<PAGE> 1
Registration No. 33-30003
Registration No. 811-05865
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. 12 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 14 [X]
(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)
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.
McDonald, Hopkins, Burke & Haber Co., L.P.A.
2100 Bank One Center
600 Superior Avenue, E.
Cleveland, Ohio 44114
It is proposed that this filing will become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b) of Rule 485.
[ ] on (date) pursuant to paragraph (b) of Rule 485.
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485.
[ ] on (date) pursuant to paragraph (a) of Rule 485.
<PAGE> 2
MAXUS INCOME FUND
MAXUS EQUITY FUND
MAXUS LAUREATE FUND
MAXUS OHIO HEARTLAND FUND
MAXUS AGGRESSIVE VALUE FUND
INVESTOR SHARES
INSTITUTIONAL SHARES
MAXUS INCOME FUND has an investment objective of obtaining the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in
income-producing securities.
MAXUS EQUITY FUND has an investment objective of obtaining a total return, a
combination of capital appreciation and income. The Fund pursues this objective
by investing primarily in equity securities.
MAXUS LAUREATE FUND has an investment objective of achieving a high total
return, a combination of capital appreciation and income, consistent with
reasonable risk. This Fund pursues its objective by investing primarily in other
mutual funds which invest on a global basis.
MAXUS OHIO HEARTLAND FUND has an investment objective of obtaining a high total
return (a combination of income and capital appreciation). The Fund pursues this
objective by investing primarily in equity securities of companies headquartered
in the State of Ohio.
MAXUS AGGRESSIVE VALUE FUND has an investment objective of obtaining capital
appreciation. The Fund pursues this objective by investing primarily in equity
securities of companies whose equity securities have a total market value of
between $10,000,000 and $200,000,000.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
PROSPECTUS/April 30, 2000
<PAGE> 3
MAXUS INCOME FUND
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE AND MAIN INVESTMENT STRATEGIES
The investment objective of Maxus Income Fund is to obtain the highest total
return, a combination of income and capital appreciation, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in
income-producing securities (such as debt securities, preferred stocks and
common and preferred shares of closed-end investment companies (also known as
"closed-end funds") having portfolios consisting primarily of income-producing
securities). Certain of the debt securities and preferred stocks in which the
Fund invests may be convertible into common shares. To a lesser degree, the Fund
will invest directly in common shares bearing high dividends.
Maxus Income Fund will alter the composition of its portfolio as economic
and market trends change. The Adviser will increase its investment in short-term
debt securities during periods when it believes interest rates will rise and
will increase its investment in long-term debt securities when it believes
interest rates will decline. Maxus Income Fund may invest in debt securities of
any maturity.
In selecting 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 (i) securities rated BB or lower by Standard & Poor's Corporation and/or (ii)
unrated securities which, in the opinion of the Adviser, are of quality
comparable to those rated BB or lower. Securities rated lower than BBB 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.
In selecting closed-end funds for Maxus Income Fund, the Adviser will invest
in closed-end funds which, in choosing corporate debt securities in which they
invest, adhere to ratings criteria no less strict than those followed by Maxus
Income Fund in
2
<PAGE> 4
selecting its direct investments in corporate debt securities. Such closed-end
funds may invest in debt securities of United States or foreign issuers.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely impact the ability of the Fund to
achieve its investment objective.
MAIN RISKS
Volatility. The value of securities in Maxus Income Fund's portfolio will go
up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Debt Securities Risks. The Fund's portfolio will also be exposed to the
following additional risks in connection with its investments in debt securities
and in closed-end funds which invest primarily in debt securities:
- Prices of debt securities rise and fall in response to interest rate
changes for similar securities. Generally, when interest rates rise,
prices of debt securities fall. The net asset value of the Fund may
decrease during periods of rising interest rates.
- An issuer of debt securities may default (fail to repay interest and
principal when due). If an issuer defaults or the risk of such default is
perceived to have increased, the Fund will lose all or part of its
investment. The net asset value of the Fund may fall during periods of
economic downturn when such defaults or risk of defaults increase.
- Securities rated below investment grade, also known as junk bonds,
generally entail greater risks than investment grade securities. For
example, their prices are more volatile, their values are more negatively
impacted by economic downturns, and their trading market may be more
limited.
Closed-End Funds. The closed-end funds in which the Fund invests typically
pay an advisory fee for the management of their portfolios, as well as other
expenses.
3
<PAGE> 5
Therefore, the investment by the Fund in closed-end funds often results in a
duplication of advisory fees and other expenses, thereby resulting in a lower
return for the Fund than would be the case in the absence of such duplication.
In addition, since these closed-end funds invest in debt securities, they
are subject to the same risks described above in "Debt Securities Risks".
Also, certain of the closed-end funds in which Maxus Income Fund invests may
invest part or all of their assets in debt securities of foreign issuers. Such
investments involve the following additional risks:
- Because foreign securities ordinarily are denominated in currencies other
than the U.S. dollar, changes in foreign currency exchange rates will
affect the closed-end 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 closed-end fund. If the value of a foreign currency
declines against the U.S. dollar, the value of the closed-end fund's
assets denominated in that currency will decrease. Although these
closed-end funds may enter into "hedging" transactions intended to
minimize the risk of loss due to a decline in the value of the subject
foreign currency, in some cases all or a portion of the closed-end fund's
portfolio remains subject to this risk of loss.
- There are additional risks relating to political, economic, or regulatory
conditions in foreign countries; withholding or other taxes; trading,
settlement, custodial, and other operational risks; and the potentially
less stringent investor protection and disclosure standards of foreign
markets. All of these factors can make foreign investments of such
closed-end funds more volatile and potentially less liquid than U.S.
investments.
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Income Fund by showing changes in the Fund's performance from
year to year over a 10-year period and by showing how the Fund's average annual
returns for one, five, and ten years compare to those of a broad-based
securities
4
<PAGE> 6
market index. How the Fund has performed in the past is not necessarily an
indication of how the Fund will perform in the future.
MAXUS INCOME FUND
INVESTOR SHARES
[GRAPH]
<TABLE>
<S> <C>
1990 1.70%
1991 19.30%
1992 7.90%
1993 8.70%
1994 -4.50%
1995 16.40%
1996 9.20%
1997 11.50%
1998 3.50%
1999 -5.70%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 7.79% (quarter ending March 31, 1991) and the lowest return for a
quarter was -4.56% (quarter ending December 31, 1999).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST PAST PAST
(FOR THE PERIODS ENDING DECEMBER 31, 1999) ONE YEAR 5 YEARS 10 YEARS
- ------------------------------------------ -------- ------- --------
<S> <C> <C> <C>
Maxus Income Fund....................... -5.72% 6.72% 6.53%
Ryan Labs Treasury Index*............... -6.21% 6.86% 6.90%
Lehman Intermediate Corporate Index**... 0.16% 7.77% 7.89%
</TABLE>
- ---------------
* The Ryan Labs Treasury Index is an equal weighted index of all Treasuries
having maturities longer than one year.
** The Lehman Intermediate Corporate Index is an index of investment grade
corporate bonds having at least $100,000,000 principal amount outstanding and
maturities of from one to ten years.
5
<PAGE> 7
MAXUS EQUITY FUND
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE AND MAIN STRATEGIES
The investment objective of Maxus Equity Fund is to obtain a total return, a
combination of capital appreciation and income. This Fund pursues this objective
by investing primarily in equity securities of both smaller and larger
companies. Under normal circumstances at least 65% of the Fund's total assets
will consist of equity securities. Equity securities consist of common stock and
securities convertible into common stock. The Fund emphasizes a "value" style of
investing. In deciding which securities to buy and which to sell, the Adviser
will give primary consideration to fundamental factors. For example, securities
having relatively low ratios of share price to book value, net asset value,
earnings and cash flow will generally be considered attractive investments.
Additionally, the Adviser will give secondary consideration to insider
transactions and the growth of earnings.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality,
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
MAIN RISKS
Volatility. The value of securities in Maxus Equity Fund's portfolio will go
up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
conditions. While Maxus Equity Fund invests in both smaller and larger
companies, the smaller companies in which the Fund invests are especially
sensitive to these factors and therefore may be subject to greater share price
fluctuations than other companies. Also, securities of these smaller companies
are often less liquid, thus possibly limiting
6
<PAGE> 8
the ability of the Fund to dispose of such securities when the Adviser deems it
desirable to do so. As a result of these factors, securities of these smaller
companies may expose shareholders of the Fund to above average risk.
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Equity Fund by showing changes in the Fund's performance from
year to year over the life of the Fund and by showing how the Fund's average
annual returns for one and five year periods and the life of the Fund compare to
those of a broad-based securities market index. How the Fund has performed in
the past is not necessarily an indication of how the Fund will perform in the
future.
MAXUS EQUITY FUND
INVESTOR SHARES
[GRAPH]
<TABLE>
<S> <C>
1990 -10.80%
1991 36.40%
1992 13.60%
1993 24.50%
1994 0.60%
1995 22.40%
1996 19.10%
1997 28.20%
1998 -8.70%
1999 12.90%
</TABLE>
During the 10-year period shown in the bar chart, the highest return for a
quarter was 27.03% (quarter ending March 31, 1991) and the lowest return for a
quarter was -21.06% (quarter ending September 30, 1998).
7
<PAGE> 9
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST PAST PAST
(FOR THE PERIODS ENDING DECEMBER 31, 1999) ONE YEAR 5 YEARS 10 YEARS
- ------------------------------------------ -------- ------- --------
<S> <C> <C> <C>
Maxus Equity Fund....................... 12.93% 14.02% 12.80%
Lipper Multicap Value Index*............ 5.94% 17.82% 13.03%
Value Line Arithmetic Index**........... 10.56% 17.78% 13.46%
</TABLE>
- ---------------
* The Lipper Multicap Value Index is an equal weighted index of mutual funds
that invest in undervalued securities within multiple capitalization ranges.
** The Value Line Arithmetic Index is an equal weighted index of the more than
1,700 stocks followed by Value Line Publishing, Inc.
MAXUS LAUREATE FUND
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE AND MAIN INVESTMENT STRATEGY
The investment objective at Maxus Laureate Fund is to achieve a high total
return, a combination of capital appreciation and income, consistent with
reasonable risk. The Fund pursues this objective by investing primarily in other
mutual funds which invest on a global basis. The Fund will structure its
portfolio of mutual funds by (1) identifying certain global investment themes
(for example, global telecommunication or emerging markets) which are expected
to provide a favorable return over the next six to twelve months and (ii)
selecting one or more mutual funds with management styles (for example, value
vs. growth or large cap vs. small cap) or investment concentrations which
represent each theme. As market conditions change, the Fund will exit those
investment themes which appear to have run their course and replace them with
more attractive opportunities. The Fund also will look for opportunities caused
by market-moving events (such as political events, currency devaluations and
natural disasters) that cause a disequilibrium between securities prices and
their underlying intrinsic values.
The Fund may also seek to achieve its objective by investing in mutual funds
whose investment objectives are to provide investment results which either (i)
generally correspond to the performance of a recognized stock price index
("index funds"), (ii) generally correspond to a specified multiple of (for
example, two times) the performance of a recognized stock price index
("leveraged index funds"),
8
<PAGE> 10
(iii) generally correspond to the inverse (opposite) of the performance of a
recognized stock price index ("bear funds") or (iv) generally correspond to a
specified multiple of the inverse (opposite) of the performance of a recognized
stock price index ("leveraged bear funds").
The Fund may invest in index funds and/or leveraged index funds when the
Adviser believes that equity prices in general are likely to rise in the near
term. Investments in index funds and leveraged index funds are designed to allow
the Fund to seek to profit from anticipated increases in the indexes to which
such funds generally are correlated. The Fund may invest in bear funds and/or
leveraged bear funds when the Adviser believes that equity prices in general are
likely to decline in the near term. Investments in bear funds and leveraged bear
funds are designed to allow the Fund to seek to profit from anticipated
decreases in the indexes to which such funds generally are inversely correlated.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
Because the Fund reallocates fund investments across potentially numerous
asset subclasses as evolving economic and financial conditions warrant, the
portfolio turnover rate of the Fund is much higher than that of most other funds
with similar objectives. Although the Fund invests exclusively in underlying
funds that do not charge front-end or deferred sales loads, a sub-custodian of
the Fund does impose a small transaction charge for each purchase or sale of
underlying fund shares. The higher the portfolio turnover rate, the greater will
be the custodial transaction charges borne by the Fund. Also, a high rate of
portfolio turnover will result in high amounts of realized investment gain
subject to the payment of taxes by shareholders. Any realized net short-term
investment gain will be taxed to shareholders as ordinary income. See
"Dividends, Distributions and Taxes" below.
9
<PAGE> 11
MAIN RISKS
Volatility. The value of securities in Maxus Laureate Fund's portfolio will
go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Foreign Exposure. Many of the underlying funds in which this Fund invests
have substantial investments in foreign markets. Foreign securities, foreign
currencies, and securities issued by U.S. entities with substantial foreign
operations can involve additional risks relating to political, economic or
regulatory conditions in foreign countries. These risks include fluctuations in
foreign currencies; withholding or other taxes; trading, settlement, custodial
and other operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. All of these factors can make
foreign investments, especially those in emerging markets, more volatile and
potentially less liquid than U.S. investments. In addition, foreign markets can
perform differently than the U.S. market. If these factors cause the net asset
values of the underlying funds to decline, the Fund's share price will decline.
Index and Leveraged Index Funds. The Fund may invest in "index funds" or
"leveraged index funds." If equity prices generally decline while the Fund is
invested in an index fund or funds, the Fund could experience substantial
losses. Such losses would be magnified to the extent the Fund is invested in a
leveraged index fund or funds.
Bear and Leveraged Bear Funds. The Fund may also invest in "bear funds" or
"leveraged bear funds." If equity prices generally rise while the Fund is
invested in a bear fund or funds, the Fund could experience substantial losses.
