ALLIED OWNERS ACTION FUND INC
N-30D, 2000-12-04
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                                 ALLIED OWNERS
                                  ACTION FUND



                                 ANNUAL REPORT






                               September 30, 2000








<PAGE>




November 1, 2000

Dear Shareholders,

      The first six months of the Allied Owners Action Fund were painful to
shareholders, and not just shareholders in the Fund. The day we opened, the
Nasdaq Composite Index stood at an all-time high of 5,050. It then proceeded to
drop 40 percent. Our stocks did only slightly better.

      However, the first six months were also a time of great excitement and
education. I remain confident that we have selected companies of strong
intrinsic value and that we will help (or force if necessary) them to realize
that value. The Fund never depended on the stock market to make our companies
more valuable, which would mean guessing what someone will pay in the future.
We're not psychologists. The Fund depends on our skeptical and thorough analysis
of what the assets of our target companies are worth; and our determination and
skill to make sure they deliver that worth to shareholders.

      We have received a lot of publicity, made a lot of friends (including many
of you) and gained powerful allies. But none of this matters if we cannot
translate it into stock price increases. Employee Solutions was our first
announced target company. We had a rocky start with management; we even had
trouble getting them on the telephone. But we persevered and now are working
hand-in-hand to restructure the company's balance sheet. Unfortunately, I am
forbidden by confidentiality agreement to discuss the progress in this effort. I
will say that I believe in the long-term value of this company and believe that
the Fund has played, and will continue to play, an important role in maximizing
shareholder value.

      Comshare was our second announced target company. This started friendlier
than Employee Solutions, but we have yet to get management or the board to go
along with any of our proposals. On a positive note, management has entered into
a dialogue with us they even posted on the eRaider website. And I believe
that some of the changes that they initiated in the company's marketing plans
and website are due to the suggestions made at the eRaider website and in my
discussions with them. If we do not make more progress on our formal proposals
to them, we will consider working to replace the board of directors or
soliciting purchasers for the Company.

      Jameson Inns was our third announced target company. We started out with
some governance issues, primarily that the CEO and Chairman of the Company was
also sole owner of its main business partner, so he negotiated both sides of
every contract. We have suspended efforts to cure that as we support the
Company's effort to protect itself from the slowdown in business travel and
rising interest rates. We will take the governance issues up again early in
2001, and submit shareholder proposals to fix the problem.




                                      -1-



<PAGE>

      The Fund is a long-term investment. It takes months to acquire a stake in
our targets without moving the price, then more months to establish a useful
relationship with the board and management. After that the real work of
increasing shareholder value begins. While I am unhappy with the Net Asset Value
of the Fund, it does not make me doubt our long-term vision. I believe we will
be successful because this is the right way to invest. The stock market will go
up and down in between, but I hope the Fund can do better than the market by
paying attention to its companies. I thank you for the faith you have shown in
the idea and the Fund. I hope my next annual report letter will be able to boast
about some success stories and a double-digit Net Asset Value. However, I can
promise only that my next annual report letter will describe extensive and
creative efforts to help the share price of our target companies.


Professor Aaron Brown
CEO, Allied Owners Action Fund
CEO, Privateer Asset Management




[GRAPH DEPICTED HERE]

GRAPH SHOWS THE COMPARISON OF A $10,000 INVESTMENT BETWEEN THE ALLIED OWNERS
ACTION FUND, THE NASDAQ COMPOSITE AND RUSSELL 2000 INDEXES FROM MARCH 9, 2000
TO SEPTEMBER 30, 2000.

<TABLE>
<CAPTION>

               ALLIED OWNERS ACTION                 NASDAQ COMPOSITE                 RUSSELL 2000
               --------------------                 ----------------                 ------------

                          TOTAL        ENDING     TOTAL RETURN    ENDING     TOTAL RETURN         ENDING
   DATE          NAV      SHARES        VALUE     FOR PERIOD      VALUE      FOR PERIOD           VALUE
   ----          ---      ------        -----     ----------      -----      ----------           -----
<S>           <C>     <C>           <C>         <C>             <C>         <C>                <C>
 09-Mar-00      10.00   1,000.000      10,000                     10,000                          10,000
 31-Mar-00       9.41   1,000.000       9,410      -9.3926%        9,061      -10.9711%            8,903
 30-Apr-00       9.47   1,000.000       9,470     -15.5650%        7,650       -6.0196%            8,367
 31-May-00       7.15   1,000.000       7,150     -11.8930%        6,741       -5.8328%            7,879
 30-Jun-00       7.95   1,000.000       7,950      16.6373%        7,862        8.7409%            8,568
 31-Jul-00       7.59   1,000.000       7,590      -5.0130%        7,468       -3.1260%            8,300
 31-Aug-00       7.48   1,000.000       7,480      11.6800%        8,340        7.5847%            8,929
 30-Sep-00       7.34   1,000.000       7,340     -12.6670%        7,284       -2.9616%            8,665

