December 1, 2000
Dear Fellow Shareholders:
Thank you for investing in The Henssler Equity Fund ("The Fund"). We are pleased
to report The Fund's return for the six months ended October 30, 2000, was 3.99%
versus (1.03%) for the Standard & Poor's 500 Index (S&P 500). Year to date, or
January 1, 2000 through October 30, 2000, The Fund's return was 7.72% versus
(1.81%) for the S&P 500.
On an annualized basis, since inception June 10, 1998, The Fund has returned
14.61% versus 12.47% for the S&P 500.
The Fund continues to perform well among its peers. In the November 2000 edition
of The Wall Street Journal mutual fund section, Lipper, Inc. (Lipper) ranked The
Fund as a Large Cap Value Fund. The Fund was rated "A" by Lipper for its
performance during the past year ended October 30, 2000. The ranking compares
performance among funds with the same investment objectives. Approximately 200
funds were classified as Large Cap Value funds. The "A" ranking places The Fund
in the top 20% of its peers. Of course, we caution investors that past
performance is no guarantee of future results.
As we explained in the letter in our annual report six months ago, our long-term
investment strategy has been to overweight our positions in the Technology,
Health Care and Financial sectors, versus the S&P 500, due to their long-term
prospects for above average growth. During the past year when tech stocks "went
through the roof," and comprised as much as 35% of the S&P 500, we felt that
prices were so high that we should be underweighted. As of November 27, 2000, we
were under weighted in the Technology sector, approximately 19.5% invested in
tech stocks, compared to 25.3% for the S&P 500.
In the Technology sector, The Fund owns companies such as Intel, Microsoft,
Dell, Applied Materials, Cisco Systems, Sun Microsystems, ADC
Telecommunications, and Oracle. In September, we added Texas Instruments (TXN)
to The Fund. After its subsequent fall from its 52 week high of almost $100, we
purchased this stock in the mid-$40's. Texas Instruments is a global
semiconductor company and a leading designer and supplier of digital signal
processing solutions.
Since our annual report, The Fund also has positions in Bank of America,
Illinois Tool Works, and National Service Industries.
After a decrease in stock price during November, we increased The Fund's
positions in Applied Materials, Home Depot, ADC Telecommunications, and Target.
<PAGE>
December 1, 2000
Page Two
Over the last six months, we eliminated The Fund's positions in Best Foods,
Computer Associates, and Watson Pharmaceuticals.
Looking to the future, we intend to continue our focus on undervalued,
financially strong companies. When the prices are reasonable, during times of
volatility and economic uncertainty, our strategy is to invest in the market
leaders. We have embraced and are committed to follow this philosophy for The
Fund.
If you would like information regarding The Fund, we encourage you to visit our
website at www.henssler.com. You can review The Henssler Equity Fund link as
often as you like. Through our website, we provide monthly details on our top 10
holdings, industry allocation, and other statistics.
On behalf of our board of directors and management team, we would like to thank
you for the trust and confidence you have shown by using The Henssler Equity
Fund as your investment vehicle.
Yours very truly,
Gene W. Henssler, Ph.D. Theodore L. Parrish
Co-Manager Co-Manager
This report is intended for The Fund's shareholders. It may not be distributed
to prospective investors unless it is preceded or accompanied by the current
fund prospectus.
