SEMI-ANNUAL REPORT
Contrarian Value Fund
July 31, 1999
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FIRSTMARK PARTNERS
808 South 74th Plaza Suite #113
Omaha, Nebraska 68114-4666
(402) 391-3375
Dear Fellow Shareholders:
Welcome, we are delighted to have you as a shareholder of the Contrarian Value
Fund. Since the fund's inception on February 10, 1999 the fund's share price has
appreciated 2.40% verses a gain of 9.26% for the S&P 500 during the same period.
While we are disappointed with the fund's results thus far, we remain optimistic
that over the long term our "value" strategies may yield more promising results.
On July 31, 1999 the fund's portfolio consisted of 23 stocks making up 86.5% of
the fund's $746,733 assets. The remaining 13.5% of assets were held either in
cash or cash equivalents. A complete list of the fund's holdings as of July 31,
1999 can be seen on the accompanying Schedule of Investments.
James M. Griffin Jr., chief investment strategist at Aeltus Investment
Management in Hartford, Conn., has stated that so far in 1999 the top 15 stocks
in the S&P 500 have accounted for 70% of the total gain in the index. The Wall
Street Journal reported that 62.4% of the over 4,000 stocks listed in the New
York Stock Exchange are down for the year. It appears to me that currently it's
not just what you own that drives performance, but what you do not own may as
well.
Most of the stocks we may consider attractive for future investment I suspect
may fall in this 62.4%. That's where we believe we will find value over time.
For now, it appears to be a rather unrewarding place in the market to invest.
Nevertheless, we will continue to manage the fund in a manner that we believe
favors the types of stocks we believe offer a significant opportunity for
capital appreciation in an approach that is as sensible as it is simple.
We appreciate you patience and confidence. Thank you for your continued support
of our efforts.
Sincerely,
Mark H. Baumann, CFA, CFP
Chairman
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Contrarian Value Fund
Schedule of Investments
July 31, 1999 (unaudited)
Shares/Principal Amount Market Value % of Assets
Broadwoven Fabric Mills, Cotton
3,300 Fruit Of The Loom Inc. Cl A * 26,194 3.51%
Candy and Other Confectionery Products
500 Hershey Foods Corp. 29,000 3.89%
Canned Specialties
690 Campbell Soup Co. 30,360 4.07%
Chewing and Smoking Tobacco and Snuff
950 UST Inc. 29,450 3.95%
Cigarettes
800 Philip Morris Companies Inc. 29,800 3.99%
Drug Stores and Proprietary Stores
1,350 Rite Aid 28,602 3.83%
Drugs, Drug Proprietaries, and Druggists' Sundries
450 Cardinal Health 30,713 4.11%
Electronic Computers
1,250 Compaq Computer Corp. 30,000 4.02%
Food Like Products
1,750 Archer Daniels-Midland Co. 24,391 3.27%
Fire, Marine,and Casualty Insurance
900 Allstate Corp. 32,006 4.29%
Frozen Specialties, Nec
1,150 Conagra Inc 29,397 3.94%
Funeral Services and Crematories
1,500 Service Corp. Int'L. 23,813 3.19%
Games and Toys
900 Mattel Inc. 21,150 2.83%
General Medical and Surgical Hospitals
1,000 Tenet Healthcare Corp 17,937 2.40%
Heavy Construction, Nec
2,000 Foster Wheeler 24,375 3.27%
Hotels and Motels
2,200 Hilton Hotels Corp. 28,875 3.87%
*Non-Income producing securities.
The accompanying notes are an integral part of the financial statements.
