[GRAPHIC OMITTED]
TANAKA GROWTH FUND
230 Park Avenue - Suite 960
New York, NY 10169
(212) 490-3380
July 24, 2000
Dear TANAKA Growth Fund Shareholder:
It has been one and one-half years since the launch of the TANAKA
Growth Fund, and we are gratified by our success and appreciative of your
support. We will continue to pursue our goal of achieving long term growth and
will adhere to our long term philosophy combining our "kick-the-tires" research
and meeting company managements with our value-added top down economic analysis.
MID YEAR PERFORMANCE
For the first 6 months of our 11/30/00 fiscal year, the TANAKA Growth
Fund enjoyed excellent results as shown below. In the last 6 months we benefited
from strong performance by a wide variety of companies, large and small. Eleven
of our holdings were up over 20%, including pharmaceutical, oil service, market
research and diversified companies, as well as several of our "Enablers and
Beneficiaries" of the Technology Revolution.
TANAKA Growth Fund
R-Share Class
Performance Since Inception (12/30/98)*
Tanaka Russell 2000 S&P 500
--------- -------------- ---------
Dec. 99 10,000 10,000 10,000
Feb. 00 12,428 11,464 9,314
May 00 10,039 9,477 9,711
<TABLE>
TANAKA GROWTH FUND
NO LOAD R-SHARE CLASS*
<S> <C> <C> <C>
Six Months Total
Return One Year Total Return Avg. Annual Total Return Since Inception
11/30/99 - 5/31/00 5/31/99 - 5/31/00 12/30/98 - 5/31/00
------------------- ---------------------- ----------------------------------------
TANAKA R-SHARES +30.11% +71.00% +45.26%
S&P 500 +2.84% +10.45% +11.24%
Russell 2000 Index +5.50% +9.91% +12.47%
</TABLE>
<TABLE>
<CAPTION>
BROKER SOLD B-SHARE CLASS*
(currently unavailable)
<S> <C> <C>
Total Return Since Inception Total Return Since Inception
12/31/99 - 5/31/00 12/31/99 - 5/31/00
------------------------ -----------------------------
TANAKA B-SHARES +5.65% +0.39%
S&P 500 -2.89% -2.89%
Russell 2000 Index -5.23% -5.23%
</TABLE>
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS
*The Fund is a non-diversified fund. The Fund may be subject to additional risk
since it can invest in smaller capitalization companies including technology
stocks, and it may invest up to 45% of its' net assets in foreign securities,
including multinational and emerging market securities. Please read the
prospectus carefully before investing as it contains important information.
Investment return and principal value fluctuate in response to the activities of
individual companies and general market and economic conditions. As a result, an
investor's shares when redeemed may be worth more or less than their original
cost. Performance shown occurred during a period of generally favorable market
conditions that are likely not sustainable. The S&P 500 and Russell 2000 indices
are unmanaged and it is therefore not possible to invest directly in them. The
performance of the Fund's R-Share class will differ from that of the Fund's
B-Share class due to differing fees and expenses. The inception date for the
Fund's B-Share class was 12/31/99. A $10,000 investment as of that date in the
Fund's B-Share class would have been valued at $10,565 on 5/31/00, and on the
same date would have been valued at $10,039 after the effct of the contingent
deferred sales charge.
ECONOMIC OUTLOOK
For the rest of calendar 2000, the domestic economy should continue to
slow in response to the Federal Reserve's tightening program initiated in mid
1999. In addition, with recent reports of relatively modest inflation (excluding
volatile food and energy prices), we believe it is unlikely that the Fed will
increase rates any further until well after the elections in November.
Corporations continue to invest heavily in technology and communications
infrastructure to be able to compete effectively in the New Economy. The
benefits of productivity and growth in corporate profits are obvious.
In the New Economy, the government sector will continue to grow slower
than the technology-rich private sector, reversing the "crowding out" by heavy
U.S. Treasury deficit financing in the 1970's through the early 1990's.
Government surpluses provide liquidity for the heavy corporate capital
investments that are needed to boost labor productivity. Productivity gains are
the only way the economy can grow in real terms in a fully employed economy, and
we are fortunate that many new technologies are being developed to aid in that
effort.
INVESTMENT STRATEGIES
We continue to feel that inflation expectations will decline and that
greater premiums will be paid on companies with rapid earnings growth. Our
conclusions are based on in-depth analyses which we will present to you in our
next report. While we are researching companies with rapid earnings growth, we
will persist in our discipline for buying "value." While in past years we were
happy to buy 15-20% growers at less than 15-20 times earnings, more recently we
have been adding 30-50% growers valued at less than 30-50 times earnings. This
has paid off for us.
