DUNHILL INVESTMENT TRUST
REGIONAL OPPORTUNITY FUND:
OHIO, INDIANA, KENTUCKY
FINANCIAL STATEMENTS
FEBRUARY 29, 2000
[LOGO] BERGE & COMPANY LTD
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
[LOGO] REGIONAL
OPPORTUNITY
FUND
- --------------------------------------------------------------------------------
Ohio, Indiana, Kentucky
April 28, 2000
Dear Fellow Shareholder:
I am pleased to present to you another year of above average returns. During the
past year the Fund was awarded the highest rating of "5 Stars" from Morningstar,
the leader in mutual fund analysis. Additionally, Mutual Fund magazine, the
premier mutual fund publication, also awarded its highest rating of "5 Stars"
and named the Fund as one of the "Top 50" mutual funds to own for 2000. On Feb.
29, 2000, the Regional Opportunity Fund ended its fiscal year with a total
return of 34.62 %, as compared to the return of the S&P 500 Index of 11.73%. The
Fund's ability to nearly triple the S&P was primarily due to active management
which allowed us to sell at highs and take advantage of buying during the market
down periods.
The market had another good year in 1999, pulling back in certain sectors during
the 2nd and 3rd quarters before making another end of year run. We remain
bullish on the overall outlook for 2000 but cautious of certain sectors. Strong
sector growth trends in Bio-technology, Communications and Healthcare will
remain firmly in place. Expect volatility, particularly in emerging technology
stocks with negative or no earnings.
Our strategy remains the same this year as last using a top down approach to
stock selection, first identifying trends that will effect the market, then
focusing on industries that will benefit from these trends. Finally, stocks are
selected of companies within those industries that meet the investment criteria
of unit sales, earnings and revenue.
Despite so much to be positive about, there are those who liken the market's
movement to that of an ocean tide. As stock prices increase, so does their
nervousness, albeit often untied to any tangible fundamental outlook virtually
impossible to alter overnight. Nevertheless, many focus on predicting its short
term direction, rather than on understanding the fundamentals of the particular
companies in which they are invested. As an investor watching the daily market
moves will cause nothing but anxiety, and those who overreact are missing the
fundamentals of investing, "timing does not make money, time makes money."
As far as investing is concerned, little has changed since the beginning of
time. It is still about doing your homework with an eye toward the future,
attempting to understand through direct contact with companies, their customers,
competitors, and suppliers how things like new products and services will affect
their businesses, and in turn about creating one investment opinion, your own.
With today's technology and information access and the hundreds of contacts that
we make on companies in which we have interest, we are equipped better to
anticipate the future capabilities of these companies, but also causes us to
understand just how are large our current opportunity really is.
Thank you all for making 1999 a success, and we look forward to serving you in
the future.
Sincerely,
/s/ Jasen M. Snelling
Jasen M. Snelling,
President
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<CAPTION>
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Shareholder Sevices: Fund Advisor:
Dunhill Fund Management 877-624-6465 CityFund Advisory, Inc.
700 West Pete Rose Way, Suite 127 Shareholder Services, Fund Advisor P.O. Box 54944
Cincinnati, Ohio 45203 and 24-hour NAV updates Cincinnati, Ohio 45254-0944
</TABLE>
<PAGE>
REGIONAL OPPORTUNITY FUND:
OHIO, INDIANA, KENTUCKY (CLASS B)
Performance Update - $10,000 Initial Investment
For the period from July 24, 1996 (commencement of operations) to
February 29, 2000
[GRAPHIC OMITTED]
--------------------------------------
Regional
Opportunity
Fund S&P 500
(Class B) Index
--------- -----
Jul-96 $10,000 $10,000
Sep-96 $11,444 $11,010
Dec-96 $11,126 $11,928
Mar-97 $11,036 $12,248
Jun-97 $12,394 $14,386
Sep-97 $13,919 $15,464
Dec-97 $13,731 $15,908
Mar-98 $15,554 $18,227
Jun-98 $16,109 $18,725
Sep-98 $15,812 $16,862
Dec-98 $21,260 $20,454
Mar-99 $24,817 $21,472
Jun-99 $23,291 $22,986
Sep-99 $22,142 $21,549
Dec-99 $27,903 $24,756
Feb-00 $29,368 $23,023
--------------------------------------
Past performance does not predict future performance.
