<PAGE>
Dear Shareholder
The first 6 months of 1998 can only be described as one of those unique periods,
which seem to occur every ten or fifteen years, in which the stock market
assumes a very noticeable split personality. The distinctive characteristics are
the participation of fewer companies in market rallies and generally
deteriorating fundamentals. We must look back to the spring of 1973 and summer
of 1987 to find comparable examples.
The very largest market capitalization companies drive the major market averages
such as the Dow Jones Industrials, the S&P 500 and the Russell 3000, because all
are capitalization weighted. Today, even the NASDAQ, dominated by Microsoft,
Cisco and Intel, has lost its emerging company character. Since the beginning of
1998, the performance of portfolios, which did not consist of most of the twenty
or so largest companies, generally fell far behind the market averages. One
noticeable exception was the Maxus Laureate Fund, which had an outstanding six
months.
All of the major market indices made most their gains in February when fourth
quarter 1997 earnings appeared to be stronger than expected and money fleeing
the deteriorating Asian economies sought the most recognizable and liquid names
available. As the large capitalization companies surged in value, their
dominance of the market averages became even more pronounced and the need to own
them appeared to be even more necessary.
What distinguishes recent months from comparable periods during the last 25
years is magnitude of divergence. The very large companies appeared
significantly overvalued on both the fundamental and historical standards while
the smaller companies appear to be significantly undervalued on both counts. The
Maxus Equity Fund, Maxus Aggressive Value Fund and the Maxus Ohio Heartland Fund
have been focused on the latter, with the expectation that in the months and
years ahead, stock market valuations will again reflect rational investment
decisions.
<PAGE>
Maxus Laureate Fund
Schedule of Investments
June 30,1998
Shares/Principal Amount Market Value % of Assets
Mutual Funds Equity
137 Heartland Value Fund 4,827
9,892 Invesco European 202,095
12,841 Invesco Financial Services 417,721
19,499 Janus Overseas Fund 415,324
18,134 Montgomery Global Communication 414,900
21,822 Montgomery Select 50 Fund 458,047
143 Mutual Series Discovery Class Z 3,021
232 Mutual Series European Class Z 3,491
274 Mutual Series Qualified Class Z 5,409
239 Mutual Series Shares Class Z 5,430
71 Oakmark Small Cap Fund 1,387
18,266 Robertson Steohens Inv Emerging Growth 412,619
8,078 Rydex Nova Fund 248,546
21,506 Rydex OTC Fund 653,794
3,983 Turner Small Cap Equity Fund 113,082
0.3 Warburg Pincus Fixed Income 3
3,359,696 82.60%
Cash and Equivalents
725,603 Star Bank Treasury 725,603 17.84%
Total Investments 4,085,299 100.44%
Other Assets Less Liabilities (17,988) -0.44%
Net Assets - Equivalent 4,067,311 100.00%
*Non-income producing securities.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets & Liabilities
Maxus Laureate Fund June 30, 1998 (unaudited)
Laureate
Fund
Assets:
Investment Securities at Market Value 4,085,299
(Identified Costs - $3,780,198)
Cash 5,643
Receivables:
Receivable for investment securities sold -
Dividends and interest receivable 7,742
Unamortized organization costs -
Total Assets 4,098,684
Liabilities:
Payable for investment purchased -
Payable for shareholder distributions -
Accrued Expenses 31,373
Total Liabilities 31,373
4,067,311
Net Assets:
Capital Paid In 3,452,259
Undistributed Net Investment Income (33,237)
Accumulated Realized Gain (Loss) on Investments - Net 343,188
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 305,101
Net Assets 4,067,311
Net Assets
Investors Shares 4,067,311
Institutional Shares -
Total 4,067,311
Shares of capital stock
Investors Shares 327,671
Institutional Shares -
Total 327,671
Net asset value
Investors Shares $12.41
Institutional Shares $12.41
