(GRAND PRIX FUNDS LOGO)
ANNUAL
REPORT
OCTOBER 31, 2000
November 2000
Dear Fellow Shareholder,
Grand Prix Fund achieved a total return of 24.64% for Class A shares (NAV)
compared to 6.09% for the S&P 500 for the fiscal year ended October 31, 2000.
The annualized return since inception December 31, 1997 was 65.33%. Since
inception, the Fund's cumulative return for these Class A shares was 316.09%
which was well ahead of the S&P 500 return of 52.80%. From inception December
31, 1997 through September 30, 2000 Grand Prix Fund was ranked number 13 among
9,248 funds within the total fund universe according to Morningstar.
The first two calendar years of Grand Prix Fund were highlighted by
extraordinary returns as the Fund got off to a strong start in 1998 with a
return of 111.83%. This was followed by a return of 147.76% in calendar 1999
based on Class A (NAV) shares. The Fund started 2000 with a powerful advance of
more than 70% by mid-March. A bear market in technology stocks started to unfold
in that month as the NASDAQ Composite fell 38% from its peak level to a low on
October 12th. Unlike the difficult third quarter of 1998 when the stock market
was caught in the throes of a mild bear market and the Fund posted a positive
return, the ferocity of the decline in technology stocks was so great that the
Fund went into a steady decline starting in March and continuing into October.
As you read through this report, you will find that the Fund held 25 stocks
compared to about 135 for the typical stock fund at fiscal year end. This so-
called "focus" fund approach puts more money into our best stocks. No big bets
are made in any particular issue as purchases for each position are kept to
similar dollar amounts. Our reason for even-weighting positions is that no
investor really knows beforehand which stocks will go up or down in any
portfolio.
The Fund employs a "quantitative" approach to stock selection using an earnings
and price momentum strategy. It has become increasingly difficult to forecast
stock prices using the traditional P/E approach. For example, JDS Uniphase never
traded above a P/E of 10 in 1997. Based on past P/E relationships, it was almost
impossible to forecast the stock soaring to a 200 P/E where it now trades.
Our quantitative approach seeks to select the best stocks without regard to
sector or industry. As a result, the Fund frequently will have sizeable sector
weightings. As of October 31, 2000 the Fund was 67.6% invested in the technology
sector, 19.9% in the health care sector, and 12.5% in utilities with no
representation in nine other sectors. It should be kept in mind that no fund can
dramatically outperform the S&P 500 if it has the same make-up and weightings as
the S&P 500. On occasion, the Fund will do worse because of these large
weightings.
The bad news is that both the NASDAQ Composite and the S&P 500 are down for the
year thus far in 2000. The NASDAQ has gone through corrections of 14% or more
with clockwork-like precision every two years since 1990. The good news is that
the NASDAQ has rebounded in the ensuing year after each correction with an
average gain of 44.2%. The S&P 500 has averaged a gain of 26.5% in those ensuing
years. With this in mind coupled with our belief that the secular bull market
that started in the early 1980's is still intact, we look forward to the
prospect of a rewarding year in 2001.