We have focused on the "Enablers and Beneficiaries" of the Technology
Revolution, and these investments in semiconductor, software and telecom
companies have generated above average returns. However, greater returns are
usually associated with greater stock volatility. While we are attempting to
control risk by rebalancing the Fund and through industry diversification, you
should be aware that our greater top-down emphasis on tech and telecom, as well
as the rising percentage of tech and telecom in the overall stock market
averages have added the potential for greater volatility for our Fund as well as
for the broad market averages. Technology is where the growth is and is likely
to be for some time. As "Information Technology" becomes a greater part of the
economy and technology becomes larger than the current 35% of the S&P 500 market
capitalization, this is an issue all investors will have to understand.
For our part, we will continue to devote over 50% of the Fund to the
"Enablers and Beneficiaries" of the Technology Revolution, as well as a 15-20%
commitment to the healthcare sector. We are also finding some Old Economy
companies that are transforming into faster growth participants in the New
Economy. We will continue to meet and challenge managements, and as always, we
recommend that investors take a long term view to be able to grow in this truly
New Economy.
Please note that we are planning to restrict the sale of our no-load class
(R-Share) of the TANAKA Growth Fund within the next few months, and will open
the broker-sold B-Share class for new investors. If you have any friends and
neighbors that might be interested in our Fund, they may wish to consider the
No-Load R-Share class before the window closes. The minimum is $1000, and once
they are a no-load class investor, they can always invest more later. We are
also on a drive to obtain 1,000 shareholders in our Fund to qualify for listing
in the newspapers, so any new accounts opened would be greatly appreciated. In
the meantime, you can always find information on the fund at www.tanaka.com.
Thanks for your support.
Sincerely yours,
Graham Y. Tanaka, CFA
<TABLE>
<CAPTION>
TANAKA GROWTH FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2000 (UNAUDITED)
<S> <C> <C>
COMMON STOCKS - 95.3% SHARES VALUE
ACCIDENT & HEALTH INSURANCE - 1.9%
AFLAC Inc. 905 $ 46,777
-----------------
BIOTECHNOLOGY - RESEARCH - 1.3%
Affymetrix, Inc. (a) 280 33,250
-----------------
COMPUTERS & OFFICE EQUIPMENT - .9%
International Business Machines, Inc. 215 23,072
-----------------
COMPUTER PROCESSING & DATA PREPARATION - .9%
Computer Outsourcing Services, Inc. (a) 1,500 22,687
-----------------
INDUSTRIAL MACHINERY & EQUIPMENT - 1.3%
Deswell Industries, Inc. 2,135 32,559
-----------------
MANAGEMENT CONSULTING SERVICES - .7%
Thomas Group, Inc. (a) 1,825 17,338
-----------------
OIL AND GAS FIELD EXPLORATION SERVICES - 2.1%
Seitel, Inc. 6,070 51,974
-----------------
PHARMACEUTICAL PREPARATIONS - 10.5%
Biovail Corp International (a) 2,360 111,510
K-V Pharmaceutical Co - Class A (a) 5,400 103,613
Pfizer, Inc. 635 28,258
Schering-Plough, Inc. 420 20,396
-----------------
263,777
-----------------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 4.1%
Concord Camera Corp. (a) 6,050 102,472
-----------------
RADIO & TV BROADCASTING & COMMUNICATION EQUIP. - 2.5%
QUALCOMM, Inc. (a) 952 63,249
-----------------
RADIO TELEPHONE COMMUNICATIONS - 2.5%
NEXTEL Communications - Class A (a) 690 63,868
RETAIL-LUMBER & OTHER BUILDING MATERIALS DEALERS - 1.2%
Home Depot, Inc. 595 29,006
-----------------
SEARCH, DETECTION, NAVIGATION, GUIDANCE SYS. - .7%
FLIR Systems, Inc. 1,950 17,977
-----------------
SECURITY BROKERS, DEALERS & FLOTATION COMPANIES - 3.4%
MFC Bancorp Ltd. (a) 10,255 85,916
-----------------
TANAKA GROWTH FUND
SCHEDULE OF INVESTMENTS - MAY 31, 2000 (UNAUDITED) - CONTINUED
COMMON STOCKS - CONTINUED SHARES VALUE
SEMICONDUCTORS & RELATED DEVICES - 22.2%
Intel Corp. 1,905 $ 237,649
Three-Five Systems, Inc. (a) 5,100 320,025
-----------------
557,674
-----------------
SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN - 1.1%
General Electric, Inc. 510 26,807
-----------------
SERVICES-COMPUTER PROGRAMMING SERVICES - 2.6%
AMDOCS Ltd. (a) 1,070 66,273
-----------------
SERVICES-PREPACKAGED SOFTWARE - 10.1%
Brio Technology, Inc. (a) 2,350 33,193
Business Objects SA (a) (c) 2,770 221,600
-----------------
254,793
-----------------
SPECIAL INDUSTRY MACHINERY - 17.4%
Novellus Systems, Inc. (a) 6,720 323,400
ASM Lithography Holdings NV (a) (c) 3,170 112,733
-----------------
436,133
-----------------
SWITCHING & TRANSMISSION EQUIPMENT - 2.2%
Nortel Networks Corp. 1,000 54,312
-----------------
TELEPHONE & TELEGRAPH APPARATUS - 3.2%
ADC Telecommunications, Inc. (a) 890 59,741
Research in Motion Ltd. (a) 675 21,727
-----------------
81,468
-----------------
WHOLESALE-PAPER & PAPER PRODUCTS - 2.5%
Staples, Inc. (a) 4,270 62,982
-----------------
TOTAL COMMON STOCKS (COST $1,790,567) 2,394,364
-----------------
PRINCIPAL
AMOUNT VALUE
Money Market Securities - 5.0%
Firstar Treasury Fund, 5.35% (b) (Cost $124,714) $ 124,714 124,714
-----------------
TOTAL INVESTMENTS - 100.3% (COST $1,915,281) 2,519,078
-----------------
LIABILITIES IN EXCESSS OF OTHER ASSETS - (.3)% (8,282)
-----------------
TOTAL NET ASSETS - 100.0% $ 2,510,796
=================
(a) Non-income producing
(b) Variable rate security; the coupon rate shown represents the rate at May 31, 2000.
(c) American Depository Receipt
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
TANAKA GROWTH FUND MAY 31, 2000
Statement of Assets & Liabilities
(UNAUDITED)
ASSETS
Investment in securities (cost $1,915,281) $ 2,519,078
Cash 27,000
Receivable for securities sold 91,113
Dividends receivable 219
Interest receivable 619
Receivable from Advisor for reimbursable expenses 46
-------------------
TOTAL ASSETS 2,638,075
LIABILITIES
Accrued investment advisory fee payable $ 2,157
Payable for securities purchased 119,582
Accrued expenses 5,540
-----------------
TOTAL LIABILITIES 127,279
-------------------
NET ASSETS $ 2,510,796
===================
Net Assets consist of:
Paid in capital $ 1,901,143
Undistributed net investment loss (16,992)
Undistributed net realized gains 22,848
Net unrealized appreciation on investments 603,797
-------------------
NET ASSETS $ 2,510,796
===================
NET ASSET VALUE
Class B:
Net Assets
Offering price per share ($1,056 / 62) $ 16.94
===================
Minimum redemption price per share ($16.94 x 95%) $ 16.09
===================
Class R:
Net Assets
Offering price and redemption price per share ($2,509,740 / 147,764) $ 16.98
===================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TANAKA GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2000 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME
Dividend income $ 696
Interest income 2,438
---------------
TOTAL INCOME 3,134
EXPENSES
Investment advisory fee $ 11,500
Administration fees 15,000
Transfer agent fees 11,205
Fund accounting fees 11,200
Legal fees 38,153
Audit fees 4,000
Custodian fees 2,279
Pricing and out of pocket expenses 2,687
Shareholder reports 82
-------------------
Total expenses before reimbursement 96,106
Reimbursed expenses (75,980)
-------------------
Total operating expenses 20,126
---------------
NET INVESTMENT INCOME (LOSS) (16,992)
---------------
REALIZED & UNREALIZED GAIN (LOSS)
Net realized gain on investment securities 22,848
Change in net unrealized appreciation (depreciation)
on investment securities 373,334
-------------------
Net gain on investment securities 396,182
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 379,190
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TANAKA GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
For the
six months For the period
ended December 30,
May 31, 2000 1998 to November
INCREASE (DECREASE) IN NET ASSETS (Unaudited) 30, 1999 (a)
----------------- -----------------
Operations
Net investment loss $ (16,992) $ (4,933)
Net realized gain on investment securities 22,848 4,664
Change in net unrealized appreciation 373,334 230,463
----------------- -----------------
