PROACTIVE
ASSET ALLOCATION FUNDS
[LOGO]
THE OPTI-FLEX(R) DYNAMIC FUND
SEMI-ANNUAL REPORT
JUNE 30, 2000
[PHOTO] Sunset over sea
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
August 2, 2000
Dear Fellow OPTI-FLEX(R)DYNAMIC FUND Shareholder:
ALTHOUGH THE NET ASSET VALUE OF OUR OPTI-FLEX(R) DYNAMIC FUND (OPTIX) SHARES
DECREASED IN VALUE BY 1.84% DURING THE FIRST SIX MONTHS OF 2000, OUR DECLINE WAS
LESS THAN HALF THE DECLINE OF OUR BENCHMARK, THE DOW JONES WORLD STOCK INDEX
(DJW-X), WHICH DECLINED BY 3.82% FOR THE SAME SIX-MONTH PERIOD. As you can see
from the table below, our Fund performance is exceeding our benchmark, slightly
since inception, and significantly for the last 3 and 2-year periods. FOR THE
LAST 1-YEAR PERIOD, THE 38.2% TOTAL RETURN OF OUR FUND MORE THAN TRIPLED THE
PERFORMANCE OF OUR BENCHMARK:
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING JUNE 30, 2000
<TABLE>
<CAPTION>
SINCE INCEPTION (10/01/96) LAST 3-YEAR PERIOD LAST 2-YEAR PERIOD LAST 1-YEAR PERIOD
--------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
OPTIX +15.7% +16.1% +24.9% +38.2%
DJW-X +15.3% +13.1% +12.3% +10.4%
</TABLE>
According to the HTTP://BIZ.YAHOO.COM/P/TOPS/58.HTML web page of 7/1/2000, based
on information provided by MORNINGSTAR, OPTIX IS IN THE TOP 1% OF ALL MUTUAL
FUNDS IN OUR CATEGORY OF 712 DOMESTIC HYBRID FUNDS FOR THE 1-YEAR PERIOD ENDING
JUNE 30, 2000.
Our OPTIX performance for the 1-year period ending June 30, 2000 continues to
place us in the TOP 20% OF ALL 2,534 MUTUAL FUNDS AND INDICES IN THE FASTTRACK
database. Our Fund was ALSO # 2 AMONG THE 30 FUNDS OF FUNDS and # 3 AMONG THE 93
ASSET ALLOCATION FUNDS in the FastTrack database for the 1-year period.
ACCORDING TO THE FUNDS OF FUNDS ASSOCIATION, at WWW.FUNDSOFFUNDS.ORG, based on
data provided by LIPPER ANALYTICAL SERVICES, INC., FOR THE 1-YEAR PERIOD ENDING
JUNE 30, 2000:
o OPTI-FLEX(R) DYNAMIC FUND IS # 1 OF 24 FUNDS OF FUNDS IN THE CONSERVATIVE
ALLOCATION CATEGORY. (We actually more than doubled the performance of the
# 2 fund in the Conservative Allocation Category.) (Our Fund's 1-year
performance was also ahead of all 28 Funds of Funds in the Moderate
Allocation Category and was even ahead of 28 of 29 Funds of Funds in the
Aggressive Allocation Category.)
o OPTIX IS ALSO # 1 OF 20 FUNDS OF FUNDS IN THE CONSERVATIVE ALLOCATION
CATEGORY FOR THE LAST 3-YEAR PERIOD.
Past performance does not guarantee future results. We invite you to check our
current Fund price, our year-to-date performance, our Fund Facts, our current
prospectus and shareholder communications at anytime on our website at
WWW.PROACTIVE-INC.COM. WE EXPECT STOCK MARKET CONDITIONS TO CONTINUE TO BE
VOLATILE IN THE PERIOD AHEAD, AND HAVE, THEREFORE, SIGNIFICANTLY REDUCED OUR
NORMAL INVESTMENT POSITIONS AND HAVE ADDED THE PROCEEDS TO FUNDS AND STRATEGIES
THAT WE EXPECT TO PERFORM WELL IN CHOPPY PERIODS. WE WILL, OF COURSE, CONTINUE
TO MAKE CHANGES IN OUR INVESTMENT PORTFOLIO AS WE DEEM APPROPRIATE FOR OUR
STATED GOAL OF "SEEKING TO PROVIDE AN ABOVE AVERAGE TOTAL RETURN OVER THE
LONG-TERM CONSISTENT WITH EXHIBITING LESS INVESTMENT RISK THAN A PORTFOLIO
CONSIST- ING ONLY OF COMMON STOCKS."
