Value Trend Funds
Annual Report June 30, 1999
Dear Shareholders:
We are pleased to present the first Annual Report for the Value Trend
Family of Funds and want to welcome our new Shareholders. The past six months
has been rewarding for our shareholders. More importantly, we are confident that
the current market volatility will not prove to be a long-term deterrent to
meeting our investment goals. The Value Trend Funds are off to a great start,
completing six full months of operations as of June 30, 1999. Through the first
half of 1999, the Value Trend Large Cap Fund gained 9.70% and the Value Trend
Links Fund gained 9.50%. Value Trend Funds invest in companies for the
long-term. Your investment in the Value Trend Funds should therefore also be for
the long-term, and we recommend you consider investing for a minimum of 3 to 5
years.
LONG-TERM OUTLOOK IS POSITIVE
Going forward, we anticipate the economy will continue to grow at a steady
rate with low inflation. This environment is great for the equities markets. Our
goal for the remainder 1999 and first half of 2000 will be to continue to focus
our investments in only those companies which have dominant franchises and
strong growth prospects. Moreover, we are very enthusiastic about the potential
of all the Fund's current holdings.
As a general principal we at Value Trend Funds believe that the baby boomer
generation will continue to drive our domestic economy over the next several
years. This coupled with the explosive growth in technology, which is expanding
at an exceptional rate, particularly in broad band communications bodes well for
the equity markets. Also, over the next several years, as the baby boomer
generation begins retirement, the leisure industry should do well. This is
particularly attractive for the Value Trend Links Fund.
You can be assured that we will be working hard on your behalf to continue
the trend that we began the first half of 1999. We want to thank our team
members - - our Transfer Agent, our Custodian Bank and our independent auditor -
- - for helping us get a solid start. Most importantly we want to thank you the
shareholder for your confidence and trust in the Value Trend Funds.
OUR PARTNERSHIP
The partnership between Value Trend Funds and our Shareholder's is very
important to us. We want to let each and every Shareholder know that we are
available to answer questions about the Value Trend Funds by calling 1-800-590-
0898 and pressing option 3. Below is additional information on our phone system.
When you call the (800) 590-0898 phone number you will be greeted by an
automated phone system that gives you four choices.
Option #1 Request a Prospectus and Applications ONLY. An answering service.
Option #2 Current NAV of the Funds (current share price).
Option #3 If you have a specific question about the Funds. Value Trend
Capital Management.
Option #4 If you have a question about your account, want to establish
automatic investing, or want to redeem shares. Our transfer agent, Mutual
Shareholder Services.
Thank you for investing in the Value Trend Funds. Please feel free to call
any time if you have questions about your account or if you have specific
questions about the Value Trend Funds.
<Ross C. Provence>
Ross C. Provence
President, Value Trend Funds
August 10, 1999
<PAGE>
The Value Trend Large Cap
Report from Ross C. Provence, Portfolio Manager
Dear valued Shareholder of the Value Trend Large Cap Fund: It is a pleasure
to welcome you to our new family of Funds. The Large Cap Fund, as the name
implies invests in companies which have a market capitalization of five billion
($5bil) dollars or more. As portfolio manager, I use a combination of value
investing and growth trends for the selection of the individual securities for
the fund. There is special emphasis in the sectors of technology, finance,
health care and communications, as these are the areas which in my opinion offer
the greatest growth potential over the next several years.
We are in a new technology revolution, which provides substantial
opportunity for the investor. It is our job to pick the industries within
technology that will provide the best possible opportunity for value and growth.
Broadband communication is probably the most import area of our future
concentration. At the present time, with millions of new subscribers to the
internet services, the most limiting factor is speed of communication. Those
companies which provide faster access to the system, mainly a select group of
equipment providers and chip makers, will be very profitable for several years
to come. The whole world is their market and the trend is clearly established
for the future.
It is the job of communication companies to provide access services to the
system developed by technology companies. A select group of these companies will
prosper over the next decade as they link people from all areas of the world
together in one giant web. The financial services sector, particularly those
servicing the baby boomer generation who are now saving at a record rate for
retirement, will be profitable over the next several years. Finally, as the
eighty million baby boomers retire, they will need more and more health care
services. These are the areas in which the Value Trend Large Cap Fund will
concentrate over the next year.
