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Claremont Investment Partners
Industry Leaders Fund(R)
Dear Shareholders:
Investment Results - Semi Annual Fiscal Period Ended December 31, 1999.
The Industry Leaders Fund(R) (the "Fund") ended the year with a total return of
4.15% for Class "I" and 3.98% for class "D shares". The Funds performance
compared to the Industry Leaders Strategy Model(TM) ("Strategy Model") was
slightly better than would be expected by the hypothetical performance
methodology of the Strategy Model described in the Prospectus dated December 31,
1999. When hypothetical results were presented in our Prospectus, hypothetical
performance included 2% of Fund assets held in cash. We attempted to be fully
invested and benefited from this position, yet for conservative historical
purposes continue to use the 2% cash position for our hypothetical analysis.
During the period of time from inception on March 17, 1999 to the close of the
first calendar year on December 31, 1999, both classes (D and I) lagged the
benchmark large value S&P BARRA Value Index(R) by 3.35% (class I) and 3.52%
(class D), but out-performed the Russell 1000 Value Index(R) by 0.86% (class I)
and 0.69% (class D).
We are pleased with our management of the Fund to the Strategy Model, and will
continue to remain as fully invested as we can, yet able to meet redemption
needs via our cash position.
<TABLE>
<CAPTION>
- ---------------------- -------------------- ------------------- -------------------- ------------------- --------------------
Comparative The Industry The Industry
Investment Returns Leaders Fund(R) Leaders Fund(R) S&P BARRA Russell 1000 Industry Leaders
(a)(b) Class "I" Class "D" Value Index(R) Value Index(R) Strategy Model(TM)(d)
- ---------------------- -------------------- ------------------- -------------------- ------------------- --------------------
- ---------------------- -------------------- ------------------- -------------------- ------------------- --------------------
<S> <C> <C> <C> <C> <C>
Last Quarter (c) 6.23% 6.17% 8.98% 5.43% 6.35%
- ---------------------- -------------------- ------------------- -------------------- ------------------- --------------------
- ---------------------- -------------------- ------------------- -------------------- ------------------- --------------------
Inception to 12/31/99 4.15% 3.98% 7.50% 3.29% 4.10%
- ---------------------- -------------------- ------------------- -------------------- ------------------- --------------------
</TABLE>
(a) Past performance is not indicative of future performance
(b) Both Classes of The Industry Leaders Fund(R) are net of all expenses,
versus the gross market benchmarks (The S&P BARRA Value Index and the
Russell 1000 Value Index). Investors are reminded that when trying to
achieve benchmark returns, investment management fees and transaction costs
will be incurred.
(c) Last Quarter 9/30/99 to 12/31/99
(d) Results of Industry Leaders Strategy Model(TM)without expenses and 2% in
cash as calculated in Prospectus.
<PAGE>
Outlook
Our outlook has not changed since our annual report. We will continue to
experience stock price volatility as interest rate concerns rattle the markets.
The Federal Reserve has tightened the short-term credit market and continues to
indicate that the trend will continue towards higher short-term interest rates.
Our long-term outlook for financial assets remains cautiously optimistic. The
markets will learn this year if the "dot.com" companies can produce profit. High
expectations have pushed the technology sector higher in the past 6 months and
this push has had a dampening effect on the Large Value sector. Many of our
leaders were punished for missing earnings estimates, yet the inverse has
happened with the dot.com companies. The upcoming 12 months will be eventful, as
the market will learn if the "dot.com" companies can produce more profits than
expectation. If expectations are not met, we could witness a correction in the
overall market, as well as the technology sector.
We do stress the importance of proper asset allocation between stocks, bonds and
cash and believe all investors should consider the risk to equity investing and
balance that risk with proper asset allocation.
We look forward to our first full calendar year and thank you for your
confidence in The Industry Leaders Fund(R), and as always, we welcome your
questions and comments.
