment in the securities loaned.
As with any extensions of credit, there are risks of delay in recovery and
in some cases even loss of rights in the collateral should the borrower of the
securities fail financially. Also, any securities purchased with cash collateral
are subject to market fluctuations while the loan is outstanding.
Repurchase Agreements. The Fund will not invest more than 5% of its assets
in repurchase agreements. A repurchase agreement is an instrument under which
the Fund acquires ownership of an obligation but the seller agrees, at the time
of sale, to repurchase the obligation at a mutually agreed-upon time and price.
The resale price is in excess of the purchase price and reflects an agreed-upon
market rate unrelated to the interest rate on the purchased security. The Fund
will make payments for repurchase agreements only upon physical delivery or
evidence of book entry transfer to the account of the custodian or bank acting
as agent. In the event of bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying securities and losses including: (a) possible decline in the value of
the underlying securities during the period while the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack of access to
income during this period; and (c) expenses of enforcing its rights.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities (principally to
broker-dealers) without limit where such loans are callable at any time and are
continuously secured by collateral (cash or government securities) equal to no
less than the market value, determined daily, of the securities loaned. As an
operating policy which may be changed without shareholders vote, the Adviser
will limit such lending to not more than one-third of the value of the Fund's
total assets. The Fund will receive amounts equal to dividends or interest on
the securities loaned. It will also earn income from having made the loan. Any
cash collateral pursuant to these loans will be invested in money market
instruments. Where voting or consent rights with respect to loaned securities
pass to the borrower, management will follow the policy of calling the loan, in
whole or in part as may be appropriate, to permit the exercise of such voting or
consent rights if the issues involved have a material effect on the Fund's
investment in the securities loaned.
As with any extension of credit, there are risks of delay in recovery and
in some cases even loss of rights in the collateral should the borrower of the
securities fail financially. Also, any securities purchased with cash collateral
are subject to market fluctuations while the loan is outstanding.
<PAGE>
Fund Policies
The Fund has adopted the following fundamental investment policies and
restrictions. These policies cannot be changed without approval by the holders
of a majority of the outstanding voting securities of the Fund. As defined in
the Act, the "vote of a majority of the outstanding voting securities" of the
Fund means the lesser of the vote of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund. The Fund
may not:
1. invest more than 5% of the value of its total assets in the
securities of any one issuer (except obligations issued or guaranteed by
the United States Government, its agencies and instrumentalities);
2. acquire more than 10% of the outstanding voting securities of any
one issuer;
3. invest more than 25% of the value of such Fund's total assets in
securities of companies in a particular industry (except obligations issued
or guaranteed by the United States Government, its agencies and
instrumentalities);
4. invest in securities of other registered investment companies,
except by purchase in the open market involving only customary brokerage
commissions, or except as part of a merger, consolidation, reorganization
or acquisition;
5. invest in securities of any registered closed-end investment
company, if immediately after such purchase or acquisition such Fund would
own more than 3% of the total outstanding voting stock of such closed-end
company.
6. Invest more than 10% of the Fund's total assets in securities of
issuers which with their predecessors have a record of less than three
years continuous operation.
7. Invest more than 10% of the Fund's net assets in securities for
which market quotations are not readily available and repurchase agreements
maturing in more than seven days.
8. Lend money or securities, provided that the making of
interest-bearing demand deposits with banks and the purchase of debt
securities in accordance with its objective and policies are not prohibited
and the Fund may lend its portfolio securities as described above under the
caption "Lending of Portfolio Securities."
9. Borrow money except for temporary or emergency purposes from banks
(but not for the purpose of purchase of investments) and then only in an
amount not to exceed 5% of the Fund's net assets; or pledge the Fund's
securities or receivables or transfer or assign or otherwise encumber them
in an amount exceeding the amount of the borrowings secured thereby.
<PAGE>
10. Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be necessary for the
clearance of transactions.
11. Write (sell) put or call options, combinations thereof or similar
options; nor may it purchase put or call options if more than 5% of the
Fund's net assets would be invested in premiums on put and call options,
combinations thereof or similar options.
12. Purchase or retain the securities of any issuer if any of the
officers or Trustees of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
13. Invest for the purpose of exercising control or management of
another issuer.
14. Invest in commodities or commodity futures contracts or in real
estate, although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate.
15. Invest in interests in oil, gas or other mineral exploration or
development programs, although it may invest in the securities of issuers
which invest in or sponsor such programs.
16. Underwrite securities issued by others except to the extent the
Fund may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities.
17. Issue senior securities as defined in the Act.
18. Purchase securities subject to restrictions on disposition under
the Securities Act of 1933.
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage beyond the specified limit resulting from a
change in values or net assets will not be considered a violation.
Defensive Investments
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments, such as money market
mutual funds, commercial paper, certificates of deposit and bank or savings and
loan association interest-bearing demand accounts. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
<PAGE>
Portfolio Turnover
The Fund is not restricted with regard to portfolio turnover and will make
changes in its investment portfolios from time to time as business and economic
conditions and market prices may dictate and its investment policies may
require. The portfolio turnover rates in 1998 and 1997 were 55% and 70%,
respectively. A high rate of portfolio turnover in any year will increase
brokerage commissions paid and could result in high amounts of realized
investment gain subject to the payment of taxes by shareholders.
MANAGEMENT OF THE FUND
The Board of Trustees is responsible for managing the Fund's business
affairs and for exercising all the Fund's powers except those reserved for the
shareholders. The day-to-day operations of the Fund are conducted by its
officers. The following table provides biographical information with respect to
each current Trustee and officer of the Fund. Each Trustee who is or may be
deemed to be an "interested person" of the Fund, as defined in the Act, is
indicated by an asterisk. Each Trustee of the Fund is also a Trustee of Maxus
Equity Fund, Maxus Laureate Fund and MaxFund Trust, three other open-end
management investment companies.