Such losses would be magnified to the extent the Fund is invested in a leveraged
bear fund or funds.
Duplication of Expenses. An investor in the Fund will bear not only his
proportionate share of the expenses of the Fund but also indirectly similar
expenses of the underlying mutual funds in which the Fund invests. These
expenses consist of advisory fees, expenses related to the distribution of
shares, brokerage commissions, accounting, pricing and custody expenses,
printing, legal and audit expenses and other miscellaneous expenses.
10
<PAGE> 12
Industry Concentration. Through its investment in underlying funds, the Fund
indirectly may invest more than 25% of its assets in one industry. Such indirect
concentration of the Fund's assets may subject the shares of the Fund to greater
fluctuation in value than would be the case in the absence of such
concentration.
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Laureate Fund by showing changes in the Fund's performance
from year to year over the life of the Fund and by showing how the Fund's
average annual returns for one and five year periods and the life of the Fund
compare to those of a broad-based securities market index. How the Fund has
performed in the past is not necessarily an indication of how the Fund will
perform in the future.
MAXUS LAUREATE FUND
INVESTOR SHARES
[GRAPH]
<TABLE>
<S> <C>
1994 -3.4%
1995 14.4%
1996 21.0%
1997 5.5%
1998 35.1%
1999 50.6%
</TABLE>
During the 6-year period shown in the bar chart, the highest return for a
quarter was 27.10% (quarter ending December 31, 1999) and the lowest return for
a quarter was -7.60% (quarter ending December 31, 1997).
11
<PAGE> 13
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST PAST SINCE
(FOR THE PERIODS ENDING DECEMBER 31, 1999) ONE YEAR 5 YEARS INCEPTION
- ------------------------------------------ -------- ------- ---------
<S> <C> <C> <C>
Maxus Laureate Fund..................... 50.58% 25.36% 18.61%
Morgan Stanley Capital
International World Index*............ 24.94% 19.76% 16.65%
</TABLE>
- ---------------
* The Morgan Stanley Capital International World Index is a total return market
capitalization weighted index of the equity markets of 23 developed countries.
12
<PAGE> 14
MAXUS OHIO HEARTLAND FUND
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE AND MAIN INVESTMENT STRATEGIES
The investment objective of Maxus Ohio Heartland Fund is to obtain a high
total return (a combination of income and capital appreciation). The Fund
pursues this objective primarily by investing in equity securities of companies
headquartered in the State of Ohio. Under normal circumstances the Fund will
invest at least 65% of its total assets in such securities. Equity securities
consist of common stock and securities convertible into common stock. In
selecting such companies, the Fund emphasizes a "value" style of investing. In
deciding which securities to buy and which to sell, the Adviser will give
primary consideration to fundamental factors. For example, securities having
relatively low ratios of share price to book value, net asset value, earnings
and cash flow will generally be considered attractive investments.
While investments may be made in all types and sizes of companies
headquartered in Ohio, the primary focus of this Fund will be to invest in
companies having annual revenues or a market capitalization of less than $5
billion, many of which may be traded in the over-the-counter market. However,
the Fund will generally not invest in companies having annual revenues less than
$25,000,000.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
MAIN RISKS
Volatility. The value of securities in Maxus Ohio Heartland Fund's portfolio
will go up and down. The Fund's portfolio will reflect changes in the prices of
individual portfolio securities or general changes in securities valuations.
Consequently, the Fund's share price may decline and you could lose money.
Geographic Concentration. Since this Fund concentrates its investments in
the State of Ohio, its assets may be at greater risk because of economic,
political or
13
<PAGE> 15
regulatory risk which may become associated with the State. For example, if
adverse tax laws uniquely affecting Ohio-based companies were passed, such a
development could have an adverse effect upon this Fund. This Fund also is
subject to the additional risk that at certain times only a limited number of
securities meeting the Fund's investment criteria may be available.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
and financial conditions. While Maxus Ohio Heartland Fund invests in both
smaller and larger companies, the smaller companies in which the Fund invests
are especially sensitive to these factors and therefore may be subject to
greater share price fluctuations than other companies. Also, securities of these
smaller companies are often less liquid, thus possibly limiting the ability of
the Fund to dispose of such securities when the Adviser deems it desirable to do
so. As a result of these factors, securities of these smaller companies may
expose shareholders of the Fund to above average risk.
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Ohio Heartland Fund by showing changes in the Fund's
performance over the life of the Fund and by showing how the Fund's average
annual returns for the life of the Fund compare to those of a broad-based
securities market index. How the Fund has performed in the past is not
necessarily an indication of how the Fund will perform in the future.
14
<PAGE> 16
MAXUS OHIO HEARTLAND FUND
INVESTOR SHARES
[GRAPH]
<TABLE>
<S> <C>
1999 -11.0%
</TABLE>
During the one year period shown in the bar chart, the highest return for a
quarter was 15.69% (quarter ending June 30, 1999) and the lowest return for a
quarter was -12.12% (quarter ending September 30, 1999).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST
(FOR THE PERIODS ENDING DECEMBER 31, 1999) ONE YEAR
------------------------------------------ --------
<S> <C>
Maxus Ohio Heartland Fund.............................. -11.03%
Russell 2000 Index*.................................... 20.89%
</TABLE>
- ---------------
* The Russell 2000 Index is a market capitalization weighted index which
measures the performance of the 2000 smallest companies in the Russell 3000
Index.
MAXUS AGGRESSIVE VALUE FUND
RISK/RETURN SUMMARY
INVESTMENT OBJECTIVE AND MAIN INVESTMENT STRATEGIES
The investment objectives of Maxus Aggressive Value Fund is to obtain
capital appreciation. The Fund pursues this objective by investing primarily in
equity securities of companies whose equity securities have a total market value
of between
15
<PAGE> 17
$10,000,000 and $200,000,000. Equity securities consist of common stock and
securities convertible into common stock. The Fund emphasizes a "value" style of
investing. In deciding which securities to buy and which to sell, the Adviser
will give primary consideration to fundamental factors. For example, securities
having relatively low ratios of share price to book value, net asset value,
earnings and cash flow will generally be considered attractive investments.
Additionally, the Adviser will give secondary consideration to insider
transactions and the growth of earnings.
As a result of its focus on smaller companies and its intent to take
short-term positions in certain equity securities, this Fund may be considered
to be more "aggressive" than other mutual funds having a "value" style of
investing.
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
MAIN RISKS
Volatility. The value of securities in Maxus Aggressive Value Fund's
portfolio will go up and down. The Fund's portfolio will reflect changes in the
prices of individual portfolio securities or general changes in securities
valuations. Consequently, the Fund's share price may decline and you could lose
money.
Smaller Companies. The prices of equity securities fluctuate based on
changes in a company's activities and financial condition and in overall market
and financial conditions. The smaller companies in which the Fund invests are
especially sensitive to these factors and therefore may be subject to greater
share price fluctuations than other companies. Also, securities of these smaller
companies are often less liquid, thus possibly limiting the ability of the Fund
to dispose of such securities when the Adviser deems it desirable to do so. As a
result of these factors, securities of these smaller companies may expose
shareholders of the Fund to above average risk.
16
<PAGE> 18
BAR CHART AND PERFORMANCE TABLE
The bar chart and table shown below provide an indication of the risks of
investing in Maxus Laureate Fund by showing changes in the Fund's performance
over the life of the Fund and by showing how the Fund's average annual returns
for the life of the Fund compare to those of a broad-based securities market
index. How the Fund has performed in the past is not necessarily an indication
of how the Fund will perform in the future.
MAXUS AGGRESSIVE VALUE FUND
INVESTOR SHARES
[GRAPH]
<TABLE>
<S> <C>
1999 21.2%
</TABLE>
During the one year period shown in the bar chart, the highest return for a
quarter was 21.19% (quarter ending June 30, 1999) and the lowest return for a
quarter was -8.82% (quarter ending September 30, 1999).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS PAST
(FOR THE PERIODS ENDING DECEMBER 31, 1999) ONE YEAR
------------------------------------------ --------
<S> <C>
Maxus Aggressive Value Fund............................. 21.19%
Lipper Small Cap Value Index*........................... 1.32%
</TABLE>
- ---------------
* The Lipper Small Cap Value Index is an equal weighted index of mutual funds
that invest 75% or more of their assets in companies with a market
capitalization less than 250% of the S&P Small Cap 600 Index median
capitalization.
17
<PAGE> 19
FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and
hold shares of a Fund.
Annual Fund Operating Expenses (expenses that are deducted from Fund).
<TABLE>
<CAPTION>
MAXUS MAXUS OHIO
MAXUS INCOME FUND MAXUS EQUITY FUND LAUREATE FUND* HEARTLAND FUND
------------------------ ------------------------ ------------------------ ------------------------
INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL INVESTOR INSTITUTIONAL
CLASS CLASS CLASS CLASS CLASS CLASS CLASS CLASS
-------- ------------- -------- ------------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees......... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Distribution and/or
Service (12b-1)
Fees.................. 0.50% 0.00% 0.50% 0.00% 0.50% 0.00% 0.50% 0.00%
Other Expenses.......... 0.41% 0.41% 0.33% 0.33% 0.42% 0.42% 1.38% 1.38%
Total Annual Fund
Operating Expenses.... 1.91% 1.41% 1.83% 1.33% 1.92% 1.42% 2.88% 2.38%
<CAPTION>
MAXUS AGGRESSIVE
VALUE FUND
------------------------
INVESTOR INSTITUTIONAL
CLASS CLASS
-------- -------------
<S> <C> <C>
Management Fees......... 1.00% 1.00%
Distribution and/or
Service (12b-1)
Fees.................. 0.50% 0.00%
Other Expenses.......... 0.60% 0.60%
Total Annual Fund
Operating Expenses.... 2.10% 1.60%
</TABLE>
* Expenses shown do not include expenses of the underlying funds in which Maxus
Laureate Fund invests.
18
<PAGE> 20
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 $20.00 as of the
date of this Prospectus (subject to change without notice).
EXAMPLES: THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF
INVESTING IN THE FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.
THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS
INDICATED AND THEN REDEEM ALL OF YOUR SHARES AT THE END OF THOSE PERIODS. THE
EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE
FUND'S OPERATING EXPENSES REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE
HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Investor Shares
Maxus Income Fund..................... $194 $600 $1,032 $2,233
Maxus Equity Fund..................... $186 $576 $ 990 $2,148
Maxus Laureate Fund................... $195 $603 $1,037 $2,243
Maxus Ohio Heartland Fund............. $291 $892 $1,518 $3,204
Maxus Aggressive Value Fund........... $213 $658 $1,129 $2,431
Institutional Shares
Maxus Income Fund..................... $144 $446 $ 771 $1,691
Maxus Equity Fund..................... $135 $421 $ 729 $1,601
Maxus Laureate Fund................... $145 $449 $ 776 $1,702
Maxus Ohio Heartland Fund............. $241 $742 $1,270 $2,716
Maxus Aggressive Value Fund........... $163 $505 $ 871 $1,900
</TABLE>
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.
19
<PAGE> 21
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, Mutual Shareholder Services ("Mutual
Shareholder Services"), 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, Maxus Laureate Fund, Maxus Ohio Heartland
Fund or Maxus Aggressive Value Fund, mailed to: Mutual Shareholder Services, The
Tower at Erieview, Suite 1005, 1301 East Ninth Street, Cleveland, Ohio 44114.
20
<PAGE> 22
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:
Firstar, N.A. Cinti/Trust, ABA #0420-0001-3, F/F/C Account No. 19-6201 Maxus
Mutual Funds DDA 483617213 (Firstar 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, Mutual
Shareholder Services, at (216) 736-3500. The investor's bank may charge a fee
for the wire transfer of funds.
SUBSEQUENT PURCHASES
Investors may make additional purchases in the following manner:
BY CHECK. Checks made payable to Maxus Income Fund, Maxus Equity Fund, Maxus
Laureate Fund, Maxus Ohio Heartland Fund or Maxus Aggressive Value Fund should
be sent, along with the stub from a previous purchase or sale confirmation, to
Mutual Shareholder Services, The Tower at Erieview, Suite 1005, 1301 East Ninth
Street, Cleveland, OH 44114.
BY WIRE. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
BY TELEPHONE. Investors may purchase shares up to an amount equal to 3 times the
market value of shares held in the shareholder's account in a Fund on the
preceding day for which payment has been received, by telephoning Mutual
Shareholder Services, at (216) 736-3500 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.
21
<PAGE> 23
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 Mutual Shareholder
Services at (216) 736-3500 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 your investment in proper form, except that the price for
shares purchased by telephone is the net asset value per share next determined
after receipt of telephone instructions. Net asset value per share is computed
for each class of each Fund as of the close of business (currently 4:00 P.M.,
New York time) each day the New York Stock Exchange is open for trading and on
each other day during which there is a sufficient degree of trading in such
Fund's investments to affect materially net asset value of its redeemable
securities.
The assets of the Funds (except Maxus Laureate Fund) are valued primarily on
the basis of market quotations. The assets of Maxus Laureate Fund are valued
primarily on the basis of the reported net asset values of the underlying mutual
funds in which this Fund invests.
OTHER INFORMATION CONCERNING PURCHASE OF SHARES
Each Fund reserves the right to reject any order, to cancel any order due to
non-payment and to waive or lower the investment minimums with respect to any
person or class of persons. If an order is canceled because of non-payment or
because your
22
<PAGE> 24
check does not clear, you will be responsible for any loss that the Fund incurs.
If you are already a shareholder, the Fund can redeem shares from your account
to reimburse it for any loss. The Adviser has agreed to hold each Fund harmless
from net losses to that Fund resulting from the failure of a check to clear to
the extent, if any, not recovered from the investor. For purchases of $50,000 or
more, each Fund may, in its discretion, require payment by wire or cashier's or
certified check.
