[logo] alpha analytics
INVESTMENT GROUP, LLC
September 2000
Dear Fellow Shareholders:
When we designed our mutual funds we had a simple goal in mind. We wanted to
offer funds that we, as investors, would like to invest in. Our funds were
designed by investors for investors. This simple idea has several consequences:
-- We have a simple universal fee of 1.3% for all our Funds that is paid
to the fund's investment advisor. In return, the advisor has agreed to
pay all expenses associated with running the funds. There are no
hidden fees.
-- Based on this agreement, our expense ratio is below the industry
average for our types of funds. These averages, as reported by
Morningstar, are 1.4% for large cap value funds, and 1.74% for
technology funds. Without this agreement the Funds' expense ratio
would be higher.
-- All of the Alpha Analytics mutual funds are no-load funds. There are
no front or back end loads. These funds are intended for investment
advisors and for sophisticated investors willing and able to do their
own homework.
-- There is a 2% redemption fee on shares held less than 90 days, and a
1% redemption fee on shares held less than 365 days. These fees are
paid to the funds and benefit the remaining shareholders. They are
meant to defray the transaction costs and other adverse effects of
short term investing.
-- Our funds have a clear focus. The Alpha Analytics Value Fund is a
large cap value fund. The Alpha Analytics Digital Future Fund is a
technology fund. We are committed to maintaining this focus. This
allows individual investors and money managers to understand exactly
what they are buying.
-- Our goal is to be close to 100% invested at all times. We leave the
timing decisions to our shareholders.
The past year has been very volatile, and made for a challenging year. Overall,
however, it has been very good for our shareholders.
--------
(1) The S&P 500 is an unmanaged index of stocks considered to be representative
of large cap stocks in general. The NASDAQ composite is an unmanaged index of
stocks in the NASDAQ, and tends to be heavily weighted in technology. The PSE
100 is an index of 100 stocks in the technology sector. You cannot invest in an
index. Specific security holdings should not be considered recommendations to
buy individual securities.
---------------------------------------------------------
1901 Avenue of the Stars Telephone: (310) 556-0389
Suite 1100 Telefax: (310) 556-8945
Los Angeles, CA 90067-6002 www.alphaanalytics.com
-1-
<PAGE>
The Alpha Analytics Value Fund was the top performing large cap value mutual
fund in 1999 according to Morningstar and Lipper. It continues to do well. For
the 12 months ending July 31, 2000 it returned 24.94%. The S&P 5001 returned
8.97%. This is illustrated in the accompanying graph. The average return of all
large cap value funds tracked by Morningstar over this same period was -1.95%.
The strong performance of the Alpha Analytics Value Fund over the 12 months
ending July 31, 2000 places it in the top 2% of large cap value mutual funds
ranked by Morningstar over this period. Of course this is too short a period of
time to judge long-term investment performance, and we do expect the performance
over longer periods to vary. Accordingly, past performance may not be indicative
of future results.
On December 16, 1999, the Alpha Analytics Value Fund posted a $0.58/share
short-term capital gains distribution and a $0.01/share dividend distribution.
The investment philosophy of the Alpha Analytics Value Fund is to search for
"relative value" as measured by price-to-earnings, price-to-sales,
price-to-revenue, and price-to-cash flow. We used the market volatility to our
advantage and found a number of opportunities to purchase extremely strong
companies at very attractive valuations. We were able to buy some technology
companies that were statistically cheap at the time of purchase and may have
been ignored by most traditional value managers.
On December 22, 1999 we launched the Alpha Analytics Digital Future Fund. This
was the top performing technology fund tracked by Morningstar and Lipper for the
first calendar quarter of 2000. For the 7 months ending July 31, 2000, it
returned 25.21%. Over this same period the Pacific Stock Exchange Technology 100
(PSE100) was up 5.69% and the NASDAQ Composite* was down -7.43%. The average
technology fund tracked by Morningstar was down -1.33%. As illustrated in the
accompanying chart, since inception the Alpha Analytics Digital Future Fund is
up 36.60%, while the PSE100 was up 13.58%, and the NASDAQ Composite was down
-3.58%. All of these periods of time are too short to judge investment
performance, and we expect the performance over longer periods of time to vary.
Subsequently, past performance may not be indicative of future results.
