<PAGE> 1
[CHOICE LOGO]
SEMI-ANNUAL REPORT
APRIL 30, 2000
[PHOTO]
Choice Focus Fund
Choice Balanced Fund
<PAGE> 2
CHOICE FUNDS
Semi-Annual Report
April 30, 2000
Table of Contents
Choice Focus Fund . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . 4
Statement of Assets and Liabilities . . . . . . . . . . . . . . . 6
Statement of Operations . . . . . . . . . . . . . . . . . . . . . 7
Statement of Changes in Net Assets . . . . . . . . . . . . . . . .8
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . .9
Choice Balanced Fund . . . . . . . . . . . . . . . . . . . . . . . . .10
Schedule of Investments . . . . . . . . . . . . . . . . . . . . .11
Statement of Assets and Liabilities . . . . . . . . . . . . . . .14
Statement of Operations . . . . . . . . . . . . . . . . . . . . .15
Statement of Changes in Net Assets . . . . . . . . . . . . . . . 16
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . 17
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 18
<PAGE> 3
Choice Focus Fund
Objective
The Choice Focus Fund seeks capital appreciation by investing primarily in 20-30
securities of companies that the portfolio manager believes have superior
potential for earnings growth.
CHOICE FOCUS FUND
[PHOTO]
Perspectives from Pat Adams. . .
We feel the Choice Focus Fund has performed very strongly from its inception
through April 30, 2000, up 22.01% versus only 7.20% for the S&P 500(R) Stock
Index over the same time period.
At Choice we look for great companies that we believe can become big
investments. We work hard to focus our efforts on picking only the very best
ideas.
Generally, we will own 20-30 core positions in the Choice Focus Fund.(1) We seek
out companies that we believe are high quality, fast growing and have the
ability to dominate their market. To attempt to avoid unwarranted volatility, we
apply strict valuation disciplines to our portfolio.
We have been concerned about a correction in the technology sector since late
1999. Our concerns centered on very high expectations and the potential for
slowing but still very strong earnings momentum. Our secondary concern about
technology was the prospect of higher interest rates affecting lofty valuations.
The technology sector started correcting in March, as we approached first
quarter earnings reports that came out in April. The correction in technology
was exacerbated by the expectation that the Federal Reserve would raise
interest rates again. We began investing more of the portfolio in the technology
sector as some of the companies we liked came down in price with the severe
correction in the Nasdaq. At the end of April, the Choice Focus Fund had
significantly raised its weighting in technology-related securities to over 50%
of the portfolio. This strategy worked very well, as the S&P 500(R) Stock
Index was down 0.78% and the Nasdaq was down 5.08%, while the Choice Focus Fund
was up 3.57% year-to-date through April 30th.(2)
We are very optimistic about the need for more communication capacity due to the
ever-growing traffic demands of the Internet. Some of the purchases we made that
address this fast growing sector, called broadband technology, are SDL, a maker
of optical components, and PMC-Sierra, a maker of semiconductor devices. As com-
munication capacity expands it will continue to fuel increased content on the
Internet. Our largest position in the portfolio at the end of April was Lycos,
which is growing strongly by providing advertising and services on the
Internet.(3)
----------
(1) The Choice Focus Fund is non-diversified, therefore it is more exposed to
individual stock volatility and market pressure than a fully diversified
fund.
(2) The Nasdaq Composite Index is an unmanaged index that measures all Nasdaq
domestic and non-U.S. based common stocks listed on The Nasdaq Stock
Market. The Index is market-value weighted. For the period from 11-1-99 to
4-30-00, the total return of the Index was 30.26%. It is not possible to
make a direct investment in an index.
(3) As of April 30, 2000, SDL, PMC-Sierra, Lycos, Associates First Capital and
Household International comprised 3.40%, 3.11%, 8.48%, 2.49%, and 1.60%,
respectively, of the Fund's net assets. Portfolio composition will change
over time due to ongoing management of the Fund. References to a specific
security should not be construed as a recommendation of the Fund, its
Advisor or Distributor.
2 Choice Focus Fund
<PAGE> 4
CHOICE FOCUS FUND
Strategy
The portfolio manager looks for reasonably priced securities of companies that
occupy a dominant position in a market due to size, products or services, and
whose growth potential is not yet fully reflected in the company's stock price.
