VAN WAGONER CAPITAL APPRECIATION FUND
Schedule of Investments
June 30, 1999 (Unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 64.98%
COMMERCIAL SERVICES - BUSINESS 0.99%
2,338 InterDent, Inc.<F1> $ 17,096
--------
COMMERCIAL SERVICES - MISCELLANEOUS 1.21%
750 The Metzler Group, Inc.<F1> 20,718
--------
COMPUTER SOFTWARE - EDUCATION 0.52%
833 Digital Chef, Inc.<F1><F2> 8,996
--------
COMPUTER SOFTWARE - ENTERPRISE 0.24%
250 Best Software, Inc.<F1> 4,031
--------
COMPUTER SOFTWARE - INTERNET 9.13%
3,236 Bluestone Software, Inc. <F1><F2> 8,802
225 Covad Communications Group<F1> 11,995
125 Exodus Communications, Inc.<F1> 14,992
2,924 iVillage, Inc.<F1><F3> 97,953
1,000 Software.com, Inc.<F1> 23,188
--------
156,930
--------
COMPUTER SOFTWARE - MEDICAL 9.27%
15,000 OnHealth Network Co.<F1> 159,375
--------
COMPUTER SOFTWARE - SECURITY 1.19%
200 ISS Group, Inc.<F1> 7,550
150 VeriSign, Inc.<F1> 12,938
--------
20,488
--------
COMPUTERS - GRAPHICS 1.16%
400 Micromuse, Inc.<F1> 19,950
--------
COMPUTERS - INTEGRATED SYSTEMS 0.75%
600 Computer Network Technology Corp.<F1> 12,975
--------
Number
of Shares Value
- --------------------------------------------------------------------------------
COMPUTERS - LOCAL NETWORKS 1.53%
500 ACT Networks, Inc.<F1> $ 8,531
200 Citrix Systems, Inc.<F1> 11,300
200 Visual Networks, Inc.<F1> 6,400
--------
26,231
--------
COMPUTERS - MEMORY DEVICES 1.75%
100 EMC Corp.<F1> 5,500
100 Network Appliances, Inc.<F1> 5,588
200 VERITAS Software Corp.<F1> 18,987
--------
30,075
--------
COMPUTERS - RETAIL/WHOLESALE 1.62%
250 Emulex Corp.<F1> 27,797
--------
COMPUTERS - SOFTWARE 1.54%
150 Ariba, Inc.<F1> 14,587
167 Event411.com, Inc.<F1><F2> 5,010
500 Persistence Software, Inc.<F1> 6,813
--------
26,410
--------
ELECTRONICS - MISCELLANEOUS
COMPONENTS 0.65%
150 RF Micro Devices, Inc.<F1> 11,194
--------
ELECTRONICS - SEMICONDUCTOR
MANUFACTURING 4.26%
100 PMC-Sierra, Inc.<F1> 5,894
150 QLogic Corp.<F1> 19,800
250 SDL, Inc.<F1> 12,766
450 TranSwitch Corp.<F1> 21,319
200 Vitesse Semiconductor Corp.<F1> 13,487
--------
73,266
--------
FINANCE - INVESTMENT BROKER 2.10%
500 The Goldman Sachs Group, Inc. 36,125
--------
INTERNET - E-COMMERCE 1.83%
300 eToys, Inc.<F1> 12,225
1,100 Stamps.com, Inc.<F1> 19,250
--------
31,475
--------
Number
of Shares Value
- --------------------------------------------------------------------------------
INTERNET - NETWORKS 2.30%
1,000 Viant Corp.<F1> $35,000
100 WebTrends Corp. <F1> 4,613
--------
39,613
--------
OIL & GAS - DRILLING 4.04%
10,000 Grey Wolf, Inc.<F1> 25,000
12,500 Key Energy Services, Inc.<F1> 44,531
--------
69,531
--------
OIL & GAS - EXPLORATION 1.75%
1,500 Basin Exploration, Inc.<F1> 30,094
--------
OIL & GAS - MACHINERY/EQUIPMENT 5.01%
500 Cooper Cameron Corp.<F1> 18,531
2,000 Dril-Quip, Inc.<F1> 45,875
250 Smith International, Inc.<F1> 10,859
1,000 Varco International, Inc.<F1> 10,938
--------
86,203
--------
POLLUTION CONTROL - SERVICES 1.20%
1,250 Tetra Tech, Inc.<F1> 20,625
--------
RETAIL - DISCOUNT/VARIETY 0.47%
100 Costco Companies, Inc.<F1> 8,006
--------
RETAIL - RESTAURANTS 0.81%
900 Rubio's Restaurants, Inc.<F1> 13,894
--------
TELECOMMUNICATIONS - EQUIPMENT 5.83%
250 Allegiance Telecom, Inc.<F1> 13,719
125 Aware, Inc.<F1> 5,765
250 Copper Mountain Networks, Inc.<F1> 19,312
1,250 Digital Microwave Corp.<F1> 15,938
