ANNUAL REPORT
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The Thurlow Growth Fund
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June 30, 2000
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TABLE OF CONTENTS
Page
Shareholder Letter................................................ 1
Statement of Net Assets........................................... 5
Statement of Assets and Liabilities............................... 10
Statement of Operations........................................... 11
Statements of Changes in Net Assets............................... 12
Notes to the Financial Statements................................. 13
Financial Highlights.............................................. 16
Report of Independent Public Accountants.......................... 17
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<PAGE>
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The Thurlow Growth Fund
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LETTER TO SHAREHOLDERS
August 2000
Dear Fellow Shareholders,
It has been another great year for the Thurlow Growth Fund! Over the past
12 months, shares in the Thurlow Growth Fund have appreciated 55.6%, as compared
to -4.77% for the Dow Jones Industrial Average, 5.97% for the Standard & Poor's
500 Index, and 47.65% for the NASDAQ Composite. This return shows that our
investment approach definitely works and runs circles around the rest of the
stock market and most other mutual funds.
And this year, 2000, will mark the third-year anniversary of the Thurlow
Growth Fund. Since its inception on August 7, 1997, to the end of our recent
fiscal year, June 30, 2000, shares in the Thurlow Growth Fund have appreciated
221%, making Thurlow Growth Fund one of the best performing mutual funds during
that period.
At first glance, these strong numbers may suggest the lack of any setbacks
but, believe it or not, there have been many along the way. During our first
fiscal year, we saw the emergence of the so-called "Asian Contagion" which
threatened economies the world over, and almost brought deflation to the
American economy. During our second fiscal year, the high technology sector,
including many of our Internet stocks, experienced a nasty correction. Despite
the setbacks of 1999, the Fund still ended the calendar year up over 200%.
In March 2000, the stock market underwent a purging of high technology and
Internet stocks that was much worse than what we experienced in 1999.
Specifically, share prices in many higher-quality Internet stocks like Ebay have
fallen over 70% from their highs. Ebay is significant because, although it is
too large for an investment by Thurlow Growth, it has all of the qualities you
would want to see in a good Internet company: a unique business experience,
perfect scalability and no inventory. Clearly, the current Internet-based
correction is a case of "throwing out the baby with the bath-water."
While the Thurlow Growth Fund is not an Internet fund per se, the growth of
Internet companies is compelling and this is why much of our portfolio has
consisted of Internet stocks. One of our holdings, Ariba, recently reported a
doubling of its quarterly revenue in the same quarter that saw its share price,
like Ebay's, fall over 70%. Other Internet stocks have shown similar revenue
growth, despite their share price's descent.
No doubt there are Internet companies that deserve to be cut down to size
like they have recently, but when high-quality leaders like Ebay and Ariba get
cut down this much, fantastic opportunities present themselves. Amid the rubble
of the current group of high technology and Internet stocks are the leaders of
tomorrow. As I recently wrote to our shareholders, I believe that when this
group starts to move, it will blast, and Thurlow Growth Fund will be there.
<PAGE>
Our economic view going forward has not changed much from our statement
last year: the U.S. economy remains an engine of global growth, with domestic
consumer demand buying imports and taking up some of the excess capacity in
slower-growth economies abroad. Inflation in the United States remains low, with
only minor increases in commodity prices (most notably in crude oil and natural
gas). The Federal government has budget surpluses for the first time in years
and is projecting higher surpluses in the future. The Federal Reserve has raised
interest rates repeatedly since June 1999, and appears to have engineered an
economic "soft landing." The Internet is literally changing our lives, and
despite the current setback in Internet stocks, Thurlow Growth Fund will also be
actively investing in this new paradigm.
At the Thurlow Growth Fund, we thank you for your continued interest, and
we look forward to continued strong results in the future.
Sincerely,
/s/ Thomas F. Thurlow
<PAGE>
(graph)
This chart assumes an initial gross investment of $10,000 made on August 8, 1997
(commencement of operations). Returns shown include the reinvestment of all
dividends. Performance reflects expense reimbursements and fee waivers in
effect. Absent expense reimbursement and fee waivers, total returns would be
reduced. Past performance is not predictive of future performance. Investment
return and principal value will fluctuate, so that your shares, when redeemed,
may be worth more or less than the original cost.