This graph depicts the performance of the Class B Shares of the Regional
Opportunity Fund versus the S&P 500 Index. It is important to note that the
Regional Opportunity Fund is a professionally managed mutual fund while the
index is not available for investment and is unmanaged. The comparison is shown
for illustrative purposes only.
Average Annual Total Returns
(as of February 29, 2000)
----------------------------
One Year 30.62%
Since inception
(July 24, 1996) 34.82%
----------------------------
The graph assumes an initial $10,000 investment on July 24, 1996. All dividends
and distributions are reinvested.
<PAGE>
[LOGO] BERGE & COMPANY LTD 20 West Ninth Street
CERTIFIED PUBLIC ACCOUNTANTS Cincinnati, Ohio 45202
(513) 651-3827
INDEPENDENT AUDITORS REPORT
To the Shareholders and
Board of Trustees
Dunhill Investment Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Regional Opportunity Fund: Ohio, Indiana,
Kentucky (the Fund), a series of the Dunhill Investment Trust, as of February
29, 2000, and the related statement of operations for the year then ended, the
statement of changes in net assets and financial highlights for the two years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the period from the first public offering
to shareholders (July 24, 1996) through February 28, 1997 and the year ended
February 28, 1998, were audited by other auditors whose report dated March 27,
1998, expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 29, 2000, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Regional Opportunity Fund: Ohio, Indiana, Kentucky as of February 29, 2000, the
results of its operations for the year then ended, and the changes in its net
assets and financial highlights for each of the two years in the period then
ended in conformity with generally accepted accounting principles.
/s/ Berge & Company LTD
Berge & Company LTD
Cincinnati, Ohio
April 7, 2000
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2000
ASSETS
Investments in common stocks, at value (Cost $7,451,018) $12,882,436
Investment in repurchase agreements 731,571
Dividends and interest receivable 2,734
Prepaid expenses 3,753
Receivable from fund manager 12,632
-----------
Total assets 13,633,126
LIABILITIES
Accrued expenses 9,952
-----------
NET ASSETS $13,623,174
===========
NET ASSETS CONSIST OF
Paid in capital $ 7,845,903
Accumulated net realized gains from security transactions 345,853
Net unrealized appreciation of securities 5,431,418
-----------
NET ASSETS $13,623,174
===========
CLASS B SHARES:
Net assets attributable to Class B shares $13,539,836
===========
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 533,116
===========
Net asset value and offering price per share* $ 25.40
===========
CLASS C SHARES:
Net assets attributable to Class C shares $ 83,338
===========
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 3,281
===========
Net asset value and offering price per share* $ 25.40
===========
*Redemption price per share varies by length of time shares are held.
