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LIGHT REVOLUTION FUND
SEMI-ANNUAL REPORT
APRIL 30, 2000
Dear Shareholder,
As of April 30, 2000, the NAV of the Light Revolution Fund stood at $17.17,
which indicates a 71% gain since inception in June of 1999. Though this is a
substantial advance, investors should be prepared to see a turbulent market for
some time to come while the Federal Reserve continues its tight money policy as
it raises short term interest rates to combat what it sees as a threat of
inflation. Though we do not share the Fed's view that inflation is a problem
(indeed, we still believe that the opposite problem, deflation, poses more cause
for concern), there is an old saying: "Don't fight the Fed." For that reason we
would advise investors at this point to be cautious.
In our view, the easy money has been made and the dot.com companies have had
their day in the sun. This does not mean that investors should sell all of their
shares and run screaming for a shovel to bury their coffee can filled with gold.
It means that whatever percent of their assets that a prudent investor decides
to put into technology shares should be put into the best companies available.
The Internet still has a long way to go with only about 300 million of the
world's six billion people online. 400 million cell phones will be bought this
year and the rest of the world continues to wake up to the fact that the
information age is here to stay. Furthermore, the telephone and cable companies
are fighting over the last mile to the door of businesses and consumers alike
and networking giants like Cisco, Nortel and Lucent are battling to take the
lead role in building an all-optical network.
Technology investments should continue to stay in a balanced portfolio and we
believe that the Light Revolution Fund offers the prudent investor a way to
participate in the information revolution, which still has a long way to go. We
thank you for choosing us.
Sincerely,
/s/ Henry Hewitt
Henry Hewitt
President
LIGHT REVOLUTION FUND
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STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (Unaudited)
ASSETS:
Investments, at value
(cost of $3,227,295) $ 4,032,814
Cash 721
Dividends and interest receivable 2,287
Receivable from Adviser 7,668
Other assets 6,633
-----
Total assets 4,050,123
---------
LIABILITIES:
Payable to Distributor 3,496
Accrued expenses and other liabilities 45,529
------
Total liabilities 49,025
------
NET ASSETS $ 4,001,098
===========
NET ASSETS CONSIST OF:
Paid in capital $ 2,925,286
Accumulated undistributed net investment loss (18,081)
Accumulated net realized gain on investments 288,374
Net unrealized appreciation of investments 805,519
-------
NET ASSETS $ 4,001,098
===========
Shares issued and outstanding (Five hundred
million shares of $0.0001 par value authorized) 232,998
NET ASSET VALUE ON REDEMPTION:
Price per share $ 17.17
=======
Maximum offering price per share $ 18.03
=======
See notes to the financial statements.
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LIGHT REVOLUTION FUND
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STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (Unaudited)
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $288) $ 4,364
Interest 12,175
------
Total investment income 16,539
------
EXPENSES:
Accounting and transfer agent fees and expenses 38,154
Administrative fees 21,808
Professional fees 15,592
Investment advisory fees 15,014
Registration and filing fees 9,332
Shareholder reports 5,286
Directors' fees and expenses 4,640
Distribution fees (12b-1) 3,754
Custody fees and expenses 2,740
Insurance expense 980
Other expenses 500
---
Total expenses before reimbursement from Adviser 117,800
Expense reimbursement from Adviser (87,771)
-------
Net expenses 30,029
------
NET INVESTMENT LOSS (13,490)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 288,374
Net change in unrealized appreciation of investments 650,836
-------
NET GAIN ON INVESTMENTS 939,210
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 925,720
=========
See notes to the financial statements.