</TABLE>

<PAGE>



<TABLE>
<CAPTION>

                           ALLIED OWNERS ACTION FUND
                     SCHEDULE OF INVESTMENTS IN SECURITIES
                               SEPTEMBER 30, 2000



                                                                      MARKET
SHARES                                                            VALUE (NOTE 2)
------                                                            --------------
  <C>       <S>                                                 <C>
              COMMON STOCKS - 75.82%
              BUILDING- HEAVY CONSTRUCTION - 4.30%
     75,700   The Goldfield Corp.*                                 $     56,775
                                                                   ------------

              DATA PROCESSING MANAGEMENT - 22.99%
     71,400   Comshare, Inc.*                                           303,450
                                                                   ------------

              HUMAN RESOURCES - 18.41%
  1,110,100   Employee Solutions, Inc.*                                 243,112
                                                                   ------------

              OIL FIELD MACHINERY AND EQUIPMENT - 2.28%
     17,200   Industrial Holdings, Inc.*                                 30,100
                                                                   ------------

              REAL ESTATE - 27.84%
     49,000   Jameson Inns, Inc.                                        367,500
                                                                   ------------

              TOTAL COMMON STOCKS
              (Cost $1,231,741)                                       1,000,937
                                                                   ------------

              SHORT TERM INVESTMENTS - 7.57%
     49,995   Federated Government Obligations Fund                      49,995
     49,999   Highmark Diversified Money Market Fund                     49,999
                                                                   ------------

              TOTAL SHORT TERM INVESTMENTS
              (Cost  $99,994)                                            99,994
                                                                   ------------

              TOTAL INVESTMENTS
              (Cost $1,331,735)A                        83.40%        1,100,931
              CASH AND OTHER ASSETS LESS LIABILITIES    16.60%          219,153
                                                        -----      ------------
              TOTAL NET ASSETS                         100.00%     $  1,320,084
                                                                   ============
<FN>
(A)At September 30, 2000 the cost of investments for federal income tax purposes
   was the same as the cost for financial reporting purposes.
*  Non-income producing security.
</FN>
</TABLE>


                       See notes to financial statements.



                                      -3-
<PAGE>

<TABLE>
<CAPTION>


                           ALLIED OWNERS ACTION FUND
                      STATEMENT OF ASSETS AND LIABILITIES
                               SEPTEMBER 30, 2000

ASSETS
<S>                                                       <C>
     Investments in securities, at market value
        (cost $1,331,735)   (Note 2) ......................    $1,100,931
     Cash .................................................       152,589
     Receivable for securities sold .......................        61,696
     Dividends and interest receivable ....................        12,217
     Receivable for Fund shares sold ......................           550
                                                              -----------
        Total Assets ......................................     1,327,983
                                                              -----------

LIABILITIES
     Payable for securities purchased .....................         4,802
     Accrued advisory fees (Note 3) .......................         3,097
                                                              -----------
        Total Liabilities .................................         7,899
                                                              -----------

        Net Assets ($7.34 per share based on 179,855 shares
         of capital stock oustanding) .....................   $ 1,320,084
                                                              ===========

NET ASSETS
     Paid in capital ......................................   $ 1,713,860
     Undistributed net investment income ..................        13,176
     Net realized loss from investment transactions .......      (176,148)
     Net unrealized depreciation on investments ...........      (230,804)
                                                              -----------
                                                               $1,320,084
                                                              ===========

</TABLE>





                       See notes to financial statements.


                                      -4-



<PAGE>


<TABLE>
<CAPTION>

                           ALLIED OWNERS ACTION FUND
                            STATEMENT OF OPERATIONS
                        For the Period from March 9, 2000
               (commencement of operations) to September 30, 2000


INVESTMENT INCOME
<S>                                                 <C>
     Dividends .....................................   $  14,700
     Interest ......................................       5,489
                                                       ---------
     Total investment income .......................      20,189
                                                       ---------

EXPENSES
     Advisory fees (Note 3) ........................       7,013
                                                       ---------
     Total expenses ................................       7,013
                                                       ---------
        Net investment income ......................      13,176
                                                       ---------

NET REALIZED AND UNREALIZED LOSSES
     ON INVESTMENTS
     Net realized loss from investment transactions     (176,148)
     Net change in unrealized depreciation
        on investments .............................    (230,804)
                                                       ---------
     Net realized and unrealized loss on investments    (406,952)
                                                       ---------
     Net decrease in net assets resulting
        from operations ............................   $(393,776)
                                                       =========

</TABLE>



                       See notes to financial statements.