Sincerely,
/s/Robert Zuccaro
Robert Zuccaro, CFA
President
Grand Prix Fund - Grand Prix Fund -
Date Class A Shares (NAV) Class A Shares (Load) S&P 500 Index
---- -------------------- --------------------- -------------
12/31/97 $10,000 $9,900 $10,000
1/31/98 $9,530 $9,033 $10,111
4/30/98 $11,970 $11,345 $11,510
10/31/98 $14,419 $13,667 $11,463
4/30/99 $25,725 $24,383 $14,021
10/31/99 $33,382 $31,641 $14,405
4/30/00 $62,376 $59,123 $15,440
10/31/00 $41,608 $39,439 $15,280
For the period ended October 31, 2000
Year Annualized
Ended Since
10/31/00 Inception
-------- ---------
Grand Prix Fund -
Class A Shares (NAV) 24.64% 65.33%
Grand Prix Fund -
Class A Shares (Load) 18.11% 62.24%
S&P 500 Index 6.09% 16.13%
Grand Prix Fund - Grand Prix Fund -
Date Class C Shares (NAV) Class C Shares (Load) S&P 500 Index
---- -------------------- --------------------- -------------
8/5/99 $10,000 $9,475 $10,000
10/31/99 $13,708 $13,571 $10,473
1/31/00 $21,011 $20,802 $10,746
4/30/00 $25,552 $25,298 $11,225
10/31/00 $16,989 $16,820 $11,109
For the period ended October 31, 2000
Year Annualized
Ended Since
10/31/00 Inception
-------- ---------
Grand Prix Fund -
Class C Shares (NAV) 23.92% 53.11%
Grand Prix Fund -
Class C Shares (Load) 22.70% 51.89%
S&P 500 Index 6.09% 8.83%
These charts assume an initial gross investment of $10,000 made on 12/31/97 and
8/05/99 (since inception) for the Class A Shares and Class C Shares,
respectively, and the Standard &Poor's 500 Index (S&P 500) on each date. The S&P
500 Stock Index is an unmanaged index of 500 selected common stocks, most of
which are listed on the New York Stock Exchange. Past performance does not
guarantee future results. Performance figures include reinvested dividends and
capital gains. Investment return and principal value will fluctuate, so that
your shares, when redeemed, may be worth more or less than the original cost.
STATEMENT OF ASSETS AND LIABILITIES - OCTOBER 31, 2000
ASSETS:
Investments, at value (cost $392,786,570) $408,372,188
Receivable for investments sold 110,365,225
Capital shares sold 6,601,093
Dividends and interest receivable 41,232
Organizational expenses, net of accumulated amortization 34,442
Other assets 45,610
------------
Total Assets 525,459,790
------------
LIABILITIES:
Payable for securities purchased 140,152,603
Capital shares redeemed 1,204,159
Payable to Advisor 343,047
Accrued expenses and other liabilities 502,322
------------
Total Liabilities 142,202,131
------------
$383,257,659
------------
------------
NET ASSETS CONSIST OF:
Capital stock $412,129,534
Accumulated undistributed net realized
loss on investments sold (44,457,493)
Net unrealized appreciation on investments 15,585,618
------------
Total Net Assets $383,257,659
------------
------------
CLASS A SHARES:
Net assets $284,020,661
Shares of beneficial interest outstanding
(500,000,000 shares of $.01 par value authorized) 8,157,937
Net asset value and redemption price per share $34.82
------------
------------
Maximum offering price per share (100/94.75 of $34.82) $36.75
------------
------------
CLASS C SHARES:
Net assets $ 99,236,998
Shares of beneficial interest outstanding
(500,000,000 shares of $.01 par value authorized) 2,870,824
Net asset value and redemption price per share $34.57
------------
------------
Maximum offering price per share (100/99 of $34.57) $34.92
------------
------------
See notes to the financial statements.
STATEMENT OF OPERATIONS - YEAR ENDED OCTOBER 31, 2000
INVESTMENT INCOME:
Interest income $ 1,437,965
Dividend income 161,392
------------
Total investment income 1,599,357
------------
EXPENSES:
Investment advisory fee 4,126,531
Administration fee 323,025
Shareholder servicing and accounting costs 451,815
Custody fees 48,675
Federal and state registration 187,285
Professional fees 55,352
Reports to shareholders 38,497
Directors' fees and expenses 2,968
Amortization of organizational expenses 15,954
Distribution expense - Class A shares 777,445
Distribution expense - Class C shares 1,016,751
Other 3,657
------------
Total operating expenses before expense
waiver recovery and interest expense 7,047,955
Advisor expense waiver recovery (Note 6) 353,671
------------
Total operating expenses before interest expense 7,401,626
Interest expense 2,979,947
------------
Total expenses 10,381,573
------------
NET INVESTMENT LOSS (8,782,216)
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions (42,640,251)
Change in unrealized appreciation
(depreciation) on investments (11,059,234)
------------
Net realized and unrealized loss on investments (53,699,485)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(62,481,701)
------------
------------
See notes to the financial statements.
