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Maxus Equity Fund
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Semi-Annual Report
June 30, 2000
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<PAGE>
Dear Shareholders,
For the first six months of 2000, the Maxus family of funds has continued their
exceptional performance relative to their respective market indices and
competing mutual funds. It was a difficult period for both bond and equity
funds. Rising interest rates and a re-emphasis on earning expectations were the
culprits.
Leading our effort in absolute performance was the Maxus Income Fund. Within a
universe of 525 domestic taxable bond funds, Maxus Income was the number one
mutual fund in the country during the first half of the year according to Lipper
Financial Services. During this period alone your Fund produced an 11% total
return, against an average of less than 1% for competing funds and 5.46% for the
Ryan Index.
The Maxus Equity Fund also had an outstanding first six months producing a
return of 11.61% against the Russell 3000 which returned 0.98%, the S&P 500
which returned a negative 0.47% and the Lipper Multi-Cap Value Index which
returned a negative 0.77%. Maxus Equity once again has proven that persistency
and consistency are desirable characteristics for a mutual fund.
After significantly outperforming the competition in 1999, the Maxus Aggressive
Value Fund produced a more modest 4.72% %, exactly in line with the average
micro-cap value fund (4.96%), but behind the average micro-cap fund which
returned 8.55%. In my estimation, micro-cap value is the most compelling market
sector today, and my expectation are exceptionally high for Maxus Aggressive
Value in the next 3 to 5 years.
Starting to show renewed signs of life since the year began were companies
headquartered in Ohio. Reflecting this trend was the Maxus Ohio Heartland Fund.
MOH returned 5.84% during this period.
Finally, our star performer in 1999 found the going a little rougher in the six
months of 2000. Maxus Laureate produced a return of 0.93% against the negative
2.56% return on the Morgan Stanley World Index, an excellent relative
performance nevertheless.
A major characteristic of the stock market during the past five years has been
what I call "sector rotation/correction." Rather than periodic corrections
devastating the entire market, each market sector has run through its own
corrective phase, on its own time, leaving the rest of the market relatively
unchanged. For example, during the first half of 2000, the dot.coms and
overvalued technology issues were taken down, along with auto related and
certain other cyclical stocks, while much of the entire market remained
unchanged.
Investors across the board have been the beneficiaries of this phenomenon as
market psychology has remained unequivocally positive in spite of rising
interest rates and major earnings disappointments. For the remainder of 2000 and
beyond, I am looking for much of the same.
Sincerely,
Richard Barone
<PAGE>
SHARES / PRINCIPAL AMOUNT MARKET VALUE % ASSETS
COMMON STOCKS
Basic Materials
50,000 A. Schulman $ 603,125
30,000 Great Lakes Chemical 945,000
---------
1,548,125 4.0%
Business Consumables
50,000 RPM Inc. 506,250
30,000 Standard Register 427,500
---------
933,750 2.4%
Capital Goods
30,000 Borg Warner 1,053,750
10,000 Eaton 670,000
30,000 Goodrich, (B.F.) 1,021,875
30,000 Harris 982,500
10,000 Honeywell International 336,875
20,000 Ionics * 612,500
45,000 Sensormatic Electronics * 711,562
40,000 Stoneridge * 350,000
30,000 Timken 558,750
16,964 Visteon 205,688
---------
6,503,500 17.0%
Communication Services
10,000 AT&T 316,250
40,000 Citizens Communications * 690,000
10,000 GTE 622,500
10,000 Motorola 290,625
---------
1,919,375 5.0%
Consumer Products
45,000 Bob Evans 672,188
30,000 Fortune Brands 691,875
10,000 Goodyear Tire & Rubber 200,000
185,400 Petsmart * 625,725
85,000 Pier One Imports 828,750
95,000 Saks * 997,500
---------
4,016,038 10.5%
<PAGE>
Energy
30,000 Apache 1,764,375
20,000 Conectiv 311,250
25,000 Kansas City Power & Light 562,500
20,000 Washington Gas 481,250
---------
3,119,375 8.1%
Entertainment
25,000 Carnival 487,500 1.3%
Financials
35,000 American Express 1,824,375
18,000 Bank One 478,125
1,000 Berkshire Hathaway Class B * 1,760,000
5,000 Chase Manhattan 230,312