NASDAQ Composite Index - A broad-based, unmanaged capitalization-weighted index
of all NASDAQ National Market and Small Cap stocks.
S&P 500 Stock Index - An unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through changes in
the aggregate market value of the 500 stocks which represent all major
industries.
Dow Jones Industrial Average - An unmanaged price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry and are listed
on the New York Stock Exchange.
<PAGE>
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Average Annual Returns
For the periods ended June 30, 2000
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Since
1-Year Inception *
------------ ---------------
Thurlow Growth Fund 55.61% 47.52%
NASDAQ Composite Index 47.65% 35.38%
S&P 500 Index 5.97% 15.93%
Dow Jones Industrial Average -4.77% 9.16%
*Inception August 8, 1997
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<PAGE>
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The Thurlow Growth Fund
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STATEMENT OF NET ASSETS
June 30, 2000
<TABLE>
<S> <C>
Shares Market Value
Common Stocks - 97.46%
Abrasive Products - 2.88%
6,000 Cabot Microelectronics Corp.* $ 274,500
-------------
Biological Products, Except Diagnostic Substances - 9.08%
8,000 Intermune Pharmaceuticals, Inc.* 330,501
4,800 Medimmune, Inc.* 355,200
1,700 Vertex Pharmaceuticals, Inc.* 179,138
-------------
864,839
-------------
Business Services, Nec - 0.24%
200 Critical Path, Inc.* 11,663
300 Firepond, Inc.* 10,800
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22,463
-------------
Commercial Physical and Biological Research - 2.51%
3,000 Lexicon Genetics, Inc.* 103,125
800 Millenium Pharmaceuticals* 89,500
500 PE Corp-Celera Genomics Group* 46,750
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239,375
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Communications Equipment, Nec - 2.03%
1,100 Digital Lightwave, Inc.* 110,550
500 Turnstone Systems, Inc.* 82,836
-------------
193,386
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Computer Integrated Systems Design - 2.21%
700 Aether Systems, Inc.* 143,500
800 Nuance Communications, Inc.* 66,650
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210,150
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Communications Services, Nec - 0.03%
100 Lifeminders, Inc.* 2,956
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Computer Programming Services - 0.20%
300 Portal Software, Inc.* 19,163
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Computer Related Services, Nec - 0.37%
300 Inktomi Corp.* 35,475
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<PAGE>
Computer Storage Devices - 1.52%
1,500 Dataram Corp.* 43,125
1,300 M-Systems Flash Disk Pioneers* 101,238
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144,363
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Computer Peripheral Equipment and Software - 1.12%
1,800 Insight Enterprises, Inc.* 106,763
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Crude Petroleum and Natural Gas - 12.04%
9,000 Chesapeake Energy Corp.* 69,750
15,400 Cross Timbers Oil Co. 340,725
3,800 Devon Energy Corp. 212,800
300 EOG Resources, Inc. 10,050
6,800 HS Resources, Inc.* 204,000
4,500 Mitchell Energy & Development Corp. 144,563
3,100 Prima Energy Corp.* 165,850
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1,147,738
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Direct Selling Establishments - 0.12%
300 Priceline.com, Inc.* 11,395
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Electrical Work - 2.30%
4,000 Quanta Services, Inc.* 220,000
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Electromedical and Electrotherapeutic Apparatus - 0.53%
1,000 Excel Technology, Inc.* 50,313
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Electronic Coils, Transformers, and Other Inductors - 0.51%
500 Technitrol, Inc. 48,438
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Electronic Components, Nec - 1.12%
100 Lernout En Hauspie Speech Products* 4,406
900 Power-One, Inc.* 102,544
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106,950
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Electronic Connectors - 1.80%
2,600 Amphenol Corp.* 172,088
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Electronic Parts and Equipment - 2.40%
6,500 Nu Horizons Electronics Corp.* 173,063
500 Sycamore Networks, Inc.* 55,188
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228,251
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<PAGE>
Instruments for Measuring and Testing of Electricity - 0.18%