<Ross C. Provence>
Ross C. Provence
August 10. 1999
The Value Of a $10,000 Investment In The Value Trend Large Cap Fund From Its
Inception (1/1/99) To Present (6/30/99) As Compared To The Standard & Poor's 500
Index Chart
6/30/99 NAV $10.97
Total Return* Through 6/30/99 From Fund Inception 1/1/99
Value Trend Large Cap Fund 9.70%
Standard & Poor's 500 Index** 12.38%
Wilshire Top 750** 11.82%
*Total return includes change in share prices and in each case includes
reinvestment of any dividends and capital gain distributions. **Each of the
indexes or averages is an unmanaged group of stocks whose composition is
different from the Fund. The S&P 500 is a broad market-weighted average
dominated by blue-chip stocks. The Wilshire Top 750 consists of 750 domestic
stocks chosen from market size, liquidity, and industry group representation.
Page 2
<PAGE>
The Value Trend Links Fund
Report from Jeffrey R. Provence, Portfolio Manager
Dear valued Shareholder of the Value Trend Links Funds. I want to welcome
you and thank you for your optimism about this unique fund. As you well know by
now, the Value Trend Links Fund invests primarily in common stocks of companies
which are associated with the golfing industry. Companies which are candidates
for this Fund may be, but are not limited to companies in the golfing industry,
sponsors of major golfing events, companies which produce products for the
golfing industry, and real estate investment trusts. Our Shareholders will
notice that our holdings represent a wide range of asset classes and our
holdings include some of the strongest franchises in the World.
As of June 30, 1999 the Value Trend Links Fund posted a gain of 9.50%.
Because the Value Trend Links Fund has a unique investment discipline, we have
decided to measure the Links Funds against the most common index which is the
Standard & Poor's 500. Please see the chart for a comparison of performance
relative to the Standard & Poor's 500.
Today, an estimated 27 million Americans play golf, and interest in the
sport is growing. The demographics are extremely positive with eighty million
baby boomers soon reaching retirement. It is clear that many baby boomers will
be starting to play golf as they reach their golden years which should give us
additional investment opportunities over the coming years.
I look forward to a long and prosperous relationship and am confident in
the long-term outlook for the Links Fund. In fact, my wife and I have invested
our IRA accounts in the Links Fund.
<Jeffrey R. Provence>
Jeffrey R. Provence
Value Trend Links Fund
August 10, 1999
The Value Of A $10,000 Investment In The Value Trend Links Fund From Its
Inception (1/1/99) To Present (6/30/99) As Compared To The Standard & Poor's 500
Index
6/30/99 NAV $10.95
Total Return* Through 6/30/99 From Fund Inception 1/1/99 Value Trend Links Fund
9.50% Standard & Poor's 500 Index** 12.38% Standard & Poor's MidCap 400 Index**
8.68%
*Total return includes change in share prices and in each case includes
reinvestment of any dividends and capital gain distributions. **Each of the
indexes or averages is an unmanaged group of stocks whose composition is
different from the Fund. The S&P 500 is a broad market-weighted average
dominated by blue-chip stocks. The S&P MidCap 400 is consists of 400 domestic
stocks chosen from market size, liquidity, and industry group representation.