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 2000
Shares Value
------ -----
COMMON STOCK - 94.5%
AUTO/TRUCK PARTS - 0.3%
2,000 Lear Seating Corporation (a) $ 42,250
COMMUNICATIONS - 6.1%
1,000 Aware, Inc. (a) 63,000
6,000 Broadwing, Inc. 178,125
500 Comverse Technology, Inc. (a) 98,437
2,000 Emmis Broadcasting (a) 73,000
3,000 Lucent Technologies 178,500
200 Nextel Communications, Inc. (a) 27,263
600 Qwest Communications International (a) 27,825
200 Sprint Corp. (FON Group) 12,200
400 Sprint Corp. (PCS Group) (a) 20,700
600 Tellabs, Inc. (a) 28,800
2,500 Western Wireless Co. Class A (a) 121,250
------------
829,100
COMPUTERS & INFORMATION - 21.1%
7,000 Dell Computer Corp. (a) 285,688
13,000 EMC Corp. (a) 1,547,000
7,700 Lexmark International, Inc. Class A (a) 918,225
150 Veritas Software Co. (a) 29,681
3,000 Miami Computer Supply Company (a) 98,250
------------
2,878,844
COMPUTER SERVICES - 1.7%
600 Check Point Software Technology (a) 122,363
200 Sapient Corp. (a) 14,300
1,000 Checkfree Holdings Corp. (a) 87,937
------------
224,600
CONGLOMERATES - 2.1%
2,200 General Electric Co. 290,813
CONSULTING SERVICES - 0.3%
1,000 USWeb Corp. (a) 38,875
DIVERSIFIED MANUFACTURING - 1.1%
4,000 Tyco International, Inc. 151,750
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 29, 2000
Shares Value
------ -----
ELECTRONIC COMPONENTS - 1.7%
3,000 CTS Corp. $ 193,500
2,000 Universal Electronics, Inc. (a) 39,500
------------
233,000
FIBER OPTICS - 0.8%
400 JDS Uniphase Corp. (a) 105,500
FILTRATION PRODUCTS - 0.1%
1,000 Scott Technologies, Inc.(a) 19,250
FOOD RETAILERS - 0.5%
4,000 Kroger Company (a) 59,500
GAMBLING (NON-HOTEL) - 0.3%
4,000 Argosy Gaming Company (a) 42,250
HOUSEHOLD PRODUCTS, NONDURABLE - 2.5%
3,860 The Procter & Gamble Co. 339,680
INDUSTRIAL & COMMERCIAL SERVICES - 0.9%
3,000 Convergys Corp. (a) 115,500
INTERNET CONTENT - 1.3%
1,400 Cnet Corp. (a) 93,625
1,000 Go2Net (a) 87,000
------------
180,625
INTERNET SOFTWARE - 0.6%
300 Broadvision, Inc. (a) 75,769
400 Earthlink, Inc. (a) 9,950
------------
85,719
MEDICAL SUPPLIES - 8.3%
7,000 Biomet, Inc. 231,000
4,000 Amgen, Inc. (a) 272,750
2,000 Genzyme (a) 114,875
7,600 Guidant Corp. (a) 512,050
------------
1,130,675
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 29, 2000
Shares Value
------ -----
MOTORCYCLES/MOTOR SCOOTERS - 0.5%
1,000 Harley-Davidson, Inc. $ 68,125
PHARMACEUTICALS - 9.1%
4,000 Biogen, Inc. (a) 431,750
3,700 Eli Lilly & Co. 219,919
2,800 Johnson & Johnson 200,900
1,000 Medimune, Inc. (a) 198,500
2,016 Priority Healthcare, Class B (a) 96,768
2,800 Pfizer, Inc. 89,950
------------
1,237,787
POWER (INDEPENDENT) - 1.3%
2,000 Calpine Corp. (a) 183,000
REGIONAL BANKS - 1.9%
500 Bank One Corp. 12,906
875 Fifth Third Bancorp 45,554
10,865 Firstar Corp. 193,533
------------
251,993
RETAILERS, APPAREL - 0.2%
1,050 Intimate Brands, Inc. 34,322
RETAILERS, DISCOUNT - 0.7%
2,000 Wal-Mart Stores, Inc. 97,375
SEMICONDUCTOR & RELATED - 10.3%
10,300 Conexant Systems, Inc. (a) 1,011,975
2,000 Intel Corp. 226,000
1,000 Texas Instruments, Inc. 166,500
------------
1,404,475
SOFTWARE & PROCESSING - 19.6%
9,600 America Online, Inc. (a) 566,400
1,000 At Home Corp. (a) 34,313
10,550 Cisco Systems, Inc. (a) 1,394,578
7,500 Microsoft Corp. (a) 670,312
------------
2,665,603
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 29, 2000
Shares Value
------ -----
TOYS - 0.0%
300 Jakks Pacific, Inc. (a) $ 4,950
TRANSPORTATION SERVICES - 1.2%
3,000 United Parcel Service Class B 163,875
------------
TOTAL COMMON STOCKS (COST $7,451,018) $ 12,882,436
Face Amount
-----------
REPURCHASE AGREEMENTS - 5.4%
$ 731,571 Fifth Third Bank, 5.22%, dated 2/29/00,
due 3/1/00, (Collateralized by 750,000
FHLMC Gold #G30141, 6.50%, 1/1/19,
market value $750,000)
(Cost $731,571) $ 731,571
------------
TOTAL INVESTMENTS IN COMMON
STOCKS AND REPURCHASE
AGREEMENTS AT VALUE - 99.9% 13,614,007
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.1% 9,167
------------
NET ASSETS - 100.0% $ 13,623,174
============
(a) Non-dividend paying securities
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
INVESTMENT INCOME