HOW TO REDEEM SHARES
All shares of each class of each Fund offered for redemption will be
redeemed at the net asset value per share of such class of that Fund next
determined after receipt of the redemption request, if in good order, by the
Transfer Agent. See "Price of Shares." Because the net asset value of each
Fund's shares will fluctuate as a result of changes in the market value of
securities owned, the amount a stockholder receives upon redemption may be more
or less than the amount paid for the shares. Redemption proceeds will be mailed
to the shareholder's registered address of record or, if $5,000 or more, may be
transmitted by wire, upon request, to the shareholder's pre-designated account
at a domestic bank. The shareholder will be charged for the cost of such wire.
If shares have been purchased by check and are being redeemed, redemption
proceeds will be paid only after the check used to make the purchase has cleared
(usually within 15 days after payment by check). This delay can be avoided if,
at the time of purchase, the shareholder provides payment by certified or
cashier's check or by wire transfer.
REDEMPTION BY MAIL
Shares may be redeemed by mail by writing directly to the Funds' Transfer
Agent, Mutual Shareholder Services, The Tower at Erieview, Suite 1005, 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.
23
<PAGE> 25
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
Mutual Shareholder Services at (216) 736-3500.
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 Mutual Shareholder Services
at (216) 736-3500 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.
24
<PAGE> 26
OTHER INFORMATION CONCERNING REDEMPTION
A shareholder who requests that the proceeds of a redemption be sent by wire
transfer will be charged for the cost of such wire, which is $10.00 as of the
date of this Prospectus (subject to change without notice).
Each Fund reserves the right to take up to seven days to make payment if, in
the judgment of the Fund's Investment Adviser, such Fund could be affected
adversely by immediate payment. In addition, the right of redemption for a Fund
may be suspended or the date of payment postponed (a) for any period during
which the NYSE is closed (other than for customary week-end and holiday
closings), (b) when trading in the markets that the Fund normally utilizes is
restricted, or when an emergency, as defined by the rules and regulations of the
SEC, exists, making disposal of that Fund's investments or determination of its
net asset value not reasonably practicable, or (c) for any other periods as the
SEC by order may permit for protection of that Fund's shareholders.
Due to the high cost of maintaining accounts, each Fund has the right to
redeem, upon not less than 30 days written notice, all of the shares of any
shareholder if, through redemptions, the shareholder's account has a net asset
value of less than $1,000 in the case of Investor Shares or $1,000,000 in the
case of Institutional Shares. A shareholder will be given at least 30 days
written notice prior to any involuntary redemption and during such period will
be allowed to purchase additional shares to bring his account up to the
applicable minimum before the redemption is processed.
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
25
<PAGE> 27
applicable Fund. Additional information regarding systematic withdrawal plans
may be obtained by calling Mutual Shareholder Services at (216) 736-3500.
INVESTMENT MANAGEMENT
THE INVESTMENT ADVISER
Each Fund has retained as its investment adviser Maxus Asset Management Inc
(the "Adviser"), The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114, an investment management organization founded in 1976.
The Adviser is actively engaged in providing discretionary investment management
services to institutional and individual clients.
Subject to the supervision of each Fund's Board of Trustees, the Adviser
manages each Fund's assets, including buying and selling portfolio securities.
The Adviser also furnishes office space and certain administrative services to
the Fund.
During 1999, the Adviser received from each Fund as compensation for its
services an annual fee of 1% of such Fund's net assets.
PORTFOLIO MANAGERS
Richard A. Barone has been the portfolio manager of Maxus Income Fund, Maxus
Equity Fund and Maxus Aggressive Value Fund since the inception of each Fund.
Mr. Barone has been President of the Adviser since 1976.
Alan Miller has been the portfolio manager of Maxus Laureate Fund since
January 1, 1995. Mr. Miller has been a portfolio manager with the Adviser since
1994.
Denis J. Amato has been the portfolio manager of the Maxus Ohio Heartland
Fund since its inception. Mr. Amato has been Chief Investment Officer of Gelfand
Maxus Asset Management Inc., a subsidiary of RMI, since 1997. Previously, he was
Managing Director of Gelfand Partners Asset Management since 1991.
26
<PAGE> 28
RULE 12b-1 PLAN (INVESTOR SHARES ONLY)
Each Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing
and servicing fees to the Distributor for the sale, distribution and customer
servicing of each Fund's Investor Shares. Such fees are payable at the annual
rate of .50% of the average daily net assets of the Investor Shares of each
Fund. Because Investor Shares pay marketing and servicing fees on an ongoing
basis, your investment cost may be higher over time than other shares with
different sales charges and fees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund declares and pays any dividends annually to shareholders.
Dividends are paid to all shareholders invested in the Fund on the record date.
The record date is the date on which a shareholder must officially own shares in
order to earn a dividend.
In addition, the Fund pays any capital gains at least annually. Your
dividends and capital gains distributions will be automatically reinvested in
additional Shares without a sales charge, unless you elect cash payments.
If you purchase Shares just before a Fund declares a dividend or capital
gain distribution, you will pay the full price for the Shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in Shares. Therefore, you should consider the tax
implications of purchasing Shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
Each Fund sends an annual statement of your account activity to assist you
in completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Dividends are taxable as ordinary income; capital gains
are taxable at different rates depending upon the length of time the Fund holds
its assets.
Fund distributions may be both dividends and capital gains. Generally,
distributions from Maxus Income Fund are expected to be primarily ordinary
income dividends, while distributions from the other Funds are expected to be
primarily capital
27
<PAGE> 29
gains distributions. Redemptions and exchanges are taxable sales. Please consult
your tax adviser regarding your federal, state, and local tax liability.
GENERAL INFORMATION
Maxus Laureate Fund is not available to residents of the State of Montana.
Shares of each Fund are offered exclusively by the Fund's Distributor, Maxus
Securities Corp. an affiliate of the Adviser. The Distributor's address is The
Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114.
Firstar, N.A., 425 Walnut Street, Cincinnati, Ohio 45201, is the custodian
for each Fund's securities and cash. Mutual Shareholder Services (an affiliate
of the Advisor), The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114, is each Fund's Transfer, Redemption and Dividend
Distributing Agent.
McCurdy & Associates C.P.A.'s, Inc., 27955 Clemens Road, Westlake, Ohio
44145, have been appointed as independent accountants for the Funds.
McDonald, Hopkins, Burke & Haber Co., L.P.A., 2100 Bank One Center, 600
Superior Avenue E., Cleveland, Ohio 44114, is legal counsel to the Funds and to
the Adviser.
28
<PAGE> 30
MAXUS INCOME FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McCurdy & Associates C.P.A.'s, Inc., whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
<TABLE>
<CAPTION>
01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
TO TO TO TO TO
INVESTOR SHARES 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
--------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of
Period........... $ 10.61 $ 11.31 $ 10.78 $ 10.54 $ 9.73
Net Investment
Income............. 0.86 0.72 0.67 0.70 0.72
Net Gains or Losses
on Securities
(realized and
unrealized)........ (1.43) (0.33) 0.53 0.24 0.81
------- ------- ------- ------- -------
Total From Investment
Operations......... (0.57) 0.39 1.20 0.94 1.53
Distributions
Net Investment
Income........... (0.82) (0.72) (0.67) (0.70) (0.72)
Capital Gains...... -- (0.37) -- -- --
Return of
Capital.......... -- -- -- -- --
------- ------- ------- ------- -------
Total
Distributions...... (0.82) (1.09) (0.67) (0.70) (0.72)
------- ------- ------- ------- -------
NET ASSET VALUE:
End of Period...... $ 9.22 $ 10.61 $ 11.31 $ 10.78 $ 10.54
======= ======= ======= ======= =======
Total Return......... (5.72%) 3.49% 11.47% 9.20% 16.15%
RATIOS/SUPPLEMENTAL
DATA
Net Assets at End of
Period
(Thousands)........ 24,023 39,650 38,620 35,728 37,387
Ratio of Expenses to
Average Net
Assets............. 1.91% 1.87% 1.91% 1.92% 1.90%
Ratio of Net Income
to Average Net
Assets............. 7.87% 6.52% 6.08% 6.50% 7.01%
Portfolio Turnover
Rate............... 51% 59% 70% 78% 121%
</TABLE>
29
<PAGE> 31
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INSTITUTIONAL SHARES 12/31/99 12/31/98
- -------------------- -------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of
Period........... $ 10.62 $ 11.31
Net Investment
Income............. 0.87 0.33
Net Gains or Losses
on Securities
(realized and
unrealized)........ (1.43) (0.50)
------- -------
Total From Investment
Operations......... (0.56) (0.17)
Distributions
Net Investment
Income........... (0.83) (0.33)
Capital Gains...... -- (0.19)
Return of
Capital.......... -- --
------- -------
Total
Distributions...... (0.83) (0.52)
------- -------
NET ASSET VALUE:
End of Period...... $ 9.23 $ 10.62
======= =======
Total Return......... (5.61%) 3.54%
RATIOS/SUPPLEMENTAL
DATA
Net Assets at End of
Period
(Thousands)........ 2,540 426
Ratio of Expenses to
Average Net
Assets............. 1.41% 1.37%*
Ratio of Net Income
to Average Net
Assets............. 8.37% 7.02%*
Portfolio Turnover
Rate............... 51% 59%*
</TABLE>
- ---------------
* annualized
** commencement of operations
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
30
<PAGE> 32
MAXUS EQUITY FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McCurdy & Associates C.P.A.'s, Inc., whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
<TABLE>
<CAPTION>
01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
TO TO TO TO TO
INVESTOR SHARES 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
--------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of
Period........... $ 15.92 $ 18.23 $ 16.00 $14.57 $12.95
Net Investment
Income............. 0.19 0.20 0.15 0.27 0.30
Net Gains or Losses
on Securities
(realized and
unrealized)........ 1.86 (1.80) 4.33 2.50 2.60
------- ------- ------- ------ ------
Total From Investment
Operations......... 2.05 (1.60) 4.48 2.77 2.90
Distributions
Net Investment
Income........... (0.23) (0.20) (0.15) (0.27) (0.27)
Capital Gains...... (0.25) (0.51) (2.10) (1.07) (1.01)
Return of
Capital.......... -- -- -- -- --
------- ------- ------- ------ ------
Total
Distributions...... (0.48) (0.71) (2.25) (1.34) (1.28)
------- ------- ------- ------ ------
NET ASSET VALUE:
End of Period...... $ 17.49 $ 15.92 $ 18.23 $16.00 $14.57
======= ======= ======= ====== ======
Total Return......... 12.93% -8.74% 28.16% 19.13% 22.43%
RATIOS/SUPPLEMENTAL
DATA
Net Assets at End of
Period
(Thousands)........ 39,885 53,279 55,637 38,765 31,576
Ratio of Expenses to
Average Net
Assets............. 1.83% 1.80% 1.87% 1.90% 1.96%
Ratio of Net Income
to Average Net
Assets............. 1.12% 1.15% 1.80% 1.71% 2.01%
Portfolio Turnover
Rate............... 78% 118% 89% 111% 173%
</TABLE>
31
<PAGE> 33
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INSTITUTIONAL SHARES 12/31/99 12/31/98
- -------------------- -------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of
Period........... $ 15.92 $ 15.92
Net Investment
Income............. 0.25 --
Net Gains or Losses
on Securities
(realized and
unrealized)........ 1.86 --
------- -------
Total From Investment
Operations......... 2.11 --
Distributions Net
Investment Income.. (0.26) --
Capital Gains...... (0.25) --
Return of
Capital.......... -- --
------- -------
Total
Distributions...... (0.51) --
------- -------
NET ASSET VALUE:
End of Period...... $ 17.52 $ 15.92
======= =======
Total Return......... 13.26% 0.00%
RATIOS/SUPPLEMENTAL
DATA
Net Assets at End of
Period
(Thousands)........ 546 0
Ratio of Expenses to
Average Net
Assets............. 1.33% 1.30%*
Ratio of Net Income
to Average Net
Assets............. 1.62% 1.65%*
Portfolio Turnover
Rate............... 78% 118%*
</TABLE>
- ---------------
* annualized
** commencement of operations
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
32
<PAGE> 34
MAXUS LAUREATE FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by McCurdy & Associates C.P.A.'s, Inc., whose
report, along with the Fund's financial statements, are included in the SAI,
which is available upon request.
<TABLE>
<CAPTION>
01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
TO TO TO TO TO
INVESTOR SHARES 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
--------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of
Period............ $13.29 $10.38 $10.82 $ 9.82 $ 9.62
Net Investment
Income.............. (0.07) (0.12) 0.52 (0.08) (0.19)
Net Gains or Losses on
Securities (realized
and unrealized)..... 6.78 3.76 0.07 2.14 1.57
------ ------ ------ ------ ------
Total From Investment
Operations.......... 6.71 3.64 0.59 2.06 1.38
Distributions
Net Investment
Income............ -- -- (0.52) -- --
Capital Gains....... (0.81) (0.73) (0.51) (1.06) (1.18)
Return of Capital... -- -- -- -- --
------ ------ ------ ------ ------
Total Distributions... (0.81) (0.73) (1.03) (1.06) (1.18)
------ ------ ------ ------ ------
NET ASSET VALUE:
End of Period....... $19.19 $13.29 $10.38 $10.82 $ 9.82
====== ====== ====== ====== ======
Total Return.......... 50.58% 35.14% 5.49% 21.03% 14.41%
RATIOS/SUPPLEMENTAL
DATA
Net Assets at End of
Period
(Thousands)......... 32,324 8,059 3,395 3,156 1,510
Ratio of Expenses to
Average Net
Assets.............. 1.92% 2.63% 2.49% 3.92% 3.85%
Ratio of Net Income to
Average Net
Assets.............. -0.49% -1.10% 4.19% -0.73% -1.69%
Portfolio Turnover
Rate................ 1172% 2792% 1511% 1267% 1377%
</TABLE>
33
<PAGE> 35
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INSTITUTIONAL SHARES 12/31/99 12/31/98
-------------------- -------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of
Period............ $13.30 $10.38
Net Investment
Income.............. 0.03 (0.11)
Net Gains or Losses on
Securities (realized
and unrealized)..... 6.78 3.76
------ ------
Total From Investment
Operations.......... 6.81 3.65
Distributions
Net Investment
Income............ -- --
Capital Gains....... (0.81) (0.73)
Return of Capital... -- --
------ ------
Total Distributions... (0.81) (0.73)
------ ------
NET ASSET VALUE:
End of Period....... $19.30 $13.30
====== ======
Total Return.......... 51.29% 35.24%
RATIOS/SUPPLEMENTAL
DATA
Net Assets at End of
Period
(Thousands)......... 1,230 9
Ratio of Expenses to
Average Net
Assets.............. 1.42% 2.13%*
Ratio of Net Income to
Average Net
Assets.............. 0.01% -0.60%*
Portfolio Turnover
Rate................ 1172% 2792%*
</TABLE>
- ---------------
* annualized
** commencement of operations
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
34
<PAGE> 36
MAXUS OHIO HEARTLAND FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by McCurdy & Associates
C.P.A.'s, Inc., whose report, along with the Fund's financial statements, are
included in the SAI, which is available upon request.