Sincerely,
Gerald P. Sullivan
President and Chief Investment Officer
---------------------------------------------------------------------
104 Summit Ave Box 80 Summit, NJ 07902-0080 (908) 273-5440 Fax: (908) 273-8762
<PAGE>
<TABLE>
<CAPTION>
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)
<S> <C> <C>
Common Stocks - 96.5% Shares Value
AEROSPACE & DEFENSE - 1.4%
Aerospace & Defense - 1.4%
Boeing Company 930 $ 38,537
-----------------
-----------------
BASIC INDUSTRIES - 8.2%
Chemicals - 1.5%
Dupont (EI) de NeMours 320 21,080
Rohm & Haas Company 550 22,378
-----------------
-----------------
43,458
-----------------
-----------------
Iron & Steel - 0.2%
USX-U.S. Steel Group 200 6,600
-----------------
-----------------
Manufacturers - Diversified - 3.0%
Illinois Tool Works, Inc. 100 6,756
Minnesota Mining & Manufacturing Company 230 22,511
Tenneco, Inc. 470 4,377
Tyco International, Inc. 1,349 52,611
-----------------
-----------------
86,255
-----------------
-----------------
Metals & Mining - 1.4%
Alcoa, Inc. 325 26,975
Barrick Gold Corporation 430 7,606
Nucor Corporation 110 6,029
-----------------
-----------------
40,610
-----------------
-----------------
Packaging & Containers - 0.4%
Crown Cork & Seal, Inc. 480 10,740
-----------------
-----------------
Paper & Forest Products - 1.7%
International Paper, Inc. 845 47,690
-----------------
-----------------
TOTAL BASIC INDUSTRIES 235,353
-----------------
-----------------
CONSTRUCTION & REAL ESTATE - 0.7%
Building Materials - 0.4%
LaFarge Corporation 130 3,591
Masco Corporation 250 6,344
-----------------
-----------------
9,935
-----------------
-----------------
Construction - 0.3%
Centex Corporation 240 5,925
Clayton Homes, Inc. 300 2,756
-----------------
-----------------
8,681
-----------------
-----------------
TOTAL CONSTRUCTION & REAL ESTATE 18,616
-----------------
-----------------
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)- continued
Common Stocks - continued Shares Value
DURABLES - 3.3%
Autos & Auto Parts - 2.3%
Delphi Automotive Systems, Inc. (a) 560 $ 8,820
Ford Motor Company 850 45,316
Goodyear Tire & Rubber Company 100 2,806
Magna International - Class A 210 8,899
-----------------
-----------------
65,841
-----------------
-----------------
Consumer Durables - 0.2%
Whirlpool Corporation 100 6,506
-----------------
-----------------
Home Furnishings - 0.2%
Leggett & Platt, Inc. 280 6,002
-----------------
-----------------
Textiles & Apparel - 0.6%
Nike, Inc. - Class B 100 4,956
Springs Industries, Inc. - Class A 100 3,994
V.F. Corporation 250 7,500
-----------------
-----------------
16,450
-----------------
-----------------
TOTAL DURABLES 94,799
-----------------
-----------------
ENERGY - 6.6%
Energy Services - 1.0%
Schlumberger Ltd. 500 28,063
-----------------
-----------------
Oil & Gas - 5.6%
Burlington Resources, Inc. 290 9,588
Chevron Corporation 310 26,854
Exxon Corporation 749 60,341
Royal Dutch Petroleum 995 60,260
Transocean Offshore 97 3,261
-----------------
-----------------
160,304
-----------------
-----------------
TOTAL ENERGY 188,367
-----------------
-----------------
FINANCE - 23.1%
Banks - 9.4%
Bank of America Corporation 1,070 53,701
Bank One Corporation 1,300 41,600
Chase Manhattan, Inc. 750 58,266
Citigroup, Inc. 1,150 64,041
Wells Fargo, Inc. 1,280 51,760
-----------------
-----------------
269,368
-----------------
-----------------
Federal Sponsored Credit - 1.3%
Fannie Mae 610 38,087
-----------------
-----------------
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)- continued
Common Stocks - continued Shares Value
FINANCE - continued
Insurance - 9.0%
Aetna, Inc. 790 $ 44,092
Allstate Corporation 2,100 50,531
American International Group 530 57,306
AXA Financial Inc. 900 30,600
Berkshire Hathaway, Inc. - Class B (a) 33 60,390