250 E-Tek Dynamics, Inc.<F1> 11,891
250 Metromedia Fiber Network, Inc.<F1> 8,984
675 NorthPoint Communications Group, Inc.<F1> 24,638
--------
100,247
--------
TELECOMMUNICATIONS - SERVICES 3.83%
2,750 Com21, Inc.<F1> 46,922
150 Level 3 Communications, Inc.<F1> 9,009
300 Qwest Communications International, Inc.<F1> 9,919
--------
65,850
--------
TOTAL COMMON AND PREFERRED STOCKS
(COST $652,651) 1,117,195
--------
Principal
Amount Value
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES 14.37%
$250,000 9/30/00, 4.50% $247,110
--------
TOTAL U.S. TREASURY NOTES (COST $246,804) 247,110
--------
SHORT-TERM INVESTMENTS 12.40%
210,000 UMB Bank, n.a., repurchase agreement,
4.29%, dated 6/30/99, repurchase price
$210,025, maturing 7/1/99 (collateralized
by FNMA discount notes maturing 7/19/99) 210,000
3,091 UMB Bank, n.a., Money Market Fiduciary 3,091
--------
TOTAL SHORT-TERM INVESTMENTS
(COST $213,091) 213,091
--------
TOTAL INVESTMENTS 91.75%
(COST $1,112,546) 1,577,396
OTHER ASSETS LESS LIABILITIES 8.25% 141,828
--------
NET ASSETS 100.00% $1,719,224
==========
<F1> Non-income producing
<F2> Preferred stock purchased in a private placement transaction; resale to
the public may require registration or sale only to qualified
institutional buyers. Security is valued under procedures approved by the
Board of Directors.
<F3> Security acquired in a private placement transaction; resale may be
limited due to certain restrictions. Security is valued under procedures
approved by the Board of Directors.
See notes to financial statements.
VAN WAGONER GROWTH FUND
Schedule of Investments
June 30, 1999 (Unaudited)
Number
of Shares Value
- --------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS 78.28%
BANKS - SUPER REGIONAL 0.94%
400 Mellon Bank Corp. $ 14,550
---------
CABLE TELEVISION 1.98%
300 Adelphia Communications Corp.<F1> 19,088
300 Comcast Corp. 11,531
---------
30,619
---------
COMMERCIAL SERVICES - MISCELLANEOUS 0.37%
50 CMGI, Inc.<F1> 5,703
---------
COMPUTER SOFTWARE - EDUCATION 0.58%
833 Digital Chef, Inc.<F1><F2> 8,996
---------
COMPUTER SOFTWARE - ENTERPRISE 0.26%
250 Best Software, Inc.<F1> 4,031
---------
COMPUTER SOFTWARE - INTERNET 9.42%
3,235 Bluestone Software, Inc.<F1><F2> 8,799
300 Covad Communications Group<F1> 15,994
2,924 iVillage, Inc.<F1><F3> 97,953
1,000 Software.com, Inc.<F1> 23,188
---------
145,934
---------
COMPUTER SOFTWARE - MEDICAL 10.29%
15,000 OnHealth Network Co.<F1> 159,375
---------
COMPUTER SOFTWARE - SECURITY 1.04%
200 ISS Group, Inc.<F1> 7,550
100 VeriSign, Inc.<F1> 8,625
---------
16,175
---------
COMPUTERS - LOCAL NETWORKS 2.53%
500 ACT Networks, Inc.<F1> 8,531
300 Cisco Systems, Inc.<F1> 19,294
200 Citrix Systems, Inc.<F1> 11,300
---------
39,125
---------
COMPUTERS - MEMORY DEVICES 0.53%
150 EMC Corp.<F1> 8,250
---------
COMPUTERS - MINI/MICRO 0.96%
400 Dell Computer Corp.<F1> 14,800
---------
Number
of Shares Value
- -------------------------------------------------------------------------------
COMPUTERS - SOFTWARE 2.87%
150 Ariba, Inc.<F1> $ 14,588
166 Event411.com, Inc.<F1> <F2> 4,980
200 Microsoft Corp.<F1> 18,038
500 Persistence Software, Inc.<F1> 6,813
---------
44,419
---------
ELECTRONICS - SEMICONDUCTOR
MANUFACTURING 2.17%
100 PMC-Sierra, Inc.<F1> 5,894
100 QLogic Corp.<F1> 13,200