200 Keithley Instruments, Inc. 17,425
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Measuring and Controlling Devices, Nec - 4.06%
3,600 Newport Corp. 386,550
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Medical Laboratories - 1.40%
1,000 Human Genome Sciences, Inc.* 133,375
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Natural Gas Transmission - 0.11%
200 El Paso Energy Corp. 10,188
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Oil and Gas Field Exploration Services - 2.26%
12,300 Key Production Company, Inc.* 215,250
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Oil and Gas Field Services, Nec - 0.32%
800 Hanover Compressor Co.* 30,400
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Pharmaceutical Preparations - 1.17%
4,000 Praecis Pharmaceuticals, Inc.* 111,500
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Prepackaged Software - 10.58%
2,400 Ariba, Inc.* 235,313
200 Broadbase Software, Inc.* 6,125
1,800 Brocade Communications System* 330,271
400 Check Point Software Technologies* 84,700
100 Commerce One, Inc.* 4,538
300 E. piphany, Inc.* 32,156
600 Echelon Corp.* 34,763
400 Embarcadero Technologies, Inc.* 11,750
300 Interwoven, Inc.* 32,995
200 Micromuse, Inc.* 33,097
500 Ondisplay, Inc.* 40,718
800 Siebel Systems, Inc.* 130,850
275 Veritas Software Corp.* 31,078
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1,008,354
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Pressed and Blown Glass and Glassware, Nec - 3.12%
1,100 Corning, Inc. 296,862
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Printed Circuit Boards - 0.73%
1,000 Elantec Semiconductor, Inc.* 69,625
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<PAGE>
Radio and Television Broadcasting Equipment - 0.23%
200 Qualcomm, Inc.* 12,000
200 Tekelec* 9,637
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21,637
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Search, Detection, Navigation, Guidance, Aeronautical - 0.69%
500 Anaren Microwave, Inc.* 65,617
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Security Brokers, Dealers, and Flotation Companies - 0.16%
450 Schwab (Charles) Corp. 15,131
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Semiconductors and Related Devices - 16.61%
1,000 Globespan, Inc.* 122,078
1,300 Integrated Silicon Solutions* 49,400
700 JDS Uniphase Corp.* 83,912
500 Marvell Technology Group Ltd.* 28,500
4,000 New Focus, Inc.* 328,500
2,000 Nvidia Corp.* 127,125
3,200 Rambus, Inc.* 329,600
1,800 SDL, Inc.* 513,337
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1,582,452
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Surgical and Medical Instruments and Apparatus - 4.09%
3,000 Techne Corp.* 390,000
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Telephone Communications - 1.03%
200 Exodus Communications, Inc.* 9,212
500 Redback Networks* 89,000
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98,212
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Telephone and Telegraph Apparatus - 4.34%
3,400 ADC Telecommunications, Inc.* 285,175
400 Ciena Corp.* 66,675
200 Juniper Networks, Inc.* 29,112
500 Phone.com, Inc.* 32,562
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413,524
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<PAGE>
Miscellaneous - 3.37%
1,000 Forcenergy, Inc.* $ 20,125
200 Foundry Networks, Inc.* 22,000
5,300 GSI Lumonics, Inc.* 186,162
2,800 Hall Kinion & Associates, Inc.* 93,275
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321,562
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Total Common Stocks - 97.46% (cost $8,513,091) 9,286,270
Call Options - 0.61% (cost $50,589)
7,700 Mitchell Energy Sept 25 Calls* 57,750
Short-term Corporate Notes - 4.30% (cost $409,952)
409,952 Fountain Square Reserves, 6.17%, due July 3, 2000 409,952
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TOTAL INVESTMENTS - 102.37% (cost $8,973,632) 9,753,972
Other assets less liabilities - (2.37%) (225,209)
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TOTAL NET ASSETS - 100% $ 9,528,763
=============
* Non-income producing security
</TABLE>
<PAGE>
See Notes to the Financial Statements
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The Thurlow Growth Fund
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STATEMENT OF ASSETS AND LIABILITIES
June 30, 2000
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<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $8,973,632) $ 9,753,972
Receivable from securities sold 1,724,947
Receivable from adviser 122,781
Organizational expenses, net of accumulated amortization 11,209
Other 15,488