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LIGHT REVOLUTION FUND
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STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months Ended June 29, 1999(1)
April 30, 2000 to
(Unaudited) October 31, 1999
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (13,490) $ (4,591)
Net realized gain on investments 288,374 0
Net change in unrealized appreciation of investments 650,836 154,683
------- -------
Net increase in net assets resulting from operations 925,720 150,092
------- -------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 1,628,665 1,198,472
Cost of shares redeemed (1,726) (125)
------ ----
Net increase in net assets from capital share transactions 1,626,939 1,198,347
--------- ---------
TOTAL INCREASE IN NET ASSETS 2,552,659 1,348,439
NET ASSETS:
Beginning of period 1,448,439 100,000
--------- -------
End of period $ 4,001,098 $ 1,448,439
=========== ===========
CHANGES IN SHARES OUTSTANDING:
Shares sold 105,957 117,160
Shares redeemed (107) (12)
---- ---
NET INCREASE IN SHARES OUTSTANDING 105,850 117,148
======= =======
</TABLE>
(1) Commencement of operations
See notes to the financial statements.
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LIGHT REVOLUTION FUND
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FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING
THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Six Months Ended June 29, 1999(1)
April 30, 2000 to
(Unaudited) October 31, 1999
---------------- ----------------
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD $11.39 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.04) (0.04)
Net realized gain and unrealized appreciation 5.82 1.43
---- ----
Total from investment operations 5.78 1.39
---- ----
NET ASSET VALUE - END OF PERIOD $17.17 $11.39
====== ======
TOTAL RETURN(2), (3) 50.75% 13.90%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $4,001 $1,448
Ratio of expenses to average net assets:
Before expense reimbursement(4) 7.84% 20.74%
After expense reimbursement(4) 2.00% 2.00%
Ratio of net investment loss to
average net assets:
Before expense reimbursement(4) (6.74%) (19.85%)
After expense reimbursement(4) (0.90%) (1.11%)
Portfolio turnover rate 15.80% 0.00%
</TABLE>
(1) Commencement of operations
(2) Not annualized
(3) The total return calculation does not reflect the maximum sales charge of
4.75%.
(4) Annualized
See notes to the financial statements.
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LIGHT REVOLUTION FUND
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SCHEDULE OF INVESTMENTS - APRIL 30, 2000 (UNAUDITED)
COMMON STOCKS - 97.4% SHARES VALUE
COMPUTER HARDWARE & ELECTRONICS - 18.2%
Apple Computer, Inc. * 600 $ 74,437
Compaq Computer Corporation 2,299 67,246
Corning Incorporated 479 94,603
Dell Computer Corporation * 1,222 61,253
EMC Corporation * 571 79,333
Hewlett-Packard Company 545 73,575
International Business Machines Corporation 573 63,961
Koninklijke (Royal) Philips Electronics N.V. 1,856 82,824
Lexmark International Group, Inc. - Class A * 680 80,240
Sony Corporation ADR 219 49,412
------
726,884
-------
ENTERTAINMENT & MEDIA - 11.3%
The Walt Disney Company 2,126 92,082
The News Corporation Limited ADR 1,622 83,432
Nintendo Co., Ltd. ADR 3,017 62,812
Reuters Group PLC ADR 771 80,425
Time Warner Inc. 853 76,717
Viacom Inc. - Class B * 1,024 55,680
------
451,148
-------
IMAGING & GRAPHICS - 8.9%
Adobe Systems Incorporated 923 111,625
Canon, Inc. ADR 1,529 71,003
Eastman Kodak Company 932 52,134
Electronics for Imaging, Inc. * 1,065 55,646
Fuji Photo Film Co., Ltd. ADR 1,622 66,502
------
356,910
-------
INTEGRATED CIRCUITS & SEMICONDUCTORS - 20.9%
Analog Devices, Inc. * 1,261 96,861
Applied Materials, Inc. * 984 100,183
Broadcom Corporation - Class A * 403 69,467
Intel Corporation 757 95,997
KLA-Tencor Corporation * 978 73,228
Maxim Integrated Products, Inc. * 1,316 85,293
Micron Technology, Inc. 797 110,982
Texas Instruments Incorporated 639 104,077
Xilinx, Inc. * 1,368 100,206
-------
836,294
-------
INTERNET - 6.4%
America Online, Inc. * 813 48,628
Cisco Systems, Inc. * 1,148 79,589
Sun Microsystems, Inc. * 806 74,102
