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Maxus Income Fund
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Semi-Annual Report
June 30, 2000
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<PAGE>
Dear Shareholders,
For the first six months of 2000, the Maxus family of funds has continued their
exceptional performance relative to their respective market indices and
competing mutual funds. It was a difficult period for both bond and equity
funds. Rising interest rates and a re-emphasis on earning expectations were the
culprits.
Leading our effort in absolute performance was the Maxus Income Fund. Within a
universe of 525 domestic taxable bond funds, Maxus Income was the number one
mutual fund in the country during the first half of the year according to Lipper
Financial Services. During this period alone your Fund produced an 11% total
return, against an average of less than 1% for competing funds and 5.46% for the
Ryan Index.
The Maxus Equity Fund also had an outstanding first six months producing a
return of 11.61% against the Russell 3000 which returned 0.98%, the S&P 500
which returned a negative 0.47% and the Lipper Multi-Cap Value Index which
returned a negative 0.77%. Maxus Equity once again has proven that persistency
and consistency are desirable characteristics for a mutual fund.
After significantly outperforming the competition in 1999, the Maxus Aggressive
Value Fund produced a more modest 4.72% %, exactly in line with the average
micro-cap value fund (4.96%), but behind the average micro-cap fund which
returned 8.55%. In my estimation, micro-cap value is the most compelling market
sector today, and my expectation are exceptionally high for Maxus Aggressive
Value in the next 3 to 5 years.
Starting to show renewed signs of life since the year began were companies
headquartered in Ohio. Reflecting this trend was the Maxus Ohio Heartland Fund.
MOH returned 5.84% during this period.
Finally, our star performer in 1999 found the going a little rougher in the six
months of 2000. Maxus Laureate produced a return of 0.93% against the negative
2.56% return on the Morgan Stanley World Index, an excellent relative
performance nevertheless.
A major characteristic of the stock market during the past five years has been
what I call "sector rotation/correction." Rather than periodic corrections
devastating the entire market, each market sector has run through its own
corrective phase, on its own time, leaving the rest of the market relatively
unchanged. For example, during the first half of 2000, the dot.coms and
overvalued technology issues were taken down, along with auto related and
certain other cyclical stocks, while much of the entire market remained
unchanged.
Investors across the board have been the beneficiaries of this phenomenon as
market psychology has remained unequivocally positive in spite of rising
interest rates and major earnings disappointments. For the remainder of 2000 and
beyond, I am looking for much of the same.
Sincerely,
Richard Barone
<PAGE>
SCHEDULE OF INVESTMENTS
June 30, 2000 (unaudited)
SHARES / PRINCIPAL AMOUNT MARKET VALUE % ASSETS
CLOSED END BOND FUNDS
58,200 1838 Bond Debenture $ 1,018,500
175,000 ACM Government Spectrum 1,017,188
150,000 Blackrock Income 956,250
71,000 Blackrock North American Government 692,250
50,000 Debt Strategies 315,625
125,000 Debt Strategies II 921,875
25,000 Dresdner RCM Global Income 154,687
40,000 Dreyfus Strategic Governments 365,000
140,000 First Australia Prime Income 647,500
85,500 First Commonwealth 774,844
35,000 Fortis Securities 260,312
240,000 MFS Government Markets 1,470,000
170,000 MFS Intermediate 1,073,125
37,100 Montgomery Street Income 598,237
33,100 Oppenheimer Multi Sector Income Trust 268,937
30,000 Pacific American Income 380,625
79,900 Pioneer Interest 873,906
120,000 Putnam Master Income 780,000
120,000 Putnam Master International Income 750,000
150,000 Putnam Premier Income 946,875
80,000 Strategic Global 840,000
64,700 Templeton Global Governments 376,069
100,000 Templeton Global Income 618,750
59,500 Van Kampen Bond 996,625
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17,097,180 52.3%
CORPORATE BOND EQUIVALENTS
10,000 American General MIPS 240,625
8.450% Due 10-15-25
10,000 American Re QUIPS 238,125
8.500% Due 09-30-25
10,600 BF Goodrich QUIPS 241,150
8.300% Due 09-30-25
10,000 Fleet Capital Trust VI 248,750
8.800% Due 06-30-30