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INVESTOR SHARES 12/31/99 12/31/98
--------------- -------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of Period.......................... $ 8.16 $ 10.00
Net Investment Income.......................... (0.07) (0.05)
Net Gains or Losses on Securities (realized and
unrealized).................................. (0.83) (1.79)
-------- --------
Total From Investment Operations............... (0.90) (1.84)
Distributions
Net Investment Income........................ -- --
Capital Gains................................ -- --
Return of Capital............................ -- --
-------- --------
Total Distributions............................ -- --
-------- --------
NET ASSET VALUE:
End of Period................................ $ 7.26 $ 8.16
======== ========
Total Return................................... -11.03% -18.40%
RATIOS/SUPPLEMENTAL DATA
Net Assets at End of Period (Thousands)........ 1,057 1,234
Ratio of Expenses to Average Net Assets........ 2.88% 3.24%*
Ratio of Net Income to Average Net Assets...... -0.94% -0.88%*
Portfolio Turnover Rate........................ 33% 7%*
</TABLE>
35
<PAGE> 37
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INSTITUTIONAL SHARES 12/31/99 12/31/98
-------------------- -------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of Period.......................... $ 8.18 $ 10.00
Net Investment Income.......................... (0.04) (0.03)
Net Gains or Losses on Securities (realized and
unrealized).................................. (0.83) (1.79)
-------- --------
Total From Investment Operations............... (0.87) (1.82)
Distributions
Net Investment Income........................ -- --
Capital Gains................................ -- --
Return of Capital............................ -- --
-------- --------
Total Distributions............................ -- --
-------- --------
NET ASSET VALUE:
End of Period................................ $ 7.31 $ 8.18
======== ========
Total Return................................... -10.64% -18.20%
RATIOS/SUPPLEMENTAL DATA
Net Assets at End of Period (Thousands)........ 834 753
Ratio of Expenses to Average Net Assets........ 2.38% 2.74%*
Ratio of Net Income to Average Net Assets...... -0.44% -0.38%*
Portfolio Turnover Rate........................ 33% 7%*
</TABLE>
- ---------------
* annualized
** commencement of operations
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
36
<PAGE> 38
MAXUS AGGRESSIVE VALUE FUND
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the period of the Fund's operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned (or
lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by McCurdy & Associates
C.P.A.'s, Inc., whose report, along with the Fund's financial statements, are
included in the SAI, which is available upon request.
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INVESTOR SHARES 12/31/99 12/31/98
--------------- -------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of Period............................... $ 4.80 $ 5.00
Net Investment Income............................... (0.06) (0.07)
Net Gains or Losses on Securities (realized and
unrealized)....................................... 1.08 (0.09)
------ -------
Total From Investment Operations.................... 1.02 (0.16)
Distributions
Net Investment Income............................. -- --
Capital Gains..................................... (0.24) (0.04)
Return of Capital................................. -- --
------ -------
Total Distributions................................. (0.24) (0.04)
------ -------
NET ASSET VALUE:
End of Period..................................... $ 5.58 $ 4.80
====== =======
Total Return........................................ 21.19% -3.27%
RATIOS/SUPPLEMENTAL DATA
Net Assets at End of Period (Thousands)............. 9,128 3,159
Ratio of Expenses to Average Net Assets............. 2.10% 2.69%*
Ratio of Net Income to Average Net Assets........... -0.82% -1.33%*
Portfolio Turnover Rate............................. 96% 109%*
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
01/01/99 02/01/98**
TO TO
INSTITUTIONAL SHARES 12/31/1999 12/31/98
-------------------- ---------- ----------
<S> <C> <C>
NET ASSET VALUE:
Beginning of Period............................. $ 4.82 $ 5.00
Net Investment Income............................. (0.04) (0.05)
Net Gains or Losses on Securities (realized and
unrealized)..................................... 1.08 (0.09)
------ -------
Total From Investment Operations.................. 1.04 (0.14)
Distributions
Net Investment Income........................... -- --
Capital Gains................................... (0.24) (0.04)
Return of Capital............................... -- --
------ -------
Total Distributions............................... (0.24) (0.04)
------ -------
NET ASSET VALUE:
End of Period................................... $ 5.62 $ 4.82
====== =======
Total Return...................................... 21.60% -2.87%
RATIOS/SUPPLEMENTAL DATA
Net Assets at End of Period (Thousands)........... 3,283 1,156
Ratio of Expenses to Average Net Assets........... 1.60% 2.19%*
Ratio of Net Income to Average Net Assets......... -0.32% -0.83%*
Portfolio Turnover Rate........................... 96% 109%*
</TABLE>
- ---------------
* annualized
** commencement of operations
Notes to Financial Statements appear in the Fund's Statement of Additional
Information.
38
<PAGE> 40
APPENDIX A
DESCRIPTION OF BOND RATINGS*
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.
- ---------------
* As described by Standard & Poor's Corporation.
39
<PAGE> 41
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
RISK/RETURN SUMMARY....................................... 2
HOW TO PURCHASE SHARES.................................... 19
HOW TO REDEEM SHARES...................................... 23
SYSTEMATIC WITHDRAWAL PLAN................................ 25
INVESTMENT MANAGEMENT..................................... 26
DIVIDENDS, DISTRIBUTIONS AND TAXES........................ 27
GENERAL INFORMATION....................................... 28
FINANCIAL HIGHLIGHTS...................................... 29
APPENDIX A................................................ 39
</TABLE>
A Statement of Additional Information (SAI) dated April 30, 2000, is
incorporated by reference into this prospectus. Additional information about the
Funds' investments is available in the Funds' annual and semi-annual reports to
shareholders. The annual report discusses market conditions and investment
strategies that significantly affected each Fund's performance during its last
fiscal year. To obtain the SAI, the annual report, semi-annual report and other
information without charge and to make shareholder inquires, call the Funds at
1-800-44-MAXUS.
Information about each Fund (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. Reports and other information about each Fund are available on
the Commission's Internet site at http://www.sec.gov and copies of this
information may be obtained, upon payment of a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009. You can
call 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
The Maxus Funds
The Tower at Erieview, 36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
(216) 687-1000
<TABLE>
<S> <C> <C>
Investment Company Act File Nos: Income Fund: 811-4144
Equity Fund: 811-5865
Laureate Fund: 811-7516
Ohio Heartland and
Aggressive Value Funds: 811-8499
</TABLE>
40
<PAGE> 42
STATEMENT OF ADDITIONAL INFORMATION
April 30, 2000
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 is not a prospectus. A
copy of the Fund's prospectus can be obtained from the Fund's distributor, Maxus
Securities Corp, The Tower at Erieview, 36th Floor, 1301 East Ninth Street,
Cleveland, Ohio 44114, telephone number (216) 687-1000.
The date of this Statement of Additional Information and of the
prospectus to which it relates is April 30, 2000.
<PAGE> 43
TABLE OF CONTENTS
CAPTION PAGE LOCATION IN PROSPECTUS
- ------- ---- ----------------------
Fund History 3 Not Applicable
Investments and Risks 3 Maxus Equity Fund -
Risk/Return Summary
Management of the Fund 7 Investment Management
Ownership of Shares 9 Not Applicable
Investment Advisory and Other Services 9 Investment Management
Capital Stock and Other Securities 12 Not Applicable
Purchase, Redemption and Pricing 12 How to Purchase Shares/
How to Redeem Shares
Taxation of Fund 13 Dividends, Distributions and
Taxes
Distributor 13 Investment Management
Performance Data 14 Not Applicable
Financial Statements 19 Maxus Equity Fund - Financial
Highlights
-2-
<PAGE> 44
FUND HISTORY
Maxus Equity Fund (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.
INVESTMENTS AND RISKS
CLASSIFICATION
The Fund is a diversified, open-end management investment company.
INVESTMENT STRATEGIES AND RISKS
The Fund has an investment objective of obtaining the highest total
return, a combination of income and capital appreciation. The principal
investment strategies used by the Fund to pursue this objective, together with
the principal risks of investing in the Fund, are described in the Prospectus
under the heading "Maxus Equity Fund - Risk/Return Summary."
Described below are (i) certain other investment strategies (including
strategies to invest in particular types of securities) which are not principal
strategies and (ii) the risks of those strategies:
DEBT SECURITIES. The Fund may invest a portion of its assets in debt
securities. The Fund's portfolio will be exposed to the following additional
risks in connection with its investments in debt securities:
- Prices of debt securities rise and fall in response to interest
rate changes for similar securities. Generally, when interest
rates rise, prices of debt securities fall. To the extent that the
Fund invests in debt securities, the net asset value of the Fund
may decrease during periods of rising interest rates.
- An issuer of debt securities may default (fail to repay interest
and principal when due). If an issuer defaults or the risk of such
default is perceived to have increased, the Fund will lose all or
part of its investment. To the extent that the Fund invests in
debt securities, the net asset value of the Fund may fall during
periods of economic downturn when such defaults or risk of
defaults increases.
- Securities rated below investment grade, also known as junk bonds,
generally entail greater risks than investment grade securities.
For example, their prices are more volatile, their values are more
negatively impacted by economic downturns, and their trading
market may be more limited.
OPTIONS. The Fund may invest up to 5% of its assets in put and call
options which trade on securities exchanges. Such options may be on individual
securities or on indexes. A put option gives the Fund, in return for the payment
of a premium, the right to sell the underlying security or index to another
party at a fixed price. If the market value of the underlying security or index
declines, the value of the put option would be expected to rise. If the market
value of the underlying security or index remains the same or rises, however,
the put option could lose all of its value, resulting in a loss to the Fund.
A call option gives the Fund, in return for the payment of a premium,
the right to purchase the underlying security or index from another party at a
fixed price. If the market value of the underlying security or index rises, the
value of the call option would also be expected to rise. If the market value of
the underlying security or index remains the same or declines, however, the call
option could lose all of its value, resulting in a loss to the Fund.
CLOSED-END FUNDS. The Fund may invest in closed-end investment
companies (also known as "closed-end funds"). Typically, the common shares of
closed-end funds are offered to the public in a one-time initial public offering
by a group of underwriters who retain a spread or underwriting commission. Such
securities are then listed for trading on a national securities exchange or in
the over-the-counter markets. Because the common shares of closed-end funds
cannot be redeemed upon demand to the issuer like the shares of an open-end
investment company
-3-
<PAGE> 45
(such as the Fund), investors seek to buy and sell common shares of closed-end
funds in the secondary market. The common shares of many closed-end funds, after
their initial public offering, frequently trade at a price per share which is
less than the net asset value per share, the difference representing the "market
discount" of such common shares. The Funds purchase common shares of closed-end
funds which trade at a market discount and which the Adviser believes presents
the opportunity for capital appreciation or increased income due in part to such
market discount.
However, there can be no assurance that the market discount on common
shares of any closed-end fund will ever decrease. In fact, it is possible that
this market discount may increase and the Fund may suffer realized or unrealized
capital losses due to further decline in the market price of the securities of
such closed-end funds, thereby adversely affecting the net asset value of the
Fund's shares. Similarly, there can be no assurance that the common shares of
closed-end funds which trade at a premium will continue to trade at a premium or
that the premium will not decrease subsequent to a purchase of such shares by
the Fund. The Fund may also invest in preferred shares of closed-end funds.
The Fund will structure its investments in the securities of closed-end
funds to comply with applicable provisions of the Investment Company Act of 1940
(the "Act"). The presently applicable provisions require that (i) the Fund and
affiliated person of such Fund not own together more than 3% of the total
outstanding stock of any one investment company, (ii) the Fund not offer its
shares at a public offering price that includes a sales load of more than 1 1/2%
and (iii) the Fund either seek instructions from its shareholders, with regard
to the voting of all proxies with respect to its investment in the securities of
closed-end funds and vote such proxies with respect to its investment in the
securities of closed-end funds and vote such instructions, or vote the shares
held by it in the same proportion as the vote of all other holders of such
securities. The Fund intends to vote the shares of any closed-end fund held by
it in the same proportion as the vote of all other holders of such fund's
securities. The effect of such "mirror" voting will be to neutralize the Fund's
influence on corporate governance matters regarding the closed-end funds in
which such Fund invests.
The Fund will not invest directly in the securities of open-end
investment companies. However, the Fund may retain the securities of a
closed-end investment company that has converted to an open-end fund status
subsequent to the Fund's investment in the securities of such closed-end fund.
