May 25, 1999
Dear shareholder:
We are pleased to provide you with the first semi-annual report for the Upright
Growth Fund, for the period of January 21,1999 (inception date) to March 31,
1999. Over this period, the Fund produced a total return of -2.2%. This is
compared to 2.7% for the S&P 500 (large companies) and -7.0 % for the Russell
2000 (small companies).
Market review
U. S. economics continue to demonstrate its strength with low unemployment, no
inflation, low interest rates, and strong consumer buying power, keeping the
equity market soaring. However, not all stocks participated equally in the
market soar. Growth investment style performed significantly better than value
investment style, and large-cap stocks, in general, outperformed mid-cap and
small-cap stocks. For example, in 1998, S&P 500 produced 28.58% return while
Russell 2000 lost -2.55%. According to Morningstar data, even under the same
category of the large-cap in 1998, the average return of large growth fund was
35% while the average return of large value fund was 13%. With a big difference
such as this, what would be our investment strategy?
Investment Strategy
No one knows what the market has in store for us in the future or which
investment style or capitalization sector will be most productive. So, we
currently will allocate 50% to large-cap sector, and 50% holdings in mid-cap and
small-cap, which are currently undervalued and offer an attractive long-term
investment opportunity. Also, we adopted both a value investment style and a
growth investment approach.
Why would we consider the mid-cap and small cap area? The reasons are (1) It is
a bargain price asset class now. We review this as one of the most attractive
buying opportunity for mid-cap and small cap since 1994. The simple fact is that
the price- to- earnings (P/E) rations of mid-cap and small-cap stocks, which
have historically traded at slight to significant premiums to large-cap stocks,
currently trade at a discount to large-caps. Other valuation measures, such as
P/E to growth and price- to- sales ration, are also at historical lows when
compared to large caps.
For example: As of 03/31/99, the mid-cap stock, Fund's holding of Watson
Pharmaceutical, is earning $1.75 per share in 1999, P/E at 25. Also, our target
small-cap stock, Barr laboratories Inc.; (purchased on 05/07/99), is earning $2
in 1999, with a P/E ratio of only around 16. Compare this to a large-cap like
Pfizer Inc., which has an earning of $2.45 per share in 1999, with a P/E ration
of 53.
Barr laboratories' return on common equity is 23% compared to Pfizer's 21.5% in
1999. The earning growth rate of Barr laboratories for the next 3 years is
estimated at 22%, while Pfizer is estimated at 18%. However, the Pfizer traded
at $138 per share while Barr laboratories traded at $31 and Watson
Pharmaceutical traded at $ 42 as of 03/31/99. They all are under the same
industry but we believe Barr laboratories is a growth stock at value price. We
also like a quality company such as Pfizer and may consider purchasing it, but
not at this price.
(2) The mid-cap and small-cap cycle over any given period, either large-cap or
small-cap can significantly outperform each other's. 1998 marks the fifth
consecutive year that large-cap stocks have outperformed small-cap. However,
many investment professionals believe that the relative earning growth potential
of mid-cap and small-cap stocks are now greater than large-caps because its
stock prices are at-all-time-lows relative to large-cap valuation.
Is all large-cap overvalued? Not necessary. Our approach is to try to find a
stock, using either a growth style or a value style, at a fair price. For
example, the Fund's current holding, the Lockheed Martin Corp is a large-cap
company. From a valuation point of view only, the P/E ration at 11.20 compared
to S&P 500 average P/E ration at 22 in 1999, has a price down from a high of $58
to $38(03/31/99). From a business point of view, it has a strong market share
in the current market, high barriers to entry, and provides products or services
that are differentiated.
<PAGE>
The key to a successful portfolio is to attain diversification by building a
portfolio that includes large-cap, mid-cap and small-cap in a variety of
industries, as well as utilizing a balance of growth and value styles of
investing. That means making and maintaining positions in current laggards as
well as current leaders.
Because we are so selective, as of 03/31/99, our performance was dampened by our
80% cash position during that period. However, we feel comfortable holding some
reserves, and welcome a chance to invest our cash during a market correction.
We would like to take this opportunity to thank our shareholders for their
confidence with us and we will continue to seek rewarding returns on your
behalf.
