Adhia Funds, Inc.
Adhia Twenty Fund - Semiannual Report
Dear Shareholder:
We are pleased to present this semi annual report for the Adhia Twenty Fund.
This report covers the six month period from January 1, 2000 through June 30,
2000. For this six month period, Adhia Twenty Fund has posted a gain of 1.55%
compared to a 0.27% return on the Standard and Poor's 500. The bust of "dot
com" companies has made investors pay more attention to traditional companies.
Our stock selection criteria are so stringent that we have avoided the "dot
com" bust in its entirety.
Winners:
The gain leaders for Adhia Twenty Fund were Oracle Corp. (ORCL) which went up
50% in the first six months of this year. Current explosion in E-commerce and
Internet has brought a whole new market for Oracle. This is one software
company which is racking up actual profits from the Internet boom. We had a
short-term position in Sybase (SYBS), a competitor to Oracle, in which we
gained 31% on investment. However, due to stiff competition from Oracle, we
believe Sybase would not be able to sustain its market momentum. So far we
have been proven right.
On the pharmaceutical end, Pfizer (PFE) went up 48% and a biotechnology
company Genzyme General (GENZ) gained 32% and Amgen (AMGN) showed a gain of
17% for the reporting period. Quicker approval of new drugs and solid pipeline
of new products should allow these three drug manufacturers to consistently
report higher revenues and profit. Also, the new initiatives by Washington to
include prescription drugs benefit to Medicare recipients will work out in
favor of drug companies in a long run.
One more candidate worthy of mention on our gainer list is Anheuser Busch
Companies (BUD), which is a new comer to our portfolio. We took the position
in this defensive stock at the correct time providing us a gain of 26% in a
very short period.
Losers:
We sold many of our dogs in first half of 2000. These include: Health South
Corporation (HRC), CompUSA (CPU), and Thomas & Betts Corporation (TNB). These
companies had consistently disappointed the market with lower revenues and
profits. Thus they did not fit our focus approach of investing. One of our
favorite stocks, Intuit (INTU), also sustained loss of 31% during the first
half of 2000. However, we believe this is a good buying opportunities on
Intuit because this company, with its financial software like Quicken,
QuickBooks and Turbo Tax, has penetrated market better than any of its
competitors. Intuit's Internet strategy and cross-selling of financial
services makes this company very attractive. Also, it has consistently
reported substantial growth in revenues and profits for last several years.
We will keep holding this quality stock with the price target of $65 in next
six months. We came late to party of QualComm (QCOM), market darling of the
year 1999. So far we have lost close to 57% of our investment in QualComm.
Fortunately, we had taken only a small position in the company.
Outlook for the next six months:
We believe that the US economy will continue to exhibit slower growth and the
Federal Reserve will stay on the side line till the Presidential election.
"Dot com" bust of the first half will make investors look for the companies
with profitability, strong balance sheets, and stability. These factors favor
the multinational companies, and cyclic sectors like industrial, chemicals and
consumer goods. Our fund will be looking to invest in companies that
represent these sectors. The pharmaceutical sector has shown buying
opportunities. We will continue to strive to target combination of growth
stocks with reasonable market multiples.
We appreciate your confidence over the past twelve months, and look forward
to your continued participation in Adhia Twenty Fund.
/S/ Hitesh P. Adhia
President
Adhia Funds, Inc.
Adhia Twenty Fund
Statement of Assets and Liabilities (unaudited)
As of June 30, 2000
ASSETS:
Investment in Securities $ 294,537.50
Cash at Fidelity Reserve / Bank 315,044.05
Dividend / Interest Receivable 130.69
Prepaid Insurance 212.00
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Total Assets $ 609,924.24
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LIABILITIES
Accrued Expense 2,388.31
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Total Liabilities 2,388.31
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NET ASSETS:
Net Assets (equivalent to $11.79 per share issued
based on 51,516.764 Shares of Capital
Stock Outstanding) (Note 5) 607,535.93
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Total Liabilities and Net Assets $ 609,924.24
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CALCULATION OF NET ASSETS
Offering and Redemption Price Per Share
($607,535.95 / 51,516.764 Shares Outstanding) $ 11.79
Attached Notes Are Integral Part of Financial Statements Page 3
Adhia Funds, Inc.