                                      -5-



<PAGE>


<TABLE>
<CAPTION>


                           ALLIED OWNERS ACTION FUND
                       STATEMENT OF CHANGES IN NET ASSETS


                                                      For the period
                                                      from March 9, 2000
                                                      (commencement
                                                      of operations) to
                                                      September 30, 2000
                                                      ------------------
<S>                                                  <C>
OPERATIONS
Net investment income ..............................   $    13,176
Net realized loss from investment transactions .....      (176,148)
Net change in unrealized depreciation on investments      (230,804)
                                                       -----------
Net decrease in net assets resulting from operations      (393,776)
                                                       -----------


FUND SHARE TRANSACTIONS
Proceeds from Fund shares sold .....................       724,213
Payments for Fund shares redeemed ..................       (10,353)
                                                       -----------
Net increase in net assets derived from
        Fund share transactions ....................       713,860

NET ASSETS
Beginning of Period ................................     1,000,000
                                                       -----------
End of Period (including undistributed
net investment income of $13,176) ..................   $ 1,320,084
                                                       ===========


</TABLE>







                       See notes to financial statements.


                                      -6-


<PAGE>



                           ALLIED OWNERS ACTION FUND
                         NOTES TO FINANCIAL STATEMENTS
                               September 30, 2000

NOTE 1.  ORGANIZATION

The Allied Owners Action Fund (the "Fund"), is organized as a Maryland
Corporation incorporated on July 12, 1999 and commenced operations on March 9,
2000. The Fund is registered as an open end, non-diversified, management
investment company under the Investment Company Act of 1940, as amended. The
Fund's business and affairs are managed by its officers under the direction of
the Board of Trustees. The Fund's investment objective is to seek maximum
capital appreciation and will accept high risk.

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with accounting
principles generally accepted in the United States.

A.    VALUATION OF INVESTMENTS - Securities for which market quotations are
      readily available are valued at the bid price. Portfolio securities for
      which market quotations are not considered readily available are stated at
      fair value on the basis of valuations furnished by a pricing service
      following procedures adopted by the Board of Trustees. Short-term
      investments held by the Fund that mature in 60 days or less are valued at
      amortized cost, which approximates market value.
B.    INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities
      transactions are accounted for on the trade date. Realized gains and
      losses on sales of investments are determined on the basis of identified
      cost. Dividend income is recorded on the ex-dividend date. Interest income
      is recorded on the accrual basis.
C.    FEDERAL INCOME TAXES - The Fund intends to comply with requirements of the
      Internal Revenue Code applicable to regulated investment companies and to
      distribute all of its taxable income to its shareholders. Therefore, no
      provision for Federal income tax is required.
D.    DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends
      and distributions to shareholders on the ex-dividend date. The Fund will
      distribute its net investment income, if any, and net realized capital
      gains, if any, annually.
E.    USE OF ESTIMATES - The preparation of financial statements in conformity
      with general 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.


                                      -7-


<PAGE>


                           ALLIED OWNERS ACTION FUND
                         NOTES TO FINANCIAL STATEMENTS
                               September 30, 2000

NOTE 3.  INVESTMENT ADVISORY FEES AND ADMINISTRATION AGREEMENT

      The Fund has an investment advisory agreement ("the Agreement") with
Privateer Asset Management Inc. ("Advisor"). Under this Agreement, the Advisor
provides the Fund with all investment, compliance and administrative services to
the Fund for a fee equal, on an annual basis, to 1.00% of the Fund's average
daily net assets. The Agreement will remain in effect for two years from the
date of its initial approval, and is subject to annual approval by the Fund's
Board of Trustees for one-year periods thereafter. Pursuant to such Agreement,
during the Agreement term the Advisor has agreed to pay all Fund operating
expenses (excluding its advisory fee). The Fund may cancel this contract at any
time on 60 days written notice to the Advisor, and after the first anniversary
of the date the Fund is declared effective, the Advisor may terminate this
contract on 60 days written notice to the Fund.

