<PAGE> 1
REGISTRATION NO. 811-5865
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. 10 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. 12
(Check appropriate box or boxes)
-------------------------
MAXUS EQUITY 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> 2
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> 3
MAXUS EQUITY FUND
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Caption Location
- -------- ------------------------------- ---------------------------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Highlights
3. Condensed Financial Information Summary Financial Information
4. General Description of Investment Objective and Management
Registrant Techniques, General Information
5. Management of the Fund Investment Management
6. Capital Stock and Other
Securities General Information
7. Purchase of Securities
Being Offered Purchase of Shares
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings None
Part B
Item No.
- --------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information and History
13. Investment Objectives and Investment Objectives and Policies
Policies
14. Management of the Fund Management of the Fund
15. Control Persons and Principal Ownership of Shares
Holders of Securities
</TABLE>
-2-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
16. Investment Advisory and Other
Services Investment Advisory and Other Services
17. Brokerage Allocation Brokerage Allocation
18. Capital Stock and Other
Securities Capital Stock and Other Securities
19. Purchase, Redemption and
Pricing of Securities Being Purchase, Redemption and Pricing of
Offered Securities Being Offered
20. Tax Status Tax Status
21. Underwriters Distributor
22. Calculations of Performance
Data Performance
23. Financial Statements Financial Statements
</TABLE>
Part C
- ------
Information required to be included in Part C is set forth under the
appropriate Item, as numbered, in Part C to this Registration Statement.
-3-
<PAGE> 5
MAXUS INCOME FUND The Tower at Erieview, 36th Floor
MAXUS EQUITY FUND 1301 East Ninth Street
MAXUS LAUREATE FUND Cleveland, Ohio 44114
(216) 687-1000
Maxus Income Fund, Maxus Equity Fund and Maxus Laureate Fund (the "Funds") are
three separate diversified, open-end management investment companies.
MAXUS INCOME FUND has an investment objective of obtaining the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. Under normal circumstances, at least 65% of the value of this
Fund's total assets will consist of income-producing securities.
MAXUS EQUITY FUND has an investment objective of obtaining a total return, a
combination of capital appreciation and income. Under normal circumstances, at
least 65% of the value of this Fund's total assets will consist of 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 exclusively in
shares of other open-end registered investment companies, commonly called mutual
funds.
By this Prospectus, each Fund is offering Investor Shares and Institutional
Shares. Investor Shares are offered to the general public. Institutional Shares
are offered to certain institutions and other specified investors. See "How to
Purchase 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.
This Prospectus sets forth concisely the information about the Funds that a
prospective investor ought to know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Funds has been filed with the Securities and Exchange Commission (the "SEC") in
separate Statements of Additional Information dated the same date as this
Prospectus and is available upon request and without charge by calling the Funds
at (216) 687-1000. Such additional information is hereby incorporated by
reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS/APRIL ___, 1998
Investors are advised to read this Prospectus
and to retain it for future reference.
1
<PAGE> 6
HIGHLIGHTS
INVESTMENT OBJECTIVES. Each Fund is a diversified, open-end management invest-
ment company. 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 investment objective of Maxus Equity Fund
is to obtain a total return, a combination of capital appreciation and income.
The investment objective of Maxus Laureate Fund is to achieve a high total
return, a combination of capital appreciation and income, consistent with
reasonable risk. No assurance can be given that any of the Funds will achieve
its objective. See "Investment Objectives and Management Techniques."
DISTRIBUTION PLAN. Each Fund sells and redeems its shares at net asset value
without any front-end sales charges or redemption charges. Investor Shares of
each Fund are subject to a plan for using as much as 0.5% of net assets annually
to aid the distribution of such shares. See "Distribution Plan (Investors Shares
Only)."
LIQUIDITY. Each Fund continuously offers and redeems shares at the net asset
value next computed after receipt by the Fund's Transfer Agent of a purchase
order or redemption request in proper form. See "How to Purchase Shares" and
"How to Redeem Shares."
MINIMUM INVESTMENT. For Investor Shares, the minimum initial investment is
$1,000, with subsequent minimum investments of $100. For Institutional Shares,
the minimum initial investment is $1,000,000, with subsequent minimum
investments of $10,000. See "How to Purchase Shares." Each Fund has the right to
redeem the shares in an account and pay the proceeds to the shareholder if,
because of shareholder redemptions, the value of the account drops below $1,000
in the case of Investor Shares or $1,000,000 in the case of Institutional
Shares. See "How to Redeem Shares."
DIVIDENDS. Each Fund intends to pay dividends at least once annually to share
holders. Unless otherwise directed, all dividends will be automatically
reinvested in additional shares. See "Dividends, Distributions and Taxes."
INVESTMENT ADVISER. Maxus Asset Management Inc. ("MAM" or the "Adviser") is the
investment adviser for each Fund. Its annual fee is 1% of the first $150,000,000
of the Fund's net assets and .75% of net assets in excess of $150,000,000. This
fee is higher than that paid by most other investment companies. Since 1976 MAM
has been an investment adviser to individuals, retirement plans, corporations
and foundations. MAM is controlled by Richard A. Barone, Chairman of each Fund.
See "Investment Management."
DISTRIBUTOR. Shares of each Fund are offered exclusively by Maxus Securities
Corp ("MSC"), an NASD broker-dealer, on a best efforts basis. MSC is controlled
by Richard A. Barone, Chairman of the Funds. See "Other Information Concerning
Purchase of Shares" and "Distribution Plan (Investor Shares Only)."
RISK FACTORS. None of the Funds are intended to provide a balanced investment
program to meet all requirements of every investor. Maxus Equity Fund and Maxus
Income Fund may invest in (i) equity and debt securities involving a greater
risk of decline in market value than that of other securities, (ii) securities
whose market values will fluctuate based on individual corporate developments as
well as general economic conditions, and (iii) lower rated and unrated corporate
debt securities which have speculative characteristics.
Maxus Laureate Fund invests in other mutual funds and Maxus Equity Fund and
Maxus Income Fund may invest in closed-end investment companies ("closed-end
funds"). Investing through the Funds in these underlying mutual funds and
closed-end funds involves a duplication of expenses and certain tax results
which would not be present in a direct investment in the underlying funds. Also,
these underlying funds will themselves invest in securities (such as foreign
securities) which entail certain risks. In addition, Federal law imposes certain
limits on the purchase and sale of underlying fund shares by the Funds. See
"Risks and Other Considerations". "Dividends, Distributions and Taxes" and
Appendix B to this Prospectus for a discussion of these and other risk factors
associated with an investment in the Funds.
2
<PAGE> 7
FEE TABLE
Annual Fund Operating Expenses (as a percentage of average net assets)
<TABLE>
<CAPTION>
MAXUS INCOME FUND MAXUS EQUITY FUND MAXUS LAUREATE FUND
----------------- ----------------- -------------------
INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS
-------- -------------- -------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Management
Fees 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
12b-1 Fees 0.50% 0.00% 0.50% 0.00% 0.50% 0.00%
Other Expenses 0.41% 0.41% 0.37% 0.37% 0.99% 0.99%
Total Fund
Operating
Expenses 1.91% 1.41% 1.87% 1.37% 2.49% 1.99%
</TABLE>
The 12b-1 fee in the foregoing table is an asset-based sales charge as
defined in the Rules of Fair Practice of the National Association of Securities
Dealers (the "Rules"). The existence of this charge may cause long-term holders
of Investor Shares to pay more in total sales charges than the economic
equivalent of the maximum front-end sales charges permitted under those Rules.
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).
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment in Investor Shares, assuming
redemption at the end of each time period:
Maxus Income Fund $19 $60 $103 $223
Maxus Equity Fund $19 $59 $101 $219
Maxus Laureate Fund $25 $58 $133 $283
</TABLE>
3
<PAGE> 8
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following expenses on a $1,000
investment in Institutional Shares, assuming
redemption at the end of each time period:
<S> <C> <C> <C> <C>
Maxus Income Fund $14 $45 $ 77 $169
Maxus Equity Fund $14 $43 $ 75 $165
Maxus Laureate Fund $20 $62 $107 $232
</TABLE>
The purpose of the foregoing table is to assist you in understanding
the various costs and expenses that an investor in any Fund will bear, directly
or indirectly. THE EXAMPLE SET FORTH IN THE FOREGOING TABLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.
4
<PAGE> 9
MAXUS INCOME FUND
FINANCIAL HIGHLIGHTS
The following table sets forth selected per-share data for the periods
shown. For the periods shown, the Fund had a single class of shares, which was
reclassified as Investor Shares as of the date of this Prospectus. Institutional
Shares were not offered during these periods. This information has been audited
by McCurdy & Associates C.P.A.'s, Inc., Certified Public Accountants, whose
report appears in the Fund's Statement of Additional Information, a copy of
which will be supplied upon request.
<TABLE>
<CAPTION>
01/01/97 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89
TO TO TO TO TO TO TO TO TO
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92* 12/31/91 12/31/90 12/31/89
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of Period $10.78 $10.54 $9.73 $10.94 $10.88 $10.98 $9.94 $10.52 $10.57
Net Investment Income .67 0.70 0.72 0.74 0.68 0.42 0.80 0.76 0.68
Net Gains or Losses on
Securities (realized or
unrealized) .53 0.24 0.81 (1.22) 0.22 (0.01) 1.05 (.60) 0.49
----------------------------------------------------------------------------------------------------
Total From Investment
Operations 1.20 0.94 1.53 (0.48) 0.90 0.41 1.85 0.16 1.17
Dividends (from net
investment income) (0.67) (0.70) (0.72) (0.73) (0.68) (0.42) (0.81) (0.74) (0.89)
Distributions (from
capital gains) 0.00 0.00 0.00 0.00 (0.16) (0.09) 0.00 0.00 (0.33)
Return of Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------------------------
Total Distributions (0.67) (0.70) (0.72) (0.73) (0.84) (0.51) (0.81) (0.74) (1.22)
NET ASSET VALUE:
End of Period $11.31 $10.78 $10.54 $9.73 $10.94 $10.88 $10.98 $9.94 $10.52
Total Return 11.47% 9.20% 16.15% (4.39)% 8.74% 7.89% 19.27% 1.70% 11.41%
RATIOS/SUPPLEMENTAL DATA
Net Assets
End of Period
(Thousands) 38,620 35,728 37,387 33,425 36,147 28,591 18,200 13,307 12,968
Ratio of Expenses to
Average Net Assets 1.91% 1.92% 1.90% 1.81% 1.90% 1.94% 2.00% 2.00% 2.00%
Ratio of Net Income to
Average Net Assets 6.08% 6.50% 7.01% 7.10% 6.06% 7.18% 7.59% 7.43% 6.25%
Portfolio Turnover Rate 70% 78% 121% 138% 88% 91% 108% 155% 145%
<FN>
* Weighted Average Used
</TABLE>
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
5
<PAGE> 10
MAXUS EQUITY FUND
FINANCIAL HIGHLIGHTS
The following table sets forth selected per-share data for the periods shown.
For the periods shown, the Fund had a single class of shares, which was
reclassified as Investor Shares as of the date of this Prospectus. Institutional
Shares were not offered during these periods. This information has been audited
by McCurdy & Associates C.P.A.'s, Inc., Certified Public Accountants, whose
report appears in the Fund's Statement of Additional Information, a copy of
which will be supplied upon request.
<TABLE>
<CAPTION>
01/01/97 01/01/96 01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89**
TO TO TO TO TO TO TO TO TO
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93 12/31/92* 12/31/91* 12/31/90* 12/31/89*
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of Period $16.00 $14.57 $12.95 $13.60 $12.29 $11.41 $8.73 $9.79 10.00
Net Investment Income 0.15 0.27 0.30 0.25 0.13 0.14 0.06 (0.02) 0.17
Net Gains or Losses on
Securities (realized or
unrealized) 4.33 2.50 2.60 (0.17) 3.13 1.91 3.22 (1.04) 0.28
-------------------------------------------------------------------------------------------------------
Total From Investment
Operations 4.48 2.77 2.90 0.88 3.26 2.05 3.28 (1.06) 0.45
Dividends (from net
investment income) (0.15) (0.27) (0.27) (0.22) (0.12) (0.14) (0.06) 0.00 (0.66)
Distributions (from
capital gains) (2.10) (1.07) (1.01) (0.51) (1.83) (1.03) (0.54) 0.00 0.00
Return of Capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------------------------------------------------------------------------------------------------------
Total Distributions (2.25) (1.34) (1.28) (0.73) (1.95) (1.17) (0.60) 0.00 (0.66)
NET ASSET VALUE:
End of Period $18.23 $16.00 $14.57 $12.95 $13.60 $12.29 $11.41 $8.73 $9.79
Total Return 28.16% 19.13% 22.43% 0.62% 24.51% 13.56% 36.45% (10.83)% 4.61%
RATIOS/SUPPLEMENTAL DATA
Net Assets
End of Period
(Thousands) 55,637 38,765 31,576 17,018 11,343 5,962 3,081 1,850 1,014
Ratio of Expenses to
Average Net Assets 1.87% 1.90% 1.96% 2.00% 2.61% 2.89% 3.94% 5.25% 0.99%
Ratio of Net Income to
Average Net Assets 1.80% 1.71% 2.01% 1.82% 0.91% 0.80% 0.52 (0.19)% 1.16%
Portfolio Turnover Rate 89% 111% 173% 184% 175% 187% 189% 221% 109%
<FN>
* Weighted Average Used
** Commencement of Operations
</TABLE>
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
6
<PAGE> 11
MAXUS LAUREATE FUND
FINANCIAL HIGHLIGHTS
The following table sets forth selected per-share data for the periods shown.
For the periods shown, the Fund had a single class of shares, which was
reclassified as Investor Shares as of the date of this Prospectus. Institutional
Shares were not offered during these periods. This information has been audited
by McCurdy & Associates C.P.A.'s, Inc., Certified Public Accountants, whose
report appears in the Fund's Statement of Additional Information, a copy of
which will be supplied upon request.
<TABLE>
<CAPTION>
01/01/97 01/01/96 01/01/95 01/01/94 01/01/93*
TO TO TO TO TO
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of Period $10.82 $9.82 $9.62 $9.96 $10.88
Net Investment Income .52 (0.08) (0.19) (0.08) (0.07)
Net Gains or Losses on
Securities (realized or
unrealized) .07 2.14 1.57 (0.26) 1.16
----------------------------------------------------------------------
Total From Investment
Operations 0.59 2.06 1.38 (0.34) 1.09
Dividends (from net
investment income) (0.52) 0.00 0.00 0.00 0.00
Distributions (from
capital gains) (0.51) (1.06) (1.18) 0.00 (1.13)
Return of Capital 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------------
Total Distributions (1.03) (1.06) (1.18) 0.00 (1.13)
NET ASSET VALUE:
End of Period $10.38 $10.82 $9.82 $9.62 $9.96
Total Return 5.49% 21.03% 14.41% (3.41)% 8.62%
RATIOS/SUPPLEMENTAL DATA
Net Assets
End of Period
(Thousands) 3,395 3,156 1,510 1,998 2,114
Ratio of Expenses to
Average Net Assets 2.49% 3.92% 3.85% 3.60% 2.42%
Ratio of Net Income to
Average Net Assets 4.19% (0.73)% (1.69)% (0.87)% (0.66)%
Portfolio Turnover Rate 1,511% 1,267% 1,377% 469% 152%
<FN>
* Commencement of Operations
</TABLE>
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
7
<PAGE> 12
INVESTMENT OBJECTIVES AND MANAGEMENT TECHNIQUES
MAXUS INCOME FUND
The objective of Maxus Income Fund is to obtain the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. This objective is a fundamental policy of this Fund and may not
be changed without approval of a majority of the Fund's outstanding shares. See
"General Information." The Fund intends to invest in a wide variety of debt and
equity securities. Debt securities will include U.S. Government securities, U.S.
Government agency securities, corporate bonds and money market investments such
as commercial paper, certificates of deposit, bank or savings and loan
association interest-bearing demand accounts, bankers' acceptances and
repurchase agreements. Equity securities will include common stock, preferred
stock, preferred stock convertible into common stock and corporate bonds
convertible into common stock. In addition, for the purpose of achieving capital
appreciation a small portion of the Fund's assets (up to 5 percent) may be
invested in put and call options which trade on securities exchanges and for
which it pays a premium (cost of option). The Fund may sell the options,
exercise them or permit them to expire. See "Risks and Other Considerations -
Maxus Income Fund and Maxus Equity Fund." There can be no assurance that the
Fund will achieve its investment objective.
In seeking its objective, Maxus Income Fund will alter the composition
of its portfolio as economic and market trends change and the Fund's portfolio
may vary considerably between debt and equity securities as these changes occur.
The Adviser will increase its investment in short-term money market debt
securities during periods when it believes interest rates will rise and stock
prices will decline and will increase its investment in long-term debt
securities, such as corporate bonds, U.S. Government securities and U.S.
Government agency securities, when it believes both interest rates and stock
prices will decline. If the Adviser anticipates that both stock prices and
interest rates will rise, it will increase its investment in equity securities,
such as common stock, preferred stock, and securities convertible into common
stock. However, individual equity securities may rise during times of generally
declining stock prices. In addition, stock prices may rise at the same time that
interest rates are declining. Therefore, the Fund may invest in a combination of
debt and equity securities and may shift its investment position as it
anticipates changes in the investment environment. Under normal circumstances,
at least 65% of this Fund's total assets will consist of income-producing
securities. Income-producing securities consist of debt securities, preferred
stocks and common and preferred shares of "closed-end" investment companies
having portfolios consisting primarily of income-producing securities. See
"Investment in Closed-End Investment Companies."
In selecting its corporate debt securities for Maxus Income Fund the
Adviser intends to invest principally in securities rated BBB or better by
Standard & Poor's Corporation rating service, but may invest in securities rated
as low as BB, B, CCC or CC or unrated securities when these investments are
believed by the Adviser to be sound. The Fund will not invest more than 20% of
its portfolio in securities rated BB or lower by Standard & Poor's Corporation
or unrated securities which, in the opinion of the Adviser, are of comparable
quality. Securities rated BBB or lower by Standard & Poor's, sometimes referred
to as "junk bonds," are usually considered lower-rated securities and have
speculative characteristics. Please refer to Appendix A of this Prospectus for a
description of these ratings. See "Risks and other Considerations - Maxus Income
Fund and Maxus Equity Fund."
In selecting commercial paper investments for Maxus Income Fund, the
Adviser will invest only in commercial paper rated A-1 or A-2 by Standard &
Poor's. Please refer to Appendix A of this Prospectus for a description of these
ratings. Except with respect to commercial paper, the Advisor is not restricted
as to any specific ratings in selecting money market investments.
8
<PAGE> 13
In selecting equity securities for Maxus Income 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.
Emphasis will be placed on large, well-capitalized companies listed on a
national securities exchange or actively traded on the over-the-counter market.
Limitations expressed in this section as to the percentage of the
Fund's assets which may be invested in a given type of security do not include
investments in closed-end funds which may invest in such type of security. See
"Investment Objectives and Management Techniques-Investment in Closed-End
Investment Companies."
MAXUS EQUITY FUND
The objective of Maxus Equity Fund is to obtain a total return, a
combination of capital appreciation and income. This objective is a fundamental
policy of this Fund and may not be changed without approval of a majority of the
fund's outstanding shares.
In seeking its objective, Maxus Equity Fund intends to invest in a wide
variety of equity and debt securities. The Fund will alter the composition of
its portfolio as economic and market trends change. Under normal circumstances
at least 65% of this Fund's total assets will consist of equity securities.
Equity securities consist of common stock and preferred stock (including common
and convertible preferred shares of "closed-end" investment companies having
portfolios consisting primarily of equity securities) and securities convertible
into common stock. The Fund may invest in a wide variety of common stocks,
including those listed on an exchange as well as those traded over the counter,
those that pay dividends as well as those that do not, and those of large and
well-established companies as well as those of smaller or newly-established
companies. Common stocks of smaller or newly-established companies often involve
a greater risk of decline in market value than may be found in common stocks of
other companies.
In selecting its equity securities, Maxus Equity Fund generally seeks
investments in companies whose break-up values are significantly higher than
their current share price; companies with high free-cash flows (net income
adjusted for non-cash expenses, less funds needed for reinvestment); companies
which have the potential for rapid growth but are selling at a low
price-to-earnings ratio; and companies in which an event or series of events may
turn around poor past performance. Most of the investments in this Fund's
portfolio have one or more of these characteristics.
Although Maxus Equity Fund intends to seek its objective primarily
through investments in equity securities, this Fund may invest up to 35% of its
portfolio in debt securities (described under "Maxus Income Fund" above) in
order to seek capital appreciation and income. In selecting its debt securities,
the Fund may invest in securities given high, low or no rating by the ratings
services. The Fund will not invest more than 5% of its portfolio in securities
rated BB or lower by Standard & Poor's Corporation or unrated securities which,
in the opinion of the Adviser, are of comparable quality. Securities rated BBB
or lower by Standard & Poor's are usually considered lower-rated securities and
have speculative characteristics. Please refer to Appendix A for a description
of these ratings. See "Risks and Other Considerations - Maxus Income Fund and
Maxus Equity Fund."
In addition, 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
commercial paper, certificates of deposit and bank or savings and loan
association interest-bearing demand accounts.
9
<PAGE> 14
Furthermore, for the purpose of achieving capital appreciation, a small
portion of the Fund's assets (up to 5%) may be invested in put and call options
which trade on securities exchanges and for which it pays a premium (cost of
option). The Fund may sell the options, exercise them, or permit them to expire.
See "Risks and Other Considerations - Maxus Income Fund and Maxus Equity Fund."
Limitations expressed in this section as to the percentage of the
Fund's assets which may be invested in a given type of security do not include
investments in closed-end funds which may invest in such type of security. See
"Investment Objectives and Management Techniques-Investment in Closed-End
Investment Companies."
MAXUS LAUREATE FUND
The investment objective of Maxus Laureate Fund is to obtain a high
total return, a combination of capital appreciation and income, consistent with
reasonable risk. It seeks to achieve this objective by investing exclusively in
shares of other registered investment companies. The Fund will allocate its
assets among one or more of the following general types of mutual funds:
aggressive growth, growth, growth and income, equity income, small company,
sector/specialty, foreign stock, global stock, balanced, income, convertible
bond, high yield bond, corporate bond, government bond, foreign bond, global
bond, municipal bond, short-term world income and money market. The Fund is
unlikely at any particular moment to have all of its assets invested in only one
of these general types of funds, and may maintain at least some nominal
investment in many of these fund types on an ongoing basis. The Adviser will
vary the proportion of each type of underlying fund based on the mix of such
funds that may, in the Adviser's view, be most likely to achieve the Fund's
investment objective. The Fund will not invest in other Maxus Funds. All
investments involve risks, and there is no assurance that the investment
objective of the Fund will be achieved. The investment objective of the Fund is
a fundamental policy and may not be changed without approval of a majority of
the Fund's outstanding shares. See "General Information."