Best Regards,
_____________________________
David Y.S. Chiueh
President, Portfolio manager
<PAGE>
Upright Growth Fund
Schedule of Investments
March 31, 1999
SHARES VALUES
Securities/Common Stocks
COMPUTER 7.43%
COMPAQ COMPUTER CORP. 100 $3,169
3COM CORP 300 6,994
INTERNATIONAL NETWORK SERVICES 100 6,994
NOVELL INC 200 5,037
ADAPTEC INC 200 4,562
BMC SOFTWARE INC 100 3,706
DEFENSE 1.84%
LOCKHEED MARTIN CORP. 200 7,550
FINANCIAL 4.88%
KNIGHT/TRIMARK GROUP INC-CL A 200 13,400
MCKESSON HBOC INC 100 6,600
FOOD 1.30%
RALSTON PURINA CORP 200 5,338
MEDICAL 1.19%
ST JUDE MEDICAL INC. 200 4,875
OIL 1.40%
TRANSOCEAN OFFSHORE INC 200 5,763
<PAGE>
SHARES VALUES
PHARMACEUTICAL 3.16%
ROBERTS PHARMACEUTICAL CORP. 200 4,150
WATSON PHARMACEUTICALS INC 200 8,825
TRANSPORTATION 1.85%
CONTINENTAL AIRLINES INC-CL B 200 7,600
-----
Total Common Stock 23.05% $94,563
Cash and Cash Equivalent 80.63% 330,771
-------
Fifth/Third Bank repurchase agreement
Due 4/1/99 at 4.4%
Total Securities (cost $427,629) 103.68% 425,333
Other assets less liabilities (net) 3.68% (15,089)
-------
Net Assets 100.00% $410,244
-------
<PAGE>
UPRIGHT GROWTH FUND
Statement of Assets and Liabilities
March 31, 1999
Assets:
Investment in securities, at value (cost $427,629) $425,333
---------
Subscriptions Receivable 54,800
Accounts Receivable 3,933
Total Assets 484,066
Liabilities: 644
Adviser Fee 193
Administrative Fee 621
Custodian Fee 2,484
Auditors and Legal Fee 138
Trustee Fee 414
Blue Sky Fee 276
Insurance Fee 69,052
Security Purchases Payable
Total Liabilities 73,822
Net Assets 410,244
Net assets consist of:
Paid in capital 411,843
Undistributed net investment income 697
Accumulated undistributed net realized gain (loss) 0
Net unrealized appreciation (depreciation) (2,296)
Net Assets for 41,932 shares outstanding $410,244
------
Net Asset Value and redemption price per share $9.78
Maximum offering price per share, 100/97 of $9.78 $10.09
<PAGE>
UPRIGHT GROWTH FUND
Statement of Changes in Net Assets
January 21, 19991 to March 31, 1999
Increase (Decrease) in Net Assets
Operations
Net investment income $697
Net realized gain (loss) 0
Change in net unrealized appreciation (depreciation) (2,296)
-------
Net increase (decrease) in net assets from operations (1,599)
Distributions to shareholders
From net investment income 0
From net realized gain 0
-
Total distributions 0
Share transactions
Net proceeds from sales of shares 311,843
Reinvestment of distributions 0
Shares redeemed 0
-
Net increase (decrease) in net assets from transaction 311,843
-------
Total increase (decrease) in net assets $310,244
Net Assets
Beginning of period $100,000
End of period $410,244
Transactions in Shares
Shares
Sold 41,932
Issued in reinvestment of distributions 0
Redeemed 0
Net increase (decrease) 41,932
- --------
1 Inception of Fund
<PAGE>
UPRIGHT GROWTH FUND
Financial Highlights
January 21, 19991 to March 31, 1999
Selected Per-Share Data
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income 0.03
Net realized and unrealized gain (loss) (0.25)
------
Total from investment operations (0.22)