10,000 Household Capital Trust V 255,625
10.000% Due 06-30-30
12,000 NWPS Capital Financing 289,500
8.125% Due 09-30-25
5,000 Royal Bank of Scotland 112,187
8.000% Due 06-01-28
10,000 Seagram QUIDS 221,875
8.000% Due 12-31-38
10,000 Sempra Energy Capital Trust I 251,250
8.900% Due 02-23-30
30,300 Texaco Cap Adj Rate MIPS 564,338
5.850% Due 12-31-38
10,000 Torchmark MIPS 245,000
9.180% Due 10-15-25
10,000 Travelers P & C Capital I Trust 230,000
8.080% Due 04-30-36
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3,138,425 9.6%
<PAGE>
PREFERRED SHARES
5,000 Crown American $5.50 188,750
10,000 Developers Diversified $2.36 225,000
12,000 Equity Inns Inc Series A $2.37 205,500
15,000 Gabelli Global Multimedia $1.98 348,750
12,000 Merrill Lynch Capital Trust V $1.82 260,250
10,000 New Plan Excel Realty $2.15 215,000
15,000 Public Storage $2.22 337,500
55,000 Royce Value Trust $2.00 1,265,000
35,000 Source Capital $2.40 973,438
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4,019,188 12.3%
CONVERTIBLE BONDS
223,000 Inco 192,895 0.6%
7.750% Due 03-15-16
CONVERTIBLE PREFERRED SHARES
25,000 Camden Property $2.25 604,688
10,000 Chiquita Brands $2.88 140,000
44,800 Equity Residential $1.81 1,008,000
53,000 Glenborough Realty $1.94 914,250
20,000 Kimco $2.37 523,750
14,000 Simon Debartolo $6.50 941,500
19,000 USX $3.25 635,313
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4,767,501 14.6%
US GOVERNMENT SECURITIES
2,000,000 US Treasury Strip 1,923,620 5.9%
7.750% Due 02-15-01
CASH EQUIVALENTS
1,352,799 Firstar Treasury Fund 4.54% 1,352,799 4.1%
TOTAL INVESTMENTS (Cost - $33,789,346) 32,491,608 99.4%
OTHER ASSETS LESS LIABILITIES 204,434 0.6%
NET ASSETS $ 32,696,042 100.0%
<PAGE>
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Statement of Assets & Liabilities
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Maxus Income Fund June 30, 2000 (unaudited)
Income
Fund
Assets:
Investment securities at market value $ 32,491,608
(Identified cost - $33,789,346)
Cash 6,769
Receivables:
Receivable for investment securities sold 257,417
Dividends and interest receivable 217,872
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Total Assets 32,973,666
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Liabilities:
Payable for investment securities purchased 43,370
Payable for shareholder redemptions 34,468
Accrued expenses 199,786
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Total Liabilities 277,624
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Net Assets $ 32,696,042
==========
Net Assets Consist Of:
Capital paid in 35,774,239
Accumulated undistributed net
investment income (loss) 17,508
Accumulated undistributed realized
gain (loss) on investments - net (1,797,967)
Unrealized depreciation in value
of investments based on identified cost - net (1,297,738)
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Net Assets 32,696,042
==========
Net Assets:
Investor shares 28,968,575
Institutional shares 3,727,467
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Total 32,696,042
==========
Shares of Capital Stock
Investor shares 2,950,038
Institutional shares 379,226
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Total 3,329,264
==========
Net Asset Value per Share
Investor shares $ 9.82
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Institutional shares $ 9.83
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<PAGE>
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Statement of Assets & Liabilities
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Maxus Income Fund June 30, 2000 (unaudited)
Income
Fund
Assets:
Investment securities at market value $ 32,491,608
(Identified cost - $33,789,346)
Cash 6,769
Receivables:
Receivable for investment securities sold 257,417
Dividends and interest receivable 217,872
----------
Total Assets 32,973,666
----------
Liabilities:
Payable for investment securities purchased 43,370
Payable for shareholder redemptions 34,468
Accrued expenses 199,786
----------
Total Liabilities 277,624
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Net Assets $ 32,696,042
==========
Net Assets Consist Of:
Capital paid in 35,774,239
Accumulated undistributed net
investment income (loss) 17,508
Accumulated undistributed realized
gain (loss) on investments - net (1,797,967)
Unrealized depreciation in value
of investments based on identified cost - net (1,297,738)
----------