<PAGE>
THE HENSSLER EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) OCTOBER 31, 2000
--------------------------------------------------------------------------------
Shares Value
-------- ------------
COMMON STOCK -- 95.63%
BASIC MATERIALS -- 3.98%
BUILDING AND CONSTRUCTION PRODUCTS
Vulcan Materials Co. 10,035 $ 421,470
------------
BUILDING - MAINTENANCE & SERVICE
Ecolab, Inc. 7,100 278,231
------------
FERTILIZERS
Potash Corporation of Saskatchewan, Inc. 4,650 276,094
------------
TOTAL BASIC MATERIALS 975,795
------------
CAPITAL GOODS -- 5.76%
AUTO-MEDIUM & HEAVY DUTY TRUCKS
Paccar, Inc. 10,350 435,347
------------
DIVERSIFIED MANUFACTURING
General Electric Co. 9,635 528,118
Illinois Tool Works, Inc. 4,300 238,919
General Electric Co. 10,150 207,441
------------
974,478
------------
TOTAL CAPITAL GOODS 1,409,825
------------
COMMUNICATION SERVICES -- 4.56%
TELECOMMUNICATION SERVICES
Vodafone Airtouch PLC ADR 11,225 477,764
------------
TELEPHONE-INTEGRATED
CenturyTel, Inc. 9,672 372,372
SBC Communications, Inc. 4,600 265,362
------------
637,734
------------
TOTAL COMMUNICATION SERVICES 1,115,498
------------
CONSUMER CYCLICALS -- 4.48%
RETAIL-APPAREL/SHOES
Ross Stores, Inc. 17,270 227,748
------------
RETAIL-BUILDING PRODUCTS
Home Depot, Inc. 8,270 355,610
------------
RETAIL-MAJOR DEPARTMENT STORES
Target Corp. 18,570 512,996
------------
TOTAL CONSUMER CYCLICALS 1,096,354
------------
CONSUMER STAPLES -- 19.20%
BEVERAGES-NON-ALCOHOLIC
Pepsico, Inc. 21,575 1,045,039
------------
<PAGE>
THE HENSSLER EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) OCTOBER 31, 2000
--------------------------------------------------------------------------------
Shares Value
-------- ------------
BREWERY
Anheuser-Busch Companies, Inc. 12,770 584,228
------------
COSMETICS & TOILETRIES
Kimberly Clark Corp. 8,335 550,110
Procter & Gamble Co. 5,650 403,622
------------
953,732
------------
FOOD-WHOLESALE/DISTRIBUTION
Sysco Corp. 13,125 684,961
------------
MEDICAL-WHOLESALE DRUG DISTRIBUTION
Cardinal Health, Inc. 8,500 805,375
------------
MULTIMEDIA
The Walt Disney Corp.* 10,050 359,916
------------
RETAIL-DRUG STORES
Walgreen Co. 5,870 267,819
------------
TOTAL CONSUMER STAPLES 4,701,070
------------
ENERGY -- 7.21%
OIL COMPANY-INTEGRATED
Exxon/Mobil Corp. 6,607 589,262
Repsol SA ADR 13,285 211,730
Royal Dutch Petroleum Co. ADR 6,580 390,687
------------
1,191,679
------------
OIL-FIELD SERVICES
Halliburton Co. 4,900 181,606
Schlumberger, Ltd. 5,150 392,044
------------
573,650
------------
TOTAL ENERGY 1,765,329
------------
FINANCIALS -- 18.48%
Commercial Banks-Southern US
Charter One Financial, Inc. 16,537 379,317
Southtrust Corp. 9,500 307,563
------------
686,880
------------
FINANCE-CREDIT CARD
MBNA Corp. 21,742 816,684
------------
FINANCE-MORTGAGE LOAN/BANKER
Fannie Mae 10,030 772,310
------------
INSURANCE-LIFE/HEALTH
Jefferson Pilot Corp. 7,275 500,156
------------
<PAGE>
THE HENSSLER EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) OCTOBER 31, 2000
--------------------------------------------------------------------------------
Shares Value
-------- ------------
INSURANCE-MULTI-LINE
American International Group, Inc. 5,309 520,282
------------
INVESTMENT MANAGEMENT/ADVISORY SERVICES
T. Rowe Price Associates, Inc. 6,500 304,281
------------
MONEY CENTER BANKS
Bank of America Corp. 9,400 451,788
J. P. Morgan & Co., Inc. 2,845 470,848