Position Held Principal Occupation(s)
Name and Address With the Fund During Past 5 Years
Richard A. Barone* Chairman, President of Maxus Securities
The Tower at Erieview, Treasurer Corp (broker-dealer), Maxus
36th Floor and Trustee Asset Management Inc. (investment
1301 East Ninth Street adviser) and Resource Management,
Cleveland, Ohio 44114 Inc., dba Maxus Investment Group
(financial services)
Denis J. Amato* Trustee Chief Investment Officer, Gelfand.
The Tower at Erieview, Maxus Asset Management, Inc.
36th Floor (investment adviser) since 1997;
1301 East Ninth Street previously, Managing Director,
Cleveland, Ohio 44114 Gelfand Partners Asset Management
(investment adviser)
Kent W. Clapp Trustee Chairman, Medical Mutual of Ohio
2060 East Ninth Street (health insurer)
Cleveland, Ohio 44114
Steven M. Kasarnich Trustee President/Business Manager, Northeast
47 Alice Drive Ohio District Council of Carpenters;
Akron, Ohio 44319 Executive Secretary-Treasurer, Ohio
State Council of Carpenters
<PAGE>
Burton D. Morgan Trustee Chairman, Morgan Bank (bank);
Park Place President, Basic Search, Inc.
10 West Streetsboro Road (venture capital); Chairman,
Hudson, Ohio 44236 Multi-Color Corporation (printing);
Chairman, Morgan Funshares, Inc. (mutual
fund)
Michael A. Rossi, C.P.A. Trustee Certified Public Accountant
6559 Wilson Mills Road
Highland Heights, Ohio 44143
Joseph H. Smith Trustee Chief Financial Officer,
1404 East Ninth Street Diocese of Cleveland
8th Floor
Cleveland, Ohio 44114
Robert J. Conrad Vice President Vice President, Resource Management,
The Tower at Erieview, Inc.; formerly Vice President,
36th Floor American Income Plus
1301 East Ninth Street
Cleveland, Ohio 44114
Robert W. Curtin Secretary Senior Vice President and Secretary,
The Tower at Erieview, Maxus Securities Corp; formerly
36th Floor Executive Vice President,
1301 East Ninth Street Roulston & Company, Inc.
Cleveland, Ohio 44114
No officer, director or employee of Maxus Asset Management Inc. ("MAM" or
the "Investment Adviser") or of any parent or subsidiary receives any
compensation from the Fund for serving as an officer or Trustee of the Fund.
Each Trustee who is not an interested person in MAM will receive from the Fund
the following fees for each Board or shareholders meeting attended: $100 per
meeting if net assets of the Fund are under $10,000,000; $200 per meeting if net
assets of the Fund are between $10,000,000 and $50,000,000; and $300 per meeting
if net assets of the Fund are over $50,000,000. The estimated fees payable to
the Trustees for the current fiscal year, which are the only compensation or
benefits payable to Trustees, are summarized in the following table:
<PAGE>
Compensation Table
Name of Trustee Aggregate Total
Compensation Compensation
from the From All Maxus
Fund Funds Payable
to Trustees
Richard A. Barone $ 0 $ 0
Denis J. Amato $ 0 $ 0
Kent W. Clapp $ 400 $1,600
Steven M. Kasarnich $ 400 $1,600
Burton D. Morgan $ 1,400 $4,400
Michael A. Rossi $ 1,400 $4,400
Joseph H. Smith $ 400 $1,600
OWNERSHIP OF SHARES
As of February 19, 1999, no person was known by the Fund to be the
beneficial owner of more than 5% of the outstanding shares of the Fund.
As of February 19, 1999, all officers and Trustees as a group beneficially
owned 123,246 shares, constituting 3.4% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
Maxus Asset Management, Inc. ("MAM"), the Fund's investment adviser, is a
wholly-owned subsidiary of Resource Management Inc., d/b/a Maxus Investment
Group, an Ohio corporation ("RMI") with interests primarily in the financial
services industry. RMI also owns all of the shares of Maxus Securities Corp.
("MSC"), the NASD broker/dealer through which shares of each Fund are offered.
Richard A. Barone is the president and a principal shareholder of RMI and,
therefore, is deemed to be in control of MAM and MSC.
As compensation for MAM's services rendered to the Fund, the Fund pays a
fee, computed and paid monthly, at an annual rate of 1% of the average value of
the first $150,000,000 of the Fund's daily net assets and .75% of average daily
net assets in excess of $150,000,000. For 1998, 1997 and 1996, the Adviser
received management fees from the Fund in the amounts of $396,884, $364,175 and
$358,378, respectively.
<PAGE>
MAM has agreed to reimburse the Fund in the amount, if any, by which the
total expenses of the Fund for any fiscal year, including amounts paid by the
Fund under its Distribution Plan, exceed 2% of average annual net assets of the
Fund, except that the amount of such reimbursement shall not exceed the amount
of fees received by MAM as Investment Adviser for the period for which
reimbursement is made. Reimbursement, if any, is made on a monthly basis,
subject to year-end adjustment. Interest expense, taxes, brokerage fees and
commissions, and extraordinary expenses are not included as expenses for these
purposes.
Subject to the supervision and direction of the Fund's Trustees, MAM, as
investment adviser, manages the Fund's portfolio in accordance with the stated
policies of the Fund. MAM makes investment decisions for the Fund and places the
purchase and sale orders for portfolio transactions. In addition, MAM furnishes
office facilities and clerical and administrative services, and pays the
salaries of all officers and employees who are employed by both it and the Fund
and, subject to the direction of the Fund's Board of Trustees, is responsible
for the overall management of the business affairs of the Fund, including the
provision of personnel for recordkeeping, the preparation of governmental
reports and responding to shareholder communications.