3Com Corporation * 1,328 52,373
------
254,692
-------
SOFTWARE - 10.1%
Intuit Inc. * 1,037 $ 37,267
Microsoft Corporation * 532 37,107
Oracle Corporation * 979 78,259
Parametric Technology Corporation * 2,299 18,751
SAP AG ADR 1,195 58,704
The Charles Schwab Corporation 1,622 72,179
Synopsys, Inc. * 930 39,060
Wells Fargo & Company 1,548 63,565
------
404,892
-------
TELECOMMUNICATIONS - 13.5%
AT&T Corp. 1,222 57,052
Bell Atlantic Corporation 1,010 59,843
Lucent Technologies Inc. 825 51,305
Nortel Networks Corporation 622 70,441
Qwest Communications International Inc. * 1,447 62,764
Sprint Corporation 918 56,457
Symbol Technologies, Inc. 1,407 78,440
Tellabs, Inc. * 970 53,168
WorldCom, Inc. * 1,171 53,185
------
542,655
-------
WIRELESS TELECOMMUNICATIONS - 8.1%
General Motors Corporation - Class H 640 61,640
Globalstar Telecommunications Limited * 1,405 16,509
Motorola, Inc. 425 50,602
Nokia Corporation ADR 1,284 73,027
QUALCOMM Incorporated * 353 38,278
Telefonaktiebolaget LM Ericsson ADR 945 83,573
------
323,629
-------
TOTAL COMMON STOCK
(cost $3,091,585) 3,897,104
---------
SHORT-TERM INVESTMENTS - 3.4% PRINCIPAL AMOUNT
VARIABLE RATE DEMAND NOTES - 3.4%
Firstar Corporation $ 135,710 135,710
-------
TOTAL SHORT-TERM INVESTMENTS
(cost $135,710) 135,710
TOTAL INVESTMENTS - 100.8%
(cost $3,227,295) 4,032,814
Liabilities in excess of other assets - (0.8)% (31,716)
-------
Total net assets - 100.0% $ 4,001,098
===========
* Non-income producing
See notes to the financial statements.
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LIGHT REVOLUTION FUND, INC.
NOTES TO THE FINANCIAL STATEMENTS - APRIL 30, 2000 (UNAUDITED)
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1. ORGANIZATION
The Light Revolution Fund, Inc. (the "Corporation") was organized as a Maryland
corporation on October 21, 1997 and is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company issuing its shares in series, each series representing a distinct
portfolio with its own investment objectives and policies. The series presently
authorized is the Light Revolution Fund (the "Fund"). Pursuant to the 1940 Act,
the Fund is a "diversified" series of the Corporation and has an investment
objective of capital appreciation. The Fund commenced operations on June 29,
1999. Shares of the Fund are subject to an initial sales charge imposed at the
time of purchase, in accordance with the Fund's prospectus. The maximum sales
charge is 4.75% of the offering price.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies employed by the
Fund in preparing its financial statements:
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.
INVESTMENT VALUATION
Common stocks and other equity-type securities that are listed on a securities
exchange are valued at the last quoted sales price during regular trading on the
day the valuation is made. Price information, on listed stocks, is taken from
the exchange where the security is primarily traded. Securities which are listed
on an exchange but which are not traded on the valuation date are valued at the
average of the most recent bid and asked prices. Unlisted securities for which
market quotations are readily available are valued at the latest quoted bid
price. Debt securities are valued at the latest bid prices furnished by a
pricing service. Other assets and securities for which no quotations are readily
available are valued at fair value as determined in good faith under the
supervision of the Board of Directors of the Corporation. Short-term instruments
(those with remaining maturities of 60 days or less) are valued at amortized
cost, which approximates market.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income and distributions of net realized capital
gains, if any, will be declared and paid at least annually.
FEDERAL INCOME TAXES
The Fund has elected to be taxed as a "regulated investment company" and intends
to distribute substantially all taxable income to its shareholders and otherwise
comply with the provisions of the Internal Revenue Code applicable to regulated
investment companies. Therefore, a provision for federal income taxes or excise
taxes has not been made.