Adhia Twenty Fund
Statement of Operations (unaudited)
For the Six Months Ended June 30, 2000:
INCOME:
Dividend $1,339.00
Interest 5,711.80
Total Income $7,050.80
EXPENSES:
Director Fees 750.00
Licenses and Permits 355.00
Transfer Agent Services 2,410.04
Professional Fees 762.00
Other Expenses 339.36
Management Fees 2,483.00
Total Operating Expenses before 7,099.40
Less: Subsidized by Investment Advisors (2,483.00)
Net $4,616.40
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NET INVESTMENT INCOME/(LOSS) 2,434.40
NET REALIZED LOSS ON INVESTMENT (3,510.21)
NET INCREASE IN UNREALIZED APPRECIATION
ON INVESTMENT 4,532.96
NET GAIN ON INVESTMENT 1,022.75
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NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 3,457.15
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Attached Notes Are Integral Part of Financial Statements Page 4
Adhia Funds, Inc.
Adhia Twenty Fund
Statement of Changes in Net Assets
For the Year Ended December 31, 1999 and Six Months Ended June 30, 2000
June 30, 2000 Dec 31, 1999
(unaudited)
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Investment Income (Loss) - Net $2,434.40 (112.75)
Net Realized Gain (Loss) on Investments (3,510.21) 20,108.01
Change in Unrealized Appreciation
on Investments 4,532.96 28,232.75
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,457.15 48,228.01
PROCEEDS FROM SHARES ISSUED 311,726.00 152,000.00
PAYMENTS TO REDEEM SHARES (20,136.17)
TOTAL INCREASE 295,046.98 200,228.01
NET ASSETS AT THE BEGINNING OF THE PERIOD 312,488.95 112,260.94
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NET ASSETS AT THE END OF THE PERIOD $607,535.93 $312,488.95
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Attached Notes Are Integral Part of Financial Statements Page 5
Adhia Funds, Inc.
Adhia Twenty Fund
Schedule of Investments
As of June 30, 2000
Security Shares Cost Basis Market Value
Common Stocks
2.5% Banking
BANK AMERICA CORP 350 $18,382.35 $15,050.00
2.6% Communication and Equipment
A T & T CORP COM 100 5,283.70 3,181.25
CISCO SYSTEMS INC COM 200 5,189.95 12,712.50
GLOBAL TELESYS GROUP INC 2,000 24,529.90 24,125.00
QUALCOMM INC 100 14,002.45 6,000.00
3.7% Food, Beverage
ANHEUSER BUSCH COS INC 300 17,714.95 22,406.25
6.2% Software and Services
INTUIT 300 6,902.45 12,412.50
ORACLE CORP COM 300 2,576.22 25,218.75
8.0% Health Care
AMGEN INC COM 200 6,114.95 14,050.00
BOSTON SCIENTIFIC CORPORATION 400 9,154.90 8,775.00
GENZYME GENERAL CORPORATION 200 7,164.95 11,887.50
MCKESSON HBOC, INC 200 5,814.95 4,187.50
PFIZER INC 200 6,714.95 9,600.00
2.5% Retail
ALBERTSONS INC COM 200 9,179.90 6,650.00
OFFICEMAX INC COM 400 4,017.40 2,000.00
K MART CORP COM 1,000 11,079.90 6,812.50
4.1% Chemicals and Industrial
COOPER TIRE & RUBBER CO COM 1,400 19,907.35 15,575.00
DUPONT E I DE NEMOURS CO 400 19,414.95 17,500.00
INGERSOLL RAND CO 500 17,452.45 20,125.00
AIR PRODUCTS & CHEMICALS INC 300 8,564.95 9,243.75
2.8% Consumer Products
PROCTER & GAMBLE CO 300 16,814.95 17,025.00
4.9% Apparel
TOMMY HILFIGER CORP COM 4,000 28,944.90 30,000.00
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48.5% Total Investment in Securities $264,923.42 $294,537.50
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51.9% Fidelity Cash Reserve / Bank $315,044.05 $315,044.05
0.3% Other Assets (Liabilities) Net (2,045.62)
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100% Net Asset $579,967.47 $607,535.93
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Attached Notes Are Integral Part of Financial Statements Page 6
Adhia Funds, Inc.
Adhia Twenty Fund
Notes to Financial Statements
I Significant Accounting Policies:
The following is a summary of significant accounting polices of the Adhia
Twenty Fund (the "Fund"), a portfolio of the Adhia Funds, Inc. (the "Company")
which is an open-end non-diversified management investment company registered
under the Investment Company Act of 1940 (the "1940 Act"). The Company was
incorporated under the laws of Maryland on January 27, 1998, and the
Registration was effective January 1, 1999. The Fund's investment objective
is to seek capital appreciation through investment in an average of about
twenty different stocks.