------------
922,636
------------
TOTAL FINANCIALS 4,523,229
------------
HEALTHCARE -- 16.11%
MEDICAL-BIOMEDICAL/GENES
Amgen, Inc.* 4,250 246,234
------------
MEDICAL- DRUGS
Abbott Laboratories 6,985 368,895
Bristol-Myers Squibb Co. 11,615 707,789
Merck & Co. 6,715 603,930
Pfizer, Inc. 8,450 364,934
Schering Plough Corp. 13,420 693,646
------------
2,739,194
------------
MEDICAL INSTRUMENTS
Medtronic, Inc. 6,900 374,756
------------
MEDICAL PRODUCTS
Johnson & Johnson 6,335 583,612
------------
TOTAL HEALTHCARE 3,943,796
------------
TECHNOLOGY -- 15.85%
COMMERCIAL SERVICES-FINANCE
Equifax, Inc. 16,880 582,360
------------
COMPUTER SOFTWARE
Microsoft Corp.* 6,500 447,688
------------
COMPUTER-MICRO
Sun Microsystems, Inc.* 4,650 515,569
------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS
Applied Materials, Inc.* 13,200 701,250
Intel Corp. 9,140 411,300
Texas Instruments, Inc. 3,600 176,625
------------
1,289,175
------------
ENTERPRISE SOFTWARE/SERVICE
Oracle Corp.* 7,360 242,880
------------
NETWORKING PRODUCTS
Cisco Systems, Inc.* 5,400 290,925
------------
<PAGE>
THE HENSSLER EQUITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) OCTOBER 31, 2000
--------------------------------------------------------------------------------
Shares Value
-------- ------------
TELECOMMUNICATION EQUIPMENT
ADC Telecommunications, Inc.* 24,000 513,000
------------
TOTAL TECHNOLOGY 3,881,597
------------
TOTAL COMMON STOCK (COST $18,454,769) 23,412,493
------------
OTHER INVESTMENTS -- 3.42%
iShares Dow Jones U. S. Telecommunications Sector
SPDR Fund 8,000 413,500
Technology Select Sector SPDR Fund 9,665 422,542
------------
(COST $853,037) 836,042
------------
REPURCHASE AGREEMENTS -- 0.96%
Fifth Third Bank, 5.95%, dated 10/31/00, due
11/01/00, repurchase price $235,708
(collateralized by FGCI Pool #E00527,
6.50%, due 01/01/13, market value $240,382
(COST $235,669) 235,669 235,669
------------
TOTAL INVESTMENTS (COST $19,543,475) -- 100.01% 24,484,204
LIABILITIES IN EXCESS OF OTHER ASSETS, NET -- (.01)% (2,875)
------------
NET ASSETS -- 100% $ 24,481,329
============
* Non-income producing investment.
ADR - American Depository Receipt
Cost for federal income tax at October 31, 2000 was
$19,543,475 and net unrealized appreciation
consisted of:
Gross unrealized appreciation $ 5,301,788
Gross unrealized depreciation (361,059)
------------
Net unrealized appreciation $ 4,940,729
------------
See notes to financial statements.
<PAGE>
THE HENSSLER EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) OCTOBER 31, 2000
--------------------------------------------------------------------------------
ASSETS:
Investments, at market (identified cost $19,543,475) $ 24,484,204
Receivables:
Dividends and interest 16,436
Fund shares sold 4,911
------------
Total assets 24,505,551
------------
LIABILITIES:
Payables:
Fund shares redeemed 437
Due to advisor 23,785
------------
Total liabilities 24,222
------------
NET ASSETS $ 24,481,329
============
NET ASSETS CONSIST OF:
Common stock $ 177
Additional capital paid - in 19,617,076
Undistributed net investment income 1,490
Accumulated realized losses on investments (78,143)
Net unrealized gain on investments 4,940,729
------------
Net Assets, for 1,771,726 shares outstanding $ 24,481,329
============
Net Asset Value, offering and redemption price per share $ 13.82
============
See notes to financial statements.