This fund is team managed by Mike Cohen, John Gipson and myself. It is unique in
that it employs a dual hybrid approach. We start with our vision of the future
of information technology, and pick companies that we believe will be leaders in
this sector. This supplies the "strategic vision" for the Fund. These stocks are
then tested using our proprietary quantitative model developed specifically for
the tech sector. This model attempts to evaluate which stocks will do well in
the near term, and hence which stocks to buy (or sell), and how large a position
to establish in each. This provides the "tactical know-how" for the Fund.
In choosing stocks you don't have to be right most of the time to come out ahead
overall. At the fiscal year end slightly more than half (23 out of 43) of our
positions in the Alpha Analytics Digital Future Fund were carried at a loss.
However, many of our positions were up substantially: Rambus, up 273.98%;
Newport Networks up 262.82%, SDLI Inc, up 148.02%, Avanex, up 94.11%. It was the
strong performance of these and the remaining stocks that were up that resulted
in the strong performance of the portfolio as a whole.
-2-
<PAGE>
We have been pleased with the performance of both these funds so far. Of course,
the above figures are a snapshot of the Funds' performance at a specific
instance in time. Past performance is no guarantee of future returns, and we do
expect the NAV of the funds to fluctuate, sometimes dramatically. For example,
during the market correction of March and April of 2000, the Net Asset Value
(NAV) of the Alpha Analytics Digital Fund went from a high of $20.08 on March 9,
2000 to a low of $9.84 on April 14, 2000. If you had bought at the high, and
sold at the low you would have incurred substantial losses. On the other hand,
we believe that many investors in the Digital Future Fund have been rewarded for
the risks they took.
We have undertaken several initiatives to make our funds more broadly available.
The funds are now registered in all 50 states and the District of Columbia. On
August 1, 2000 our funds became available through Schwab OneSource. Schwab is
the largest independent fund distributor. The Schwab ticker symbol of the Alpha
Analytics Value Fund is AVF1Z (AVF-"one"-Z"), and of the Alpha Analytics Digital
Future Fund ADF1Z (ADF-"one"-Z"). We continue to explore other distribution
channels, and hope to have our funds available through other sources in the
future.
Our web site, WWW.ALPHAANALYTICS.COM, continues to be an important channel of
communication with our shareholders and the public. We encourage you to visit us
there. We answer all email that originates from the website, and welcome
suggestions from you on how we can improve the website and our customer service.
This site was redesigned in January 2000, and continues to be modified, based in
large part on comments by visitors. Prospectuses and account applications can be
directly downloaded from the website. Our Funds' Net Asset Value (NAV) and
performance figures are updated on a daily basis. Last year our site averaged
about 5 visitors a day; we now see about 100 visitors a day. We expect the
traffic to continue to increase as we attract more shareholders, and as our
performance becomes more widely known.
We believe that communication is one of our most important responsibilities. We
have worked hard to make sure that information about our funds is readily
available. We are proud of the performance of our funds, and want investors and
money managers to be able to easily compare our funds against their peers. Our
mutual funds are now tracked by Morningstar, Lipper and Standard & Poor's. Third
party information about our funds can be found on the Schwab website,
WWW.SCHWAB.COM, at the Morningstar website, WWW.MORNINGSTAR.COM (symbols M$_BAFD
and M$_EAH), at the Standard & Poor's mutual fund site WWW.MICROPAL.COM), and at
WWW.MAXFUNDS.COM (symbols TNBXM and XBCMM).
I started this letter by addressing you as "Fellow Shareholders". I personally
own substantial shares in both our funds. This is true of our portfolio managers
as well. We invest this money like our own because our money is invested
side-by-side with yours.
-3-
<PAGE>
Are we concerned by the recent volatility in the NASDAQ? Of course we are. Do we
think this means that you should abandon your long-term investment strategy and
move to cash? No, we don't. The basics of successful long-term investing remain:
knowing your own tolerance for risk and desire for reward, careful planning,
diligent implementation, persistent patience and appropriate diversification.
Don't let the short-term market volatility (either up or down) knock you off
your well thought out long term investment plans.
Thanks again for choosing Alpha Analytics mutual funds as one of your investment
vehicles.
May all your investments prosper.