30,000 KeyCorp 528,750
12,000 Lehman Brothers Holdings 1,134,750
---------
5,956,312 15.5%
Healthcare
30,000 Becton Dickinson 860,625
50,000 Bergen Brunswig 275,000
100,000 Healthsouth * 718,750
14,000 Invacare 367,500
20,000 Manor Care * 140,000
60,000 Steris * 532,500
---------
2,894,375 7.6%
Real Estate
65,000 Developers Diversified Realty 970,938
50,000 Saint Joe 1,500,000
---------
2,470,938 6.4%
Technology
10,000 Cable Design Technologies * 335,000
188,000 Iomega * 752,000
20,000 LSI Logic * 1,082,500
20,000 Silicon Valley Group * 517,500
---------
2,687,000 7.0%
Transportation
30,000 CSX 635,625 1.7%
<PAGE>
Wholesale Distribution
50,000 Pioneer Standard Electronics 737,500 1.9%
TOTAL FOR COMMON STOCKS 33,909,413 88.4%
CONVERTIBLE PREFERRED STOCKS
10,000 Chiquita Brands $2.88 140,000 0.4%
CLOSED END EQUITY FUND
100,000 John Hancock Bank & Thrift 668,750 1.7%
US GOVERNMENT SECURITIES
2,000,000 U.S.Treasury Strips 0% 08-15-00 1,986,580 5.2%
CASH EQUIVALENTS
2,472,757 Firstar Treasury Fund 4.54% 2,472,757 6.5%
TOTAL INVESTMENTS (Cost -$31,491,921) 39,177,500 102.2%
OTHER ASSETS LESS LIABILITIES (841,926) -2.2%
NET ASSETS $ 38,335,574 100.0%
* Non-income producing securities.
<PAGE>
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Statement of Assets & Liabilities
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Maxus Equity Fund June 30, 2000 (unaudited)
Equity
Fund
Assets:
Investment securities at market value $ 39,177,500
(Identified cost - $31,491,921)
Cash 4,053
Receivables:
Receivable for investment securities sold 1,501,889
Dividends and interest receivable 65,848
------------
Total Assets 40,749,290
------------
Liabilities:
Payable for investment securities purchased 2,270,187
Payable for shareholder redemptions 50,657
Accrued expenses 92,872
------------
Total Liabilities 2,413,716
------------
Net Assets $ 38,335,574
============
Net Assets Consist Of:
Capital paid in 25,980,167
Accumulated undistributed net investment income (loss) 133,626
Accumulated undistributed realized
gain (loss) on investments - net 4,536,202
Unrealized appreciation in value
of investments based on identified cost - net 7,685,579
------------
Net Assets 38,335,574
============
Net Assets:
Investor shares 37,482,656
Institutional shares 852,918
------------
Total 38,335,574
============
Shares of Capital Stock
Investor shares 1,923,863
Institutional shares 43,623
------------
Total 1,967,486
============
Net Asset Value per Share
Investor shares $ 19.48
------------
Institutional shares $ 19.55
------------
<PAGE>
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Statement of Operations
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Maxus Equity Fund June 30, 2000 (unaudited)
Equity
Fund
Investment Income:
Dividend income $ 341,576
Interest income 147,062
-----------
Total Income 488,638
-----------
Expenses:
Investment advisory fees (Note 2) 193,030
Distribution fees (investor shares) 95,036
Transfer agent fees/accounting 20,331
Custodial fees 8,203
Registration and filing fees 11,788
Audit 8,400
Legal 7,577
Trustee fees 1,800
Miscellaneous 10,570
-----------
Total Expenses 356,735
Net investment income (loss) 131,903
Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on investments 4,634,479
Unrealized appreciation (depreciation) on investments (577,646)
-----------
Net realized and unrealized gain (loss) on investments 4,056,833
-----------
Net increase (decrease) in net assets from operations $ 4,188,736
<PAGE>
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Statement of Changes in Net Assets
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Maxus Equity Fund June 30, 2000 (unaudited)
Maxus Equity Fund
01/01/00 01/01/99
to to
06/30/00 12/31/99
From Operations:
Net investment income 131,903 528,815
Net realized gain (loss) on investments 4,634,479 563,351
Net unrealized appreciation (depreciation) (577,646) 4,639,730
--------- ---------
Increase (decrease) in net assets from operations 4,188,736 5,731,896
Distributions to Investor Shareholders:
Net investment income (4,316) (519,250)
Net realized gain (loss) from
security transactions (71,622) (555,639)
Distributions to Institutional Shareholders:
Net investment income (82) (7,705)
Net realized gain (loss) from security
transactions (1,422) (7,508)
--------- ---------