Other expenses are borne by the Fund and include brokerage fees and
commissions, fees of Trustees not affiliated with MAM, expenses of registration
of the Fund and of the shares of the Fund with the Securities and Exchange
Commission (the "SEC") and the various states, charges of the custodian,
dividend and transfer agent, outside auditing and legal expenses, liability
insurance premiums on property or personnel (including officers and trustees),
maintenance of business trust existence, any taxes payable by the Fund, interest
payments relating to Fund borrowings, costs of preparing, printing and mailing
registration statements, prospectuses, periodic reports and other documents
furnished to shareholders and regulatory authorities, costs of printing share
certificates, portfolio pricing services and Fund meetings, and costs incurred
pursuant to the Fund's Distribution and Shareholder Servicing Plan described
below.
Distribution Plan
The Fund has a Distribution and Shareholder Servicing Plan (the "Plan")
pursuant to Rule 12b-1 under the Act, pursuant to which the Fund pays Maxus
Securities Corp ("MSC") .50% of average net assets of Investor Shares annually
for the costs of activities intended to result in the sale of Investor Shares,
regardless of the amount of expenses actually incurred by MSC. In 1998, $199,302
(.50% of average net assets) was paid by the Fund to MSC pursuant to the Plan.
Of such amount, $186,347 was used by MSC to compensate securities dealers and
other persons and organizations for providing distribution assistance and
shareholder services with respect to Investor Shares, and $12,955 was expended
for advertising and marketing.
The Fund does not participate in any joint distribution activities with
respect to another series or investment company.
The Trustees believe that the Plan has benefitted and will continue to
benefit the Fund and the holders of Investor Shares. Among these benefits are:
(1) reductions in the per share expenses of the Fund as a result of increased
assets n the Fund; (2) reductions in the cost of executing portfolio
transactions and the possible ability of the Investment Adviser in some cases to
negotiate lower purchase prices for securities, due to the potentially larger
blocks of securities which may be traded by the Fund as its net assets increase
in size; and (3) a more predictable flow of cash which may provide investment
flexibility in seeking the Fund's investment objective and may better enable the
Fund to meet redemption demands without liquidating portfolio securities at
inopportune times.
<PAGE>
Other Service Providers
The Fund has entered into an Administration Agreement with Maxus
Information Systems Inc. ("MIS"), pursuant to which MIS has agreed to act as the
Fund's Transfer, Redemption and Dividend Disbursing Agent. As such, MIS
maintains the Fund's official record of shareholders and is responsible for
crediting dividends to shareholders' accounts. In consideration of such
services, the Fund pays MIS an annual fee, paid monthly, equal to $6.75 per
shareholder account (with a monthly minimum of $775) plus $12 per month for each
state in which the Fund is registered under such state's securities laws, plus
out-of-pocket expenses. In addition, the Fund has entered into an Accounting
Services Agreement with MIS, pursuant to which MIS has agreed to provide
portfolio pricing and related services, for the payment of an annual fee of
$17,400 for the first $25,000,000 in net assets, $8,500 for the next $25,000,000
in net assets and $4,750 for each additional $25,000,000 in net assets, plus
out-of-pocket expenses. For 1998, 1997 and 1996, the Fund paid MIS fees under
the Administration Agreement and the Accounting Services Agreement in the
amounts of $40,603, $41,545 and $45,749, respectively. MIS is a subsidiary of
RMI, the parent company of the Investment Adviser.
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, serves as the
Fund's custodian. As custodian, Star Bank maintains custody of the Fund's cash
and portfolio securities.
McCurdy & Associates C.P.A.'s, Inc., independent certified public
accountants located at 27955 Clemens Road, Westlake, Ohio 44145, has been
selected as auditors for the Fund. In such capacity, McCurdy & Associates
C.P.A.'s, Inc. periodically reviews the accounting and financial records of the
Fund and examines its financial statements.
BROKERAGE ALLOCATION
Decisions to buy and sell securities for the Fund are made by MAM subject
to the overall supervision and review by the Fund's Trustees. Portfolio security
transactions for the Fund are effected by or under the supervision of MAM.
Transactions on stock exchanges involve the payment of negotiated brokerage
commissions. There is generally no stated commission in the case of securities
traded in the over-the-counter markets, but the price of those securities
includes an undisclosed commission or markup. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's markup or markdown.
In executing portfolio transactions and selecting brokers and dealers, it
is the Fund's policy to seek the best overall terms available. The Investment
Advisory and Administration Agreement between the Fund and MAM provides that, in
assessing the best overall terms available for any transaction, MAM shall
consider the factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In addition, the
Investment Advisory and Administration Agreement authorizes MAM, in selecting
brokers or dealers to execute a particular transaction, and, in evaluating the
best overall terms available, to consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Fund and/or other accounts over which MAM exercises
investment discretion.
<PAGE>
The Fund's Board of Trustees periodically reviews the commissions paid by
the Fund to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits inuring to the Fund. It is
possible that certain of the services received will primarily benefit one or
more other accounts for which investment discretion is exercised. Conversely,
the Fund may be the primary beneficiary of services received as a result of
portfolio transactions effected for other accounts. MAM's fee under the
Investment Advisory and Administration Agreement is not reduced by reason of
MAM's receiving such brokerage and research services.