In addition to having a large position in technology-related securities, we also
have invested in other growth companies that we believe have attractive
valuations, such as financial stocks like Associates First Capital and Household
International.(3) Other sectors we favor are radio stations, retailers and paper
products.
During much of the period, the Fund had a significant portion of its assets in
cash and similar securities. We believe that our higher cash position is prudent
until the market provides us with further buying opportunities or until the
Federal Reserve is finished raising interest rates. We will continue to apply
our fundamental research process to select our best ideas and are pleased with
our performance through this volatile market.
INVESTMENT RETURNS TABLE
As of April 30, 2000
<TABLE>
<CAPTION>
Total Return
Since Inception*
--------------------------------------------------------------------------------
<S> <C>
CHOICE FOCUS FUND (inception date 11-1-99) 22.01%
S&P 500(R) Stock Index 7.20%
* Not annualized
</TABLE>
Performance is historical and does not represent future results. A Fund's
performance, especially for very short periods of time, should not be the sole
factor in making your investment decisions. Investment returns and principal
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost. The Fund achieved its short term performance through
investments in favorable markets, new securities issuances and investments in
technology, which may not be sustainable.
[LINE GRAPH]
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 11-1-99 to 4-30-00
<TABLE>
<CAPTION>
CHOICE FOCUS FUND S&P 500
----------------- -------
<S> <C> <C>
31-0ct-99 10,000 10,000
30-Nov-99 11,530 10,203
31-Dec-99 11,780 10,804
31-Jan-00 11,680 10,261
29-Feb-00 12,661 10,067
31-Mar-00 13,382 11,052
30-Apr-00 12,201 11,720
</TABLE>
This chart assumes an initial investment of $10,000 made on 11-1-99. Total
Return is based on net change in N.A.V. assuming reinvestment of distributions.
Returns shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent past
performance, which is no guarantee of future results, and will fluctuate. In the
absence of fee waivers, Total Return would be reduced. The investment return and
principal value of an investment in the Choice Focus Fund will fluctuate so that
an investor's shares in the Fund, when redeemed, may be worth more or less than
their original cost.
The S&P 500(R) Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The returns for this Index do not reflect any fees or expenses. It is
not possible to make a direct investment in an index.
Choice Focus Fund 3
<PAGE> 5
Choice Focus Fund
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number of Shares Value
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 80.0%
Banking 3.3%
15,000 Bank of America Corp. $ 735,000
18,000 First Union Corp. 573,750
----------
1,308,750
----------
Computer Networking 4.6%
32,000 Extreme Networks, Inc.* 1,844,000
----------
Financial Services 5.4%
45,000 Associates First Capital Corp. 998,437
15,400 Household International, Inc. 642,950
6,000 Providian Financial Corp. 528,375
----------
2,169,762
----------
Manufacturing 2.9%
25,700 Tyco International Ltd. 1,180,594
----------
Paper Products 3.8%
32,000 Fort James Corp. 766,000
19,500 Willamette Industries, Inc. 744,656
----------
1,510,656
----------
Radio Stations 5.3%
14,000 AMFM, Inc.* 929,250
35,500 Infinity Broadcasting Corp.* 1,204,781
----------
2,134,031
----------
Retail 1.7%
8,000 Circuit City Stores- Circuit City Group 470,500
4,600 Lowe's Companies, Inc. 227,700
----------
698,200
----------
Semiconductors 18.0%
10,000 Advanced Micro Devices, Inc.* 877,500
20,000 Cypress Semiconductor Corp.* 1,038,750
7,500 Intel Corp. 951,094
18,000 Lam Research Corp.* 825,750
6,500 Novellus Systems, Inc.* 433,469
6,500 PMC-Sierra, Inc.* 1,247,188
7,000 SDL, Inc.* 1,365,000
17,500 Therma-Wave, Inc.* 481,250
----------
7,220,001
----------
</TABLE>
See notes to financial statements.