100 Texas Instruments, Inc. 14,500
---------
33,594
---------
EYE CARE PRODUCTS 0.99%
200 Bausch & Lomb, Inc. 15,300
---------
FINANCE - CONSUMER LOANS 0.29%
100 Associates First Capital Corp. 4,431
---------
FINANCE - INVESTMENT BROKER 2.33%
500 The Goldman Sachs Group, Inc. 36,125
---------
FINANCE - INVESTMENT MANAGEMENT 1.03%
250 Kansas City Southern Industries, Inc. 15,953
---------
INTERNET - E-COMMERCE 2.03%
300 eToys, Inc.<F1> 12,225
1,100 Stamps.com, Inc.<F1> 19,250
---------
31,475
---------
INTERNET - NETWORKS 2.26%
1,000 Viant Corp.<F1> 35,000
---------
MEDIA - CABLE TV 0.95%
200 Time Warner, Inc. 14,700
---------
MEDIA - RADIO/TV 1.27%
250 CBS Corp. 10,859
200 Viacom, Inc.<F1> 8,825
---------
19,684
---------
MEDICAL - ETHICAL DRUGS 0.35%
50 Pfizer, Inc. 5,488
---------
MEDICAL - PRODUCTS 0.66%
200 Guidant Corp. 10,288
---------
OIL & GAS - DRILLING 4.49%
10,000 Grey Wolf, Inc.<F1> 25,000
12,500 Key Energy Services, Inc.<F1> 44,531
---------
69,531
---------
Number
of Shares Value
- -------------------------------------------------------------------------------
OIL & GAS - EXPLORATION 1.94%
1,500 Basin Exploration, Inc.<F1> $ 30,094
---------
OIL & GAS - FIELD SERVICES 2.93%
300 Halliburton Co. 13,575
500 Schlumberger Ltd. 31,844
---------
45,419
---------
OIL & GAS - MACHINERY/EQUIPMENT 1.90%
500 Cooper Cameron Corp.<F1> 18,531
250 Smith International, Inc.<F1> 10,859
---------
29,390
---------
RESTAURANTS 1.21%
500 Starbucks Corp.<F1> 18,781
---------
RETAIL 1.08%
500 TJX Companies, Inc. 16,656
---------
RETAIL - DISCOUNT/VARIETY 0.52%
100 Costco Companies, Inc.<F1> 8,006
---------
RETAIL - RESTAURANTS 0.90%
900 Rubio's Restaurants, Inc.<F1> 13,894
---------
RETAIL/WHOLESALE - BUILDING PRODUCTS 1.04%
250 The Home Depot, Inc. 16,109
---------
TELECOMMUNICATIONS - CELLULAR 1.05%
150 General Instrument Corp.<F1> 6,375
50 Vodafone AirTouch PLC 9,850
---------
16,225
---------
TELECOMMUNICATIONS - EQUIPMENT 8.35%
324 AT&T Corp. 18,083
250 Copper Mountain Networks, Inc.<F1> 19,313
200 Lucent Technologies, Inc. 13,488
300 Metromedia Fiber Network, Inc.<F1> 10,781
500 Nokia Ab ADR 45,781
600 NorthPoint Communications Group, Inc.<F1> 21,900
---------
129,346
---------
TELECOMMUNICATIONS - SERVICES 5.72%
2,500 Com21, Inc.<F1> 42,656
400 Level 3 Communications, Inc.<F1> 24,025
100 MCI WorldCom, Inc.<F1> 8,606
400 Qwest Communications
International, Inc.<F1> 13,225
---------
88,512
---------
TRANSPORTATION 1.05%
300 FDX Corp.<F1> 16,275
---------
TOTAL COMMON AND PREFERRED STOCKS
(COST $799,607) 1,212,253
---------
Principal
Amount Value
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 13.21%
$200,000 UMB Bank, n.a., repurchase agreement,
4.29%, dated 6/30/99, repurchase price
$200,024, maturing 7/1/99 (collateralized
by FNMA discount notes maturing 7/19/99) $ 200,000
4,563 UMB Bank, n.a., Money Market Fiduciary 4,563
---------
TOTAL SHORT-TERM INVESTMENTS
(COST $204,563) 204,563
---------
TOTAL INVESTMENTS 91.49%
(COST $1,004,170) 1,416,816
OTHER ASSETS LESS LIABILITIES 8.51% 131,781
NET ASSETS 100.00% $1,548,597
=========
<F1> Non-income producing
<F2> Preferred stock purchased in a private placement transaction; resale to
the public may require registration or sale only to qualified
institutional buyers. Security is valued under procedures approved by
the Board of Directors.
