<PAGE>
Dear Shareholder
The first 6 months of 1998 can only be described as one of those unique periods,
which seem to occur every ten or fifteen years, in which the stock market
assumes a very noticeable split personality. The distinctive characteristics are
the participation of fewer companies in market rallies and generally
deteriorating fundamentals. We must look back to the spring of 1973 and summer
of 1987 to find comparable examples.
The very largest market capitalization companies drive the major market averages
such as the Dow Jones Industrials, the S&P 500 and the Russell 3000, because all
are capitalization weighted. Today, even the NASDAQ, dominated by Microsoft,
Cisco and Intel, has lost its emerging company character. Since the beginning of
1998, the performance of portfolios, which did not consist of most of the twenty
or so largest companies, generally fell far behind the market averages. One
noticeable exception was the Maxus Laureate Fund, which had an outstanding six
months.
All of the major market indices made most their gains in February when fourth
quarter 1997 earnings appeared to be stronger than expected and money fleeing
the deteriorating Asian economies sought the most recognizable and liquid names
available. As the large capitalization companies surged in value, their
dominance of the market averages became even more pronounced and the need to own
them appeared to be even more necessary.
What distinguishes recent months from comparable periods during the last 25
years is magnitude of divergence. The very large companies appeared
significantly overvalued on both the fundamental and historical standards while
the smaller companies appear to be significantly undervalued on both counts. The
Maxus Equity Fund, Maxus Aggressive Value Fund and the Maxus Ohio Heartland Fund
have been focused on the latter, with the expectation that in the months and
years ahead, stock market valuations will again reflect rational investment
decisions.
<PAGE>
Maxus Equity Fund
Schedule of Investments
June 30,1998
- --------------------------------------------------------------------------------
Shares/Principal Amount Market Value % of Assets
- --------------------------------------------------------------------------------
Metals & Mining
40,000 Inco 545,000 0.90%
Industrial Products
55,000 A. Schulman 1,075,938
88,000 Algoma Steel * 291,500
45,000 Birmingham Steel 556,875
55,000 Stoneridge Inc * 1,014,063
30,000 Timken Co. 930,000
30,000 Worthington Ind. 451,875
---------
4,320,251 7.15%
Machinery & Equipment
50,000 Flowserve 1,231,250
45,000 RDO Equipment * 753,750
48,000 Sensormatic Electronics Corp* 672,000
32,500 Snap On Tools 1,178,125
---------
3,835,125 6.35%
Infrastructure & Environment
15,000 Ameron, Inc. 867,187
21,250 Corrpro * 239,062
35,200 Flow International * 409,200
111,000 Foster L B * 575,812
20,000 Foster Wheeler 428,750
100,000 International Tech * 950,000
---------
3,470,011 5.74%
Consumer Products
99,000 Michael Anthony Jewelers * 253,688
250,000 Petrie Stores Liquidating Trust * 715,000
50,000 Pluma * 334,375
150,000 Royal Appliance * 937,500
40,100 The Limited 1,328,312
31,600 Universal Electrs * 395,000
---------
3,963,875 6.56%
Energy
30,000 Apache 945,000
30,000 Patina Oil & Gas 210,000
30,000 Pennzoil 1,524,375
---------
2,679,375 4.43%
Financial Services
20,000 American Express 2,275,000
30,000 Cincinnati Financial 1,151,250
15,000 First Chicago NBD 1,329,375
25,000 Lehman Brothers Holdings Inc. 1,939,063
---------
6,694,688 11.08%
*Non-Income Producing Securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Real Estate
65,000 Boykin Lodging 1,381,250
35,000 MGI Properties 916,562
15,000 Public Storage Inc 703,125
35,000 St Joe * 958,125
3,959,062 6.55%
Medical Products & Services
20,000 Becton Dickinson 1,552,500
15,000 McKesson 1,222,500
---------
2,775,000 4.59%
Wholesale Distribution
30,000 Applied Industrial Technologies. 616,875
20,000 Arrow Electronics * 435,000
128,450 Pioneer Standard 1,236,331
---------
2,288,206 3.79%
Information Technology
30,500 Bel Fuse * 678,625
127,100 Intergraph * 1,088,294
35,000 LSI Logic Corp * 807,188
50,000 National Semiconductor Corp * 656,250
21,000 Silicon Valley Group Inc * 337,312
24,500 Unisys * 692,126
46,500 VLSI Technology * 780,328
---------
5,040,123 8.34%
Utilities
130,000 Citizens Utilities Co. 1,251,250
30,000 Kansas City Power & Light 870,000
25,000 Pennsylvania Enterprises 673,438
32,000 Western Resources 1,242,000
---------
4,036,688 6.68%
Closed End Equity Funds