4 Choice Focus Fund
<PAGE> 6
Choice Focus Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number of Shares Value
------------------------------------------------------------------------------
<S> <C> <C> <C>
Service 11.6%
73,200 Lycos, Inc.(*) $ 3,403,800
46,700 Primark Corp. 1,260,900
-----------
4,664,700
===========
Software 16.3%
16,500 Allaire Corp.(*) 908,531
104,200 Cadence Design Systems, Inc.(*) 1,751,863
18,000 Commerce One, Inc.(*) 1,099,125
8,000 Numerical Technologies, Inc.(*) 334,000
13,500 Portal Software, Inc.(*) 619,313
95,800 Razorfish, Inc.(*) 1,814,212
-----------
6,527,044
===========
Wireless Equipment 7.1%
24,000 Motorola, Inc. 2,857,500
-----------
TOTAL COMMON STOCKS
(cost $30,157,933) 32,115,238
-----------
Principal Amount
----------------
SHORT-TERM INVESTMENT 20.3%
$8,137,370 UMB Bank Money Market Fiduciary 8,137,370
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $8,137,370) 8,137,370
-----------
TOTAL INVESTMENTS 100.3%
(cost $38,295,303) 40,252,608
Liabilities less Other Assets (0.3%) (113,095)
-----------
NET ASSETS 100.0% $40,139,513
===========
</TABLE>
(*) Non-income producing
See notes to financial statements.
Choice Focus Fund 5
<PAGE> 7
Choice Focus Fund
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $38,295,303) $40,252,608
Cash 38,940
Receivable for investments sold 3,612,405
Receivable for fund shares sold 7,000
Interest and dividends receivable 33,894
Receivable from Adviser 799
Other assets 16,479
-----------
Total assets 43,962,125
===========
LIABILITIES:
Payable for investments purchased 3,688,580
Accrued investment advisory fee 32,876
Accrued distribution fee 17,795
Accrued expenses 83,361
-----------
Total liabilities 3,822,612
-----------
NET ASSETS $40,139,513
===========
NET ASSETS CONSIST OF:
Paid in capital $38,128,432
Accumulated net investment loss (30,407)
Accumulated net realized gain on investments 84,183
Net unrealized appreciation on investments 1,957,305
-----------
NET ASSETS $40,139,513
===========
CAPITAL STOCK (NO PAR VALUE)
Issued and outstanding (unlimited shares authorized) 3,291,962
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $12.19
===========
</TABLE>
See notes to financial statements.
6 Choice Focus Fund
<PAGE> 8
Choice Focus Fund
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2000 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 31,540
Interest 265,651
----------
297,191
----------
EXPENSES:
Investment advisory fees 157,555
Shareholder servicing fees 58,506
Distribution fees 39,389
Fund administration and accounting fees 29,668
Professional fees 28,790
Federal and state registration fees 25,825
Reports to shareholders 25,541
Trustees' fees and related expenses 15,625
Custody fees 6,558
Other 9,402
----------
Total expenses before waiver and reimbursements 396,859
Waiver and reimbursements of expenses by Adviser (42,760)
----------
Net expenses 354,099
----------
NET INVESTMENT LOSS (56,908)
----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investments 141,091
Change in unrealized appreciation/depreciation on investments 1,957,305
----------
NET GAIN ON INVESTMENTS 2,098,396
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,041,488
</TABLE> ==========
See notes to financial statements.
Choice Focus Fund 7
<PAGE> 9
Choice Focus Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment loss $ (56,908)
Net realized gains on investments 141,091
Change in unrealized appreciation/depreciation on investments 1,957,305
-----------
Net increase in net assets resulting from operations 2,041,488
-----------
DISTRIBUTIONS PAID:
In excess of net investment income (30,407)
-----------
Net decrease in net assets resulting from distributions paid (30,407)
-----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 45,611,526
Shares issued to holders in reinvestment of distributions 29,438
Shares redeemed (7,612,532)
-----------
Net increase in net assets resulting from capital share transactions 38,028,432
-----------
TOTAL INCREASE IN NET ASSETS 40,039,513
-----------
NET ASSETS:
Beginning of period 100,000
-----------
End of period $40,139,513
===========
</TABLE>
See notes to financial statements.
8 Choice Focus Fund
<PAGE> 10
Choice Focus Fund
FINANCIAL HIGHLIGHTS
For the Six Months Ended April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss (0.02)
Net realized and unrealized gains on investments 2.22
-------
Total Income (Loss) from Investment Operations 2.20
-------
LESS DISTRIBUTIONS PAID:
From net investment income (0.01)
-------
Total Distributions Paid (0.01)
-------
NET ASSET VALUE, END OF PERIOD $ 12.19
=======
TOTAL RETURN(1) 22.01%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $40,140
Ratio of expenses to average net assets (2)(3) 2.25%
Ratio of net investment loss to average net assets (2)(3) (0.36)%
Portfolio turnover rate 965%
</TABLE>
(1) Not annualized for periods less than a full year.