In allocating assets among general types of underlying funds, the
Adviser will employ both fundamental and technical analysis to assess relative
risk and reward potential throughout the financial markets, with the objective
of providing the best opportunity for maximizing total return without incurring
unreasonable risk. The allocation process goes beyond the basic determination of
the degree to which the Fund's assets should be invested in equity funds versus
bond funds. The Adviser engages in continual research with regard to evolving
opportunities in various asset subclasses, including: investment discipline
(i.e. "growth investing" vs. "value investing"), market capitalization (i.e.,
"small company" vs. "blue chip," geo-economic considerations (i.e. "domestic"
vs. "foreign"), fixed-income security maturities (i.e., "short-term vs.
long-term") and sector/industry rotation (e.g., "basic materials" vs. "consumer
non-durables" or "aerospace/defense" vs. "electric utilities").
Generally, in seeking the Fund's objective, the Adviser will alter the
composition of the Fund's portfolio as economic and market trends change and the
Fund's portfolio may vary considerably among equity, bond, and money market
mutual funds as these changes occur. The Adviser will increase its investment in
money market funds during periods when it believes interest rates will rise and
stock prices will decline and will increase its investment in bond funds when it
believes both interest rates and stock prices will decline. If the Adviser
anticipates that both stock prices and interest rates will rise, it will
increase its investment in equity funds. However, individual equity funds may
rise during times of generally declining stock prices. In addition, equity fund
prices may rise at the same time that interest rates are declining. Therefore,
the Fund may invest in a combination of equity and bond funds and may shift its
investment positions as it anticipates changes in the investment environment.
Within the framework of the foregoing guidelines, the underlying funds
in which the Fund will invest will consist of funds which seek capital growth
and appreciation by investing primarily in common stock or securities
convertible
10
<PAGE> 15
into or exchangeable for common stock (such as convertible preferred stock,
convertible debentures or warrants); funds which seek a combination of capital
appreciation and current income (including income from dividends, income from
interest, growth of income or any combination thereof) by investing primarily in
common stocks, preferred stocks, bonds and other fixed income securities
(including convertible preferred stock and convertible debentures); funds which
seek high current income by investing primarily in long or short-term bonds and
other fixed income securities (such as securities issued, guaranteed or insured
by the U.S. Government, its agencies or instrumentalities, commercial paper,
preferred stock, convertible preferred stock or convertible debentures); and
funds which seek as high a level of current income as is consistent with
preservation of capital and liquidity by investing in a broad range of high
quality, short-term money market instruments which have remaining maturities not
exceeding one year (including U.S. Government securities, bank obligations,
commercial paper, corporate debt securities and repurchase agreements). Certain
additional investments which the underlying funds may make, together with the
risks associated with those investments, are described in Appendix B to this
Prospectus.
The Fund may also deposit cash in a money market deposit account,
maintained by the Fund's custodian, (i) for temporary defensive purposes
(without monetary limitation) when and to the extent that, in the judgement of
the Adviser, other investments involve unreasonable risk, or (ii) as may be
considered necessary to accumulate cash in order to meet anticipated
redemptions. To the extent that such balances exceed $100,000, the deposit is
not protected by federal insurance.
The Adviser selects underlying funds in which to invest based, in part,
upon an analysis of their past performance (absolute, relative and risk-
adjusted), management style, and investment objectives and policies. The Adviser
also considers other factors in the selection of funds, including, but not
limited to, asset size, liquidity, expense ratios, quality of shareholder
service, reputation and tenure of portfolio managers, industry classifications
represented in their portfolios, and specific portfolio holdings. The underlying
funds may, but need not, have the same investment objective, policies and
limitations as the Fund. The Fund may be affected by the losses of such
underlying funds, and the level of risk arising from the investment practices of
such funds (such as repurchase agreements, quality standards, lending of
securities, or investment concentration) and has no control over the risks taken
by such funds. The Fund can also elect to redeem (subject to the 1% limitation
discussed in the section titled "Risks and Other Considerations") its investment
in an underlying fund if that action is considered necessary or appropriate.
PORTFOLIO TURNOVER
The Funds are not restricted with regard to portfolio turnover and will
make changes in their investment portfolios from time to time as business and
economic conditions and market prices may dictate and their respective
investment policies may require. The portfolio turnover rates in 1997 and 1996 ,
respectively, were 70% and 78% for Maxus Income Fund, 89% and 111% for Maxus
Equity Fund and 1,511% and 1,267% for Maxus Laureate Fund. These rates are
greater than those of many other investment companies. 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
share holders. Any realized net short-term investment gain will be taxed to
shareholders as ordinary income. See "Dividends, Distributions and Taxes" below.
Because Maxus Laureate Fund intends to employ flexible defensive
investment strategies when market trends are not considered favorable, and to
reallocate fund investments across potentially numerous asset subclasses as
evolving economic and financial conditions warrant, the portfolio turnover rate
of the Fund in any given year may be 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
11
<PAGE> 16
shares. The higher the portfolio turnover rate, the greater will be the
custodial transaction charges borne by the Fund.
INVESTMENT IN CLOSED-END INVESTMENT COMPANIES
Maxus Income Fund and Maxus Equity Fund may invest in "closed-end"
investment companies (or "closed-end funds"), subject to the investment
restrictions set forth below. 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 each 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. These Funds purchase
common shares of closed-end funds which trade at a market discount and which the
Adviser believes present 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 a 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 that
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. These Funds may also invest in preferred shares of closed-end funds.
Maxus Income Fund and Maxus Equity Fund each will structure its
investments in the securities of closed-end funds to comply with applicable
provisions of the Investment Company Act of 1940 (the "1940 Act"). The presently
applicable provisions require that (i) each Fund and affiliated person of such
Fund not own together more than 3% of the total outstanding stock of any one
investment company, (ii) each Fund not offer its shares at a public offering
price that includes a sales load of more than 1 1/2% and (iii) each 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 each Fund's influence on corporate
governance matters regarding the closed-end funds in which such Fund invests.
Maxus Income Fund and Maxus Equity Fund will not invest directly in the
securities of open-end investment companies. However, such Funds may retain the
securities of a closed-end investment company that has converted to an open-end
fund status subsequent to such 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 1940 Act, a 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 a 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 such 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),
such 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.
12
<PAGE> 17
Such 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 such Fund's total assets.
Maxus Income Fund and Maxus Equity Fund each 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 1940 Act. However, because such Funds do not
intend to concentrate their investments in any single industry and because the
closed-end funds in which each Fund will invest 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 1940 Act will represent any
special risks to the shareholders of the Funds. Each 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-ends funds in which Maxus Income Fund and Maxus
Equity Fund invest 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 up 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 assets in one industry; enter into future contracts; and write
(sell) or purchase options on futures contracts. The risks associated with these
investment policies are described in Appendix B to this Prospectus.
Like the Funds, closed-end funds frequently pay an advisory fee for the
management of their portfolios, as well as other expenses. Therefore, investment
by a Fund in such funds often results in a "layering" of advisory fees and other
expenses, thereby increasing the overall charge to the net asset value of such
Fund's shares.
LENDING OF PORTFOLIO SECURITIES
Consistent with applicable regulatory requirements, Maxus Income Fund
and Maxus Equity Fund each 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 each Fund's
total assets. The Fund lending its portfolio securities 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 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 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.
13
<PAGE> 18
INVESTMENT POLICIES AND RESTRICTIONS
Each Fund has adopted certain fundamental policies which may not be
changed without the approval of the holders of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act). Certain of these
policies are detailed below, while other policies are set forth in the Statement
of Additional Information.
MAXUS INCOME FUND AND MAXUS EQUITY FUND
Neither Maxus Income Fund nor Maxus Equity Fund may:
(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; or
(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.
MAXUS LAUREATE FUND
Maxus Laureate Fund may not:
(1) invest in securities other than those issued by open-end registered
investment companies, including money market funds (this restriction does not
preclude the use of the Custodian's money market deposit account for idle cash
balances of the Fund);
(2) invest more than 25% of its total assets in the securities of
underlying funds which concentrate (i.e., invest more than 25% of their assets)
in the same industry, provided that (i) through its investment in underlying
funds, the Fund indirectly may invest more than 25% of its assets in one
industry, and (ii) the Fund will concentrate more than 25% of its assets in the
mutual fund industry; or
(3) invest more than 25% of its assets in the shares of any one
open-end registered investment company.
Maxus Laureate Fund must also structure its investments to comply with
certain provisions of federal and state securities laws. Under these provisions,
among other things, this Fund may not:
(1) invest in any registered investment company if a purchase of its
shares would result in the Fund and its affiliates owning more than 3% of the
total outstanding stock of such investment company; or
(2) purchase the securities of any issuer if, as a result, more than
10% of the value of the Fund's net assets would be invested in securities that
are not readily marketable; for this purpose, securities which are not readily
marketable include shares of an open-end registered investment company owned by
the Fund in an amount exceeding 1% of the issuer's total outstanding securities
(see "Risks and Other Considerations").
14
<PAGE> 19
Changes in values of particular Fund assets or the assets of the Fund
as a whole will not cause a violation of the investment restrictions so long as
percentage restrictions are observed by the Fund at the time it purchases any
security. Other investment policies are discussed in this Fund's Statement of
Additional Information under the heading "Investment Policies and Restrictions."
RISKS AND OTHER CONSIDERATIONS
MAXUS INCOME FUND AND MAXUS EQUITY FUND
Maxus Income Fund and Maxus Equity Fund each may invest in equity and
debt securities involving a greater risk of decline in market value than that of
other securities. Investments in equity securities will include common stock,
preferred stock and convertible preferred stock. 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.
Investments by these Funds in corporate debt securities will be
principally in those rated BBB or better by Standard & Poor's Corporation rating
service but may be in lower rated and unrated securities. Securities rated BBB
or lower by Standard & Poor's are usually considered lower-rated securities and
have speculative characteristics. It should be noted that (a) the market prices
of lower-rated securities fluctuate more than prices of higher-rated securities;
(b) the prices of lower-rated securities may decline significantly in periods of
general economic difficulty or rising interest rates; (c) there is a greater
possibility of a financial reversal affecting the ability of issuers of
lower-rated securities to make payments of income and principal on time; (d)
lower-rated or unrated securities may include securities which are in default or
which are issued by companies in bankruptcy; and (e) the secondary trading
market for lower-rated or unrated securities may be less liquid than the market
for higher rated securities, thus possibly limiting the ability of the Fund to
dispose of such securities when the Adviser deems it desirable to do so. Unrated
securities are not necessarily of lower quality than rated securities, but they
may not be attractive to as many buyers.
Each Fund also may invest in closed-end investment companies. See
"Investment Objectives and Management Techniques-Investment in Closed-End
Investment Companies" for a discussion of the risks of such investments.
Each Fund may also invest a small portion of its assets (up to five
percent) in put and call options which trade on securities exchanges and for
which it pays a premium. The Fund may suffer a total loss of its investment if
the underlying security decreases in value in the case of a call option or
increases in value in the case of a put option.
The operating expenses of these Funds are higher than those of many
other funds.
MAXUS LAUREATE FUND
Any investment in a mutual fund involves risk, and, although Maxus
Laureate Fund invests in a number of underlying funds, this practice does not
eliminate investment risk. Some of the underlying funds in which the Fund
invests may incur more risks than others. For example, some of the underlying
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
15
<PAGE> 20
warrants; lend their portfolio securities; sell securities short; borrow money
in amounts up 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 assets in one
industry; enter into future contracts; and write (sell) or purchase options on
futures contracts. The risks associated with these investment policies are
described in Appendix B to this Prospectus.
Through its investment in underlying funds, Maxus Laureate 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.
Maxus Laureate Fund, together with any "affiliated persons" (as defined
in the 1940 Act) may purchase only up to 3% of the total outstanding securities
of any underlying fund. For this purpose, shares of underlying funds held by
private discretionary investment advisory accounts managed by the Adviser will
be aggregated with those held by the Fund. Accordingly, when affiliated persons
and other accounts managed by the Adviser hold shares of any of the underlying
funds, the Fund's ability to invest fully in shares of those funds is
restricted, and the Adviser must then in some instances, select alternative
investments that would not have been in first preference.
Under certain circumstances, an underlying fund may determine to make a
payment for redemption of its shares to Maxus Laureate Fund wholly or partly by
a distribution in kind of securities from its portfolio, in lieu of cash, in
conformity with the rules of the SEC. In such cases, the Fund may hold
securities distributed by an underlying fund until the Adviser determines that
it is appropriate to dispose of such securities. Such disposition may entail
additional costs to the Fund.
Investment decisions by the investment advisers of the underlying funds
are made independently of Maxus Laureate Fund and the Adviser. Therefore, the
investment advisor of an underlying fund may be purchasing securities of the
same issuer whose securities are being sold by the investment adviser of another
underlying fund. The result of this would be an indirected expense to the Fund
without accomplishing any investment purpose.
An investor in Maxus Laureate Fund will bear not only his proportionate
share of the expenses of the Fund but also indirectly similar expenses of the
underlying funds. 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.
The operating expenses of this Fund are higher than those of many other
funds.
In the event Maxus Laureate Fund holds more than one percent (1%) of an
underlying fund's shares, the 1940 Act provides that the underlying fund will be
obligated to redeem only one percent (1%) of the underlying fund's outstanding
shares during any period of less than 30 days. To the extent that, due to this
restriction, the Fund is unable at its discretion to dispose of shares of an
underlying fund, the Fund would not be able to protect itself against a decline
in value of such shares during the period such restrictions remain in effect.
Any shares of an underlying fund held by the Fund in excess of one percent (1%)
of the underlying fund's outstanding shares will be considered not readily
marketable securities that, together with other such securities, may not exceed
10% of the Fund's net assets.
16
<PAGE> 21
PERFORMANCE
From time to time, the Funds 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 a 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 each Fund for periods
ended December 31, 1997 are set forth below. For the periods shown, each Fund
had a single class of shares, which was reclassified as Investor Shares as of
the date of this Prospectus. Institutional Shares were not offered during these
periods.
<TABLE>
<CAPTION>
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
---- ----- ----- ----- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
11.47% 12.23% 7.99% 8.71% 11.47% 41.35% 46.84% 130.48%
<CAPTION>
MAXUS EQUITY FUND
-----------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE THREE FIVE LIFE OF ONE THREE FIVE LIFE OF
YEAR YEARS YEARS FUND* YEAR YEARS YEARS FUND*
---- ----- ----- ----- ---- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
28.16% 23.18% 18.55% 15.45% 28.16% 86.91% 134.17% 227.24%
<FN>
* From commencement of operations, Sept. 30, 1989.
</TABLE>
<TABLE>
<CAPTION>
MAXUS LAUREATE FUND
-------------------
AVERAGE ANNUAL TOTAL RETURNS CUMULATIVE TOTAL RETURNS
ONE THREE LIFE OF ONE THREE LIFE OF
YEAR YEARS FUND* YEAR YEARS FUND*
---- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C>
5.49% 13.46% 9.58% 5.49% 46.06% 53.23%
<FN>
* From commencement of operations, May 1, 1993.
</TABLE>
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.
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 each of the Funds is
contained in the Funds' Annual Report to Shareholders which may be obtained from
the Fund without charge.
17
<PAGE> 22
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.
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.
18
<PAGE> 23
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 instruc-
tions 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.
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.
For purposes of pricing sales and redemptions, net asset value per share of a
class of a Fund is calculated by determining the value of the class's
proportional interest in the assets of such 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 Maxus Income
Fund and Maxus Equity 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
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<PAGE> 24
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 each
Fund's Board of Trustees. Unless the particular circumstances (such as an
impairment of the credit-worthiness of the issuer) dictate otherwise, the fair
value of short-term securities with maturities of 60 days or less shall be their
amortized cost. All other securities and other assets of each such Fund will be
valued at their fair value as determined in good faith by that Fund's Board of
Trustees.
The assets of Maxus Laureate Fund (other than cash and cash
equivalents) consist of the underlying funds that are valued at their respective
net asset values under the 1940 Act. An underlying fund values securities in its
portfolio for which market quotations are readily available at their current
market value (generally the last reported sales price) and all other securities
and assets at fair value pursuant to methods established in good faith by the
board of directors of the underlying fund. Money market funds with portfolio
securities that mature in one year or less may use the amortized cost or
penny-rounding methods to value their securities.
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 cancelled 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.
Shares of each Fund are offered exclusively, on a best efforts basis,
by the Funds' Distributor, Maxus Securities Corp ("MSC"), an NASD broker-dealer.
Purchases of the Fund's shares through MSC will be transmitted promptly to the
Transfer Agent so that the investor's purchase order receives the net asset
value next determined following receipt of the order by MSC. The address of MSC
is The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114. MSC, which is controlled by Richard A. Barone, Chairman of each Fund,
receives for its services as Distributor an annual distribution fee of .50% of
average net assets of Investor Shares. See "Distribution Plan (Investor Shares
Only)." Certain employees of MSC may receive compensation under the Distribution
Plans.
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 deter-
mined 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.
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<PAGE> 25
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.
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
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.
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<PAGE> 26
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 with drawal plans may be obtained by calling Maxus Information
Systems Inc. at (216) 687-1000.
INVESTMENT MANAGEMENT
TRUSTEES AND OFFICERS
The business and affairs of each Fund are managed under the direction
of its Trustees as required by Ohio law. The day-to-day operations of each Fund
are conducted through or under the direction of its officers. By virtue of the
responsibilities assumed by MAM as investment adviser (see below), the Funds
have no executive employees other than their officers, each of whom is employed
by MAM or its affiliates and none of whom devotes full time to the affairs of
any Fund. No officer, director or employee of MAM or any of its affiliates
receives any compensation from any Fund for serving as a Trustee or officer of
such Fund. Each Fund pays each Trustee who is not an officer, director or
employee of MAM or any of its affiliates a fee of $100 per meeting attended and
reimburses each such Trustee for travel and out-of-pocket expenses.
THE INVESTMENT ADVISER
Each Fund has retained as its investment adviser Maxus Asset Management
Inc ("MAM" or 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 and is registered
under the Investment Advisers Act of 1940. The Adviser has not been sponsored,
recommended or approved, nor have its abilities or qualifications been passed
upon, by the Securities and Exchange Commission or any other government agency.
MAM 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 being offered. See "Distribution Plan (Investor Shares Only)." Mr.
Richard A. Barone is the president and majority shareholder of RMI and,
therefore, is deemed to be in control of MAM and MSC.
Subject to the supervision and direction of each Fund's Trustees, MAM,
as investment adviser, manages each Fund's portfolio in accordance with the
stated policies of that Fund. MAM makes investment decisions for each Fund and
places the purchase and sale orders for portfolio transactions. In addition, MAM
or its affiliates furnishes office facilities and clerical and administrative
services, pays the salaries of all officers and employees who are employed by
both it and the Funds and, subject to the direction of each Fund's Board of
Trustees, is responsible for the overall management of the business affairs of
each Fund, including the provision of personnel for recordkeeping, the
preparation of governmental reports and responding to shareholder
communications.
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<PAGE> 27
Richard A. Barone is the person primarily responsible for the
management of the portfolio of each of the Funds. Mr. Barone has been President
of MAM since 1976 and has been Chairman of each of the Funds since their
inception.
ADVISORY FEE
The Adviser receives from each Fund as compensation for its services to
each Fund an annual fee of 1% on the first $150,000,000 of each Fund's net
assets, and 0.75% of each Fund's net assets in excess of $150,000,000. This fee
is higher than that paid by most other investment companies. The fee is paid
monthly and calculated on the basis of that month's net assets. For the year
ended December 31, 1997, each Fund paid the Adviser a fee equal to 1.00% of that
Fund's average net assets.
EXPENSES BORNE BY EACH FUND
Each Fund pays all expenses not assumed by the Adviser, including
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 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 trust existence such as the filing of reports required
by state law, 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, fees and expenses of legal counsel, and costs of
printing share certificates, portfolio pricing services and shareholder
meetings, reimbursements to RMI for organizational expenses, and costs pursuant
to each Fund's plan of distribution described below.
An investor in Maxus Laureate Fund should recognize that he may invest
directly in mutual funds and that, by investing in mutual funds indirectly
through the Fund, he will bear not only his proportionate share of the expenses
of the Fund but also indirectly similar expenses of the underlying funds. In
addition, a Maxus Laureate Fund shareholder will bear his proportionate share of
expenses related to the distribution of the Fund's shares (see "Distribution
Plan") and also may indirectly bear expenses paid by an underlying fund related
to the distribution of its shares. An investor should also recognize that, as a
result of Maxus Laureate Fund's policy of investing in other mutual funds, he
may receive taxable capital gains distributions to a greater extent than would
be the case if he invested directly in the underlying funds. See "Dividends,
Distributions and Taxes."
RMI, the parent company of the Adviser, paid the organizational
expenses of each Fund incurred prior to the initial offering of that Fund's
shares, including expenses involved in preparing, printing and mailing
registration statements and prospectuses to potential investors. Each Fund
agreed to reimburse RMI for such expenses. Such reimbursed expenses were
deferred and amortized by each Fund on a straightline basis over a period of
five years from the date of commencement of operations.
DISTRIBUTION PLAN (INVESTOR SHARES ONLY)
Under a plan adopted by each Fund's Board of Trustees pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), each Fund pays MSC a shareholder
servicing and distribution fee at the annual rate of .50% of the average daily
net assets of the Investor Shares of such Fund. Such fee will be used by MSC to
make payments for administration, shareholder services and distribution
assistance, including, but not limited to (i) compensation to securities dealers
and other persons and organizations ("Service Organizations") for providing
distribution assistance with respect to Investor Shares, (ii) compensation to
Service Organizations for providing administration, accounting and other
shareholder services with respect to Investor Shares, and (iii) otherwise
promoting the sale of Investor Shares, including paying for the preparation of
advertising and sales literature and the
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<PAGE> 28
printing and distribution of such materials to prospective investors. The fees
paid to MSC under the Plan are payable without regard to actual expenses
incurred. Third parties also may charge fees to their clients who are beneficial
owners of Investor Shares in connection with their clients' accounts. These fees
would be in addition to any amounts which may be received by them from MSC under
the Plan.
EXECUTION OF PORTFOLIO TRANSACTIONS
Maxus Income Fund and Maxus Equity Fund. Orders for transactions in
portfolio securities for Maxus Income Fund and Maxus Equity Fund are placed by
the Adviser with securities broker-dealers with the objective of obtaining the
best available price, investment services and execution. Cost of execution
(commissions) is an important consideration but may not be the overriding
determinant. Based upon this consideration the Adviser makes substantial use of
the services of MSC, an affiliate of each Fund and of the Adviser, but is not
required to do so.
Maxus Laureate Fund. Orders for portfolio transactions of Maxus
Laureate Fund generally are placed through MSC. In connection therewith, MSC
receives orders from the Adviser, places them with the underlying fund's
distributor, transfer agent or other person as appropriate, confirms the trades,
prices and numbers of shares purchased or sold, assures prompt payment by or to
the Fund and proper completion of the order.
