<PAGE>
Dear Shareholder:
If I could relive 1998, I might have been inclined to work a lot less. Perhaps
I could have played some golf instead of digging through balance sheets, income
statement and difficult footnotes. The fact is, I don't play golf and even if I
did, without the advantage of hindsight, I do not believe I would have changed
any investment decision.
In 1998, all one needed to do to achieve superb performance was buy the 20 or 30
largest U.S. corporations or, if income was the primary objective, invest in 10
year U.S. Government bonds. For diversified equity or income portfolio
managers, it was nearly impossible to beat this simple formula. As 1998 came to
a close and as we begin 1999, this simplistic investment formula has now become
the conventional wisdom, expected to create great wealth for investors in the
months and years ahead.
An obvious exception to the new investment precept is The Maxus Laureate Fund.
Fund manager Alan Miller produced a 35% return in 1998 without owning one of the
30 corporate giants. Rather than buying and holding, Alan's formula is knowing
when to be in and out of the market. With a market as volatile as we have
experienced in recent months, Alan's exceptional talents were exercised to their
full potential, proving that hard work still has a place in the creation of
wealth.
The value style of investing, as characterized by the Maxus Equity, Maxus
Aggressive Value and Maxus Ohio Heartland Funds, was clearly out of favor in
1998, at least relative to the capitalization weighted S&P 500. Against the
benchmark of the Russell 2000, however, the Maxus Aggressive Value Fund had an
excellent year (measured from inception on March 1, 1998), and thus far in 1999,
Maxus Aggressive Value is showing up near the top of all national microcap
mutual funds.
Investors always have choices. The current wisdom suggests that investors
should pay 30 to 80 times earnings for companies whose earnings growth is
projected to be no more than 15% annually by analysts who almost always err on
the high side. Our formula is to seek out companies whose current market values
are less than their private market values and whose prospects for greater
success are exceptionally high.
During the past several months I have come to sense that the more sophisticated
investors are moving away from last year's overvalue approach and toward the
value style. If this trend continues, the Maxus Funds are exceptionally poised
to outperform the competition. Whatever the prospects for the immediate future,
however, the record shows that long term investors focused on value have always
outperformed other investors and investment styles.
/s/ Richard A Barone
Richard A Barone
<PAGE>
Maxus Laureate Fund
Schedule of Investments
December 31,1998
Shares/Principal Amount Market Value % of Assets
Mutual Funds Equity
52,271 American Century 20th
Century Intl Growth 500,754
14,667 Baron Asset 741,252
137 Heartland Value 4,018
35,809 Invesco European 639,915
7,109 Invesco Health Sciences 433,928
14,675 Janus Overseas 294,674
25,284 Montgomery Emerging Asia 200,506
42,847 Montgomery Global Communications 918,201
1,211 Mutual Series European Class Z 15,180
57,014 Oakmark Small Cap 842,104
16,461 Robertson Stephens Inv Microcap Growth A 234,733
55,032 Robertson Stephens Information Age 988,382
21,202 Robertson Stephens Inv Emerging Growth 486,584
15,510 Rydex Nova 515,388
20,414 Rydex OTC 844,305
417 Turner Small Cap Equity 11,138
7,671,062 95.07%
Cash Equivalents
428,026 Star Bank Treasury 428,026 5.31%
Total Investments (Cost - $6,962,645) 8,099,088 100.38%
Other Assets Less Liabilities (31,015) -0.38%
Net Assets - Equivalent 8,068,073 100.00%
Non-income producing securities.
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets & Liabilities
Maxus Laureate Fund December 31, 1998
Laureate Fund
Assets:
Investment Securities at Market Value 8,099,088
(Identified Costs - $6,962,645)
Cash 4,936
Receivables:
Receivable for investment securities sold -
Dividends and interest receivable 5,294
Unamortized organization costs -
Total Assets 8,109,318
Liabilities:
Payable for investment purchased -
Payable for shareholder distributions -
Accrued Expenses 41,245
Total Liabilities 41,245
Net Assets 8,068,073
Net Assets Consist Of:
Capital Paid In 6,931,630
Undistributed Net Investment Income -
Accumulated Realized Gain (Loss) on Investments - Net -
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 1,136,443
Net Assets 8,068,073
Net Assets:
Investors Shares 8,059,194
Institutional Shares 8,879
Total 8,068,073
Shares of capital stock
Investors Shares 606,564
Institutional Shares 668
Total 607,232
Net asset value per share
Investors Shares $13.29
Institutional Shares $13.29
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations
Maxus Laureate Fund December 31, 1998
Laureate Fund
Investment Income:
Dividend income $21,113
Interest income 51,673
Total Income 72,786
Expenses:
Investment advisory fees (Note 2) 47,163
Distribution fees (Investor shares) 23,580
Distribution fees (Institutional shares) -
Custodial fees 4,013
Organization costs 1,149
Transfer agent fees/Accounting and Pricing 24,713
Legal 5,948
Audit 6,200
Registration and filing fees 2,047
Trustee fees 600
Printing & Other Miscellaneous 10,135
Total Expenses 125,548
Net Investment Income (Loss) (52,762)
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 468,275
Distribution of Realized Capital Gains
from other Investment Companies -