Page 3
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
Value Trend Funds
We have audited the accompanying statement of assets and liabilities of the
Value Trend Funds (comprising, respectively, the Value Trend Large Cap Fund and
the Value Trend Links Fund), including the schedule of portfolio investments, as
of June 30, 1999, and the related statement of operations for the year then
ended, the statement of changes in net assets for the year then ended, and
financial highlights for the period from January 1, 1999 (commencement of
operations) to June 30, 1999 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.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 investments and cash held as
of June 30, 1999 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
Value Trend Funds as of June 30, 1999, the results of its operations for the
year then ended, the changes in its net assets for the year then ended, and the
financial highlights for the period from January 1, 1999 (commencement of
operations) to June 30, 1999 in the period then ended, in conformity with
generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
July 17, 1999
<PAGE>
Value Trend Links Fund
Schedule of Investments
June 30, 1999
Shares/Principal Amount Market Value % of Assets
Air Courier Services
190 FDX Corp. * $10,308 2.37%
Aircraft
90 Textron 7,408 1.70%
Amusement and Recreation Services, Nec
500 Family Golf Centers* 3,844 0.88%
Commercial Banks, Nec
315 Citigroup 14,963 3.44%
Computer Peripheral Equipment, Nec
620 Cisco Systems Inc. * 39,990
800 EMC Corporation * 44,000
83,990 19.33%
Deep Sea Transportation of Passengers, Except byFerry
225 Royal Caribbean 9,844 2.27%
Drug Stores and Proprietary Stores
175 CVS Corp. 8,881 2.04%
Eating and Drinking Places
160 McDonalds Corp. 6,580
200 Wendy's International Inc. 5,700
12,280 2.83%
Electronic Computers
320 Gateway Inc.* 18,880
160 International Business Machines Inc. 20,720
39,600 9.11%
General Industrial Machinery and Equipment, Nec
150 Ingersoll-Rand 9,694 2.23%
Hardware, Nec
100 Fortune Brands 4,138 0.95%
Hotels and Motels
250 Starwood Hotels 7,641 1.76%
Lumber and Other Building Materials Dealers
225 Home Depot Inc. 14,513 3.34%
Men's and Boys' Shirts, Except Work Shirts
300 Cutter & Buck* 5,062
120 Tommy Hilfiger* 8,790
13,852 3.20%
*Non-income producing securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Shares/Principal Amount Market Value % of Assets
National Commercial Banks
130 Bankamerica Corp. $9,531 2.19%
Personal Credit Institutions
110 American Express Co. 14,314 3.29%
Prepackaged Software
260 Microsoft Corp. * 23,449 5.40%
Real Estate Investment Trusts
400 Golf Trust Of America 9,775 2.25%
Rubber and Plastics Footwear
170 Nike Inc. Cl B 10,762 2.48%
Security Brokers, Dealers, and Flotation Companies
165 Schwab (Charles) Corp. 17,985 4.14%
Sporting and Athletic Goods, Nec
1,200 Callaway Golf 17,550 4.04%
Stationery Stores
375 Office Depot Inc. * 8,273 1.90%
Telephone Communications, Except Radiotelephone
350 American Telephone & Telegraph 19,534
150 Bell Atlantic Corp. 9,806
120 GTE Corp. 9,060
280 Qwest Communications Intl.* 9,257
215 MCI Worldcom Inc.* 18,503
66,160 15.24%
Total Common Stocks 418,755 96.38%
Cash Equivalents
15,009 Fifth Third Bank Repo 4.40, 07-01-99 15,009 3.45%
Total Investments (Cost - $392,898 ) 433,764 99.83%
Other Assets Less Liabilities 736 0.17%
Net Assets - Equivalent $434,500 100.00%
*Non-income producing securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Value Trend Large Cap Fund
Schedule of Investments
June 30, 1999
Shares/Principal Amount Market Value % of Assets
Biological Products, Except Diagnostic Substances
150 Amgen Inc. * $9,131 2.94%
Commercial Banks, Nec
225 Citigroup 10,688 3.44%
Computer Peripheral Equipment, Nec
260 Cisco Systems Inc. * 16,770
310 EMC Corporation * 17,050
33,820 10.87%
Computer Programming Services
200 At Home Corp.* 10,787 3.47%
Construction Machinery and Equipment
140 Caterpillar Inc. 8,400 2.70%
Department Stores
140 Dayton-Hudson Corp. 9,100
255 TJX Companies Inc. 8,495
17,595 5.66%
Eating and Drinking Places
120 McDonalds Corp. 4,935 1.59%
Electric Housewares and Fans
75 General Electric Co. 8,475 2.73%
Electronic Computers
200 Gateway Inc.* 11,800
100 International Business Machines Inc. 12,950
24,750 7.96%
Fire, Marine, and Casualty Insurance
200 Allstate Corp. 7,200 2.32%