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Contrarian Value Fund
Schedule of Investments
July 31, 1999 (unaudited)
Shares/Principal Amount Market Value % of Assets
Packaging Paper and Plastics Film, Coated and
Laminated
1,250 Tennaco * 28,516 3.82%
Petroleum Refining
800 Ashland Inc 30,400 4.07%
Pharmaceutical Preparations
950 Watson Pharm * 32,716 4.38%
School Buses
4,000 Laidlaw Inc 24,500 3.28%
Surgical and Medical Instruments and Apparatus
1,100 Becton Dickinson & Co. 30,181 4.04%
Telegraph and Other Message Communications
600 Level 3 Comm * 31,800 4.26%
Travel Trailers and Campers
1,350 Fleetwood 31,134 4.17%
Cash Equivalents
55,103 Foutian Square 55,103 7.38%
Total Investments (cost $745,254) 700,413 93.84%
Other Assets Less Liabilities 45,964 6.16%
Net Assets - Equivalent to $10.24 per share 746,377 100.00%
based on 72,858 shares of capital
stock outstanding (Note 4)
*Non-Income producing securities.
The accompanying notes are an integral part of the financial statements.
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Statement of Assets and Liabilities
July 31, 1999 (unaudited)
Assets:
Investment Securities at Market Value $700,413
(Identified Cost - 745,254)
Cash 46,170
Receivables:
Dividends and Interest 818
Total Assets 747,401
Liabilities
Payables:
Investment Securities Purchased -
Shareholder Distributions -
Accrued Expenses 1,024
Total Liabilities 1,024
Net Assets $746,377
Net Assets Consist of:
Capital Paid In 738,496
Undistributed Net Investment Income 3,902
Accumulated Realized Gain (Loss) on Investments - Net 48,820
Unrealized Appreciation in Value
of Investments Based on Identified Cost - Net (44,841)
Net Assets, for 72,858 Shares Outstanding $746,377
Net Asset Value and Redemption Price
Per Share ($746,377/72,858 shares) 10.24
Offering Price Per Share 10.24
Statement of Operations
For period ending July 31, 1999 (unaudited)
Investment Income:
Dividends 4,221
Interest 4,858
Total Investment Income 9,079
Expenses
Management Fees (Note 2) 3,698
Administrative Fees 1,479
5,177
Net Investment Income 3,902
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments 48,820
Unrealized Gain (Loss) from Appreciation (Depreciation)
on Investments (44,841)
Net Realized and Unrealized Gain (Loss) on Investments 3,979
Net Increase (Decrease) in Net Assets from Operations 7,881
The accompanying notes are an integral part of the financial statements.
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Statement of Changes in Net Assets
2/10/99
to
7/31/99
From Operations:
Net Investment Income 3,902
Net Realized Gain (Loss) on Investments 48,820
Net Unrealized Appreciation (Depreciation) (44,841)
Increase (Decrease) in Net Assets from Operations 7,881
From Distributions to Shareholders
Net Investment Income 0
Net Realized Gain (Loss) from Security Transactions 0
Net Increase (Decrease) from Distributions 0
From Capital Share Transactions:
Proceeds From Sale of 64,352 Shares 653,716
Net Asset Value of 0 Shares Issued on Reinvestment of
Dividends 0
Cost of 1,494 Shares Redeemed (15,220)
638,496
Net Increase in Net Assets 646,377
Net Assets at Beginning of Period (including undistributed
net investment income of $0) 100,000
Net Assets at End of Period (including undistributed net
investment income of $3,902) 746,377
Share Transactions:
Issued 64,352
Reinvested -
Redeemed (1,494)
Net increase (decrease) in shares 62,858
Shares outstanding beginning of period 10,000
Shares outstanding end of period 72,858
The accompanying notes are an integral part of the financial statements.
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Financial Highlights
Selected data for a share outstanding throughout the period: 2/10/99
to
7/31/99
Net Asset Value -
Beginning of Period 10.00
Net Investment Income 0.12
Net Gains or Losses on Securities
(realized and unrealized) 0.12
Total from Investment Operations 0.24
Dividends
(from net investment income) 0.00
Distributions (from capital gains) 0.00
Return of Capital 0.00
Total Distributions 0.00
Net Asset Value -
End of Period 10.24
Total Return 2.40%
Ratios/Supplemental Data
Net Assets - End of Period (Thousands) 746
Ratio of Expenses to Average Net Assets * 1.72%
Ratio of Net Income to Average Net Assets * 3.01 %
Portfolio Turnover Rate * 158.21%
* Annualized
The accompanying notes are an integral part of the financial statements.