Loews Corporation 250 15,172
-----------------
-----------------
258,091
-----------------
-----------------
Real Estate Investment Trust - 0.7%
Equity Residential Properties Trust 460 19,636
-----------------
-----------------
Securities Industry - 2.1%
Morgan Stanley, Dean Witter & Company 410 58,527
-----------------
-----------------
Services - 0.6%
American Express Company 100 16,625
-----------------
-----------------
TOTAL FINANCE 660,334
-----------------
-----------------
HEALTH - 3.8%
Diversified - 1.5%
Johnson & Johnson, Inc. 470 43,828
-----------------
-----------------
Drugs & Pharmaceuticals - 2.3%
Bristol-Myers Squibb, Inc. 100 6,419
Merck & Company, Inc. 825 55,430
Pfizer, Inc. 100 3,250
-----------------
-----------------
65,099
-----------------
-----------------
TOTAL HEALTH 108,927
-----------------
-----------------
INDUSTRIAL MACHINERY & EQUIPMENT - 4.0%
Electrical Equipment - 2.6%
Applied Materials, Inc. (a) 100 12,669
General Electric, Inc. 400 61,900
-----------------
-----------------
74,569
-----------------
-----------------
Industrial Machinery & Equipment - 1.1%
Caterpillar, Inc. 665 31,297
-----------------
-----------------
Pollution Control - 0.3%
Waste Management 485 8,336
-----------------
-----------------
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 114,202
-----------------
-----------------
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)- continued
Common Stocks - continued Shares Value
MEDIA & LEISURE - 4.8%
Broadcasting - 0.2%
Comcast Corporation - class A, Non-voting 100 $ 5,056
-----------------
-----------------
Entertainment - 2.2%
Disney (Walt) Company 2,175 63,619
-----------------
-----------------
Lodging & Gaming - 1.1%
Carnival Corporation 360 17,213
Park Place Entertainment Corporation (a) 1,100 13,750
-----------------
-----------------
30,963
-----------------
-----------------
Publishing - 0.7%
Gannett Company, Inc. 180 14,681
McGraw-Hill Companies 100 6,162
-----------------
-----------------
20,843
-----------------
-----------------
Restaurants - 0.6%
McDonald's Corporation 390 15,722
-----------------
-----------------
TOTAL MEDIA & LEISURE 136,203
-----------------
-----------------
NON-DURABLES - 4.6%
Beverages - 1.4%
Coca-Cola Company 380 22,135
Seagram Company Ltd. 400 17,900
-----------------
-----------------
40,035
-----------------
-----------------
Foods - 1.6%
Unilever N.V. 858 46,707
-----------------
-----------------
Household Products - 0.9%
Gillette Company 100 4,119
Procter & Gamble, Inc. 200 21,912
-----------------
-----------------
26,031
-----------------
-----------------
Tobacco - 0.7%
Philip Morris Companies 820 18,860
-----------------
-----------------
TOTAL NON-DURABLES 131,633
-----------------
-----------------
RETAIL & WHOLESALE - 6.2%
Department Stores - 0.2%
Penney (J.C.) 300 5,981
-----------------
-----------------
Drug Stores - 0.4%
Walgreen Company 350 10,238
-----------------
-----------------
General Merchandise Stores - 2.6%
Wal-Mart Stores, Inc. 1,070 73,964
-----------------
-----------------
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)- continued
Common Stocks - continued Shares Value
RETAIL & WHOLESALE - continued
Grocery Stores - 0.8%
Albertson's, Inc. 585 $ 18,866
Supervalu, Inc. 230 4,600
-----------------
-----------------
23,466
-----------------
-----------------
Specialty - 2.2%
AutoNation, Inc. (a) 2,075 19,194
Home Depot, Inc. 225 15,469
Genuine Parts Co. 100 2,481
Toys R Us, Inc. (a) 1,735 24,832
-----------------
-----------------
61,976
-----------------
-----------------
TOTAL RETAIL & WHOLESALE 175,625
-----------------
-----------------
SERVICES - 0.7%
Advertising - 0.2%
Interpublic Group 100 5,769
-----------------
-----------------
Educational Services - 0.1%
Sylvan Learning Systems, Inc. (a) 100 1,300