Net increase in net assets resulting from operations 379,190 230,194
----------------- -----------------
SHARE TRANSACTIONS - CLASS B
Net proceeds from sale of shares 1,000 0
Shares redeemed 0 0
----------------- -----------------
1,000 0
SHARE TRANSACTIONS - CLASS R
Net proceeds from sale of shares 651,967 1,275,976
Shares redeemed (16,264) (11,267)
----------------- -----------------
635,703 1,264,709
NET INCREASE IN NET ASSETS RESULTING
FROM SHARE TRANSACTIONS 636,703 1,264,709
----------------- -----------------
TOTAL INCREASE IN NET ASSETS 1,015,893 1,494,903
----------------- -----------------
Net Assets
Beginning of period 1,494,903 0
----------------- -----------------
End of period [including accumulated undistributed net
investment loss of $(16,992) and $0, repectively] $ 2,510,796 $ 1,494,903
================= =================
(a) Commencement of operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TANAKA GROWTH FUND - CLASS B
FINANCIAL HIGHLIGHTS FOR THE PERIOD DECEMBER 31, 1999
(COMMENCEMENT OF OPERATIONS) THROUGH MAY 31, 2000 (UNAUDITED)
<S> <C>
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 16.03
----------------------
Income from investment operations
Net investment income (loss) (0.21)
Net realized and unrealized gain (loss) 1.12
----------------------
Total from investment operations 0.91
----------------------
Net asset value, end of period $ 16.94
======================
TOTAL RETURN (b) 5.68%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $1
Ratio of expenses to average net assets 2.50% (a)
Ratio of expenses to average net assets
before reimbursement 8.38% (a)
Ratio of net investment income (loss) to
average net assets (2.23)%(a)
Ratio of net investment income (loss) to
average net assets before reimbursement (8.10)%(a)
Portfolio turnover rate 26.22% (a)
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TANAKA GROWTH FUND - CLASS R
FINANCIAL HIGHLIGHTS
<S> <C> <C>
For the six For the
months ended period December 30,
May 31, 2000 1998 to November
(Unaudited) 30, 1999 (c)
--------------------- ---------------------
SELECTED PER SHARE DATA
Net asset value, beginning of period $ 13.05 $ 10.00
--------------------- ---------------------
Income from investment operations
Net investment income (loss) (0.13) (0.08)
Net realized and unrealized gain (loss) 4.06 3.13
--------------------- ---------------------
Total from investment operations 3.93 3.05
--------------------- ---------------------
Net asset value, end of period $ 16.98 $ 13.05
===================== =====================
TOTAL RETURN (b) 30.11% 30.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000) $2,510 $1,495
Ratio of expenses to average net assets 1.75% (a) 1.75% (a)
Ratio of expenses to average net assets
before reimbursement 8.38% (a) 13.89% (a)
Ratio of net investment income (loss) to
average net assets (1.48)%(a) (0.80)%(a)
Ratio of net investment income (loss) to
average net assets before reimbursement (8.11)%(a) (12.94)%(a)
Portfolio turnover rate 26.22% (a) 53.45% (a)
(a) Annualized
(b) For periods of less than a full year, total returns are not annualized.
(c) Commencement of operations.
</TABLE>
<PAGE>
TANAKA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000
(UNAUDITED)
NOTE 1. ORGANIZATION
TANAKA Growth Fund (the "Fund") was organized as a series of TANAKA Funds,
Inc., a Maryland corporation (the "Company") on November 5, 1998; the Fund
commenced operations on December 30, 1998. The Fund is registered under the
Investment Company Act of 1940, as amended, as a non-diversified open-end
management investment company. The Fund's investment objective is to provide
growth of capital. The Company is authorized to issue up to 250,000,000 shares
of common stock, par value $0.01 per share, of which it currently has allocated
150,000,000 shares to the Fund. The Board of Directors (the "Board") have
authorized that shares of the Fund may be offered in three classes: Class A,
Class B and Class R; only Class B and Class R shares of the Fund were
outstanding as of May 31, 2000.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements.
