CHAIRWOMAN'S LETTER
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It is my pleasure to present the first semi-annual report of the Meyers Sheppard
Pride Fund for the period June 13, 1996 to November 30, 1996. Response to the
Pride Fund has been overwhelming. We have sent out thousands of prospectuses in
just the first six months! Account holders reside in over 30 states from every
region of the country.
We officially began trading the Fund on June 13, 1996 with $100,000 seed
capital. By period ended November 30, 1996 the Fund had grown to $744,000. The
majority of account holders invested in the Fund after July 1, 1996. For the
period June 13, 1996 to November 30, 1996, the Fund returned a total of 8.80%.
In the second quarter, from September 1, 1996 to November 30, 1996, the Fund
returned a total of 14.53%.
A more detailed discussion of the Pride Fund portfolio and performance is
presented later in this report. Also, this report includes detailed financial
information on the Pride Fund.
An important administrative note: effective February 1, 1997, we will reduce the
maximum total expense charges from 2.25% to 1.95%.
We would like to welcome the BISYS Group, Inc. as our new partner for 1997.
BISYS is assuming our mutual fund distribution, administration, fund accounting,
transfer agency and other support services upon their completion of their
purchase of Furman Selz's mutual fund administration group. BISYS is the largest
independent administrator and distributor of mutual funds in the country. Their
leadership in technology and their focus on service will help us provide you
with the highest quality service.
[Signature: Shelly J. Meyers]
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS
FOR THE MEYERS SHEPPARD PRIDE FUND
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REPORT ON THE FUND
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The Pride Fund is unique in that it has a Fundamental social objective to only
invest in companies that have adopted progressive policies towards gays and
lesbians. Importantly, two companies officially adopted sexual orientation in
their anti-discrimination policies as a result of our efforts. One was a New
York based investment bank, and the other was a Washington state software
company. We will continue to be proactive in this regard and we will report our
progress in this area in subsequent reports to shareholders.
The period June 13, 1996 to November 30, 1996 saw an initial sharp sell-off of
the U.S. stock market beginning in June, followed by a recovery from late July
continuing through November. The large cap stocks in the Dow Industrials and S&P
500 outperformed as investors sought liquidity as a safe haven in the event of
another drop in the market. In general, growth stocks outperformed value stocks
which put the Pride Fund at a disadvantage relative to market performance.
During the most recent quarter, the Fund benefited from a strong performance by
technology and financial stocks. Other advancing areas included consumer
non-durables and consumer services. Sectors that slowed relative Fund
performance were utility and energy stocks. Fund performance during the first
two months of operation was also inhibited by higher than usual trading costs
incurred by the high level of activity required to start up the portfolio.
Transaction costs had already decreased significantly by period end, and we
expect them to be lower than the average for equity Funds because of our
projected low annual portfolio turnover.
Technology stocks, in particular, looked to be most undervalued as we built the
portfolio and these stocks were hit the hardest during the mid-summer downturn
after we launched the Fund. We took advantage of the mid-summer correction by
adding to technology holdings. This paid off handsomely as we moved into
November, with three technology stocks returning over 50%: Advanced Micro
Devices (69.8%), IBM (59.7%), and Lam Research (53.9%). In total, thirty-five of
the portfolio stock holdings posted positive returns for the entire period, and
only seven of the Fund's forty-two holdings were below initial cost basis.
As of November 30, 1996, the Fund's top five equity holdings were: Arrow
Electronics (3.6%), AnnTaylor Stores (3.5%), Glendale Federal Bank FSB (3.3%),
Amgen (3.2%), and Time Warner (3.2%). A complete listing of the portfolio is
included in this report. We will continue to invest in diversified portfolios of
securities that we believe offer the potential for superior returns over time,
and we will continue to take advantage of any market and/or company specific
corrections to purchase undervalued securities that we believe will enhance the
Fund's performance over the long term.
-2-
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MEYERS SHEPPARD PRIDE FUND
STATEMENT OF ASSETS AND LIABILITIES (unaudited)
November 30, 1996
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Assets:
Investments, at value (cost $657,801)(Note 1a) $736,893
Cash........................................ 10,616
Dividend/Interest receivable................ 926
Receivable from advisor (Note 2)............ 137,067
Deferred organization expense and other assets 102,818
-----------
Total Assets.............................. $988,320
Liabilities:
Organizational expense payable.............. 102,818
Accrued expenses............................ 141,317
-----------
Total Liabilities......................... 244,135
-----------
Net Assets, applicable to 68,372 shares of
beneficial interest....................... $744,185
===========
Net assets consist of:
Capital..................................... 666,628
Accumulated undistributed net investment loss (1,529)
Accumulated undistributed net realized loss on
investments............................... (6)
Net unrealized appreciation on investments.. 79,092
-----------
Net Assets.................................. $744,185
===========
Net Asset Value Per Share..................... $10.88
===========
The accompanying notes are an integral part of the financial statements.