/s/ROBERT E. GIPSON
-------------------
Robert Gipson
President
-4-
<PAGE>
COMPARISON OF CHANGES IN VALUE OF $10,000 SINCE INCEPTION
(INCLUDING REINVESTMENT OF DIVIDENDS)
ALPHA ANALYTICS VALUE FUND
Average Annual Total Return:
For the year ended July 31, 2000: 24.94%
Since Inception (January 1, 1999): 28.59%
Value Fund $14,892
S&P 500 Index $11,851
ALPHA ANALYTICS DIGITAL FUTURE FUND
Total return for the period December 22, 1999
(commencement of operations) through July 31, 2000: 36.60%
Digital Future Fund $13,660
PSE Technology Index $11,358
NASDAQ Composite Index $ 9,642
THE PERFORMANCE INFORMATION SHOWN REPRESENTS PAST PERFORMANCE AND SHOULD NOT BE
INTERPRETED AS INDICATIVE OF THE FUND'S FUTURE PERFORMANCE.
RETURN AND SHARE PRICE WILL FLUCTUATE SO THAT SHARES, WHEN REDDEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
-5-
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
VALUE FUND
SCHEDULE OF INVESTMENTS
July 31, 2000
MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 94.19%
APPAREL MANUFACTURERS - 1.51%
<C> <S> <C>
3,000 + Jones Apparel Group, Inc. ................... $ 68,625
----------
BANKING - 2.08%
2,000 Bank of America Corp. ....................... 94,750
----------
BASIC MATERIALS - 1.58%
1,500 Minerals Technologies, Inc. ................. 71,906
----------
BEVERAGES - 3.83%
5,000 Diageo PLC- Sposored ADR .................... 174,063
----------
COMMERCIAL SERVICES - 5.89%
3,300 First Data Corp. ............................ 152,006
3,000 Manpower, Inc. .............................. 116,062
----------
268,068
----------
COMMUNICATION SERVICES - 15.04%
6,200 AT&T Corp. .................................. 191,812
18,300 + Global Telesystems Group, Inc. .............. 155,550
3,500 SBC Communications, Inc. .................... 148,969
4,000 Verizon Communications ...................... 188,000
----------
684,331
----------
COMPUTER HARDWARE - 9.98%
10,000 Compaq Computer Corporation ................. 280,625
4,449 + Palm, Inc. .................................. 173,511
----------
454,136
----------
COMPUTER NETWORKS - 7.95%
21,000 + 3Com Corp. .................................. 284,813
8,000 + Novell, Inc. ................................ 77,000
----------
361,813
----------
COMPUTER SOFTWARE & Programming - 4.55%
1,000 Electronic Data Systems Corp. ............... 43,000
4,700 + J.D. Edwards & Company ...................... 59,631
3,200 + Synopsys, Inc. .............................. 104,200
----------
206,831
----------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.22%
3,000 Honeywell International, Inc. ............... 100,875
----------
FINANCIAL SERVICES - 6.10%
2,055 ING Groep N.V. Sponsored ADR ................ 138,199
2,500 MBIA, Inc. .................................. 139,219
----------
277,418
----------
INSURANCE - 6.67%
4,000 Allstate Corp. .............................. 110,250
9,200 + MetLife, Inc. ............................... 193,200
----------
303,450
----------
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
VALUE FUND
SCHEDULE OF INVESTMENTS
July 31, 2000
(Continued)
MARKET
SHARES VALUE
------ -----
INTERNET SOFTWARE - 3.57%
20,000 + Genuity, Inc. ............................... $ 162,500
---------
MANUFACTURING - 1.76%
6,000 + Owens-Illinois, Inc. ........................ 79,875
---------
MEDICAL & Related - 5.44%
3,900 Abbott Laboratories ......................... 162,337
4,000 Mylan Laboratories .......................... 85,000
---------
247,337
---------
NETWORKING PRODUCTS - 2.16%
1,000 + AVICI Systems, Inc. ......................... 98,375
---------
OIL, ENERGY & Natural Gas - 5.11%
7,500 Conoco, Inc- Cl B ........................... 172,969
1,200 Transocean Sedco Forex, Inc. ................ 59,400
---------
232,369
---------
PHARMACEUTICALS - 4.20%