STATEMENT OF CASH FLOWS - YEAR ENDED OCTOBER 31, 2000
CASH PROVIDED (USED) BY FINANCING ACTIVITIES:
Sales of Capital Shares $1,294,765,602
Repurchases of Capital Shares (951,202,444)
Distributions Paid in Cash*<F1> (53,460)
Net Change in Receivables/Payables Related to
Capital Share Transactions (504,315)
--------------
Cash Provided by Capital Share Transactions 343,005,383
Net Repayment of Borrowings (10,000,000)
--------------
$ 333,005,383
-------------
CASH PROVIDED (USED) BY OPERATIONS:
Purchases of Investments (3,607,214,564)
Proceeds from Sales of Investments 3,280,036,159
--------------
(327,178,405)
--------------
Net Investment Loss (8,782,216)
Net Change in Receivables/Payables
Related to Operations 627,889
--------------
(8,154,327)
--------------
(335,332,732)
-------------
Net Decrease in Cash (2,327,349)
Cash, Beginning of Year 2,327,349
-------------
Cash, End of Year $ 0
-------------
-------------
*<F1> Net of reinvestment of dividends of $1,440,112
Supplemental Information:
Cash paid for interest $2,931,104
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
Year Ended Year Ended
October 31, 2000 October 31, 1999
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (8,782,216) $ (570,862)
Net realized gain (loss) on investment transactions (42,640,251) 260,879
Change in unrealized appreciation (depreciation) on investments (11,059,234) 26,470,077
-------------- ------------
Net increase (decrease) in net assets resulting from operations (62,481,701) 26,160,094
-------------- ------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS
FROM NET REALIZED GAINS (1,291,162) (312,180)
-------------- ------------
DISTRIBUTIONS TO CLASS C SHAREHOLDERS
FROM NET REALIZED GAINS (202,410) --
-------------- ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,294,765,602 92,563,756
Shares issued to holders in reinvestment of dividends 1,440,112 312,180
Cost of shares redeemed (951,202,444) (18,089,596)
-------------- ------------
Net increase in net assets resulting from capital share transactions 345,003,270 74,786,340
-------------- ------------
TOTAL INCREASE IN NET ASSETS 281,027,997 100,634,254
NET ASSETS:
Beginning of period 102,229,662 1,595,408
-------------- ------------
End of period $ 383,257,659 $102,229,662
-------------- ------------
-------------- ------------
</TABLE>
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
Selected per share data is based on a share of common stock outstanding
throughout each period.
<TABLE>
Class A Shares Class C Shares
Class A Shares Class A Shares Dec. 31, 1997 (1)<F2> Class C Shares Aug. 5, 1999 (1)<F2>
Year Ended Year Ended through Year Ended through
Oct. 31, 2000 Oct. 31, 1999 Oct. 31, 1998 Oct. 31, 2000 Oct. 31, 1999
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Data:
Net asset value, beginning of period $28.21 $14.42 $10.00 $28.17 $20.55
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss (0.89)(2)(3) (0.32)(2)(3) (0.10) (1.10)(2)(3) (0.13)(2)(3)
<F3><F4> <F3><F4> <F3><F4> <F3><F4>
Net realized and unrealized gains
on investments 7.82 16.74 4.52 7.82 7.75
------ ------ ------ ------ ------
Total from investment operations 6.93 16.42 4.42 6.72 7.62
------ ------ ------ ------ ------
Less distributions from
net realized gains (0.32) (2.63) -- (0.32) --
------ ------ ------ ------ ------
Net asset value, end of period $34.82 $28.21 $14.42 $34.57 $28.17
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total return (4)<F5> 24.64% 131.51% 44.20%(5)<F6> 23.92% 37.08%(5)<F6>
Supplemental data and ratios:
Net assets, end of period (000's) $284,021 $92,500 $1,595 $99,237 $9,730
Ratio of operating expenses to
average net assets 1.62%(6)(7) 1.72%(8) 1.65%(8) 2.37%(6)(7) 2.47%(8)
<F7><F8> <F9> <F9> <F7><F8> <F9>
Ratio of interest expense to
average net assets 0.72% 0.04% -- 0.72% 0.19%
Ratio of net investment loss to
average net assets (1.23)%(6)<F7> (1.45)%(8)<F9> (1.03)%(8)<F9> (1.98)%(6)<F7> (2.41)%(8)<F9>
Portfolio turnover rate (9)<F10> 834.9% 764.3% 521.6% 834.9% 764.3%
</TABLE>
(1)<F2> Commencement of operations.