Dividends $ 33,500
Interest 42,249
------------
Total investment income 75,749
EXPENSES
Investment advisory fees 137,603
Distribution fees 114,302
Administration fees 33,052
Shareholder services and transfer agent fees 13,992
Reports and notices to stockholders 13,061
Professional fees 13,050
Trustees' fees and expenses 1,516
Custodian fees 10,159
Fund accounting fees 37,316
Registration and filing fees 15,733
Amortization of organization expenses 7,254
Insurance expense 2,969
Miscellaneous 4,243
------------
Total expenses 404,250
Less fees waived by the Manager (93,935)
------------
Net expenses 310,315
------------
NET INVESTMENT LOSS (234,566)
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS
Net realized gains from security transactions 2,567,018
Unrealized appreciation of investments:
Beginning of year $ 4,196,899
End of year 5,431,418
------------
Net change in unrealized appreciation of investments 1,234,519
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 3,801,537
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 3,566,971
============
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999
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<CAPTION>
2000 1999
------------ ------------
OPERATIONS
<S> <C> <C>
Net investment loss $ (234,566) $ (132,530)
Net realized gains (losses) from security transactions 2,567,018 (7,832)
Net change in unrealized appreciation of investments 1,234,519 3,122,231
------------ ------------
Net increase in net assets from operations 3,566,971 2,981,869
DISTRIBUTIONS TO SHAREHOLDERS
from net capital gains on investments (1,907,066)
FUND SHARE TRANSACTIONS
Class B shares:
Proceeds from shares sold 820,412 2,869,376
Reinvestment of distributions to shareholders 1,907,066
Payments for shares redeemed (959,697) (700,997)
Class C shares:
Proceeds from shares sold 79,806
------------
Net increase in net assets from capital share transaction 1,847,587 2,168,379
------------ ------------
NET INCREASE IN NET ASSETS 3,507,492 5,150,248
NETASSETS
Beginning of year 10,115,682 4,965,434
------------ ------------
End of year $ 13,623,174 $ 10,115,682
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR
A SHARE OUTSTANDING THROUGHOUT EACH YEAR ENDED
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999, 1998 AND 1997
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CLASS C
CLASS B SHARES SHARES
--------------------------------------------------------------- ------------
2000 1999 1998 1997 (2) 2000 (3)
------------ ------------ ------------ ------------ ------------
PER SHARE DATA
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Net asset value at beginning of period $ 22.16 $ 15.41 $ 11.33 $ 10.46 $ 23.50
Income from investment operations:
Net investment loss (0.38) (0.32) (0.13) (0.02) (0.04)
Net realized and unrealized gain 7.76 7.07 4.21 1.30 1.94
------------ ------------ ------------ ------------ ------------
Total from investment operations 7.38 6.75 4.08 1.28 1.90
------------ ------------ ------------ ------------ ------------
Less distributions:
Dividends from capital gains (4.14) -- -- (0.41) --
------------ ------------ ------------ ------------ ------------
Total distributions (4.14) -- -- (0.41) --
------------ ------------ ------------ ------------ ------------
Net asset value at end of period $ 25.40 $ 22.16 $ 15.41 $ 11.33 $ 25.40
============ ============ ============ ============ ============
Total Return (1) 34.70% 43.80% 36.01% 12.25% 8.09%
============ ============ ============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net Assets at End of Period $ 13,539,836 $ 10,115,682 $ 4,965,434 $ 646,067 $ 83,338
============ ============ ============ ============ ============
Ratio of expenses to average net assets:
Before expense reimbursement and
waived fees 3.52% 3.64% 5.81% 12.14%(4) 3.79%(4)
After expense reimbursement and
waived fees 2.70% 2.70% 2.69% 2.66%(4) 2.70%(4)
Ratio of net investment loss to average
net assets (2.04)% (1.87)% (1.69)% (1.04)%(4) (2.18)%(4)
Portfolio turnover rate 151% 26% 21% 39%(4) 151%(4)
</TABLE>
(1) Calculated without sales charge.