NEW ACCOUNTS WITH OUR FUND CAN BE OPENED WITH AS LITTLE AS $1,000 ($500 FOR
IRAS). If you or friends or relatives have earned income, you and/or they may
want to consider establishing an IRA. Contributions can be made now for the year
2000 for a Roth or Traditional IRA. YOU MAY ALSO WANT TO CONSIDER ESTABLISHING
EDUCATION IRAS FOR YOUR CHILDREN OR GRANDCHILDREN. Our Fund Advisor, PROACTIVE
MONEY MANAGEMENT, INC., decided to pay the $8 annual IRA fee for all our Fund
client accounts in 1999, as well as the $10 annual fee for accounts below
$10,000. They have decided to pay the same fees for the year 2000. PLEASE LET
YOUR REPRESENTATIVE OR US KNOW IF YOU HAVE ANY QUESTIONS OR IF WE CAN ASSIST YOU
IN ANY WAY. THANK YOU FOR THE CONFIDENCE YOU CONTINUE TO PLACE IN US.
Sincerely yours,
/s/ C. Martin Unterreiner
C. Martin Unterreiner, OPTI-FLEX(R)Portfolio Manager
Statistical information herein reflects reinvestment of dividends and capital
gains and was derived from sources believed to be reliable; however, we do not
make any warranties or representation of the accuracy of that data.
1
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Unaudited)
SHARES VALUE
------------ ------------
REGISTERED INVESTMENT COMPANIES - 100%
Prudent Bear Fund 1,354,071 $ 5,159,011
Montgomery Global Long-Short Fund # 155,145 4,769,164
Rydex Energy Services Fund # 193,370 1,866,024
Rydex Energy Fund # 160,016 1,780,981
Oppenheimer Real Asset Fund 206,041 1,588,574
Oppenheimer Gold and Special Minerals 177,894 1,565,466
Fund
Rydex Precious Metals Fund # 63,084 1,226,353
Franklin U.S. Long-Short Fund # 62,522 1,141,027
Franklin Natural Resources Fund # 53,569 895,138
Franklin Gold & Precious Metals Fund 85,536 718,501
Caldwell & Orkin Market Opportunity 586 11,703
Fund
Van Kampen Worldwide High Income Fund 480 4,764
Van Wagoner Emerging Growth Fund # 31 1,554
Van Wagoner Technology Fund # 23 1,459
Grand Prix Fund # 31 1,441
Van Wagoner Post-Venture Fund # 35 1,403
Van Wagoner Micro-Cap Fund # 32 1,348
AIM Large Cap Opportunities Fund # 104 1,333
AIM Mid Cap Opportunities Fund 55 1,318
Vontobel Eastern European Equity Fund 143 1,244
MetaMarkets.com Open Fund 51 1,186
Van Kampen American Value Fund # 51 1,186
Vontobel International Equity Fund 46 1,126
Rydex Series Trust Utilities Fund # 108 1,057
Flex-funds Money Market Fund 2,118 2,118
-----------
TOTAL REGISTERED INVESTMENT COMPANIES
(Cost $19,986,535) 20,744,479
-----------
TOTAL INVESTMENTS - 100%
(Cost $19,986,535) $ 20,744,479
===========
# Represents non-income producing security.
See accompanying notes to financial statements.
2
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
(Unaudited)
Assets:
Investments, at market value (cost $19,986,535) $ 20,744,479
Cash 456
Unamortized organization costs 18,679
Prepaid expense and other assets 18,241
Total Assets 20,781,855
Liabilities:
Payable for underwriter commissions 1,023
Advisor fees payable 34,501
Distribution fees payable 38,704
Shareholder services fees payable 12,192
Organizational costs due to advisor 22,415
Other accrued liabilities 16,990
Total Liabilities 125,825
Net Assets $ 20,656,030
Components of Net Assets:
Capital $ 14,512,406
Accumulated net investment income (loss) (524,604)
Accumulated undistributed net realized gains from 5,910,284
investment transactions
Net unrealized appreciation of investments 757,944
Total Net Assets $ 20,656,030
Capital Stock Outstanding 1,331,368
Net Asset Value -- Offering and Redemption Price Per $ 15.51
Share
See accompanying notes to financial statements.