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Total assets 11,628,397
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LIABILITIES:
Disbursements in excess of demand deposit cash 961,706
Payable for securities purchased 1,117,129
Shareholder redemptions 11,013
Accrued expenses and other liabilities 9,786
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Total liabilities 2,099,634
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NET ASSETS $ 9,528,763
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NET ASSETS CONSIST OF:
Capital stock $ 7,960,950
Accumulated undistributed net realized gain on investments 787,473
Net unrealized appreciation on investments 780,340
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Total Net Assets $ 9,528,763
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Shares outstanding 416,826
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(500 million shares authorized, $0.0001 par value)
Net Asset Value, Redemption Price and Offering Price Per Share $ 22.86
==========
</TABLE>
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The Thurlow Growth Fund
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STATEMENT OF OPERATIONS
Year Ended June 30, 2000
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income $ 3,211
Interest income 53,293
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Total investment income 56,504
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EXPENSES:
Investment advisory fees 98,357
Registration fees 29,708
Shareholder servicing and accounting costs 27,772
Distribution fees 19,671
Custody fees 31,846
Professional fees 59,490
Amortization of organizational expenses 5,274
Other 65,750
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Total expenses before waiver and reimbursement 337,868
Less: Waiver of expenses and reimbursement from Adviser (184,631)
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Net expenses 153,237
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NET INVESTMENT LOSS (96,733)
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 1,003,920
Change in unrealized appreciation on investments 474,385
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Net realized and unrealized gain on investments 1,478,305
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,381,572
=============
</TABLE>
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The Thurlow Growth Fund
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STATEMENTS OF CHANGES IN NET ASSETS
Years Ended June 30, 2000 and 1999
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<TABLE>
<S> <C> <C>
2000 1999
--------------- ------------
OPERATIONS:
Net investment loss $ (96,733) $ (12,401)
Net realized gain on investments 1,003,920 857,374
Change in unrealized appreciation on investments 474,385 261,913
--------------- ------------
Net increase in net assets from operations 1,381,572 1,106,886
--------------- ------------
SHAREHOLDER DISTRIBUTIONS:
Net realized gain from investment transactions (1,083,140)
---------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 16,481,754 2,083,584
Reinvestment of dividends 1,074,455
Cost of shares redeemed (10,423,505) (1,525,853)
--------------- ------------
Net increase in net assets from
capital share transactions 7,132,704 557,731
--------------- ------------
TOTAL INCREASE IN NET ASSETS 7,431,136 1,664,617
NET ASSETS:
Beginning of year 2,097,627 433,010
--------------- ------------
End of period $ 9,528,763 $ 2,097,627
=============== ============
CHANGES IN SHARES OUTSTANDING:
Shares sold 695,783 133,928
Shares reinvested 66,598
Shares redeemed (447,256) (79,838)
--------------- ------------
Net increase in shares outstanding 315,125 54,090
=============== ============
</TABLE>
<PAGE>
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The Thurlow Growth Fund
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NOTES TO THE FINANCIAL STATEMENTS
June 30, 2000
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1. ORGANIZATION
The Thurlow Funds, Inc. (the "Company") was incorporated under the laws of
Maryland on April 30, 1997, and is registered as a no-load, open-end,
diversified management investment company under the Investment Company Act
of 1940. The Company presently consists of one diversified investment
portfolio, The Thurlow Growth Fund (the "Fund"). The principal investment
objective of the Fund is capital appreciation, with current income as a
secondary objective. Thomas F. Thurlow and Thomas N. Thurlow held 10,069
shares of the Fund's capital stock at $10 per share on July 28, 1997. The
Fund commenced operations on August 8, 1997.
