THE
PROACTIVE
ASSET ALLOCATION FUNDS
-----------------------------
THE
OPTI-flex(R) DYNAMIC FUND
SEMI-ANNUAL REPORT
JUNE 30, 1997
-----------------------------
This report has been prepared for shareholders
and may be distributed to others only if preceded
or accompanied by a current prospectus.
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (Unaudited)
SHARES VALUE
MUTUAL FUNDS - 97.1%
American Century International Growth 58,275 555,944
Artisan International Fund 37,341 540,702
Crabbe Huson Special Fund 33,422 548,797
Eaton Vance Traditional Greater India Fund 76,978 577,332
Guinness Flight Asia Small Cap Fund 32,031 535,554
Invesco Strategic Financial Services Fund 20,825 560,808
Invesco Value Equity Fund 19,996 559,085
Invesco Pacific Basin Fund 37,565 538,687
J.P. Morgan Emerging Markets Equity 43,783 545,534
Janus Overseas Fund 30,656 554,261
Lexington Small Cap Asia Fund 38,606 547,433
Linder Growth Fund 20,968 544,738
Montgomery International Small Cap Fund 32,031 549,648
Montgomery Select 50 Fund 27,233 544,935
Morgan Stanley Emerging Markets Fund 29,815 549,791
Morgan Stanley Institutional Emerging Market Debt 61,350 542,331
Nicholas Applegate Emerging Countries-I Fund 22,762 456,837
Oakmark International Fund 29,326 536,657
Robertson Stephens Partners Fund 664 10,552
Rydex High Yield Fund 1,671 16,664
Scudder Latin America Fund 19,577 564,800
Star Treasury Fund 239,387 239,387
Vontobel Eastern European Equity Fund 19,817 356,698
Warburg Pincus Capital Appreciation Fund 27,263 532,443
Warburg Pincus Japan OTC 71,327 563,481
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TOTAL MUTUAL FUNDS
(Cost $11,025,116) 12,073,099
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THE OPTI-flex(R) DYNAMIC FUND
CLOSED END MUTUAL FUNDS - 2.9%
Emerging Markets Telecommunications Fund 1,000 18,750
Equus II Inc. 2,000 43,000
GT Global Developing Markets Fund 7,000 98,437
Global High Income Dollar Fund 4,000 55,750
Morgan Stanley Asia Fund 3,000 31,500
New South Africa Fund 1,000 16,250
Scudder New Asia Fund Inc. 1,000 14,625
Southern Africa Fund Inc. 1,000 17,750
Templeton Vietnam Opportunities Fund 2,000 24,875
Templeton China World Fund 2,000 27,875
Templeton Dragon Fund 1,000 16,250
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TOTAL CLOSED END MUTUAL FUNDS
(Cost $351,480) 365,062
-----------
TOTAL INVESTMENTS - 100%
(Cost $11,376,596) 12,438,161
===========
See accompanying notes to financial statements.
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (Unaudited)
Assets:
Investments, at market value (cost $11,376,596) $ 12,438,161
Cash 192
Receivable for capital stock sold 2,185
Interest receivable 534
Receivable from adviser 18,629
Unamortized organization costs 63,762
Prepaid expense and other assets 2,380
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Total Assets 12,525,843
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Liabilities:
Payable for securities purchased 140,060
Other accrued liabilities 88,365
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Total Liabilities 228,425
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Net Assets $ 12,297,418
============
Components of Net Assets:
Capital $ 11,671,309
Accumulated net investment loss (77,324)
Accumulated undistributed net realized
losses from investment transactions (358,132)
Net unrealized appreciation of investments 1,061,565
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Total Net Assets $ 12,297,418
============
Capital Stock Outstanding 1,137,467
============
Net Asset Value -- Offering and Redemption Price Per Share $ 10.81
============
See accompanying notes to financial statements.