<F3> Security acquired in a private placement transaction; resale may be
limited due to certain restrictions. Security is valued under
procedures approved by the Board of Directors.
See notes to financial statements.
VAN WAGONER FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
Capital
Appreciation Growth
Fund Fund
----------- --------
ASSETS:
Investments, at value
(cost $902,546 and $804,170,
respectively) $1,367,396 $1,216,816
Repurchase agreements, at value
(cost $210,000 and
$200,000, respectively) 210,000 200,000
Cash 265,000 15,000
Deposit at brokers for short sales 105,897 105,897
Receivable for investments sold 38,794 37,785
Interest and dividends receivable 2,932 302
Receivable from investment adviser 7,265 6,986
Prepaid expenses and other assets 5,010 5,068
---------- ----------
Total Assets 2,002,294 1,587,854
---------- ----------
LIABILITIES:
Payable for investments purchased 270,694 26,874
Accrued investment advisory fee 1,638 1,173
Accrued expenses and
other liabilities 10,738 11,210
---------- ----------
Total Liabilities 283,070 39,257
---------- ----------
NET ASSETS $1,719,224 $1,548,597
========== ==========
NET ASSETS CONSIST OF:
Capital stock $5 $6
Paid-in-capital 582,435 611,911
Accumulated net realized
gain on investments 671,934 524,034
Net unrealized appreciation
on investments 464,850 412,646
---------- ----------
Net Assets $1,719,224 $1,548,597
========== ==========
CAPITAL STOCK, $0.0001 par value
Authorized 100,000,000 100,000,000
Issued and outstanding 54,411 58,323
NET ASSET VALUE, REDEMPTION PRICE,
AND OFFERING PRICE PER SHARE (NET
ASSETS/SHARES OUTSTANDING) $31.60 $26.55
====== ======
See notes to financial statements.
VAN WAGONER FUNDS, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED)
Capital
Appreciation Growth
Fund Fund
-------------- -----------
INVESTMENT INCOME:
Interest $4,764 $3,347
Dividends 79 994
--------- --------
Total Investment Income 4,843 4,341
--------- --------
EXPENSES:
Fund accounting and administration fees 30,580 30,580
Investment advisory fees 8,685 6,515
Professional fees 6,259 6,053
Custody fees 3,595 2,828
Directors' fees and expenses 2,357 2,357
State registration fees 312 252
Miscellaneous 673 1,638
--------- --------
Total expenses before waivers and
reimbursements 52,461 50,223
Less: Waivers and reimbursements
of expenses (38,912) (37,520)
--------- --------
Net Expenses 13,549 12,703
--------- --------
NET INVESTMENT LOSS (8,706) (8,362)
--------- --------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on investments 744,646 601,878
Net realized loss on options purchased (21,118) (18,432)
Change in unrealized
appreciation on investments 228,901 195,951
--------- --------
Net Gain on Investments 952,429 779,397
--------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $943,723 $771,035
========= ========
See notes to financial statements.
VAN WAGONER FUNDS, INC
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Capital Appreciation Fund Growth Fund
---------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 1999 Year Ended June 30, 1999 Year Ended
(Unaudited) Dec. 31, 1998 (Unaudited) Dec. 31, 1998
----------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment loss $ (8,706) $ (1,526) $ (8,362) $ (1,330)
Net realized gain on investments 744,646 272,542 601,878 296,829
Net realized loss on options purchased (21,118) (10,458) (18,432) (11,145)
Change in unrealized appreciation on investments 228,901 172,140 195,951 134,119
------------ ------------ ------------ ------------
Net increase in net assets resulting from operations 943,723 432,698 771,035 418,473
------------ ------------ ------------ ------------
DISTRIBUTIONS:
Of net realized gains (636) (24,567) (1,518) (93,710)
In excess of net realized gains - (40,725) - (48,205)
------------ ------------ ------------ ------------
Total distributions (636) (65,292) (1,518) (141,915)
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 2,101 25,000 - 25,000
Proceeds from reinvestment of dividends 65,928 - 143,432 -
Redemption of shares (162,500) (826,147) (162,500) (825,990)
------------ ------------ ------------ ------------
Net decrease from share transactions (94,471) (801,147) (19,068) (800,990)
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 848,616 (433,741) 750,449 (524,432)
NET ASSETS:
Beginning of period 870,608 1,304,349 798,148 1,322,580
------------ ------------ ------------ ------------
End of period $1,719,224 $870,608 $1,548,597 $798,148
============ ============ ============ ============
TRANSACTIONS IN SHARES:
Shares sold 89 2,249 - 2,152
Shares issued in reinvestment of dividends 4,371 - 10,182 -
Shares redeemed (7,908) (88,011) (8,618) (83,464)
------------ ------------ ------------ ------------
Net increase (decrease) (3,448) (85,762) 1,564 (81,312)
============ ============ ============ ============
</TABLE>
See notes to financial statements.