The costs incurred in connection with the organization, initial
registration and public offering of shares, aggregating $26,399, have been
paid by the Fund. These costs are being amortized over the period of
benefit, but not to exceed 60 months from the Fund's commencement of
operations.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - Common stocks that are listed on a securities
exchange are valued at the last quoted sales price on the day the
valuation is made. Price information on listed securities is taken
from the exchange where the security is primarily traded. Common
stocks which are listed on an exchange but which are not traded on the
valuation date are valued at the current bid prices. Unlisted equity
securities for which market quotations are readily available and
options are valued at the current bid prices. Debt securities which
will mature in more than 60 days will be valued at the latest bid
prices furnished by an independent pricing service. Short-term
instruments with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates market value. Other assets and
securities for which no quotations are readily available are valued at
fair value as determined by the Adviser in accordance with procedures
approved by the Board of Directors.
b) Federal Income Taxes - No provision for federal income taxes or excise
taxes has been made since the Fund intends to comply with the
provisions of the Internal Revenue Code available to regulated
investment companies in the current and future years. Net investment
income and net realized gains differ for financial statement and tax
purposes primarily because of the deferral of wash sale losses.
c) Distributions to Shareholders - Dividends from net investment income
are declared and paid annually. Distributions of the Fund's net
realized capital gains, if any, will be declared at least annually.
d) Use of Estimates - 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.
e) Other - Investment and shareholder transactions are recorded on the
trade date. The fund determines the gain or loss realized from the
investment transaction by comparing the original cost of the security
lot sold with the net sales proceeds. Dividend income is recognized on
the ex-dividend date or as soon as information is available to the
Fund, and interest income is recognized on an accrual basis. Generally
accepted accounting principles require that permanent financial
reporting and tax differences be reclassified to capital stock.
<PAGE>
3. INVESTMENT TRANSACTIONS
The aggregate purchases of investments and U.S. Government securities,
excluding short-term investments, by the Fund for the year ended June 30,
2000, were $69,557,257 and $0, respectively. The aggregate sales of
investments and U.S. Government securities, excluding short-term
investments, by the Fund for the year ended June 30, 2000 were $63,742,126
and $0, respectively.
At June 30, 2000, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
Appreciation $ 1,112,598
Depreciation (1,955,037)
------------
Net depreciation on
investments $ (842,439)
------------
At June 30, 2000, the cost of investments for federal income tax purposes
was $10,596,411.
4. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Fund has entered into an Investment Advisory Agreement with Thurlow
Capital Management, Inc. ("Adviser"). Pursuant to its Investment Advisory
Agreement with the Fund, the Adviser is entitled to receive a fee,
calculated daily and payable monthly, at the annual rate of 1.25% as
applied to the Fund's daily net assets.
As of July 1, 2000, the Fund entered into a revised agreement with its
adviser to also provide Fund management services. Thurlow Capital
Management, Inc. provides or pays the cost of all management, supervisory
and administrative services required in the normal operation of the Fund.
This includes investment management; fees of the custodian, independent
public accountants and legal counsel; remuneration of officers and
directors; rent; and shareholder services including maintenance of the
shareholder accounting system and transfer agency. Not considered normal
operating expenses and, therefore, payable by the Fund are taxes, interest,
extraordinary expenses and extraordinary legal fees and brokerage
commissions. Thurlow's revised management fees are based on average daily
net assets of the Fund at an annual rate of 1.90%.
Firstar Trust Company, a Subsidiary of Firstar Corporation, a publicly held
bank holding company, served as custodian, transfer agent, administrator
and accounting services agent for the Fund through March 31, 1999.
Mutual Shareholder Services serves as transfer agent and accounting
services agent, Fifth Third Bank serves as custodian and Thurlow Capital
Management serves as administrator.
The Fund has adopted a written plan of distribution (the "Plan") in
accordance with Rule 12b-1 under the Investment Company Act of 1940. The
Plan authorizes the Fund to make payments in connection with the
distribution of shares at an annual rate of up to 0.25% of the Fund's
average daily net assets. This plan has been abolished as of July 1, 2000,
in accordance with the new management agreement with Thurlow Capital
Management, Inc.
If the aggregate annual operating expenses (excluding interest, taxes,
brokerage commissions and other costs incurred in connection with the
purchase or sale of portfolio securities, and extraordinary items) exceed
1.95% of the Fund's average daily net assets, the Adviser is obligated to
reimburse the Fund for the amount of such excess. Accordingly, for the year
ended June 30, 2000, the Adviser was obligated to reimburse the Fund
$184,631. At June 30, 2000, the outstanding reimbursement due from the
Adviser was $122,781.
