Dear Shareholders:

Investment Results - Annual Fiscal Period Ended June 30, 2000

The Industry Leaders Fund® ("the Fund") ended its first full fiscal year on June 30, 2000 with a total return of -4.36% for Class D shares and -3.92% for Class I shares. The actual performance of the two Fund share classes was better than the respective classes of the Industry Leaders Strategy Model ("Strategy Model"). The market volatility for the past fiscal year benefited the Fund, since we were able to rebalance our actual positions to the Strategy Model intra-month. Future market volatility may not benefit the Fund in the same manner, yet we plan to continue to use prudence when rebalancing our actual positions to that of the Strategy Model.

We have illustrated the actual performance of the Fund to performances of the Strategy Model and the two most recognizable Large Cap Value Indexes, the S&P BARRA Value Index® and the Russell 1000 Value Index®. During both periods of time listed below, Class I shares of the Fund outperformed the returns of the comparative indexes and the Class I Strategy Model, while the Class D shares of the Fund outperformed the comparative indexes and the Class D Strategy Model for the 1 year period, and the Russell 1000 Value Index® and the Class D Strategy Model since inception.

Comparative Actual and Hypothetical Average Annual Return Performance

Of the Industry Leaders Fund® and The Industry Leaders Strategy Model (a)(b)

* 1 year period (fiscal year) 6/30/99 to 6/30/00.

** Inception date 3/17/99, From Inception 3/17/99 to 6/30/00.

***Strategy Model calculated as described in Prospectus dated 8/29/00, Investment Strategy Section. (2% held in cash and class respective expenses of 0.70% for Class I and 0.95% for Class D taken out on a monthly basis).

(a) Past performance is not indicative of future performance.

(b) Both Classes of the Industry Leaders Fund® are net of all expenses, versus the gross market benchmarks (the S&P BARRA Value Index® and the Russell Value Index®). Investors are reminded that when trying to achieve benchmark returns, investment management fees and transaction costs will be incurred.

We are pleased with our management of the Fund to our Strategy Model, and of the Strategy Model to the Large Cap Value Indexes. While past performance of our rebalances will not predict future performance, we will continue to be disciplined in our application of the Strategy Model. The long-term performance of the Strategy Model continues to out perform the large cap value indexes. This may not continue in the future, but the discipline of the Strategy Model is being supported with actual results.

The Industry Leaders Fund® - Letter to Shareholders page 2

(graph)
 

This graph and following table, provided in accordance with SEC regulations, compares a $10,000 investment in the Fund, made at its inception, with the performance of the S&P BARRA Value Index® and the Russell 1000 Value Index®. Results include the reinvestment of dividends and capital gains distributions. Performance is historical and does not represent future results. Investment returns and principal value vary, and you may have a gain or loss when you sell shares.

Outlook

Our long-term outlook for financial assets continues to remain cautiously optimistic. Interest rates appear to be leveling off, as economic data begins to signal the moderating of economic growth, which is comforting to the Federal Reserve. Unfortunately the labor market continues to be tight as unemployment is at historically low levels, and may ultimately cause the Federal Reserve to lean on the side of tighter monetary policy.

We have experienced a justified correction in some of the growth sector of equity assets, as the Internet and "New Economy" stocks saw significant downward corrections. The market has not responded well to disappointing earnings announcements, and should continue in the future to look unfavorably on unmet expectations. The large value sector (low price/earnings and low price/book) has suffered from some disappointment from slowing earnings growth, as the sector continues to under-perform the large cap sectors with higher price/earnings and price/book ratios (large cap blend i.e. S&P 500 Index® and large cap growth i.e. S&P BARRA Growth Index®). The next year will provide judgment on some of the optimistic growth expectations found in the more growth-orientated sectors.

Our next fiscal year will be challenged by a national election and the continued evolution of the expansion of the economy. Given this uncertainty we stress the importance of proper asset allocation between stocks, bonds and cash. We believe that all investors should consider the risk of equity investing and balance this risk with proper asset allocation.

Personal Message from the Portfolio Manager

I would like to thank all of you, our founding shareholders, for your confidence in our ability to deliver a portfolio that represents the Industry Leaders Strategy Model. I thank the Board of Trustees for their patient input, and Mark S. Kaufmann, Chairman of the Board, for his tireless effort. We will be notified in early 2001 on the status of our patent application for the Strategy Model, which could guarantee the uniqueness of our Fund for the future, and give our Board something extra to be excited with.