(2) Net of waiver and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net assets
would have been 2.52%, and the ratio of net investment income to average
net assets would have been (0.63)% for the six months ended April 30,
2000.
(3) Annualized
See notes to financial statements.
Choice Focus Fund 9
<PAGE> 11
CHOICE BALANCED FUND
Choice Balanced Fund
OBJECTIVE
The Choice Balanced Fund seeks capital appreciation and current income by
investing primarily in a diverse group of domestic equity and fixed income
securities.
The Choice Balanced Fund commenced operations on April 1, 2000. Although the
Fund was operational for only one month, it had competitive returns of 4.10%
relative to the S&P 500(R) Stock Index which was down 3.01%. We take a
bottom-up approach to allocating assets between stocks, bonds, and cash. At
Choice, we build our portfolio one security at a time. The more confidence we
have in each individual equity security, the more we generally will have
invested in stocks. Conversely, if it is difficult to find stocks that we
believe have a significant enough upside potential, we will generally own less
in equities and more in fixed income and cash.
The Balanced Fund's fixed income component was invested in investment grade
corporate bonds with shorter maturities as of April 30, 2000. We believe our
fixed income style captures a higher amount of income relative to the general
treasury yield curve.
The Balanced Fund's asset allocation as of April 30, 2000 was approximately 43%
in equities, 28% in fixed income, and the remainder in cash. We will continue to
manage our mix between stocks, bonds, and cash, and anticipate increasing our
equity allocation as opportunities arise.
INVESTMENT RETURNS TABLE
<TABLE>
<CAPTION>
As of April 30, 2000 Total Return
Since Inception(*)
---------------------------------------------------------------------------
<S> <C>
CHOICE BALANCED FUND (inception date 4-1-00) 4.10 %
---------------------------------------------------------------------------
S&P 500(R) Stock Index (3.01)%
</TABLE>
Performance is historical and does not represent future results. A Fund's
performance, especially for very short periods of time, should not be the sole
factor in making your investment decisions. Investment returns and principal
will fluctuate so that shares, when redeemed, may be worth more or less than
their original cost.
[LINE GRAPH]
GROWTH OF AN ASSUMED $10,000 INVESTMENT
From 4-1-00 to 4-30-00
<TABLE>
<CAPTION>
<S> <C> <C>
CHOICE BALANCED FUND S&P 500
---------------------- -------
31-Mar-00 10,000 10,000
07-Apr-00 10,320 10,122
14-Apr-00 9,860 9,056
21-Apr-00 10,120 9,577
30-Apr-00 10,410 9,699
</TABLE>
This chart assumes an initial investment of $10,000 made on 4-1-00. Total return
is based on net change in N.A.V. assuming reinvestment of distributions. Returns
shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent past
performance, which is no guarantee of future results, and will fluctuate. In
the absence of fee waivers, Total Return would be reduced. The investment return
and principal value of an investment in the Choice Balanced Fund will fluctuate
so that an investor's shares in the Fund, when redeemed may be worth more or
less than their original cost.
The S&P 500(R) Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two thirds of the total market value of all domestic common
stocks. The returns for this Index do not reflect any fees or expenses. It is
not possible to make a direct investment in an index.
10 Choice Balanced Fund
<PAGE> 12
Choice Balanced Fund
SCHEDULE OF INVESTMENTS
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number of Shares Value
----------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 43.4%
Banking 3.4%
5,000 Bank of America Corp. $ 245,000
6,000 First Union Corp. 191,250
---------
436,250
---------
Computer Networking 2.3%
5,000 Extreme Networks, Inc.(*) 288,125
---------
Financial Services 4.1%
14,500 Associates First Capital Corp. 321,719
10,000 Heller Financial, Inc. 194,375
---------
516,094
---------
Manufacturing 0.4%
1,000 Tyco International Ltd. 45,938
---------
Paper Products 2.9%
9,000 Fort James Corp. 215,437
4,100 Willamette Industries, Inc. 156,569
---------
372,006
---------
Radio Stations 2.5%
4,000 AMFM, Inc.(*) 265,500
1,500 Infinity Broadcasting Corp.(*) 50,906
---------
316,406
---------
Retail 2.0%
15,000 Guitar Centers (The), Inc.(*) 204,375
1,000 Krispy Kreme Doughnuts, Inc.(*) 46,000
---------
250,375
---------
Semiconductors 8.5%
500 Bookham Technology ADR(*) 26,000
25,000 Catalyst Semiconductor, Inc.(*) 190,625
5,000 Cypress Semiconductor Corp.(*) 259,688
2,500 Intel Corp. 317,031
1,500 SDL, Inc.(*) 292,500
---------
1,085,844
---------
</TABLE>
See notes to financial statements.