-----------------
-----------------
Leasing & Rental - 0.4%
Hertz Corporation - Class A 230 11,529
-----------------
-----------------
TOTAL SERVICES 18,598
-----------------
-----------------
TECHNOLOGY - 12.2%
Communications Equipment - 1.0%
Lucent Technologies, Inc. 400 30,000
-----------------
-----------------
Computer Services & Software - 3.5%
Excite@Home 275 11,791
IMS Health, Inc. 100 2,719
Microsoft, Inc. (a) 740 86,395
-----------------
-----------------
100,905
-----------------
-----------------
Computers & Office Equipment - 3.5%
Hewlett-Packard Company 325 36,969
International Business Machines, Inc. 580 62,567
-----------------
-----------------
99,536
-----------------
-----------------
Electronics - 3.4%
Intel Corporation 790 65,027
JDS Uniphase Corporation 200 32,262
-----------------
-----------------
97,289
-----------------
-----------------
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)- continued
Common Stocks - continued Shares Value
TECHNOLOGY - continued
Photography & Imaging - 0.8%
Eastman Kodak, Inc. 120 $ 7,950
Xerox Corporation 605 13,726
-----------------
-----------------
21,676
-----------------
-----------------
TOTAL TECHNOLOGY 349,406
-----------------
-----------------
TRANSPORTATION - 2.0%
Air Transportation - 1.0%
AMR Corporation (a) 450 30,150
-----------------
-----------------
Railroads - 0.9%
Burlington Northern Santa Fe, Inc. 1,065 25,826
-----------------
-----------------
Water Transportation - 0.1%
Alexander & Baldwin, Inc. 100 2,281
-----------------
-----------------
TOTAL TRANSPORTATION 58,257
-----------------
-----------------
UTILITIES - 14.9%
Electric Utility - 5.6%
Duke Energy, Inc. 300 15,037
PG&E Corporation 1,340 27,470
The Southern Company 1,665 59,212
Texas Utilities, Inc. 2,565 60,277
-----------------
-----------------
161,996
-----------------
-----------------
Natural Gas - 1.7%
Enron Corporation 840 37,275
KeySpan Corporation 470 10,898
-----------------
-----------------
48,173
-----------------
-----------------
Telephone Services - 7.5%
AT&T Corporation 1,075 54,623
Bell Atlantic Corporation 985 60,639
MCI WorldCom (a) 1,080 57,307
SBC Communications, Inc. 845 41,194
-----------------
-----------------
213,763
-----------------
-----------------
Water - 0.1%
American Water Works, Inc. 100 2,125
-----------------
-----------------
TOTAL UTILITIES 426,057
-----------------
-----------------
TOTAL COMMON STOCKS (Cost $2,700,230) 2,754,914
-----------------
-----------------
Industry Leaders Fund (R)
Schedule of Investments - December 31, 1999 (Unaudited)- continued
Principal
Amount Value
Money Market Securities - 0.8%
Fiduciary Money Market Fund, 2.20% (b)
(Cost $22,144) $ 22,144 22,144
-----------------
-----------------
TOTAL INVESTMENTS - 97.3% (Cost $2,722,374) 2,777,058
-----------------
-----------------
Other assets less liabilities - 2.7% 75,716
-----------------
-----------------
TOTAL NET ASSETS - 100.0% $ 2,852,774
=================
=================
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at December 31, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Industry Leaders Fund (R) December 31, 1999
Statement of Assets & Liabilities (Unaudited)
<S> <C> <C>
Assets
Investment in securities (cost $2,722,374) $ 2,777,058
Cash 60,600
Receivable for fund shares sold 12,700
Dividends receivable 4,143
Interest receivable 64
------------------
Total assets 2,854,565
Liabilities
Accrued investment advisory fee payable $ 1,621
Accrued distribution fee payable 170
-----------------
Total liabilities 1,791
------------------
Net Assets $ 2,852,774
==================
Net Assets consist of:
Paid in capital $ 2,816,971
Accumulated undistributed net investment income 193
Accumulated net realized gain (loss) on investments (19,074)