Net Assets 32,696,042
==========
Net Assets:
Investor shares 28,968,575
Institutional shares 3,727,467
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Total 32,696,042
==========
Shares of Capital Stock
Investor shares 2,950,038
Institutional shares 379,226
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Total 3,329,264
==========
Net Asset Value per Share
Investor shares $ 9.82
----------
Institutional shares $ 9.83
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<PAGE>
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Statement of Assets & Liabilities
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Maxus Income Fund June 30, 2000 (unaudited)
Income
Fund
Assets:
Investment securities at market value $ 32,491,608
(Identified cost - $33,789,346)
Cash 6,769
Receivables:
Receivable for investment securities sold 257,417
Dividends and interest receivable 217,872
----------
Total Assets 32,973,666
----------
Liabilities:
Payable for investment securities purchased 43,370
Payable for shareholder redemptions 34,468
Accrued expenses 199,786
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Total Liabilities 277,624
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Net Assets $ 32,696,042
==========
Net Assets Consist Of:
Capital paid in 35,774,239
Accumulated undistributed net
investment income (loss) 17,508
Accumulated undistributed realized
gain (loss) on investments - net (1,797,967)
Unrealized depreciation in value
of investments based on identified cost - net (1,297,738)
----------
Net Assets 32,696,042
==========
Net Assets:
Investor shares 28,968,575
Institutional shares 3,727,467
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Total 32,696,042
==========
Shares of Capital Stock
Investor shares 2,950,038
Institutional shares 379,226
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Total 3,329,264
==========
Net Asset Value per Share
Investor shares $ 9.82
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Institutional shares $ 9.83
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<PAGE>
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Statement of Operations
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Maxus Income Fund June 30, 2000 (unaudited)
Income
Fund
Investment Income:
Dividend income $ 1,359,157
Interest income 27,403
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Total Income 1,386,560
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Expenses:
Investment advisory fees (Note 2) 142,510
Distribution fees (investor shares) 64,132
Transfer agent fees/accounting 20,331
Registration and filing fees 12,346
Custodial fees 5,849
Audit 8,550
Legal 8,568
Trustee fees 1,800
Miscellaneous 9,634
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Total Expenses 273,720
Net investment income (loss) 1,112,840
Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on investments (662,882)
Unrealized appreciation (depreciation) on investments 2,493,108
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Net realized and unrealized gain (loss) on investments 1,830,226
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Net increase (decrease) in net assets from operations $ 2,943,066
==========
<PAGE>
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Financial Highlights
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Maxus Income Fund (unaudited) Investor Shares
Selected data for a share of capital
stock outstanding throughout the period indicated
<TABLE>
<CAPTION>
01/01/00 01/01/99 01/01/98 01/01/97 01/01/96
to to to to to
06/30/00 12/30/99 12/30/98 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C>
Net Asset Value -
Beginning of Period 9.22 10.61 11.31 10.78 10.54
Net investment income 0.36 0.86 0.72 0.67 0.7
Net gains (losses) on securities,
realized and unrealized 0.59 (1.43) (0.33) 0.53 0.24
-------- -------- -------- -------- --------
Total from investment operations 0.95 (0.57) 0.39 1.2 0.94
Distributions
Net investment income (0.35) (0.82) (0.72) (0.67) (0.70)
Capital gains - - (0.37) - -
Return of capital - - - - -
-------- -------- -------- -------- --------
Total distributions (0.35) (0.82) (1.09) (0.67) (0.70)
Net Asset Value -
End of Period $ 9.82 $ 9.22 $ 10.61 $ 11.31 $ 10.78
======== ======== ======== ======== ========
Total return 10.47% (5.72%) 3.49% 11.47% 9.20%
Ratios/Supplemental Data:
Net assets at end of period
(thousands) 28,969 24,023 39,650 38,620 35,728