MSC also may receive distribution payments from the underlying funds or
their underwriter in accordance with the distribution plans of those funds. If
such distribution payments are received by MSC (or any affiliated person with
MSC), MSC immediately will remit all of such monies to the Fund.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund will declare and pay, at least annually, dividends to
shareholders of substantially all of its net investment income, if any, earned
during the year from investments, and will distribute net realized capital
gains, if any, once each year. All dividends and distributions will be
reinvested automatically at net asset value in additional shares of a Fund
unless the shareholder has notified such Fund in writing of his election to
receive distributions in cash. As a result of the application of the
Distribution Plan to Investor Shares only, the amount of dividends on
Institutional Shares will exceed the amount of dividends on Investor Shares. The
Board of Trustees of Maxus Income Fund has adopted a policy of making
distributions of net income on a monthly basis, but that policy is subject to
change at any time.
Each Fund intends to qualify continually as a regulated investment
company under Subchapter M of the Internal Revenue Code (the "Code"). Such
qualification removes from the Fund any liability for federal income taxes upon
the portion of its income distributed to shareholders and makes federal income
tax upon such distributed income generated by such Fund's investments the sole
responsibility of the shareholders. Continued qualification requires each Fund
to distribute to its shareholders each year substantially all of its income and
capital gains. In addition, amounts not distributed on a timely basis in
accordance with a calendar year distribution requirement are subject to a
nondeductible four percent (4%) excise tax. To prevent imposition of the excise
tax each Fund must distribute for each calendar year an amount equal to the sum
of (1) at least 98% of its calendar year net ordinary income, (2) at least 98%
of the excess of its capital gains over capital losses (adjusted for certain
ordinary losses) realized during the one-year period ending December 31 of such
year, and (3) 100% of any undistributed net ordinary income and net capital
gains for previous years. A distribution will be treated as paid on December 31
of the calendar year if it is declared by the Fund in December of that year with
a record date in December and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the
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distributions are declared, rather than the calendar year in which the
distributions are received. Each Fund will notify shareholders of the tax status
of dividends and distributions.
Any dividend or distribution paid by a Fund has the effect of reducing
the net asset value per share on the ex-dividend date by the amount of the
dividend or distribution. Therefore, a dividend or distribution paid shortly
after a purchase of shares by an investor would represent, in substance, a
return of capital to the shareholder, even though subject to income taxes.
Each Fund may also, from time to time, pay dividends in excess of net
income and net realized capital gains. Any such excess dividends would consti-
tute a non-taxable return of capital to the shareholder.
Depending on the residence of the shareholder for tax purposes, dis-
tributions also may be subject to state and local taxes, including withholding
taxes. Shareholders should consult their own tax advisers as to the tax
consequences of ownership of shares of a Fund in their particular circumstances.
In accordance with the Code, each Fund may be required to withhold a
portion of dividends or redemptions or capital gains paid to a shareholder and
remit such amount to the Internal Revenue Service if the shareholder fails to
furnish the Fund with a correct taxpayer identification number, if the
shareholder fails to supply the Fund with a tax identification number
altogether, if the investor fails to make a required certification that his
taxpayer identification number is correct and that he is not subject to backup
withholding, or if the Internal Revenue Service notifies the Fund to withhold a
portion of such distributions from a shareholder's account.
SPECIAL CONSIDERATIONS FOR MAXUS LAUREATE FUND
Income received by Maxus Laureate Fund from a mutual fund in that
Fund's portfolio (including dividends and distributions of short-term capital
gains), as well as interest received on cash held in the Custodian's money
market deposit account and net short-term capital gains received by the Fund on
the sale of mutual fund shares, will be distributed by the Fund (net of expenses
incurred by the Fund) and will be taxable to shareholders as ordinary income.
Because the Fund is actively managed and can realize taxable net short-term
capital gains by selling shares of an underlying fund with unrealized portfolio
appreciation, investing in the Fund rather than directly in the underlying funds
may result in increased tax liability to the shareholder, since the Fund must
distribute its gain in accordance with the rules of the Code.
Distributions of net capital gains received by Maxus Laureate Fund from
underlying mutual funds, as well as net long-term capital gains realized by the
Fund from the purchase and sale of underlying mutual fund shares held by the
Fund for more than one year, will be distributed by the Fund and will be taxable
to shareholders as long-term capital gains (even if the shareholder has held the
shares for less than one year). However, if a shareholder who has received a
capital gains distribution suffers a loss on the sale of his shares not more
than six months after purchase, the loss will be treated as a long-term capital
loss to the extent of the capital gains distribution received.
For purposes of determining the character of income received by Maxus
Laureate Fund when an underlying fund distributes net capital gains to the Fund,
the Fund will treat the distribution as a long-term capital gain, even if it has
held shares of the mutual fund for less than one year. However, any loss
incurred by the Fund on the sale of that underlying fund's shares held for six
months or less will be treated as a long-term capital loss only to the extent of
the gain distribution. The tax treatment of distributions from the Fund is the
same whether the distributions are received in additional shares or in cash.
Shareholders receiving distributions in the form of additional shares will have
a cost basis for federal income tax purposes in each share received equal to the
net asset value of a share of the Fund on the reinvestment date.
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<PAGE> 30
Maxus Laureate Fund may invest in underlying funds with capital loss
carry-forwards. If such an underlying fund realizes capital gains, it will be
able to offset the gains to the extent of its loss carrying forwards in
determining the amount of capital gains which must be distributed to its
shareholders.
GENERAL INFORMATION
The Funds are separate, diversified, open-end management investment companies,
organized as Trusts under the laws of the State of Ohio by Declarations of
Trust dated October 31, 1984 (Maxus Income Fund), July 12, 1989 (Maxus Equity
Fund) and February 10, 1993 (Maxus Laureate Fund). The Declaration of Trust of
each Fund provides for an unlimited number of authorized shares of
beneficial interest in such Fund. Each share represents an equal proportionate
interest in a 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
that 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 a 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 such 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 such Fund, whichever is less.
Although none of the Funds is required to hold annual meetings of the
shareholders, shareholders holding at least 10% of a Fund's outstanding shares
have the right to call a meeting to elect or remove one or more of the Trustees
of such Fund.
Upon issuance and sale in accordance with the terms of this Prospectus,
each share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights and are redeemable as set forth
under "How to Redeem Shares." The Declaration of Trust of each Fund also
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of such Fund and that every agreement, obligation or
instrument entered into or executed by such Fund shall contain a provision to
the effect that the shareholders are not personally liable thereunder. Although
each Fund is offering its own shares, it is possible that one Fund may become
liable for any misstatement in this Prospectus about one of the other Funds.
Maxus Laureate Fund intends to vote the shares of the underlying funds
held by it in the same proportion as the vote of all other holders of such
underlying fund's securities. The effect of such "mirror" voting will be to
neutralize such Fund's influence on corporate governance matters regarding the
underlying funds in which the Fund invests.
Shareholders of Maxus Laureate Fund will not have the opportunity to
vote on matters submitted to shareholders of the underlying funds. However,
shareholders of such Fund will, of course, have the opportunity to vote on
matters required to be submitted to shareholders of the Fund.
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<PAGE> 31
Maxus Laureate Fund is not available to residents of the State of
Montana.
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.
Shareholder inquiries should be directed to the Secretary of the Funds
at The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114.
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APPENDIX A
DESCRIPTION OF BOND AND COMMERCIAL PAPER RATINGS*
STANDARD & POOR'S CORPORATION
BONDS
AAA: Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA: Bonds rated AA have very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in the higher rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for the bonds in higher rated categories.
BB, B, CCC AND CC: Bonds rated BB, B, CCC and CC are regarded on
balance as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
COMMERCIAL PAPER
A-1: Commercial paper rated A-1 indicates that the degree of safety
regarding timely payment is very strong.
A-2: Commercial paper rated A-2 indicates that the capacity for timely
payment is strong. However, the relative degree of safety is not as overwhelming
as for issues designated A-1.
*As described by Standard & Poor's Corporation.
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APPENDIX B
DESCRIPTION OF VARIOUS SECURITIES INVESTED IN,
AND TECHNIQUES EMPLOYED BY,
FUNDS IN WHICH THE MAXUS FUNDS MAY INVEST
As described in this Prospectus under "Investment Objectives and
Management Techniques" and under "Risks and Other Considerations," Maxus Income
Fund and Maxus Equity Fund may invest in the shares of closed-end investment
companies (or "closed-end funds") and Maxus Laureate Fund may invest in the
shares of open-end investment companies (or "mutual funds"). These closed-end
funds and mutual funds (collectively referred to in this Appendix as "underlying
funds") may incur certain risks which are described in this Appendix B.
FOREIGN SECURITIES
An underlying fund may invest up to 100% of its assets in securities of
foreign issuers. Investments in foreign securities involve risks relating to
political and economic developments abroad as well as those that may result from
the differences between the regulation to which U.S. issuers are subject and
that applicable to foreign issuers. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends and interest, limitations
on the use or transfer of an underlying fund's assets and political or social
instability or diplomatic developments.
Individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. Securities of many foreign companies may be less liquid and
their prices more volatile than securities of comparable U.S. companies.
Moreover, the underlying funds generally calculate their net asset values and
complete orders to purchase, exchange or redeem shares only on days when the New
York Stock Exchange is open. However, foreign securities in which the underlying
funds may invest may be listed primarily on foreign stock exchanges that may
trade on other days (such as U.S. holidays and weekends). As a result, the net
asset value of an underlying fund's portfolio may be significantly affected by
such trading on days when the Adviser does not have access to the underlying
funds and shareholders do not have access to the Fund.
Additionally, because foreign securities ordinarily are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect an underlying fund's net asset value, the value of dividends
and interest earned, gains and losses realized on the sale of securities and net
investment income and capital gain, if any, to be distributed to shareholders by
the underlying fund. If the value of a foreign currency rises against the U.S.
dollar, the value of the underlying fund's assets denominated in that currency
will increase; correspondingly, if the value of a foreign currency declines
against the U.S. dollar, the value of the underlying fund's assets denominated
in that currency will decrease. The exchange rates between the U.S. dollar and
other currencies are determined by supply and demand in the currency exchange
markets, international balance of payments, governmental intervention,
speculation and other economic and political conditions. The costs attributable
to foreign investment that an underlying fund must bear frequently are higher
than those attributable to domestic investing. For example, the costs of
maintaining custody of foreign securities exceed custodian costs relating to
domestic securities.
FOREIGN CURRENCY TRANSACTIONS
In connection with its portfolio transactions in securities traded in a
foreign currency, an underlying fund may enter into forward contracts to
purchase or sell an agreed upon amount of a specific currency at a future date
that may be any fixed number of days from the date of the contract agreed upon
by the parties at a price set at the time of the contract. Under such an
arrangement, concurrently with the entry into a contract to acquire a foreign
security for a
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<PAGE> 34
specified amount of currency, the fund would purchase with U.S. dollars the
required amount of foreign currency for delivery at the settlement date of the
purchase; the fund would enter into similar forward currency transactions in
connection with the sale of foreign securities. The effect of such transactions
would be to fix a U.S. dollar price for the security to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the subject foreign currency during the period between the date
the security purchased or sold and the date on which payment is made or
received, the normal range of which is three to fourteen days. These contracts
are traded in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. Although such contracts tend to minimize the risk of loss due
to a decline in the value of the subject currency, they tend to limit
commensurately any potential gain that might result should the value of such
currency increase during the contract period.
HIGH-YIELD SECURITIES
The Funds may, from time to time, invest in shares of underlying funds
which invest in lower-rated securities (rated BBB or lower by Standard & Poor's
Corporation Rating Service) or in unrated securities, when, in the view of the
Adviser, such investments are consistent with the Fund's investment objective.
Certain risk factors that investors should recognize as being associated with
the Adviser's discretion to invest in such underlying funds are set forth below.
In general, when interest rates decline, the value of fixed income
securities can be expected to rise. Conversely, when interest rates rise, the
value of fixed income securities can be expected to decline. Prices of
lower-rated securities (also sometimes referred to as "high-yield" securities)
have been found to be less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic changes or individual
corporate developments. In addition, periods of economic uncertainty and changes
can be expected to result in increased volatility of market prices of
lower-rated securities.
The values of lower-rated securities tend to reflect individual
corporate developments to a greater extent than higher-rated securities, which
react primarily to fluctuations in the general level of interest rates. Further,
securities rated BB or lower by Standard & Poor's are below investment grade and
are considered, on balance, to be predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of the
obligation and will generally involve more credit risk than securities in the
higher rating categories. In some cases, such securities are subordinated to the
prior payment of senior indebtedness, thus potentially limiting the underlying
fund's ability to receive payments when senior securities are in default or to
recover full principal. Many issuers of lower-rated corporate debt securities
are substantially leveraged, which may impair their ability to meet debt service
obligations. Also, during an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
payment obligations, to meet projected business goals, and to obtain additional
financing. Upon any default, the underlying fund may incur additional expenses
to the extent it is required to seek recovery of the payment of principal or
interest on the relevant portfolio holding.
In addition, lower-rated securities may tend to trade in markets that
are relatively less liquid than the market for higher rated securities. It is
thus possible that the underlying fund's ability to dispose of such securities,
when its investment adviser deems it desirable to do so, may be limited. The
lack of a liquid secondary market may also have an adverse impact on market
price and the underlying fund's ability to dispose of particular issues when
necessary to meet the underlying fund's liquidity needs or in response to a
specific economic event, such as a deterioration in the creditworthiness of the
issuer. In addition, a less liquid market may interfere with the ability of the
underlying
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fund to accurately value lower-rated securities and, consequently, value the
fund's assets. Furthermore, adverse publicity and investor perceptions, whether
or not based on fundamental analysis, may decrease the values and liquidity of
lower-rated securities, especially in a thinly-traded market.
The market for "high yield" fixed-income securities has not weathered a
major economic recession and it is unknown what effect a recession might have on
such securities. It is likely, however, that any such recession could severely
disrupt the market for such securities and may have an adverse impact on the
value of such securities. In addition, it is likely that any such economic
downturn would adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon.
Standard & Poor's Corporation ("S&P") is a private service that
provides rates of the credit quality of debt obligations. A description of
ratings assigned to commercial paper and corporate debt obligations by S&P can
be found in Appendix A to this Prospectus. These ratings represent S&P's opinion
as to the quality of the securities that they undertake to rate. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality. Consequently, securities with the same maturity, interest rate and
rating may have different market prices. Subsequent to its purchase by an
underlying fund, an issue of securities may cease to be rated or its ratings may
be reduced below the minimum rating required for purchase by an underlying fund.
CONVERTIBLE PREFERRED STOCKS AND DEBT SECURITIES
Certain preferred stocks and debt securities that may be held by an
underlying fund have conversion features allowing the holder to convert
securities into another specified security (usually common stock) of the same
issuer at a specified conversion ratio (e.g., two shares of preferred for one
share of common stock) at some specified future date or period. The market value
of convertible securities generally includes a premium that reflects the
conversion right. That premium may be negligible or substantial. To the extent
that any preferred stock or debt security remains unconverted after the
expiration of the conversion period, the market value will fall to the extent
represented by that premium.
ILLIQUID SECURITIES
An underlying fund may invest in securities for which no readily
available market exists ("illiquid securities") or securities the disposition of
which would be subject to legal restrictions (so-called "restricted securities")
and repurchase agreements maturing in more than seven days. A considerable
period may elapse between an underlying fund's decision to sell securities and
the time when the fund is able to sell such securities. If, during such a
period, adverse market conditions were to develop, the underlying fund might
obtain a less favorable price than prevailed when it decided to sell.
INDUSTRY CONCENTRATION
An underlying fund may concentrate its investments within one industry.
Because the scope of investment alternatives within an industry is limited, the
value of the shares of such an underlying fund may be subject to greater market
fluctuation than an investment in a fund that invests in a broader range of
securities.
OPTION ACTIVITIES
An underlying fund may write (i.e., sell) call options ("calls") if the
calls are "covered" throughout the life of the option. A call is "covered" if
the fund owns the optioned securities. When a fund writes a call, it receives a
premium and gives the purchaser the right to buy the underlying security at any
time during the call period (usually not more than nine months in the case of
common stock) at a fixed exercise price regardless of market price changes
during the call period. If the call is exercised, the fund will forego any gain
from
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<PAGE> 36
an increase in the market price of the underlying security over the
exercise price.
An underlying fund may purchase a call on securities only to effect a
"closing transaction," which is the purchase of a call covering the same
underlying security and having the same exercise price and expiration date as a
call previously written by the fund on which it wishes to terminate its
obligation. If the fund is unable to effect a closing transaction, it will not
be able to sell the underlying security until the call previously written by the
fund expires (or until the call is exercised and the fund delivers the
underlying security).
An underlying fund also may write and purchase put options ("puts").
When a fund writes a put, it receives a premium and gives the purchaser of the
put the right to sell the underlying security to the fund at the exercise price
at any time during the option period. When a fund purchases a put, it pays a
premium in return for the right to sell the underlying security at the exercise
price at any time during the option period. An underlying fund also may purchase
stock index puts, which differ from puts on individual securities in that they
are settled in cash based on the values of the securities in the underlying
index rather than by delivery of the underlying securities. Purchase of a stock
index put is designed to protect against a decline in the value of the portfolio
generally rather than an individual security in the portfolio. If any put is not
exercised or sold, it will become worthless on its expiration date.
An underlying fund's option positions may be closed out only on an
exchange that provides a secondary market for options of the same series, but
there can be no assurance that a liquid secondary market will exist at any given
time for any particular option. In this regard, trading in options on certain
securities (such as U.S. Government securities) is relatively new, so that it is
impossible to predict to what extent liquid markets will develop or continue.
An underlying fund's custodian, or a securities depository acting for
it, generally acts as escrow agent as to the securities on which the fund has
written puts or calls, or as to other securities acceptable for such escrow so
that no margin deposit is required of the fund. Until the underlying securities
are released from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation ("OCC") has the
authority to permit other, generally comparable securities to be delivered in
fulfillment of option exercise obligations. If the OCC exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the OCC may impose special
exercise settlement procedures.
FUTURES CONTRACTS
An underlying fund may enter into futures contracts for the purchase or
sale of debt securities and stock indexes. A futures contract is an agreement
between two parties to buy and sell a security or an index for a set price on a
future date. Futures contracts are traded on designated "contract markets" that,
through their clearing corporation, guarantee performance of the contracts.
Generally, if market interest rates increase, the value of outstanding
debt securities declines (and vice versa). Entering into a futures contract for
the sale of debt securities has an effect similar to the actual sale of
securities, although sale of the futures contract might be accomplished more
easily and quickly. For example, if an underlying fund holds long-term U.S.
Government securities and it anticipates a rise in long-term interest rates (and
therefore a decline in the value of those securities), it could, in lieu of
disposing of those securities, enter into futures contracts for the sale of
similar long-term securities. If rates thereafter increase and the value of the
fund's portfolio securities thus declines, the value of the fund's futures
contracts would
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increase, thereby protecting the fund by preventing the net asset value from
declining as much as it otherwise would have. Similarly, entering into futures
contracts for the purchase of debt securities has an effect similar to the
actual purchase of the underlying securities, but permits the continued holding
of securities other than the underlying securities. For example, if an
underlying fund expects long-term interest rates to decline, it might enter into
futures contracts for the purchase of long-term securities so that it could gain
rapid market exposure that may offset anticipated increases in the cost of
securities it intends to purchase while continuing to hold higher-yield
short-term securities or waiting for the long-term market to stabilize.
A stock index futures contract may be used to hedge an underlying
fund's portfolio with regard to market risk as distinguished from risk relating
to a specific security. A stock index futures contract does not require the
physical delivery of securities, but merely provides for profits and losses
resulting from changes in the market value of the contract to be credited or
debited at the close of each trading day to the respective accounts of the
parties to the contract. On the contract's expiration date, a final cash
settlement occurs. Changes in the market value of a particular stock index
futures contract reflect changes in the specified index of equity securities on
which the contract is based.
There are several risks in connection with the use of futures
contracts. In the event of an imperfect correlation between the futures contract
and the portfolio position that is intended to be protected, the desired
protection may not be obtained and the fund may be exposed to risk of loss.
Further, unanticipated changes in interest rates or stock price movements may
result in a poorer overall performance for the fund than if it had not entered
into futures contracts on debt securities or stock indexes.
In addition, the market price of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions that could distort the normal relationship between the
securities and futures markets. Second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price distortions.
Finally, positions in futures contracts may be closed out only on an
exchange or board of trade that provides a secondary market for such futures.
There is no assurance that a liquid secondary market on an exchange or board of
trade will exist at any particular time.
OPTIONS ON FUTURES CONTRACTS
An underlying fund may purchase and write (sell) put and call options
on futures contracts. An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put), at a specified exercise price at any time during the option
period. When an option on a futures contract is exercised, delivery of the
futures position is accompanied by cash representing the difference between the
current market price of the futures contract and the exercise price of the
option. A fund may purchase put options on futures contracts in lieu of, and for
the same purpose as, a sale of a futures contract. It also may purchase such put
options in order to hedge a long position in the underlying futures contract in
the same manner as it purchases "protective puts" on securities.
As with options on securities, the holder of an option on a futures
contract may terminate its position by selling an option of the same series.
There is no guarantee that such closing transactions can be effected. An
underlying fund is required to deposit initial margin and variation margin with
respect to put and call options on futures contracts written by it pursuant to
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<PAGE> 38
brokers' requirements similar to those applicable to futures contracts described
above and, in addition, net option premiums received will be included as initial
margin deposits.
In addition to the risks that apply to all options transactions, there
are several special risks relating to options on futures contracts. The ability
to establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. There can be no
certainty that liquid secondary markets for all options on futures contracts
will develop. Compared to the use of futures contracts, the purchase of options
on futures contracts involves less potential risk to an underlying fund because
the maximum amount of risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the fund when the use of a futures
contract would not, such as when there is no movement in the prices of the
underlying securities. Writing an option on a futures contract involves risks
similar to those arising in the sale of futures contracts, as described above.
SHORT SALES
An underlying fund may sell securities short. In a short sale, the fund
sells securities that it does not own, making delivery with securities
"borrowed" from a broker. The fund is then obligated to replace the borrowed
securities by purchasing them at the market price at the time of replacement.
This price may or may not be less than the price at which the securities were
sold by the fund. Until the securities are replaced, the fund is required to pay
to the lender any dividends or interest that accrue during the period of the
loan. In order to borrow the securities, the fund may also have to pay a premium
that would increase the cost of the securities sold. The proceeds of the short
sale will be retained by the broker, to the extent necessary to meet margin
requirements, until the short position is closed out.