Under the Act, with respect to transactions effected on a securities
exchange, a mutual fund may not pay brokerage commissions to an affiliate which
exceed the usual and customary broker's commissions. A commission is deemed as
not exceeding the usual and customary broker's commission if (i) the commission
is reasonable and fair compared to the commission received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time and (ii) the Board of
Trustees, including a majority of the Trustees who are not interested persons of
the mutual fund, have adopted procedures reasonably designed to provide that
such commission is consistent with the above-described standard, review these
procedures annually for their continuing appropriateness and determine quarterly
that all commissions paid during the preceding quarter were in compliance with
these procedures.
The Fund's Board of Trustees has determined that any portfolio transaction
for the Fund may be effected through MSC if, in MAM's judgment, the use of MSC
is likely to result in price and execution at least as favorable as those of
other qualified brokers, and if, in the transaction, MSC charges the Fund a
commission rate consistent with those charged by MSC to comparable unaffiliated
customers in similar transactions. Each quarter, the Trustees review a report
comparing the commissions charged the Fund by MSC to industry norms for similar
sized transactions both (i) with proprietary research or other valuable services
being provided and (ii) without such services being provided. Based upon such
review, the Board of Trustees determines on a quarterly basis whether the
commissions charged by MSC meet the requirements of the Act. MSC will not
participate in commissions from brokerage given by the Fund to other brokers or
dealers. Over-the-counter purchases and sales are transacted through brokers and
dealers with principal market makers. The Fund will in no event effect principal
transactions with MSC in over-the-counter securities in which MSC makes a
market. MSC is a wholly owned subsidiary of RMI, a corporation controlled by
Richard A. Barone, Chairman of the Fund. Richard A. Barone is, therefore,
considered to control MSC.
Even though investment decisions for the Fund are made independently from
those of the other accounts managed by MAM, investments of the kind made by the
Fund may also be made by those other accounts. When the Fund and one or more
accounts managed by MAM are prepared to invest in, or desire to dispose of, the
same security, available investments or opportunities for sales will be
allocated in a manner believed by MAM to be equitable. In some cases, this
procedure may adversely affect the price paid or received by the Fund or the
size of the position obtained for or disposed of by the Fund.
<PAGE>
During 1998, 1997, and 1996, the aggregate amount of brokerage commissions
paid by the Fund were $173,226, $159,476 and $217,516, respectively,
substantially all of which was paid to MSC.
CAPITAL STOCK AND OTHER SECURITIES
The Declaration of Trust provides for an unlimited number of authorized
shares of beneficial interest in the Fund. Shares of the Fund or divided into
two classes, Investor Shares and Institutional Shares. Each share represents an
equal proportionate interest in the Fund with other shares of the same class,
and is entitled to such dividends and distributions out of the income earned on
the assets belonging to the Fund as are declared at the discretion of the
Trustees.
Shareholders are entitled to one vote per share (with proportional voting
for fractional shares) on such matters as shareholders are entitled to vote.
Shareholders vote in the aggregate and not by class on all matters except that
(i) shares shall be voted by individual class when required by the 1940 Act or
when the Trustees have determined that the matter affects only the interests of
a particular class, and (ii) only the holders of Investor Shares will be
entitled to vote on matters submitted to shareholder vote with regard to the
Distribution Plan applicable to such class.
Whenever the approval of a majority of the outstanding shares of the Fund
is required in connection with shareholder approval of an investment advisory
contract, changes in the investment objective and policies or the investment
restrictions, or approval of a distribution expense plan, a "majority" shall
mean the vote of (i) 67% or more of the shares of the Fund present at a meeting,
if the holders of more than 50% of the outstanding shares of such Fund are
present in person or by proxy, or (ii) more than 50% of the outstanding shares
of the Fund, whichever is less.
Although the Fund is not required to hold annual meetings of the
shareholders, shareholders holding at least 10% of the Fund's outstanding shares
have the right to call a meeting to elect or remove one or more of the Trustees
of the Fund.
Upon issuance and sale in accordance with the terms of the Prospectus, each
share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights. The Declaration of Trust also
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of the Fund and that every agreement, obligation or
instrument entered into or executed by the Fund shall contain a provision to the
effect that the shareholders are not personally liable thereunder.
<PAGE>
PURCHASE, REDEMPTION AND PRICING OF SHARES
The information pertaining to the purchase and redemption of the Fund's
shares appearing in the Prospectus under the captions "How To Purchase Shares"
and "How To Redeem Shares" is hereby incorporated by reference.
The price paid for shares of a certain class of the Fund is the net asset
value per share of such class next determined after receipt by the Transfer
Agent of properly identified purchase funds, except that the price for shares
purchased by telephone is the net asset value per share next determined after
receipt of telephone instructions. Net asset value per share is computed for
each class of the Fund as of the close of business (currently 4:00 P.M., New
York time) each day the New York Stock Exchange is open for trading and on each
other day during which there is a sufficient degree of trading in the Fund's
investments to affect materially net asset value of its redeemable securities.
For purposes of pricing sales and redemptions, net asset value per share of
a class of the Fund is calculated by determining the value of the class's
proportional interest in the assets of the Fund, less (i) such class's
proportional share of general liabilities and (ii) the liabilities allocable
only to such class; and dividing such amount by the number of shares of such
class outstanding.
For purposes of computing the net asset value per share of the Fund,
securities listed on a national securities exchange or on the NASDAQ National
Market System will be valued on the basis of the last sale of the date on which
the valuation is made or, in the absence of sales, at the closing bid price.
Over-the-counter securities will be valued on the basis of the bid price at the
close of business on each day or, if market quotations are not readily
available, at fair value as determined in good faith by the Board of Trustees.
Unless the particular circumstances (such as an impairment of the
credit-worthiness of the issuer) dictate otherwise, the fair market value of
short-term securities with maturities of 60 days or less shall be their
amortized cost. All other securities and other assets of the Fund will be valued
at their fair value as determined in good faith by the Board of Trustees.