3
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2000
(Unaudited)
Investment Income:
Dividends $ 9,425
Interest 7,882
Total Investment Income 17,307
Fund Expenses:
Advisor fees 76,762
Distribution expense 76,762
Shareholder service fee 25,587
Transfer agent and accounting fees 18,680
Trustee fees 13,984
Administrative fees 9,978
Registration and filing fees 9,169
Amortization of organization costs 7,555
Audit fees 6,072
Custodian fees 5,888
Insurance expense 2,377
Other expenses 3,008
Total Expenses 255,822
Expenses voluntarily reimbursed by Advisor (8,534)
Distribution expenses reimbursed (903)
Net Expenses 246,385
Net Investment Income (Loss) (229,078)
Realized and Unrealized Gains (Losses) from Investments:
Net realized gains (losses) from investment 3,985,799
transactions
Net change in unrealized appreciation of (4,209,880)
investments
Net Realized and Unrealized Losses from (224,081)
Investments
Net Increase (Decrease) in Net Assets Resulting $ (453,159)
from Operations
See accompanying notes to financial statements.
4
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Year Ended
Ended June 30, December 31,
2000, 1999
(Unaudited)
Increase (Decrease) In Net Assets:
Operations:
Net investment income (loss) $ (229,078) $ (229,441)
Net realized gains (losses) from investment
transactions 3,985,799 1,902,385
Net change in unrealized appreciation of
investments (4,209,880) 4,669,767
Net Increase (Decrease) in Net Assets Resulting
from Operations (453,159) 6,342,711
Capital Transactions:
Proceeds from shares subscribed 3,032,525 1,794,654
Cost of shares redeemed (669,039) (2,183,144)
Net Increase (Decrease) in Net Assets Resulting
from Capital Transactions 2,363,486 (388,490)
Total Increase (Decrease) In Net Assets 1,910,327 5,954,221
Net Assets - Beginning of Period 18,745,703 12,791,482
Net Assets - End of Period $20,656,030 $18,745,703
Share Transactions:
Subscribed 186,281 152,258
Redeemed (41,359) (188,799)
Net Increase (Decrease) in Shares Outstanding 144,922 (36,541)
See accompanying notes to financial statements.
5
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended Year Ended Year Ended Year Ended October 1, 1996(1)
June 30, 2000 December 31, December 31, December 31, through
(Unaudited) 1999 1998 1997 December 31, 1996
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 15.80 $ 10.46 $ 9.75 $ 10.13 $ 10.00
Investment Operations:
Net investment income (loss) (0.14) (0.20) (0.06) 0.03 0.09
Net gains (losses) from investments (0.15) 5.54 0.77 0.47 0.23
(realized and unrealized)
Total (0.29) 5.34 0.71 0.50 0.32
Distributions:
From net investment income --- --- --- (0.02) (0.09)
From net realized gains --- --- --- (0.38) (0.10)
In excess of net realized gains --- --- --- (0.48) ---
Total --- --- --- (0.88) (0.19)
Net Asset Value, End of Period $ 15.51 $ 15.80 $ 10.46 $ 9.75 $ 10.13
Total Return (excludes redemption charge): -1.84%(2) 51.05% 7.28% 5.02% 3.22%(2)
Ratios/Supplemental Data:
Net assets, end of period (000) $ 20,656 $ 18,746 $ 12,791 $ 13,530 $ 6,806
Ratio of expenses to average net assets (5) 2.40%(3) 2.39% 2.35% 2.35% 2.39%(3)
Ratio of net investment income (loss) to -2.23%(3) -1.69% -0.56% 0.32% 17.25%(3)(4)
average net assets
Ratio of expenses to average net assets, 2.49%(3) 2.96% 2.99% 3.33% 14.61%(3)
before voluntary fee reductions (5)
Ratio of net investment income (loss) -2.32%(3) -2.26% -1.20% -0.66% 5.03%(3)
to average net assets, before voluntary
fee reductions
Portfolio turnover rate 711.06%(2) 1011.63% 1574.17% 1237.35% 18.77%(2)
<FN>
(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.
(5) These ratios exclude the expenses of the mutual funds in which the Fund
invests.
</FN>
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
1. ORGANIZATION
The PROACTIVE Asset Allocation Funds Trust was organized in 1996 and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a diversified, open-end management investment company. The OPTI-flex
Dynamic Fund (the "Fund"), a series of the PROACTIVE Asset Allocation Funds,
commenced operations on October 1, 1996. The Fund is authorized to issue an
indefinite number of shares of $0.10 par value stock. The Fund's objective is to
seek an above average total return over the long-term consistent with exhibiting
less investment risk than a portfolio consisting solely of common stocks.