Generally, shares of an open-end investment company can be redeemed, at their
net asset value, upon demand to the issuer. However, pursuant to applicable
provisions of the Act, the Fund may not redeem more than 1% of the outstanding
redeemable securities of an open-end investment company during any period of 30
days or less. Consequently, if the Fund should own more than 1% of the
outstanding redeemable securities of an open-end investment company after such
fund's conversion from closed-end fund status, the amount in excess of 1% may be
treated as an investment in illiquid securities. Because the Fund may not hold
at any time more than 10% of the value of its net assets in illiquid securities
(e.g. securities that are not readily marketable within seven days), the Fund
may seek to divest itself, prior to any such conversion, of securities in excess
of 1% of the outstanding redeemable securities of a converting fund. The Fund
may, however, retain such securities and any amount in excess of 1% of the
open-end fund and thereby subject to the limits on redemption would be treated
as an investment in illiquid securities subject to the aggregate limit of 10% of
the Fund's total assets.
The Fund may invest in the securities of closed-end funds which (i)
concentrate their portfolios in issuers in specific industries or in specific
geographic areas and (ii) are non-diversified for purposes of the Act. However,
because the Fund does not intend to concentrate their investments in any single
industry and because the closed-end funds in which the Fund invests generally
satisfy the diversification requirements applicable to a regulated investment
company under the Internal Revenue Code, the Funds do not believe that their
investments in closed-end funds which concentrate in specific industries or
geographic areas or which are non-diversified for purposes of the Act will
represent special risks to the shareholders of the Fund. The Fund will treat its
entire investment in the securities of a closed-end fund that concentrates in a
specific industry as an investment in securities of an issuer in such industry.
Some of the closed-end funds in which the Fund invests may incur more
risks than others. For example, some of these closed-end funds may have policies
that permit them to invest up to 100% of their assets in securities of foreign
issuers and to engage in foreign currency transactions with respect to their
investments; invest up to 100% of their assets in corporate bonds which are not
considered investment grade bonds by Standard & Poor's
-4-
<PAGE> 46
Corporation or Moody's Investor Services, Inc., or which are unrated; invest
some portion of their net assets in illiquid securities; invest some portion of
their net assets in warrants; lend their portfolio securities; sell securities
short; borrow money in amounts upon to some designated percentage of their
assets for investment purposes; write (sell) or purchase call or put options on
securities or on stock indexes; concentrate 25% or more of their total assets in
one industry; enter into future contracts; and write (sell) or purchase options
on futures contracts.
Like the Fund, closed-end funds frequently pay an advisory fee for the
management of their portfolios, as well as other expenses. Therefore, investment
by the Fund in such funds often results in a "duplication" of advisory fees and
other expenses, thereby increasing the overall charge to the net asset value of
the Fund's shares.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, the Fund may lend its portfolio securities (principally to
broker-dealers) without limit where such loans are callable at any time and are
continuously secured by collateral (cash or government securities) equal to no
less than the market value, determined daily, of the securities loaned. As an
operating policy which may be changed without shareholders vote, the Adviser
will limit such lending to not more than one-third of the value of the Fund's
total assets. The Fund will receive amounts equal to dividends or interest on
the securities loaned. It will also earn income for having made the loan. Any
cash collateral pursuant to these loans will be invested in money market
instruments. Where voting or consent right with respect to loaned securities
pass to the borrower, management will follow the policy of calling the loan, in
whole or in part as may be appropriate, to permit the exercise of such voting or
consent rights if the issues involved have a material effect on the Fund's
investment in the securities loaned.
As with any extensions of credit, there are risks of delay in recovery
and in some cases even loss of rights in the collateral should the borrower of
the securities fail financially. Also, any securities purchased with cash
collateral are subject to market fluctuations while the loan is outstanding.
REPURCHASE AGREEMENTS. The Fund will not invest more than 5% of its
assets in repurchase agreements. A repurchase agreement is an instrument under
which the Fund acquires ownership of an obligation but the seller agrees, at the
time of sale, to repurchase the obligation at a mutually agreed-upon time and
price. The resale price is in excess of the purchase price and reflects an
agreed-upon market rate unrelated to the interest rate on the purchased
security. The Fund will make payments for repurchase agreements only upon
physical delivery or evidence of book entry transfer to the account of the
custodian or bank acting as agent. In the event of bankruptcy or other default
of a seller of a repurchase agreement, the Fund could experience both delays in
liquidating the underlying securities and losses including: (a) possible decline
in the value of the underlying securities during the period while the Fund seeks
to enforce its rights thereto; (b) possible subnormal levels of income and lack
of access to income during this period; and (c) expenses of enforcing its
rights.
-5-
<PAGE> 47
FUND POLICIES
The Fund has adopted the following fundamental investment policies and
restrictions. These policies cannot be changed without approval by the holders
of a majority of the outstanding voting securities of the Fund. As defined in
the Act, the "vote of a majority of the outstanding voting securities" of the
Fund means the lesser of the vote of (a) 67% of the shares of the Fund at a
meeting where more than 50% of the outstanding shares are present in person or
by proxy or (b) more than 50% of the outstanding shares of the Fund. The Fund
may not:
1. invest more than 5% of the value of its total assets in the
securities of any one issuer (except obligations issued or guaranteed
by the United States Government, its agencies and instrumentalities);
2. acquire more than 10% of the outstanding voting securities of
any one issuer;
3. invest more than 25% of the value of such Fund's total assets
in securities of companies in a particular industry (except
obligations issued or guaranteed by the United States Government, its
agencies and instrumentalities);
4. invest in securities of other registered investment companies,
except by purchase in the open market involving only customary
brokerage commissions, or except as part of a merger, consolidation,
reorganization or acquisition;
5. invest in securities of any registered closed-end investment
company, if immediately after such purchase or acquisition such Fund
would own more than 3% of the total outstanding voting stock of such
closed-end company.
6. Invest more than 10% of the Fund's total assets in securities
of issuers which with their predecessors have a record of less than
three years continuous operation.
7. Invest more than 10% of the Fund's net assets in securities
for which market quotations are not readily available and repurchase
agreements maturing in more than seven days.
8. Lend money or securities, provided that the making of
interest-bearing demand deposits with banks and the purchase of debt
securities in accordance with its objective and policies are not
prohibited and the Fund may lend its portfolio securities as described
above under the caption "Lending of Portfolio Securities."
9. Borrow money except for temporary or emergency purposes from
banks (but not for the purpose of purchase of investments) and then
only in an amount not to exceed 5% of the Fund's net assets; or pledge
the Fund's securities or receivables or transfer or assign or
otherwise encumber them in an amount exceeding the amount of the
borrowings secured thereby.
10. Make short sales of securities, or purchase any securities on
margin except to obtain such short-term credits as may be necessary
for the clearance of transactions.
11. Write (sell) put or call options, combinations thereof or
similar options; nor may it purchase put or call options if more than
5% of the Fund's net assets would be invested in premiums on put and
call options, combinations thereof or similar options.
12. Purchase or retain the securities of any issuer if any of the
officers or Trustees of the Fund or its investment adviser owns
beneficially more than 1/2 of 1% of the securities of such issuer and
together own more than 5% of the securities of such issuer.
13. Invest for the purpose of exercising control or management of
another issuer.
14. Invest in commodities or commodity futures contracts or in
real estate, although it may invest in securities which are secured by
real estate and securities of issuers which invest or deal in real
estate.
-6-
<PAGE> 48
15. Invest in interests in oil, gas or other mineral exploration
or development programs, although it may invest in the securities of
issuers which invest in or sponsor such programs.
16. Underwrite securities issued by others except to the extent
the Fund may be deemed to be an underwriter, under the federal
securities laws, in connection with the disposition of portfolio
securities.
17. Issue senior securities as defined in the Act.
18. Purchase securities subject to restrictions on disposition
under the Securities Act of 1933.
If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage beyond the specified limit resulting
from a change in values or net assets will not be considered a violation.
DEFENSIVE INVESTMENTS
When the Adviser believes that market conditions warrant a temporary
defensive posture, the Fund may invest up to 100% of its assets in high-quality
short-term debt securities and money market instruments, such as money market
mutual funds, commercial paper, certificates of deposit and bank or savings and
loan association interest-bearing demand accounts. The taking of such a
temporary defensive posture may adversely affect the ability of the Fund to
achieve its investment objective.
PORTFOLIO TURNOVER
The Fund is not restricted with regard to portfolio turnover and will
make changes in its investment portfolios from time to time as business and
economic conditions and market prices may dictate and its investment policies
may require. The portfolio turnover rates in 1999, 1998 and 1997 were 78%, 118%
and 89%, respectively. A high rate of portfolio turnover in any year will
increase custodial transaction charges paid and could result in high amounts of
realized investment gain subject to the payment of taxes by shareholders.
MANAGEMENT OF THE FUND
The Board of Trustees is responsible for managing the Fund's business
affairs and for exercising all the Fund's powers except those reserved for the
shareholders. The day-to-day operations of the Fund are conducted by its
officers. The following table provides biographical information with respect to
each current Trustee and officer of the Fund. Each Trustee who is or may be
deemed to be an "interested person" of the Fund, as defined in the Act, is
indicated by an asterisk. Each Trustee of the Fund is also a Trustee of Maxus
Income Fund, Maxus Laureate Fund and MaxFund Trust, three 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 Management
Inc., dba Maxus Investment Group
(financial services)
Raj Aggarwal PhD. Trustee Professor of Finance
John Carroll University John Carroll University
20700 North Park Blvd.
University Heights, Ohio 44118
</TABLE>
-7-
<PAGE> 49
<TABLE>
<S> <C> <C>
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)
Kent W. Clapp Trustee Chairman, Medical Mutual of Ohio
2060 East Ninth Street (health insurer)
Cleveland, Ohio 44114
Robert H. Fritz Trustee Retired
12613 West Lake Road
Vermillion, Ohio 44089
Steven M. Kasarnich Trustee President/Business Manager, Northeast
47 Alice Drive Ohio District Council of Carpenters;
Akron, Ohio 44319 Executive Secretary-Treasurer, Ohio
State Council of Carpenters
Burton D. Morgan Trustee Chairman, Morgan Bank (bank);
Park Place President, Basic Search, Inc.
10 West Streetsboro Road (venture capital); Chairman,
Hudson, Ohio 44236 Multi-Color Corporation (printing);
Chairman, Morgan Funshares, Inc. (mutual
fund)
Michael A. Rossi, C.P.A. Trustee Certified Public Accountant
6559 Wilson Mills Road
Highland Heights, Ohio 44143
Joseph H. Smith Trustee Chief Financial Officer, Diocese of
1404 East Ninth Street Cleveland
8th Floor
Cleveland, Ohio 44114
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 most recently completed fiscal year, which are the only
compensation or benefits payable to Trustees, are summarized in the following
table:
-8-
<PAGE> 50
COMPENSATION TABLE
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation From All Maxus
Name of Trustee from the Fund Funds Payable to Trustees
--------------- ------------- -------------------------
<S> <C> <C>
Richard A. Barone $0 $0
Denis J. Amato $0 $0
Raj Aggarwal $0 $0
Kent W. Clapp $700 $2,500
Robert H. Fritz $0 $0
Steven M. Kasarnich $1,000 $3,300
Burton D. Morgan $900 $3,400
Michael A. Rossi $1,000 $3,300
Joseph H. Smith $1,000 $3,300
</TABLE>
OWNERSHIP OF SHARES
As of March 31, 2000, the following person was known by the Fund to be
the beneficial owner of 126,507 shares (6.13%) of the Fund:
Saxon & Company
P.O. Box 7750-1888
Philadelphia, Pennsylvania 19282
As of March 31, 2000, all officers and Trustees as a group beneficially
owned 13,027 shares, constituting 0.6% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
MAM, the Fund's investment adviser, is a wholly-owned subsidiary of
Resource Management Inc., d/b/a Maxus Investment Group, an Ohio corporation
("RMI") with interests primarily in the financial services industry. RMI also
owns all of the shares of Maxus Securities Corp. ("MSC"), the NASD broker/dealer
through which shares of each Fund are offered. Richard A. Barone is the
president and a principal shareholder of RMI and, therefore, is deemed to be in
control of MAM and MSC.
As compensation for MAM's services rendered to the Fund, the Fund pays
a fee, computed and paid monthly, at an annual rate of 1% of the average value
of the first $150,000,000 of the Fund's daily net assets and 0.75% of average
daily net assets in excess of $150,000,000. For 1999, 1998, and 1997, the
Adviser received management fees from the Fund in the amounts of $472,564,
$549,278, and $477,143, respectively.
Subject to the supervision and direction of the Fund's Trustees, MAM,
as investment adviser, manages the Fund's portfolio in accordance with the
stated policies of the Fund. MAM makes investment decisions for the Fund and
places the purchase and sale orders for portfolio transactions. In addition, MAM
furnishes office facilities and clerical and administrative services, and pays
the salaries of all officers and employees who are employed by both it and the
Fund and, subject to the direction of the Fund's Board of Trustees, is
responsible for the overall management of the business affairs of the Fund,
including the provision of personnel for recordkeeping, the preparation of
governmental reports and responding to shareholder communications.
Other expenses are borne by the Fund and include brokerage fees and
commissions, fees of Trustees not affiliated with MAM, expenses of registration
of the Fund and of the shares of the Fund with the Securities and Exchange
Commission (the "SEC") and the various states, charges of the custodian,
dividend and transfer agent, outside auditing and legal expenses, liability
insurance premiums on property or personnel (including officers and
-9-
<PAGE> 51
trustees), maintenance of business trust existence, any taxes payable by the
Fund, interest payments relating to Fund borrowings, costs of preparing,
printing and mailing registration statements, prospectuses, periodic reports and
other documents furnished to shareholders and regulatory authorities, costs of
printing share certificates, portfolio pricing services and Fund meetings,
amortization of organizational expenses and costs incurred pursuant to the
Fund's Distribution and Shareholder Servicing Plan described below.
DISTRIBUTION PLAN
The Fund has a Distribution and Shareholder Servicing Plan (the "Plan")
pursuant to Rule 12b-1 under the Act, pursuant to which the Fund pays MSC 0.50%
of average net assets of Investor Shares annually for the costs of activities
intended to result in the sale of Investor Shares, regardless of the amount of
expenses actually incurred by MSC. In 1999, $235,565 (0.50% of average net
assets) was paid by the Fund to MSC pursuant to the Plan. Of such amount,
$228,413 was used by MSC to compensate securities dealers and other persons
and organizations for providing distribution assistance and shareholder services
with respect to Investor Shares, and $7,152 was expended for advertising and
marketing.