Net unrealized appreciation on investments 54,684
------------------
Net Assets $ 2,852,774
==================
Class D:
Net Asset Value, offering price and redemption
price per share ($1,081,274 / 106,752 shares) $ 10.13
==================
Class I:
Net Asset Value, offering price and redemption
price per share ($1,771,500 / 172,115 shares) $ 10.29
==================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Industry Leaders Fund (R)
Statement of Operations for six months ended December 31, 1999 (Unaudited)
<S> <C> <C>
Investment Income
Dividend income $ 23,396
Interest income 341
---------------
Total Income 23,737
Expenses
Investment advisory fee $ 9,550
Distribution fees - Class D 1,362
------------------
Total operating expenses 10,912
---------------
---------------
Net Investment Income 12,825
---------------
Realized & Unrealized Gain (Loss)
Net realized gain (loss) on investment securities (12,508)
Change in net unrealized appreciation (depreciation)
on investment securities (89,430)
------------------
Net gain (loss) on investment securities (101,938)
---------------
---------------
Net increase in net assets resulting from operations $ (89,113)
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Industry Leaders Fund (R)
Statement of Changes in Net Assets
Six months
ended Period
December 31, ended
1999 June 30,
(Unaudited) 1999 (a)
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income $ 12,825 $ 7,878
Net realized gain (loss) on investment securities (12,508) 21,055
Change in net unrealized appreciation (depreciation) (89,430) 144,114
----------------- -----------------
----------------- -----------------
Net increase (decrease) in net assets resulting from operations (89,113) 173,047
----------------- -----------------
Distributions to shareholders
From net investment income (20,510) -
Return of capital - -
From net realized gain (27,621) -
----------------- -----------------
Total distributions (48,131) -
Share Transactions - net increase
Class D 17,786 1,050,000
Class I 218,285 1,530,900
----------------- -----------------
Net increase in net assets resulting
from share transactions 236,071 2,580,900
----------------- -----------------
----------------- -----------------
Total increase in net assets 98,827 2,753,947
----------------- -----------------
Net Assets
Beginning of period 2,753,947 -
----------------- -----------------
End of period $ 2,852,774 $ 2,753,947
================= =================
(a) March 17, 1999 (commencement of operations) to June 30, 1999.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Industry Leaders Fund (R)
Class D
Financial Highlights
Six months
ended Period
December 31, ended
1999 June 30,
(Unaudited) 1999 (a)
-------------- ---------------
<S> <C> <C>
Selected Per Share Data
Net asset value, beginning of period $ 10.77 $ 10.00
-------------- ---------------
Income from investment operations
Net investment income 0.04 0.03
Net realized and unrealized gain (0.51) 0.74
-------------- ---------------
Total from investment operations (0.47) 0.77
-------------- ---------------
Less distributions:
Distributions from net investment income (0.07) -
Distributions from net realized gains (0.10) -
-------------- ---------------
Total distributions (0.17) -
-------------- ---------------
-------------- ---------------
Net asset value, end of period $ 10.13 $ 10.77
============== ===============
Total Return (b) (4.37)% 7.70%
Ratios and Supplemental Data
Net assets, end of period (000) $1,081 $1,130
Ratio of expenses to average net assets 0.95% (c) 0.95% (c)
Ratio of net investment income to
average net assets 0.73% (c) 0.84% (c)
Portfolio turnover rate 66.19% (c) 64.93% (c)
(a) March 17, 1999 (commencement of operations) to June 30, 1999.
(b) For periods of less than a full year, total returns are not annualized.