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 -- The Fund may engage in repurchase agreement
transactions whereby the Fund takes possession of an underlying debt instrument
subject to an obligation of the seller to repurchase the instrument from the
Fund and an obligation of the Fund to resell the instrument at an agreed upon
price and term. At all times, the Fund maintains the value of collateral,
including accrued interest, at least 100% of the amount of the repurchase
agreement, plus accrued interest. If the seller defaults or the fair value of
the collateral declines, realization of the collateral by the Fund may be
delayed or limited. As of June 30, 2000, the Fund was not invested in any
repurchase agreements.
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.
Security Transactions - The Fund records purchases and sales of investments on
the trade date. The Fund calculates realized and losses from sales of
investments on the first-in first-out basis. Dividend income is recognized on
the ex-dividend date and interest income is recognized as earned.
Dividends and Distributions -- Dividends to shareholders are recorded on the
ex-dividend date. The Fund declares dividends from net investment income
annually. The Fund distributes net capital gains, if any, on an annual basis.
The amounts of dividends from net investment income and of distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature such amounts are
reclassified within the composition of net assets based on their federal
tax-basis treatment;
7
<PAGE>
THE OPTI-flex(R) DYNAMIC FUND
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2000
temporary differences do not require reclassification. Dividends and
distributions to shareholders which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or distributions in
excess of net realized gains.
Organizational Costs -- Costs related to the organization of the Fund have been
deferred and are being amortized on a straight-line basis over a five-year
period. The amount paid by the Fund on any redemption by the stockholders of any
of the initial 10,000 shares will be reduced by a portion of any unamortized
organization expenses, determined by the proportion of the amount of the initial
shares redeemed to the aggregate amount of the initial shares then outstanding
after taking into account any prior redemptions of any of the initial shares.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
PROACTIVE Money Management, Inc. (the "Advisor") 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, 2000, PROACTIVE voluntarily reimbursed
expenses totaling $8,534 so that total expenses of the Fund would not exceed
2.40% of average daily net assets. To the extent the Fund does not increase net
assets, the Fund is reliant upon the ability of the investment advisor to
continue to provide fee reimbursements. The investment advisor is dependent upon
achieving its own financial goals, including targeted increases in the Fund's
net assets through net sales of fund shares, in order to provide such support to
the Fund.
Pursuant to Rule 12b-1 of the 1940 Act, the Fund has adopted a Distribution Plan
(the "Plan") with PROACTIVE Financial Services, Inc. (the "Distributor"). Under
the provisions of the Plan, the Fund pays the Distributor an annual fee, at a
maximum rate of 0.75% of average daily net assets of the Fund, to aid in the
distribution of Fund shares. Additionally, the Fund has adopted a Service Plan
with the Distributor. Under the provisions of the Service Plan, the Fund pays
the Distributor an annual fee, at a maximum rate of 0.25% of average daily net
assets of the Fund, to reimburse securities dealers for personal services or
maintenance of shareholder accounts. During the six months ended June 30, 2000,
distribution expenses were reduced by $903 due to reimbursements.
Certain officers and trustees of the Fund are also officers or directors of the
Advisor and the Distributor and currently own 24% of the capital stock
outstanding.
4. PURCHASES AND SALES OF INVESTMENTS
For the six months ended June 30, 2000, the cost of purchases and proceeds from
sales, excluding short-term investments and U.S. Government and agency
obligations, were $146,667,788 and $144,467,722, respectively.
As of June 30, 2000, the aggregate cost of investments and net unrealized
appreciation (depreciation) for Federal income tax purposes was comprised of the
following:
Investments at Unrealized Unrealized Net Unrealized
cost Appreciation Depreciation Appreciation
Opti-flex
Dynamic Fund $19,986,535 $937,799 ($179,855) $757,944
8
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[LOGO] THE OPTI-FLEX(R) DYNAMIC FUND
INVESTMENT ADVISOR
PROACTIVE Money Management, Inc.
DISTRIBUTOR
PROACTIVE Financial Services, Inc.
ADDRESS OF ADVISOR & DISTRIBUTOR
21 Hawk Ridge Circle
Lake Saint Louis, MO 63367
888-776-2284
636-561-0100
CUSTODIAN
Firstar Bank, N.A.
Firstar Tower
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT & DIVIDEND
DISBURSING AGENT
Mutual Funds Service Company
6000 Memorial Drive
Dublin, OH 43017
LEGAL COUNSEL
Armstrong, Teasdale, Schlafly, & Davis
One Metropolitan Square
St. Louis, MO 63102-2740
AUDITORS
KPMG LLP
Two Nationwide Plaza
Columbus, OH 43215
PROACTIVE Asset Allocation Funds
21 Hawk Ridge Circle
Lake Saint Louis, MO 63367
636-561-0100
9