(a) Each security is valued at the last sale price reported by the principal
security exchange on which the issue is traded. Securities for which quotations
are not readily available are valued at fair value as determined by the
investment adviser under the supervision of the Board of Directors.
Short-term investment are valued at amortized costs which approximates quoted
market value. For financial reporting purposes, investment transactions are
recorded on trade date. Cost amounts, as reported on the schedule of
investments, are substantially the same for Federal income tax purposes.
(b) Net realized gains and losses on common stock are computed on the
identified cost basis.
(c) Provision has not been made for Federal income taxes since the Fund has
elected to be taxed as a "regulated investment company" and intends to
distribute substantially all net investment company taxable income and net
capital gains to its shareholders and otherwise comply with the provisions of
the Internal Revenue Code applicable to a regulated investment company.
(d) Dividend income is recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
(f) Generally accepted accounting principles require that permanent differences
between income for financial reporting and tax purposes be reclassified in the
capital accounts.
(g) 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
disclosures 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 these estimates.
II Fund Advisor:
The Fund has an agreement with Adhia Investment Advisors, Inc.
(the "Advisor"), with whom certain officers and directors of Adhia Funds, Inc.
are affiliated, to furnish investment advisory services to the Fund.
Under the terms of this agreement, the Fund will pay the Advisor a monthly fee
based on the Fund's average daily net assets at the annual rate of 1.00%.
Under the investment advisory agreement, if the aggregate annual operating
expenses (including the investment advisory fee and the administration fee
but excluding interest, taxes, brokerage commissions and other costs incurred
in connection with the purchase or sale of portfolio securities and
extraordinary items) exceed 2 1/2% which is the lowest limitation imposed by
state securities administrators, the Advisor will reimburse the Fund for the
amount of such excess. For the period ended June 30, 2000, the Advisor waived
advisory fees in the amount of $ 2,483.
III Organization Costs:
Organizational costs and initial registration expenses are paid by the
sponsor and Advisor Adhia Investment Advisors, Inc.
IV. Investment Transactions:
For the period ended June 30, 2000, purchases and proceeds of sales of
investment securities were $223,466.70 and $72,404.57 respectively for common
stock.
V. Capital Stock:
Capital Stock, is composed of Common Stock 500,000,000 Shares Authorized and
51,516.76 issued at $.001 par value. Net Assets are composed of Capital
Stocks Investment Plus Accumulated Net Investment Income, Plus Accumulated
Realized Gain on Investments, Plus Change in Unrealized Appreciation of
Investments Net of Distributions to Stockholders.
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period as follows:
June 30,2000 1999 1998
Net assets value at beginning of the year $11.61 $9.70 $10.00
Income Loss From Operation:
Net investment Income (Loss) (a) 0.15 <2.26> <0.01>
Net realized gain (loss) (b) <0.09> 1.74 <0.03>
Net unrealized gain (loss) (b) 0.12 2.43 <0.26>
Net Assets value at end of year (c) $11.79 11.61 9.70
(a) This amount has been adjusted for changed in the average number of stocks
outstanding throughout the period.
(b) Computer using the number of shares outstanding at the beginning of the
period 26,909.21, 11,577.58 and 11,500 shares for 2000, 1999 and 1998
respectively.
(c) Computed using the number of shares outstanding at the end of the period
51,516.76, 26,909.21 and 11,577.58 for 2000, 1999 and 1998 respectively.
Adhia Funds, Inc.
Adhia Twenty Fund
Management Office
1311 N. Westshore Blvd., Suite 110
Tampa, FL 33607
Phone: (813) 289-8440
Fax: (813)289-8849
Board of Directors
Hitesh (John) P. Adhia
Dr. Thomas L. Wheelen
Pravin D. Patel
Anil Amlani
Investment Advisors
Adhia Investment Advisors, Inc.
1311 N. Westshore Blvd., Suite 110
Tampa, FL 33607
Phone: (813) 289-8440
Fax: (813) 289-8849
Transfer Agent and Dividend Disbursing Agent
Unified Fund Services, Inc.
431 N. Pennsylvania Street
Indianapolis, IN 46204 - 1897
Phone: (800) 627 8172
Fax: (317) 266 8756
Independent Auditors
Alan K. Geer, CPA, PA
7401 D Temple Terrace Highway
Temple Terrace, FL 33637