(2) Represents the period from the first public offering to shareholders (July
24, 1996) through February 28, 1997. Class B shares were initially
purchased on April 10, 1995 by the Advisor; who subsequently redeemed the
initial shares on March 13, 1996.
(3) Represents the period from the first public offering to shareholders
(January 31, 2000) through February 29, 2000.
(4) Annualized.
See accompanying notes to financial statements.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Regional Opportunity Fund: Ohio, Indiana, Kentucky (the Fund) is a
non-diversified, open-end series of the Dunhill Investment Trust (the
Trust) registered as a management investment company under the Investment
Company Act of 1940 (the 1940 Act). The Fund's investment objective is to
provide long-term capital growth by investing primarily in common stocks
and other equity securities of publicly-traded companies headquartered or
having a significant presence in Greater Cincinnati and the Cincinnati
tri-state region.
The Fund offers two separate classes of shares. Class B and Class C. Class
B shares of the Fund are offered at net asset value and are subject to a
maximum 5% contingent deferred sales charge and 12b-1 distribution fees up
to 1% of average daily net assets. The contingent deferred sales charge is
applicable to redemptions during the five-year period from the date of
purchase. The charge declines from 5% to 0% over the five-year period.
Class C shares of the Fund are offered at net asset value and are subject
to a 1% contingent deferred sales charge if redeemed within one year after
purchase and 12b-1 distribution fees up to 1% of average daily net assets.
Class C shares were first available for sale on January 31, 2000.
Contingent sales charges received in 2000 amounted to approximately $6,000.
SECURITIES VALUATION - The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m. Eastern time). Securities which are traded
over-the-counter are valued at the last sales price, if available,
otherwise, at the last quoted bid price. Securities traded on a national
stock exchange are valued based upon the closing price on the principal
exchange where the security is traded.
REPURCHASE AGREEMENTS - The Fund generally invests its cash reserves by
entering into repurchase agreement with its custodian bank. Repurchase
agreements, which are collateralized by U.S. Government obligations, are
valued at cost which, together with accrued interest, approximates market.
At the time the Fund enters into a repurchase agreement, the seller agrees
that the value of the underlying securities, including accrued interest,
will at times be equal to or exceed the face amount of the repurchase
agreement. In addition, the Fund actively monitors and seeks additional
collateral, as needed.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SHARE VALUATION - The net asset value per share for each class of share of
the fund is calculated daily by dividing the total value of the Fund's
assets attributed to the class, less liabilities attributed to the class,
by the number of shares of each class outstanding.
INVESTMENT INCOME - Interest income is accrued as earned. Dividend income
is recorded on the ex-dividend date.
DISTRIBUTIONS TO SHAREHOLDERS - Dividends arising from net investment
income, if any, are declared and paid annually to shareholders of the Fund.
Net realized short-term capital gains, if any, may be distributed
throughout the year and net realized long-term capital gains, if any, are
distributed at least once a year. Income distributions and capital gain
distributions are determined in accordance with income tax regulations.
SECURITY TRANSACTIONS - Security transactions are accounted for on trade
date. Securities sold are valued on a specific identification basis.
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 at the date of the financial statements and the reported
amounts or revenue and expenses during the reporting period. Management
believes the estimates utilized in preparing these financial statements are
reasonable and prudent. Actual results could differ from these estimates.
FEDERAL INCOME TAX - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies, and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been
made. In order to avoid imposition of the excise tax applicable to
regulated investment companies, it is also the Fund's intention to declare
as dividends in each calendar year at least 98% of its net investment
income (earned during the calendar year) and 98% of its net realized
capital gains (earned during the twelve months ended October 31) plus
undistributed amounts from prior years.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATION OF CAPITAL ACCOUNTS - For the year ended February 29,
2000, the Fund reclassified net investment losses of $234,566 against
accumulated net realized gains from security transactions on the Statement
of Assets and Liabilities. This reclassification was the result of
permanent differences between financial statement and income tax reporting
requirements and has no effect on the Fund's net assets and net asset value
per share.