TAXATION OF THE FUND
The Fund intends to qualify each year as a "regulated investment company"
under the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). Qualification as a regulated investment company will
result in the Fund's paying no taxes on net income and net realized capital
gains distributed to shareholders. If these requirements are not met, the Fund
will not receive special tax treatment and will pay federal income tax, thus
reducing the total return of the Fund.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually by the Fund's transfer agent. Shareholders
are urged to consult their own tax advisers regarding specific questions as to
Federal, state or local taxes.
<PAGE>
DISTRIBUTOR
Shares of the Fund are offered on a best-efforts basis by Maxus Securities
Corp, a registered NASD broker-dealer. MSC is a wholly-owned subsidiary of RMI,
which is controlled by Richard A. Barone, Chairman of the Fund.
Pursuant to the Distribution Agreement between the Fund and MSC, MSC has
agreed to hold itself available to receive orders, satisfactory to MSC, for the
purchase of the Fund's shares, to accept such orders on behalf of the Fund as of
the time of receipt of such orders and to transmit such orders to the Fund's
transfer agent as promptly as practicable. MSC does not receive any commissions
or other compensation for the sale of shares of the Fund. However, pursuant to
the Plan, MSC receives an annual distribution fee of .50% of average net assets
of Investor Shares. Certain employees of MSC may receive compensation under the
Plan. See "Investment Advisory and Other Services - Distribution Plan."
The Distribution Agreement provides that MSC shall arrange to sell the
Fund's Shares as agent for the Fund and may enter into agreements with
registered broker-dealers as it may select to arrange for the sale of such
shares. MSC is not obligated to sell any certain number of shares.
PERFORMANCE
From time to time, the Fund may advertise performance data represented by a
cumulative total return or an average annual total return. Total returns are
based on the overall or percentage change in value of a hypothetical investment
in the Fund and assume all of the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if the Fund's performance had been constant
over the entire period. Because average annual returns tend to smooth out
variations in the Fund's returns, it should be recognized that they are not the
same as actual year-by-year results. The total returns for Investor Shares of
the Fund for periods ended December 31, 1998 are set forth below.
Maxus Income Fund
Average Annual Total Returns Cumulative Total Returns
One Three Five Ten One Three Five Ten
Year Years Years Years Year Years Years Years
3.49% 8.00% 6.98% 8.31% 3.49% 25.97% 40.12% 122.15%
Performance may be compared to well-known indices such as the Dow Jones
Industrial Average or alternative investments such as Treasury Bills. Also, the
Funds may include published editorial comments compiled by independent
organizations such as Lipper Analytical Services or Morningstar, Inc.
<PAGE>
All performance information is historical in nature and is not intended to
represent or guarantee future results. The value of Fund shares when redeemed
may be more or less than their original cost.
Further information about the performance of the Fund is contained in the
Fund's Annual Report to Shareholders which may be obtained from the Fund without
charge.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
Maxus Income Fund:
We have audited the accompanying statement of assets and liabilities of Maxus
Income Fund, including the schedule of portfolio investments, as of December 31,
1998, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the periods then
ended, and financial highlights for each of the five years in the periods then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of December 31, 1998, by correspondence with the custodian and
brokers. An audit also included assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Maxus
Income Fund as of December 31, 1998, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
January 12, 1999
<PAGE>
Maxus Income Fund
Schedule of Investments
December 31, 1998
Shares/Principal Amount Market Value % of Assets
Common Stock - Real Estate
20,000 Boykin Lodging 247,500 0.62%
Closed End Bond Funds
200,000 Blackrock Income 1,387,500
70,000 Blackrock North American Government 708,750
120,000 Debt Strategies II 982,500
50,000 Debt Strategies III 453,125
244,200 Hyperion 1999 1,755,188
185,000 Kemper Multi Market 1,711,250
20,000 Lincoln National Conv 280,000
300,000 MFS Government + Markets 1,968,750
230,000 MFS Intermediate 1,566,875
30,000 MFS Multimarket 193,125
32,300 Preferred Income Management 423,937
11,431,000 28.52%
Closed End Global Bond Funds
70,000 Dreyfus Strategic Governments 638,750
180,000 First Commonwealth 1,923,750
170,000 Kleinwort Benson Australian 1,115,625
170,000 Strategic Global 1,997,500
50,000 Templeton Global Governments 331,250
150,000 Templeton Global Income * 1,059,375
7,066,250 17.64%
Corporate Bonds
150,000 AES Corp 8%, 12-31-08 146,057 0.36%
Corporate Bond Equivalents
10,000 American General 8.45% MIPs 260,625
10,000 American Re 8.5% QUIPs 258,984
10,000 Bank One 250,625
10,000 Bear Stearns Cap Trust II 249,531
13,000 BF Goodrich 8.3% 332,312
7,000 Chase Cap V 7.03% 177,187
15,000 Conagra Capitol Ser B Adj Rate 300,000
10,000 Conseco Financing 9.16% 255,000
5,000 Donaldson Lufkin 8.42% 128,438
12,000 NWPS Capital Financing 8.125% 307,500
21,000 Pacificorp 8.55% QUIDs 531,563
15,000 RJR Nabisco Holdings 10.00% 376,875
10,000 Seagram 8% QUIDs 252,500
5,000 Shaw Communications 8.50% 125,313
15,500 Southern Company 7.75% 403,969
30,000 Texaco Cap Adj Rate 645,000
10,000 Time Warner 8.875% 259,375
10,000 Torchmark 9.18% MIPs 256,250
5,371,047 13.40%
*Non-income producing securities.