(2)<F3> Net investment loss per share represents net investment loss divided
by the monthly average shares of common stock outstanding.
(3)<F4> Net investment loss before interest expense for the periods ending
October 31, 2000 and October 31, 1999 for the Class A Shares was
$(0.56) and $(0.31), respectively. Net investment loss before
interest expense for the periods ending October 31, 2000 and October
31, 1999 for the Class C Shares was $(0.91) and $(0.12), respectively.
(4)<F5> The total return does not reflect the 5.25% and 1.00% front-end sales
charge for the Class A and Class C Shares, respectively.
(5)<F6> Not annualized.
(6)<F7> For the year ended October 31, 2000, the operating expense ratio
excludes interest expense. The ratio for the Class A Shares and the
Class C Shares including interest expense was 2.34% and 3.09%,
respectively. The ratio of net investment loss to average net assets,
including interest expense for the Class A Shares and the Class C
Shares was (1.95)% and (2.70)%, respectively.
(7)<F8> Ratio includes Advisor expense waiver recovery of 0.09%.
(8)<F9> Operating expense excludes interest expense and is net of
reimbursements and waivers. The ratio including interest expense and
excluding reimbursements and waivers for the Class A Shares for the
periods ended October 31, 1999 and October 31, 1998 would have been
2.28% and 15.93%, respectively, and for the Class C Shares for the
period ended October 31, 1999 would have been 3.33%. The ratio of net
investment loss to average net assets, including interest expense and
excluding reimbursements and waivers for the Class A Shares for the
periods ended October 31, 1999 and October 31, 1998 would have been
(2.01)% and (15.31)%, respectively, and for the Class C Shares for the
period ended October 31, 1999 would have been (3.27)%.
(9)<F10> Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS - OCTOBER 31, 2000
Shares Value
------ -----
COMMON STOCKS - 97.4%
AUDIO EQUIPMENT - 2.5%
200,000 Harman International Industries, Incorporated $ 9,600,000
------------
BUSINESS SERVICES - 11.7%
250,000 Paychex, Inc. 14,171,875
200,000 SEI Investments Company 18,150,000
300,000 Concord EFS, Inc. *<F11> 12,393,750
------------
44,715,625
------------
COMPUTER SERVICES - 5.9%
200,000 DST Systems, Inc. *<F11> 12,325,000
200,000 SunGard Data Systems Inc. *<F11> 10,225,000
------------
22,550,000
------------
COMPUTER STORAGE DEVICES - 3.7%
100,000 VERITAS Software Corporation *<F11> 14,101,563
------------
COMPUTERS - 6.7%
140,000 EMC Corporation *<F11> 12,468,750
120,000 Sun Microsystems, Inc. *<F11> 13,305,000
------------
25,773,750
------------
ELECTRONIC COMPONENTS - 5.7%
175,000 Celestica Inc. *<F11> 12,578,125
80,000 Sanmina Corporation *<F11> 9,145,000
------------
21,723,125
------------
ENERGY - 6.3%
150,300 Calpine Corporation *<F11> 11,864,306
300,000 PPL Corporation 12,356,250
------------
24,220,556
------------
HEALTHCARE - 8.0%
120,000 UnitedHealth Group Incorporated 13,125,000
150,000 Wellpoint Health Networks Inc. *<F11> 17,540,625
------------
30,665,625
------------
NETWORKING PRODUCTS - 1.9%
60,000 Network Appliance, Inc. *<F11> 7,140,000
------------
PHARMACEUTICALS - 14.8%
250,000 ALZA Corporation *<F11> 20,234,375
300,000 Biovail Corporation *<F11> 12,618,750
125,000 Forest Laboratories, Inc. *<F11> 16,562,500
125,000 Teva Pharmaceutical Industries Ltd. - ADR 7,390,625
------------
56,806,250
------------
SCIENTIFIC INSTRUMENTS - 7.0%
225,000 PerkinElmer, Inc. 26,887,500
------------
SEMICONDUCTORS - 6.1%
210,000 Elantec Semiconductor, Inc. *<F11> 23,362,500
------------
SOFTWARE - 17.1%
50,000 i2 Technologies, Inc. *<F11> 8,500,000
75,000 Micromuse Inc. *<F11> 12,726,562
197,000 Siebel Systems, Inc. *<F11> 20,672,688
150,000 Check Point Software Technologies Ltd. *<F11> 23,756,250
------------