10,000 Brazil Fund 181,250
70,000 Emerging Markets Telecommunications 875,000
150,000 Emerging Mkts Infrastructure 1,462,500
50,000 First Australia 328,125
---------
2,846,875 4.71%
Cash and Equivalents
1,000,000 Fedl Home Loan Bk Cons Disc Nt 8/5/98 994,640
4,000,000 Fedl Home Loan Bk Cons Disc Nt 9/16/98 3,953,980
4,000,000 US T-notes 5.50%, 11-15-98 4,001,250
2,000,000 Smith Barney CP Disc 7-10-98 1,997,028
2,107,480 Star Bank Treasury 2,107,480
----------
13,054,378 21.60%
*Non-Income Producing Securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Total Investments 59,508,657 98.46%
Other Assets Less Liabilities 927,847 1.54%
Net Assets - Equivalent 60,436,504 100.00%
*Non-Income Producing Securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets & Liabilities
Maxus Equity Fund June 30, 1998 (unaudited)
Equity
Fund
--------
Assets:
Investment Securities at Market Value 59,508,657
(Identified Costs - $50,328,388)
Cash 4,879
Receivables:
Receivable for investment securities sold 1,252,810
Dividends and interest receivable 159,497
Unamortized organization costs -
Total Assets 60,925,843
Liabilities:
Payable for investment purchased 343,356
Payable for shareholder distributions 12,469
Accrued Expenses 133,514
Total Liabilities 489,339
60,436,504
Net Assets:
Capital Paid In 47,664,791
Undistributed Net Investment Income 89,169
Accumulated Realized Gain (Loss) on Investments - Net 3,502,275
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 9,180,269
Net Assets 60,436,504
Net Assets
Investors Shares 60,436,504
Institutional Shares -
Total 60,436,504
Shares of capital stock
Investors Shares 3,205,380
Institutional Shares -
Total 3,205,380
Net asset value
Investors Shares $18.85
Institutional Shares $18.85
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations
Maxus Equity Fund June 30, 1998 (unaudited)
Equity
Fund
Investment Income:
Dividend income $455,433
Interest income 402,339
Total Income 857,772
Expenses:
Investment advisory fees (Note 2) 299,225
Distribution fees (Investor shares) 149,613
Distribution fees (Institutional shares) -
Custodial fees 17,223
Organization costs
Transfer agent fees/Accounting and Pricing 23,566
Legal 13,710
Audit 8,050
Registration and filing fees 32,981
Printing & Other Miscellaneous 18,442
----------
Gross Expenses 562,810
Net Investment Income (Loss) 294,962
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 3,527,990
Distribution of Realized Capital Gains from other
Investment Companies -
Unrealized Gain (Loss) from Appreciation
(Depreciation) on Investments (1,688,371)
Net Realized and Unrealized Gain (Loss) on Investments 1,839,619
Net Increase (Decrease) in Net Assets from Operations $2,134,581
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
Maxus Equity Fund June 30, 1998 (unaudited)
Maxus Equity Fund
01/01/98 01/01/97
to to
06/30/98 12/31/97
From Operations:
Net Investment Income 294,962 383,553
Net Realized Gain (Loss) on Investments 3,527,990 5,790,522
Net Unrealized Appreciation (Depreciation) (1,688,371) 5,027,441
Increase (Decrease) in Net Assets from Operations 2,134,581 11,201,516
Distributions to investor shareholders:
Net Investment Income (207,677) (381,850)
Net Realized Gain (Loss) from Security Transactions - (5,787,553)
Distributions to institutional shareholders:
Net Investment Income - -
Net Realized Gain (Loss) from Security Transactions - -
Change in net assets from distributions (207,677) (6,169,403)
From Capital Share Transactions:
Proceeds from sale of shares 9,162,422 15,843,329
Dividend reinvestment 195,208 5,729,950
Cost of shares redeemed (6,484,873) (9,733,252)
Change in net assets from capital transactions 2,872,757 11,840,027
Change in net assets 4,799,661 16,872,140
Net Assets:
Beginning of period 55,636,843 38,764,703
End of period 60,436,504 55,636,843
Share Transactions:
Issued 481,300 844,773
Reinvested 10,356 315,032
Redeemed (337,634) (531,196)
Net increase (decrease) in shares 154,022 628,609
Shares outstanding beginning of period 3,051,358 2,422,749
Shares outstanding end of period 3,205,380 3,051,358
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights
Maxus Equity Fund
<TABLE>
<S> <C> <C> <C> <C> <C>
01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
to to to to to
06/30/98 12/31/97 12/31/96 12/31/95 12/31/94
Net Asset Value -
Beginning of Period 18.23 16.00 14.57 12.95 13.60
Net Investment Income 0.09 0.15 0.27 0.30 0.25
Net Gains or Losses on Securities
(realized and unrealized) 0.59 4.33 2.50 2.60 (0.17)