Ratio of expenses to average net assets * 1.92% 1.91% 1.87% 1.91% 1.92%
Ratio of net income to average net assets * 7.79% 7.87% 6.52% 6.08% 6.50%
Portfolio turnover rate * 58% 51% 59% 70% 78%
</TABLE>
(unaudited) Institutional Shares
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01/01/00 01/01/99 2/1/98**
to to to
06/30/00 12/31/99 12/31/98
Net Asset Value -
Beginning of Period 9.23 10.62 11.31
Net investment income 0.36 0.87 0.33
Net gains (losses) on securities,
realized and unrealized 0.59 (1.43) (0.50)
-------- -------- --------
Total from investment operations 0.95 (0.56) (0.17)
Distributions
Net investment income (0.35) (0.83) (0.33)
Capital gains - - (0.19)
Return of capital - - -
-------- -------- --------
Total distributions (0.35) (0.83) (0.52)
-------- -------- --------
Net Asset Value -
End of Period $ 9.83 $ 9.23 $ 10.62
======== ======== ========
Total return 10.47% (5.61%) 3.54%
Ratios/Supplemental Data:
Net assets at end of period (thousands) 3,727 2,540 426
Ratio of expenses to average net assets * 1.42% 1.41% * 1.37%
Ratio of net income to average net assets * 8.29% 8.37% * 7.02%
Portfolio turnover rate * 58% 51% * 59%
*annualized
**commencement of operations
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAXUS INCOME FUND
JUNE 30, 2000 (UNAUDITED)
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. Shares of the Fund are 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. Investor shares incur a distribution expense. 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. The Fund has net loss carry forwards totaling $1,797,967
that expire in 2007.
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.
<PAGE>
3.)RELATED PARTY TRANSACTIONS
Resource Management Inc. has two wholly owned subsidiaries which provide
services to the Fund. These subsidiaries are Maxus Asset Management Inc.
and Maxus Securities Corp. Maxus Asset Management was paid $142,510 in
investment advisory fees during the six months ending June 30, 2000. The
Fund has adopted a Distribution and Shareholder Servicing Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Maxus Securities has
served as the national distributor of the Fund's shares. The Fund has
entered into a distribution agreement pursuant to which the Fund pays Maxus
Securities a fee, accrued daily and payable monthly at an annual rate of
.50%, based on the average daily net assets for Investor class only. Maxus
Securities was reimbursed $64,132 for distribution expenses for the six
months ending June 30, 2000. Resource Management Inc. owns 49% of Mutual
Shareholder Services. Mutual Shareholder Services performs fund accounting
and transfer agency services for the Fund. Mutual Shareholder Services
received fees totaling $20,331 for services rendered to the Fund for the
six months ending June 30, 2000. 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 $80,572 for the six months ending June
30, 2000.
At June 30, 2000, Maxus Securities Corp. owned 100,000 shares and a wholly
owned subsidiary of Resource Management Inc. owned 60,000 shares in the
Fund.
Certain officers and/or trustees of the Fund are officers and/or directors
of the Investment Advisor and Administrator.
4.)CAPITAL STOCK AND DISTRIBUTION
At June 30, 2000 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $35,774,239.
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 six months ending June 30, 2000, purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $8,226,463 and $8,072,100 respectively. Purchases
and sales of U.S. Government obligations aggregated $1,917,480 and $0
respectively.
6.)SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June 30,
2000 was the same as identified cost.
At June 30, 2000, 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)
$747,288 $(2,045,026) $(1,297,738)
<PAGE>
Investment Adviser
Maxus Asset Management, Inc.
1301 East Ninth Street
Cleveland, OH 44114
Transfer Agent
Mutual Shareholder Services, LLC.
1301 E. 9th St., Suite 1005
Cleveland, OH 44114
Custodian
Firstar Bank, NA
425 Walnut Street
P.O. Box 1118
Cincinnati, OH 45201
Legal Counsel
Benesch, Friedlander, Coplan & Aronoff
2300 BP America Building
200 Public Square
Cleveland, OH 44114
Auditors McCurdy & Associates,
CPA's, Inc.
27955 Clemens Road
Westlake, OH 44145
Board of Trustees
Denis J Amato
Richard A Barone
Kent W Clapp
Steven M Kasarnich
Joseph H Smith
Burton D Morgan
Michael A Rossi