<PAGE>
THE HENSSLER EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 11,106
Dividends 130,912
------------
Total investment income 142,018
------------
EXPENSES:
Investment advisory fees 58,553
Administration fee 81,975
------------
Total expenses 140,528
------------
Net investment income 1,490
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (86,720)
Net change in unrealized appreciation on investments 974,724
------------
Net gain on investments 888,004
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 889,494
============
See notes to financial statements.
<PAGE>
THE HENSSLER EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
OCTOBER 31, 2000 YEAR ENDED
(UNAUDITED) APRIL 30, 2000
------------ ------------
Operations:
<S> <C> <C>
Net investment income $ 1,490 19,266
Net realized gain on investments (86,720) 17,744
Net change in unrealized appreciation on investments 974,724 2,401,997
------------ ------------
Net increase in net assets resulting from operations 889,494 2,439,007
------------ ------------
Distributions to shareholders from:
Net investment income -- (28,434)
Net realized gains -- (1,927)
------------ ------------
-- (30,361)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold 3,578,073 9,783,270
Proceeds from shares issued to holders in
reinvestment of dividends (2,106,119) 29,758
Cost of shares redeemed -- (5,781,663)
------------ ------------
Increase in net assets from Fund share transactions 1,471,954 4,031,365
------------ ------------
Increase in net assets 2,361,448 6,440,011
NET ASSETS:
Beginning of period 22,119,881 15,679,870
------------ ------------
End of period (including accumulated net investment
income of $1,490 and $0, respectively) $ 24,481,329 22,119,881
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
THE HENSSLER EQUITY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The table below sets forth financial data for one share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED FOR THE YEAR FOR THE PERIOD
OCTOBER 31, 2000 ENDED ENDED
(UNAUDITED) APRIL 30, 2000 APRIL 30, 1999*
------------ ------------ ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 13.29 $ 11.74 $ 10.00
------------ ------------ ------------
Income From Investment Operations:
Net investment income -- 0.01 0.02
Net gains on securities (both realized and
unrealized) 0.53 1.56 1.74
------------ ------------ ------------
Total from investment operations 0.53 1.57 1.76
------------ ------------ ------------
Distributions:
Net investment income -- (0.02) (0.02)
------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD $ 13.82 $ 13.29 $ 11.74
============ ============ ============
TOTAL RETURN 3.99% 13.37% 17.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000s) $ 24,481 $ 22,120 $ 15,680
Ratio of expenses to average net assets 1.20%1 1.20% 1.20%1
Ratio of net investment income to
average net assets 0.01%1 0.10% 0.17%1
Portfolio turnover rate 22% 58% 14%
</TABLE>
* The Henssler Equity Fund commenced operations on June 10, 1998.
1 Annualized
See notes to financial statements.
<PAGE>
THE HENSSLER EQUITY FUND
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Henssler Equity Fund (the "Company") was incorporated under the laws of
the state of Maryland on February 12, 1998, and consists solely of The Henssler
Equity Fund (the "Fund"). The Company is registered as a no-load, open-end
diversified management investment company of the series type under the
Investment Company Act of 1940 (the "1940 Act"). The Company has an authorized
capital of 100,000,000 shares, classified as shares of common stock with a par
value of $.0001 per share. The Fund's investment strategy is to emphasize
long-term capital appreciation and safety of principal. The Fund became
effective with the SEC on June 8, 1998 and commenced operations on June 10,
1998.
The costs incurred in connection with the organization, initial
registration and public offering of shares have been paid by Henssler Asset
Management, LLC (the "Advisor"). Accordingly, no organization costs have been
recorded by the Fund.