(c) Annualized
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Industry Leaders Fund (R)
Class I
Financial Highlights
Six months
ended Period
December 31, ended
1999 June 30,
(Unaudited) 1999 (a)
-------------- ---------------
<S> <C> <C>
Selected Per Share Data
Net asset value, beginning of period $ 10.77 $ 10.00
-------------- ---------------
Income from investment operations
Net investment income 0.06 0.04
Net realized and unrealized gain (0.36) 0.73
-------------- ---------------
Total from investment operations (0.30) 0.77
-------------- ---------------
Less distributions:
Distributions from net investment income (0.08) -
Distributions from net realized gains (0.10) -
-------------- ---------------
Total distributions (0.18) -
-------------- ---------------
Net asset value, end of period $ 10.29 $ 10.77
============== ===============
Total Return (b) (2.69)% 7.70%
Ratios and Supplemental Data
Net assets, end of period (000) $1,772 $1,624
Ratio of expenses to average net assets 0.70% (c) 0.70%
Ratio of net investment income to
average net assets 1.08% (c) 1.39%
Portfolio turnover rate 66.19% (c) 64.93%
(a) March 17, 1999 (commencement of operations) to June 30, 1999.
(b) For periods of less than a full year, total returns are not annualized.
(c) Annualized
</TABLE>
<PAGE>
INDUSTRY LEADERS FUND(R)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED
DECEMBER 31, 1999 (UNAUDITED)
NOTE 1. ORGANIZATION
Industry Leaders Fund(R) (the "Fund") was organized as a series of the
Industry Leaders Fund(R), a Delaware business trust (the "Trust), on December
13, 1995 and commenced operations on March 17, 1999. The Fund is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified open-end management investment company. The Fund's investment
objective is to provide long-term capital appreciation. The Declaration of Trust
permits the Trustees to issue an unlimited number of shares of beneficial
interest of separate series without par value.
The Fund currently consists of two classes of shares, Class D and Class I,
each of which has equal rights as to assets and voting privileges except that
each class has different distribution expenses. Each class has exclusive voting
rights with respect to its distribution plans.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
SECURITIES VALUATION- Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last-quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the opinion of the Advisor (as such term is defined in note 3 of this document),
the last bid price does not accurately reflect the current value of the
security. All other securities for which over-the-counter market quotations are
readily available are valued at their last bid price. When market quotations are
not readily available, when the Advisor determines the last bid price does not
accurately reflect the current value, or when restricted securities are being
valued, such securities are valued as determined in good faith by the Advisor,
in conformity with guidelines adopted by and subject to review of the Board.
Fixed-income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market values of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Advisor,
subject to review by the
INDUSTRY LEADERS FUND(R)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED
DECEMBER 31, 1999 (UNAUDITED) - CONTINUED
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Board. Short-term investments in fixed-income securities with maturities of less
than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized-cost method of valuation, which the
Board has determined will represent fair value.
FEDERAL INCOME TAXES - The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
DIVIDENDS AND DISTRIBUTIONS- The Fund intends to comply with federal tax rules
regarding distribution of substantially all its net investment income and
capital gains. These rules may cause multiple distributions during the course of
the year.
REDEMPTION FEES - Class D shares held in the fund less than six months are
subject to a redemption fee equal to 0.75% of an amount equal to the lesser of
the net asset value at time of purchase of Class D shares being redeemed or the
net asset value of such Class D shares at time of redemption. The fee, which is
retained by the Fund, is accounted for as an addition to paid in capital.
OTHER - The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Claremont Investment Partners(R)L.L.C. (the "Adviser") to
manage the Fund's investments. The Adviser is organized as a Delaware limited
liability company and its Chief Executive Officer is Barry F. Sullivan. Barry F.
Sullivan is the father of the Portfolio Manager, Gerald P. Sullivan who is
primarily responsible for the day-to-day management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the operating expenses of the Fund. As compensation for its
management services and agreement to pay the Fund's expenses, the Fund is
obligated to pay the Adviser a fee of
INDUSTRY LEADERS FUND(R)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED
DECEMBER 31, 1999 (UNAUDITED) - CONTINUED
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
0.70% of the average daily net assets of the Fund. It should be noted that most
investment companies pay their own operating expenses directly, while the Fund's
expenses are paid by the Adviser. For the six-month period ended December 31,
1999, the Adviser received a fee of $9,550 from the Fund. Certain officers and
trustees of the Fund are also officers of the Advisor and shareholders of the
Fund.