65,655,500
------------
TOTAL COMMON STOCKS (Cost $357,616,376) 373,201,994
------------
Principal
Amount
------
SHORT-TERM INVESTMENTS - 9.2%
U.S. GOVERNMENT AGENCY OBLIGATIONS - 8.5%
$32,510,000 Fannie Mae, 6.20%, 11/02/2000 32,504,401
------------
VARIABLE RATE DEMAND NOTES#<F12> - 0.7%
983,327 American Family Financial Services Inc., 6.2151% 983,327
960,844 Sara Lee Corporation, 6.2200% 960,844
201,622 Wisconsin Corporate Central Credit Union, 6.2900% 201,622
520,000 Wisconsin Electric Power Company, 6.2150% 520,000
------------
2,665,793
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $35,170,194) 35,170,194
------------
TOTAL INVESTMENTS - (COST $392,786,570) - 106.6% 408,372,188
Liabilities, less Other Assets - (6.6)% (25,114,529)
------------
TOTAL NET ASSETS - 100.0% $383,257,659
------------
------------
ADR - American Depository Receipt
*<F11> Non-income producing security.
#<F12> Variable rate demand notes are considered short-term obligations and
are payable on demand. Interest rates change periodically on specified
dates. The rates listed are as of October 31, 2000.
See notes to the financial statements.
NOTES TO THE FINANCIAL STATEMENTS - OCTOBER 31, 2000
1. ORGANIZATION
The Grand Prix Funds, Inc. (the "Corporation") was incorporated on October
30, 1997 as a Maryland Corporation and is registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"1940 Act"). The Corporation is authorized to issue its shares in series,
each series representing a distinct portfolio with its own investment
objectives and policies. The Corporation currently offers one series of
shares: The Grand Prix Fund (the "Fund"). The shares of common stock of the
Fund are further divided into two classes:Class A and Class C. Each class
of shares has identical rights and privileges except with respect to 12b-1
fees and voting rights on matters affecting a single class of shares. The
Fund commenced investment operations on December 31, 1997. Effective
December 1, 1998, the Fund changed from a no-load mutual fund to a load
fund.
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
("GAAP"). The presentation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.
(a) Investment Valuation - Securities are stated at value. Securities
which are traded on a recognized stock exchange are valued at the last
sale price on the securities exchange on which such securities are
primarily traded. Securities traded on only over-the-counter markets
are valued on the basis of closing over-the-counter trade prices.
Securities for which there were no transactions are valued at the
average of the latest bid and asked prices. Debt securities (other
than short-term instruments) are valued at prices furnished by a
pricing service. Debt instruments maturing within 60 days are valued
by the amortized cost method. Any securities for which market
quotations are not readily available are valued at their fair value as
determined in good faith by Target Investors (the "Advisor") pursuant
to guidelines established by the Board of Directors.
(b) Organization Costs - Costs incurred by the Fund in connection with its
organization, registration and the initial public offering of shares
have been deferred and will be amortized over the period of benefit,
but not to exceed five years from the date upon which the Fund
commenced its investment activities. If any of the original shares of
the Fund purchased by the initial shareholder are redeemed prior to
the end of the amortization period, the redemption proceeds will be
reduced by the pro rata share of the unamortized costs as of the date
of redemption. The pro rata share by which the proceeds are reduced
will be derived by dividing the number of original shares of the Fund
being redeemed by the total number of original shares outstanding at
the time of redemption.