Unrealized Gain (Loss) from Appreciation
(Depreciation) on Investments 1,125,684
Net Realized and Unrealized Gain (Loss) on Investments 1,593,959
Net Increase (Decrease) in Net Assets from Operations $1,541,197
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
Maxus Laureate Fund December 31, 1998
Maxus Laureate Fund
01/01/98 01/01/97
to to
12/31/98 12/31/97
From Operations:
Net Investment Income (52,762) 155,271
Net Realized Gain (Loss) on Investments 468,275 156,212
Net Unrealized Appreciation (Depreciation) 1,125,684 (95,242)
Increase (Decrease) in Net Assets from Operations 1,541,197 216,241
Distributions to investor shareholders:
Net Investment Income - (155,173)
Net Realized Gain (Loss) from Security Transactions (417,895) (156,184)
Distributions to institutional shareholders:
Net Investment Income - -
Net Realized Gain (Loss) from Security Transactions (463) -
Change in net assets from distributions (418,358) (311,357)
From Capital Share Transactions:
Proceeds from sale of shares 4,475,218 1,753,927
Dividend reinvestment 409,851 293,207
Cost of shares redeemed (1,335,080) (1,712,497)
Change in net assets from capital transactions 3,549,989 334,637
Change in net assets 4,672,828 239,521
Net Assets:
Beginning of period 3,395,245 3,155,724
End of period 8,068,073 3,395,245
Share Transactions:
Issued 359,682 155,832
Reinvested 30,779 28,121
Redeemed (110,248) (148,601)
Net increase (decrease) in shares 280,213 35,352
Shares outstanding beginning of period 327,019 291,667
Shares outstanding end of period 607,232 327,019
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights
Maxus Laureate Fund Investor Shares
Selected data for a share of capital stock
outstanding throughout the period indicated
<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
12/31/98 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 (0.12) 0.52 (0.08) (0.19) (0.08)
Net Gains or Losses on Securities
(realized and unrealized) 3.76 0.07 2.14 1.57 (0.26)
Total from Investment Operations 3.64 0.59 2.06 1.38 (0.34)
Distributions
Net investment income - (0.52) - - -
Capital gains (0.73) (0.51) (1.06) (1.18) -
Return of capital - - - - -
Total Distributions (0.73) (1.03) (1.06) (1.18) -
Net Asset Value -
End of Period $13.29 $10.38 $10.82 $9.82 $9.62
Total Return * 35.14% 5.49% 21.03% 14.41% -3.41%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 8,059 3,395 3,156 1,510 1,998
Ratio of expenses to average net assets * 2.63% 2.49% 3.92% 3.85% 3.60%
Ratio of net income to average net assets * -1.10% 4.19% -0.73% -1.69% -0.87%
Portfolio turnover rate * 2792% 1511% 1267% 1377% 469%
</TABLE>
Institutional Shares
02/01/98
to
12/31/98
Net Asset Value -
Beginning of Period 10.38
Net Investment Income (0.11)
Net Gains or Losses on Securities
(realized and unrealized) 3.76
Total from Investment Operations 3.65
Distributions
Net investment income -
Capital gains (0.73)
Return of capital -
Total Distributions (0.73)
Net Asset Value -
End of Period $13.30
Total Return * 35.24%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 9
Ratio of expenses to average net assets * 2.13%
Ratio of net income to average net assets * -0.60%
Portfolio turnover rate * 2792%
* Annualized
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes to Financial Statements
Maxus Laureate Fund
December 31, 1998
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 $47,163 in investment advisory fees during the fiscal year ended December
31, 1998. Maxus Securities, who served as the national distributor of the
Fund's shares, was reimbursed $23,580 for distribution expenses. Maxus
Information Systems, who provides accounting and shareholder services,
received fees totaling $24,713 for services rendered to the Fund for the
fiscal year ending December 31, 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 December 31, 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 $100 per meeting.
4.)CAPITAL STOCK AND DISTRIBUTION
At December 31, 1998 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $6,953,273.
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 ended during February, 1998.
6.) PURCHASES AND SALES OF SECURITIES During the fiscal year ending December 31,
1998 purchases and sales of investment securities other than U.S. Government
obligations and short-term investments aggregated $102,083,239 and $99,315,754
respectively.
7.) FINANCIAL INSTRUMENTS DISCLOSURE There are no reportable financial
instruments which have any off-balance
sheet risk as of December 31, 1998.
8.) SECURITY TRANSACTIONS For Federal income tax purposes, the cost of
investments owned at December 31, 1998 was the same as identified cost.
At December 31, 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)
1,149,796 (13,353) 1,136,443
8.) RECLASSIFICATION
In accordance with AICPA Statement of Position 93-2, the components of the net
assets of the Fund have been reclassified to the extent that the net
investment loss of ($21,643) sustained during the fiscal year ended December
31, 1998, which represents a permanent difference for income tax purposes, has
been reclassified as a decrease in the net capital paid in.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
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, 1998, 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, 1998, 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, 1998, 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.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
January 12, 1999