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations
Maxus Laureate Fund June 30, 1998 (unaudited)
Laureate
Fund
Investment Income:
Dividend income $18,682
Interest income -
Total Income 18,682
Expenses:
Investment advisory fees (Note 2) 17,098
Distribution fees (Investor shares) 8,549
Distribution fees (Institutional shares) -
Custodial fees 1,036
Organization costs 1,149
Transfer agent fees/Accounting and Pricing 10,442
Legal 4,725
Audit 3,200
Registration and filing fees 1,838
Printing & Other Miscellaneous 3,980
Gross Expenses 52,017
Net Investment Income (Loss) (33,335)
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 361,808
Distribution of Realized Capital Gains from other
Investment Companies 276
Unrealized Gain (Loss) from Appreciation (Depreciation)
on Investments 294,342
Net Realized and Unrealized Gain (Loss) on Investments 656,426
Net Increase (Decrease) in Net Assets from Operations $623,091
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
Maxus Laureate Fund June 30, 1998 (unaudited)
Maxus Laureate Fund
01/01/98 01/01/97
to to
06/30/98 12/31/97
From Operations:
Net Investment Income (33,335) 155,271
Net Realized Gain (Loss) on Investments 362,084 156,212
Net Unrealized Appreciation (Depreciation) 294,342 (95,242)
Increase (Decrease) in Net Assets from Operations 623,091 216,241
Distributions to investor shareholders:
Net Investment Income - (155,173)
Net Realized Gain (Loss) from Security Transactions - (156,184)
Distributions to institutional shareholders:
Net Investment Income - -
Net Realized Gain (Loss) from Security Transactions - -
Change in net assets from distributions - (311,357)
From Capital Share Transactions:
Proceeds from sale of shares 553,025 1,753,927
Dividend reinvestment - 293,207
Cost of shares redeemed (504,050) (1,712,497)
Change in net assets from capital transactions 48,975 334,637
Change in net assets 672,066 239,521
Net Assets:
Beginning of period 3,395,245 3,155,724
End of period 4,067,311 3,395,245
Share Transactions:
Issued 45,976 155,832
Reinvested - 28,121
Redeemed (45,324) (148,601)
Net increase (decrease) in shares 652 35,352
Shares outstanding beginning of period 327,019 291,667
Shares outstanding end of period 327,671 327,019
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights
Maxus Laureate Fund
<TABLE>
<S> <C> <C> <C> <C> <C>
01/01/98 01/01/97 01/01/96 01/01/95 01/01/94
to to to to to
06/30/98 12/31/97 12/31/96 12/31/95 12/31/94
Net Asset Value -
Beginning of Period 10.38 10.82 9.82 9.62 9.96
Net Investment Income (0.10) 0.52 (0.08) (0.19) (0.08)
Net Gains or Losses on Securities
(realized and unrealized) 2.13 0.07 2.14 1.57 (0.26)
Total from Investment Operations 2.03 0.59 2.06 1.38 (0.34)
Distributions
Net investment income - (0.52) - - -
Capital gains - (0.51) (1.06) (1.18) -
Return of capital - - - - -
Total Distributions - (1.03) (1.06) (1.18) -
Net Asset Value -
End of Period $12.41 $10.38 $10.82 $9.82 $9.62
Total Return * 39.12% 5.49% 21.03% 14.41% -3.41%
Ratios/Supplemental Data:
Net Assets at end of period
(thousands) 4,067 3,395 3,156 1,510 1,998
Ratio of expenses to average
net assets * 2.96% 2.49% 3.92% 3.85% 3.60%
Ratio of net income to average
net assets * -1.90% 4.19% -0.73% -1.69% -0.87%
Portfolio turnover rate * 2362% 1511% 1267% 1377% 469%
Average commission per share 0.00171 0.00137 0.00019
</TABLE>
* Annualized
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAXUS LAUREATE FUND
JUNE 30, 1998 (UNAUDITED)
1.)SIGNIFICANT ACCOUNTING POLICIES
The Fund is a diversified, open-end management investment company,
organized as a Trust under the laws of the State of Ohio by a Declaration
of Trust dated February 10, 1993. The Fund has an investment objective of
achieving a high total return, a combination of capital appreciation and
income, consistent with reasonable risk. This fund pursues its objective by
investing exclusively in shares of other open-end registered investment
companies, commonly called mutual funds.