(c) Federal Income and Excise Taxes - The Fund intends to meet the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all net
investment company taxable income and net capital gains to
shareholders in a manner which results in no tax cost to the Fund.
Therefore, no federal income or excise tax provision is required.
(d) Distribution to Shareholders - Dividends from net investment income
will be declared and paid annually. Distributions of net realized
gains, if any, will be declared at least annually. Distributions to
shareholders are recorded on the ex-dividend date. The Fund may
periodically make reclassifications among certain of its capital
accounts as a result of the recognition and characterization of
certain income and capital gain distributions determined annually in
accordance with federal tax regulations which may differ from
generally accepted accounting principles.
(e) Securities Transactions and Investment Income - Investment
transactions are recorded on the trade date for financial statement
purposes. The Fund determines the gain or loss realized from
investment transactions by comparing the original cost of the security
lot sold with the net sale proceeds. Dividend income is recognized on
the ex-dividend date and interest income is recognized on an accrual
basis. Acquisition and market discounts are amortized over the life of
the security.
3. SHARES OF COMMON STOCK
Transactions in shares of common stock were as follows:
PERIOD ENDING OCTOBER 31, 2000
$ Shares
- ------
CLASS A SHARES:
Shares sold $1,063,359,246 23,604,210
Shares issued to holders in
reinvestment of dividends 1,241,890 37,776
Shares redeemed (839,814,361) (18,763,415)
-------------- -----------
Net increase $224,786,775 4,878,571
--------------
SHARES OUTSTANDING:
Beginning of period 3,279,366
-----------
End of period 8,157,937
-----------
-----------
CLASS C SHARES:
Shares sold $ 231,406,356 5,080,879
Shares issued to holders in
reinvestment of dividends 198,222 6,026
Shares redeemed (111,388,083) (2,561,520)
-------------- -----------
Net increase $ 120,216,495 2,525,385
--------------
SHARES OUTSTANDING:
Beginning of period 345,439
-----------
End of period 2,870,824
-----------
-----------
TOTAL INCREASE $ 345,003,270
--------------
--------------
PERIOD ENDING OCTOBER 31, 1999
$ Shares
- ------
CLASS A SHARES:
Shares sold $ 84,276,270 3,988,061
Shares issued to holders in
reinvestment of dividends 312,180 21,770
Shares redeemed (18,069,123) (841,135)
-------------- -----------
Net increase $ 66,519,327 3,168,696
--------------
SHARES OUTSTANDING:
Beginning of period 110,670
-----------
End of period 3,279,366
-----------
-----------
CLASS C SHARES:
Shares sold $ 8,287,486 346,298
Shares issued to holders in
reinvestment of dividends -- --
Shares redeemed (20,473) (859)
-------------- -----------
Net increase $ 8,267,013 345,439
--------------
SHARES OUTSTANDING:
Beginning of period --
-----------
End of period 345,439
-----------
-----------
TOTAL INCREASE $ 74,786,340
--------------
--------------
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments and U.S. government obligations, for the Fund for the year
ended October 31, 2000 are summarized below. There were no purchases or
sales of long-term U.S. government securities.
Purchases $3,708,290,930
Sales $3,387,754,697
At October 31, 2000, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $411,085,498
were as follows:
Unrealized appreciation $ 25,067,795
Unrealized depreciation (27,781,105)
------------
Net unrealized depreciation
on investments $ (2,713,310)
------------
------------
At October 31, 2000, the Grand Prix Fund had an accumulated net realized
capital loss carryover of $26,158,565, expiring in 2008. To the extent the
Grand Prix Fund realizes future net capital gains, taxable distributions to
its shareholders will be offset by any unused capital loss carryover.
