<PAGE>
THE MAXUS FUNDS
Dear Shareholder:
Against the backdrop of increasing corporate profits and declining interest
rates, 1997 marked the third year in a row of superior returns in the financial
markets. The broad based Russell 3000 index of domestic equities gained 31.68%
while the Ryan Government Bond Index produced a total return of 9.43%.
With market conditions that favorable, The Maxus Equity Fund was able to advance
28.16% for 1997 in spite of my cautionary attitude during most of the year. The
relative valuation and asset allocation approach used by Maxus Equity produced a
portfolio with a relatively low correlation to market declines, while the
overall value style uncovered equities with superior returns. According to
Lipper Analytical Services, The Maxus Equity Fund ranked 12th in 1997 out of 196
mutual funds with similar characteristics.
The Maxus Income Fund, while receiving fewer accolades during 1997, had one of
its best years ever relative to other income funds with high quality, balanced
portfolios. For the year ending December 31, 1997, The Maxus Income Fund
produced a total return of 11.47%. Because of the hybrid nature of the portfolio
(high quality debt securities are held through conduits such as closed-end funds
and preferred shares), rating services such as Morningstar have the Maxus Income
Fund incorrectly categorized as an equity fund, in spite of the fact that it has
had virtually no recognizable correlation to the equity markets. Moreover, as an
important part of its overall performance, while the major advance in bond
prices came in longer duration securities (those with more risk when interest
rate rise), The Maxus Income Fund produced a very low correlation to long
duration bonds during periods of rising interest rates, i.e. bond market
declines.
The environment was tougher for The Maxus Laureate Fund, managed by Alan Miller,
which allocates its portfolio among the global equity markets. For all of 1997
Maxus Laureate produced a total return of 5.49%, and earned a four star ranking
by Morningstar for the one-year period ending December 31.
We continued to maintain our caution as we entered 1998. In spite of market
enthusiasm, it appears to me that the growth in corporate profitability, at
best, will lose momentum. Should profit margins come under pressure as
production costs increase and pricing power continues to erode, the financial
markets in 1998 will produce a much tougher environment in which to excel.
But we intend to do just that - offer our clients the best investment products
and superior performance. On February 1, The Maxus family of mutual funds became
larger. On that date, we introduced The Maxus Ohio Heartland Fund, managed by
Denis Amato, which will focus on investments in small to mid-capitalization
companies based in Ohio. Also on February 1, the Maxus Aggressive Value Fund
became a reality. This Fund, which I manage, will seek out investments in very
small companies (under $200 million in market capitalization) using a
disciplined value style.
<PAGE>
As Maxus Fund shareholders, I want to reiterate our commitment to providing you
with the highest possible level of investor service. In doing so, I would like
to encourage you to talk with your personal financial advisor or a Maxus
Financial Advisor about how any one or combination of our Funds may be able to
help secure your financial future.
Richard A Barone
<PAGE>
MAXUS LAUREATE FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
Shares/Principal Amount Cost Market Value % of
Assets
- --------------------------------------------------------------------------------
AGGRESSIVE GROWTH
31,669 Rydex Nova Fund 800,050 789,514 23.25%
GROWTH
29,302 Rydex OTC Fund 663,875 655,186
34,513 Masters' Select Equity Fund 400,025 408,628
--------- --------
1,063,900 1,063,814 31.33%
SMALL CAP GROWTH / VALUE
137 Heartland Value Fund 3,957 4,646
143 Mutual Series Discovery Fund 2,604 2,698
71 Oakmark Small Cap Fund 1,365 1,375
417 Turner Small Cap Equity Fund 10,025 10,263
------ ------
17,951 18,982 0.56%
GROWTH & INCOME
274 Mutual Series Qualified 5,025 4,989
239 Mutual Series Shares Fund 5,025 5,088
------ ------
10,050 10,077 0.30%
INTERNATIONAL STOCK
232 Mutual Series European Fund 2,456 2,929 0.08%
SPECIALTY/SECTOR
27,443 Cohen & Steers Realty Shrs Fd 400,025 407,719 12.01%
WORLD FUND
10,672 Montgomery Select 50 Fund 200,025 200,960 5.92%
INCOME
6,530 Benham Target Maturities
Trust 2020 200,025 201,893
23,861 Benham Target Maturities
Trust 2025 600,050 609,403
0.3 Warburg Pincus Fixed Income 3 3
------- -------
800,078 811,299 23.90%
Star Bank Treasury 127,587 127,587 3.76%
Total Investments 3,422,122 3,432,881 101.11%
Other Assets Less Liabilities (37,636) (1.11)%
Net Assets - Equivalent to
$10.38 per share on 327,019
shares of capital stock outstanding 3,395,245 100.00%
The accompanying notes are an integral part of the financial statements.