The Fund does not participate in any joint distribution activities with
respect to another series or investment company.
The Trustees believe that the Plan has benefited and will continue to
benefit the Fund and the holders of Investor Shares. Among these benefits are:
(1) reductions in the per share expenses of the Fund as a result of increased
assets n the Fund; (2) reductions in the cost of executing portfolio
transactions and the possible ability of the Investment Adviser in some cases to
negotiate lower purchase prices for securities, due to the potentially larger
blocks of securities which may be traded by the Fund as its net assets increase
in size; and (3) a more predictable flow of cash which may provide investment
flexibility in seeking the Fund's investment objective and may better enable the
Fund to meet redemption demands without liquidating portfolio securities at
inopportune times.
OTHER SERVICE PROVIDERS
The Fund has entered into an Administration Agreement with Mutual
Shareholder Services ("MSS"), pursuant to which MSS has agreed to act as the
Fund's Transfer, Redemption and Dividend Disbursing Agent. As such, MSS
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 MSS 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 MSS, pursuant to which MSS has agreed to provide
portfolio pricing and related services, for the payment of an annual fee of
$17,400 for the first $25,000,000 in net assets, $8,500 for the next $25,000,000
in net assets and $4,750 for each additional $25,000,000 in net assets, plus
out-of-pocket expenses. For 1999, 1998 and 1997, the Fund paid MSS fees under
the Administration Agreement and the Accounting Services Agreement in the
amounts of $42,065, $46,077, and $42,563, respectively. MSS is a subsidiary of
RMI, the parent company of the Investment Adviser.
Firstar, 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.
-10-
<PAGE> 52
Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. There is generally no stated commission in the case of
securities traded in the over-the-counter markets, but the price of those
securities includes an undisclosed commission or markup. The cost of securities
purchased from underwriters includes an underwriting commission or concession,
and the prices at which securities are purchased from and sold to dealers
include a dealer's markup or markdown.
In executing portfolio transactions and selecting brokers and dealers,
it is the Fund's policy to seek the best overall terms available. The Investment
Advisory and Administration Agreement between the Fund and MAM provides that, in
assessing the best overall terms available for any transaction, MAM shall
consider the factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In addition, the
Investment Advisory and Administration Agreement authorizes MAM, in selecting
brokers or dealers to execute a particular transaction, and, in evaluating the
best overall terms available, to consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934) provided to the Fund and/or other accounts over which MAM exercises
investment discretion.
The Fund's Board of Trustees periodically reviews the commissions paid
by the Fund to determine if the commissions paid over representative periods of
time were reasonable in relation to the benefits inuring to the Fund. It is
possible that certain of the services received will primarily benefit one or
more other accounts for which investment discretion is exercised. Conversely,
the Fund may be the primary beneficiary of services received as a result of
portfolio transactions effected for other accounts. MAM's fee under the
Investment Advisory and Administration Agreement is not reduced by reason of
MAM's receiving such brokerage and research services.
Under the Act, with respect to transactions effected on a securities
exchange, a mutual fund may not pay brokerage commissions to an affiliate which
exceed the usual and customary broker's commissions. A commission is deemed as
not exceeding the usual and customary broker's commission if (i) the commission
is reasonable and fair compared to the commission received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold during a comparable period of time and (ii) the Board of
Trustees, including a majority of the Trustees who are not interested persons of
the mutual fund, have adopted procedures reasonably designed to provide that
such commission is consistent with the above-described standard, review these
procedures annually for their continuing appropriateness and determine quarterly
that all commissions paid during the preceding quarter were in compliance with
these procedures.
The Fund's Board of Trustees has determined that any portfolio
transaction for the Fund may be effected through MSC if, in MAM's judgment, the
use of MSC is likely to result in price and execution at least as favorable as
those of other qualified brokers, and if, in the transaction, MSC charges the
Fund a commission rate consistent with those charged by MSC to comparable
unaffiliated customers in similar transactions. Each quarter, the Trustees
review a report comparing the commissions charged the Fund by MSC to industry
norms for similar sized transactions both (i) with proprietary research or other
valuable services being provided and (ii) without such services being provided.
Based upon such review, the Board of Trustees determines on a quarterly basis
whether the commissions charged by MSC meet the requirements of the Act. MSC
will not participate in commissions from brokerage given by the Fund to other
brokers or dealers. Over-the-counter purchases and sales are transacted through
brokers and dealers with principal market makers. The Fund will in no event
effect principal transactions with MSC in over-the-counter securities in which
MSC makes a market. MSC is a wholly owned subsidiary of RMI, a corporation
controlled by Richard A. Barone, Chairman of the Fund. Richard A. Barone is,
therefore, considered to control MSC.
Even though investment decisions for the Fund are made independently
from those of the other accounts managed by MAM, investments of the kind made by
the Fund may also be made by those other accounts. When the Fund and one or more
accounts managed by MAM are prepared to invest in, or desire to dispose of, the
same security, available investments or opportunities for sales will be
allocated in a manner believed by MAM to be equitable. In some cases, this
procedure may adversely affect the price paid or received by the Fund or the
size of the position obtained for or disposed of by the Fund.
-11-
<PAGE> 53
During 1999, 1998, and 1997, the aggregate amount of brokerage
commissions paid by the Fund were $277,638, $379,744, and $250,842,
respectively, all of which was paid to MSC.
CAPITAL STOCK AND OTHER SECURITIES
The Declaration of Trust provides for an unlimited number of authorized
shares of beneficial interest in the Fund. Shares of the Fund or divided into
two classes, Investor Shares and Institutional Shares. Each share represents an
equal proportionate interest in the Fund with other shares of the same class,
and is entitled to such dividends and distributions out of the income earned on
the assets belonging to the Fund as are declared at the discretion of the
Trustees.
Shareholders are entitled to one vote per share (with proportional
voting for fractional shares) on such matters as shareholders are entitled to
vote. Shareholders vote in the aggregate and not by class on all matters except
that (i) shares shall be voted by individual class when required by the 1940 Act
or when the Trustees have determined that the matter affects only the interests
of a particular class, and (ii) only the holders of Investor Shares will be
entitled to vote on matters submitted to shareholder vote with regard to the
Distribution Plan applicable to such class.
Whenever the approval of a majority of the outstanding shares of the
Fund is required in connection with shareholder approval of an investment
advisory contract, changes in the investment objective and policies or the
investment restrictions, or approval of a distribution expense plan, a
"majority" shall mean the vote of (i) 67% or more of the shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of such Fund are present in person or by proxy, or (ii) more than 50% of the
outstanding shares of the Fund, whichever is less.
Although the Fund is not required to hold annual meetings of the
shareholders, shareholders holding at least 10% of the Fund's outstanding shares
have the right to call a meeting to elect or remove one or more of the Trustees
of the Fund.
Upon issuance and sale in accordance with the terms of the Prospectus,
each share will be fully paid and non-assessable. Shares of the Fund have no
preemptive, subscription or conversion rights. The Declaration of Trust also
provides that shareholders shall not be subject to any personal liability for
the acts or obligations of the Fund and that every agreement, obligation or
instrument entered into or executed by the Fund shall contain a provision to the
effect that the shareholders are not personally liable thereunder.
PURCHASE, REDEMPTION AND PRICING OF SHARES
The information pertaining to the purchase and redemption of the Fund's
shares appearing in the Prospectus under the captions "How To Purchase Shares"
and "How To Redeem Shares" is hereby incorporated by reference.
The price paid for shares of a certain class of the Fund is the net
asset value per share of such class next determined after receipt by the
Transfer Agent of properly identified purchase funds, except that the price for
shares purchased by telephone is the net asset value per share next determined
after receipt of telephone instructions. Net asset value per share is computed
for each class of the Fund as of the close of business (currently 4:00 P.M., New
York time) each day the New York Stock Exchange is open for trading and on each
other day during which there is a sufficient degree of trading in the Fund's
investments to affect materially net asset value of its redeemable securities.
For purposes of pricing sales and redemptions, net asset value per
share of a class of the Fund is calculated by determining the value of the
class's proportional interest in the assets of the Fund, less (i) such class's
proportional share of general liabilities and (ii) the liabilities allocable
only to such class; and dividing such amount by the number of shares of such
class outstanding.
-12-
<PAGE> 54
The assets of the Fund (other than cash and cash equivalents) consist
of the underlying funds that are valued at their respective net asset values
under the 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.
TAXATION OF THE FUND
The Fund intends to qualify each year as a "regulated investment
company" under the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). Qualification as a regulated investment company
will result in the Fund's paying no taxes on net income and net realized capital
gains distributed to shareholders. If these requirements are not met, the Fund
will not receive special tax treatment and will pay federal income tax, thus
reducing the total return of the Fund.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually by the Fund's transfer agent. Shareholders
are urged to consult their own tax advisers regarding specific questions as to
Federal, state or local taxes.
Income received by the Fund from a mutual fund in the 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 the 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 the
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.
The 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, 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.
DISTRIBUTOR
Shares of the Fund are offered on a best-efforts basis by MSC, a
registered NASD broker-dealer. MSC is a wholly-owned subsidiary of RMI, which is
controlled by Richard A. Barone, Chairman of the Fund.
-13-
<PAGE> 55
Pursuant to the Distribution Agreement between the Fund and MSC, MSC
has agreed to hold itself available to receive orders, satisfactory to MSC, for
the purchase of the Fund's shares, to accept such orders on behalf of the Fund
as of the time of receipt of such orders and to transmit such orders to the
Fund's transfer agent as promptly as practicable. MSC does not receive any
commissions or other compensation for the sale of shares of the Fund. However,
pursuant to the Plan, MSC receives an annual distribution fee of .50% of average
net assets of Investor Shares. Certain employees of MSC may receive compensation
under the Plan. See "Investment Advisory and Other Services - Distribution
Plan."
The Distribution Agreement provides that MSC shall arrange to sell the
Fund's Shares as agent for the Fund and may enter into agreements with
registered broker-dealers as it may select to arrange for the sale of such
shares. MSC is not obligated to sell any certain number of shares.
PERFORMANCE
From time to time, the Fund may advertise performance data represented
by a cumulative total return or an average annual total return. Total returns
are based on the overall or percentage change in value of a hypothetical
investment in the Fund and assume all of the Fund's dividends and capital gain
distributions are reinvested. A cumulative total return reflects the Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if the Fund's performance had been constant
over the entire period. Because average annual returns tend to smooth out
variations in the Fund's returns, it should be recognized that they are not the
same as actual year-by-year results. The total returns for Investor Shares of
the Fund for periods ended December 31, 1999 are set forth below.
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
12.93% 9.73% 14.02% 12.80% 12.93% 32.14% 92.72% 237.40%
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 the Fund is contained in
the Fund's Annual Report to Shareholders which may be obtained from the Fund
without charge.
-14-
<PAGE> 56
INDEPENDENT AUDITOR'S REPORT
----------------------------
To The Shareholders and
Board of Trustees
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,
1999, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the periods then
ended, and financial highlights for each of the five years in the periods then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held
by the custodian as of December 31, 1999, 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, 1999, 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.
/s/ McCurdy & Associates CPA's, Inc.
- ------------------------------------
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
January 20, 2000
-15-
<PAGE> 57
SCHEDULE OF INVESTMENTS
MAXUS EQUITY FUND
DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL AMOUNT MARKET VALUE % OF ASSETS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
BASIC MATERIALS
42,500 A. Schulman 693,281
105,600 Ethyl 415,800
30,000 Great Lakes Chemical 1,145,625
60,000 National Steel Class B 446,250
5,000 NCH Corp 222,813
100,000 RPM Inc 1,018,750
-------------------------------------------------------------------------------------------------
3,942,519 9.75%
CAPITAL GOODS
80,000 Agco 1,075,000
24,500 Borg Warner 992,250
80,500 Checkpoint Systems* 820,094
50,000 Fairchild Corp Class A* 453,125
40,000 Goodrich, (B.F.) 1,100,000
30,000 Harris 800,625
20,000 Ionics* 562,500
50,000 Sensormatic Electronics* 871,875
29,900 Stoneridge* 461,581
40,000 Timken 817,500
-------------------------------------------------------------------------------------------------
7,954,550 19.67%
COMMUNICATION SERVICES
80,000 Citizens Utilities* 1,135,000 2.81%
CONSUMER PRODUCTS
30,000 American Business Products 350,625
100,000 Officemax* 550,000
40,000 Pactiv* 425,000
143,500 Petsmart* 825,125
100,000 Pier One Imports 637,500
20,000 Saks* 311,250
-------------------------------------------------------------------------------------------------
3,099,500 7.67%
ENERGY
40,000 Apache 1,477,500
35,000 Kansas City Power & Light 772,188
-------------------------------------------------------------------------------------------------
2,249,688 5.56%
ENTERTAINMENT
60,000 Mirage Resorts* 918,750 2.27%
</TABLE>
-16-
<PAGE> 58
SCHEDULE OF INVESTMENTS
MAXUS EQUITY FUND
DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL AMOUNT MARKET VALUE % OF ASSETS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCIALS
15,000 American Express 2,493,750
20,000 Bank One 641,250
50,000 First American Financial 621,875
30,000 Firstar 633,750
20,000 Lehman Brothers Holdings 1,693,750
17,000 National City 402,687
-------------------------------------------------------------------------------------------------
6,487,062 16.04%
HEALTHCARE
30,000 Becton Dickinson 802,500
20,000 Bergen Brunswig 166,250
19,000 Invacare 381,187
40,000 Steris* 412,500
-------------------------------------------------------------------------------------------------
1,762,437 4.36%
REAL ESTATE
30,500 Boykin Lodging 333,594
100,000 Developers Diversified Realty 1,287,500
10,000 Public Storage 226,875
50,000 Saint Joe 1,215,625
-------------------------------------------------------------------------------------------------
3,063,594 7.58%
TECHNOLOGY
10,000 Cable Design Technologies* 230,000
25,000 LSI Logic* 1,687,500
50,000 Silicon Valley Group* 887,500
-------------------------------------------------------------------------------------------------
2,805,000 6.94%
WHOLESALE DISTRIBUTION
100,000 Pioneer Standard Electronics 1,443,750 3.57%
TOTAL FOR COMMON STOCKS 34,861,850 86.22%
CONVERTIBLE PREFERRED STOCKS
10,000 Chiquita Brands $2.88 195,000
30,000 Glenborough Realty $1.94 418,125
-------------------------------------------------------------------------------------------------
613,125 1.52%
</TABLE>
-17-
<PAGE> 59
SCHEDULE OF INVESTMENTS
MAXUS EQUITY FUND
DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
SHARES/PRINCIPAL AMOUNT MARKET VALUE % OF ASSETS
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLOSED END EQUITY FUNDS
36,000 Emerging Markets Infrastructure 405,000
40,000 First Financial 307,500
--------------------------------------------------------------------------------------------------
712,500 1.76%
US GOVERNMENT SECURITIES
2,000,000 U.S. Treasury Strips 5-15-00 1,960,880
2,000,000 U.S. Treasury Strips 8-15-00 1,928,260
--------------------------------------------------------------------------------------------------
3,889,140 9.62%
CASH EQUIVALENTS
605,947 Firstar Treasury Fund 4.51% 605,947 1.50%
TOTAL INVESTMENTS (Cost -$32,419,337) 40,682,562 100.62%
OTHER ASSETS LESS LIABILITIES (251,058) -0.62%
NET ASSETS 40,431,504 100.00%
* - Non-income producing security.