Total from Investment Operations 0.68 4.48 2.77 2.90 0.08
Distributions
Net investment income (0.06) (0.15) (0.27) (0.27) (0.22)
Capital gains - (2.10) (1.07) (1.01) (0.51)
Return of capital - - - - -
Total Distributions (0.06) (2.25) (1.34) (1.28) (0.73)
Net Asset Value -
End of Period $18.85 $18.23 $16.00 $14.57 $12.95
Total Return * 13.94% 28.16% 19.13% 22.43% 0.59%
Ratios/Supplemental Data:
Net Assets at end of period
(thousands) 60,437 55,637 38,765 31,576 17,018
Ratio of expenses to average
net assets * 1.83% 1.87% 1.90% 1.96% 2.00%
Ratio of net income to
average net assets * 0.96% 1.80% 1.71% 2.01% 1.82%
Portfolio turnover rate * 82% 89% 111% 173% 184%
Average commission per share 0.05490 0.05544 0.05209
* Annualized
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAXUS EQUITY FUND
JUNE 30, 1998 (UNAUDITED)
1.)SIGNIFICANT ACCOUNTING POLICIES
The Fund is a diversified, open-end management investment company,
organized as a Trust under the laws of the State of Ohio by a Declaration
of Trust dated 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 fiscal year, any remaining net investment income and net realized
capital gains.
ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2.)INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration
agreement with Maxus Asset Management Inc. a wholly owned subsidiary of
Resource Management Inc. The Investment Advisor receives from the Fund as
compensation for its services to the Fund an annual fee of 1% on the first
$150,000,000 of the Fund's net assets, and 0.75% of the Fund's net assets
in excess of $150,000,000.
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 $299,225 in investment advisory fees during the six
months ended June 30, 1998. Maxus Securities, who served as the national
distributor of the Fund's shares, was reimbursed $149,613 for distribution
expenses. Maxus Information Systems received fees totaling $23,566 for
services rendered to the Fund for the six months ended June 30, 1998. Maxus
Securities is a registered broker-dealer. Maxus Securities effected
substantially all of the investment portfolio transactions for the Fund.
For this service Maxus Securities received commissions of $134,938 for the
six months ending June 30, 1998.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAXUS EQUITY FUND
JUNE 30, 1998 (UNAUDITED)
At June 30, 1998, 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 $100 per meeting.
4.)CAPITAL STOCK AND DISTRIBUTION
At June 30, 1998 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $47,664,791.
Distributions to shareholders are recorded on the ex-dividend date.
Payments in excess of net investment income or of accumulated net realized
gains reported in the financial statements are due primarily to book/tax
differences. Payments due to permanent differences have been charged to
paid in capital. Payments due to temporary differences have been charged to
distributions in excess of net investment income or realized gains.
5.)PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1998, purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $25,294,986 and $26,006,015 respectively. Purchases
and sales of U.S. Government obligations aggregated $10,870,874 and
$11,000,000 respectively.
6.)FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any off-balance
sheet risk as of June 30, 1998.
7.)SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June 30,
1998 was the same as identified cost. At June 30, 1998, the composition of
unrealized appreciation (the excess of value over tax cost) and
depreciation (the excess of tax cost over value) was as follows:
Appreciation (Depreciation) Net Appreciation (Depreciation)
11,666,031 (2,485,762) 9,180,269
<PAGE>
THE MAXUS FUNDS
1301 East Ninth Street, Suite 3600, Cleveland, OH 44114
(216) 687-1000
INVESTMENT ADVISOR
Maxus Asset Management Inc
1301 East Ninth Street
Cleveland, Ohio 44114
BOARD OF TRUSTEES
Denis J. Amato
Richard A. Barone
Burton D. Morgan
Michael A. Rossi
Jerry Murphy
OFFICERS
Richard A. Barone, Chairman
Robert J. Conrad, Vice-President
Robert W. Curtin, Secretary
CUSTODIAN
Star Bank, N. A.
425 Walnut Street
P. O. Box 1118
Cincinnati, Ohio 45201-1118
TRANSFER AGENT
Maxus Information Systems Inc
1301 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
Maxus Securities Corp
1301 East Ninth Street
Cleveland, Ohio 44114
LEGAL COUNSEL
Benesch, Friedlander, Coplan & Aronoff
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2378
AUDITOR
McCurdy & Associates CPA's Inc
27955 Clemens Road
Westlake, Ohio 44145
<PAGE>