Choice Balanced Fund 11
<PAGE> 13
Choice Balanced Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Number of Shares Value
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Service 4.6%
9,000 Lycos, Inc.(*) $ 418,500
6,000 Primark Corp. 162,000
-----------
580,500
-----------
Software 8.0%
3,000 Allaire Corp.(*) 165,188
20,000 Cadence Design Systems, Inc.(*) 336,250
2,000 Numerical Technologies, Inc.(*) 83,500
7,000 Razorfish, Inc.(*) 132,563
6,500 Vignette Corp.(*) 313,218
-----------
1,030,719
-----------
Wireless Equipment 4.7%
5,000 Motorola, Inc. 595,312
-----------
TOTAL COMMON STOCKS
(cost $5,175,162) 5,517,569
-----------
Principal Amount
----------------
BONDS 28.0%
$ 600,000 Amgen, Inc.
6.21%, 08/27/03 578,847
475,000 Checkfree Holdings Corp.
6.50%, 12/01/06 448,281
600,000 Colgate-Palmolive Co.
6.02%, 08/15/03 574,261
500,000 DaimlerChrysler AG
7.125%, 04/10/03 493,764
500,000 Lockheed Martin Corp.
6.85%, 05/15/01 492,581
500,000 TCI Communications, Inc.
6.375%, 05/01/03 483,973
500,000 Westinghouse Electric Corp.
6.875%, 09/01/03 486,466
-----------
TOTAL BONDS
(cost $3,628,896) 3,558,173
-----------
</TABLE>
See notes to financial statements.
12 Choice Balanced Fund
<PAGE> 14
Choice Balanced Fund
SCHEDULE OF INVESTMENTS (continued)
April 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal Amount Value
------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM INVESTMENT 32.4%
$4,135,803 UMB Bank Money Market Fiduciary $ 4,135,803
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $4,135,803) 4,135,803
-----------
TOTAL INVESTMENTS 103.8%
(cost $12,939,861) 13,211,545
Liabilities less Other Assets (3.8%) (483,822)
-----------
NET ASSETS 100.0% $12,727,723
===========
</TABLE>
(*) Non-income producing
See notes to financial statements.
Choice Balanced Fund 13
<PAGE> 15
Choice Balanced Fund
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000 (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $12,939,861) $13,211,545
Cash 1,694
Receivable for investments sold 875,306
Interest and dividends receivable 108,348
Receivable from Adviser 9,392
-----------
Total assets 14,206,285
-----------
LIABILITIES:
Payable for investments purchased 1,451,745
Accrued investment advisory fee 6,534
Accrued distribution fee 2,178
Accrued expenses 18,105
-----------
Total liabilities 1,478,562
-----------
NET ASSETS $12,727,723
===========
NET ASSETS CONSIST OF:
Paid in capital $12,282,082
Accumulated net investment income 14,396
Accumulated net realized gain on investments 159,561
Net unrealized appreciation on investments 271,684
-----------
NET ASSETS $12,727,723
===========
CAPITAL STOCK (NO PAR VALUE)
Issued and outstanding (unlimited shares authorized) 1,222,743
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE $ 10.41
===========
</TABLE>
See notes to financial statements.
14 Choice Balanced Fund
<PAGE> 16
Choice Balanced Fund
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2000(1) (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends $ 1,943
Interest 29,878
---------
31,821
---------
EXPENSES:
Investment advisory fees 6,534
Shareholder servicing fees 5,079
Fund administration and accounting fees 2,843
Professional fees 2,804
Federal and state registration fees 2,326
Reports to shareholders 2,264
Distribution fees 2,178
Trustees' fees and related expenses 1,354
Custody fees 603
Other 832
---------
Total expenses before waiver and reimbursements 26,817
Waiver and reimbursements of expenses by Adviser (9,392)
---------
Net expenses 17,425
---------
NET INVESTMENT INCOME 14,396
---------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investments 159,561
Change in unrealized appreciation/depreciation on investments 271,684
---------
NET GAIN ON INVESTMENTS 431,245
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 445,641
=========
</TABLE>
(1) Commenced operations on April 1, 2000.