Information Retrieval Services
100 America Online* 11,025 3.55%
Lumber and Other Building Materials Dealers
210 Home Depot Inc.* 13,545 4.36%
Medical, Dental, and Hospital Equipment and Supplies
50 Johnson & Johnson 4,900 1.58%
*Non-income producing securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Motion Picture and Video Tape Production
100 Disney (Walt) Co. $3,063 0.99%
Motor Vehicles and Passenger Car Bodies
60 Ford Motor Co. 3,435 1.11%
National Commercial Banks
150 Bankamerica Corp. 10,997
75 Morgan (J.P) & Co. Inc. 10,537
21,534 6.92%
Office Machines, Nec
100 Minnesota Mining & Manuf. Co. 8,694 2.80%
Pharmaceutical Preparations
65 American Home Products Corp. 3,729
100 Merck & Co. Inc. 7,362
11,091 3.57%
Prepackaged Software
170 Microsoft Corp. * 15,332 4.93%
Radio and Television Broadcasting and Communication Equipmen
100 Qualcomm Inc. 14,350 4.62%
Security Brokers, Dealers, and Flotation Companies
130 Lehman Brothers Holdings Inc. 8,076 2.60%
Semiconductors and Related Devices
150 Intel Corp. 8,925 2.87%
Telephone Communications, Except Radiotelephone
150 American Telephone & Telegraph 8,372
65 Ameritech Corp. 4,778
198 Lucent Technologies 13,352
55 Bell Atlantic Corp. 3,596
200 Qwest Communications Intl.* 6,613
100 MCI Worldcom Inc.* 8,606
45,317 14.58%
Total Investments (Cost - $270,268 ) 305,068 98.16%
Other Assets Less Liabilities 5,717 1.84%
Net Assets - Equivalent $310,785 100.00%
*Non-income producing securities
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Assets & Liabilities
Value Trend Links & Large Cap Funds June 30, 1999
Value Trend Value Trend
Links Large Cap
Fund Fund
Assets:
Investment Securities at Market Value $433,764 $305,068
(Identified Costs - $392,898 and $270,268)
Cash 739 5,840
Receivables:
Dividends and interest receivable 461 178
Total Assets 434,964 311,086
Liabilities:
Accrued Expenses 464 301
Total Liabilities 464 301
Net Assets 434,500 310,785
Net Assets Consist Of:
Paid In Capital 404,052 285,844
Accumulated Realized Gain (Loss)
on Investments - Net (10,418) (9,859)
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net 40,866 34,800
Net Assets $434,500 $310,785
Shares of capital stock 39,690 28,335
Net asset value per share $10.95 $10.97
Ordering price per share $10.95 $10.97
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Operations
Value Trend Links & Large Cap Funds For the period ended June 30, 1999
Value Trend Value Trend
Links Large Cap
Fund Fund
Investment Income:
Dividend income $263 $156
Interest income 1,453 1,117
Total Income 1,716 1,273
Expenses:
Investment advisory fees (Note 2) 2,084 1,532
Total Expenses 2,084 1,532
Net Investment Income (Loss) (368) (259)
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments (10,418) (9,859)
Unrealized Gain (Loss) from Appreciation
(Depreciation) on Investments 40,866 34,800
Net Realized and Unrealized Gain (Loss) on Investments 30,448 24,941
Net Increase (Decrease) in Net Assets from Operations $30,080 $24,682
The accompanying notes are an integral part of the financial statements.
<PAGE>
Statement of Changes in Net Assets
Value Trend Links & Large Cap Funds "June 30, 1999"
Value Trend Value Trend
Links Large Cap
01/01/99 01/01/99
to to
06/30/99 06/30/99
From Operations:
Net Investment Income $(368) $(259)
Net Realized Gain (Loss) on Investments " (10,418)" " (9,859)"
Net Unrealized Appreciation (Depreciation) " 40,866 " " 34,800 "
Increase (Decrease) in Net Assets from Operations " 30,080 " " 24,682 "
Distributions to shareholders:
Net Investment Income - -
Net Realized Gain (Loss) from Security
Transactions - -
Change in net assets from distributions - -
From Capital Share Transactions:
Proceeds from sale of shares " 356,317 " " 236,103 "
Dividend reinvestment - -
Cost of shares redeemed " (1,897)" -
Change in net assets from capital transactions " 354,420 " " 236,103 "
Change in net assets " 384,500 " " 260,785 "
Net Assets:
Beginning of period " 50,000 " " 50,000 "
End of period (including accumulated
undistributed
net investment income of $0) " $434,500 " " $310,785 "
Share Transactions:
Issued " 34,864 " " 23,335 "
Reinvested - -
Redeemed (174) -
Net increase (decrease) in shares " 34,690 " " 23,335 "
Shares outstanding beginning of period " 5,000 " " 5,000 "
Shares outstanding end of period " 39,690 " " 28,335 "
The accompanying notes are an integral part of the financial statements.