<PAGE>
5. SUBSEQUENT ACCOUNTING POLICY CHANGE
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"). This statement, as amended
by SFAS No. 137 and 138, requires all derivatives to be recorded on the
balance sheet date at fair value and establishes standard accounting
methodologies for hedging activities. The standard will result in the
recognition of offsetting changes in value or cash flows of both the hedge
and the hedged item in net investment income in the same period. The
statement is effective for the Fund's fiscal year ending June 30, 2001.
Because the Fund reports derivatives at fair value, the adoption of this
statement is not expected to have a material impact on the financial
statements.
See Notes to the Financial Statements
<PAGE>
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The Thurlow Growth Fund
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FINANCIAL HIGHLIGHTS
Selected data for a share outstanding throughout each period
<TABLE>
<S> <C> <C> <C>
2000 1999 1998 (1)
-------- -------- --------
PER SHARE DATA
Net asset value, beginning of period $ 20.63 $ 9.09 $ 10.00
-------- -------- --------
Gain (loss) from investment operations:
Net investment loss (0.29) (0.17) (0.07)
Net realized and unrealized gain (loss) on investments 5.81 11.71 (0.84)
-------- -------- ---------
Total gain (loss) from investment operations 5.52 11.54 (0.91)
-------- -------- ---------
Distributions:
Distributions from capital gains (3.29)
Net asset value, end of period $ 22.86 $ 20.63 $ 9.09
======== ======== ========
TOTAL RETURN 55.61% 126.95% (9.10%) (2)
======== ======== ========
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $ 9,529 $ 2,098 $ 433
Ratio of net expenses to average net assets 1.95% 1.95% 1.95% (3)
Ratio of net investment loss to average net assets (1.26%) (1.24%) (1.23%) (3)
Ratio of net expenses to average net assets - without fee waiver 4.40% 12.85% 39.47% (3)
Ratio of net investment income to average net assets -
without fee waiver (3.66%) (12.19%) (38.75%) (3)
Portfolio turnover rate 951% 1,101% 408.62%
</TABLE>
1. Fort he period August 8, 1997 ( commencement of operations)
through June 30, 1998.
2. Not annualized.
3. Annualized for the period August 8, 1997 through June 30, 1998.
<PAGE>
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The Thurlow Growth Fund
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INDEPENDENT ACCOUNTANTS' REPORT
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Board of Directors
The Thurlow Growth Fund
Napa, California 94558
We have audited the accompanying statement of assets and liabilities of THE
THURLOW GROWTH FUND, including the statement of net assets, as of June 30, 2000,
and the related statement of operations for the year ended June 30, 2000, and
the statements of changes in net assets and the financial highlights for the
years ended June 30, 2000 and 1999 (the period presented prior to June 30, 1999
was audited by other independent accountants, whose report dated July 17, 1998,
expressed an unqualified opinion). These financial statements and financial
highlights are the responsibility of the Company'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 verification of securities owned as of June
30, 2000, by confirmation, or by the application of alternative auditing
procedures with respect to unsettled portfolio security transactions. 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
THURLOW GROWTH FUND as of June 30, 2000, the results of its operations, the
changes in its net assets and the financial highlights for the periods indicated
thereon in conformity with generally accepted accounting principles.
/s/ BAIRD, KURTZ & DOBSON
Kansas City, Missouri
August 17, 2000
<PAGE>
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The Thurlow Growth Fund
================================================================================
--------------------------------------------------------------------------------
Investment Adviser & Administrator
Thurlow Capital Management, Inc.
3212 Jefferson St. #416
Napa, CA 94558
Dividend Paying Agent,
Shareholders' Servicing Agent,
Transfer Agent
Mutual Shareholder Services
1301 E. 9th St., Suite 1005
Cleveland, OH 44114
Custodian
Fifth Third Bank
Mutual Fund Services
38 Fountain Square Plaza
MD 1090E5
Cincinnati, OH 45263
Counsel
Foley and Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Independent Auditors
Baird, Kurtz & Dobson
1100 Main Street, Suite 2700
Kansas City, MO 64105
Directors
Thomas F. Thurlow
Martina Hearn
Natasha L. McRee
Stephanie E. Rosendahl
R. Clint McRee
Tamara Thurlow Field
Christine Owens
<PAGE>