-3-
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MEYERS SHEPPARD PRIDE FUND
STATEMENT OF OPERATIONS (unaudited)
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For the period from
June 10, 1996*
through November 30, 1996
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Investment Income
Interest income.............................. $794
Dividend income.............................. 1,927
----------
$2,721
Expenses
Advisory (Note 2).......................... 1,681
Administrative Services (Note 2)........... 70,000
Fund accounting fees and expenses (Note 2). 842
Audit...................................... 10,000
Legal...................................... 12,500
Registration............................... 8,686
Custodian.................................. 7,500
Amortization of organization expense....... 10,567
Printing................................... 4,000
Trustees' fees............................. 3,750
Transfer agent and shareholder servicing (Note 2) 1,205
12b-1 fees (Note 2)........................ 548
Insurance.................................. 5,500
Miscellaneous.............................. 4,212
----------
Total expenses before waivers/reimbursements 140,991
Less expenses waived/reimbursed (Note 2). (136,741)
-----------
Net expenses............................. 4,250
-----------
Net Investment Loss.......................... (1,529)
-----------
Realized And Unrealized Gain/(Loss) on
Investments
Net realized losses on investments......... (6)
Net unrealized appreciation on
investments................................ 79,092
----------
Net realized and unrealized gain on
investments................................ 79,086
-----------
Net increase in net assets resulting from
operations............................... $77,557
===========
* Commencement of operations.
The accompanying notes are an integral part of the financial statements.
-4-
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MEYERS SHEPPARD PRIDE FUND
STATEMENT OF CHANGES IN NET ASSETS (unaudited)
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For the period from
June 10, 1996*
through November 30, 1996
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Increase in Net Assets from:
Operations
Net investment income...................... $(1,529)
Net realized loss on investments........... (6)
Net change in unrealized appreciation on
investments................................ 79,092
-----------
Net increase in net assets resulting
from operations............................ 77,557
-----------
Capital Share Transactions (Note 4)
Proceeds from sale of shares............... 567,600
Net asset value of shares.................. (1,000)
-----------
Net increase in net assets from
capital share.............................. 566,600
-----------
Total increase in net assets............... 644,157
-----------
Net Assets
Beginning of period........................ 100,028
-----------
End of period.............................. $744,185
===========
The accompanying notes are an integral part of the financial statements.
-5-
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MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
(Unaudited)
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Market
Shares Cost Value
-------- ----------- ------------
Common Stocks (95.4%)
Banking (8.7%)
500 H.F. Ahmanson & Co. $13,149 $16,500
1,200 Glendale Federal Bank* 21,766 25,200
300 Lincoln National Corp 13,430 16,163
400 Riggs National Corp. 4,887 6,925
----------- ------------
53,232 64,788
----------- ------------
Beverages (1.6%)
300 Seagram Co. LTD. 10,296 12,263
----------- ------------
Broadcasting (2.5%)
500 Viacom Inc.* 18,155 18,875
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Computer Equipment (11.7%)
500 Digital Equipment Corp. 18,555 18,375
100 International Business Machines Corp. 9,981 15,937
4,000 Midisoft Corp.* 17,048 13,000
1,000 Silicon Graphics, Inc.* 23,110 19,875
2,600 Unisys Corp.* 16,785 19,825
----------- ------------
85,479 87,012
----------- ------------
Computer Software (1.6%)
200 Sun Microsystems, Inc.* 11,800 11,650
----------- ------------
Electrical & Electronics (8.8%)
500 Arrow Electronics, Inc.* 21,830 26,875
1,200 Cypress Semiconductor Corp.* 13,396 14,700
200 LAM Research Corp.* 4,662 7,175
12,947 16,569
550 LSI Logic Corp.* ----------- ------------
52,835 65,319
----------- ------------
-6-
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
(Unaudited)
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Entertainment (5.3%)
200 The Walt Disney Co. $11,475 $14,750
600 Time-Warner, Inc. 21,236 24,450
----------- ------------
32,711 39,200
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Financial Services (5.3%)
400 American Express Company 18,324 20,900
400 Salomon, Inc. 17,741 18,250
----------- ------------
36,065 39,150
----------- ------------
Food-Wholesale (1.0%)
400 Nash-Finch Co. 6,815 7,600
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Forest Products & Papers (1.3%)