See notes to financial statements.
Choice Balanced Fund 15
<PAGE> 17
Choice Balanced Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended April 30, 2000(1)
(Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATIONS:
Net investment income $ 14,396
Net realized gains on investments 159,561
Change in unrealized appreciation/depreciation on investments 271,684
------------
Net increase in net assets resulting from operations 445,641
------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 12,383,939
Shares redeemed (101,857)
------------
Net increase in net assets resulting from capital share transactions 12,282,082
------------
TOTAL INCREASE IN NET ASSETS 12,727,723
------------
NET ASSETS:
Beginning of period --
------------
End of period (includes undistributed net investment
income of $14,396) $ 12,727,723
============
</TABLE>
(1) Commenced operations on April 1, 2000.
See notes to financial statements.
16 Choice Balanced Fund
<PAGE> 18
Choice Balanced Fund
FINANCIAL HIGHLIGHTS
For the Period Ended April 30, 2000(1) (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01
Net realized and unrealized gains on investments 0.40
------
Total Income from Investment Operations 0.41
------
NET ASSET VALUE, END OF PERIOD $10.41
======
TOTAL RETURN (2) 4.10%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $12,728
Ratio of expenses to average net assets (3)(4) 2.00%
Ratio of net investment income to average net assets (3)(4) 1.66%
Portfolio turnover rate 92%
</TABLE>
(1) Commenced operations on April 1, 2000.
(2) Not annualized for periods less than a full year.
(3) Net of waiver and reimbursements by Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net assets
would have been 3.08%, and the ratio of net investment income to average net
assets would have been 0.58% for the period ended April 30, 2000.
(4) Annualized
See notes to financial statements.
Choice Balanced Fund 17
<PAGE> 19
Choice Funds
NOTES TO FINANCIAL STATEMENTS
April 30, 2000 (Unaudited)
(1) ORGANIZATION
Choice Funds (the "Trust") was established on July 16, 1999 as a Delaware
business trust and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company issuing its shares in series, each series representing a
distinct portfolio with its own investment objectives and policies. The
Focus Fund and the Balanced Fund (collectively, the "Funds") are separate
investment portfolios of the Trust. The Focus Fund is a non-diversified
fund that seeks capital appreciation by normally investing in a core
position of 20-30 common stocks. The Balanced Fund is a diversified fund
that seeks capital appreciation and current income by normally investing
in a diverse group of domestic equity and fixed income securities.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements. These policies are in conformity with accounting principles
generally accepted in the United States ("GAAP"), which permit management
to make certain estimates and assumptions at the date of the financial
statements. Actual results could differ from those estimates.
(A) ORGANIZATION AND PREPAID INITIAL REGISTRATION EXPENSES
Expenses incurred by the Trust in connection with the organization
and the initial public offering of shares are expenses as
incurred. These expenses were advanced by the Adviser, and the
Adviser has agreed to voluntarily reimburse the Fund for these
expenses, subject to potential recovery (see Note 3). Prepaid
initial registration expenses are deferred and amortized over the
period of benefit (not to exceed 12 months).
(B) INVESTMENT VALUATION
Securities (other than short-term instruments) for which market
quotations are readily available are valued at the last trade
price on the national securities exchange on which such securities
are primarily traded. Securities for which there were no
transactions on a given day or securities not listed on a national
securities exchange are valued at the most recent bid prices.
Securities maturing within 60 days when purchased are valued by
the amortized cost method. Any securities for which market
quotations are not readily available are valued at their fair
value as determined in good faith by Choice Investment Management,
LLC (the "Adviser") pursuant to guidelines established by the
Board of Trustees.
(C) EXPENSES
The Funds are charged for those expenses that are directly
attributable to each Fund, such as advisory and custodian fees.
Expenses that are not directly attributable to a portfolio are
typically allocated among the portfolios in proportion to their
average net assets.
18 Choice Funds
<PAGE> 20
(D) FEDERAL INCOME AND EXCISE TAXES
No federal income tax provision has been made since the Funds
intend to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute
substantially all investment company taxable income and net
capital gains to shareholders in a manner which results in no tax
cost to the Funds.