      The Advisor is permitted to subcontract such services as necessary. It
currently has contracts with American Data Services, Inc. ("ADS"), to provide
administrative, stock transfer and accounting services. It has a contract with
Union Bank of California, N.A. to act as custodian.

      The Fund has adopted a plan (called a 12b-1 plan) allowing the Advisor to
spend up to 1% of the Fund's average daily net assets on distribution
activities. Neither the Fund nor the Advisor has paid any 12b-1 fees for the
period ending September 30, 2000.

NOTE 4.  INVESTMENT TRANSACTIONS

      During the period ended September 30, 2000, purchases and proceeds from
sales and maturities of investments, excluding short term securities were as
follows:

        NON-GOVERNMENT  GOVERNMENT      NON-GOVERNMENT  GOVERNMENT
        PURCHASES       PURCHASES          SALES          SALES
        ---------       ---------          -----          -----
        $ 1,891,216     $ 373,150       $ 483,318       $ 374,340


NOTE 5.  SHAREHOLDERS' TRANSACTIONS

Following is a summary of shareholder transactions for the Fund:

Shares sold ............................... 81,197
Shares redeemed ........................... (1,342)
                                            ------
                                            79,855
                                            ======


                                      -8-

<PAGE>

                           ALLIED OWNERS ACTION FUND
                         NOTES TO FINANCIAL STATEMENTS
                               September 30, 2000

NOTE 6.  BENEFICIAL INTEREST

      The number of shareholders each owning beneficially or of record 5% or
more of a class of shares of a Fund outstanding as of September 30, 2000 is 3
and the total percentage of the class of shares of the Fund held by such
shareholders is 68.72%.

NOTE 7.  RELATED PARTY TRANSACTIONS

      Certain owners of Privateer Asset Management, Inc. beneficially own 63.24%
of the Fund. These individuals may receive benefits from any management fee paid
to the Advisor.













                                      -9-


<PAGE>


<TABLE>
<CAPTION>


                           ALLIED OWNERS ACTION FUND

                        FINANCIAL HIGHLIGHTS AND RELATED
                            RATIOS/SUPPLEMENTAL DATA

Selected data based on a share outstanding throughout the period indicated

                                                    September 30, 2000
                                                    ------------------

<S>                                                   <C>
Net asset value, beginning of period* ...............   $      10.00
Income (loss) from investment operations:
        Net investment incomeA ......................           0.08
        Net realized and unrealized loss
        on investments ..............................          (2.74)
                                                        ------------
Total from investment operations ....................          (2.66)
                                                        ------------

Net asset value, end of period ......................   $       7.34
                                                        ============

Total return# .......................................         (26.60%)

Net assets (in thousands) ...........................  $       1,320

Ratio of expenses to average net assets^ ............           1.00%

Ratio of net investment income to average net assets^           1.88%

Portfolio Turnover Rate# ............................           6.59%

<FN>

*     For the period March 9, 2000 (commencement of operations) to September 30,
      2000.
^     Annualized.
#     Non-Annualized.
A     Amount was computed based on average shares outstanding during the period.
</FN>
</TABLE>







                       See notes to financial statements.


                                      -10-


<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and the
Board of Directors of the Allied Owners Action Fund:

      We have audited the accompanying statement of assets and liabilities of
the Allied Owners Action Fund (a Maryland corporation), including the schedule
of investments in securities, as of September 30, 2000, and the related
statements of operations, changes in net assets and financial highlights for the
period from March 9, 2000 to September 30, 2000. 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 audit in accordance with auditing standards generally
accepted in the United States. 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 securities
owned as of September 30, 2000, by correspondence with the custodian and
brokers. 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
Allied Owners Action Fund as of September 30, 2000, the results of its
operations, changes in its net assets and financial highlights for the period
from March 9, 2000 to Septemer 30, 2000 in conformity with accounting principles
generally accepted in the United States.


                                           ARTHUR ANDERSEN LLP


New York, New York
November 17, 2000







                                      -11-
<PAGE>








Investment Adviser
Privateer Asset Management Inc.
372 Central Park West
New York, NY  10025


Administrator
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788


Custodian
Union Bank of California
475 Sansome Street, 15th Floor
San Francisco, CA  94145


Legal Counsel
Goodwin, Procter & Hoar LLP
599 Lexington Avenue
New York, NY  10022



Independent Auditors
Arthur Andersen  LLP
1345 Avenue of the Americas
New York, NY  10105



Transfer Agent and Dividend Disbursing Agent
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788




This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.





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