1,300 + Elan Corporation PLC Sponsored ADR .......... 69,469
2,200 + Watson Pharmaceuticals, Inc. ................ 121,550
---------
191,019
---------
RETAIL - 3.11%
6,000 + Abercrombie & Fitch ......................... 96,375
1,500 Albertson's, Inc. ........................... 45,281
---------
141,656
---------
TRAVEL SERVICES - 1.44%
3,400 Galileo International, Inc. ................. 65,450
---------
TOTAL COMMON STOCK
(Cost $4,222,869) ........................... 4,284,847
---------
PRINCIPAL
AMOUNT
------
SHORT TERM INVESTMENTS - 4.88%
$ 222,000 Firstar Treasury Fund
(Cost $222,000) ............................. 222,000
---------
TOTAL INVESTMENTS
(Cost $4,444,869) ............. 99.07% 4,506,847
Cash and other assets
less liabilities .............. 0.93% 42,139
------ ---------
TOTAL NET ASSETS ..............100.00% $4,548,986
====== ==========
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
VALUE FUND
SCHEDULE OF INVESTMENTS
July 31, 2000
(Continued)
(1) Federal Tax Information: At July 31, 2000 the net unrealized appreciation
based on cost for Federal Income tax purposes of $4,444,869 was as follows:
Aggregate gross unrealized appreciation for all investments
for which there was an excess of value over cost........... $ 670,048
Aggregate gross unrealized depreciation for all investments
for which there was an excess of cost over value........... (608,070)
---------
Net unrealized appreciation................................. $ 61,978
=========
+ Non-income producing security
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
DIGITAL FUND
SCHEDULE OF INVESTMENTS
July 31, 2000
MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 99.03%
COMMUNICATIONS EQUIPMENT - 21.09%
2,800 + ADC Telecommunications, Inc.................. $ 117,425
500 + Avanex Corp.................................. 63,469
600 + Broadcom Corp................................ 134,550
600 + Comverse Technology, Inc..................... 52,650
800 + Conexant Systems, Inc........................ 25,600
1,100 + Corvis Corp.................................. 90,561
1,000 + Harmonic, Inc................................ 23,563
700 Lucent Technologies, Inc..................... 30,625
800 Nortel Networks Corp......................... 59,500
1,300 + Qualcomm, Inc................................ 84,419
900 Vodafone Group PLC........................... 38,812
---------
721,174
---------
COMPUTER HARDWARE - 3.15%
1,100 + Emulex Corp.................................. 55,000
500 + Sun Microsystems, Inc........................ 52,719
---------
107,719
---------
COMPUTER/NETWORK PRODUCTS - 5.66%
800 + Cisco Systems, Inc........................... 52,350
1,300 + EMC Corp..................................... 110,663
600 + Terayon Communication Systems, Inc........... 30,600
---------
193,613
---------
COMPUTERS - PERIPHERAL EQUIPMENT - 1.86%
1,000 + SanDisk Corp................................. 63,750
---------
COMPUTER SOFTWARE & Services - 9.58%
1,200 + Commerce One, Inc............................ 50,475
2,600 + eXcelon Corp................................. 15,437
450 + Foundry Networks, Inc........................ 36,816
1,000 + Informatica Corp............................. 80,000
2,400 + Legato Systems, Inc.......................... 23,325
500 + Microsoft Corp............................... 34,906
800 SAP AG- Sponsored ADR........................ 44,600
5,000 + Vertel Corp.................................. 41,875
---------
327,434
---------
ELECTRICAL EQUIPMENT - 1.55%
2,000 + C-COR.net Corp............................... 52,875
---------
ELECTRONICS - INSTRUMENT - 10.69%
1,200 + Coherent, Inc............................... 71,850
3,000 Newport Corp................................ 293,625
---------
365,475
---------
The accompanying notes are an integral part of these financial statements.
