Hughes Value Fund
741 Cox Road
Moorestown NJ 08057
January 7, 1999
Dear Shareholder:
I am pleased to present the first semi-annual report of the
Hughes Value Fund for the period July 29, 1998 through December
31, 1998.
The Hughes Value Fund's net asset value per share at inception on
July 29, 1998 was $10.00 as compared to $11.66 on December 31,
1998. After adjusting for dividend payments of $0.06 per share,
the Fund registered a return of 16.6% during the period.
Sincerely,
Charles J Hughes
President
<PAGE>
Hughes Value Fund
Schedule of Investments
December 31, 1998 (unaudited)
Shares/Principal Amount Market Value % of Assets
Cigarettes
96 Philip Morris Companies Inc. 5,136 4.38%
Computer Networks
68 Cisco Systems, Inc.* 6,311 5.39%
Department Stores
66 Wal-Mart Stores Inc. 5,375 4.59%
Eating and Drinking Places
70 Mcdonalds Corp 5,377 4.59%
Electric Housewares and Fans
68 General Electric Co. 6,936 5.92%
Federal and Federally Sponsored Credit Agencies
76 Fedl National Mortgage Assoc. 5,624 4.80%
Fire, Marine,and Casualty Insurance
140 Citicorp 6,956 5.94%
Life Insurance
80 Jeferson Pilot 6,000 5.12%
Lumber and Other Building Materials Dealers
80 Home Depot Inc. 4,895 4.18%
Medical, Dental, and Hospital Equipment and Supplies
58 Johnson & Johnson 4,865 4.15%
Nondeposit Trust Facilities
56 Morgan (J.P) & Co. Inc. 5,883 5.02%
Paint, Glass,and Wallpaper Stores
216 Sherwin Williams Co. Ohio 6,345 5.42%
Perfumes, Cosmetics, and Other Toilet Preparations
52 Procter & Gamble Co. 4,748 4.05%
Petroleum Refining
64 Exxon Corp. 4,680 3.99%
PharmaceuticalPreparations
34 Merck & Co. Inc. 5,015
86 Schering-Plough Corp. 4,752
--------
9,767 8.34%
Prepackaged Software
44 Microsoft Corp. * 6,102 5.21%
The acompanying notes are an integral part of the finanial statements.
<PAGE>
Semiconductorsand Related Devices
50 Intel Corp. 5,928 5.06%
State Commercial Banks
100 Wilmington Trust 6,163 5.26%
Telephone Communications, Except Radiotelephone
86 Bell Atlantic Corp. 4,558 3.89%
Telephone andTelegraph Apparatus
46 Lucent 5,057 4.32%
Cash and Equivalents
309 Fountain Square Treasury 309 0.26%
Total Investments 117,015 99.86%
Other Assets Less Liabilities 159 0.14%
Net Assets - Equivalent to $11.66
per share on 117,174 100.00%
* Non-Income Producing Securities.
The acompanying notes are an integral part of the finanial statements.
<PAGE>
Statement of Assets and Liabilites
December 31, 1998 (unaudited)
Assets:
Investment Securities at Market Value $117,015
(Identified Cost - 101,829)
Cash -
Receivables:
Dividends and Interest 133
---------
Total Assets 117,148
Liabilities
Payables:
Investment Securities Purchased -
Accrued Expenses -
---------
Total Liabilities -
Net Assets $117,148
Net Assets Consist of:
Capital Paid In 100,552
Undistributed Net Investment Income -
Accumulated Realized Gain (Loss)
on Investments - Net 1,410
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 15,186
---------
Net Assets, for 10,047 Shares Outstanding $117,148
Net Asset Value and Redemption Price
Per Share ($117,148/10,047 shares) 11.66
Offering Price Per Share 11.66
The acompanying notes are an integral part of the finanial statements.
<PAGE>
Statement of Operations
July 29 to
December 31, 1998
(unaudited)
Investment Income:
Dividends 102
Interest 450
------
Total Investment Income 552
Expenses
Management Fees (Note 2) 282
------
Total Expenses 282
Reimbursed Fees (282)
------
Total Expenses after Reimbursements -
Net Investment Income 552
Realized and Unrealized Gain
(Loss) on Investments:
Realized Gain (Loss) on Investments 1,410
Unrealized Gain (Loss) from Appreciation
(Depreciation) on Investments 15,186
Net Realized and Unrealized
Gain (Loss) on Investments 16,596
------
Net Increase (Decrease)
in Net Assets from Operations 17,148
The acompanying notes are an integral part of the finanial statements.
<PAGE>
Statement of Changes in Net Assets
(unaudited)
7/29/98
to
12/31/98
--------
From Operations:
Net Investment Income 552
Net Realized Gain (Loss) on Investments 1,410
Net Unrealized Appreciation (Depreciation) 15,186
-------
Increase (Decrease) in Net
Assets from Operations 17,148
From Distributions to Shareholders
Net Investment Income (552)
Net Realized Gain (Loss) from
Security Transactions 0
-------
Net Increase (Decrease) from Distributions (552)
From Capital Share Transactions:
Proceeds From Sale of 10,000 Shares 100,000
Net Asset Value of 47 Shares Issued
on Reinvestment of Dividends 552
Cost of 0 Shares Redeemed 0
-------
100,552
Net Increase in Net Assets 117,148
Net Assets at Beginning of Period
(including undistributed net investment
income of $0) 0
Net Assets at End of Period
(including undistributed net investment
income of $0) 117,148
The acompanying notes are an integral part of the finanial statements.