The Accompanying Notes are an Integral Part of the Financial Statements.
<PAGE>
Preferred Shares
5,000 Associated Estates $2.43 113,438
10,000 Crown American $5.50 488,750
10,000 Developers Diversified $2.36 B 247,500
15,000 Gabelli Global Multimedia $1.98 390,000
5,000 Great Lakes REIT $2.43 125,000
10,000 New Plan Excel Realty $2.15 247,500
20,000 Public Storage $2.22 G 505,000
48,500 Royce Value Trust $2.00 1,273,125
10,000 Simon Debartolo $2.18 255,625
11,000 Source Capital $2.40 328,625
3,974,563 9.92%
Convertible Bonds
223,000 Inco 7.75%, 3-15-16 199,585
350,000 United States Filter 4.5%, 12-15-01 327,145
526,730 1.31%
Convertible Preferred Shares
11,000 Armco $3.625 B 478,500
25,000 Camden Ppty $2.25 592,187
8,000 Chiquita Brands $2.88 281,000
50,000 Equity Residential $1.81 1,025,000
50,000 Glenborough Realty $1.94 912,500
4,600 Premier Farnell $1.35 72,737
17,000 USX $3.25 712,938
4,074,862 10.17%
U.S. Government Securities
5,000,000 US Treas 0%, 11-15-12 2,385,650
2,000,000 US Treas 11.75%, 02-15-01 2,282,188
4,667,838 11.65%
Cash Equivalents
2,645,535 Star Bank Treasury 2,645,535 6.60%
Total Investments (Cost - $40,724,486) 40,151,382 100.19%
Other Assets Less Liabilities (75,631) -0.19%
Net Assets - Equivalent 40,075,751 100.00%
*Non-income producing securities.
The Accompanying Notes are an Integral Part of the Financial Statements.
<PAGE>
Statement of Assets & Liabilities
Maxus Income Fund December 31, 1998
Income Fund
Assets:
Investment Securities at Market Value 40,151,382
(Identified Costs - $40,724,486)
Cash 17,582
Receivables:
Receivable for investment securities sold 34,898
Dividends and interest receivable 362,425
Unamortized organization costs -
Total Assets 40,566,287
Liabilities:
Payable for investment purchased 389,075
Payable for shareholder distributions -
Accrued Expenses 101,461
Total Liabilities 490,536
Net Assets 40,075,751
Net Assets Consist Of:
Capital Paid In 41,560,999
Undistributed Net Investment Income (133,597)
Accumulated Realized Gain (Loss) on Investments - Net (778,547)
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net (573,104)
Net Assets 40,075,751
Net Assets:
Investors Shares 39,649,753
Institutional Shares 425,998
Total 40,075,751
Shares of capital stock
Investors Shares 3,738,530
Institutional Shares 40,118
Total 3,778,648
Net asset value per share
Investors Shares $10.61
Institutional Shares $10.62
The Accompanying Notes are an Integral Part of the Financial Statements.
<PAGE>
Statement of Operations
Maxus Income Fund December 31, 1998
Income Fund
Investment Income:
Dividend income $2,487,395
Interest income 879,374
Total Income 3,366,769
Expenses:
Investment advisory fees (Note 2) 396,884
Distribution fees (Investor shares) 199,302
Distribution fees (Institutional shares) -
Custodial fees 23,721
Organization costs -
Transfer agent fees/Accounting and Pricing 40,603
Legal 22,571
Audit 15,625
Registration and filing fees 11,797
Trustee fees 1,400
Printing & Other Miscellaneous 38,532
Total Expenses 750,435
Net Investment Income (Loss) 2,616,334
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 705,637
Distribution of Realized Capital Gains from other Investment Companies -
Unrealized Gain (Loss) from Appreciation
(Depreciation) on Investments (1,963,997)
Net Realized and Unrealized Gain (Loss) on Investments (1,258,360)
Net Increase (Decrease) in Net Assets from Operations $1,357,974
The Accompanying Notes are an Integral Part of the Financial Statements.
<PAGE>
Statement of Changes in Net Assets
Maxus Income Fund December 31, 1998
Maxus Income Fund
01/01/98 01/01/97
to to
12/31/98 12/31/97
From Operations:
Net Investment Income 2,616,334 2,217,642
Net Realized Gain (Loss) on Investments 705,637 927,701
Net Unrealized Appreciation (Depreciation) (1,963,997) 804,642
Increase (Decrease) in Net Assets from Operations 1,357,974 3,949,985
Distributions to investor shareholders:
Net Investment Income (2,740,775) (2,215,429)
Net Realized Gain (Loss) from
Security Transactions (1,162,678) -
Distributions to institutional shareholders:
Net Investment Income (11,770) -
Net Realized Gain (Loss) from
Security Transactions (7,639) -
Change in net assets from distributions (3,922,862) (2,215,429)
From Capital Share Transactions:
Proceeds from sale of shares 12,000,632 8,907,950
Dividend reinvestment 3,238,389 1,680,395
Cost of shares redeemed (11,218,520) (9,430,667)
Change in net assets from capital transactions 4,020,501 1,157,678
Change in net assets 1,455,613 2,892,234
Net Assets:
Beginning of period 38,620,138 35,727,904
End of period 40,075,751 38,620,138
Share Transactions:
Issued 1,075,539 799,064
Reinvested 295,087 151,394
Redeemed (1,005,874) (850,768)
Net increase (decrease) in shares 364,752 99,690
Shares outstanding beginning of period 3,413,896 3,314,206
Shares outstanding end of period 3,778,648 3,413,896
The Accompanying Notes are an Integral Part of the Financial Statements.