-9-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
DIGITAL FUND
SCHEDULE OF INVESTMENTS
July 31, 2000
(Continued)
MARKET
SHARES VALUE
------ -----
ELECTRONICS- SEMICONDUCTORS - 22.23%
1,000 + Altera Corp.................................. $ 98,187
700 + Applied Micro Circuits Corp.................. 104,475
2,500 + Atmel Corp................................... 74,844
1,000 Intel Corp................................... 66,750
1,300 + QLogic Corp.................................. 96,850
600 Texas Instruments, Inc....................... 35,212
3,000 + TriQuint Semiconductors, Inc................. 114,937
1,700 + Vitesse Semiconductor Corp................... 101,363
900 + Xilinx, Inc.................................. 67,556
---------
760,174
---------
FIBER OPTICS - 14.81%
1,640 + JDS Uniphase Corp............................ 193,725
900 + SDL, Inc..................................... 312,356
---------
506,081
---------
INTERNET - 3.26%
1,500 + CMGI, Inc.................................... 56,812
1,000 + DoubleClick, Inc............................. 35,938
6,000 + On2.com, Inc................................. 18,750
---------
111,500
---------
SERVICES - 5.15%
2,400 + Rambus, Inc.................................. 175,950
---------
TOTAL COMMON STOCK
(Cost $3,316,444)............................ 3,385,745
---------
TOTAL INVESTMENTS
(Cost $3,316,444).............. 99.03% 3,385,745
Cash and other assets less
liabilities................ 0.97% 33,240
----- ---------
TOTAL NET ASSETS........... 100.00% $3,418,985
====== ==========
<FN>
(1) Federal Tax Information: At July 31, 2000 the net unrealized appreciation
based on cost for Federal Income tax purposes of $3,319,399 was as follows:
Aggregate gross unrealized appreciation for all investments
for which there was an excess of value over cost........... $ 902,641
Aggregate gross unrealized depreciation for all investments
for which there was an excess of cost over value............ (836,295)
---------
Net unrealized appreciation................................. $ 66,346
=========
+ Non-income producing security
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
July 31, 2000
DIGITAL
VALUE FUND FUTURE FUND
---------- -----------
ASSETS:
<S> <C> <C>
Investments in securities, at value (Cost $4,444,869 and
and $3,316,444, respectively) (Note 2) ............. $4,506,847 $3,385,745
Cash ..................................................... 417,763 7,803
Receivable for securities sold ........................... 103,774 90,588
Receivable for fund shares sold .......................... 11,500 21,367
Dividends and interest receivable ........................ 3,581 196
Other receivables ........................................ 3,881 6,402
---------- ----------
Total Assets ....................................... 5,047,346 3,512,101
---------- ----------
LIABILITIES:
Payable for securities purchased ......................... 493,467 89,122
Accrued advisory fees (Note 3) ........................... 4,893 3,994
---------- ----------
Total Liabilities .................................. 498,360 93,116
---------- ----------
Net Assets ......................................... $4,548,986 $3,418,985
========== ==========
NET ASSETS CONSIST OF:
Additional paid in capital (Note 6) ..................... $3,714,609 $3,321,267
Undistributed net realized gain (loss) from
investment transactions (Note 6) ................... 772,399 28,417
Net unrealized appreciation (depreciation) on investments 61,978 69,301
---------- ----------
Net Assets ......................................... $4,548,986 $3,418,985
========== ==========
Net asset value and redemption price per share
($4,548,986/319,391 and $3,418,985/250,339 shares of
capital stock outstanding, respectively) (Note 4) . $ 14.24 $ 13.66
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
STATEMENT OF OPERATIONS
For the year ended July 31, 2000
DIGITAL
FUTURE
VALUE FUND FUND(1)
---------- -------
INVESTMENT INCOME:
<S> <C> <C>
Dividends ............................................ $ 29,160 $ 177
Interest ............................................. 6,726 1,013
--------- ---------
Total investment income ....................... 35,886 1,190
--------- ---------
EXPENSES:
Investment advisory fee (Note 3) ..................... 52,544 21,348
Trustees fees ........................................ 9,000 9,000
Taxes ................................................ 800 0
--------- ---------
Total expenses ................................ 62,344 30,348
Less: Expense reimbursement and waivers (Note 3) .... (16,880) (11,884)
--------- ---------
Net expenses .................................. 45,464 18,464
--------- ---------
Net investment income (loss) .................. (9,578) (17,274)
--------- ---------
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS
(Note 2)
Net realized gains (losses) from investment
transactions .................................. 783,350 45,690
Unrealized appreciation (depreciation) of
investments for the period .................... (74,143) 69,301
--------- ---------
Net realized and unrealized gains (losses)
on investments ................................ 709,207 114,991
--------- ---------
Net increase (decrease) in net assets resulting
from operations ............................... $ 699,629 $ 97,717
========= =========
<FN>
(1) The Digital Future Fund commenced operations on December 22, 1999.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR JANUARY 1, 1999(1)
ENDED THROUGH
JULY 31, 2000 JULY 31, 1999
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
<S> <C> <C>
Net investment income (loss) .................................. $ (9,578) $ 1,162
Net realized gains from investment transactions .............. 783,350 125,255