Significant accounting policies of the Fund are presented below:
SECURITY VALUATION:
The Fund intends to invest exclusively in other open-end management
investment companies (mutual funds). The investments in mutual funds are
carried at market value. The market quotation used for mutual funds is the
net asset value on the date on which the valuation is made.
SECURITY TRANSACTION TIMING:
Security transactions are recorded on the dates transactions are entered
into (the trade dates). Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded as
earned. The fund uses the identified cost basis in computing gain or loss
on sale of investment securities. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
INCOME TAXES:
It is the Fund's policy to distribute annually, prior to the end of the
calendar year, dividends sufficient to satisfy excise tax requirements of
the Internal Revenue Service. This Internal Revenue Service requirement may
cause an excess of distributions over the book year-end accumulated income.
In addition, it is the Fund's policy to distribute annually, after the end
of the fiscal year, any remaining net investment income and net realized
capital gains.
ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2.)INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration
agreement with Maxus Asset Management Inc, a wholly owned subsidiary of
Resource Management Inc. The Investment Advisor receives from the Fund as
compensation for its services to the Fund an annual fee of 1% on the first
$150,000,000 of the Fund's net assets, and 0.75% of the Fund's net assets
in excess of $150,000,000.
3.)RELATED PARTY TRANSACTIONS
Resource Management, Inc. has three wholly owned subsidiaries which provide
services to the Fund. These subsidiaries are Maxus Asset Management Inc,
Maxus Securities Corp, and Maxus Information Systems Inc. Maxus Asset
Management was paid $17,098 in investment advisory fees during the six
months ended June 30, 1998. Maxus Securities, who served as the national
distributor of the Fund's shares, was reimbursed $8,549 for distribution
expenses. Maxus Information Systems, who provides accounting and
shareholder services, received fees totaling $10,442 for services rendered
to the Fund for the six months ended June 30, 1998. Maxus Securities is a
registered broker-dealer. Maxus Securities effected substantially all of
the investment portfolio transactions for the Fund. The fees collected by
Maxus Securities represent transaction charges imposed by the custodian.
Maxus Securities pays these charges to the custodian without a mark-up.
<PAGE>
At June 30, 1998, Maxus Securities Corp 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. Each director who is not an
"affiliated person" receives an attendance fee of $100 per meeting.
4.)CAPITAL STOCK AND DISTRIBUTION
At June 30, 1998 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $3,452,259.
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.)ORGANIZATION COSTS
Organization costs are being amortized on a straight line basis over a five
year period which ending during February, 1998.
6.)PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1998 purchases and sales of investment
securities other than U.S. Government obligations and short-term
investments aggregated $41,462,677 and $42,064,701 respectively.
7.)FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any off-balance
sheet risk as of June 30, 1998.
8.)SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June 30,
1998 was the same as identified cost.
At June 30, 1998, the composition of unrealized appreciation (the excess of
value over tax cost) and depreciation (the excess of tax cost over value)
was as follows:
Appreciation (Depreciation) Net Appreciation (Depreciation)
305,101 (0) 305,101
<PAGE>
THE MAXUS FUNDS
1301 East Ninth Street, Suite 3600, Cleveland, OH 44114
(216) 687-1000
INVESTMENT ADVISOR
Maxus Asset Management Inc
1301 East Ninth Street
Cleveland, Ohio 44114
BOARD OF TRUSTEES
Denis J. Amato
Richard A. Barone
Burton D. Morgan
Michael A. Rossi
Jerry Murphy
OFFICERS
Richard A. Barone, Chairman
Robert J. Conrad, Vice-President
Robert W. Curtin, Secretary
CUSTODIAN
Star Bank, N. A.
425 Walnut Street
P. O. Box 1118
Cincinnati, Ohio 45201-1118
TRANSFER AGENT
Maxus Information Systems Inc
1301 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
Maxus Securities Corp
1301 East Ninth Street
Cleveland, Ohio 44114
LEGAL COUNSEL
Benesch, Friedlander, Coplan & Aronoff
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2378
AUDITOR
McCurdy & Associates CPA's Inc
27955 Clemens Road
Westlake, Ohio 44145
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