The fund also must deposit in a segregated account an amount of cash or
U.S. Government securities equal to the difference between (a) the market value
of the securities sold short at the time they were sold short and (b) the value
of the collateral deposited with the broker in connection with the sale (not
including the proceeds from the short sale). Each day the short position is
open, the fund must maintain the segregated account at such a level that the
amount deposited in it plus the amount deposited with the broker as collateral
(1) equals the current market value of the securities sold short and (2) is not
less than the market value of the securities at the time they were sold short.
Depending upon market conditions, up to 80% of the value of a fund's net assets
may be deposited as collateral for the obligation to replace securities borrowed
to effect short sales and allocated to a segregated account in connection with
short sales.
An underlying fund will incur a loss as a result of a short sale if the
price of the security increases between the date of the short sale and the date
on which the fund replaces the borrowed security. The fund will realize a gain
if the security declines in price between those dates. The amounts of any gain
will be decreased and the amount of any loss in creased by the amount of any
premium, dividends or interest the fund may be required to pay in connection
with the short sale.
A short sale is "against the box" if at all times when the short
position is open the fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short. Such a transaction serves to
defer a gain or loss for federal income tax purposes.
WARRANTS
An underlying fund may invest in warrants, which are options to
purchase a specified security, usually an equity security such as common stock,
at a specified price (usually representing a premium over the applicable market
value
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<PAGE> 39
of the underlying equity security at the time of the warrant's issuance) and
usually during a specified period of time. Moreover, they are usually issued by
the issuer of the security to which they relate. While warrants may be traded,
there is often no secondary market for them. The prices of the warrants do not
necessarily move parallel to the prices of the underlying securities. Holders of
warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer. To the extent that the market value of the
security that may be purchased upon exercise of the warrant rises above the
exercise price, the value of the warrant will tend to rise. To the extent that
the exercise price equals or exceeds the market value of such security, the
warrant is not exercised within the specified time period, it will become
worthless and the fund will lose the purchase price paid for the warrant and the
right to purchase the underlying security.
MASTER DEMAND NOTES
Although the Funds themselves will not do so, underlying funds
(particularly money market mutual funds) may invest up to 100% of their assets
in master demand notes. Master demand notes are unsecured obligations of U.S.
corporations redeemable upon notice that permit investment by a fund of
fluctuating amounts at varying rates of interest pursuant to direct arrangements
between the fund and the issuing corporation. Because they are direct
arrangements between the fund and the issuing corporation, there is no secondary
market for the notes. However, they are redeemable at face value, plus accrued
interest, at any time.
REPURCHASE AGREEMENTS
Underlying funds, particularly money market funds, may enter into
repurchase agreements with banks and broker-dealers under which they acquire
securities subject to an agreement with the seller to repurchase the securities
at an agreed upon time and price. These agreements are considered under the
Investment Company Act of 1940 to be loans by the purchaser collateralized by
the underlying securities. If the seller should default on its obligation to
repurchase the securities, the underlying fund may experience delay or
difficulties in exercising its rights to realize upon the securities held as
collateral and might incur a loss if the value of the securities should decline.
LOANS OF PORTFOLIO SECURITIES
An underlying fund may lend its portfolio securities provided: (1) the
loan is secured continuously by collateral of U.S. Government securities or cash
or cash equivalents maintained on a daily mark-to-market basis in an amount at
least equal to the current market value of the securities loaned; (2) the fund
may at any time call the loan and obtain the return of the securities loaned;
(3) the fund will receive any interest or dividends paid on the loaned
securities; and (4) the aggregate market value of securities loaned will not at
any time exceed one-third of the total assets of the fund. Loans of securities
involve a risk that the borrower may fail to return the securities or may fail
to provide additional collateral.
HEDGING
An underlying fund may employ many of the investment techniques
described in this section not only for investment purposes, but also for hedging
purposes. For example, an underlying fund may purchase or sell put and call
options on common stocks to hedge against movements in individual common stock
prices, or purchase and sell stock index futures and related options to hedge
against marketwide movements in common stock prices. Although such hedging
techniques generally tend to minimize the risk of loss that is hedged against,
they also may limit commensurately the potential gain that might have resulted
had the hedging transaction not occurred. Also, the desired protection generally
resulting from hedging transactions may not always be achieved.
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LEVERAGE THROUGH BORROWING
An underlying fund may borrow up to 25% of the value of its net assets
on an unsecured basis from banks to increase its holdings of portfolio
securities. Under the Investment Company Act of 1940, the fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if disadvantageous from an investment standpoint. Leveraging
will exaggerate the effect of any increase or decrease in value of portfolio
securities on the fund's net asset value, and money borrowed will be subject to
interest costs (which may include commitment fees and/or the cost of maintaining
minimum average balances) which may or may not exceed the interest and option
premiums received from the securities purchased with borrowed funds.
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<PAGE> 41
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Funds or the Adviser.
This Prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
TABLE OF CONTENTS PAGE
- ----------------- ----
Highlights............................................................2
Financial Highlights................................................. 5
Investment Objectives and Management Techniques...................... 8
Investment Policies and Restrictions................................ 14
Risks and Other Considerations..................................... 15
Performance......................................................... 17
How to Purchase Shares.............................................. 18
How to Redeem Shares................................................ 20
Systematic Withdrawal Plan.......................................... 22
Investment Management............................................... 22
Dividends, Distributions and Taxes...................................24
General Information................................................. 26
Appendix A.......................................................... 28
Appendix B.......................................................... 29
Investors are advised to read
this Prospectus and to retain
it for future reference.
<PAGE> 42
MUTUAL FUNDS
PROSPECTUS
April ___, 1998
<PAGE> 43
STATEMENT OF ADDITIONAL INFORMATION April ___, 1998
MAXUS EQUITY FUND
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
Maxus Equity Fund (the "Fund") is a diversified, open-end management
investment company with an investment objective of obtaining the highest total
return, a combination of capital appreciation and income, consistent with
reasonable risk. This Statement of Additional Information relating to the Fund
is not a prospectus and should be read in conjunction with the Fund's
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 prospectus to which this Statement relates is dated the same date as
this Statement of Additional Information.
The date of this Statement of Additional Information is April ___,
1998.
<PAGE> 44
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
CAPTION PAGE LOCATION IN PROSPECTUS
- ------- ---- ----------------------
<S> <C> <C>
General Information and History 3 General Information
Investment Objective and Policies 3 Investment Objectives
and Management Techniques
Management of the Fund 6 Investment Management
Ownership of Shares 8 Not Applicable
Investment Advisory and Other Services 8 Investment Management
Brokerage Allocation 10 Execution of Portfolio
Transactions
Capital Stock and Other Securities 12 General Information
Purchase, Redemption and Pricing of 12 How to Purchase Shares/
Securities Being Offered How to Redeem Shares
Determination of Net Asset Value 12 How to Purchase Shares
Tax Status 13 Dividends, Distributions
and Federal Taxes
Distributor 14 Investment Management
Financial Statements 15 Financial Highlights
</TABLE>
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<PAGE> 45
GENERAL INFORMATION AND HISTORY
Maxus Equity Fund (the "Fund") is a diversified, open-end management
investment company that seeks the highest total return, a combination of income
and capital appreciation, consistent with reasonable risk. The Fund was
organized as a Trust under the laws of the State of Ohio pursuant to a
Declaration of Trust dated July 12, 1989.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are briefly described
in the Fund's prospectus under the heading "Investment Objective And Management
Techniques." The Fund has also adopted the following fundamental investment
policies and restrictions in addition to the fundamental investment policies
described in the Prospectus under the subheading "Investment 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 Investment
Company Act of 1940 (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 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.
2. 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.
3. 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
in the Prospectus under the caption "Investment Objectives and
Management Techniques -- Lending of Portfolio Securities."
4. 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.
5. 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.
-3-
<PAGE> 46
6. 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.
7. 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.
8. Invest for the purpose of exercising control or management
of another issuer.
9. 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.
10. 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.
11. 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.
12. Issue senior securities as defined in the Act.
13. 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.
The Fund's portfolio turnover rate (see "INVESTMENT OBJECTIVES AND
MANAGEMENT TECHNIQUES" in the Prospectus) for the fiscal years ended December
31, 1997 and 1996 was 89% and 111% , respectively.
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
-4-
<PAGE> 47
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.
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.
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.
Risk Factors
- ------------
As stated in the Prospectus, in selecting its corporate debt securities
the Adviser intends to invest principally in securities rated BBB or better by
Standard & Poor's Corporation Rating Service, but may invest up to 5% of its
portfolio in securities rated as low as BB, B, CCC or CC or unrated securities
when these investments are believed by the Adviser to be sound. Securities rated
BBB or lower by Standard & Poor's are usually considered lower-rated securities.
The Prospectus sets forth certain risk factors which should be noted in
connection with the Adviser's discretion to invest in lower-rated securities.
Set forth below is an expanded discussion of such risk factors. It also should
be noted that the sections of the Prospectus captioned "Investment Objectives
and Management Techniques" and "Risk Factors and Other Considerations", as well
as Appendix B to the Prospectus, contain a discussion of additional risk factors
which should be considered in connection with an investment in the Fund.
In general, when interest rates decline, the value of fixed income
securities can be expected to rise. Conversely, when interest rates rise, the
value of fixed income securities can be expected to decline. Prices of
lower-rated securities (also sometimes referred to as "high-yield" securities)
have been found to be less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic changes or individual
corporate developments. In addition, periods of economic uncertainty and changes
can be expected to result in increased volatility of market prices of
lower-rated securities.
The values of lower-rated securities tend to reflect individual
corporate developments to a greater extent than higher-rated securities, which
react primarily to fluctuations in the general level of interest rates. Further,
securities rated BB or lower by Standard & Poor's are below investment grade and
are considered, on balance, to be predominately speculative with respect to
capacity to pay interest and repay principal in accordance with the terms of the
obligation and will generally involve more credit risk than securities in the
higher rating categories. In some cases, such securities are
-5-
<PAGE> 48
subordinated to the prior payment of senior indebtedness, thus potentially
limiting the Fund's ability to receive payments when senior securities are in
default or to recover full principal. Many issuers of lower-rated corporate debt
securities are substantially leveraged, which may impair their ability to meet
debt service obligations. Also, during an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to service their
principal and interest payment obligations, to meet projected business goals,
and to obtain additional financing. Upon any default, the Fund may incur
additional expenses to the extent it is required to seek recovery of the payment
of principal or interest on the relevant portfolio holding.
In addition, lower-rated securities may tend to trade in markets that
are relatively less liquid than the market for higher rated securities. It is
thus possible that the Fund's ability to dispose of such securities, when the
Adviser deems it desirable to do so, may be limited. The lack of a liquid
secondary market may also have an adverse impact on market price and the Fund's
ability to dispose of particular issues when necessary to meet the Fund's
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. In addition, a less liquid
market may interfere with the ability of the Fund to accurately value
lower-rated securities and, consequently, value the Fund's assets. Furthermore,
adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of lower-rated securities,
especially in a thinly-traded market.
The market for "high yield" fixed-income securities has not weathered a
major economic recession and it is unknown what effect a recession might have on
such securities. It is likely, however, that any such recession could severely
disrupt the market for such securities and may have an adverse impact on the
value of such securities. In addition, it is likely that any such economic
downturn would adversely affect the ability of the issuers of such securities to
repay principal and pay interest thereon.
MANAGEMENT OF THE FUND
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
Income Fund and Maxus Laureate Fund, two other open-end management investment
companies.
<TABLE>
<CAPTION>
Position Held Principal Occupation(s)
Name and Address With the Fund During Past 5 Years
- ---------------- ------------- -----------------------
<S> <C> <C>
Richard A. Barone* Chairman, President of Maxus Securities
The Tower at Erieview, 36th Floor Treasurer Corp (broker-dealer), Maxus
1301 East Ninth Street and Trustee Asset Management Inc. (invest-
Cleveland, Ohio 44114 ment adviser) and Resource
</TABLE>
-6-
<PAGE> 49
<TABLE>
<S> <C> <C>
Management Inc., dba Maxus
Investment Group (financial services)
Denis J. Amato* Trustee Chief Investment Officer, Gelfand.
The Tower at Erieview, 36th Floor Maxus Asset Management, Inc. (invest-
1301 East Ninth Street ment adviser) since 1997; previously,
Cleveland, Ohio 44114 Managing Director, Gelfand Partners
Asset Management (investment
adviser)
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)
Murlan J. Murphy, Jr. Trustee Independent Investor
11249 Lake Forest Drive
Chesterland, Ohio 44026
Michael A. Rossi, C.P.A. Trustee Certified Public Accountant
6559 Wilson Mills Road
Highland Heights, Ohio 44143
Robert J. Conrad Vice President Vice President, Resource Management,
The Tower at Erieview, 36th Floor Inc.; formerly Vice President, American
1301 East Ninth Street Income Plus
Cleveland, Ohio 44114
Robert W. Curtin Secretary Senior Vice President and Secretary,
The Tower at Erieview, 36th Floor Maxus Securities Corp; formerly
1301 East Ninth Street Executive Vice President,
Cleveland, Ohio 44114 Roulston & Company, Inc.
</TABLE>
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:
-7-
<PAGE> 50
COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Total Compensation
Compensation From All Maxus Funds
Name of Trustee from the Fund Payable to Trustees
--------------- ------------- ---------------------
<S> <C> <C>
Richard A. Barone $ 0 $ 0
Denis J. Amato $ 0 $ 0
Burton D. Morgan $1,200 $3,600
Murlan J. Murphy, Jr $1,200 $3,600
Michael A. Rossi $1,200 $3,600
</TABLE>
OWNERSHIP OF SHARES
As of February 6, 1998, 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 6, 1998, all officers and Trustees as a group
beneficially owned 33,227 shares, constituting 1.1% of the outstanding
shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Maxus Asset Management, Inc. ("MAM"), the Fund's investment adviser, is
a wholly-owned subsidiary of RMI. MAM is registered as an investment adviser
under the Investment Advisers Act of 1940. MAM has not been sponsored,
recommended or approved, nor have its abilities or qualifications been passed
upon, by the Securities and Exchange Commission or any other governmental
agency.
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. This fee is higher than that paid by
most other investment companies. For the fiscal years ended December 31, 1997,
1996 and 1995 , the Adviser received management fees from the Fund in the
amounts of $477,143, $365,389 and $250,329, respectively.
MAM acts as investment adviser to the Fund pursuant to an Investment
Advisory and Administration Agreement dated August 16, 1989. 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
-8-
<PAGE> 51
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, reimbursement to RMI for
organizational expenses, including costs of printing share certificates,
portfolio pricing services and Fund meetings, and costs incurred pursuant to the
Fund's Plan of Distribution described below.
The Investment Advisory and Administration Agreement is subject to
annual approval by (i) the Trustees of the Fund or (ii) vote of a majority (as
defined in the Act) of the outstanding voting securities of the Fund, provided
that in either event the continuance is also approved by a majority of the
Trustees who are not "interested persons" (as defined in the Act) of the Fund or
MAM by vote cast in person at a meeting called for the purpose of voting on such
approval. The Board of Trustees, including a majority of the Trustees who are
not "interested persons," most recently voted to continue the Investment
Advisory and Administration Agreement at a meeting held on February 19, 1998.
The Investment Advisory and Administration Agreement is terminable without
penalty, on not less than 60 days' notice, by the Board of Trustees of the Fund
or by vote of the holders of a majority of the Fund's shares or, upon not less
than 90 days' notice, by MAM. The Investment Advisory and Administration
Agreement will terminate automatically in the event of its assignment.
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. See "Investment Management -- Distribution Plan" in the Fund's
Prospectus. During the fiscal year ended December 31, 1997, $238,210 (.50%
of average net assets) was expended by the Fund pursuant to the Plan.
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 in 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.
-9-
<PAGE> 52
The Fund has entered into an Administration Agreement with Maxus
Information Systems Inc. ("MIS"), The Tower at Erieview, 36th Floor, 1301 East
Ninth Street, Cleveland, Ohio 44114, 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. Under the Administration Agreement and the Accounting
Services Agreement the Fund paid MIS $42,563 during the fiscal year ended
December 31, 1997. 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
-10-
<PAGE> 53
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.
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, 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, including in certain instances over-the-counter
purchases and sales, 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 the commissions which would
have been charged for the same transactions by a national discount brokerage
firm and a full-service brokerage firm at its institutional rates. 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.
Under the rules adopted by the SEC, MSC may not execute transactions
for the Fund on the floor of any national securities exchange, but may effect
transactions for the Fund by transmitting orders for execution, providing for
clearance and settlement, and arranging for the performance of those functions
by members of the exchange not associated with MSC. MSC will be required to pay
fees charged by those persons performing the floor brokerage elements out of the
brokerage compensation it receives from the Fund. The Fund has been advised by
MSC that on most
-11-
<PAGE> 54
transactions, the floor brokerage generally constitutes from 10% to 40% of the
total commissions paid.
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.
During the years ended December 31, 1997, 1996 and 1995 , the
aggregate amount of brokerage commissions paid by the Fund were $250,842,
$293,236 and $233,530 , respectively, substantially all of which was paid to
MSC.
CAPITAL STOCK AND OTHER SECURITIES
See "General Information" in the Fund's prospectus.
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
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.
DETERMINATION OF NET ASSET VALUE
The information pertaining to the determination of net asset value
appearing in the Prospectus under the caption "How to Purchase Shares -- Price
of Shares" is hereby incorporated by reference.
TAX STATUS
The Fund's policy is to distribute at least annually, prior to the end
of the calendar year, dividends sufficient to satisfy excise tax requirements of
the Internal Revenue Service and to distribute annually, after the end of the
calendar year, any remaining net investment income and net realized capital
gains. Unless a shareholder elects otherwise, dividends and capital gains
distributions are paid in additional shares that are credited to the
shareholder's account with the Fund.
-12-
<PAGE> 55
As a result of the application of the Distribution and Shareholder
Servicing Plan to Investor Shares only, the amount of dividends on Institutional
Shares will exceed the amount of dividends on Investor Shares.
The Fund intends to qualify each year as a "regulated investment
company" under 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. To qualify for this treatment, the Fund must derive at least 90%
of its gross income from dividends, interest, and gains from the sale or other
disposition of securities; derive less than 30% of its gross income from the
sale or other disposition of securities held for fewer than three months; invest
in securities within certain limits; and distribute to its shareholders at least
90% of its net taxable income earned in any year.
Dividends derived from the Fund's net investment income, whether
received in additional shares or in cash, will be taxable to shareholders as
ordinary income, but a portion may be eligible for the 70% dividends received
deduction available to corporations.
Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to a shareholder in the year in which
received (except as set forth in the next paragraph), whether those
distributions are accepted in cash or in additional shares, and regardless of
the length of time the shareholder has held his Fund shares. These
distributions, like dividends, may also be subject to state and local taxes.
In addition to any dividends paid within the calendar year, dividends
and capital gain distributions declared in December and paid the following
January will be taxable in the year they are declared.
Investors should consider carefully the tax implications of purchasing
shares of the Fund just prior to the record date of a dividend or capital gains
distribution. Although a dividend or distribution paid shortly after shares have
been purchased is in effect a return of investment, it is subject to taxation as
described above, and a sale at a loss of shares held not more than six months
will be long-term capital loss to the extent of any long-term capital gain
dividends received within that period.
Shareholders must furnish the Fund with their correct Taxpayer
Identification Number to avoid being subject to a 20% federal backup withholding
tax on dividend distributions. Investors also must certify on the Account
Application that the stated Tax Identification Number is correct and that the
Investor is not subject to 20% backup withholding for previous under-reporting
to the IRS. Shareholders not subject to income taxation do not have to pay an
income tax on the dividend or capital gain distributions.
Shareholders shall upon demand disclose to the Fund in writing such
information with respect to direct and indirect ownership of Shares of the Fund
as the Trustees of the Fund deem necessary to comply with the provisions of the
Internal Revenue Code, or to comply with the requirements of any other taxing
authority.
-13-
<PAGE> 56
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.
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. Pursuant to the Distribution
and Shareholder Servicing Plan, MSC receives an annual distribution fee of .50%
of average net assets of Investor Shares for distributing and marketing
Investor Shares. Certain employees of MSC may receive compensation under the
Plan. See "Investment Advisory and Other Services."
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
-14-
<PAGE> 57
<TABLE>
<CAPTION>
MAXUS EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
=======================================================================================================================
SHARES/PRINCIPAL AMOUNT COST MARKET VALUE % OF ASSETS
=======================================================================================================================
INFORMATION TECHNOLOGY
<S> <C> <C> <C> <C>
25,000 Airtouch Communications* 629,625 1,039,062
37,500 Bel Fuse* 430,647 717,188
10,000 Harris Corp 430,225 458,750
76,000 Intergraph* 528,737 760,000
39,072 Unisys* 386,950 542,125
34,000 VLSI Technology* 494,196 803,250
20,000 Western Digital* 298,650 320,000
--------------- ---------------
3,199,030 4,640,375 8.34%
INFRASTRUCTURE
15,000 Ameron Inc 514,513 948,750
17,000 Corrpro Companies* 132,683 250,750
111,000 Foster L B* 423,751 548,062
--------------- ---------------
1,070,947 1,747,562 3.14%
MACHINERY & EQUIPMENT
35,000 Flowserve 878,349 977,813
50,000 Sensormatic Electronic 682,893 821,875
30,000 Snap on Tools 861,200 1,308,750
--------------- ---------------
2,422,442 3,108,438 5.59%
MEDICAL SERVICES & SUPPLIES
20,000 Becton Dickinson 359,650 1,000,000
32,000 Invacare 675,488 696,000
43,300 Loewen Group 1,069,954 1,114,975
13,500 McKesson 578,558 1,463,063
--------------- ---------------
2,683,650 4,274,038 7.68%
REAL ESTATE
35,000 MGI Properties 480,393 840,000
25,000 Public Storage 8.25% X 652,478 1,225,000
10,000 St Joe Paper 579,110 905,000
--------------- ---------------
1,711,981 2,970,000 5.34%
</TABLE>
*Non-income producing securities.
The accompanying notes are an integral part of the financial statements.