Change in net assets from distributions (77,442) (1,090,102)
--------- ---------
From Capital Share Investor Transactions:
Proceeds from sale of shares 2,602,238 4,962,583
Dividend reinvestment 71,869 1,011,737
Cost of shares redeemed (9,095,959) (24,005,375)
From Capital Share Institutional Transactions:
Proceeds from sale of shares 268,283 526,872
Dividend reinvestment 774 15,213
Cost of shares redeemed (54,429) (8)
--------- ---------
Change in net assets from capital transactions (6,207,224) (17,488,978)
--------- ---------
Change in net assets (2,095,930) (12,847,184)
Net Assets:
Beginning of period 40,431,504 53,278,688
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End of period (including accumulated
undistributed net investment income
(loss) of $133,626 and $6,121 respectively.) 38,335,574 40,431,504
========== ==========
Investor Share Transactions:
Issued 140,162 289,762
Reinvested 3,977 59,619
Redeemed (500,775) (1,415,011)
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Net increase (decrease) in shares (356,636) (1,065,630)
Shares outstanding beginning of period 2,280,499 3,346,129
--------- ---------
Shares outstanding end of period 1,923,863 2,280,499
Institutional Share Transactions:
Issued 15,180 30,296
Reinvested 63 895
Redeemed (2,811) -
--------- ---------
Net increase (decrease) in shares 12,432 31,191
Shares outstanding beginning of period 31,191 -
--------- ---------
Shares outstanding end of period 43,623 31,191
========= =========
<PAGE>
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Financial Highlights
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Maxus Equity Fund (unaudited) Investor Shares
Selected data for a share of capital stock outstanding throughout the
period indicated
<TABLE>
<CAPTION>
01/01/00 01/01/199 01/01/98 01/01/97 01/01/96
to to to to to
06/30/00 12/30/99 12/30/98 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C>
Net Asset Value -
Beginning of Period 17.49 15.92 18.23 16.00 14.57
Net investment income 0.06 0.19 0.20 0.15 0.27
Net gains (losses) on securities,
realized and unrealized 1.96 1.86 (1.80) 4.33 2.50
--------- ---------- --------- ---------- ----------
Total from investment operations 2.02 2.05 (1.60) 4.48 2.77
Distributions
Net investment income - (0.23) (0.20) (0.15) (0.27)
Capital gains (0.03) (0.25) (0.51) (2.10) (1.07)
Return of capital - - - - -
--------- ---------- --------- ---------- ----------
Total distributions (0.03) (0.48) (0.71) (2.25) (1.34)
--------- ---------- --------- ---------- ----------
Net Asset Value -
End of Period $ 19.48 $ 17.49 $ 15.92 $ 18.23 $ 16.00
========= ========== ========= ========== ==========
Total return 11.62% 12.93% -8.74% 28.16% 19.13%
Ratios/Supplemental Data:
Net assets at end of period (thousands) 37,483 39,885 53,279 55,637 38,765
Ratio of expenses to average net assets * 1.84% 1.83% 1.80% 1.87% 1.90%
Ratio of net income to average net assets * 0.68% 1.12% 1.15% 1.80% 1.71%
Portfolio turnover rate * 111% 78% 118% 89% 111%
</TABLE>
(unaudited) Institutional Shares
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<TABLE>
<CAPTION>
01/01/00 01/01/99 2/1/98**
to to to
06/30/00 12/31/99 12/31/98
<S> <C> <C> <C>
Asset Value -
Beginning of Period 17.52 15.92 15.92
Net investment income 0.10 0.25 -
Net gains (losses) on securities,
realized and unrealized 1.96 1.86 -
--------- --------- ---------
Total from investment operations 2.06 2.11 -
Distributions
Net investment income - (0.26) -
Capital gains (0.03) (0.25) -
Return of capital - - -
--------- --------- ---------
Total distributions (0.03) (0.51) -
--------- --------- ---------
Net Asset Value -
End of Period $ 19.55 $ 17.52 $ 15.92
========= ========= =========
Total return 11.82% 13.26% 0.00%
Ratios/Supplemental Data:
Net assets at end of period (thousands) 853 546 0
Ratio of expenses to average net assets * 1.34% 1.33% * 1.3%
Ratio of net income to average net assets * 1.18% 1.62% * .65%
Portfolio turnover rate * 111% 78% * 118%
*annualized
**commencement of operations
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAXUS EQUITY FUND
JUNE 30, 2000 UNAUDITED
1.)SIGNIFICANT ACCOUNTING POLICIES
The Fund is a diversified, open-end management investment company,
organized as a Trust under the laws of the State of Ohio by a Declaration
of Trust dated 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.