VAN WAGONER FUNDS, INC.
FINANCIAL HIGHLIGHTS
For a Fund share outstanding throughout the period
<TABLE>
<CAPTION>
Capital Appreciation Fund <F1> Growth Fund <F1>
-----------------------------------------------------------------------------------
Six Months Six Months
Ended Year Ended Year Ended Ended Year Ended Year Ended
June 30, 1999 Dec. 31, Dec. 31, June 30, 1999 Dec. 31, Dec. 31,
(Unaudited) 1998 1997 (Unaudited) 1998 1997
-------------- ------------ ---------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $15.05 $9.08 $10.00 $14.06 $9.58 $10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.16) (0.03) (0.11) (0.14) (0.02) (0.12)
Net realized and unrealized gains
on investments 16.72 7.13 0.54 12.65 7.00 0.68
------- ------- ------- ------- ------- -------
Total from investment operations 16.56 7.10 0.43 12.51 6.98 0.56
------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
Of net realized gains (0.01) (0.43) - (0.02) (1.65) -
In excess of net realized gains - (0.70) (1.35) - (0.85) (0.98)
------- ------- ------- ------- ------- -------
Total distributions (0.01) (1.13) (1.35) (0.02) (2.50) (0.98)
NET ASSET VALUE, END OF PERIOD $31.60 $15.05 $9.08 $26.55 $14.06 $9.58
======== ======== ======== ======== ======== ========
TOTAL RETURN<F2> 110.08% 78.18% 4.56% 89.08% 72.86% 5.74%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $1,719 $871 $1,304 $1,549 $798 $1,323
Ratio of net expenses to average net
assets, net of waivers and
reimbursements<F3> 1.95% 1.95% 1.95% 1.95% 1.95% 1.95%
Ratio of net investment loss to
average net assets, net of waivers and
reimbursements<F3> (1.25)% (0.21)% (1.36)% (1.28)% (0.18)% (1.40)%
Ratio of net expenses to average net
assets, before voluntary waivers and
reimbursements<F3> 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Ratio of net investment loss to
average net assets, before voluntary
waivers and reimbursements<F3> (1.20)% (0.26)% (1.41)% (1.23)% (0.23)% (1.45)%
Portfolio turnover rate<F2> 209% 1,263% 625% 187% 1,233% 593%
</TABLE>
<F1> Commenced operations after the close of business on December 31, 1996
<F2> Not annualized
<F3> Annualized
See notes to financial statements.
VAN WAGONER FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
(1) Organization
------------
Van Wagoner Funds, Inc. (the "Company") was organized on October 18, 1995
as a Maryland corporation and is registered under the Investment Company
Act of 1940 (the "1940 Act") as an open-end management investment company.
The Capital Appreciation Fund and the Growth Fund (collectively, the
"Funds") are separate, diversified investment portfolios of Van Wagoner
Funds, Inc. The majority shareholder of the Funds is an affiliate of the
investment adviser.
(2) Significant Accounting Policies
-------------------------------
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements.
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") which permit management to make
estimates and assumptions at the date of the financial statements.
(a) Investment Valuation - A security traded on a recognized stock
exchange is valued at the last sale price. If no sale is reported,
the most current bid price will be used. All other securities for
which over-the-counter market quotations are readily available are
valued at the most current closing price. Debt securities which will
mature in more than 60 days are valued at prices furnished by a
pricing service. Securities which will mature in 60 days or less are
valued at amortized cost, which approximates market value. Any
securities for which market quotations are not readily available are
valued at their fair value as determined in good faith by the Funds'
investment adviser under supervision of the Board of Directors.