<PAGE>
Financial Highlights
Maxus Income Fund Investor Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
<TABLE>
<S> <C> <C> <C> <C> <C>
01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
to to to to to
12/30/98 12/31/97 12/31/96 12/31/95 12/31/94
Net Asset Value -
Beginning of Period 11.31 10.78 10.54 9.73 10.94
Net Investment Income 0.72 0.67 0.70 0.72 0.74
Net Gains or Losses on Securities
(realized and unrealized) (0.33) 0.53 0.24 0.81 (1.22)
Total from Investment Operations 0.39 1.20 0.94 1.53 (0.48)
Distributions
Net investment income (0.72) (0.67) (0.70) (0.72) (0.73)
Capital gains (0.37) - - - -
Return of capital - - - - -
Total Distributions (1.09) (0.67) (0.70) (0.72) (0.73)
Net Asset Value -
End of Period $10.61 $11.31 $10.78 $10.54 $9.73
Total Return 3.49% 11.47% 9.20% 16.15% -4.39%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 39,650 38,620 35,728 37,387 33,425
Ratio of expenses to average net assets 1.87% 1.91% 1.92% 1.90% 1.81%
Ratio of net income to average net assets 6.52% 6.08% 6.50% 7.01% 7.10%
Portfolio turnover rate 59% 70% 78% 121% 138%
</TABLE>
Institutional Shares
02/01/98
to
12/31/98
Net Asset Value -
Beginning of Period 11.31
Net Investment Income 0.33
Net Gains or Losses on Securities
(realized and unrealized) (0.50)
Total from Investment Operations (0.17)
Distributions
Net investment income (0.33)
Capital gains (0.19)
Return of capital -
Total Distributions (0.52)
Net Asset Value-
End of Period $10.62
Total Return 3.54%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 426
Ratio of expenses to average net assets * 1.37%
Ratio of net income to average net assets * 7.02%
Portfolio turnover rate 59%
* Annualized
The Accompanying Notes are an Integral Part of the Financial Statements.
<PAGE>
Notes to Financial Statements
Maxus Income Fund
December 31, 1998
1.) SIGNIFICANT ACCOUNTING POLICIES
The Fund is a diversified, open-end management investment company, organized
as a Trust under the laws of the State of Ohio by a Declaration of Trust dated
October 31, 1984. The Fund has an investment objective of obtaining the
highest total return, a combination of income and capital appreciation,
consistent with reasonable risk. The Fund pursues this objective by investing
primarily in income-producing securities. Significant accounting policies of
the Fund are presented below:
SECURITY VALUATION
The Fund intends to invest in a wide variety of equity and debt securities.
The investments in securities are carried at market value. The market
quotation used for common stocks, including those listed on the NASDAQ
National Market System, is the last sale price on the date on which the
valuation is made or, in the absence of sales, at the closing bid price.
Over-the-counter securities will be valued on the basis of the bid price at
the close of each business day. Short-term investments are valued at amortized
cost, which approximates market. Securities for which market quotations are
not readily available will be valued at fair value as determined in good faith
pursuant to procedures established by the Board of Directors.
SECURITY TRANSACTION TIMING
Security transactions are recorded on the dates transactions are entered into
(the trade dates). Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded as earned. The
Fund uses the identified cost basis in computing gain or loss on sale of
investment securities. Discounts and premiums on securities purchased are
amortized over the life of the respective securities.
INCOME TAXES
It is the Fund's policy to distribute annually, prior to the end of the
calendar year, dividends sufficient to satisfy excise tax requirements of the
Internal Revenue Service. This Internal Revenue Service requirement may cause
an excess of distributions over the book year-end accumulated income. In
addition, it is the Fund's policy to distribute annually, after the end of the
fiscal year, any remaining net investment income and net realized capital
gains.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration agreement
with Maxus Asset Management, Inc., a wholly owned subsidiary of Resource
Management Inc. The Investment Advisor receives from the Fund as compensation
for its services to the Fund an annual fee of 1% on the first $150,000,000 of
the Fund's net assets, and 0.75% of the Fund's net assets in excess of
$150,000,000. The Investment Advisor agrees to reimburse its fee to the Fund
in the amount by which the Fund expenses exceed 2% of average annual net
assets.
3.) RELATED PARTY TRANSACTIONS
Resource Management, Inc. has three wholly owned subsidiaries which provide
services to the Fund. These subsidiaries are Maxus Asset Management Inc, Maxus
Securities Corp, and Maxus Information Systems Inc. Maxus Asset Management was
paid $396,884 in investment advisory fees during the fiscal year ending
December 31, 1998. Maxus Securities, who served as the national distributor of
the Fund's shares, was reimbursed $199,302 for distribution expenses. Maxus
Information Systems, who provides accounting and shareholder services,
received fees totaling $40,603 for services rendered to the Fund for the
fiscal year ending December 31, 1998. Maxus Securities is a registered
broker-dealer. Maxus Securities effected substantially all of the investment
portfolio transactions for the Fund. For this service Maxus Securities
received commissions of $173,226 for the fiscal year ending December 31, 1998.
<PAGE>
At December 31, 1998, Maxus Securities Corp owned 60,000 shares in the Fund.
Certain officers and/or trustees of the Fund are officers and/or directors of
the Investment Advisor and Administrator. Each director who is not an
"affiliated person" receives an attendance fee of $100 per meeting.
4.) CAPITAL STOCK AND DISTRIBUTION
At December 31, 1998 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $41,560,999.
Distributions to shareholders are recorded on the ex-dividend date. Payments
in excess of net investment income or of accumulated net realized gains
reported in the financial statements are due primarily to book/tax
differences. Payments due to permanent differences have been charged to paid
in capital. Payments due to temporary differences have been charged to
distributions in excess of net investment income or realized gains.