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
Investment
Income:
Interest $ 18,664
Dividends 16,171
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Total Investment Income 34,835
------------
Fund Expenses:
Investment advisory fees 36,284
Audit fees 6,069
Custodian fees 3,033
Trustee fees 14,840
Amortization of organization expense 7,432
Registration and filing fees 9,848
Insurance expense 4,682
Administrative fees 14,498
Printing and postage 4,911
Distribution expense 36,284
Shareholder Service fee 12,095
Transfer agent and accounting fees 14,165
Other expenses 343
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Total expenses 167,072
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Management fees waived by adviser (36,284)
Reimbursement of expenses by adviser (18,629)
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Net Expenses 112,159
------------
------------
Net investment loss (77,324)
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Realized and Unrealized Losses from Investments
Net realized losses from investment transactions (358,132)
Net increase in net unrealized appreciation of investments 1,063,935
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Net Realized and Unrealized Gains from Investments 705,803
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Net Increase in Net Assets Resulting from Operations $ 628,479
============
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
STATEMENTS OF CHANGES IN NET ASSETS
October 1,
Six Months 1996(1)
Ended June through
30, 1997 December
(Unaudited) 31, 1996
Increase (Decrease) In Net Assets:
Operations:
Net investment loss $ (77,324) $ 59,356
Net realized losses from investment
transactions (358,132) 65,717
Net increase in net unrealized appreciation
of investments 1,063,935 (2,370)
----------- ----------
Net Increase in Net Assets Resulting from
Operations 628,479 122,703
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Dividends and Distributions to Shareholders:
From net investment income 0 (59,356)
From net realized gains 0 (65,717)
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Net Decrease in Net Assets Resulting from
Dividends and Distributions to Shareholders 0 (125,073)
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Capital Transactions:
Proceeds from shares subscribed 5,381,185 6,694,304
Reinvestment of dividends 0 124,978
Cost of shares redeemed (518,316) (10,842)
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Net Increase in Net Assets Resulting from
Capital Transactions 4,862,869 6,808,440
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Total Increase In Net Assets 5,491,348 6,806,070
Net Assets - Beginning of Period 6,806,070 0
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Net Assets - End of Period $12,297,418 $6,806,070
=========== ==========
Share Transactions:
Subscribed 516,095 660,748
Reinvested 0 12,338
Redeemed (50,650) (1,064)
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Net Increase in Shares Outstanding 465,445 672,022
=========== ==========
(1)Date of commencement of operations
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
FINANCIAL HIGHLIGHTS
October 1,
Six Months 1996(1)
Ended June through
30, 1997 December
(Unaudited) 31, 1996
Net Asset Value, Beginning of Period $ 10.13 $ 10.00
Investment Operations:
Net investment income (loss) (0.07) 0.09
Net gains from investments
(realized and unrealized) 0.75 0.23
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Total 0.68 0.32
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Distributions:
From net investment income 0 (0.09)
From net realized gains 0 (0.10)
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Total 0 (0.19)
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Net Asset Value, End of Period $ 10.81 $ 10.13
========= =======
Total Return 6.71%(2) 3.22%(2)
Ratios/Supplemental Data:
Net assets, end of period $12,297,418 $ 6,806,070
Ratio of expenses to average net assets 2.40%(3) 2.39%(3)
Ratio of net investment income (loss) to
average net assets -1.65%(3) 17.25%(3)(4)
Ratio of expenses to average net assets,
before voluntary fee reductions 3.58%(3) 18.77%(3)
Ratio of net investment income (loss) to average
net assets before voluntary fee reductions -2.83%(3) 14.61%(3)
Portfolio turnover rate 378.10% 5.03%
Average commission rate paid $ 0.0067 $ 0.0281
(1) Date of commencement of operations.
(2) Not annualized.
(3) Annualized.
(4) This ratio is higher than normal for a fund of this type because it is an
annualized ratio based on the net investment income earned during the period
which included annual dividends from its investment holdings.
See accompanying notes to financial statements.