Unrealized appreciation (depreciation) for the period ......... (74,143) 136,121
----------- -----------
Net increase in net assets resulting from operations .......... 699,629 262,538
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.01 and $0.00
per share, respectively) ................................. (2,166) 0
Distributions from net gains on investments ($0.58 and $0.00
per share, respectively) ................................. (125,624) 0
CAPITAL SHARE TRANSACTIONS: (Note 4) ......................... 1,591,898 2,071,711
----------- -----------
Net increase in net assets .................................... 2,163,737 2,334,249
NET ASSETS:
Beginning of period ........................................... 2,385,249 51,000
----------- -----------
End of period (including undistributed net investment income of
$0 and $1,162, respectively) ............................. $ 4,548,986 $ 2,385,249
=========== ===========
<FN>
(1) Commencement of operations.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
DIGITAL FUTURE FUND
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 22, 1999(1)
THROUGH
JULY 31, 2000
-------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS:
<S> <C>
Net investment loss ............................................. $ (17,274)
Net realized gains from investment transactions ................. 45,690
Unrealized appreciation for the period ......................... 69,301
-----------
Net increase in net assets resulting from operations ............ 97,717
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ........................ 0
Distributions from net gains on investments ..................... 0
CAPITAL SHARE TRANSACTIONS: (Note 4) ........................... 3,321,268
-----------
Net increase in net assets ...................................... 3,418,985
NET ASSETS:
Beginning of period ............................................. 0
-----------
End of period (including undistributed
net investment income of $0)............................. $ 3,418,985
===========
<FN>
(1) Commencement of operations.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
VALUE FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout each period)
FOR THE YEAR JANUARY 1, 1999(1)
ENDED THROUGH
JULY 31, 2000 JULY 31, 1999
------------- -------------
<S> <C> <C>
Net asset value, beginning of period ....................... $ 11.92 $ 10.00
--------- ---------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............................... (0.04) 0.01
Net realized and unrealized gains (losses)
on investments ........................................ 2.95 1.91
--------- ---------
Total from investment operations ........................... 2.91 1.92
--------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ....................... (0.01) 0.00
Distribution from realized gains from security
transactions .......................................... (0.58) 0.00
--------- ---------
Total distributions ........................................ (0.59) 0.00
--------- ---------
Net asset value, end of period ............................. $ 14.24 $ 11.92
========= =========
Total return ............................................... 24.94% 19.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ....................... $ 4,549 $ 2,385
Ratio of expenses to average net assets,
before reimbursement .................................. 1.78% 2.45%
Ratio of expenses to average net assets,
net of reimbursement .................................. 1.30% 1.30%
Ratio of net investment income (loss) to average net assets,
before reimbursement .................................. (.76%) (1.03%)
Ratio of net investment income (loss) to average net assets,
net of reimbursement .................................. (.27%) 0.12%
Portfolio turnover rate .................................... 101.54% 32.98%
<FN>
(1) Commencement of operations.
(2) Ratios for this period of operations are annualized.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
ALPHA ANALYTICS INVESTMENT TRUST
DIGITAL FUTURE FUND
FINANCIAL HIGHLIGHTS
(For a fund share outstanding throughout each period)
DECEMBER 22, 1999(1)
THROUGH
JULY 31, 2000
-------------
<S> <C>
Net asset value, beginning of period........................... $ 10.00
-------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss)................................... (0.10)
Net realized and unrealized gains (losses)
on investments............................................ 3.76
-------
Total from investment operations............................... 3.66
-------
LESS DISTRIBUTIONS:
Dividends from net investment income........................... 0.00
Distribution from realized gains from security
transactions.............................................. 0.00
-------
Total distributions............................................ 0.00
-------
Net asset value, end of period................................. $ 13.66
=======
Total return................................................... 36.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........................... $ 3,419
Ratio of expenses to average net assets,
before reimbursement...................................... 2.12%(2)
Ratio of expenses to average net assets,
net of reimbursement...................................... 1.30%(2)
Ratio of net investment income (loss) to average net assets,
before reimbursement...................................... (2.04%)(2)
Ratio of net investment income (loss) to average net assets,
net of reimbursement...................................... (1.21%)(2)
Portfolio turnover rate........................................ 16.55%
<FN>
(1) Commencement of operations.