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Contrarian Value Fund
Notes to Financial Statements
July 31, 1999 (unaudited)
1.) SIGNIFICANT ACCOUNTING POLICIES
Contrarian Value Fund (the "Fund") is a non-diversified series of Firstmark
Partners (the "Trust"), an open-end management investment company. The Trust
was organized in Delaware as a business trust and may offer shares of
beneficial interest in a number of separate series, each series representing a
distinct fund with its own investment objectives and policies. At present,
there is only one series authorized by the Trust, which series has been
designated as the Contrarian Value Fund. The Fund's primary investment
objective is to seek capital appreciation by primarily investing in a core
portfolio of 20-30 common stocks that the Fund's adviser believes to be
undervalued in the marketplace. Receipt of income is a secondary objective, as
some investments may yield dividends, interest or other income. Significant
accounting policies of the Fund are presented below:
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.
Fixed income securities generally are valued by using market quotations, but
may be valued on the basis of prices furnished by a pricing service when the
Adviser believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional- size trading units of debt
securities without regard to sale or bid prices. When prices are not readily
available from a pricing service, or when restricted or illiquid securities
are being valued, securities are valued at fair value as determined in good
faith by the Adviser, subject to review of the Board of Trustees. 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.
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 as earned. The
Fund uses 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 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.
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Contrarian Value Fund
Notes to Financial Statements
July 31, 1999 (unaudited)
2.) INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory and administration agreement
with Firstock Financial Services, Inc. The Fund is authorized to pay the
Adviser a fee equal to an annual average rate of 1.25% for investment adviser
services and a fee equal to an annual average rate of 0.50% for administrative
fees. As a result of the above calculation, for the period ending July 31,
1999, the management fee amounted to $3,698 and the administrative fee
amounted to $1,479.
3.) RELATED PARTY TRANSACTIONS
The owner of Firstock Financial Services, Inc. is also an owner and/or
trustee of the Contrarian Value Fund. This individual may receive
benefits from any management fee paid to the Advisor.
4.) CAPITAL STOCK AND DISTRIBUTION
At July 31, 1999 an indefinite number of shares of capital stock ($.10 par
value) were authorized, and paid-in capital amounted to $738,496.
Transactions in common stock were as follows:
5.) PURCHASES AND SALES OF SECURITIES
During the period ending July 31, 1999, purchases and sales of investment
securities other than U.S. Government obligations and short-term investments
aggregated $941,131 and $299,800 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 July 31, 1999.
7.) SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at July
31, 1999 was the same as identified cost.
At July 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:
Appreciation (Depreciation) Net Appreciation
(Depreciation)
11,713 (56,774) (44,841)
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Board of Trustees
Mark H. Baumann
Jane A. Baumann
John R. Wingender Jr.
Robin R. Richardson
Gary L. Teel
Investment Adviser
Firstock Financial Services, Inc.
808 south 74th Plaza, Suite #113
Omaha, Nebraska 68114-4666
Dividend Paying Agent,
Shareholders' Servicing Agent,
Transfer Agent
Mutual Shareholder Services
1301 E. 9th St., Suite 1005
Cleveland, Ohio 44114
Custodian
Fifth Third Bank
Mutual Fund Services
38 Fountain Square Plaza
MD 1090E5
Cincinnati, Ohio 45263
Counsel
Anderson, Berkshire, Lauritsen & Brower
8805 Indian Hills Dr., Suite.# 200
Omaha, Nebraska 68114
Independent Auditors
McCurdy & Associates CPA's, Inc.
27955 Clemens Rd
Westlake, Ohio 44145
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