<PAGE>
Financial Highlights
Selected data for a share of common stock
outstanding throughout the period:
7/29/98
to
12/31/98
--------
Net Asset Value -
Beginning of Period 10.00
Net Investment Income 0.06
Net Gains or Losses on Securities
(realized and unrealized) 1.66
-------
Total from Investment Operations 1.72
Dividends
(from net investment income) (0.06)
Distributions (from capital gains) 0.00
Return of Capital 0.00
-------
Total Distributions (0.06)
Net Asset Value -
End of Period 11.66
Total Return 16.60%
Ratios/Supplemental Data
Net Assets - End of Period (Thousands) 117
Before reimbursments
Ratio of Expenses to Average Net Assets* 1.00%
Ratio of Net Income to Average Net Assets* 0.96%
After reimbursments
Ratio of Expenses to Average Net Assets* 0.00%
Ratio of Net Income to Average Net Assets* 1.96%
Portfolio Turnover Rate 46.12%
Average commission per share 0.23270
* Annualized
The acompanying notes are an integral part of the finanial statements.
<PAGE>
Hughes Value Fund
Notes to Financial Statements
December 31, 1998 (unaudited)
1.) SIGNIFICANT ACCOUNTING POLICIES
The Fund is an open-end management investment company, organized as a
Maryland Corporation in December 1997. The Fund is a diversified mutual
fund whose primary investment objective is growth of capital. The Fund
will seek to achieve its objective by investing primarily in the
securities of companies whose stock is traded on the New York Stock
Exchange ("NYSE"), the American Stock Exchange ("ASE") and the NASDAQ
over-the-counter market. There can be no assurance that the Fund's
objective will be achieved. Significant accounting policies of the Fund
are presented below:
SECURITY VALUATION:
The Fund intends to invest in a wide variety of equity and debt
securities. The investments in securities are carried at market value.
The market quotation used for common stocks, including those listed on
the NASDAQ National Market System, is the last sale price on the date on
which the valuation is made or, in the absence of sales, at the closing
bid price. Over-the-counter securities will be valued on the basis of
the bid price at the close of each business day. Short-term investments
are valued at amortized cost, which approximates market. Securities for
which market quotations are not readily available will be valued at fair
value as determined in good faith pursuant to procedures established by
the Board of Directors.
SECURITY TRANSACTION TIMING
Security transactions are recorded on the dates transactions are entered
into (the trade dates). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is
recorded as earned. The Fund uses the identified cost basis in
computing gain or loss on sale of investment securities. Discounts and
premiums on securities purchased are amortized over the life of the
respective securities.
INCOME TAXES:
It is the Fund's policy to distribute annually, prior to the end of the
calendar year, dividends sufficient to satisfy excise tax requirements
of the Internal Revenue Service. This Internal Revenue Service
requirement may cause an excess of distributions over the book year-end
accumulated income. In addition, it is the Fund's policy to distribute
annually, after the end of the fiscal year, any remaining net investment
income and net realized capital gains.
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.
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration
agreement with Hughes Investment Advisors LLC. The Investment Advisor
receives from the Fund as compensation for its services an annual fee of
1.0% on the Fund's net assets. Hughes Investment Advisors LLC receives
from the fund as compensation for its administrative services an annual
fee of 0.1% of the fund's net assets. Hughes Investment Advisors LLC has
agreed to be responsible for payment of all operation expenses of the
fund except for brokerage and commission expenses, and any extraordinary
and non-recurring expenses. From time to time, Hughes Investment
Advisors LLC may waive some or all of the fees. During the period
ending December 31, 1998 all management and administrative fees have
been waived.
<PAGE>
3.) RELATED PARTY TRANSACTIONS
Certain owners of Hughes Investment Advisors LLC are also owners and/or
directors of the Hughes Value Fund. These individuals may receive
benefits from any management and or administration fees paid to the
Advisor.
4.) CAPITAL STOCK AND DISTRIBUTION
At December 31, 1998 an indefinite number of shares of capital stock
($.10 par value) were authorized, and paid-in capital amounted to
$100,552. Transactions in common stock were as follows:
Shares sold 10,047
Shares issued to shareholders in
reinvestment of dividends 47
-------
10,047
Shares redeemed 0
-------
Net Increase 10,047
Shares Outstanding:
Beginning of Period 0
-------
End of Period 10,047
5.) PURCHASES AND SALES OF SECURITIES
During the period from inception to December 31, 1998, purchases and
sales of investment securities other than U.S. Government obligations
and short-term investments aggregated $148,029 and $47,920 respectively.
Purchases and sales of U.S. Government obligations aggregated $0 and $0
respectively.
6.) FINANCIAL INSTRUMENTS DISCLOSURE
There are no reportable financial instruments that have any off-balance
sheet risk as of December 31, 1998.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at
December 31, 1998 was the same as identified cost.
At December 31, 1998, the composition of unrealized appreciation (the
excess of value over tax cost) and depreciation (the excess of tax cost
over value) was as follows:
Appreciation (Depreciation) Net Appreciation (Depreciation)
15,362 (176) 15,186