<PAGE>
Financial Highlights
Value Trend Links and Large Cap Funds
Selected data for a share of capital stock outstanding throughout the period
indicated
Value Trend Value Trend
Links Large Cap
01/01/99 01/01/99
to to
06/30/99 06/30/99
Net Asset Value -
Beginning of Period $10.00 $10.00
Net Investment Income (0.01) (0.01)
Net Gains or Losses on Securities
(realized and unrealized) 0.96 0.98
Total from Investment Operations 0.95 0.97
Distributions - -
Net Asset Value -
End of Period $10.95 $10.97
Total Return 9.50% 9.70%
Ratios/Supplemental Data:
Net Assets at end of period (thousands) 435 311
Ratio of expenses to average net assets * 1.35% 1.25%
Ratio of net income to average net assets * -0.25% -0.23%
Portfolio turnover rate * 76.49% 57.25%
* Annualized
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes to Financial Statements
Value Trend Funds
June 30, 1999
1.) SIGNIFICANT ACCOUNTING POLICIES
Value Trend Funds (the "Trust") is registered under the Investment
Company Act of 1940 with two separately managed non-diversified, no-load
portfolios (each a "Fund" and collectively, the "Funds). The Trust is
organized as a Massachusetts business trust on September 14, 1998. The
two separate Funds are the Large Cap Fund and the Links Fund. Each
Fund's investment objective is long-term growth of capital. The Large
Cap Fund seeks to achieve its objective by investing substantially all
of its assets in common stocks of well-established, high quality U.S.
Companies. The Links Fund seeks to achieve its objective by investing
primarily in common stocks of companies which are associated with the
golfing industry. Significant accounting policies of the Funds are
presented below:
SECURITY VALUATION
Both Funds intend 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 (the trade dates). Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is
recorded on an accrual basis. Both Funds use the identified cost basis
in computing gain or loss on sale of investment securities. Discounts
and premiums on securities purchased are amortized over the life of the
respective securities.
INCOME TAXES
It is both Funds' 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 both Funds' policy to distribute
annually, after the end of the calendar 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.
2.) INVESTMENT ADVISORY AGREEMENT
The Trust has entered into an investment advisory and administration
agreement with Value Trend Capital Management, LP. The Investment
Advisor receives from the Value Trend Links Fund as compensation for its
services to that Fund an annual fee of 1.35%. The Investment Advisor
also receives from the Value Trend Large Cap Fund as compensation for
its services to that Fund an annual fee of 1.25%. For the period ending
June 30, 1999 the Advisor earned $2,084 in management fees for the Value
Trend Links Fund and the Advisor earned $1,532 in management fees for
the Value Trend Large Cap Fund. The advisor pays all fund expenses.
<PAGE>
3.) RELATED PARTY TRANSACTIONS
Certain owners of Value Trend Capital Management, LP are also owners
and/or directors of the Value Trend Funds. These individuals may
receive benefits from any management fees paid to the Advisor. Value
Trend Capital Management, LP serves as distributor and administrator of
the Funds. No compensation is received for these services.
4.) CAPITAL STOCK AND DISTRIBUTION
At June 30, 1999, an indefinite number of shares of capital stock
without, par value, were authorized, and paid-in capital amounted to
$404,052 for the Value Trend Links Fund $285,844 for the Value Trend
Large Cap Fund.
5.) PURCHASES AND SALES OF SECURITIES
The table below displays information describing purchases and sales of
investment securities, excluding short-term investments made during the
six months ending June 30, 1999.
Value Trend Value Trend Large
Links Fund Cap Fund
---------- ----------
Purchases $496,195 $343,415
Sales 107,891 63,288
6.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at June
30, 1999 was the same as identified cost.
At June 30, 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:
Value Trend Value Trend
Links Fund Large Cap Fund
---------- --------------
Appreciation $52,490 $41,174
(Depreciation) (11,624) (6,374)
Net Appreciation 40,866 34,800
(Depreciation)
7.) RECLASSIFICATION
In accordance with AICPA Statement of Position 93-2, the components of
the net assets of the Value Trend Links Fund have been reclassified to
the extent that the net investment loss of ($368) sustained during the
six months ending June 30, 1999, which represents a permanent difference
for income tax purposes, has been reclassified as a decrease in the net
paid-in-capital.
The components of the net assets of the Value Trend Large Cap Fund have
been reclassified to the extent that the net investment loss of ($259)
sustained during the six months ending June 30, 1999, which represents a
permanent difference for income tax purposes, has been reclassified as a
decrease in the net paid-in-capital.