FOREIGN SECURITIES
The Fund may invest in foreign securities. Investing in securities of foreign
companies and foreign governments involves special risks and considerations not
typically associated with investing in U.S. companies and the U.S. Government.
These risks include revaluation of currencies and future adverse political and
economic developments. Moreover, securities of many foreign companies and
foreign governments and their markets may be less liquid and their prices more
volatile than securities of comparable U.S. companies and the U.S. Government.
FOREIGN CURRENCY TRANSLATION
Investment securities and other assets and liabilities initially expressed in
foreign currencies are converted to U.S. dollars based upon current exchange
rates. Purchases and sales of foreign investment securities and income are
converted to U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses.
OTHER
Investment and shareholder transactions are recorded on the trade date. The Fund
determines the gain or loss realized from the investment transactions by
comparing the original cost of the security lot sold with the net sales
proceeds. Dividend income is recognized on the ex-dividend date and interest
income is recognized on an accrual basis. Reclassifications are made within the
net asset accounts for amounts related to permanent differences in the character
of certain income and expense items for income tax and financial reporting
purposes.
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, by the Fund for the six months ended April 30, 2000, were as
follows:
PURCHASES SALES
U.S. Government $ $
Other $2,141,975 $405,209
At April 30, 2000, gross unrealized appreciation and depreciation of investments
for tax purposes were as follows:
Appreciation $1,007,645
(Depreciation) (202,126)
------------
Net appreciation of investments $805,519
========
At April 30, 2000, the cost of investments is identical for federal income tax
and financial reporting purposes.
4. AGREEMENTS
The Corporation has entered into an Investment Advisory Agreement with Light
Index Investment Company (the "Investment Adviser"). Pursuant to its advisory
agreement with the Corporation, the Investment Adviser is entitled to receive a
fee, calculated daily and payable monthly, at the annual rate of 1.00% as
applied to the Fund's daily net assets.
Until March 31, 2001, the Investment Adviser has agreed to voluntarily waive its
advisory fee and/or reimburse the Fund's other expenses to the extent that
total operating expenses (exclusive of interest, taxes, brokerage commissions
and other costs incurred in connection with the purchase or sale of portfolio
securities, and extraordinary items) exceed the annual rate of 2.00% of the
average net assets of the Fund, computed on a daily basis. Accordingly, for the
six months ended April 30, 2000, the Investment Adviser waived advisory fees and
reimbursed other Fund expenses in the amount of $81,771. After March 31, 2001,
the Investment Adviser may terminate or revise the total annual operating
expense limitations at any time. Any waiver or reimbursement is subject to later
adjustment to allow the Investment Adviser to recoup amounts waived or
reimbursed to the extent actual fees and expenses for a period are less than the
expense limitation cap of 2.00%, provided, however, that the Investment Adviser
shall only be entitled to recoup such amounts for a period of three years from
the date such amount was waived or reimbursed.
Provident Distributors, Inc. (the "Distributor") serves as principal underwriter
of the shares of the Fund pursuant to a Distribution Agreement between the
Distributor and the Corporation. The Corporation, on behalf of the Fund, has
adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the "12b-1 Plan"),
which authorizes the Fund to pay the Distributor (and others that have entered
into related agreements under the 12b-1 Plan) a distribution fee at an annual
rate of up to 0.25% of the average daily net assets of the Fund. Payments under
the 12b-1 Plan shall be used to reimburse the recipient for services provided
and expenses incurred in connection with the sale of the Fund's shares.
Shares of the Light Revolution Fund are distributed by an independent third
party, Provident Distributors, Inc. This report has been prepared for the
general information of Light Revolution Fund shareholders. It is not authorized
for distribution to prospective investors unless preceded or accompanied by a
current prospectus. The Fund's prospectus contains more complete information
about the objectives, policies, expenses and risks of the Fund. Please read the
prospectus carefully before investing or sending money.
LIGHT REVOLUTION FUND
704 Court A
Tacoma, Washington 98402
Fund: 1.888.463.3957
Fund Adviser: 1.888.544.4889