(2) Ratios for this period of operations are annualized.
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
-15-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
NOTE 1. ORGANIZATION
Alpha Analytics Value Fund (the "Value Fund") and Alpha Analytics Digital
Future Fund (the "Digital Future Fund"), were each organized as a series of
Alpha Analytics Investment Trust, an Ohio business trust (the "Trust"). The
Value Fund was organized on August 18, 1998, and commenced operations on January
1, 1999. The Digital Future Fund was organized on December 13, 1999, and
commenced operations on December 22, 1999. The Trust is an open-end, diversified
management investment company under the Investment Company Act of 1940,
authorized to issue an unlimited number of shares, each share representing an
undivided, proportionate interest in each Fund, each with its own investment
objectives and policies.
Each Fund's investment objective is to provide shareholders with long term
capital appreciation. The Value Fund seeks to achieve its objective by pursuing
a relative value philosophy, investing in stocks of companies that possess
above-average financial characteristics and that are attractively priced
relative to the market and to the prices at which stocks have sold on a
historical basis. The Digital Future Fund seeks to achieve its objective by
investing primarily in stocks of information technology companies.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Funds in the preparation of its financial statements. These policies are
in conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from these estimates.
SECURITY VALUATION-Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price on such exchanges,
or at the last bid price in the over-the-counter market except when, in the
Adviser's opinion, the last bid price does not accurately reflect the current
value of the security. When market quotations are not readily available, when
the Adviser determines the last bid price does not accurately reflect the
current value or when restricted securities are being valued, such securities
are valued as determined in good faith by the Adviser, subject to review by the
Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by an independent pricing
service which uses prices based upon yields or prices of comparable securities,
indications as to values from dealers, and general market conditions, when the
Adviser believes such prices accurately reflect the fair market value of the
security.
Short term investments in fixed income securities with maturities of less
than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized cost method of valuation, which the
Board has determined will represent fair value.
-16-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(CONTINUED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FEDERAL INCOME TAXES- The Funds intend to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its net investment income and any realized
capital gain. Therefore, no federal income tax provision is required.
DIVIDENDS AND DISTRIBUTIONS-Each Fund intends to distribute substantially
all of its net investment income as dividends to its shareholders on an annual
basis. Each Fund intends to distribute its net long-term capital gains and its
net short-term capital gains at least once a year. Income and capital gain
distributions to shareholders are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
Those differences are primarily due to differing treatments for net operating
losses and deferral of wash sale losses.
ORGANIZATION EXPENSES- During its organization and initial registration
with the Securities and Exchange Commission (the "SEC"), each Fund incurred
organization expenses. The Adviser was obligated to incur these expenses.
SECURITY TRANSACTIONS- The Funds follow industry practice and record
security transactions on the trade date. The first in first out identification
method is used for determining gains or losses for financial statements and
income tax purposes. Dividend income is recorded on the ex-dividend date and
interest income is recorded on an accrual basis. Discount and premium on
securities purchased are amortized over the life of the respective securities.
NOTE 3. INVESTMENT ADVISORY AGREEMENT AND OTHER RELATED PARTY TRANSACTIONS
The Trust retains Alpha Analytics Investment Group, LLC (the "Adviser"), to
manage the assets of each Fund. Under the terms of the agreement, a monthly fee
is paid to the Adviser at an annual rate of 1.50% of the average daily net
assets of each Fund. The Adviser pays all of the operating expenses for each of
the Funds except brokerage, taxes, interest, fees and expenses of non-interested
person trustees and extraordinary expenses. Through November 30, 2000, the
Adviser has agreed to waive 0.20% of average net assets from its fees so that
the fee would be 1.30% of average daily net assets.
For the year ended July 31, 2000, the Adviser earned advisory fees of
$73,892 and incurred expense reimbursements and waivers of $28,764. The Adviser
earned $52,544 from the Value Fund and $21,348 from the Digital Future Fund. The
Adviser waived fees and reimbursed expenses amounting to $16,880 for the Value
Fund and $11,884 for the Digital Future Fund.