On behalf of the Class D shares, the fund has adopted a distribution fee
(the "Distribution Plan") under Rule 12b-1 of the 1940 Act. Under the
Distribution Plan, the Fund is authorized to pay a fee in an amount not to
exceed on an annual basis 0.25% of the average daily net asset value of the
Class D Shares. For the six month period ended December 31, 1999, the Adviser
received distribution fees of $1,362 from the Fund for expenses related to the
sale of Fund shares.
NOTE 4. SHARE TRANSACTIONS
As of December 31, 1999, there was an unlimited number of authorized shares
for the Fund. Paid in capital at December 31, 1999 was $2,816,971.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTH ENDED FOR THE PERIOD MARCH 17, 1999
DECEMBER 31, 1999 (COMMENCEMENT OF OPERATIONS) TO JUNE 30,
1999
SHARES DOLLARS SHARES DOLLARS
CLASS D:
<S> <C> <C> <C> <C>
Shares sold 0 $0 105,500 $1,050,000
Shares issued in
reinvestment of
dividend 1,752 $17,786 0 $0
Shares Redemption (0) $(0) (0) $(0)
-------- --------- --------- -------------
1,752 $17,786 105,500 $1,050,000
===== ======= ====== ==========
</TABLE>
INDUSTRY LEADERS FUND(R)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED
DECEMBER 31, 1999 (UNAUDITED) - CONTINUED
NOTE 4. SHARE TRANSACTIONS - CONTINUED
<TABLE>
<CAPTION>
SIX MONTH ENDED FOR THE PERIOD MARCH 17, 1999
DECEMBER 31, 1999 (COMMENCEMENT OF OPERATIONS) TO JUNE 30,
1999
SHARES DOLLARS SHARES DOLLARS
CLASS I:
<S> <C> <C> <C> <C>
Shares sold 18,770 $192,200 150,769 $1,530,900
Shares issued in 2,990 $30,345 0 $0
Shares Redemption (414) $(4,260) (0) $(0)
-------- --------- ------------ ----------------
21,346 $218,285 150,769 $1,530,900
======= ======= ======= ========
</TABLE>
NOTE 5. INVESTMENTS
For the six month period ended December 31, 1999, purchases and sales of
investment securities, other than short-term investments, aggregated $939,830
and $762,879, respectively. As of December 31, 1999, the gross unrealized
appreciation for all securities totaled $283,802 and the gross unrealized
depreciation for all securities totaled $229,118 for a net unrealized
appreciation of $54,684. The aggregate cost of securities for federal income tax
purposes at December 31, 1999 was $2,722,374.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
INDUSTRY LEADERS FUND(R)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED
DECEMBER 31, 1999 (UNAUDITED) - CONTINUED
NOTE 7. RELATED PARTY TRANSACTIONS
The Adviser is not a registered broker-dealer of securities and thus does
not receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of December 31, 1999, Barry F.
Sullivan, Chief Executive Officer of Claremont Investment Partners, L.L.C. (the
Adviser), and entities which the Adviser could be deemed to control or have
investment discretion over, beneficially owned in aggregate more than 25% of the
Fund.
NOTE 8. SHAREHOLDER MEETING
At a Special Meeting of Shareholders held on July 29, 1999, shareholders of
the Fund approved an increase in the Fund's fundamental restriction on the
maximum percentage of assets which it may invest in any one issuer from 2.25% to
2.75%.
The fundamental investment restriction change was approved by 100% of the
outstanding Class D Shares and 92.25% of outstanding Class I Shares. Of the
7.75% Class I Shares not voting in favor of the fundamental investment
restriction change, none were present at the Special Meeting in person or by
proxy. No Class I or Class D Shares voted against the proposal. No abstentions
or broker non-votes were submitted.
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