-15-
<PAGE> 58
<TABLE>
<CAPTION>
MAXUS EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
=======================================================================================================================
SHARES/PRINCIPAL AMOUNT COST MARKET VALUE % OF ASSETS
=======================================================================================================================
ENTERTAINMENT
<S> <C> <C> <C> <C>
120,000 Trump Hotels Casino Resorts* 866,350 802,500 1.44%
CONSUMER PRODUCTS
100,000 Jan Bell Marketing* 221,910 250,000
50,000 Limited 933,000 1,275,000
135,000 Michael Anthony Jewelers* 389,203 329,063
59,000 Pluma* 715,255 505,187
180,000 Royal Appliance Mfg* 552,690 1,192,500
44,600 Universal Electronics* 225,274 446,000
--------------- ---------------
3,037,332 3,997,750 7.19%
ENVIRONMENT
15,200 Dionex* 242,016 763,800
100,000 International Tech* 779,812 750,000
15,000 U.S. Filter* 428,713 449,062
35,000 Weston Roy F* 136,661 142,188
--------------- ---------------
1,587,202 2,105,050 3.78%
FINANCIAL SERVICES
20,000 American Express 848,750 1,785,000
10,000 Cincinnati Financial 567,830 1,407,500
15,000 First Chicago NBD 392,536 1,252,500
20,000 Frontier Insurance Group 475,575 457,500
30,000 Lehman Brothers Holdings 651,175 1,530,000
--------------- ---------------
2,935,866 6,432,500 11.56%
UTILITIES
100,000 Citizens Utilities 974,975 962,500
30,000 Kansas City Power & Light 878,675 886,875
--------------- ---------------
1,853,650 1,849,375 3.32%
INDUSTRIAL PRODUCT S
130,000 Algoma Steel* 597,929 450,937
17,000 Armco Inc $3.625 B 831,475 794,750
50,000 Birmingham Steel 820,256 787,500
50,000 Schulman A 1,015,820 1,256,250
25,000 Steel Dynamics* 409,345 400,000
40,000 Stoneridge* 635,275 640,000
30,000 Timken 524,175 1,031,250
15,000 USX 6.75% QUIPs 691,363 690,000
--------------- ---------------
5,525,638 6,050,687 10.88%
</TABLE>
*Non-income producing securities.
The accompanying notes are an integral part of the financial statements.
-16-
<PAGE> 59
<TABLE>
<CAPTION>
MAXUS EQUITY FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
=======================================================================================================================
SHARES/PRINCIPAL AMOUNT COST MARKET VALUE % OF ASSETS
=======================================================================================================================
<S> <C> <C> <C> <C>
100,000 Central Fund of Canada 390,250 387,500
80,000 Inco 1,699,175 1,360,000
--------------- ---------------
2,089,425 1,747,500 3.14%
PRODUCT DISTRIBUTION
20,000 Applied Indl Technologies 433,087 535,000
250,000 Petrie Stores Liquidating Tr* 805,473 747,500
67,000 Pioneer Std Electrs 787,836 1,021,750
--------------- ---------------
2,026,396 2,304,250 4.14%
CLOSED END GLOBAL EQUITY FUNDS
20,000 Emerging Markets Telecommunications 336,023 267,500
75,000 Emerging Mkts Infrastructure 809,256 881,250
170,000 First Australia 1,462,781 1,232,500
70,000 New Germany 882,775 945,000
--------------- ---------------
3,490,835 3,326,250 5.98%
U.S. GOVERNMENT SECURITIES
4,000,000 US Treasury 5.375%, 5-31-98 3,989,218 3,996,625
4,000,000 US Treasury 5.5%, 11-15-98 3,988,923 3,994,625
--------------- ---------------
7,978,141 7,991,250 14.36%
Star Bank Treasury 2,458,873 2,458,873 4.42%
Total Investments 44,937,758 55,806,398 100.30%
ARTICLE I
= Other Assets Less Liabilities (169,555) (0.30)%
Net Assets - Equivalent to $18.23 per share on
3,051,358 shares of capital stock outstanding 55,636,843 100.00%
</TABLE>
*Non-income producing securities.
The accompanying notes are an integral part of the financial statements.
-17-
<PAGE> 60
<TABLE>
<CAPTION>
MAXUS EQUITY FUND
STATEMENT OF ASSETS & LIABILITIES
December 31, 1997
<S> <C>
Assets:
Investment Securities at Market Value
(Identified Cost - $44,937,758) $55,806,398
Cash 8,792
Receivables:
Investment Securities Sold 545,850
Dividends and Interest 229,333
Total Assets $56,590,373
Liabilities
Payables:
Investment Securities Purchased $438,013
Shareholder Distributions 386,040
Accrued Expenses 129,477
Total Liabilities 953,530
Net Assets $55,636,843
Net Assets Consist of:
Capital Paid In 44,792,034
Undistributed Net Investment Income 1,884
Accumulated Realized Gain (Loss) on Investments - Net (25,715)
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 10,868,640
Net Assets, for 3,051,358 Shares Outstanding $55,636,843
Net Asset Value and Redemption Price
Per Share ($55,636,843/3,051,358 shares) $18.23
Offering Price Per Share $18.23
STATEMENT OF OPERATIONS
<CAPTION>
DECEMBER 31, 1997
<S> <C>
Investment Income:
Dividends $779,554
Interest 496,584
Total Investment Income $1,276,138
Expenses
Registration Expense 17,862
Trustee Fees (Note 3) 1,500
Accounting and Pricing 42,563
Custody 22,226
Distribution Plan Expenses 238,210
Audit 16,160
Legal 6,506
Management Fees (Note 2) 477,143
Insurance 8,539
Printing & Other Miscellaneous 61,876
Total Expenses 892,585
</TABLE>
The accompanying notes are an integral part of the financial statements.
-18-
<PAGE> 61
<TABLE>
<S> <C>
MAXUS EQUITY FUND
Net Investment Income 383,553
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 5,454,407
Distribution of Realized Capital Gains from other Investment Companies 336,115
Unrealized Gain (Loss) from Appreciation (Depreciation) on Investments 5,027,441
Net Realized and Unrealized Gain (Loss) on Investments $10,817,963
Net Increase (Decrease) in Net Assets from Operations $11,201,516
</TABLE>
The accompanying notes are an integral part of the financial statements.
-19-
<PAGE> 62
<TABLE>
<CAPTION>
<S> <C>
MAXUS EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
01/01/97 01/01/96
to to
12/31/97 12/31/96
<S> <C> <C> <C>
From Operations:
Net Investment Income 383,553 620,573
Net Realized Gain (Loss) on Investments 5,790,522 2,437,747
Net Unrealized Appreciation (Depreciation) 5,027,441 3,419,289
Increase (Decrease) in Net Assets from Operations 11,201,516 6,477,609
From Distributions to Shareholders
Net Investment Income (381,850) (620,392)
Net Realized Gain (Loss) from Security Transactions (5,787,553) (2,436,220)
Net Increase (Decrease) from Distributions (6,169,403) (3,056,612)
From Capital Share Transactions:
Proceeds From Sale of 844,703 Shares 15,843,329 12,447,924
Net Asset Value of 315,032 Shares Issued on Reinvestment of Dividends 5,729,950 2,637,296
Cost of 531,196 Shares Redeemed (9,733,252) (11,328,765)
11,840,027 3,756,455
Net Increase in Net Assets 16,872,140 7,177,452
Net Assets at Beginning of Period (including undistributed net investment
income of $181 and $0, respectively) 38,764,703 31,587,251
Net Assets at End of Period (including undistributed net investment income
of $1,884 and $181, respectively) 55,636,843 38,764,703
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout the period:
01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
to to to to to
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
<S> <C> <C> <C> <C> <C>
Net Asset Value -
Beginning of Period 16.00 14.57 12.95 13.60 12.29
Net Investment Income 0.15 0.27 0.30 0.25 0.13
Net Gains or Losses on Securities
(realized and unrealized) 4.33 2.50 2.60 (0.17) 3.13
Total from Investment Operations 4.48 2.77 2.90 0.08 3.26
Dividends
(from net investment income) (0.15) (0.27) (0.27) (0.22) (0.12)
Distributions (from capital gains) (2.10) (1.07) (1.01) (0.51) (1.83)
Return of Capital 0.00 0.00 0.00 0.00 0.00
Total Distributions (2.25) (1.34) (1.28) (0.73) (1.95)
Net Asset Value -
End of Period 18.23 16.00 14.57 12.95 13.60
Total Return 28.16% 19.13% 22.43% 0.59% 24.51%
</TABLE>
The accompanying notes are an integral part of the financial statements.
-20-
<PAGE> 63
<TABLE>
<CAPTION>
MAXUS EQUITY FUND
<S> <C> <C> <C> <C> <C>
Ratios/Supplemental Data
Net Assets -
End of Period (Thousands) 55,637 38,765 31,576 17,018 11,343
Ratio of Expenses to Average Net Assets 1.87 1.90 1.96 2.00 2.61
Ratio of Net Income to Average Net Assets 1.80 1.71 2.01 1.82 0.91
Portfolio Turnover Rate 89% 111% 173% 184% 175%
Average commission per share $0.05544 $0.05209
</TABLE>
The accompanying notes are an integral part of the financial statements.
-21-
<PAGE> 64
MAXUS EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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 July 12, 1989. The Fund has an investment objective of
obtaining a total return, a combination of capital appreciation and income.
Under normal circumstances, at least 65% of the value of the Fund's total
assets will consist of equity 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 calendar 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.
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 $477,143 in investment advisory fees during the twelve
months ended December 31, 1997. Maxus Securities, who served as the
national distributor of the Fund's shares, was reimbursed $238,210 for
distribution expenses. Maxus Information Systems received fees totaling
$42,563 for services rendered to the Fund for the twelve months ended
December 31, 1997. 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 $250,842 for the twelve months ending December 31, 1997.
The accompanying notes are an integral part of the financial statements.
-22-
<PAGE> 65
MAXUS EQUITY FUND
At December 31, 1997, Maxus Securities Corp owned 20,000 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 $100 per meeting.
4.) CAPITAL STOCK AND DISTRIBUTION
At December 31, 1997 an indefinite number of shares of capital stock ($.10
par value) were authorized, and paid-in capital amounted to $44,792,034.
Transactions in common stock were as follows:
<TABLE>
<S> <C>
Shares sold 844,773
Shares issued to shareholders in reinvestment of dividends 315,032
1,159,805
Shares redeemed (531,196)
Net Increase 628,609
Shares Outstanding:
Beginning of Period 2,422,794
End of Period 3,051,358
</TABLE>
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 twelve months ended December 31, 1997, purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $42,613,182 and $43,971,317 respectively. Purchases
and sales of U.S. Government obligations aggregated $7,983,593 and
$3,000,234 respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any off-balance
sheet risk as of December 31, 1997.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at December
31, 1997 was the same as identified cost. At December 31, 1997, the
composition of unrealized appreciation (the excess of value over tax cost)
and depreciation (the excess of tax cost over value) was as follows:
<TABLE>
<CAPTION>
Appreciation (Depreciation) Net Appreciation (Depreciation)
<S> <C> <C> <C>
12 268 302 (1,399,662) 10,868,640
</TABLE>
-23-
<PAGE> 66
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Directors:
Maxus Equity Fund
We have audited the accompanying statement of assets and liabilities of Maxus
Equity Fund, including the schedule of portfolio investments, as of December 31,
1997, 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 period then
ended, and financial highlights for each of the five years in the period 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, 1997, 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
Equity Fund as of December 31, 1997, 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 21, 1998
-24-
<PAGE> 67
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements:
The Financial Statements filed as part of this
Registration Statement are as follows:
<TABLE>
<S> <C>
Statement of Assets and Liabilities as of December 31, 1997.
Statement of Operations for the year ended December 31, 1997.
Statement of Changes in Net Assets for the year ended December 31, 1997.
Supplementary Information for the years ended December 31, 1997, 1996, 1995, 1994 and 1993.
Schedule of Investments at December 31, 1997.
</TABLE>
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
1 Amended and Restated Declaration of Trust.
2 Amended and Restated By-Laws.
3 None.
4 Specimen Certificate for Registrant's Shares of Beneficial
Interest. (1)
5 Investment Advisory and Administration Agreement. (2)
6 Distribution Agreement.
7 None.
</TABLE>
C-1
<PAGE> 68
<TABLE>
<S> <C> <C>
8 Custody Agreement. (3)
9(a) Administration Agreement.
9(b) Accounting Services Agreement.
10 Opinion and consent. (1)
11 Consent of Independent Auditors.
12 None.
13 Subscription Agreement between the Fund and Resource
Management Inc. (2)
14 Individual Retirement Account Documents. (4)
15 Distribution and Shareholder Servicing Plan.
17 Financial Data Schedule
</TABLE>
**1 (1) Incorporated by reference to the corresponding exhibit to
Pre-Effective Amendment No. 1 to Registration Statement No. 33-30003.
(2) Incorporated by reference to the corresponding exhibit to Registration
Statement No. 33- 30003.
(3) Incorporated by reference to the corresponding exhibit to Post-Effective
Amendment No. 9 to Registration Statement No. 33-30003.
(4) Incorporated by reference to the corresponding exhibit to Pre-Effective
Amendment No. 2 to Registration Statement No. 33-30003.
* 1 moved from here; text not shown
Item 25. Persons Controlled by or Under Common Control with Registrant.
-------------------------------------------------------------
The Fund, together with Maxus Income 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.
C-2
<PAGE> 69
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 26. Number of Holders of Securities.
As of February 6, 1998 there were 1,607 record holders of the Fund's
Shares of Beneficial Interest.
Item 27. Indemnification
Reference is made to Article VIII of the Registrant's Amended and
Restated Declaration of Trust filed as Exhibit 1. The application of
these provisions is limited by Article 10 of the Registrant's Amended
and Restated By-laws filed as Exhibit 2 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.
Item 29. Principal Underwriters.
(a) Maxus Securities Corp, the distributor for the Fund,
also distributes securities for Maxus Income Fund, Maxus Laureate
Fund and MaxFund Trust.
C-3
<PAGE> 70
(b) The following information is provided with respect to
each director and officer of Maxus Securities Corp:
C-4
<PAGE> 71
<TABLE>
<CAPTION>
Name and Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C> <C>
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
</TABLE>
Item 30. 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.
Items 28 and 31 of Part C of the Registration Statement filed with the
Commission on Form N-1A are hereby incorporated by reference in this
Post-Effective Amendment.
C-5
<PAGE> 72
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 19th day of
February, 1998.
MAXUS EQUITY 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.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Richard A. Barone Chairman, Treasurer February 19, 1998
and Trustee (Principal
Executive Officer,
Financial Officer and
Accounting Officer)
Denis J. Amato Trustee February 19, 1998
Burton D. Morgan Trustee February 19, 1998
Murlan J. Murphy, Jr. Trustee February 19, 1998
Michael A. Rossi Trustee February 19, 1998
</TABLE>
<PAGE> 1
Exhibit 1
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
MAXUS EQUITY FUND
THIS AMENDED AND RESTATED DECLARATION OF TRUST is made this 12th day of
January, 1998 by the Trustees hereunder (hereinafter with any additional and
successor trustees referred to as the "Trustees") and by the holders of shares
of beneficial interest to be issued hereunder as hereinafter provided.
W I T N E S S E T H:
WHEREAS, this instrument amends and restates the Declaration of Trust
of Maxus Equity Fund dated July 12, 1989, as amended, which is amended and
restated in its entirety to read as hereinafter provided; and
WHEREAS, this instrument shall be effective upon the approval hereof by
a majority of the outstanding shares of the Trust and upon the filing of this
instrument with the Secretary of State of Ohio; and
WHEREAS, the Trustees have formed an unincorporated association in the
form of a business trust under the laws of the State of Ohio for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of an Ohio business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets, which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders from
time to time of Shares, whether or not certificated, in this Trust as
hereinafter set forth.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as "Maxus Equity
Fund".
Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The term "Commission" shall have the meaning provided
in the 1940 Act;
1
<PAGE> 2
(b) The "Trust" refers to the Ohio business trust
established by this Declaration of Trust, as amended from time to time;
(c) "Shareholder" means a record owner of Shares of the
Trust;
(d) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest in the Trust shall
be divided from time to time or, if more than one series or class of
Shares is authorized by the Trustees, the equally proportionate
transferable units into which each series or class of Shares shall be
divided from time to time, and includes a fraction of a Share as well
as a whole Share;
(e) The "1940 Act" refers to the Investment Company Act
of 1940, and the Rules and Regulations thereunder, all as amended from
time to time;
(f) The term "Manager" is defined in Article IV, Section
5;
(g) The term "Person" shall mean an individual or any
corporation, partnership, joint venture, trust or other enterprise;
(h) "Declaration of Trust" shall mean this Amended and
Restated Declaration of Trust as amended or restated from time to time;
(i) "Bylaws" shall mean the Bylaws of the Trust as
amended from time to time;
(j) The term "series" or "series of Shares" refers to
the one or more separate investment portfolios of the Trust into which
the assets and liabilities of the Trust may be divided and the Shares
of the Trust representing the beneficial interest of Shareholders in
such respective portfolios; and
(k) The term "class" or "class of Shares" refers to the
division of Shares representing any series into two or more classes as
provided in Article III, Section 1 hereof.
ARTICLE II
Purposes of Trust
This Trust is formed for the following purpose or purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, lend, write
options on, exchange, distribute or otherwise dispose of and deal in
and with securities of every nature, kind, character, type and form,
including, without limitation of the generality of the foregoing, all
types of stocks, shares, futures contracts, bonds,
2
<PAGE> 3
debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of
interest, certificates of participation, certificates, interests,
evidences of ownership, guarantees, warrants, options or evidences of
indebtedness issued or created by or guaranteed as to principal and
interest by any state or local government or any agency or
instrumentality thereof by the United States Government or any agency,
instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory, district
or possession thereof, by any corporation organized under the laws of
any state, the United States or any territory or possession thereof or
under the laws of any foreign country, bank certificates of deposit,
bank time deposits, bankers' acceptances and commercial paper; to pay
for the same in cash or by the issue of stock, including treasury
stock, bonds or notes of the Trust or otherwise; and to exercise any
and all rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act
with respect thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of said rights,
powers and privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust;
(d) to issue, sell, repurchase, redeem, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and otherwise
deal in, Shares including Shares in fractional denominations, and to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or other assets of the appropriate
series or class of Shares, whether capital or surplus or otherwise, to
the full extent now or hereafter permitted by the laws of the State of
Ohio;
(e) to conduct its business, promote its purposes, and
carry on its operations in any and all of its branches and maintain
offices both within and without the State of Ohio, in any and all
States of the United States of America, in the District of Columbia,
and in any other parts of the world; and
(f) to do all and everything necessary, suitable,
convenient, or proper for the conduct, promotion, and attainment of any
of the businesses and purposes herein specified or which at any time
may be incidental thereto or may appear conducive to or expedient for
the accomplishment of any of such businesses and purposes and which
might be engaged in or carried on by a business trust organized under
Ohio Revised Code Chapter 1746, and to have and exercise all of the
powers conferred by the laws of the State of Ohio upon an Ohio business
trust.
The foregoing provisions of this Article II shall be construed both as
purposes and powers and each as an independent purpose and power.
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ARTICLE III
Beneficial Interest
Section 1. Shares of Beneficial Interest. The Shares of the Trust
shall be issued in one or more series as the Trustees may, without Shareholder
approval, authorize. Each series shall be preferred over all other series in
respect of the assets allocated to that series and shall represent a separate
investment portfolio of the Trust. The beneficial interest in each series at all
times shall be divided into Shares, with or without par value as the Trustees
may from time to time determine, each of which shall except as provided in the
following sentence, represent an equal proportionate interest in the series with
each other Share of the same series, none having priority or preference over
another. The Trustees may, without Shareholder approval, divide Shares of any
series into two or more classes, Shares of each such class having such
preferences and special or relative rights and privileges (including conversion
rights, if any) as the Trustees may determine. The number of Shares authorized
shall be unlimited, and the Shares so authorized may be represented in part by
fractional shares. From time to time, the Trustees may divide or combine the
Shares of any series or class into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series or class.
Section 2. Ownership of Shares. The ownership of Shares will be
recorded in the books of the Trust or a transfer agent. The record books of the
Trust or any transfer agent, as the case may be, shall be conclusive as to who
are the holders of Shares of each series and class and as to the number of
Shares of each series and class held from time to time by each. No certificates
certifying the ownership of Shares need be issued except as the Trustees may
otherwise determine from time to time.
Section 3. Issuance of Shares. The Trustees are authorized, from
time to time, to issue or authorize the issuance of Shares at not less than the
par value thereof, if any, and to fix the price or the minimum price or the
consideration (in cash and/or such other property, real or personal, tangible or
intangible, as from time to time they may determine) or minimum consideration
for such Shares. Anything herein to the contrary notwithstanding, the Trustees
may issue Shares pro rata to the Shareholders of a series at any time as a stock
dividend, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that series, and any stock dividend to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
All consideration received by the Trust for the issue or sale of Shares
of each series, together with all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall belong irrevocably to the
series of Shares with respect to which the same were received by the Trust for
all purposes, subject only to the rights of creditors, and shall be so handled
upon the books of account of the Trust and are herein referred to as "assets of"
such series.
Shares may be issued in fractional denominations to the same extent as
whole Shares, and Shares in fractional denominations shall be Shares having
proportionately to the respective fractions represented thereby all the rights
of whole Shares, including, without limitation, the right to vote, the right to
receive
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dividends and distributions, and the right to participate upon liquidation of
the Trust or of a particular series of Shares.
Section 4. No Preemptive Rights; Derivative Suits. Shareholders
shall have no preemptive or other right to subscribe for any additional Shares
or other securities issued by the Trust. No action may be brought by a
Shareholder on behalf of the Trust or a series unless a prior demand regarding
such matter has been made on the Trustees and the Shareholders of the Trust or
such series.
Section 5. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the same nor entitle the representative
of any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders partners. Neither the Trust nor
the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind any Shareholder or Trustee personally or to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder at any time personally may agree to pay by way of
subscription for any Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust shall include a recitation
limiting the obligation represented thereby to the Trust and its assets or the
assets of a particular series (but the omission of such a recitation shall not
operate to bind any Shareholder or Trustee personally).
ARTICLE IV
Trustees
Section 1. Election. A Trustee may be elected either by the
Trustees or the Shareholders. The number of Trustees shall be fixed from time to
time by the Trustees and, at or after the commencement of the business of the
Trust, shall be not less than three. Each Trustee, whether serving as Trustee on
the date hereof or hereafter becoming a Trustee, shall serve as a Trustee during
the lifetime of this Trust, until such Trustee dies, resigns, retires, or is
removed, or, if sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and the election and qualification of his
successor. Subject to Section 16(a) of the 1940 Act, the Trustees may elect
their own successors and, pursuant to this Section, may appoint Trustees to fill
vacancies (including vacancies occurring by reason of an increase in the number
of Trustees).
Section 2. Powers. The Trustees shall have all powers necessary or
desirable to carry out the purposes of the Trust, including, without limitation,
the powers referred to in Article II hereof. Without limiting the generality of
the foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business of the Trust and
may amend and repeal them to the extent that they do not reserve that right to
the Shareholders; they may fill vacancies in their
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number, including vacancies resulting from increases in their own number, and
may elect and remove such officers and employ, appoint and terminate such
employees or agents as they consider appropriate; they may appoint from their
own number and terminate any one or more committees; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities, retain a transfer agent and a
Shareholder servicing agent, or both, provide for the distribution of Shares
through a principal underwriter or otherwise, set record dates, and in general
delegate such authority as they consider desirable (including, without
limitation, the authority to purchase and sell securities and to invest funds,
to determine the net income of the Trust for any period, the value of the total
assets of the Trust and the net asset value of each Share, and to execute such
deeds, agreements or other instruments either in the name of the Trust or the
names of the Trustees or as their attorney or attorneys or otherwise as the
Trustees from time to time may deem expedient) to any officer of the Trust,
committee of the Trustees, any such employee, agent, custodian or underwriter or
to any Manager.