Most importantly, I would like to thank my family and friends for their support. Without them there would not be an Industry Leaders Fund®, an Industry Leaders Strategy Model or Claremont Investment Partners. I have been working on this project for more than four years and have tried every day to move it forward. I have engaged friends and family countless times for input, and have extracted their input and placed it to good use. It has been difficult at times, yet it is satisfying to propose a theory, validate it with data, and then manufacture a product based on the theory.

Distribution is the key to success in the mutual fund business, and that will be the challenge of the next few years, to bring our product and knowledge to a wider range of people. I believe our product belongs in every well-balanced portfolio that invests in equity mutual funds. In the future, our success will depend on our ability to project that belief and will require that we define and disseminate an understandable message to all current and future shareholders. This challenge will be met with the same effort extended during the past four years.

Thank-you for your support.

Sincerely;

Gerald P. Sullivan

President and Chief Investment Officer

INDEPENDENT AUDITOR'S REPORT

To The Shareholders and

Board of Trustees

The Industry Leaders Fund

We have audited the accompanying statement of assets and liabilities of the Industry Leaders Fund, including the schedule of portfolio investments, as of June 30, 2000, and the related statement of operations for the year then ended, the statement of changes in net assets and financial highlights for the year then ended and for the period from March 17, 1999 (commencement of operations) to June 30, 1999 in the period 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 June 30, 2000, by correspondence with the custodian. 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 the Industry Leaders Fund as of June 30, 2000, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for the year then ended and for the period from March 17, 1999 (commencement of operations) to June 30, 1999 in the period then ended, in conformity with generally accepted accounting principles.

McCurdy & Associates CPA's, Inc.

Westlake, Ohio

July 30, 2000

NOTE 1. ORGANIZATION

Industry Leaders Fund® (the "Fund") was organized as a series of Industry Leaders Fund®, 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 Adviser (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 Adviser 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 Adviser, 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 Adviser 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 Adviser, subject to review by the 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,

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued

are valued by using the amortized-cost method of valuation, which the Board has determined will represent fair value.

The Fund subtracts the non-class specific liabilities of the Fund from the Fund's assets to determine its total assets. The Fund then determines each class's proportionate interest in the Fund's net assets. The liabilities attributable to that class, including its Fund management and Distribution Plan fees, are then deducted and the resulting amount is divided by the number of shares of that class outstanding to produce its net asset value per share.

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® 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.

NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - continued

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 expenses of the Fund except brokerage commission and SEC fees. As compensation for its management services and agreement to pay the Fund’s expenses (except for brokerage commission and SEC fees), the Fund is obligated to pay the Adviser a fee of 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 fiscal year period ended June 30, 2000, the Adviser received a fee of $20,047 from the Fund. Certain officers and trustees of the Fund are also officers of the Adviser 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 fiscal year period ended June 30, 2000, the Adviser received distribution fees of $2,763 from the Fund for expenses related to the sale of Fund shares.

NOTE 4. SHARE TRANSACTIONS

As of June 30, 2000, there were an unlimited number of authorized shares for the Fund. Paid in capital on June 30, 2000 was $3,098,471.
Transactions in Class D shares were as follows:

NOTE 4. SHARE TRANSACTIONS - continued

Transactions in Class I shares were as follows:

NOTE 5. INVESTMENTS

For the fiscal period ended June 30, 2000, purchases and sales of investment securities, other than short-term investments, aggregated $2,644,903 and $2,202,685, respectively. As of June 30, 2000, the gross unrealized appreciation for all securities totaled $348,319 and the gross unrealized depreciation for all securities totaled $233,981 for a net unrealized appreciation of $114,338. The aggregate cost of securities for federal income tax purposes at June 30, 2000 was $2,993,997.

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.

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

NOTE 7. RELATED PARTY TRANSACTIONS - continued

presumption of control of the Fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of June 30, 2000, Barry F. Sullivan, Chief Executive Officer of Claremont Investment Partners (the Adviser) beneficially owns 33.1% of the Fund, and is deemed a control person. Donaldson Lufkin Jenrette Securities Corporation Inc. owns 33.2% of the shares of the Fund (for the account of Barry F. Sullivan) and is deemed a control person.