100 Kimberly-Clark Corp. 7,344 9,775
----------- ------------
Lodging (3.1%)
500 ITT Corp.* 21,260 23,062
----------- ------------
Insurance (3.5%)
300 Nac're Corp. 10,585 10,950
500 U.S. Life Corp. 14,967 15,437
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25,552 26,387
----------- ------------
Medical-Hospital Management (4.1%)
300 Foundation Health Corp.* 9,368 8,775
500 United Healthcare Corp. 18,905 21,563
----------- ------------
28,273 30,338
----------- ------------
Oil/Gas Exploration (6.3%)
200 Amerada Hess Corp. 10,605 11,775
300 Amoco Corp. 20,543 23,287
100 Mobil Corp. 11,118 12,100
----------- ------------
42,266 47,162
----------- ------------
-7-
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
(Unaudited)
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Pharmaceuticals (8.5%)
400 Amgen, Inc.* 22,437 24,350
400 McKesson Corp. 17,999 22,500
200 Merck & Co., Inc. 12,162 16,600
----------- ------------
52,598 63,450
----------- ------------
Retail (9.5%)
1,300 Ann Taylor Stores, Inc.* 20,120 26,325
500 Dayton-Hudson Corp. 17,105 19,438
400 Lillian Vernon Corp. 5,341 4,800
21,491 19,800
1,100 Limited, Inc. ----------- ------------
64,057 70,363
----------- ------------
Technology (2.6%)
800 Advanced Micro Devices, Inc.* 11,424 19,400
----------- ------------
Transportation-Air (3.1%)
1,600 America West Airline, Inc.* 22,315 23,400
----------- ------------
Telecommunications (6.9%)
600 AT&T Corp. 23,148 23,550
129 Lucent Technologies, Inc. 6,229 6,611
500 Sprint Corp. 19,347 20,938
----------- ------------
48,724 51,099
----------- ------------
TOTAL COMMON STOCKS 631,201 710,293
=========== ============
MONEY MARKET ACCOUNT (3.6%)
23,750 Stagecoach Prime Money Market Fund 23,750 23,750
2,850 Stagecoach Treasury Money Market Fund 2,850 2,850
----------- ------------
26,600 26,600
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-8-
The accompanying notes are an integral part of the financial statements.
<PAGE>
MEYERS SHEPPARD PRIDE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (continued)
(Unaudited)
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TOTAL INVESTMENTS (99.0%) $657,801+ $736,893
========== ---------
Other Liabilities in Excess of Assets (1.0%) 7,292
NET ASSETS (100.0%) $744,185
=========
* Represents non-income producing securities.
+ Cost for book and tax purposes is the same.
The accompanying notes are an integral part of the financial statements.
-9-
<PAGE>
MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENT (unaudited)
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1. Significant Accounting Policies. The Meyers Sheppard Pride Fund (the "Fund")
is a separate series of the Meyers Sheppard Investment Trust (the "Trust"), a
business trust organized under the laws of the State of Delaware on March 26,
1996. The Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund is an open-ended, no-load, diversified
management investment company whose overall investment objective is to attain
long-term capital appreciation. Prior to June 10, 1996 (commencement of
operations), the Fund had no operations other than the sale of 10,003 shares of
common stock at $10.00 per share, to initial seed capital investors. The overall
investment objective of the Fund is to attain long-term capital appreciation by
investing in a diversified portfolio of equity securities of undervalued but
nevertheless fundamentally sound companies which have been identified as having
met the "Social Objective". Companies which meet the "Social Objective" are
defined as companies which, in general, have been identified as having
progressive policies towards gays and lesbians, but at a minimum have in place
specifically stated policies against discrimination in hiring and promotion
based upon sexual orientation. The following are significant accounting policies
followed by the Fund in the preparation of these financial statements:
a. Valuation of Securities. Equity securities held by the Fund are valued at the
last sale price on the exchange on which they are primarily traded, or on the
NASDAQ system for unlisted national market issues, or at the last quoted bid
price for securities in which there were no sales during the day or for unlisted
securities not reported on the NASDAQ system. Short-term obligations, with
remaining maturities of 60 days or less, are valued at amortized cost, which
approximates market value. Fund securities (other than short-term obligations
with remaining maturities of less than sixty days) for which there are no such
quotation or valuation, are valued at fair value as determined in good faith by
or at the direction of the Fund's Board of Trustees.
b. Organizational Expenses. Costs incurred in connection with the organization
and initial registration of the Fund have been deferred and are being amortized
over a sixty-month period, beginning with the Fund's commencement of operations.