Without limiting the generality of the foregoing, the Trustees shall
have full power and authority:
(a) To invest and reinvest cash and to hold cash
uninvested;
(b) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property; and
to execute and deliver proxies or powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such person or
persons such power and discretion with relation to securities or
property as the Trustees shall deem proper;
(c) To hold any security or property in a form not
indicating any trust whether in bearer, unregistered or other
negotiable form or in the name of the Trust or a custodian,
subcustodian or other depository or a nominee or nominees or otherwise;
(d) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or concern,
any security of which is held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
concern, and to pay calls or subscriptions with respect to any security
held in the Trust;
(e) To join with other security holders in acting through
a committee, depositary, voting trustee or otherwise, and in that
connection to deposit any security with, or transfer any security to,
any such committee, depositary or trustee, and to delegate to them such
power and authority with relation to any security (whether or not so
deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem
proper;
(f) To compromise, arbitrate, or otherwise adjust claims
in favor of or against the Trust or any matter in controversy,
including, but not limited to, claims for taxes;
(g) Subject to the provisions of Article III, Section 3,
to allocate assets, liabilities, income and expenses of the Trust to a
particular series of Shares or to apportion the same among
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two or more series, provided that any liabilities or expenses incurred
by a particular series of Shares shall be payable solely out of the
assets of that series; and to the extent necessary or appropriate to
give effect to the preferences and special or relative rights and
privileges of any classes of Shares, to allocate assets, liabilities,
income and expenses of a series to a particular class of Shares of that
series or to apportion the same among two or more classes of Shares of
that series;
(h) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(i) To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate for
the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers or Managers, principal underwriters, or independent
contractors of the Trust individually against all claims and
liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
Manager, principal underwriter, or independent contractor, including
any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify
such person against such liability; and
(j) To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out
pension, profit-sharing, share bonus, share purchase, savings, thrift
and other retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the
Trust.
Further, without limiting the generality of the foregoing, the Trustees
shall have full power and authority to incur and pay out of the principal or
income of the Trust such expenses and liabilities as may be deemed by the
Trustees to be necessary or proper for the purposes of the Trust; provided,
however, that all expenses and liabilities incurred by or arising in connection
with a particular series of Shares, as determined by the Trustees, shall be
payable solely out of the assets of that series.
Any determination made in good faith and, so far as accounting matters
are involved, in accordance with generally accepted accounting principles by or
pursuant to the authority granted by the Trustees, as to the amount of the
assets, debts, obligations or liabilities of the Trust or a particular series or
class of Shares; the amount of any reserves or charges set up and the propriety
thereof; the time of or purpose for creating such reserves or charges; the use,
alteration or cancellation of any reserves or charges (whether or not any debt,
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged); the price or closing bid or asked price of
an investment owned or held by the Trust or a particular series; the market
value of any investment or fair value of any other asset of the Trust or a
particular series; the number of Shares outstanding; the estimated expense to
the Trust or a particular
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series in connection with purchases of its Shares; the ability to liquidate
investments in an orderly fashion; and the extent to which it is practicable to
deliver a cross-section of the portfolio of the Trust or a particular series in
payment for any such Shares, or as to any other matters relating to the issue,
sale, purchase and/or other acquisition or disposition of investments or Shares
of the Trust or a particular series, shall be final and conclusive, and shall be
binding upon the Trust or such series and its Shareholders, past, present and
future, and Shares are issued and sold on the condition and understanding that
any and all such determinations shall be binding as aforesaid.
Section 3. Meetings. At any meeting of the Trustees, a majority
of the Trustees then in office shall constitute a quorum. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice.
When a quorum is present at any meeting, a majority of the Trustees
present may take an action, except when a larger vote is required by this
Declaration of Trust, the By-Laws or the 1940 Act.
Any action required or permitted to be taken at any meeting of the
Trustees or of any committee thereof may be taken without a meeting, if a
written consent to such action is signed by a majority of the Trustees or
members of any such committee then in office, as the case may be, and such
written consent is filed with the minutes of proceedings of the Trustees or any
such committee.
The Trustees or any committee designated by the Trustee may participate
in a meeting of the Trustees or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other at the same time. Participation
by such means shall constitute presence in person at a meeting.
Section 4. Ownership of Assets of the Trust. Title to all of the
assets of each series of Shares of the Trust at all times shall be considered as
vested in the Trustees.
Section 5. Investment Advice and Management Services. The Trustees
shall not in any way be bound or limited by any present or future law or custom
in regard to investments by trustees. The Trustees from time to time may enter
into a written contract or contracts with any person or persons (herein called
the "Manager"), including any firm, corporation, trust or association in which
any Trustee or Shareholder may be interested, to act as investment advisers
and/or managers of the Trust and to provide such investment advice and/or
management as the Trustees from time to time may consider necessary for the
proper management of the assets of the Trust, including, without limitation,
authority to determine from time to time what investments shall be purchased,
held, sold or exchanged and what portion, if any, of the assets of the Trust
shall be held uninvested and to make changes in the Trust's Investments. Any
such contract shall be subject to the requirements of the 1940 Act with respect
to its continuance in effect, its termination and the method of authorization
and approval of such contract, or any amendment thereto or renewal thereof.
Any Trustee or any organization with which any Trustee may be
associated also may act as broker for the Trust in making purchases and sales of
securities for or to the Trust for its investment portfolio, and may charge and
receive from the Trust the usual and customary commission for such
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service. Any organization with which a Trustee may be associated in acting as
broker for the Trust shall be responsible only for the proper execution of
transactions in accordance with the instructions of the Trust and shall be
subject to no further liability of any sort whatever.
The Manager, or any affiliate thereof, also may be a distributor for
the sale of Shares by separate contract or may be a person controlled by or
affiliated with any Trustee or any distributor or a person in which any Trustee
or any distributor is interested financially, subject only to applicable
provisions of law. Nothing herein contained shall operate to prevent any
Manager, who also acts as such a distributor, from also receiving compensation
for services rendered as such distributor.
Section 6. Removal and Resignation of Trustees. The Shareholders
(by vote of a majority of the outstanding Shares entitled to vote thereon) may
remove at any time any Trustee with or without cause, and any Trustee may resign
at any time as Trustee, without penalty by written notice to the Trust; provided
that sixty days' advance written notice shall be given in the event that there
are only three or fewer Trustees at the time a notice of resignation is
submitted.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. The Shareholders shall have power to
vote only (i) for the election of Trustees as provided in Article IV, Section 1,
of this Declaration of Trust; provided, however, that no meeting of Shareholders
is required to be called for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees have been elected by the
Shareholders, (ii) for the removal of Trustees as provided in Article IV,
Section 6, (iii) with respect to any Manager as provided in Article IV, Section
5, (iv) with respect to any amendment of this Declaration of Trust as provided
in Article IX, Section 8, (v) with respect to the termination of the Trust or a
series of Shares as provided in Article IX, Section 5, and (vi) with respect to
such additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, or the By-Laws of the Trust or any registration of the
Trust with the Commission or any state, or as the Trustees may consider
desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote (except that in the election of Trustees said vote
may be cast for as many persons as there are Trustees to be elected), and each
fractional Share shall be entitled to a proportionate fractional vote.
Notwithstanding any other provision of this Declaration of Trust, on any matter
submitted to a vote of Shareholders, all Shares of the Trust then entitled to
vote shall be voted in the aggregate as a single class without regard to series
or classes of Shares, except (i) when required by the 1940 Act or when the
Trustees shall have determined that the matter affects one or more series or
classes differently Shares shall be voted by individual series or class and (ii)
when the Trustees have determined that the matter affects only the interests of
one or more series or classes then only Shareholders of such series or classes
shall be entitled to vote thereon. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy with
respect to Shares held in the name of two or more persons shall be valid if
executed by any one of them, unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall
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rest on the challenger. Whenever no Shares of any series or class are issued and
outstanding, the Trustees may exercise with respect to such series or class all
rights of Shareholders and may take any action required by law, this Declaration
of Trust or any By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings. Meetings of the Shareholders may be called by
the Trustees or such other person or persons as may be specified in the By-Laws
and shall be called by the Trustees upon the written request of Shareholders
owning at least 10% of the outstanding Shares entitled to vote. Shareholders
shall be entitled to at least ten days' prior notice of any meeting.
Section 3. Quorum and Required Vote. Thirty percent (30%) of the
outstanding Shares shall be a quorum for the transaction of business at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust permits or requires that holders of any series or class
shall vote as a series or class, then thirty percent (30%) of the aggregate
number of Shares of that series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that series or class. Any
lesser number, however, shall be sufficient for adjournment and any adjourned
session or sessions may be held within 90 days after the date set for the
original meeting without the necessity of further notice. Except when a larger
vote is required by any provision of this Declaration of Trust or the ByLaws of
the Trust and subject to any applicable requirements of law, a majority of the
Shares voted shall decide any question and a plurality shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust permits
or requires that the holders of any series or class shall vote as a series or
class, then a majority of the Shares of that series or class voted on the matter
(or a plurality with respect to the election of a Trustee) shall decide that
matter insofar as that series or class is concerned.
Section 4. Action by Written Consent. Any action required or
permitted to be taken at any meeting may be taken without a meeting if a consent
in writing, setting forth such action, is signed by a majority of Shareholders
entitled to vote on the subject matter thereof (or such larger proportion
thereof as shall be required by any express provision of this Declaration of
Trust) and such consent is filed with the records of the Trust.
Section 5. Additional Provisions. The By-Laws may include
further provisions for Shareholders, votes and meetings and related matters.
ARTICLE VI
Distributions and Redemptions
Section 1. Distributions. The Trustees shall distribute
periodically to the Shareholders of each series of Shares an amount
approximately equal to the net income of that series, determined by the Trustees
or as they may authorize and as herein provided. Distributions of income may be
made in one or more payments, which shall be in Shares, cash or otherwise, and
on a date or dates and as of a record date or dates determined by the Trustees.
At any time and from time to time in their discretion, the Trustees also may
cause to be distributed to the Shareholders of any one or more series as of a
record date or dates determined by the Trustees, in Shares, cash or otherwise,
all or part of any gains realized on the sale or disposition of the assets of
the series or all or part of any other principal of the Trust
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attributable to the series. Each distribution pursuant to this Section 1 shall
be made ratably according to the number of Shares of the series held by the
several Shareholders on the record date for such distribution, except to the
extent otherwise required or permitted by the preferences and special or
relative rights and privileges of any classes of Shares of that series, and any
distribution to the Shareholders of a particular class of Shares shall be made
to such Shareholders pro rata in proportion to the number of Shares of such
class held by each of them. No distribution need be made on Shares purchased
pursuant to orders received, or for which payment is made, after such time or
times as the Trustees may determine.
Section 2. Determination of Net Income. In determining the net
income of each series or class of Shares for any period, there shall be deducted
from income for that period (a) such portion of all charges, taxes, expenses and
liabilities due or accrued as the Trustees shall consider properly chargeable
and fairly applicable to income for that period or any earlier period and (b)
whatever reasonable reserves the Trustees shall consider advisable for possible
future charges, taxes, expenses and liabilities which the Trustees shall
consider properly chargeable and fairly applicable to income for that period or
an earlier period. The net income of each series or class for any period may be
adjusted for amounts included on account of net income in the net asset value of
Shares issued or redeemed or repurchased during that period. In determining the
net income of a series or class for a period ending on a date other than the end
of its fiscal year, income may be estimated as the Trustees shall deem fair.
Gains on the sale or disposition of assets shall not be treated as income, and
losses shall not be charged against income unless appropriate under applicable
accounting principles, except in the exercise of the discretionary powers of the
Trustees. Any amount contributed to the Trust which is received as income
pursuant to a decree of any court of competent jurisdiction shall be applied as
required by the said decree.
Section 3. Redemptions. Any Shareholder shall be entitled to
require the Trust to redeem and the Trust shall be obligated to redeem at the
option of such Shareholder all or any part of the Shares owned by said
Shareholder, at the redemption price, pursuant to the method, upon the terms and
subject to the conditions hereinafter set forth:
(a) Certificates for Shares, if issued, shall be presented
for redemption in proper form for transfer to the Trust or the agent of
the Trust appointed for such purpose, and these shall be presented with
a written request that the Trust redeem all or any part of the Shares
represented thereby.
(b) The redemption price per Share shall be the net asset
value per Share when next determined by the Trust at such time or times
as the Trustees shall designate, following the time of presentation of
certificates for Shares, if issued, and an appropriate request for
redemption, or such other time as the Trustees may designate in
accordance with any provision of the 1940 Act, or any rule or
regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934, as determined by the
Trustees, less any applicable charge or fee imposed from time to time
as determined by the Trustees.
(c) Net asset value of each series or class of Shares (for
the purpose of issuance of Shares as well as redemptions thereof) shall
be determined by dividing:
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(i) the total value of the assets of such series
or class determined as provided in paragraph (d) below less to
the extent determined by or pursuant to the direction of the
Trustees in accordance with generally accepted accounting
principles, all debts, obligations and liabilities of such
series or class (which debts, obligations and liabilities
shall include, without limitation of the generality of the
foregoing, any and all debts, obligations, liabilities, or
claims, of any and every kind and nature, fixed, accrued and
otherwise, including the estimated accrued expenses of
management and supervision, administration and distribution
and any reserves or charges for any or all of the foregoing,
whether for taxes, expenses, or otherwise, and the price of
Shares redeemed but not paid for) but excluding the Trust's
liability upon its Shares and its surplus, by
(ii) the total number of Shares of such series or
class outstanding.
The Trustees are empowered, in their absolute discretion, to
establish other methods for determining such net asset value whenever
such other methods are deemed by them to be necessary to enable the
Trust to comply with applicable law, or are deemed by them to be
desirable, provided they are not inconsistent with any provision of the
1940 Act.
(d) In determining for the purposes of this Declaration
of Trust the total value of the assets of each series or class of
Shares at any time, investments and any other assets of such series or
class shall be valued in such manner as may be determined from time to
time by or pursuant to the order of the Trustees.
(e) Payment of the redemption price by the Trust may be
made either in cash or in securities or other assets at the time owned
by the Trust or partly in cash and partly in securities or other assets
at the time owned by the Trust. The value of any part of such payment
to be made in securities or other assets of the Trust shall be the
value employed in determining the redemption price. Payment of the
redemption price shall be made on or before the seventh day following
the day on which the Shares are improperly presented for redemption
hereunder, except that delivery of any securities included in any such
payment shall be made as promptly as any necessary transfers on the
books of the issuers whose securities are to be delivered may be made
and, except as postponement of the date of payment may be permissible
under the 1940 Act.
Pursuant to resolution of the Trustees, the Trust may deduct
from the payment made for any Shares redeemed a liquidating charge not
in excess of an amount determined by the Trustees from time to time.
(f) The right of any holder of Shares redeemed by the
Trust as provided in this Article VI to receive dividends or
distributions thereon and all other rights of such Shareholder with
respect to such Shares shall terminate at the time as of which the
redemption price of such Shares is determined, except the right of such
Shareholder to receive (i) the redemption price of such Shares from the
Trust in accordance with the provisions hereof, and (ii) any dividend
or distribution to which such Shareholder previously had become
entitled as the record holder of such Shares on the record date for
such dividend or distribution.
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(g) Redemption of Shares by the Trust is conditional upon
the Trust having funds or other assets legally available therefor.
(h) The Trust, either directly or through an agent, may
repurchase its Shares, out of funds legally available therefor, upon
such terms and conditions and for such consideration as the Trustees
shall deem advisable, by agreement with the owner at a price not
exceeding the net asset value per Share as determined by or pursuant to
the order of the Trustees at such time or times as the Trustees shall
designate, less any applicable charge, if and as fixed by the Trustees
from time to time, and to take all other steps deemed necessary or
advisable in connection therewith.
(i) Shares purchased or redeemed by the Trust shall be
cancelled or held by the Trust for reissue, as the Trustees from time
to time may determine.
(j) The obligations set forth in this Article VI may be
suspended or postponed, (1) for any period (i) during which the New
York Stock Exchange is closed other than for customary weekend and
holiday closings or (ii) during which trading on the New York Stock
Exchange is restricted, (2) for any period during which an emergency
exists as a result of which (i) the disposal by the Trust of
investments owned by it is not reasonably practicable, or (ii) it is
not reasonably practicable for the Trust fairly to determine the value
of its net assets, or (3) for such other periods as the Commission or
any successor governmental authority by order may permit.
Notwithstanding any other provision of this Section 3 of Article VI, if
certificates representing such Shares have been issued, the redemption or
repurchase price need not be paid by the Trust until such certificates are
presented in proper form for transfer to the Trust or the agent of the Trust
appointed for such purpose; however, the redemption or repurchase shall be
effective, in accordance with the resolution of the Trustees, regardless of
whether or not such presentation has been made.
Section 4. Redemptions at the Option of the Trust. The Trust
shall have the right at its option and at any time to redeem Share of any
Shareholder at the net asset value thereof as determined in accordance with
Section 3 of Article VI of this Declaration of Trust: (i) if at such time such
Shareholder owns fewer Shares than, or Shares having an aggregate net asset
value of less than, an amount determined from time to time by the Trustees, or
(ii) to the extent that such Shareholder owns Shares of a particular series or
class of Shares equal to or in excess of a percentage of the outstanding Shares
of that series or class determined from time to time by the Trustees, or (iii)
to the extent that such Shareholder owns Shares of the Trust representing a
percentage equal to or in excess of such percentage of the aggregate number of
outstanding Shares of the Trust or the aggregate net asset value of the Trust
determined from time to time by the Trustees.
Section 5. Dividends, Distributions, Redemptions and
Repurchases. No dividend or distribution including, without limitation, any
distribution paid upon termination of the Trust or of any series) with respect
to, nor any redemption or repurchase of, the Shares of any series shall be
effected by the Trust other than from the assets of such series.
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ARTICLE VII
Compensation and Limitation of
Liability of Trustees
Section 1. Compensation. The Trustees shall be entitled to
reasonable compensation from the Trust and may fix the amount of their
compensation.
Section 2. Limitation of Liability. The Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any officer,
agent, employee or Manager of the Trust, nor shall any Trustee be responsible
for the act or omission of any other Trustee, but nothing herein contained shall
protect any Trustee against any liability to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
Every note, bond, contract, instrument, certificate, share, or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust,
shall be deemed conclusively to have been executed or done only in their or his
capacity as Trustees or Trustee, and such Trustees or Trustee shall not be
personally liable thereon.
ARTICLE VIII
Indemnification
Section 1. Indemnification of Trustees, Officers, Employees and
Agents. Each person who is or was a Trustee, officer, employee or agent of the
Trust or who serves or has served at the Trust's request as a director, officer
or trustee of another entity in which the Trust has or had any interest as a
shareholder, creditor or otherwise shall be entitled to indemnification out of
the assets of the Trust to the extent provided in, and subject to the provisions
of, the By-Laws, provided that no indemnification shall be granted by the Trust
in contravention of the 1940 Act.
Section 2. Merged Corporations. For the purposes of this Article
VIII references to "the Trust" include any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents as well as the resulting
or surviving entity; so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at the
request of such a constituent corporation as a trustee, director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the provisions of this
Article VIII with respect to the resulting or surviving entity as he would have
with respect to such a constituent corporation if its separate existence had
continued.
Section 3. Shareholders. In case any Shareholder or former
Shareholder shall be held to be personally liable solely by reason of his being
or having been a Shareholder and not because of his acts
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or omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of the particular series of Share of which
he is or was a Shareholder to be held harmless from and indemnified against all
losses and expenses arising from such liability. Upon request, the Trust shall
cause its counsel to assume the defense of any claim which, if successful, would
result in an obligation of the Trust to indemnify the Shareholder as aforesaid.
ARTICLE IX
Status of the Trust and Other General Provisions
Section 1. Trust Not a Partnership. It is hereby expressly
declared that a trust and not a partnership is created hereby. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally either the Trust's Trustees or officers or any
Shareholders. All persons extending credit to, contracting with or having any
claim against the Trust or a particular series of Shares shall look only to the
assets of the Trust or the assets of that particular series for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefore. Nothing in this Declaration of
Trust shall protect any Trustee against any liability to which such Trustee
otherwise would be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee hereunder.
Section 2. Trustee's Good Faith Action, Expert Advice, No Bond
or Surety. The exercise by the Trustees of their powers and discretion hereunder
under the circumstances then prevailing, shall be binding upon every one
interested. A Trustee shall be liable for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact or law. The Trustees may take advice
of counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and subject to the provisions of Section 1 of this Article
IX shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
Section 3. Liability of Third Persons Dealing with Trustees.
No person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees
pursuant hereto or to see to the application of any payments made or property
transferred to the Trust or upon its order.
Section 4. Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any claim
against the Trust or a particular series of Shares shall look only to the assets
of the Trust or the assets of that particular series of Shares for payment under
such credit, contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
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Section 5. Termination of Trust. Unless terminated as provided
herein, the Trust shall continue without limitation of time. The Trust may be
terminated at any time by vote of Shareholders holding at least a majority of
the Shares of each series entitled to vote or by the Trustees by written notice
to the Shareholders. Any series of Shares may be terminated at any time by vote
of Shareholders holding at least a majority of the Shares of such series
entitled to vote or by the Trustees by written notice to the Shareholders of
such series.
Upon termination of the Trust or of any one or more series of Shares,
after paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated as may be determined by the
Trustees, the Trust shall reduce, in accordance with such procedures as the
Trustees consider appropriate, the remaining assets to distributable form in
cash or shares or other securities, or any combination thereof, and distribute
the proceeds to the Shareholders of the series involved, ratably according to
the number of Shares of such series held by the several Shareholders of such
series on the date of termination, except to the extent otherwise required or
permitted by the preferences and special or relative rights and privileges of
any classes of Shares of that series, provided that any distribution to the
Shareholders of a particular class of Shares shall be made to such Shareholders
pro rata in proportion to the number of Shares of such class held by each of
them.
xxx Section 6. Filing of Copies, References, Headings. The original
or a copy of this instrument and of each amendment hereto and of each
Declaration of Trust supplemental hereto shall be kept at the office of the
Trust where it may be inspected by any Shareholder. A copy of this instrument
and of each such amendment shall be filed by the Trust with the Secretary of
State of the State of Ohio, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust may rely
on a certificate by an officer of the Trust as to whether or not any such
amendments have been made and as to matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendment. In this instrument or in any such amendment, references to
this instrument, and all expressions like "herein," "hereof," and "hereunder,"
shall be deemed to refer to this instrument as amended or affected by any such
amendment. Headings are placed herein for convenience of reference only and in
case of any conflict, the text of this instrument, rather than the headings,
shall control. This instrument may be executed in any number of counterparts
each of which shall be deemed an original.