(b) Repurchase Agreements - During the term of a repurchase agreement, the
market value of the underlying collateral, including accrued interest,
is required to equal or exceed the market value of the repurchase
agreement. The underlying collateral for all repurchase agreements is
held by the Funds' custodian.
VAN WAGONER FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(c) Expenses - The Funds are charged for those expenses that are directly
attributable to each portfolio, such as advisory and custodian fees.
Expenses that are not directly attributable to a portfolio are
typically allocated among the portfolios in proportion to their
respective net assets.
(d) Federal Income Taxes - Each Fund intends to comply with the
requirements of the Internal Revenue Code necessary to qualify as a
regulated investment company and to make the requisite distributions
of income to its shareholders which will be sufficient to relieve it
from all or substantially all federal income taxes.
(e) Restricted Securities - The Funds own some securities which are
unregistered and thus restricted as to resale. These securities are
valued at their fair value, which at June 30, 1999 is equal to cost.
Where future disposition of these securities requires registration
under the Securities Act of 1933, the Funds have the right to include
these securities in such registration, generally without cost to the
Funds. The Funds have no right to require registration of
unregistered securities. The Capital Appreciation and Growth Funds
had restricted securities with an aggregate market value of $22,808
and $22,776, respectively, representing 1.3% and 1.5%, respectively,
of the net assets of each of the Funds.
(f) Options Contracts - The Funds purchase put options to hedge portfolio
investments. Premiums paid for options contracts purchased are
included in the Statements of Assets and Liabilities as an asset.
Option contracts are valued at the last sales price reported on the
date of valuation. If no sale is reported, the option contract
purchased is valued at the average of the current bid and asked price
reported on the day of valuation. When option contracts expire or are
closed, realized gains or losses are recognized without regard to any
unrealized gains or losses on the underlying securities.
(g) Distributions to Shareholders - Dividends from net investment income
and net realized capital gains, if any, will be declared and paid at
least annually. Distributions to shareholders are recorded on the ex-
dividend date. Each Fund may periodically make reclassifications
among certain of its capital accounts as a result of the timing and
characterization of certain income and capital gains distributions
determined in accordance with federal tax regulations, which may
differ from GAAP.
VAN WAGONER FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(h) Other - Investment transactions are accounted for on the trade date
basis. Each Fund determines the gain or loss realized from the
investment transactions by comparing the original cost of the security
lot sold with the net sale proceeds. Dividend income is recognized on
the ex-dividend date and interest income is recognized on an accrual
basis.
(3) Investment Advisory Agreement
-----------------------------
The Funds have an agreement with Van Wagoner Capital Management, Inc. (the
"Adviser") to furnish investment advisory services to the Funds. Under the
terms of this agreement, the Adviser is compensated at the rate of 1.25%
and 1.00% of the average daily net assets of the Capital Appreciation Fund
and Growth Fund, respectively. The agreement also provides that the
Adviser will limit expenses to no more than 2.00% of each Fund's average
daily net assets. The Adviser has further agreed to voluntarily reduce
fees for expenses (exclusive of brokerage, interest, taxes and
extraordinary expenses) that exceed the expense limitation of 1.95% for
each Fund until January 1, 2000. Expenses of $38,912 and $37,520 were
waived in the Capital Appreciation and Growth Funds, respectively, during
the six months ended June 30, 1999.
(4) Service and Distribution Plan
-----------------------------
The Funds have adopted a Service and Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by
the Funds in connection with the distribution of their shares at an annual
rate, as determined from time to time by the Board of Directors, of up to
0.25% of a Fund's average daily net assets. No fees were paid under the
plan during the six months ended June 30, 1999.
VAN WAGONER FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(UNAUDITED)
(5) Investment Transactions
-----------------------
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the six months ended June 30, 1999 were as
follows:
Capital
Appreciation Growth
Fund Fund
------------ --------
Purchases $2,297,939 $2,053,368
Sales 2,977,600 2,445,081
For the six months ended June 30, 1999, there were no purchases or sales of
long-term U.S. government securities.
The cost of securities on a tax basis for the Capital Appreciation Fund and
Growth Fund is $1,115,876 and $1,007,459, respectively. At June 30, 1999,
gross unrealized appreciation and depreciation on investments for federal
income tax purposes were as follows:
Capital
Appreciation Growth
Fund Fund
------------ --------
Unrealized appreciation 467,800 $412,280
Unrealized depreciation (6,280) (2,923)
-------- --------
Net unrealized appreciation
on investments $461,520 $409,357
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