The Adviser has entered into a sub-advisory agreement with Cambiar
Investors, Inc. to serve as the sub-adviser to the Value Fund.
-17-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(CONTINUED)
NOTE 3. INVESTMENT ADVISORY AGREEMENT AND OTHER RELATED PARTY TRANSACTIONS
(CONTINUED)
The Trust has agreements with American Data Services, Inc. (the
"Administrator") to provide shareholder servicing , fund accounting and
administrative services to the Funds. The services to be provided under the
agreements include day-to-day administration of matters related to the corporate
existence of the Funds (other than rendering investment advice), maintenance of
its records, preparation of reports, supervision of each Fund's arrangement with
its custodian and assistance in the preparation of the Trust's registration
statement under federal and state laws. For its services as administrator,
transfer agent, and fund accountant, American Data Services, Inc. receives a
monthly fee from the Adviser equal to an annual average rate based upon assets
and the number of shareholder accounts serviced subject to an annual minimum fee
of $43,200 per Fund.
Certain officers and trustees of the Trust are also officers and owners of
Alpha Analytics Investment Group, L.L.C. Beneficial ownership of more than 25%
of the voting securities of the Funds creates a presumption of control of this
Fund under Section 2(a)(9) of the Investment Company Act of 1940. As of July 31,
2000, Wildwood Enterprises owned more than 25% of the Value Fund.
The Trust has an agreement with AmeriMutual Funds Distributors, Inc. (the
"Distributor") to act as the principal distributor of the Funds' shares. The
services of the Administrator and Distributor are operating expenses paid by the
Adviser.
NOTE 4. FUND SHARE TRANSACTIONS
At July 31, 2000, there were an unlimited number of Fund shares authorized.
Paid in capital at July 31, 2000, for the Value Fund and Digital Future Fund,
amounted to $3,714,609 and $3,321,267, respectively.
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
ALPHA ANALYTICS VALUE FUND:
FOR THE YEAR FOR THE PERIOD
ENDED JANUARY 1, 1999(1)
JULY 31, 2000 TO JULY 31, 1999
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold .................... 119,834 $ 1,610,186 195,006 $ 2,071,723
Shares issued for reinvestment of
dividends and distributions
from realized gains ........... 9,917 127,727 0 0
Shares redeemed ................ (10,464) (146,015) (1) (12)
----------- ----------- ----------- -----------
Net increase ................... 119,287 $ 1,591,898 195,005 $ 2,071,711
=========== =========== =========== ===========
<FN>
(1) Commencement of operations.
</FN>
</TABLE>
-18-
<PAGE>
ALPHA ANALYTICS INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(CONTINUED)
NOTE 4. FUND SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
ALPHA ANALYTICS DIGITAL FUTURE FUND:
FOR THE PERIOD
DECEMBER 22, 1999(1)
TO JULY 31, 2000
SHARES AMOUNT
-----------------------------
<S> <C> <C>
Shares sold ................................ 251,011 $ 3,329,933
Shares issued for reinvestment of
dividends and distributions
from realized gains ....................... 0 0
Shares redeemed ............................ (672) (8,666)
----------- -----------
Net increase ............................... 250,339 $ 3,321,267
=========== ===========
(1) Commencement of operations.
NOTE 5. INVESTMENTS
Investment transactions, excluding short-term investments, for the year
ended July 31, 2000, were as follows:
DIGITAL
VALUE FUND FUTURE FUND
---------- -----------
Purchases........................... $ 4,889,834 $ 3,610,957
Sales............................... $ 3,290,160 $ 335,160
</TABLE>
NOTE 6. RECLASSIFICATIONS
In accordance with SOP 93-2, the Value Fund and the Digital Future Fund
have each recorded a reclassification in the capital accounts. As of July 31,
2000 the Value Fund and Digital Future Fund recorded permanent book/tax
differences from undistributed net investment income to realized capital gains
of ($10,572) and ($17,274), respectively. This reclassification has no impact on
the net asset value of the Funds and is designed generally to present
undistributed income and realized gains on a tax basis which is considered to be
more informative to shareholders.
-19-
<PAGE>