Section 7. Applicable Law. The Trust set forth in this
instrument is made in the State of Ohio and it is created under and is to be
governed by and construed and administered according to the laws of said state,
including, without limitation, Ohio Revised Code Chapter 1746. The Trust shall
be of the type commonly called an Ohio business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
Section 8. Amendments. This Declaration of Trust may be amended
at any time by an instrument in writing signed by a majority of the then
Trustees when authorized so to do by a vote of Shareholders holding a majority
of the Shares outstanding and entitled to vote, except that an amendment which
shall affect the holders of one or more series or class of Shares but not the
holders of all outstanding series or classes of Shares shall be authorized by
vote of the Shareholders holding a majority of the Shares entitled to vote of
the series or classes affected and no vote of Shareholders of a series or
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class not affected shall be required. Amendments having the purpose of changing
the name of the Trust or of supplying any omission, curing any ambiguity or
curing, correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
Section 9. Counterparts. This Declaration of Trust may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such original
counterpart.
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IN WITNESS WHEREOF, the undersigned Trustees have hereunto set their
hands as of the day and year first above written.
/s/ Denis J. Amato /s/ Richard A. Barone
Denis J. Amato Richard A. Barone
/s/ Burton D. Morgan /s/ Murlan J. Murphy, Jr.
Burton D. Morgan Murlan J. Murphy, Jr.
/s/ Michael A. Rossi, C.P.A.
Michael A. Rossi, C.P.A.
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Exhibit 2
AMENDED AND RESTATED
BY-LAWS
OF
MAXUS EQUITY FUND
ARTICLE 1
DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1. Agreement and Declaration of Trust. These By-Laws shall be subject
to the Declaration of Trust, as from time to time in effect (the "Declaration of
Trust"), of the above-captioned Ohio business trust established by the
Declaration of Trust (the "Trust").
1.2. Principal Office of the Trust. The principal office of the Trust
shall be located at such place within or outside the State of Ohio as the
Trustees from time to time may select.
ARTICLE 2
MEETINGS OF TRUSTEES
2.1. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the Trustees from
time to time may determine, provided that notice of the first regular meeting
following any such determination shall be given to absent Trustees.
2.2. Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the President or the Treasurer or by two or more Trustees, sufficient notice
thereof being given to each Trustee by the Secretary or an Assistant Secretary
or by the officer or the Trustees calling the meeting.
2.3. Notice of Special Meetings. It shall be sufficient notice to a
Trustee of a special meeting to send notice by mail at least forty-eight hours
or by telegram at least twenty-four hours before the meeting addressed to the
Trustee at his or her usual or last known business or residence address or to
give notice to him or her in person or by telephone at least twenty-four hours
before the meeting. Notice of a meeting need not be given to any Trustee if a
written waiver of notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him or her. Neither notice of a meeting nor a waiver of a notice need specify
the purposes of the meeting.
2.4. Notice of Certain Actions by Consent. If in accordance with the
provisions of the Declaration of Trust any action is taken by the Trustees by a
written consent of less than all of the Trustees, then prompt notice of any such
action shall be furnished to each Trustee who did not execute such written
consent, provided that the effectiveness of such action shall not be impaired by
any delay or failure to furnish such notice.
<PAGE> 2
ARTICLE 3
OFFICERS
3.1. Enumeration; Qualification. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers, if any, as the
Trustees from time to time may in their discretion elect. The Trust also may
have such agents as the Trustees from time to time may in their discretion
appoint. Officers may be but need not be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2. Election. The President, the Treasurer and the Secretary shall be
elected by the Trustees upon the occurrence of any vacancy in any such office.
Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any such other office may be filled at any time.
3.3. Tenure. The President, Treasurer and Secretary shall hold office
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
authority at the pleasure of the Trustees.
3.4. Powers. Subject to the other provisions of these By-Laws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as commonly are incident
to the office occupied by him or her as if the Trust were organized as an Ohio
business corporation or such other duties and powers as the Trustees may from
time to time designate.
3.5. President. Unless the Trustees otherwise provide, the President
shall preside at all meetings of the shareholders and of the Trustees. Unless
the Trustees otherwise provide, the President shall be the chief executive
officer.
3.6. Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, shall be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the President.
3.7. Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an Assistant
Secretary, or if there be none or if he or she is absent, a temporary Secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8. Resignations and Removals. Any Trustee or officer may resign at
any time by written instrument signed by him or her and delivered to the
President or Secretary or to a meeting of the Trustees. Such resignation shall
be effective upon receipt unless specified to be effective at some other time.
The Trustees may remove any Officer elected by them with or without cause.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee or officer resigning and no officer removed shall have any right to
any compensation for any period following his or her resignation or removal, or
any right to damages on account of such removal.
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ARTICLE 4
COMMITTEES
4.1. Appointment. The Trustees may appoint from their number an
executive committee and other committees. Except as the Trustees otherwise may
determine, any such committee may make rules for conduct of its business.
4.2. Quorum; Voting. A majority of the members of any Committee of the
Trustees shall constitute a quorum for the transaction of business, and any
action of such a Committee may be taken at a meeting by a vote of a majority of
the members present (a quorum being present).
ARTICLE 5
REPORTS
The Trustees and officers shall render reports at the time and in the
manner required by the Declaration of Trust or any applicable law. Officers and
Committees shall render such additional reports as they may deem desirable or as
may from time to time be required by the Trustees.
ARTICLE 6
FISCAL YEAR
The fiscal year of the Trust shall be fixed, and shall be subject to
change, by the Board of Trustees.
ARTICLE 7
SEAL
The seal of the Trust shall consist of a flat-faced die with the word
"Ohio," together with the name of the Trust and the year of its organization cut
or engraved thereon but, unless otherwise required by the Trustees, the seal
shall not be necessary to be placed on, and in its absence shall not impair the
validity of, any document, instrument other paper executed and delivered by or
on behalf of the Trust.
ARTICLE 8
EXECUTION OF PAPERS
Except as the Trustees generally or in particular cases may authorize
the execution thereof in some other manner, all deeds, leases, contracts, notes
and other obligations made by the Trustees shall be signed by the President, any
Vice President, or by the Treasurer and need not bear the seal of the Trust.
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ARTICLE 9
ISSUANCE OF SHARE CERTIFICATES
9.1. Sale of Shares. Except as otherwise determined by the Trustees,
the Trust will issue and sell for cash or securities from time to time, full and
fractional shares of its shares of beneficial interest, such shares to be issued
and sold at a price of not less than net asset value per share as from time to
time determined in accordance with the Declaration of Trust and these By-Laws
and, in the case of fractional shares, at a proportionate reduction in such
price. In the case of shares sold for securities, such securities shall be
valued in accordance with the provisions for determining value of assets of the
Trust as stated in the Declaration of Trust and these By-Laws. The officers of
the Trust are severally authorized to take all such actions as may be necessary
or desirable to carry out this Section 9.1.
9.2. Share Certificates. In lieu of issuing certificates for shares,
the Trustees or the transfer agent either may issue receipts therefor or may
keep accounts upon the books of the Trust for the record holders of such shares,
who shall in either case, for all purposes hereunder, be deemed to be the
holders of certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and agreed to the
terms hereof.
The Trustees at any time may authorize the issuance of share
certificates. In that event, each shareholder shall be entitled to a certificate
stating the number of shares owned by him, in such form as shall be prescribed
from time to time by the Trustees. Such certificate shall be signed by the
President or Vice President and by the Treasurer or Assistant Treasurer. Such
signatures may be facsimile if the certificate is signed by a transfer agent, or
by a registrar, other than a Trustee, officer or employee of the Trust. In case
any officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he or she were such
officer at the time of its issue.
9.3. Loss of Certificates. The Trust, or if any transfer agent is
appointed for the Trust, the transfer agent with the approval of any two
officers of the Trust, is authorized to issue and countersign replacement
certificates for the shares of the Trust which have been lost, stolen or
destroyed subject to the deposit of a bond or other indemnity in such form and
with such security, if any, as the Trustees may require.
9.4. Discontinuance of Issuance of Certificates. The Trustees at any
time may discontinue the issuance of share certificates and by written notice to
each shareholder, may require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
INDEMNIFICATION
10.1. Trustees, Officers, etc. The Trust shall indemnify each of its
Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter
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referred to as a "Covered Person") against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably incurred by
any Covered Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or
may have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, except with respect to any matter as to
which such Covered Person shall have been finally adjudicated in a decision on
the merits in any such action, suit or other proceeding not to have acted in
good faith in the reasonable belief that such Covered Person's action was in the
best interests of the Trust and except that no Covered Person shall be
indemnified against an liability to the Trust or its Shareholders to which such
Covered Person would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in satisfaction
of judgments, in compromise or as fines or Penalties), may be paid from time to
time by the Trust in advance of the final disposition or any such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Trust if it is ultimately determined that
indemnification of such expenses is not authorized under this Article, provided
that (a) such Covered Person shall provide security for his undertaking, (b) the
Trust shall be insured against losses arising by reason of Such Covered Person's
failure to fulfill his undertaking, or (c) a majority of the Trustees who are
disinterested persons and who are not Interested Persons (as that term is
defined in the Investment Company Act of 1940) (provided that a majority of such
Trustees then in office act on the matter), or independent legal counsel in a
written opinion, shall determine, based on a review of readily available facts
(but not a full trial-type inquiry), that there is reason to believe such
Covered Person ultimately will be entitled to indemnification.
10.2. Compromise Payment. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication in a decision on the merits by a court, or by any other body before
which the proceeding was brought, that such Covered Person either (a) did not
act in good faith in the reasonable belief that such Covered Person's action was
in the best interests of the Trust or (b) is liable to the Trust or its
Shareholders by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office, indemnification shall be provided if (a) approved as in the
best interest of the Trust, after notice that it involves such indemnification,
by at least a majority of the Trustees who are disinterested persons and are not
Interested Persons (provided that a majority of such Trustees then in office act
on the matter), upon a determination based upon a review of readily available
facts (but not a full trial-type inquiry) that such Covered Person acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and is not liable to the Trust or its Shareholders by
reason of wilful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's office, or (b)
there has been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (but not a full trial-type
inquiry) to the effect that such Covered Person appears to have acted in good
faith in the reasonable belief that such Covered Person's action was in the best
interests of the Trust and that such indemnification would not protect such
Covered Person against any liability to the Trust to which such Covered Person
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Any approval pursuant to this Section shall not prevent the
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recovery from any Covered Person of any amount paid to such Covered Person in
accordance with this Section as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction not to have acted
in good faith in the reasonable belief that such Covered Person's action was in
the best interests of the Trust or to have been liable to the Trust or its
shareholders by reason of wilful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Covered
Person's office.
10.3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
any such Covered Person may be entitled. As used in this Article 10, the term
"Covered Person" shall include such person's heirs, executors and
administrators, and a "disinterested person" is a person against whom none of
the actions, suits or other proceedings in question or another action, suit, or
other proceeding on the same or similar grounds is then or has been pending.
Nothing contained in this article shall affect any rights to indemnification to
which personnel of the Trust, other than Trustees and officers, and other
persons may be entitled by contract or otherwise under law, nor the power of the
Trust to purchase and maintain liability insurance on behalf of such person.
10.4. Limitation. Notwithstanding any provisions in the Declaration of
Trust and these ByLaws pertaining to indemnification, all such provisions are
limited by the following undertaking set forth in the rules promulgated by the
Securities and Exchange Commission:
In the event that a claim for indemnification is asserted by a Trustee,
officer or controlling person of the Trust in connection with the registered
securities of the Trust, the Trust will not make such indemnification unless (i)
the Trust has submitted, before a court or other body, the question of whether
the person to be indemnified was liable by reason of wilful misfeasance, bad
faith, gross negligence, or reckless disregard of duties, and has obtained a
final decision on the merits that such person was not liable by reason of such
conduct or (ii) in the absence of such decision, the Trust shall have obtained a
reasonable determination, based upon a review of the facts, that such person was
not liable by virtue of such conduct, by (a) the vote of a majority of Trustees
who are neither interested persons as such term is defined in the Investment
Company Act of 1940, nor parties to the proceeding or (b) an independent legal
counsel in a written opinion.
The Trust will not advance attorneys' fees or other expenses incurred
by the person to be indemnified unless the Trust shall have (i) received an
undertaking by or on behalf of such person to repay the advance unless it is
ultimately determined that such person is entitled to indemnification and one of
the following conditions shall have occurred: (x) such person shall provide
security for his undertaking, (y) the Trust shall be insured against losses
arising by reason of any lawful advances or (z) a majority of the disinterested,
non-party Trustees of the Trust, or an independent legal counsel in a written
opinion, shall have determined that based on a review of readily available facts
there is reason to believe that such person ultimately will be found entitled to
indemnification.
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ARTICLE 11
SHAREHOLDERS
11.1. Meetings. A meeting of the shareholders shall be called by the
Secretary whenever ordered by the Trustees, or requested in writing by the
holder or holders of at least 10% of the outstanding shares entitled to vote at
such meeting. If the meeting is a meeting of the shareholders of one or more
series or class of shares, but not a meeting of all shareholders of the Trust,
then only the shareholders of such one or more series or classes shall be
entitled to notice of and to vote at the meeting. If the Secretary, when so
ordered or requested, refuses or neglects for more than five days to call such
meeting, the Trustees, or the shareholders so requesting may, in the name of the
Secretary, call the meeting by giving notice thereof in the manner required when
notice is given by the Secretary.
11.2. Access to Shareholder List. Shareholders of record may apply to
the Trustees for assistance in communicating with other shareholders for the
purpose of calling a meeting in order to vote upon the question of removal of a
Trustee. When ten or more shareholders of record who have been such for at least
six months preceding the date of application and who hold in the aggregate
shares having a net asset value of at least $25,000 or at least 1% of the
outstanding shares, whichever is less, so apply, the Trustees shall within five
business days either:
(i) afford to such applicants access to a list of names and
addresses of all shareholders as recorded on the books of the Trust; or
(ii) inform such applicants of the approximate number of
shareholders of record and the approximate cost of mailing material to
them and, within a reasonable time thereafter, mail, materials
submitted by the applicants, to all such shareholders of record. The
Trustees shall not be obligated to mail materials which they believe to
be misleading or in violation of applicable law.
11.3. Record Dates. For the purpose of determining the shareholders of
any series or class who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to receive payment of any dividend or
of any other distribution, the Trustees from time to time may fix a time, which
shall be not more than 90 days before the date of any meeting of shareholders or
the date of payment of any dividend or of any other distribution, as the record
date for determining the shareholders of such series or class having the right
to notice of and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution, and in such case only
shareholders of record or such record date shall have such right notwithstanding
any transfer of shares on the books of the Trust after the record date; or
without fixing such record date the Trustees may for any such purposes close the
register or transfer books for all or part of such period.
11.4. Place of Meetings. All meetings of the shareholders shall be held
at the principal office of the Trust or at such other place within the United
States as shall be designated by the Trustees or the President of the Trust.
11.5. Notice of Meetings. A written notice of each meeting of
shareholders, stating the place, date and hour and the purposes of the meeting,
shall be given at least ten days before the meeting to each
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shareholder entitled to vote thereat by leaving such notice with him or at his
residence or usual place of business or by mailing it, postage prepaid, and
addressed to such shareholder at his address as it appears in the records of the
Trust. Such notice shall be given by the Secretary or an Assistant Secretary or
by an officer designated by the Trustees. No notice of any meeting of
shareholders need be given to a shareholder if a written waiver of notice,
executed before or after the meeting by such shareholder or his attorney
thereunto duly authorized, is filed with the records of the meeting.
11.6. Ballots. No ballot shall be required for any election unless
requested by a shareholder present or represented at the meeting and entitled to
vote in the election.
11.7. Proxies. Shareholders entitled to vote may vote either in person
or by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the Secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.
ARTICLE 12
AMENDMENTS TO THE BY-LAWS
These By-Laws may be amended or repealed, in whole or in part, by a
majority of the Trustees then in office at any meeting of the Trustees, or by
one or more writings signed by such a majority.
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Exhibit 6
DISTRIBUTION AGREEMENT
THIS AGREEMENT dated as of the 19th day of February, 1998 by and
between MAXUS EQUITY FUND (the "Trust"), a business trust established and
existing under the laws of the State of Ohio, and MAXUS SECURITIES CORP (the
"Distributor"), a corporation organized and existing under the laws of the State
of Ohio.
W I T N E S S E T H:
WHEREAS, the Distributor is currently acting as the Distributor for the
Trust pursuant to a Distribution Agreement between the parties;
WHEREAS, the parties desire to enter into this Agreement which will
supersede the existing Distribution Agreement;
WHEREAS, this Agreement shall become effective upon the effectiveness
of the Trust's Distribution and Shareholder Servicing Plan (Investor Shares
Only) after approval thereof by the shareholders of the Trust.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
Section 1. Appointment of the Distributor. The Trust hereby appoints
the Distributor as its agent to arrange for the sale of shares of the Trust on
the terms and for the period set forth in this Agreement, and the Distributor
hereby accepts such appointment and agrees to act hereunder. It is acknowledged
that the Trust is authorized to issue shares in one or more series, with each
series representing shares of a separate investment portfolio of the Trust (a
"Fund"), and with the shares of each Fund being divided into Investor Shares and
Institutional Shares. The term "Shares" as used herein shall refer to shares of
each class of each Fund of the Trust.
Section 2. Services and Duties of the Distributor.
(a) The Distributor agrees to arrange to sell, as agent for
the Trust, from time to time during the term of this Agreement, Shares
upon the terms described in the Prospectus. As used in this Agreement,
the term "Prospectus" shall mean the prospectus included in the Trust's
Registration Statement most recently filed by the Trust with the
Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act"), as such Registration
Statement is amended by any amendments thereto at the time in effect.
(b) Upon commencement of the continuous public offering of the
Shares of the Trust, the Distributor will hold itself available to
receive orders, satisfactory to the Distributor, for the purchase of
Shares and will accept such orders on behalf of the Trust as of the
time of receipt of such orders and will transmit such orders as are so
accepted to the Trust's Dividend and
<PAGE> 2
Transfer Agent as promptly as practicable. Purchase orders shall be
deemed effective at the time and in the manner set forth in the
Prospectus.
(c) The Distributor, as agent for the Trust and in its
discretion, may enter into agreements with such registered and
qualified retail broker-dealers as it may select pursuant to which such
broker-dealers may also arrange for the sale of Shares.
(d) The offering price of the Shares of each class of each
Fund shall be the net asset value (as described in the Prospectus, as
amended from time to time and determined as set forth in the
Prospectus) per Share of such class of such Fund next determined
following receipt of an order. The Trust shall furnish the Distributor
with all possible promptness advice of each computation of net asset
value.
(e) The Distributor shall not be obligated to sell any certain
number of Shares, and nothing herein contained shall prevent the
Distributor from entering into like distribution agreements with other
investment companies so long as the performance of its obligations
hereunder is not impaired thereby.
Section 3. Duties of the Trust.
(a) The Trust agrees to sell its Shares so long as it has
Shares available for sale and to cause its Dividend and Transfer Agent
to issue, if requested by the purchaser, certificates for Shares,
registered in such names and amounts as the Distributor has requested
in writing, as promptly as practicable after receipt by the Trust of
the purchase price therefor and thereof and written request of the
Distributor therefor.
(b) The Trust shall keep the Distributor fully informed with
regard to its affairs and shall furnish to the Distributor copies of
all information, financial statements and other papers which the
Distributor may reasonably request for use in connection with the
distribution of Shares of the Trust. This shall include, without
limitation, one certified copy of all financial statements of the Trust
prepared by independent accountants and such reasonable number of
copies of its most current Prospectus and annual and interim reports as
the Distributor may request. The Trust shall cooperate fully in the
efforts of the Distributor to arrange for the sale of the Shares and in
the performance of the Distributor under this Agreement.
(c) The Trust agrees to file from time to time such
amendments, reports and other documents as may be necessary in order
that there may be no untrue statement of a material fact in a
Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact in the Registration
Statement or Prospectus which omission would make the statements
therein, in light of the circumstances under which they were made,
misleading.
(d) The Trust shall use its best efforts to qualify and
maintain the qualification of an appropriate number of its Shares for
sale under the securities laws of such states as the Distributor and
the Trust may approve, and, if necessary or appropriate in connection
therewith, to qualify and maintain the qualification of the Trust as a
broker or dealer in such states; provided that the Trust shall not be
required to amend the Declaration of Trust or its By-Laws to comply
with the laws of any state, to maintain an office in any state, to
change the terms of the offering of its Shares in any state from the
terms set forth in its Registration Statement and Prospectus,
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<PAGE> 3
to qualify as a foreign corporation, business trust or similar entity
in any state or to consent to service of process in any state other
than with respect to claims arising out of the offering of its Shares.
The Distributor shall furnish such information and other material
relating to its affairs and activities as may be required by the Trust
in connection with such qualifications.
Section 4. Compensation and Expenses.
(a) Except as set forth in this Section, (i) the Distributor
shall not receive any compensation for its services under this
Agreement and (ii) the Distributor shall not be required to bear any
costs in connection with the offering of Shares for sale to the public.
(b) The Trust shall bear all costs and expenses of the
continuous offering of its Shares, including: (i) fees and
disbursements of its counsel and auditors, (ii) the preparation, filing
and printing of any registration statements and/or prospectuses
required by and under the federal securities laws, (iii) the
preparation and mailing of annual and interim reports and proxy
materials to shareholders and (iv) the qualification of the Shares for
sale and of the Trust as a broker or dealer under the securities laws
of such states or other jurisdictions as shall be selected by the Trust
and by the Distributor pursuant to Section 3(d) hereof and the cost and
expenses payable to each such state for continuing qualification
therein.
(c) The Distributor agrees to provide the services described
in the Trust's Distribution and Shareholder Servicing Plan (Investor
Shares Only). In consideration for such services, the Trust shall pay
to the Distributor a fee at the annual rate of .50% of the average
daily net assets of the Investor Shares of each Fund.
Section 5. Indemnification. The Trust agrees to indemnify, defend and
hold the Distributor, its officers and directors and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act or Section 20 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees and expenses incurred in connection therewith)
which the Distributor, its officers, directors or any such controlling persons
may incur under the 1933 Act, the 1934 Act, or under common law or otherwise,
arising out of or based upon any untrue statement of a material fact contained
in the Registration Statement or Prospectus or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Trust for use in the Registration Statement
or Prospectus; provided, however, that this indemnity agreement, to the extent
that it might require indemnity of any person who is also an officer or trustee
of the Trust or who controls the Trust within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, shall not inure to the benefit of such
officer, trustee or controlling person unless a court of competent jurisdiction
shall determine, or it shall have been determined by controlling precedent, that
such result would not be against public policy as expressed in the 1933 Act; and
further provided, that in no event shall anything contained herein be so
construed as to protect the Distributor against any liability to the Trust or to
its security holders to which the Distributor would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations under
this Agreement. The Trust's agreement to indemnify the Distributor, its officers
and directors and any
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<PAGE> 4
such controlling person as aforesaid is expressly conditioned upon the Trust
being promptly notified of any action brought against the Distributor, its
officers or directors, or any such controlling person, such notification to be
given by letter or telegram addressed to the Trust at its principal business
office. The Trust agrees promptly to notify the Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issue and sale of any of its Shares.