Less Distributions
From net investment income 0.00
From net realized gain 0.00
Total distributions 0.00
Net asset value, end of period $9.78
Total Return (2.20)% 2
Ratios and Supplemental Data
Net assets, end of period $410,244
Ratio of expenses to average net assets (before reimbursement) 2.13%
Ratio of expenses to average net assets (after reimbursement) 0.37%
Ratio of net investment income to average net assets (1.45)%
Ratio of net investment income to average net assets
(after reimbursement) 0.31%
Portfolio turnover rate 0.00%
1
- --------
1 Since Inception of Fund
2 Total returns do not include the one time sales charge.
<PAGE>
UPRIGHT GROWTH FUND
Statement of Operations
January 21, 19991 to March 31, 1999
Investment Income
Dividends $0
Interest 1,534
Total Income 1,534
Expenses
Adviser fee 644
Administrative fee 193
Custodian fee 621
Auditors and Legal fee 2,484
Trustee fee 138
Blue Sky fee 414
Insurance fee 276
---
Total expenses before reductions 4,770
Reimbursement from advisor (3,933)
Net expense (after reimbursement) 837
Net investment income (Loss) 697
Realized and Unrealized Gain (Loss)
Net realized gain (loss) on investment
securities 0
Change in net unrealized appreciation (depreciation) on
Investment securities (2,296)
Net gain (loss) (2,296)
Net increase (decrease) in net assets resulting from
operation
$(1,599)
1
- --------
1 Inception of Fund
<PAGE>
UPRIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Upright Investments Trust (the "Trust") is an open-end management investment
company organized as a business trust under the laws of the State of
Delaware under a Certificate of Formation dated March 4, 1998. The
Certificate of Formation provides for an unlimited number of authorized
shares of beneficial interest, which may, without shareholder approval, be
divided into an unlimited number of series of such shares, and which
presently consist of one series of shares for the Upright Growth Fund.
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. Dividend income and distributions to shareholders are recorded on the
ex-dividend data. Interest income is recorded as earned. The Fund uses the
identified cost basis in computing gain or loss on sale of investment
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.
<PAGE>
UPRIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
March 31, 1999
2. RELATED PARTY TRANSACTIONS
David Y. S. Chiueh is an officer of Upright Financial Corpora-
tion, the Fund Advisor. He is also an officer and trustee of
the Fund.
Upright Financial Corporation, the Fund's investment adviser, is registered
as an investment adviser under the Investment Advisers Act of 1940. As
compensation for Upright Financial Corporation's services rendered to the
Fund, such Fund pays a fee, computed at an annual rate of 1.50% of its
average daily net assets. The Fund has accrued $638 of advisor fees through
March 31, 1999, none of which has been paid. The advisor has agreed to
reimburse the Fund to the extent necessary to limit expenses to 1.95% of
average assets.
Upright Financial Corporation is the Fund's administrator and transfer
agent. As compensation for Upright Financial's services rendered to the
Fund, such Fund pays a fee computed at an annual rate of .45% of its average
daily net assets. The Fund has accrued $192 of administration fees through
March 31, 1999, none of which has been paid.
3. CAPITAL STOCK AND DISTRIBUTION
At March 31, 1999, an unlimited number of shares were authorized and paid in
capital amounted to $411,843 for the Upright Growth Fund. Transactions in
capital stock were as follows:
Shares Sold 32,426
Shares Redeemed 0
Net Increase 32,426
Shares Outstanding:
Beginning of period 10,000
End of period 42,426
4. SALES CHARGE
The sales charge for shares of the Fund are outlined below:
As a % of
Investment Offering Price Net Amount Invested
Up to $49,999 3.0% 3.09%
$ 50,000 - 99,999 2.5% 2.56%
$100,000 - 249,999 2.25% 2.30%
$250,000 - 499,999 1.75% 1.78%
$500,000 - 749,999 1.50% 1.52%
$750,000 - 999,999 1.25% 1.27%
$1 million and up .75% .76%
<PAGE>
UPRIGHT GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
March 31, 1999
5. PURCHASES AND SALES OF SECURITIES
During the period ending March 31, 1999, purchases and sales of
investment securities other than U. S. Government obligations
and short-term investments aggregated $96,858 and $0
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 March 31, 1999.
7. SECURITY TRANSACTIONS
For federal income tax purposes, the cost of investments owned at March 31,
1999 was the same as identified cost.
At March 31, 1999, the composition of unrealized appreciation (the excess of
value over tax cost) and depreciation (the excess of tax cost over value) was
as follows:
Net Appreciation
Appreciation (Depreciation) (Depreciation)
1,839 (4,135) (2,296)
<PAGE>