The following is a summary of significant accounting policies consistently
followed by the Fund.
a) Investment Valuation--Common stocks and other equity-type securities listed
on a securities exchange are valued at the last quoted sales price on the
day of the valuation. Price information on listed stocks is taken from the
exchange where the security is primarily traded. Securities that are listed
on an exchange but which are not rated on the valuation date are valued at
the most recent bid prices. Other assets and securities for which no
quotations are readily available are valued at fair value as determined in
good faith by the Investment manager under the supervision of the Board of
Directors. Short-term instruments (those with remaining maturities of 60
days or less) are valued at amortized cost, which approximates fair market
value.
b) Repurchase agreements--In connection with transactions in repurchase
agreements, it is the Funds policy that its custodian take possession of
the underlying collateral securities, the fair market value which exceeds
the principal amount of the repurchase transaction, including accrued
interest, at all times. If the seller defaults, and the fair market value
of the collateral declines, realization of the collateral by the Fund may
be delayed or limited.
c) Federal Income Taxes--No provision for federal income taxes has been made
since the Fund has complied to date with the provision of the Internal
Revenue Code applicable to regulated investment companies and intends to so
comply in the future and to distribute substantially all of its net
investment income and realized capital gains in order to relieve the Fund
from all federal income taxes.
d) 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. Income and
<PAGE>
THE HENSSLER EQUITY FUND
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
capital gains distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting
principles.
e) 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.
f) Other--Investment and shareholder transactions are recorded on 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 or as soon as information is available to the Fund, and interest
income is recognized on an accrual basis.
2. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Fund were as follows:
PERIOD ENDED YEAR ENDED
OCTOBER 31, 2000 APRIL 30, 2000
---------------- --------------
Sold ............................... 263,542 811,641
Reinvested ......................... -- 2,320
Redeemed ........................... (156,200) (484,957)
------------ ------------
Net Increase ....................... 107,342 329,004
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of investments, excluding short-term
investments, by the Fund for the period ended October 31, 2000, were as follows:
Purchases: $ 6,657,805
Sales: 5,110,821
------------
4. ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
The Fund has entered into a Management Agreement with Henssler Asset
Management, LLC (the "Advisor") to provide investment management services to the
Fund. Pursuant to the Advisory Agreement, the Advisor is entitled to receive a
fee, calculated daily and payable monthly at the annual rate of 0.50% as applied
to the Fund's daily net assets. For the period ended October 31, 2000, the
Advisor received advisory fees of $58,553.
<PAGE>
THE HENSSLER EQUITY FUND
--------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
OCTOBER 31, 2000
4. ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
(CONTINUED)
The Fund has entered into an Operating Services Agreement (the "Servicing
Agreement") with the Advisor to provide or arrange for day-to-day operational
services to the Fund. Pursuant to the Servicing Agreement, the Advisor is
entitled to receive a fee, calculated daily and payable monthly at the annual
rate of 0.70% as applied to the Fund's daily net assets. For the period ended
October 31, 2000, the Advisor received fees of $81,975.
The Fund and the Advisor have entered into an Investment Company Services
Agreement (the "ICSA") with Declaration Service Company to provide day-to-day
operational services to the Fund including, but not limited to, accounting,
administrative, transfer agent, dividend disbursing, registrar and recordkeeping
services.
The Fund and the Advisor have entered into a Distribution Agreement with
Declaration Distributors, Inc. to provide distribution services to the Fund.
Declaration Distributors, Inc. serves as underwriter/distributor of the Fund.
Certain directors and officers of the Fund are directors and officers of
the Advisor.
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 October 31,
2000, Charles Schwab & Co., owned of record in aggregate more than 70% of the
Henssler Equity Fund.
5. REVOLVING LINE OF CREDIT
Revolving Credit Agreement--The Fund has a $5,000,000 Revolving Credit
Agreement with Fifth Third Bank; Borrowings under this arrangement bear interest
at the Overnight Funds Rate in effect on the day the loan is made. The Overnight
Funds Rate means the rate of interest on overnight funds which the Bank is
offering to other borrowers and potential borrowers of comparable financial
condition to borrower on the business day a loan is made, pursuant to this
agreement. As of October 31, 2000 there were no outstanding balances.