The Distributor agrees to indemnify, defend and hold the Trust, its
trustees and officers and any person who controls the Trust, if any, within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Trust, its trustees or officers or any such controlling person may incur under
the 1933 Act, the 1934 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Trust, its trustees or
officers or such controlling person resulting from such claims or demands shall
arise out of or be based upon (i) any alleged untrue statement of a material
fact contained in information furnished in writing by the Distributor to the
Trust for use in the Registration Statement or Prospectus; (ii) any failure of
the Distributor or any investor purchasing Shares of the Trust through the
Distributor to timely transmit good payment for the purchase of Trust Shares; or
(iii) any breach of the obligations of the Distributor under Section 6 of this
Agreement. The Distributor's agreement to indemnify the Trust, its trustees and
officers and any such controlling person as aforesaid, is expressly conditioned
upon the Distributor being promptly notified of any event giving rise to rights
of indemnification hereunder, including any action brought against the Trust,
its trustees or officers or any such controlling person, such notification being
given to the Distributor at its principal business office.
Section 6. Compliance with Securities Laws. The Trust represents that
it is registered as a diversified, open-end management investment company under
the 1940 Act, and agrees that it will comply with all of the provisions of the
1940 Act and of the rules and regulations thereunder. The Trust and the
Distributor each agree to comply with all of the applicable terms and provisions
of the 1940 Act, the 1933 Act and, subject to the provisions of Section 3(d),
all applicable state "Blue Sky" laws. The Distributor agrees to comply with all
of the applicable terms and provisions of the 1934 Act.
Section 7. Terms of Agreement; Termination. This Agreement shall
commence on the date first set forth above. This Agreement shall continue in
effect for a period more than two years from the date hereof only so long as
such continuance is specifically approved at least annually in conformity with
the requirements of the 1940 Act, including Rule 12b-1 thereunder.
This Agreement shall terminate automatically in the event of its
assignment (as defined by the 1940 Act). In addition, this Agreement may be
terminated by either party at any time, without penalty, on not more than sixty
days' nor less than thirty days' written notice to the other party.
Section 8. Notices. Any notice required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (i) to the Distributor at Maxus Securities Corp, The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114 or (2) to
the Trust at Maxus Equity Fund, The Tower at Erieview, 36th Floor, 1301 East
Ninth Street, Cleveland, Ohio 44114.
Section 9. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Ohio.
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Section 10. Non-Liability of Shareholders, Trustees, Officers,
Employees, Representatives and Agents. It is expressly agreed that the
obligation of the Trust hereunder shall not be binding upon nor resort be had to
the private property of any of the trustees, Shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the Trust property,
as provided in the Declaration of Trust. The execution and delivery of this
Agreement have been authorized by the trustees of the Trust and signed by the
officers of the Trust, acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officers shall be deemed to
have been made by any of them individually, or to impose any liability on any of
them personally, but shall bind only the Trust property as provided in the
Declaration of Trust.
Section 11. Use of Name. The Trust recognizes that directors, officers
and employees of the Distributor may from time to time serve as directors,
officers and employees of other corporations (including other investment
companies) and that such other corporations may include the name "Maxus" as part
of their name, and that the Distributor or its affiliates may enter into
distribution or other agreements with such other corporations. If the
Distributor ceases to act as the Trust's distributor of shares or if Maxus Asset
Management Inc, an affiliate of the Distributor, ceases to act as the Trust's
investment adviser, the Trust agrees that, at the Distributor's request, the
Trust's license to use the word "Maxus" will terminate and the Trust will take
all necessary action to change the name of all Funds of the Trust to a name not
including the word "Maxus".
Section 12. Complete Agreement. This Agreement contains the complete
agreement with respect to the subject matter hereof and supersedes any prior
understandings, agreements or representations by or between the parties related
to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
MAXUS EQUITY FUND
By: /s/ Richard A. Barone
Richard A. Barone, Chairman
MAXUS SECURITIES CORP
By: /s/ Richard A. Barone
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<PAGE> 1
Exhibit 9(a)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made and entered into this 19th day of February,
1998, by and between Maxus Equity Fund, an Ohio business trust (the "Fund"), and
Maxus Information Systems, Inc., an Ohio corporation ("MIS").
RECITALS:
A. The Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
B. The Fund desires to appoint MIS as its transfer agent and dividend
disbursing and redemption agent, and MIS desires to accept such appointment.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. DUTIES OF MIS.
1.01 Subject to the terms and conditions set forth in this Agreement,
the Fund hereby employs and appoints MIS to act, and MIS agrees to act, as
transfer agent for the Fund's authorized and issued shares of beneficial
interest of each class of each portfolio of the Fund (the "Shares), and as
dividend disbursing and redemption agent for the Fund.
1.02 MIS agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and MIS, MIS shall:
(i) Receive for acceptance, orders for the purchase
of Shares, and promptly deliver payment and appropriate
documentation therefore to the Custodian of the Fund
authorized by the Board of Directors of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares in the
appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation therefore to the Custodian;
<PAGE> 2
(iv) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the redeeming
Shareholders;
(v) Effect transfers of Shares by the registered
owners thereof upon receipt of appropriate instructions;
(vi) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(vii) Maintain records of account for and advise the
Fund and its Shareholders as to the foregoing; and
(viii) Record the issuance of shares of the Fund and
maintain pursuant to SEC Rule 17Ad-10(e) a record of the total
number of shares of the Fund which are authorized, based upon
data provided to it by the Fund, and issued and outstanding.
MIS shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition, MIS shall perform all of the customary
services of a transfer agent, dividend disbursing and redemption agent,
including but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies, receiving and
tabulating proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect
to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of Shares
and other confirmable transactions in Shareholder accounts, preparing
and mailing activity statements for Shareholders, and providing
Shareholder account information and provide a system and reports which
will enable the Fund to monitor the total number of Shares sold in each
State.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and MIS.
2. FEES AND EXPENSES
2.01 In consideration of the services to be performed by MIS pursuant
to this Agreement, the Fund agrees to pay MIS the fees set forth in the fee
schedule attached hereto as Exhibit "A".
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse MIS for out-of-pocket expenses or advances incurred by MIS
in connection with the performance of its
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obligations under this Agreement. In addition, any other expenses incurred by
MIS at the request or with the consent of the Fund will be reimbursed by the
Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to MIS by the Fund at least seven days
prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF MIS
MIS represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of the State of Ohio.
3.02 It is duly qualified to carry on its business in the State of
Ohio.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 MIS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to MIS that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Ohio.
4.02 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment company
registered under the 1940 Act.
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4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 MIS shall not be responsible for, and the Fund shall indemnify and
hold MIS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of MIS or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without gross negligence or willful
misconduct.
(b) The Fund's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Fund's lack good faith, gross
negligence or willful misconduct or which arise out of the breach of
any representation or warranty of the Fund hereunder.
(c) The reliance on or use by MIS or its agents or
subcontractors of information, records and documents which (i) are
received by MIS or its agents or subcontractors and furnished to it by
or on behalf of the Fund, and (ii) have been prepared and/or maintained
by the Fund or any other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by MIS or its agents
or subcontractors of, any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with respect
to the offer or sale of such Shares in such state.
5.02 MIS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by MIS as a result of MIS's lack of good faith, gross negligence
or willful misconduct.
5.03 At any time MIS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by MIS under this
Agreement, and MIS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. MIS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided MIS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
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<PAGE> 5
any change of authority of any person, until receipt of written notice thereof
from the Fund. MIS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 Upon the assertion of a claim for which either party may be
required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE FUND AND MIS
6.01 The Fund shall promptly furnish to MIS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
MIS and the execution and delivery of this Agreement.
6.02 MIS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 MIS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, as amended, and the Rules thereunder,
MIS agrees that all such records prepared or maintained by MIS relating to the
services to be performed by MIS hereunder are the property of the Fund and will
be preserved, maintained and made available in accordance with such Section and
Rules, and will be surrendered promptly to the Fund on and in accordance with
its request.
6.04 MIS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
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6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, MIS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. MIS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERM OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three years; provided, however, that each
party to this Agreement have the option to terminate the Agreement without
penalty, upon 90 days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, MIS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. MISCELLANEOUS
8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party.
This Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
8.02 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
8.03 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Ohio as at the time in
effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of Ohio, or any of the provisions here in, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
8.04 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
8.05 All notices and other communications hereunder shall be in
writing, shall be deemed to have been given when received or when sent by telex
or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To MIS:
Maxus Equity Fund Maxus Information Systems, Inc.
The Tower at Erieview, 36th Floor The Tower at Erieview, 36th Floor
1301 East Ninth Street 1301 East Ninth Street
Cleveland, OH 44114 Cleveland, OH 44114
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MAXUS EQUITY FUND MAXUS INFORMATION SYSTEMS, INC.
By: /s/ Richard A. Barone By: /s/ Gregory Getts
Richard A. Barone
President Its: President
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EXHIBIT "A"
FEE SCHEDULE
The following fees will be paid in respect of each portfolio of the Fund:
$6.75 per shareholder account per annum, payable monthly, subject to a
$775 minimum per month.*
plus:
$12.00 per month for each state in which a portfolio is registered
under the blue sky laws of such state.*
- ------------------
*Notwithstanding the foregoing, if for any month the average net assets of a
portfolio are less than $10,000,000, all of the above dollar amounts will be
reduced based on the proportion which such average net assets bears to
$10,000,000.
<PAGE> 1
Exhibit 9(b)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made and entered into this 19th day of February,
1998, by and between Maxus Equity Fund, an Ohio business trust (the "Fund"), and
Maxus Information Systems, Inc., an Ohio corporation ("MIS").
RECITALS:
A. The Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
B. MIS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
C. The Fund desires to avail itself of the experience, assistance and
facilities of MIS and to have MIS perform the Fund certain services appropriate
to the operations of the Fund, and MIS is willing to furnish such services in
accordance with the terms hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereby agree as follows:
1. DUTIES OF MIS.
MIS will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for the
Fund:
(a) Timely calculate and transmit to NASDAQ the daily net
asset value of each class of shares of each portfolio of the Fund, and
communicate such value to the Fund and its transfer agent;
(b) Maintain and keep current all books and records of the
Fund as required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"), that
are applicable to the fulfillment of MIS's duties hereunder, as well as
any other documents necessary or advisable for compliance with
applicable regulations as may be mutually agreed to between the Fund
and MIS. Without limiting the generality of the foregoing, MIS will
prepare and maintain the following records upon receipt of information
in proper form from the Fund or its authorized agents:
1
<PAGE> 2
<TABLE>
<S> <C> <C>
o Cash receipts journal
o Cash disbursements journal
o Dividend record
o Purchase and sales - portfolio securities journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and collateral therefore
o Foreign currency journals
o Trial balances
</TABLE>
(c) Provide the Fund and its investment adviser with daily
portfolio valuation, net asset value calculation and other standard
operational reports as requested from time to time.
(d) Provide all raw data available from its fund accounting
system for the preparation by the Fund or its investment advisor of the
following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1A;
5. Annual proxy statement.
(e) Provide facilities to accommodate annual audit and any
audits or examinations conducted by the Securities and Exchange
Commission or any other governmental or quasi-governmental entities
with jurisdiction.
MIS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. FEES AND EXPENSES.
(a) In consideration of the services to be performed by MIS
pursuant to this Agreement, the Fund agrees to pay MIS the fees set
forth in the fee schedule attached hereto as Exhibit A.
(b) In addition to the fees paid under paragraph (a) above,
the Fund agrees to reimburse MIS for out-of-pocket expenses or advances
incurred by MIS in connection with the performance of its obligations
under this Agreement. In addition, any other expenses incurred by MIS
at the request or with the consent of the Fund will be reimbursed by
the Fund.
2
<PAGE> 3
(c) The Fund agrees to pay all fees and reimburseable expenses
within five days following the receipt of the respective billing
notice.
3. LIMITATION OF LIABILITY OF MIS.
(a) MIS shall be held to the exercise of reasonable care in
carrying out the provisions of the Agreement, but shall not be liable
to the Fund for any action taken or omitted by it in good faith without
gross negligence, bad faith, willful misconduct or reckless disregard
of its duties hereunder. It shall be entitled to rely upon and may act
upon the accounting records and reports generated by the Fund, advice
of the Fund, or of counsel for the Fund and upon statements of the
Fund's independent accountants, and shall not be liable for any action
reasonably taken or omitted pursuant to such records and reports or
advice, provided that such action is not, to the knowledge of MIS, in
violation of applicable federal or state laws or regulations, and
provided further that such action is taken without gross negligence,
bad faith, willful misconduct or reckless disregard of its duties.
(b) Nothing herein contained shall be construed to protect MIS
against any liability to the Fund to which MIS shall otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence
in the performance of its duties to the Fund, reckless disregard of its
obligations and duties under this Agreement or the willful violation of
any applicable law.
(c) Except as may otherwise be provided by applicable law,
neither MIS nor its stockholders, officers, directors, employees or
agents shall be subject to, and the Fund shall indemnify and hold such
persons harmless from and against, any liability for and any damages,
expenses or losses incurred by reason of the inaccuracy of information
furnished to MIS by the Fund or its authorized agents.
4. REPORTS.
(a) The Fund shall provide to MIS on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to MIS during the preceding quarter was true,
complete and correct in all material respects. MIS shall not be
responsible for the accuracy of any information furnished to it by the
Fund or its authorized agents, and the Fund shall hold MIS harmless in
regard to any liability incurred by reason of the inaccuracy of such
information.
(b) Whenever, in the course of performing its duties under
this Agreement, MIS determines, on the basis of information supplied to
MIS by the Fund or its authorized agents, that a violation of
applicable law has occurred or that, to its knowledge, a possible
violation of applicable law may have occurred or, with the passage of
time, would occur, MIS shall promptly notify the Fund and its counsel
of such violation.
5. ACTIVITIES OF MIS.
3
<PAGE> 4
The services of MIS under this Agreement are not to be deemed
exclusive, and MIS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by MIS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved.
MIS agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. MIS shall assist
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records. MIS shall
preserve the accounts and records as they are required to be maintained and
preserved by Rule 31a-1.
7. CONFIDENTIALITY.
MIS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
8. TERM OF AGREEMENT.
(a) This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three years; provided, however, that each
party to this Agreement have the option to terminate the Agreement, without
penalty, upon 90 days prior written notice.
(b) Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movements of records and material will be borne by
the Fund. Additionally, MIS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. MISCELLANEOUS.
(a) Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns.
(b) The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of Ohio as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of Ohio, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
(c) This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
4
<PAGE> 5
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
(e) All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
<TABLE>
<CAPTION>
To the Fund: To MIS:
<S> <C> <C>
Maxus Equity Fund Maxus Information Systems, Inc.
The Tower at Erieview, 36th Floor The Tower at Erieview, 36th Floor
1301 East Ninth Street 1301 East Ninth Street
Cleveland, OH 44114 Cleveland, OH 44114
</TABLE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MAXUS EQUITY FUND MAXUS INFORMATION
SYSTEMS, INC.
By: /s/ Richard A. Barone By: /s/ Gregory Getts
Richard A. Barone,
President Its: President
5
<PAGE> 6
EXHIBIT A
FEE SCHEDULE
The following fees will be paid in respect of each portfolio of the Fund:
<TABLE>
<CAPTION>
ANNUAL FEE
AVERAGE PORTFOLIO (payable monthly at
NET ASSETS the end of each month)
<S> <C> <C>
First $25 Million in Assets $17,400.00*
Next $25 Million in Assets 8,500.00
Each Additional $25 Million in Assets 4,750.00
</TABLE>
*Notwithstanding the foregoing, if the average net asset value of the portfolio
for the month is less than $10,000,000, the portfolio will pay an annual fee
(payable monthly) equal to .174% of average net assets for the month.
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Post-Effective Amendment No. 10 to Maxus Laureate
Fund's Registration Statement on Form N-1A of our report dated January 21, 1998
on the financial statements of Maxus Laureate Fund and the Summary Financial
Information included in the Prospectus and to the references made to us under
the caption "General Information" included in the Prospectus and under the
caption "Investment Advisory and Other Services" included in the Statement of
Additional Information.
McCURDY & ASSOCIATES CPA's, INC.
Westlake, Ohio
February 18, 1998
<PAGE> 1
Exhibit 15
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
(Investor Shares Only)
WHEREAS, Maxus Equity Fund (the "Trust") engages in business as an
open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trust is comprised of the series set forth on Schedule 1,
as such schedule is revised from time to time (each, a "Portfolio"); and
WHEREAS, the shares of each Portfolio are divided into two classes,
namely, Investor Shares and Institutional Shares; and
WHEREAS, the Trust desires to adopt this Plan pursuant to Rule 12b-1
under the Act, and the Trust's Board has determined that there is a reasonable
likelihood that adoption of this Plan will benefit the Portfolios and holders of
the Investor Shares; and
WHEREAS, the Trust engages Maxus Securities Corp. (the "Distributor")
as distributor for the Portfolios' shares (the "Shares") pursuant to a
Distribution Agreement dated as of the date hereof.
NOW, THEREFORE, the Trust hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan in accordance with Rule 12b-1 under the Act on
the following terms and conditions:
1. (a) Each Portfolio shall pay the Distributor a
shareholder servicing and distribution fee at the
annual rate of .50% of the average daily net assets
of the Investor Shares of such Portfolio.
(b) Such fee will be used by the Distributor to make
payments for administration, shareholder services and
distribution assistance for holders of Investor
Shares, including, but not limited to (i)
compensation to securities dealers and other persons
and organizations (collectively, "Service
Organizations"), for providing distribution
assistance with respect to Investor Shares, (ii)
compensation to Service Organizations for providing
administration, accounting and other shareholder
services with respect to Investor Shares, and (iii)
otherwise promoting the sale of Investor Shares,
including paying for the preparation of advertising
and sales literature and the printing and
distribution of such materials to prospective
investors. The Distributor shall determine the
amounts to be paid to third parties and the basis on
which such payments will be made. Payments to a third
party are subject to compliance by the third
-1-
<PAGE> 2
party with the terms of any related Plan agreement
between the third party and the Distributor.
(c) For the purposes of determining the fees payable
under this Plan, the value of each Portfolio's net
assets shall be computed in the manner specified in
the Trust's charter documents as then in effect for
the computation of the value of such Portfolio's net
assets.
2. As respects each Portfolio, this Plan shall not take effect
until it, together with any related agreement, has been
approved by vote of a majority of both (a) the Trust's Board
and (b) those Trustees who are not "interested persons" of the
Trust (as defined by the Act) and who have no direct or
indirect financial interest in the operation of this Plan or
any agreements related to it (the "Rule 12b-1 Trustees") cast
in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related Agreements.
3. As respects each Portfolio, this Plan shall remain in effect
until December 31, 1998 and shall continue in effect
thereafter so long as such continuance is specifically
approved at least annually in the manner provided for approval
of this Plan in paragraph 2.
4. The Distributor shall provide to the Trust's Board and the
Board shall review, at least quarterly, a written report of
amounts paid hereunder and the purposes for which they were
made.
5. As respects each Portfolio, this Plan may be terminated at any
time by vote of a majority of the Rule 12b-1 Trustees or by a
vote of a majority of the outstanding Investor Shares of such
Portfolio.
6. This Plan may not be amended as to any Portfolio to increase
materially the amount of compensation payable pursuant to
paragraph 1 hereof unless such amendment is approved by a vote
of at least a majority (as defined in the Act) of the
outstanding Investor Shares of such Portfolio. No material
amendment to the Plan shall be made unless approved in the
manner provided in paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of
the Trustees who are not interested persons (as defined in the
Act) of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons.
8. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 4
hereof, for a period of not less than six years from the date
of this Plan, any such agreement or any such report, as the
case may be, the first two years in an easily accessible
place.
-2-
<PAGE> 3
9. This Plan may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument. The name Maxus Equity Fund is the designation of
the Trustees for the time being under an Amended and Restated
Declaration of Trust dated November 19, 1997, as amended from
time to time, and all persons dealing with the Trust must look
solely to the property of the Trust for enforcement of any
claims against the Trust as neither the Trustees, officers,
agents or shareholders assume any personal liability for
obligations entered into on behalf of the Trust.
IN WITNESS WHEREOF, the Trust, on behalf of each Portfolio, and the
Distributor have executed this Plan as of the date set forth below.
Dated: November 19, 1997
MAXUS EQUITY FUND
By: /s/ Richard A. Barone
MAXUS SECURITIES CORP.
By: /s/ Richard A. Barone
-3-
<PAGE> 4
SCHEDULE 1
Name of Series
Maxus Equity Fund
- ------------------ COMPARISON OF HEADERS ------------------
- -HEADER 1-
Maxus Equity Fund
Schedule of Investments
December 31, 1997
- -HEADER 2-
Maxus Laureate Fund
Schedule of Investments
December 31, 1997
- -HEADER 3-
Maxus Equity Fund
- -HEADER 4-
Maxus Equity Fund
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 44,946,550
<INVESTMENTS-AT-VALUE> 55,815,190
<RECEIVABLES> 775,183
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,590,373
<PAYABLE-FOR-SECURITIES> 438,013
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 515,517
<TOTAL-LIABILITIES> 953,530
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,792,034
<SHARES-COMMON-STOCK> 3,051,358
<SHARES-COMMON-PRIOR> 2,422,794
<ACCUMULATED-NII-CURRENT> 383,553
<OVERDISTRIBUTION-NII> (1,884)
<ACCUMULATED-NET-GAINS> (25,715)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,868,640
<NET-ASSETS> 55,636,843
<DIVIDEND-INCOME> 779,554
<INTEREST-INCOME> 496,584
<OTHER-INCOME> 0
<EXPENSES-NET> 892,585
<NET-INVESTMENT-INCOME> 383,553
<REALIZED-GAINS-CURRENT> 5,790,522
<APPREC-INCREASE-CURRENT> 5,027,441
<NET-CHANGE-FROM-OPS> 11,201,516
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (381,850)
<DISTRIBUTIONS-OF-GAINS> (5,787,553)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 844,773
<NUMBER-OF-SHARES-REDEEMED> (531,196)
<SHARES-REINVESTED> 315,032
<NET-CHANGE-IN-ASSETS> 16,872,140
<ACCUMULATED-NII-PRIOR> 181
<ACCUMULATED-GAINS-PRIOR> (28,684)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 477,143
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 892,585
<AVERAGE-NET-ASSETS> 47,811,127
<PER-SHARE-NAV-BEGIN> 16.00
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 4.33
<PER-SHARE-DIVIDEND> (2.25)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.23
<EXPENSE-RATIO> 1.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