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
THE OPTI-flex(R) DYNAMIC FUND, JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION
The PROACTIVE Asset Allocation Funds was organized in 1996 and is registered
under the Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The OPTI-flex(R) Dynamic Fund (the "Fund")
commenced operations on October 1, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments - Securities which are traded on stock exchanges are valued at the
last sales price as of the close of business of the New York Stock Exchange on
the day of valuation, or, lacking any sales, at the closing bid prices. Mutual
funds are valued at the daily redemption value determined by the underlying
fund.
Money market securities maturing more than sixty days after the valuation date
are valued at the last sales price as of the close of business on the day of
valuation, or, lacking any sales, at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such securities. When
such securities are valued within sixty days or less to maturity, the difference
between the valuation existing on the sixty-first day before maturity and
maturity value is amortized on a straight-line basis to maturity. Securities
maturing within sixty days from their date of acquisition are valued at
amortized cost.
Repurchase Agreements - It is the Fund's policy to take possession of the
collateral for repurchase agreements before payment is made to the seller.
Market value of the collateral must be at least 100% of the amount of the
repurchase agreement.
Income Taxes -- It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no Federal
income tax provision is required.
Organizational Costs -- The cost related to the organization of the Fund has
been deferred and is being amortized on a straight-line basis over a five-year
period.
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
3. INVESTMENT ADVISORY AGREEMENT
PROACTIVE Money Management, Inc. (PROACTIVE) provides the Fund with investment
management research, statistical and advisory services. For such services the
Fund pays monthly a fee based upon the average daily value of the Fund's net
assets at the following annual rates: 0.75% of average net assets up to $500
million, 0.65% of average net assets exceeding $500 million. During the six
months ended June 30, 1997, PROACTIVE voluntarily waived all of its investment
advisory fees in the Fund.
The Fund has adopted a distribution expense plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plan"). Pursuant to the Plan, the Fund
may use as much as 75/100 of 1% of net assets annually to aid in the
distribution of shares. The Fund has adopted a service plan for using as much as
25/100 of 1% of net assets annually to aid in the distribution of shares.
Certain officers and/or trustees of the Fund are officers and/or directors of
PROACTIVE.
4. CAPITAL SHARE TRANSACTIONS
At June 30, 1997, an indefinite number of shares of $0.10 par value stock were
authorized in the Fund and capital amounted to $11,671,308 in the Fund.
Transactions in capital stock are included elsewhere in this report.
5. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding short-term investments and U.S.
Government and agency obligations for the six months ended June 30, 1997 were as
follows:
Purchases Sales
--------- -----
OPTI-flex(R)Dynamic Fund $35,039,855 $30,172,387
As of June 30, 1997, the aggregate cost of investments and net unrealized
appreciation (depreciation) for Federal income tax purposes was comprised of the
following:
Unrealized Unrealized Net Unrealized
Investment Appreciation Depreciation Appreciation
Cost of Investments of Investments of Investments
---------- -------------- -------------- --------------
Opti-flex(R)
Dynamic Fund $11,376,596 $1,061,750 $(185) $1,061,565
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
INVESTMENT ADVISOR
PROACTIVE Money Management, Inc.
DISTRIBUTOR
PROACTIVE Financial Services, Inc.
ADDRESS OF FUND, ADVISOR, & DISTROBUTOR
500 Chesterfield Center, Suite 250
Chesterfield, MO 63017
888-PROACTIVE
(888-766-2284)
314-530-7575
www.proactive-inc.com/optifund
CUSTODIAN
Star Bank, N.A.
Star Bank Center
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT & DIVIDEND
DISBURSING AGENT
Mutual Funds Service Company
6000 Memorial Drive
Dublin, OH 43017
888-587-3539
614-798-3149 (in Central Ohio)
LEGAL COUNSEL
Armstrong, Teasdale, Schlafly, & Davis
One Metropolitan Square
St. Louis, MO 63102-2740
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, OH 43215