5.) PURCHASES AND SALES OF SECURITIES
During the fiscal year ending December 31, 1998, purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $29,620,894 and $26,122,576 respectively. Purchases and
sales of U.S. Government obligations aggregated $2,972,950 and $4,534,030
respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any off-balance sheet
risk as of December 31, 1998.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at December 31,
1998 was the same as identified cost.
At December 31, 1998, the composition of unrealized appreciation (the excess
of value over tax cost) and depreciation (the excess of tax cost over value)
was as follows:
Appreciation (Depreciation) Net Appreciation
(Depreciation)
915,817 (1,488,921) (573,104)
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits.
Exhibit Description
a Second Amended and Restated Declaration of Trust.
(1)
b Amended and Restated By-Laws. (1)
c None.
d Investment Advisory and Administration Agreement.
(2)
e Distribution Agreement. (1)
f None.
g Custody Agreement. (4)
h(1) Administration Agreement. (1)
h(2) Accounting Services Agreement. (1)
i Opinion and consent. (3)
j Consent of Independent Auditors.
k None.
l Subscription Agreement between the Fund and
Resource Management Inc. (5)
m Distribution and Shareholder Servicing Plan. (1)
n Financial Data Schedule
(1) Incorporated by reference to the corresponding exhibit to Post-Effective
Amendment No. 15 to Registration Statement No. 2-94197.
<PAGE>
(2) Incorporated by reference to the corresponding exhibit to Pre-Effective
Amendment No. 1 to Registration Statement No. 2-94197.
(3) Incorporated by reference to the corresponding exhibit to Pre-Effective
Amendment No. 3 to Registration Statement No. 2-94197.
(4) Incorporated by reference to the corresponding exhibit to Post-Effective
Amendment No. 14 to Registration Statement No. 2-94197.
(5) Incorporated by reference to the corresponding exhibit to Pre-Effective
Amendment No. 2 to Registration Statement No. 2-94197.
Item 24. Persons Controlled by or Under Common Control with Registrant.
The Fund, together with Maxus Equity Fund, Maxus Laureate Fund and
MaxFund Trust (three other investment companies), may be deemed to be
under common control on the basis of the fact that all officers and
Trustees of the Fund are also officers and Trustees of the other three
funds.
In addition, the Fund and Resource Management Inc. (together with its
subsidiaries, MAM, MSC and MIS) may be deemed to be under common
control of Richard A. Barone, the Chairman of the Fund and the
President and controlling shareholder of Resource Management Inc.
Item 25. Indemnification
Reference is made to Article VIII of the Registrant's Second Amended and
Restated Declaration of Trust filed as Exhibit a. The application of these
provisions is limited by Article 10 of the Registrant's Amended and
Restated By-laws filed as Exhibit b and by the following undertaking set
forth in the rules promulgated by the Securities and Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Act and will be governed by
the final adjudication of such issue.
<PAGE>
Item 26. Business and Other Connections of the Investment Adviser.
The directors of Maxus Asset Management, Inc. ("MAM") are Richard A.
Barone, N. Lee Dietrich and Sanford A. Fox. The business and
employment of Mr. Barone is described in the Statement of Additional
Information under "Management of the Fund." Mr. Dietrich is retired
and Dr. Fox is an endodontist in private practice.
The officers of MAM are Mr. Barone and Robert W. Curtin. The
employment of Mr. Curtin is described in the Statement of Additional
Information under "Management of the Fund."
Item 27. Principal Underwriters.
(a) Maxus Securities Corp, the distributor for the Fund, also
distributes securities for Maxus Income Fund, Maxus Laureate Fund and
MaxFund Trust.
(b) The following information is provided with respect to each
director and officer of Maxus Securities Corp:
Name and Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
Richard A. Barone President, Treasurer Chairman, Treasurer
The Tower at Erieview and Director and a Trustee
36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
Robert W. Curtin Senior Vice President Secretary
The Tower at Erieview and Secretary
36th Floor
1301 East Ninth Street
Cleveland, OH 44114
<PAGE>
Item 28. Location of Accounts and Records.
All accounts, books and documents required to be maintained by the
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and Rules 31a-1 through 31a-3 thereunder are maintained at the
office of the Registrant and the Transfer Agent at The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114,
except that all records relating to the activities of the Fund's
Custodian are maintained at the office of the Custodian, Star Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45201.
Item 29. Management Services.
Not Applicable.
Item 30. Undertakings.
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cleveland, State of Ohio, on the 26th day of
February, 1999.
MAXUS INCOME FUND
By: /s/ Richard A. Barone
Richard A. Barone, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
Richard A. Barone Chairman, Treasurer February 26, 1999
and Trustee (Principal
Executive Officer,
Financial Officer and
Accounting Officer)
Denis J. Amato Trustee February 26, 1999
Kent W. Clapp Trustee February 26, 1999
Steven M. Kasarnich Trustee February 26, 1999
Burton D. Morgan Trustee February 26, 1999
Michael A. Rossi Trustee February 26, 1999
Joseph H. Smith Trustee February 26, 1999
<PAGE>
Exhibit J
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this Post-
effective Amendment No. 16 to the Registration Statement for Maxus Income Fund
of all references to our firm included in or made a part of this Amendment.
McCurdy & Associates CPA's, Inc.
February 19, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MAXUS INCOME FUND - INVESTOR SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 40,724,486
<INVESTMENTS-AT-VALUE> 40,151,382
<RECEIVABLES> 397,232
<ASSETS-OTHER> 17,582
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40,566,287
<PAYABLE-FOR-SECURITIES> 389,075
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<TABLE> <S> <C>
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<NAME> MAXUS INCOME FUND - INSTITUTIONAL SHARES
<S> <C>
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