<PAGE>
3.)RELATED PARTY TRANSACTIONS
Resource Management Inc. has two wholly owned subsidiaries which provide
services to the Fund. These subsidiaries are Maxus Asset Management Inc.
and Maxus Securities Corp. Maxus Asset Management was paid $193,030 in
investment advisory fees during the six months ending June 30, 2000. The
Fund has adopted a Distribution and Shareholder Servicing Plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Maxus Securities has
served as the national distributor of the Fund's shares. The Fund has
entered into a distribution agreement pursuant to which the Fund pays Maxus
Securities a fee, accrued daily and payable monthly at an annual rate of
.50%, based on the average daily net assets for Investor class only. Maxus
Securities was reimbursed $95,036 for distribution expenses for the six
months ending June 30, 2000. Resource Management Inc. owns 49% of Mutual
Shareholder Services. Mutual Shareholder Services performs fund accounting
and transfer agency services for the Fund. Mutual Shareholder Services
received fees totaling $20,331 for services rendered to the Fund for the
six months ending June 30, 2000. Maxus Securities is a registered
broker-dealer. Maxus Securities effected substantially all of the
investment portfolio transactions for the Fund. For this service Maxus
Securities received commissions of $135,563 for the six months ending June
30, 2000.
At June 30, 2000, Resource Management Inc. owned 10,000 shares in the Fund.
Certain officers and/or trustees of the Fund are officers and/or directors
of the Investment Advisor and Administrator.
4.)CAPITAL STOCK AND DISTRIBUTION
At June 30, 2000 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $25,980,167.
Distributions to shareholders are recorded on the ex-dividend date.
Payments in excess of net investment income or of accumulated net realized
gains reported in the financial statements are due primarily to book/tax
differences. Payments due to permanent differences have been charged to
paid in capital. Payments due to temporary differences have been charged to
distributions in excess of net investment income or realized gains.
5.)PURCHASES AND SALES OF SECURITIES
During the six months ending June 30, 2000, purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $20,832,539 and $26,401,467 respectively. Purchases
and sales of U.S. Government obligations aggregated $0 and $1,975,220
respectively.
6.)SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June 30,
2000 was the same as identified cost. At June 30, 2000, the composition of
unrealized appreciation (the excess of value over tax cost) and
depreciation (the excess of tax cost over value) was as follows:
Appreciation (Depreciation) Net Appreciation (Depreciation)
$9,170,537 $(1,484,958) $7,685,579
<PAGE>
Investment Adviser
Maxus Asset Management, Inc.
1301 East Ninth Street
Cleveland, OH 44114
Transfer Agent
Mutual Shareholder Services, LLC.
1301 E. 9th St., Suite 1005
Cleveland, OH 44114
Custodian
Firstar Bank, NA
425 Walnut Street
P.O. Box 1118
Cincinnati, OH 45201
Legal Counsel
Benesch, Friedlander, Coplan & Aronoff
2300 BP America Building
200 Public Square
Cleveland, OH 44114
Auditors McCurdy & Associates,
CPA's, Inc.
27955 Clemens Road
Westlake, OH 44145
Board of Trustees
Denis J Amato
Richard A Barone
Kent W Clapp
Steven M Kasarnich
Joseph H Smith
Burton D Morgan
Michael A Rossi