c. Securities Transactions and Investment Income. Securities transactions are
recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income,
including, where applicable, amortization of premium and accretion of discount
on investments, is accrued daily.
d. Dividends and Distributions to Shareholders. Dividends from net investment
income and distributions of net realized gains are normally declared and paid
annually by the Fund. The Fund records dividends and distributions to
shareholders on the ex-dividend date. The amount of dividends and distributions
from net investment income and net realized capital gains are determined in
accordance with federal income tax regulations which may differ with generally
accepted accounting principles. These "book/tax" differences are either
temporary or permanent in nature. To the extent these differences are permanent
in nature, such amounts are reclassified within the capital accounts based on
their federal tax-basis treatment; temporary differences do not require a
reclassification.
e. Federal Income Taxes. The Fund intends to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code and distribute all of
its taxable income to its shareholders. Therefore, no federal income tax
provision is required.
-10-
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MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENT (unaudited)
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g. Use of Estimates. Estimates and assumptions are required to be made regarding
assets, liabilities, and changes in net assets resulting from operations when
financial statements are prepared. Actual results could differ from these
amounts.
2. Investment Management Administration and Distribution Agreements. The Fund
has entered into an investment management agreement (the "Investment Management
Agreement") with the Investment Manager. The Investment Management Agreement
provides that the Fund pays the Investment Manager for its management and
investment advisory services, a monthly fee equal, on an annual basis to 1.00%
of the Fund's average daily net assets. The Investment Manager has undertaken to
waive the portion of its investment management fee necessary to maintain Total
Annual Operating Expenses of no more than 2.25% per year of average daily net
assets. For the period ended November 30, 1996, the Investment Manager earned
$1,681, and waived fees of $1,681.
Furman Selz LLC ("Furman Selz") provides the Fund with administrative, fund
accounting, dividend disbursing and transfer agency services pursuant to an
administration agreement (the "Administration Agreement"). The services under
the Administration Agreement are subject to the supervision of the Fund's
directors and officers and include the day-to-day administration of matters
related to the corporate existence of the Fund, maintenance of its records,
preparation of reports, supervision of the Fund's arrangements with its
custodian and assistance in the preparation of the Fund's registration
statements under federal and state laws. Pursuant to the Administration
Agreement, the Fund pays Furman Selz, per year, an amount equal to 0.15% of the
first $100 million of the Fund's aggregate assets, 0.10% for the next $400
million, 0.07% for the next $500 million, and 0.06% for aggregate assets in
excess of $1 billion. For the period ended November 30, 1996, Furman Selz earned
$70,000, and waived fees of $70,000.
As Administrator, Furman Selz provides the Fund with fund accounting and related
services. For these services Furman Selz is paid a fee of $35,000 per year, plus
out-of-pocket expenses. For the period ended November 30, 1996, Furman Selz
earned $842, and waived fees of $842.
Furman Selz acts as Transfer Agent for the Fund. Furman Selz receives
reimbursement of certain expenses plus a per account fee of $15.00 per year,
subject to a $12,000 per year minimum. For the period ended November 30, 1996,
Furman Selz earned fees of $1,205, and waived fees of $1,205.
The Trustees of the Trust have adopted a Plan of Distribution (the "Distribution
Plan") with respect to the Fund in accordance with Rule 12b-1 under the
Investment Company Act, after having concluded that there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and its
shareholders. As contemplated by the Distribution Plan, Furman Selz acts as
agent of the Fund in connection with the offering of shares of the Fund pursuant
to the Distribution Agreement. Pursuant to the Distribution Agreement, Furman
Selz also acts as the Fund's Distributor, and is responsible for facilitating
the continuous sale or redemption of Fund shares. Solely for the purpose of
reimbursing Furman Selz for activities primarily intended to result in the sale
of Fund shares, the Trust has, on behalf of the Fund, adopted the Distribution
Plan wherein, pursuant to Rule 12b-1 of the Investment Company Act, the Fund is
authorized to spend up to 0.25% of net asset value annually for Furman Selz's
services in connection with the distribution of shares of the Fund. For the
period ended November 30, 1996, the fund incurred distribution fees of $548, and
waived fees of $548.
-11-
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MEYERS SHEPPARD PRIDE FUND
NOTES TO FINANCIAL STATEMENT (unaudited)
------------------------------------------------------------------------------
In conforming with certain statutory limitations, the Investment Manager has
undertaken to reimburse the Fund for expenses necessary to maintain total annual
operating expenses at no more than 2.25% per year of average daily net assets.
For the period ended November 30, 1996, the Investment Manager reimbursed the
Fund $63,670.