2. INVESTMENTS
During the year ended February 29, 2000, purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $15,737,430 and $16,394,389 respectively.
For federal income tax purposes, the cost of portfolio investments amounted
to $8,182,589 at February 29, 2000. The composition of unrealized
appreciation (the excess of value over cost) and unrealized depreciation
(the excess of tax cost over value) was as follows:
Gross unrealized appreciation $ 5,812,114
Gross unrealized depreciation (380,696)
------------
Net unrealized appreciation $ 5,431,418
==========
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Trust are also officers of Dunhill Investment
Advisors, Limited (Dunhill) the manager, administrator and transfer agent
for the Fund and CityFund Advisory, Inc. (CityFund), the Fund's investment
advisor.
FUND MANAGER AGREEMENT
The Fund is managed by Dunhill under the terms of a management agreement.
The Fund pays Dunhill a fee equal to the annual rate of 1.20% of the
average value of its daily net assets. Dunhill currently intends to waive
its management fees and reimburse expenses of the Fund to the extent
necessary to limit the total operating expenses of the Fund to 2.70% of
average daily net assets of the Fund. Accordingly, for the year ended
February 29, 2000, the manager waived $93,935 of advisory fees.
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by CityFund under the terms of an
Investment Advisory Agreement. Under the Investment Advisory Agreement, the
Manager (not the Fund) pays CityFund a fee equal to an annual rate of .35%
of the average daily net assets of the Fund.
ADMINISTRATIVE AGREEMENT
Under the terms of an Administrative Agreement, Dunhill supplies executive,
and through a sub-administrative agreement with Ultimus Fund Solutions,
LLC, administrative and regulatory services to the Fund, supervises the
preparation of tax returns, and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities.
For these services, Dunhill receives a monthly fee from the Fund at an
annual rate of 0.15% on its average daily net assets up to $50 million;
0.125% on the next $50 million of such net assets; and 0.10% of such net
assets in excess of $100 million. During the year ended February 29, 2000,
Dunhill was paid $17,052 of fees under the Agreement.
TRANSFER AGENT AND SHAREHOLDER SERVICING AGREEMENT
Under the terms of a Transfer Agent and Shareholder Servicing Agreement,
Dunhill maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution
disbursing agent and performs other shareholder service functions. For
these services, Dunhill receives a monthly fee from the Fund at an annual
rate of $17 per shareholder's account, subject to a minimum monthly fee of
$1,000. In addition, the Fund pays out-of-pocket expenses, including but
not limited to, postage and supplies. During the year ended February 29,
2000, Dunhill was paid $13,992 of fees under the Agreement.
4. DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the Plan) pursuant to Rule 12b-1
under the 1940 Act. The Plan provides that the Fund may incur certain costs
related to the distribution of Fund shares, generally not to exceed 1.00%
of the Fund's average daily net assets. During the year ended February 29,
2000, Class B and Class C shares of the Fund incurred and paid
approximately $114,254 and $48, respectively, of distribution expenses
under the Plan.
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REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2000
5. FUND SHARE TRANSACTIONS
Proceeds and payments on shares of the Fund as shown in the Statements of
Changes in Net Assets on the result of the following share transactions:
Class B Shares Class C Shares
--------------------- --------------
2000 1999 2000
-------- -------- --------
Shares sold 34,150 177,719 3,281
Shares issued in reinvestment of
distributions to shareholders 80,535
Shares redeemed (37,991) (43,511)
-------- -------- --------
Net increase in shares outstanding 76,694 134,208 3,281
Shares outstanding, beginning of year 456,422 322,214
-------- -------- --------
Shares outstanding, end of year 533,116 456,422 3,281
======== ======== ========
Class C Shares were initially offered January 31, 2000.