5. CREDIT FACILITY
Firstar Bank, N.A. (the "Bank") has made available to the Fund a $100
million credit facility pursuant to a Loan and Security Agreement
("Agreement") dated September 27, 1999 for the purpose of purchasing
portfolio securities. For the year ended October 31, 2000, the interest
rate on the outstanding principal amount was the Bank's Prime Rate
(weighted average rate of 9.19% during the year ended October 31, 2000).
The Fund is also charged a fee of 0.06% based on the maximum line of credit
available. Advances are collateralized by a first lien against the Fund's
assets. During the year ended October 31, 2000, the Fund had an outstanding
average daily balance of $31,387,978. The maximum amount outstanding during
the year ended October 31, 2000, was $100,000,000. Interest expense
amounted to $2,979,947 for the year ended October 31, 2000. There was no
outstanding loan payable at October 31, 2000.
6. INVESTMENT ADVISOR
The Fund has an agreement with the Advisor, with whom certain officers and
directors of the Fund are affiliated, to furnish investment advisory
services to the Fund. Under the terms of this agreement, the Advisor is
compensated at an annual rate of 1.00% of average daily net assets of the
Fund. The Advisor agreed to waive its investment advisory fee and/or
reimburse the Fund's operating expenses (exclusive of brokerage, interest,
taxes and extraordinary expenses) to the extent necessary to ensure that
the Fund's Class A total operating expenses for the periods December 31,
1997 through February 25, 1999, February 26, 1999 through February 29,
2000, and March 1, 2000 through October 31, 2000 did not exceed 1.65%,
1.72% and 1.75%, respectively, while the Class C total operating expenses
for the periods August 5, 1999 through February 29, 2000, and March 1, 2000
through October 31, 2000, did not exceed 2.47% and 2.50%, respectively. The
Advisor may recover from the Fund the expenses paid in excess of the cap on
expenses for the three previous years, as long as the recovery does not
cause the Fund to exceed such cap on expenses. For the fiscal periods
ending October 31, 1999 and October 31, 1998, the Advisor waived investment
advisory fees totaling $204,561 and $149,110, respectively. During the
period ended October 31, 2000, the Advisor recovered all previous expense
waivers, totaling $353,671.
7. SERVICE AND DISTRIBUTION PLAN
The Fund has adopted Service and Distribution Plans (the "Plans") pursuant
to Rule 12b-1 under the 1940 Act. The Plans authorize payments by the Fund
in connection with the distribution of its shares at an annual rate, as
determined from time to time by the Board of Directors, of up to 0.25% of
the Fund's average daily net assets for the Class A shares and up to 1.00%
for the Class C shares. The currently approved rate is 0.25% and 1.00% of
average daily assets for the Class A and Class C shares, respectively.
Amounts paid under the Plans by the Fund may be spent by the Fund on any
activities or expenses primarily intended to result in the sale of shares
of the Fund, including but not limited to, advertising, compensation for
sales and marketing activities of financial institutions and others such as
dealers and distributors, shareholder account servicing, the printing and
mailing of prospectuses to other than current shareholders and the printing
and mailing of sales literature. The Fund incurred $777,445 for the Class A
Shares and $1,016,751 for the Class C Shares pursuant to the Plans for the
year ended October 31, 2000.
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the Fund. This report may be
distributed to others only if preceded or accompanied by a current
prospectus. The Grand Prix Fund is distributed by T.O. Richardson
Securities, Inc., a member of the NASD.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of the Grand Prix Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Grand Prix Fund (the Fund), as of October
31, 2000, the related statements of operations, cash flows and changes in net
assets and the financial highlights for the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on the financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 securities
owned as of October 31, 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
Grand Prix Fund at October 31, 2000, and the results of its operations, cash
flows and changes in its net assets and the financial highlights for the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
/s/Ernst & Young
Milwaukee, Wisconsin
November 29, 2000
GRAND PRIX FUND
P.O. BOX 701
MILWAUKEE, WI 53201
FUND INFORMATION 800 307-4880
ACCOUNT INFORMATION 800 432-4741
WWW.GRANDPRIXFUNDS.COM