3. Investments. Purchase and sales of securities for the period ended November
30, 1996, other than short-term securities, amounted to $667,628, and $1,000,
respectively. The cost of securities is substantially the same for Federal
income tax purposes as it is for financial reporting purposes.
-----------------
Aggregate cost................................ $657,801
=================
Gross unrealized appreciation................. $89,530
Gross unrealized depreciation................. (10,438)
-----------------
Net unrealized appreciation................... $79,092
=================
4. Capital Stock Transactions. The Fund's Articles of Incorporation permit the
Fund to issue an unlimited number of full and fractional shares of beneficial
interest (par value $0.00001). Transactions in shares for the period ended
November 30, 1996, were as follows:
----------------------------
Shares Amount
Beginning balance................ 10,003 $100,028
------------- -----------
Shares sold...................... 58,464 567,600
Shares redeemed.................. (95) (1,000)
------------- -----------
Net increase..................... 58,369 566,628
------------- -----------
Ending balance................... 68,372 $666,628
============= ===========
5. Subsequent Events. Furman Selz has consummated an agreement with BISYS Group,
Inc. ("BISYS") whereby services currently provided to the Company by Furman Selz
will be provided to the Company by BISYS and certain of its affiliates under new
Administrative Services, Transfer Agency and Fund Accounting Agreements between
the Company and BISYS.
-12-
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MEYERS SHEPPARD PRIDE FUND
FINANCIAL HIGHLIGHTS (unaudited)
- --------------------------------------------------------------------------------
For the period from
Selected ratios and data for a share of capital June 10, 1996*
stock outstanding through the period: through November 30, 1996
- --------------------------------------------------------------------------------
Per Share Operating Performance:
$10.00
Net asset value, beginning of period............................ -----------
Net investment income......................................... (0.02)
Net realized and unrealized gains on investments.............. 0.90
Net asset value, end of period.................................. $10.88
===========
Total Investment Return+........................................ 8.80%
Ratios/Supplemental Data:
Net assets, end of period (in thousands)...................... $744
Ratios to average net assets:
Expenses...................................................... 2.25%(1)(2)
Net Income.................................................... (0.33%)(1)(3)
Portfolio turnover rate......................................... 0%
Average commission per share.................................... $0.080842
* Commencement of operations.
(1) Annualized
(2) If the Fund had borne all expenses that were assumed or waived by the
Advisor and Administrator, the above expense ratio would have been 14.72%.
(3) If the Fund had borne all expenses that were assumed or waived by the
Advisor and Administrator, the above net income ratio would have been
(12.80%).
+ Total return is based on the change in net asset value during the period and
assumes reinvestment of all dividends and distributions.
The accompanying notes are an integral part of the financial statements.
-13-
<PAGE>
MEYERS SHEPPARD PRIDE FUND
Trustees and Officers
Shelly J. Meyers Investment Manager
Chairman of the Board, President and Meyers, Sheppard & Co., LLC
Trustee 9107 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90210
Leslie C. Sheppard Administrator, and Dividend
Trustee and Executive Vice President Disbursing Agent
Furman Selz LLC
230 Park Avenue
New York, NY 10169
Gwendolyn H. Baba Transfer Agent
Trustee BISYS Group, Inc.
3435 Stelzer Road
Columbus, OH 43219
Jay W. Gendron, Esq. Distributor
Trustee Furman Selz LLC
237 Park Avenue
New York, NY 10017
Robert E. Gipson, Esq. Custodian
Trustee Wells Fargo Bank, N.A.
P.O. Box 63084
San Francisco, CA 94163
Leonard Greenhalgh, M.B.A., Ph.D. Legal Counsel
Trustee Pollet & Woodbury,
a Law Corporation
10900 Wilshire Boulevard, Suite 500
Los Angeles, CA 90024
Loretta Sanchez Legal Counsel for the Independent
Trustee Trustees
Mayer, Brown & Platt
1675 Broadway, Suite 1900
New York, NY 10019
Duane E. McWaine, M.D. Independent Accountants
Trustee KPMG Peat Marwick LLP
345 Park Avenue
New York, NY 10154
John J. Pileggi
Vice President and Treasurer
Eric Rubin
Vice President
Theresa Donovan
Secretary
Tejal Albanese
Assistant Treasurer
Philip McKinley
Assistant Secretary
Alaina Metz
Assistant Secretary
<PAGE>
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MEYERS SHEPPARD PRIDE FUND
------------------------------------------
SEMI-ANNUAL REPORT
November 30, 1996
MEYERS SHEPPARD INVESTMENT TRUST
<PAGE>