(E) DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income and distributions of net
realized gains, if any, will be declared and paid at least
annually. Distributions to shareholders are recorded on the
ex-dividend date. The character of distributions made during the
year from net investment income or net realized gain may differ
from the characterization for federal income tax purposes due to
differences in the recognition of income, expense and gain items
for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such
differences that are permanent in nature.
(F) OTHER
Investment transactions are recorded on a trade date basis. The
Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot
sold with the net sale proceeds. Dividend income is recognized on
the ex-dividend date and interest income is recognized on an
accrual basis.
(3) INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have an agreement with the Adviser, with whom certain officers
and directors of the Funds are affiliated, to furnish investment advisory
services to the Funds. Under the terms of this agreement, the Funds will
pay the Adviser a monthly fee at the annual rate of 1.00% and 0.75% of
the Fund's average daily net assets for the Focus Fund and the Balanced
Fund, respectively. The Adviser has agreed to voluntarily waive its
management fee and/or reimburse the Fund's operating expenses (exclusive
of brokerage, interest, taxes and extraordinary expenses) to ensure that
the Fund's operating expenses do not exceed 2.25% and 2.00% of the Fund's
average daily net assets for the Focus Fund and the Balanced Fund,
respectively, until October 31, 2000. The Adviser is entitled to recoup
amounts waived or reimbursed for a period of up to three years from the
date such amounts were waived or reimbursed, to the extent actual fees
and expenses for a period are less than expense limitation.
The Trust has entered into an administration and fund accounting
agreement and transfer agent agreement with Sunstone Financial Group,
Inc. The administration services agreement provides for an annual fee of
0.15% which decreases as the assets of the Fund reach certain levels,
subject to a minimum annual fee of $59,500, plus out-of-pocket expenses.
The transfer agent agreement provides for an annual base fee per
shareholder account, with a minimum fee of $18,000. The transfer agent is
also paid certain fees related to set-up costs, processing and
out-of-pocket expenses.
Choice Funds 19
<PAGE> 21
The Trust has entered into a distribution agreement with Sunstone
Distribution Services, LLC (the "Distributor"). Under the Distribution
Agreement, the Distributor shall offer shares of the Fund on a continuous
basis and may engage in advertising and solicitation activities in
connection therewith.
(4) DISTRIBUTION PLAN
The Funds have adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The Plan authorizes payments by the Funds in
connection with the distribution of their shares at an annual rate, as
determined from time to time by the Board of Trustees of up to 0.25% of
each Fund's average daily net assets.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the period ended April 30, 2000
were as follows:
<TABLE>
<CAPTION>
Focus Fund Balanced Fund
---------- -------------
<S> <C> <C>
Shares sold 3,920,421 1,232,718
Shares issued to holders in
reinvestment of distributions 2,497 --
Shares redeemed (640,956) (9,975)
--------- ---------
Net Increase 3,281,962 1,222,743
========= =========
</TABLE>
(6) INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the period ended April 30, 2000 were as
follows:
<TABLE>
<CAPTION>
Focus Fund Balanced Fund
---------- -------------
<S> <C> <C>
Purchases $236,983,106 $ 17,035,815
Sales 206,966,264 8,391,374
</TABLE>
There were no purchases or sales of long-term U.S. government securities.
At April 30, 2000, gross unrealized appreciation and depreciation of
investments, based on cost for federal income tax purposes of $41,112,761
and $13,060,634, were as follows:
<TABLE>
<CAPTION>
Focus Fund Balanced Fund
---------- -------------
<S> <C> <C>
Appreciation $ 2,291,202 $ 399,066
Depreciation (3,151,355) (248,155)
----------- -----------
Net appreciation (depreciation)
on investments $ (860,153) $ 150,911
=========== ===========
</TABLE>
20 Choice Funds
<PAGE> 22
These financial agreements are submitted for the general information of the
shareholders of Choice Funds.
They are not authorized for distribution to prospective investors
unless preceded or accompanied
by an effective prospectus.
Sunstone Distribution Services, LLC, Distributor
To learn more about our funds, discuss an existing account, or
conduct a transaction, call
1 (800) 392-7107
If you are a Financial Professional, call
1 (888) 729-9559
Visit our web site at
www.choicefunds.net
[CHOICE LOGO]
P.O. BOX 759 - 207 East Buffalo Street - Suite 400
Milwaukee, Wisconsin 53202
(800) 392-7107