<PAGE>
MAXUS LAUREATE FUND
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1997
Assets:
Investment Securities at Market Value
(Identified Cost - $3,422,122) $3,432,881
Cash 4,043
Receivables:
Dividends and Interest 3,161
Other Assets 1,148
-----------
Total Assets $3,441,233
Liabilities
Payables:
Investment Securities Purchased 0
Shareholder Distributions 13,837
Accrued Expenses 30,545
Other 1,606
-----------
Total Liabilities $45,988
Net Assets $3,395,245
Net Assets Consist of:
Capital Paid In $3,403,284
Undistributed Net Investment Income 98
Accumulated Realized Gain (Loss) on Investments - Net (18,896)
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 10,759
-----------
Net Assets, for 327,019 Shares Outstanding $3,395,245
Net Asset Value and Redemption Price
Per Share ($3,395,245/327,019 shares) $10.38
Offering Price Per Share $10.38
STATEMENT OF OPERATIONS
DECEMBER 31, 1997
Investment Income:
Dividends $230,800
Interest 16,727
---------
Total Investment Income $247,527
Expenses:
Accounting and Pricing 21,368
Amortization of Organization Expense 5,634
Audit 6,476
Custody 1,748
Distribution Plan Expenses 18,308
Legal 6,007
Management Fees (Note 2) 14,360
Registration 6,203
Trustee Fees (Note 3) 1,500
Insurance 2,206
Printing & Miscellaneous 8,446
---------
Total Expenses 92,256
Net Investment Income (Loss) 155,271
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 10,219
Distribution of Realized Capital Gains from
other Investment Companies 145,993
Unrealized Gain (Loss) from Appreciation
(Depreciation) on Investments (95,242)
---------
Net Realized and Unrealized Gain (Loss) on Investments $60,970
Net Increase (Decrease) in Net Assets from Operations $216,241
=========
The accompanying notes are an integral part of the financial statements.
<PAGE>
MAXUS LAUREATE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
01/01/97 01/01/96
to to
12/31/97 12/31/96
- --------------------------------------------------------------------------------
From Operations:
Net Investment Income (Loss) 155,271 $(15,196)
Net Realized Gain (Loss) on Investments 156,212 304,352
Net Unrealized Appreciation (Depreciation) (95,242) 113,913
-------- --------
Increase (Decrease) in Net Assets from Operations 216,241 403,069
From Distributions to Shareholders
Net Investment Income (Loss) (155,173) 0
Net Realized Gain (Loss) from Security Transactions (156,184) (289,117)
--------- ---------
Net Increase (Decrease) from Distributions (311,357) (289,117)
From Capital Share Transactions:
Proceeds From Sale of 155,832 Shares 1,753,927 1,869,913
Net Asset Value of 28,121 shares issued
on Reinvestment of Dividends 293,207 217,705
Cost of 148,601 Shares Redeemed (1,712,497) (555,837)
----------- ---------
334,637 1,531,781
Net Increase (Decrease) in Net Assets 239,521 1,645,733
Net Assets at Beginning of Period (including
undistributed net investment
income of $0 and $0, respectively) 3,155,724 1,509,991
Net Assets at End of Period (including
undistributed net investment income
of $98 and $0, respectively) $3,395,245 $3,155,724
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding throughout the period:
<TABLE>
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
to to to to to
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
- ----------------------------------------------------------------------------------------------------
Net Asset Value -
Beginning of Period $10.82 $9.82 $9.62 $9.96 $10.00
Net Investment Income 0.52 (0.08) (0.19) (0.08) (0.07)
Net Gains or (Losses) on Securities
(realized and unrealized) 0.07 2.14 1.57 (0.26) 1.16
---- ---- ---- ------ ----
Total from Investment Operations 0.59 2.06 1.38 (0.34) 1.09
Dividends (from net investment income) (0.52) 0.00 0.00 0.00 0.00
Distributions (from capital gains) (0.51) (1.06) (1.18) 0.00 (1.13)
Return of Capital 0.00 0.00 0.00 0.00 0.00
---- ---- ---- ---- ----
Total Distributions (1.03) (1.06) (1.18) 0.00 (1.13)
Net Asset Value End of Period $10.38 $10.82 $9.82 $9.62 $9.96
Total Return 5.49% 21.03% 14.41% (3.41)% 8.62%
Ratios/Supplemental Data Net Assets -
End of Period (Thousands) 3,395 3,156 1,510 1,998 2,114
Ratio of Expenses to Average Net Assets 2.49% 3.92% 3.85% 3.60% 2.42%
Ratio of Net Income to Average Net Assets 4.19% (0.73)% (1.69)% (0.87)% (0.66)%
Portfolio Turnover Rate 1511% 1267% 1377% 469% 152%
Average commission per share $0.00137 $0.00193
* Weighted average used
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
MAXUS LAUREATE FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1.)SIGNIFICANT ACCOUNTING POLICIES
The Fund is a diversified, open-end management investment company,
organized as a Trust under the laws of the State of Ohio by a Declaration
of Trust dated 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 calendar year, any remaining net investment income and net realized
capital gains.
ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2.)INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration
agreement with Maxus Asset Management Inc, a wholly owned subsidiary of
Resource Management Inc. The Investment Advisor receives from the Fund as
compensation for its services to the Fund an annual fee of 1% on the first
$150,000,000 of the Fund's net assets, and 0.75% of the Fund's net assets
in excess of $150,000,000.
3.)RELATED PARTY TRANSACTIONS
Resource Management, Inc. has three wholly owned subsidiaries which provide
services to the Fund. These subsidiaries are Maxus Asset Management Inc,
Maxus Securities Corp, and Maxus Information Systems Inc. Maxus Asset
Management was paid $14,360 in investment advisory fees during the twelve
months ended December 31, 1997. Maxus Securities, who served as the
national distributor of the Fund's shares, was reimbursed $18,308 for
distribution expenses. Maxus Information Systems, who provides accounting
and shareholder services, received fees totaling $21,368 for services
rendered to the Fund for the twelve months ended December 31, 1997. Maxus
Securities is a registered broker-dealer. Maxus Securities effected
substantially all of the investment portfolio transactions for the Fund.
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. At December 31, 1997, 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 $100 per meeting.
<PAGE>
4.)CAPITAL STOCK AND DISTRIBUTION
At December 31, 1997 an indefinite number of shares of capital stock ($.10
par value) were authorized, and paid-in capital amounted to $3,403,284.
Transactions in common stock were as follows:
Shares sold 155,832
Shares issued to shareholders in reinvestment of dividends 28,121
--------
183,953
Shares redeemed (148,601)
--------
Net Increase (Decrease) 35,352
Shares Outstanding:
Beginning of Period 291,667
--------
End of Period 327,019
========
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.
6.)PURCHASES AND SALES OF SECURITIES
During the twelve months ended December 31, 1997 purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $56,055,293 and $55,978,025 respectively.
7.)FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments which have any off-balance
sheet risk as of December 31, 1997.
8.)SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at December
31, 1997 was the same as identified cost. At December 31, 1997, the
composition of unrealized appreciation (the excess of value over tax cost)
and depreciation (the excess of tax cost over value) was as follows:
Appreciation (Depreciation) Net Appreciation (Depreciation)
55,307 (44,548) 10,759
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Directors:
Maxus Laureate Fund
We have audited the accompanying statement of assets and liabilities of Maxus
Laureate Fund, including the schedule of portfolio investments, as of December
31, 1997, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the periods then
ended, and financial highlights for each of the four years in the periods then
ended and for the period from May 1, 1993 (commencement of operations) to
December 31, 1993. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments and cash held by
the custodian as of December 31, 1997, by correspondence with the custodian and
brokers. An audit also includes 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
Laureate Fund as of December 31, 1997, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
periods then ended, and the financial highlights for each of the four years in
the periods then ended and for the period from May 1, 1993 to December 31, 1993,
in conformity with generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
January 21, 1998
<PAGE>
THE MAXUS FUNDS
1301 East Ninth Street, Suite 3600, Cleveland, OH 44114
(216) 687-1000
INVESTMENT ADVISOR
Maxus Asset Management Inc
1301 East Ninth Street
Cleveland, Ohio 44114
BOARD OF TRUSTEES
Denis J. Amato
Richard A. Barone
Burton D. Morgan
Michael A. Rossi
Jerry Murphy
OFFICERS
Richard A. Barone, Chairman
Robert J. Conrad, Vice-President
Robert W. Curtin, Secretary
CUSTODIAN
Star Bank, N. A.
425 Walnut Street
P. O. Box 1118
Cincinnati, Ohio 45201-1118
TRANSFER AGENT
Maxus Information Systems Inc
1301 East Ninth Street
Cleveland, Ohio 44114
DISTRIBUTOR
Maxus Securities Corp
1301 East Ninth Street
Cleveland, Ohio 44114
LEGAL COUNSEL
Benesch, Friedlander, Coplan & Aronoff
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114-2378
AUDITOR
McCurdy & Associates CPA's Inc
27955 Clemens Road
Westlake, Ohio 44145
<PAGE>