In valuing the Fund's assets, portfolio securities, including American
Depositary Receipts ("ADRs") and American Depositary Shares ("ADSs"), which are
traded on the Exchange, will be valued at the last sale price prior to the close
of regular trading on the Exchange, unless there are indications of
substantially different valuations. Lacking any sales, the security will be
valued at the last bid price prior to the close of regular trading on the
Exchange. ADRs and ADSs for which such a value cannot be readily determined on
any day will be valued at the closing price of the underlying security adjusted
for the exchange rate. In cases where securities are traded on more than one
exchange, the securities are valued on the exchange designated in accordance
with procedures approved by the Board of Directors of the Fund as the primary
market. Securities will be valued using quotations on the exchange and lacking
any sales, securities will be valued at the last reported bid price prior to the
Fund's valuation time, unless the Fund is aware of a material change in the
value prior to the time it values its securities.
Unlisted securities which are quoted on the National Market System of the
National Association of Securities Dealers, Inc. (the "NASD"), for which there
have been sales of such securities, shall be valued at the last sale price
reported on such system. If there are no such sales, the value shall be the high
or "inside" bid, which is the bid supplied by the NASD on its NASDAQ Screen for
such securities in the over-the-counter market. The value of such securities
quoted on the NASDAQ System, but not listed on the NASD's National Market
System, shall be valued at the high or "inside" bid. Unlisted securities
TANAKA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (UNAUDITED) - CONTINUED
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
which are not quoted on the NASDAQ System and for which the over-the-counter
market quotations are readily available will be valued at the current bid prices
for such securities in the over-the-counter market. Other unlisted securities
(and listed securities subject to restriction on sale) may be valued at their
fair value as determined in good faith by the Board of Directors.
The value of a security traded or dealt in upon an exchange may be valued
at what the Company's pricing agent determines is fair market value on the basis
of all available information, including the last determined value, if there was
no sale on a given day and the pricing agent determines that the last bid does
not represent the value of the security, or if such information is not
available. For example, the pricing agent may determine that the price of a
security listed on a foreign stock exchange that was fixed by reason of a limit
on the daily price change does not represent the fair market value of the
security. Similarly, the value of a security not traded or dealt in upon an
exchange may be valued at what the pricing agent determines is fair market value
if the pricing agent determines that the last sale does not represent the value
of the security, provided that such amount is not higher than the current bid
price.
Fixed-income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Advisor believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Advisor,
subject to review of the Board. Short-term investments in fixed-income
securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
The value of an illiquid security which is subject to legal or contractual
delays in or restrictions on resale by the Fund shall be the fair value thereof
as determined in accordance with procedures established by the Fund's Board, on
the basis of such relevant factors as the following: the cost of such security
to the Fund, the market price of unrestricted securities of the same class at
the time of purchase and subsequent changes in such market price, potential
expiration or release of the restrictions affecting such security, the existence
of any registration rights, the fact that the Fund may have to bear part or all
of the expense of registering such security, and any potential sale of such
security to another investor. The value of other property owned by the Fund
shall be determined in a manner, which, in the discretion of the pricing agent
TANAKA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (UNAUDITED) - CONTINUED
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
of the Fund, most fairly reflects fair market value of the property on such
date.
FEDERAL INCOME TAXES- The Fund intends to qualify each year as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended. By so
qualifying, the Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.
DIVIDENDS AND DISTRIBUTIONS- The Fund intends to comply with federal tax rules
regarding distribution of substantially all of its net investment income and
capital gains. These rules may cause multiple distributions during the course of
the year.
OTHER- The Fund follows industry practice and records security transactions on
the trade date. The specific identification method is used for determining gains
or losses for financial statements and income tax purposes. Dividend income is
recorded on the ex-dividend date and interest income is recorded on an accrual
basis. Discounts and premiums on securities purchased are amortized over the
life of the respective securities.
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund retains Tanaka Capital Management, Inc. (the "Advisor") to manage
the Fund's investments. The Advisor was organized as a Delaware corporation in
1986. Graham Y. Tanaka, portfolio manager and President of the Advisor, is
primarily responsible for the day-to-day management of the Fund's portfolio.
Under the terms of the management agreement, (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board. As compensation
for its management services, the Fund is obligated to pay the Advisor a fee
computed and accrued daily and paid monthly at an annual rate of 1.00% of the
average daily net assets of the Fund. For the six months ended May 31, 2000, the
Advisor received a fee of $11,500 from the Fund. The Advisor has contractually
agreed to limit the total expenses of the Fund (excluding interest, taxes,
brokerage commissions and extraordinary expenses) to an annual rate of 2.50% of
the average net assets of the Fund attributable to Class B shares, and 1.75% of
the average net assets of the Fund attributable to Class R shares until April 1,
2001. For the six months ended May 31, 2000, the Advisor reimbursed expenses of
$75,980.