</TABLE>
-18-
<PAGE> 60
STATEMENT OF ASSETS & LIABILITIES
MAXUS EQUITY FUND
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment Securities at Market Value $ 40,682,562
(Identified Cost - $32,419,337)
Cash 267,749
Receivables:
Dividends and interest receivable 115,514
Receivable for shareholder purchases
34,058
------------
TOTAL ASSETS 41,099,883
------------
LIABILITIES:
Payable for investment securities purchased 482,256
Payable for shareholder redemptions 77,836
Accrued Expenses 108,287
------------
TOTAL LIABILITIES 668,379
------------
NET ASSETS 40,431,504
============
NET ASSETS CONSIST OF:
Capital Paid In 32,187,390
Accumulated Undistributed Net Investment Income 6,121
Accumulated Undistributed Realized Gain (Loss)
on Investments - Net (25,232)
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 8,263,225
------------
NET ASSETS 40,431,504
============
Net Assets:
Investors Shares 39,885,167
Institutional Shares 546,337
------------
Total 40,431,504
============
Shares of capital stock
Investors Shares 2,280,499
Institutional Shares 31,191
------------
Total 2,311,690
============
Net asset value per share
Investors Shares $ 17.49
------------
Institutional Shares $ 17.52
------------
</TABLE>
-19-
<PAGE> 61
STATEMENT OF OPERATIONS
MAXUS EQUITY FUND
DECEMBER 31, 1999
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 854,801
Interest income 536,501
----------
TOTAL INCOME 1,391,302
----------
EXPENSES:
Investment advisory fees (Note 2) 472,564
Distribution fees (Investor shares) 235,565
Distribution fees (Institutional shares) -
Transfer agent fees/Accounting and Pricing 42,065
Custodial fees 27,087
Registration and filing fees 18,266
Audit 16,800
Printing 16,418
Legal 15,294
Trustee fees 4,600
Miscellaneous 13,828
----------
TOTAL EXPENSES 862,487
Net Investment Income (Loss) 528,815
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized Gain (Loss) on Investments 563,351
Distribution of Realized Capital Gains from
other Investment Companies -
Unrealized Appreciation (Depreciation) on Investments 4,639,730
----------
Net Realized and Unrealized Gain (Loss) on Investments 5,203,081
----------
Net Increase (Decrease) in Net Assets from Operations $5,731,896
==========
</TABLE>
-20-
<PAGE> 62
STATEMENT OF CHANGES IN NET ASSETS
MAXUS EQUITY FUND
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MAXUS EQUITY FUND
-----------------
01/01/99 01/01/98
TO TO
12/31/99 12/31/98
-------- --------
<S> <C> <C>
FROM OPERATIONS:
Net Investment Income $ 528,815 $ 639,647
Net Realized Gain (Loss) on Investments 563,351 1,618,637
Net Unrealized Appreciation (Depreciation) 4,639,730 (7,245,146)
------------ -------------
Increase (Decrease) in Net Assets from 5,731,896 (4,986,862)
Operations ------------ -------------
DISTRIBUTIONS TO INVESTOR SHAREHOLDERS:
Net Investment Income (519,250) (637,270)
Net Realized Gain (Loss) from Security Transactions (555,639) (1,618,358)
DISTRIBUTIONS TO INSTITUTIONAL SHAREHOLDERS:
Net Investment Income (7,705) -
Net Realized Gain (Loss) from Security Transactions (7,508) -
------------ -------------
Change in net assets from distributions (1,090,102) (2,255,628)
------------ -------------
FROM CAPITAL SHARE INVESTOR TRANSACTIONS:
Proceeds from sale of shares 4,962,583 23,163,590
Dividend reinvestment 1,011,737 2,112,247
Cost of shares redeemed (24,005,375) (20,391,502)
FROM CAPITAL SHARE INSTITUTIONAL TRANSACTIONS:
Proceeds from sale of shares 526,872 -
Dividend reinvestment 15,213 -
Cost of shares redeemed (8) -
------------ -------------
Change in net assets from capital transactions (17,488,978) 4,884,335
------------ -------------
Change in net assets (12,847,184) (2,358,155)
NET ASSETS:
Beginning of period 53,278,688 55,636,843
------------ -------------
End of period (including accumulated 40,431,504 53,278,688
undistributed net ============ ============
investment income of $6,121 and $4,261, respectively)
INVESTOR SHARE TRANSACTIONS:
Issued 289,762 1,342,925
Reinvested 59,619 133,559
Redeemed (1,415,011) (1,181,713)
------------ -------------
Net increase (decrease) in shares (1,065,630) 294,771
Shares outstanding beginning of period 3,346,129 3,051,358
------------ -------------
Shares outstanding end of period 2,280,499 3,346,129
============ ============
INSTITUTIONAL SHARE TRANSACTIONS:
Issued 30,296 -
</TABLE>
-21-
<PAGE> 63
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C>
Reinvested 895 -
Redeemed - -
- -
Net increase (decrease) in shares 31,191 -
Shares outstanding beginning of period - -
- -
Shares outstanding end of period 31,191 -
============ ============
</TABLE>
-22-
<PAGE> 64
FINANCIAL HIGHLIGHTS
MAXUS EQUITY FUND
<TABLE>
<CAPTION>
INVESTOR SHARES 01/01/99 01/01/98 01/01/97 01/01/96 01/01/95
TO TO TO TO TO
12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value -
Beginning of Period $ 15.92 $ 18.23 $ 16.00 $ 14.57 $ 12.95
Net Investment Income 0.19 0.20 0.15 0.27 0.30
Net Gains or Losses on Securities
(realized and unrealized) 1.86 (1.80) 4.33 2.50 2.60
-------- -------- -------- -------- --------
Total from Investment Operations 2.05 (1.60) 4.48 2.77 2.90
Distributions
Net investment income (0.23) (0.20) (0.15) (0.27) (0.27)
Capital gains (0.25) (0.51) (2.10) (1.07) (1.01)
Return of capital 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- --------
Total Distributions (0.48) (0.71) (2.25) (1.34) (1.28)
-------- -------- -------- -------- --------
NET ASSET VALUE -
END OF PERIOD $ 17.49 $ 15.92 $ 18.23 $ 16.00 $ 14.57
======== ======== ======== ======== ========
Total Return 12.93% -8.74% 28.16% 19.13% 22.43%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) 39,885 53,279 55,637 38,765 31,576
Ratio of expenses to average net assets 1.83% 1.80% 1.87% 1.90% 1.96%
Ratio of net income to average net assets 1.12% 1.15% 1.80% 1.71% 2.01%
Portfolio turnover rate 78% 118% 89% 111% 173%
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 01/01/99 2/1/98**
TO TO
12/31/99 12/31/98
-------- --------
<S> <C> <C>
Net Asset Value -
Beginning of Period $ 15.92 $ 15.92
Net Investment Income 0.25 0.00
Net Gains or Losses on Securities
(realized and unrealized) 1.86 0.00
-------- --------
Total from Investment Operations 2.11 0.00
Distributions
Net investment income (0.26) 0.00
Capital gains (0.25) 0.00
Return of capital 0.00 0.00
-------- -------
Total Distributions (0.51) 0.00
-------- -------
NET ASSET VALUE -
END OF PERIOD $ 17.52 $ 15.92
======== =======
Total Return 13.26% 0.00%
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (thousands) 546 0
Ratio of expenses to average net assets 1.33% 1.30%*
Ratio of net income to average net assets 1.62% 1.65%*
Portfolio turnover rate 78% 118%*
*annualized
**commencement of operations
</TABLE>
-23-
<PAGE> 65
NOTES TO FINANCIAL STATEMENTS
MAXUS EQUITY FUND
DECEMBER 31, 1999
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. Shares of the
Fund are divided into two classes, Investor shares and Institutional
shares. Each share represents an equal proportionate interest in the Fund
with other shares of the same class. Investor shares incur a distribution
expense. The Fund has an investment objective of obtaining a total return,
a combination of capital appreciation and income. The Fund pursues this
objective by investing primarily in 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 two wholly owned
subsidiaries which provide services to the Fund. These subsidiaries are
Maxus Asset
-24-
<PAGE> 66
Management Inc. and Maxus Securities Corp. Maxus Asset Management was paid
$472,564 in investment advisory fees during the fiscal year ending December
31, 1999. The Fund has adopted a Distribution and Shareholder Servicing
Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940. Maxus
Securities has served as the national distributor of the Fund's shares. The
Fund has entered into a distribution agreement pursuant to which the Fund
pays Maxus Securities a fee, accrued daily and payable monthly at an annual
rate of .50%, based on the average daily net assets for Investor class
only. Maxus Securities was reimbursed $235,565 for distribution expenses.
Resource Management, Inc. owns 49% of Mutual Shareholder Services. Mutual
Shareholder Services performs fund accounting and transfer agency services
for the Fund. Mutual Shareholder Services received fees totaling $42,065
for services rendered to the Fund for the fiscal year ending December 31,
1999. 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 $277,638
for the fiscal year ending December 31, 1999.
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 $100 per meeting.
4.) CAPITAL STOCK AND DISTRIBUTION At December 31, 1999 an indefinite number of
shares of capital stock ($.10 par value) were authorized, and paid-in
capital amounted to $32,187,390.
Distributions to shareholders are recorded on the ex-dividend date.
Payments in excess of net investment income or of accumulated net realized
gains reported in the financial statements are due primarily to book/tax
differences. Payments due to permanent differences have been charged to
paid in capital. Payments due to temporary differences have been charged to
distributions in excess of net investment income or realized gains.
5.) PURCHASES AND SALES OF SECURITIES During the fiscal year ending December
31, 1999, purchases and sales of investment securities other than U.S.
Government obligations and short-term investments aggregated $34,231,461
and $45,305,083 respectively. Purchases and sales of U.S. Government
obligations aggregated $3,826,360 and $7,992,180 respectively.
6.) SECURITY TRANSACTIONS For Federal income tax purposes, the cost of
investments owned at December 31, 1999 was the same as identified cost.
At December 31, 1999, 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)
------------ -------------- -------------------------------
9,788,008 (1,524,783) 8,263,225
-25-
<PAGE> 67
PART C
OTHER INFORMATION
Item 23. Exhibits.
EXHIBIT
NUMBER DESCRIPTION
------- -----------
a Amended and Restated Declaration of Trust. (1)
b Amended and Restated By-Laws. (1)
c None.
d Investment Advisory and Administration
Agreement.(3)
e Distribution Agreement. (1)
f None.
g Custody Agreement. (4)
h(1) Administration Agreement. (1)
h(2) Accounting Services Agreement. (1)
i Opinion and consent. (2)
j Consent of Independent Auditors.
k None.
l Subscription Agreement between the Fund and
Resource Management Inc.(3)
m Distribution and Shareholder Servicing Plan. (1)
n Rule 18f-3 Plan*
p Code of Ethics
q Financial Data Schedule
(1) Incorporated by reference to the corresponding exhibit to Post-Effective
Amendment No. 11 to Registration Statement No. 33-30003.
(2) Incorporated by reference to the corresponding exhibit to Pre-Effective
Amendment No. 1 to Registration Statement No. 33-30003.
(3) Incorporated by reference to the corresponding exhibit to Registration
Statement No. 33-30003.
(4) Incorporated by reference to the corresponding exhibit to Post-Effective
Amendment No. 9 to Registration Statement No. 33-30003.
(5) Incorporated by reference to the corresponding exhibit to Pre-Effective
Amendment No. 2 to Registration Statement No. 33-30003.
* To be filed by Amendment
<PAGE> 68
Item 24. 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.
In addition, the Fund and Resource Management Inc. (together with
its subsidiaries, MAM and MSC) may be deemed to be under common
control of Richard A. Barone, the Chairman of the Fund and the
President and controlling shareholder of Resource Management Inc.
Item 25. INDEMNIFICATION
Reference is made to Article VIII of the Registrant's Amended and
Restated Declaration of Trust filed as Exhibit a. The application of
these provisions is limited by Article 10 of the Registrant's Amended
and Restated By-laws filed as Exhibit b and by the following
undertaking set forth in the rules promulgated by the Securities and
Exchange Commission:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a trustee,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in such Act and will be governed by the final
adjudication of such issue.