TANAKA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (UNAUDITED) - CONTINUED
NOTE 3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
The Fund retains AmeriPrime Financial Services, Inc. (the "Administrator"),
a wholly owned subsidiary of Unified Financial Services, Inc., to manage the
Fund's business affairs and provide the Fund with administrative services,
including all regulatory reporting and necessary office equipment and personnel.
The Administrator receives a monthly fee from the Fund equal to an annual rate
of 0.10% of the Fund's assets under $50 million, 0.075% of the Fund's assets
from $50 million to $100 million, and 0.050% of the Fund's assets over $100
million (subject to a minimum fee of $2,500 per month). For the six months ended
May 31, 2000 the Administrator received fees of $15,000 from the Fund for
administrative services provided to the Fund.
The Fund retains Unified Fund Services, Inc. ("Unified"), a wholly owned
subsidiary of Unified Financial Services, Inc., to act as the Fund's transfer
agent and fund accountant. For its services as transfer agent, Unified receives
a monthly fee from the Fund of $1.30 per shareholder (subject to a minimum
monthly fee of $1,250 per class of shares). For the six months ended May 31,
2000, Unified received fees of $11,205 from the Fund for transfer agent services
provided to the Fund. For its services as fund accountant, Unified receives an
annual fee from the Fund equal to 0.050% of the Fund's assets up to $100
million, and 0.040% of the Fund's assets from $100 million to $300 million, and
0.030% of the Fund's assets over $300 million (subject to minimum fees of $1,750
per month). For the six months ended May 31, 2000, Unified received fees of
$11,200 from the Fund for fund accounting services provided to the Fund.
The Fund retains AmeriPrime Financial Securities, Inc. ("the Distributor"), a
wholly owned subsidiary of Unified Financial Services, Inc., to act as the
principal distributor of the Fund's shares. There were no payments made to the
Distributor for the six months ended May 31, 2000.
TANAKA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (UNAUDITED) - CONTINUED
NOTE 4. SHARE TRANSACTIONS
As of May 31, 2000, there were 150,000,000 authorized shares for the Fund.
Paid in capital at May 31, 2000 was $1,901,143.
Transactions in shares of Class B were as follows:
FOR THE PERIOD DECEMBER 31, 1999 (COMMENCEMENT OF
OPERATIONS) TO MAY 31, 2000
SHARES DOLLARS
Shares sold 62 $1,000
Shares redeemed 0 0
---- -------
62 $1,000
==== =======
Transactions in shares of Class R were as follows:
<TABLE>
<S> <C> <C> <C> <C>
FOR THE PERIOD DECEMBER 30, 1998
SIX MONTHS ENDED (COMMENCEMENT OF OPERATIONS) TO
MAY 31, 2000 (UNAUDITED) NOVEMBER 30, 1999
SHARES DOLLARS SHARES DOLLARS
Shares sold 34,068 $651,967 115,607 $1,275,976
Shares issued in
reinvestment of dividends 0 0 0 0
Shares redeemed (883) (16,264) (1,028) (11,267)
----- -------- ------- --------
33,185 $635,703 114,579 $1,264,709
====== ======== ======= =========
</TABLE>
TANAKA GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2000 (UNAUDITED) - CONTINUED
NOTE 5. INVESTMENTS
For the six months ended May 31, 2000, purchases and sales of investment
securities, other than short-term investments, aggregated $1,113,610 and
$379,858, respectively. As of May 31, 2000, the gross unrealized appreciation
for all securities totaled $763,666 and the gross unrealized depreciation for
all securities totaled $159,869 for a net unrealized appreciation of $603,797.
The aggregate cost of securities for federal income tax purposes at May 31, 2000
was $1,915,281.
NOTE 6. ESTIMATES
Preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 7. RELATED PARTY TRANSACTIONS
The Advisor is not a registered broker-dealer of securities and thus does
not receive commissions on trades made on behalf of the Fund. The beneficial
ownership, either directly or indirectly, of more than 25% of the voting
securities of a Fund creates a presumption of control of the Fund, under Section
2(a)(9) of the Investment Company Act of 1940. As of May 31, 2000, Graham Y.
Tanaka owned in aggregate 100% of the Fund's Class B shares. As of May 31, 2000,
Graham Y. Tanaka beneficially owned due to record ownership or power to vote or
direct the investment 50.58% of the Fund's Class R shares.