Item 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
The directors of Maxus Asset Management, Inc. ("MAM") are Richard
A. Barone, N. Lee Dietrich and Sanford A. Fox. The business and
employment of Mr. Barone is described in the Statement of
Additional Information under "Management of the Fund." Mr.
Dietrich is retired and Dr. Fox is an endodontist in private
practice.
The officers of MAM are Mr. Barone and Robert W. Curtin. The
employment of Mr. Curtin is described in the Statement of
Additional Information under "Management of the Fund."
Item 27. PRINCIPAL UNDERWRITERS.
(a) Maxus Securities Corp, the distributor for the Fund, also
distributes securities for Maxus Income Fund, Maxus Laureate Fund and
MaxFund Trust.
(b) The following information is provided with respect to each
director and officer of Maxus Securities Corp:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION & OFFICES POSITION & OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
------------------ ------------------ ------------------
<S> <C> <C> <C>
Richard A. Barone President, Treasurer and Director Chairman, Treasurer and a
The Tower at Erieview Trustee
36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
</TABLE>
-C-2-
<PAGE> 69
<TABLE>
<S> <C> <C> <C>
Robert W. Curtin Senior Vice President and Secretary
The Tower at Erieview Secretary
36th Floor
1301 East Ninth Street
Cleveland, Ohio 44114
</TABLE>
Item 28. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and documents required to be maintained by
the Registrant pursuant to Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 through 31a-3 thereunder are
maintained at the office of the Registrant and the Transfer Agent
at The Tower at Erieview, 10th 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, Firstar, N.A., 425 Walnut Street, Cincinnati,
Ohio 45201.
Item 29. MANAGEMENT SERVICES.
Not Applicable.
Item 30. UNDERTAKINGS.
Not Applicable.
-C-3-
<PAGE> 70
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 27th day of
April, 2000.
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.
Signature Title Date
/s/ Richard A. Barone
- -------------------------
Richard A. Barone Chairman, Treasurer April 27, 2000
and Trustee (Principal
Executive Officer,
Financial Officer and
Accounting Officer)
/s/ Raj Aggarwal
- -------------------------
Raj Aggarwal Trustee April 27, 2000
/s/ Denis J. Amato
- -------------------------
Denis J. Amato Trustee April 27, 2000
/s/ Kent W. Clapp
- -------------------------
Kent W. Clapp Trustee April 27, 2000
/s/ Robert H. Fritz
- -------------------------
Robert H. Fritz Trustee April 27, 2000
/s/ Steven M. Kasarnich
- -------------------------
Steven M. Kasarnich Trustee April 27, 2000
/s/ Burton D. Morgan
- -------------------------
Burton D. Morgan Trustee April 27, 2000
/s/ Michael A. Rossi
- -------------------------
Michael A. Rossi Trustee April 27, 2000
/s/ Joseph H. Smith
- -------------------------
Joseph H. Smith Trustee April 27, 2000
-C-4-
<PAGE> 1
EXHIBIT J
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-effective Amendment No. 12 to the Registration Statement for Maxus Equity
Fund of all references to our firm included in or made a part of this Amendment.
/s/ McCurdy & Associates CPA's, Inc.
- ------------------------------------
McCurdy & Associates CPA's, Inc.
April 27, 2000
<PAGE> 1
Exhibit P
MAXUS FUND CODE OF ETHICS
SECTION I - DEFINITIONS
(a) "Fund" means Maxus Income Fund, Maxus Equity Fund, Maxus Laureate Fund and
MaxFund Trust.
(b) "Access person" means any director, officer, general partner, or advisory
person of the Fund and their immediate family.
(1) Immediate family is defined as parents, children, spouse, yourself and
anyone for whom you have financial responsibility (i.e., claim as
dependent on Income Tax return and the IRA accounts thereof).
(2) Exception, if the immediate family member has a managed account and
the account is managed in the same manner as other such accounts.
(c) "Advisory person" means (i) any employee of the Fund or of any company in
a control relationship to the Fund, who, in connection with his regular
functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a security by the Fund, or whose
functions relate to the making of any recommendations with respect to
such purchases or sales; and (ii) any natural person in a control
relationship the Fund who obtains information concerning recommendations
made to the fund with regard to the purchase or sale of a security.
(d) A security is "being considered for purchase or sale" when a recommendation
to purchase or sell a security has been made and communicated and, with
respect to the person making the recommendation, when such person seriously
considers making such a recommendation.
(e) "Beneficial ownership" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions of Section
16 of the Securities Exchange Act of 1934 and the rules and regulations
thereunder, except that the determination of direct or indirect beneficial
ownership shall apply to all securities which an access person has or
acquires.
(f) "Control" shall have the same meaning as that set forth in Section 2(a)
(9) of the Investment Company Act.
(g) "Disinterested director" means a director of the Fund Who is not an
"interested person" of the Fund within the meaning of Section 2(a) (9) of
the Investment Company Act.
<PAGE> 2
(h) "Security" shall have the meaning set forth in Section 2(a) (36) of the
Investment Company Act, except that it shall not include shares of
registered open-end investment companies, securities issued by the
Government of the United States, short term debt securities which are
"government securities" within the meaning of Section 2(a) (16) of the
Investment Company Act, bankers' acceptances, bank certificates of deposit,
commercial paper. Corp Bonds (non-convertible) rated "A" or better with
$100 million or more in original issue and non-convertible preferred stocks
rated "A" or better with R100 million or more in the original issue.
SECTION II - EXEMPTED TRANSACTIONS
The prohibitions of Section III of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the access person has
no direct or indirect influence of control.
(b) Purchases or sales which are nonvolitional on the part of either the access
person or the Fund.
(c) Purchases which are part of an automatic dividend reinvestment plan.
(d) Purchases effected upon the exercise of rights issued by an issuer PRO RATA
to all holders of a class of its securities, to the extent such rights were
acquired from such issuer, and sales of such rights so acquired.
SECTION III - PROHIBITED PURCHASES AND SALE
No access person shall purchase of sell, directly or indirectly, any security in
which he has, or by reason of such transaction acquires, any direct or indirect
beneficial ownership and which to his actual knowledge at the time of such
purchase or sale:
(a) is being considered for purchase or sale by the Fund managed Accounts.
(b) is being purchased or sold by the Fund or managed accounts
SECTION IV - THE FOLLOWING ARE THE PROCEDURES TO BE FOLLOWED WHEN ENTERING
ORDERS.
A. STOCK ON HELD SECURITIES LIST - Orders placed by Money Managers or other
registered reps in the office.
a. FOR MANAGED ACCOUNTS
1. Ask if one of the Funds is buying. If so, funds come first.
2. Simply enter orders.
b. FOR UNMANAGED CLIENT ACCOUNTS
1. Orders go the end of the line for that day.
2. No approval needed.
3. If entered at market and does not push up price - cannot put in
more than amount offered at offer price.
<PAGE> 3
c. FOR PERSONAL ACCOUNTS
1. Must be approved by Richard Barone or Bob Curtin and mentioned at
next Investment Committee meeting.
2. Must check with Money manager who put stock on list.
3. Order fills after all other market orders.
4. If entered at market and does not push up price - cannot put in
more than amount offered at offer price.
5. Securities must be held for 90 days or sold only prior to 90 days
if all managed accounts sell same security.
B. STOCKS ON WATCH SECURITIES LIST - For orders placed by Money Managers or
other registered reps in the office.
a. FOR MANAGED ACCOUNTS
1. If not buying for Funds, check Manager who put mane on list.
2. No approval necessary.
3. First purchase moves security to Held List.
b. FOR UNMANAGED ACCOUNTS
1. Check with Manager who put stock on list.
2. No approval necessary.
3. Order fills according to ticket instructions.
c. FOR PERSONAL ACCOUNTS
1. Must get approval of Money Manager who put security on list.
2. Must get second approval of Richard Barone or Bob Curtin.
C. PERSONAL ACCOUNTS - For all purchases other than exempted securities.
a. All tickets must be approved by Richard Barone or Bob Curtin.
b. All securities must be for "Investment Purposes Only,"and must be held
for a minimum of 90 days unless it meets conditions described below.
c. A security may be sold prior to 90 days only if all managed accounts
have sold the security first. If security is held in even one managed
account, it cannot be sold from a personal account without additional
approval of Richard Barone or Bob Curtin.
d. All personal tickets must be given to the Supervisor of Operation so
that she can make sure all managed clients are filled before personal
ticket is entered.
<PAGE> 4
SECTION IV - REPORTING
(a) Every access person shall report to the Fund the information described in
Section 4(c) of this Code with respect to transactions in any security in
which such access person has, or by reason of such transaction acquires,
any direct or indirect beneficial ownership in the security; provided,
however, that an access person shall not be required to make a report with
respect to transactions effected for any account over which such person
does not have any direct or indirect influence.
(b) A disinterested director of the Fund need only report a transaction in a
security if such director, at the time of that transaction, knew or, in the
ordinary course of fulfilling his official duties as a director of the
Fund, should have known that, during the 15- day period immediately
preceding the date of the transaction by the director, such security was
purchased or sold by the Fund or was being considered by the Fund or its
investment adviser for purchase of sale by the Fund.
(c) Every report shall be made not later than 10 BUSINESS DAYS after the end of
the calendar quarter in which the transaction to which the report relates
was effected, and shall contain the following information:
(h) The date of the transaction, the title and the number of shares, and
the principal amount of each security involved.
(ii) The nature of the transaction (i.e., purchase, sale or any other type
of acquisition or disposition);
(iii) The price at which the transaction was effected; and,
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected.
(d) Any such report may contain a statement that the report shall not be
construed as an admission by the person making such report that he has any
direct or indirect beneficial ownership in the security to which the report
relates.
SECTION V - SANCTIONS
Upon discovering a violation of this Code, the board of directors of the fund
may impose such sanctions as it deems appropriate, including, INTER ALIA, a
letter of censure or suspension or termination of the employment of the
violator.
<PAGE> 1
[ARTICLE] 6
[SERIES]
[NUMBER] 1
[NAME] INVESTOR SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-END] DEC-31-1999
[INVESTMENTS-AT-COST] 32,419,337
[INVESTMENTS-AT-VALUE] 40,682,562
[RECEIVABLES] 149,572
[ASSETS-OTHER] 267,749
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 41,099,883
[PAYABLE-FOR-SECURITIES] 482,256
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 186,123
[TOTAL-LIABILITIES] 668,379
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 32,187,390
[SHARES-COMMON-STOCK] 2,280,499
[SHARES-COMMON-PRIOR] 3,346,129
[ACCUMULATED-NII-CURRENT] 6,121
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (25,232)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8,263,225
[NET-ASSETS] 39,885,167
[DIVIDEND-INCOME] 854,801
[INTEREST-INCOME] 563,501
[OTHER-INCOME] 0
[EXPENSES-NET] 862,487
[NET-INVESTMENT-INCOME] 528,815
[REALIZED-GAINS-CURRENT] 563,351
[APPREC-INCREASE-CURRENT] 4,639,730
[NET-CHANGE-FROM-OPS] 5,731,896
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (511,545)
[DISTRIBUTIONS-OF-GAINS] (548,131)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 4,435,711
[NUMBER-OF-SHARES-REDEEMED] (24,005,367)
[SHARES-REINVESTED] 996,524
[NET-CHANGE-IN-ASSETS] (12,847,184)
[ACCUMULATED-NII-PRIOR] 4,261
[ACCUMULATED-GAINS-PRIOR] (25,436)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 472,564
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 862,487
[AVERAGE-NET-ASSETS] 47,262,473
[PER-SHARE-NAV-BEGIN] 15.92
[PER-SHARE-NII] 0.019
[PER-SHARE-GAIN-APPREC] 1.86
[PER-SHARE-DIVIDEND] (0.23)
[PER-SHARE-DISTRIBUTIONS] (0.48)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 17.49
[EXPENSE-RATIO] 1.83
</TABLE>
<PAGE> 2
[ARTICLE] 6
[SERIES]
[NUMBER] 2
[NAME] INSTITUTIONAL SHARES
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] DEC-31-1999
[PERIOD-END] DEC-31-1999
[INVESTMENTS-AT-COST] 32,419,337
[INVESTMENTS-AT-VALUE] 40,682,562
[RECEIVABLES] 149,572
[ASSETS-OTHER] 267,749
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 41,099,883
[PAYABLE-FOR-SECURITIES] 482,256
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 186,123
[TOTAL-LIABILITIES] 668,379
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 32,187,390
[SHARES-COMMON-STOCK] 31,191
[SHARES-COMMON-PRIOR] 167
[ACCUMULATED-NII-CURRENT] 6,121
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (25,232)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8,263,225
[NET-ASSETS] 546,337
[DIVIDEND-INCOME] 854,801
[INTEREST-INCOME] 536,501
[OTHER-INCOME] 0
[EXPENSES-NET] 636,922
[NET-INVESTMENT-INCOME] 764,380
[REALIZED-GAINS-CURRENT] 563,351
[APPREC-INCREASE-CURRENT] 4,639,760
[NET-CHANGE-FROM-OPS] 5,967,461
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (7,705)
[DISTRIBUTIONS-OF-GAINS] (7,508)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 526,872
[NUMBER-OF-SHARES-REDEEMED] (8)
[SHARES-REINVESTED] 15,213
[NET-CHANGE-IN-ASSETS] (12,847,184)
[ACCUMULATED-NII-PRIOR] 4,261
[ACCUMULATED-GAINS-PRIOR] (25,436)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 472,564
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 626,922
[AVERAGE-NET-ASSETS] 146,482
[PER-SHARE-NAV-BEGIN] 15.92
[PER-SHARE-NII] 0.25
[PER-SHARE-GAIN-APPREC] 1.86
[PER-SHARE-DIVIDEND] (0.26)
[PER-SHARE-DISTRIBUTIONS] (0.51)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 17.52
[EXPENSE-RATIO] 1.33
</TABLE>