<PAGE>
Dear Shareholders,
In the six months ended April 30, 2000, equity investors have faced an extremely
challenging investment environment. The Federal Reserve raised the Fed Funds
rate to force a slowdown of what it considers an over-accelerated rate of
economic growth. Rapid growth has led some investors to become concerned that
inflation may also escalate, though few signs of higher prices have thus far
appeared outside the energy sector. These conditions have made it unusually
difficult to anticipate whether, or how fast, the economy will grow or whether
the 'landing' will be soft or hard. Our view is that 1994 offers a useful
historical comparison for investors seeking to understand present market
conditions. Then, as now, the Federal Reserve raised the Fed Funds rate and
investors' unease and concern rose with each Fed move. Although some had
forecasted a recession for 1995, the economy rebounded and the equity market had
a great year.
Although volatility is extremely high and earnings surprises are common, we
expect the market to reward companies with management teams that can meet or
exceed earnings expectations even more handsomely. We also expect little
patience to be shown to a company with a management team that disappoints the
investment community. We believe that consistent with the investment policy of
our two Funds, stock selection strongly influenced by management quality and
expected earnings growth will continue to enable our Funds to achieve very
positive investment results.
The returns since the Funds' inception are shown below:
DLJDIRECT CHOICE TECHNOLOGY FUND
For the first four months of 2000, the DLJdirect Choice Technology Fund returned
11.79%. For the quarter ended April 30, 2000, the Fund returned 10.99%. Since
the Fund's inception on November 18, 1999 through April 30, 2000, it has
returned 38.40%, while the H&Q blended technology index returned 19.53% and the
NASDAQ index returned 15.34%. The Fund's holdings in the semiconductor,
software, and electronic equipment manufacturing industries performed
particularly well. Outstanding performers included Analog Devices, Network
Appliances, Ciena, Scientific Atlanta, and Cognos. Other above-average
performers included Oracle, Amdocs, Applied Materials, Exodus Communications,
Flextronics International, Veritas Software, Texas Instruments, KLA-Tencor
Corp., Xilinx, Cisco Systems, and EMC.
DLJDIRECT STRATEGIC GROWTH FUND
For the first four months of 2000, the DLJdirect Strategic Growth Fund returned
3.30%. For the quarter ended April 30, 2000, the Fund returned 7.02%. Since the
Fund's inception on November 18, 1999 through April 30, 2000, it has returned
12.80% while the S&P500/BARRA Growth index returned 5.32%. The Fund's holdings
in the electronic equipment manufacturing, software, and semiconductor
industries performed particularly well. Outstanding performers included
Scientific Atlanta, Oracle, Flextronics International, Texas Instruments, and
Intel. Other above-average performers included Exodus Communications, Cisco
Systems, EMC, Sun Microsystems, Nortel Networks, Time Warner, and Medtronic.
We would like to thank you for your investment in the DLJdirect Funds. We hope
to continue to service your investment needs and to achieve strong positive
long-term investment results.
Sincerely,
/s/ G. Moffett Cochran
----------------------
G. Moffett Cochran
President June, 2000
<PAGE>
FUND HIGHLIGHTS (unaudited)
DLJDIRECT CHOICE TECHNOLOGY FUND
PORTFOLIO ALLOCATION April 30, 2000
[GRAPHIC]
<TABLE>
<S> <C>
Internet Professional Services.............................. 0.7%
Internet Services........................................... 0.7%
Cash Equivalents and Other Assest/Liabilities............... 1.4%
Business & Information Technology Services.................. 1.7%
Personal Computer Manufacturers............................. 3.2%
Internet Business-to-Business & Consumer.................... 4.1%
Semiconductor Manufacturers - Fabless....................... 4.4%
Storage Networks & Systems.................................. 4.8%
Computer Networking......................................... 4.9%
Communiucations Services.................................... 5.2%
Semiconductor Capital Equipment............................. 6.2%
Computer Systems Manufacturers.............................. 6.3%
Internet Business-to-Consumer............................... 6.3%
Electronic Manufacturing Services........................... 7.2%
Semiconductor Manufacturers - Large......................... 8.0%
Telecommunications Equipment................................ 8.0%
Internet Business-to-Business............................... 8.9%
Software Products...........................................18.0%
</TABLE>
TEN LARGEST HOLDINGS April 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
NET
VALUE ASSETS
---------- ----------
<S> <C> <C>
Oracle Corp................................................ $1,079,156 3.7%
Cisco Systems, Inc......................................... 1,026,056 3.5
Applied Materials, Inc..................................... 1,013,034 3.5
Cognos, Inc................................................ 984,375 3.4
Network Appliance, Inc..................................... 935,309 3.2
Sun Microsystems, Inc...................................... 894,092 3.1
Veritas Software Corp...................................... 858,125 2.9
Texas Instruments, Inc..................................... 851,022 2.9
Exodus Communications, Inc................................. 795,938 2.7
Kla-Tencor Corp............................................ 793,675 2.7
---------- ----
$9,230,782 31.6%
========== =====
</TABLE>
INVESTMENT RESULTS For the Period Ended April 30, 2000
<TABLE>
<CAPTION>
TOTAL RETURN
------------------------------------------------
DLJDIRECT HEMBRECHT & QUIST
CHOICE TECHNOLOGY TECHNOLOGY/INTERNET
FUND NASDAQ BLENDED INDEX
----------------- ------ -------------------
<S> <C> <C> <C>
From Inception 11/18/99............. 38.40% 15.34% 19.53%
</TABLE>
The performance data quoted represents past performance, which is no
indication of future performance. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. No adjustment has been made for any
income taxes payable by shareholders on dividends or capital gains.
Investments in the Fund are not subject to any sales charge. The Fund
commenced operations on November 18, 1999. Total returns calculated for a
period of less than one year are not annualized.
The indices are unmanaged portfolios that measure market performance and
do not take into account charges, fees and other expenses. NASDAQ is a
value-weighted index calculated on price change only and does not include
reinvested dividends or capital gains distributions. The Hembrecht & Quist
Technology/Internet Blended Index is comprised of 60% Hembrecht & Quist
Technology Index and 40% Hembrecht & Quist Internet Index.
<PAGE>
FUND HIGHLIGHTS (unaudited)
DLJDIRECT STRATEGIC GROWTH FUND
PORTFOLIO ALLOCATION April 30, 2000
[GRAPHIC]
<TABLE>
<S> <C>
Banking....................................................... 1.0%
Aerospace & Defense........................................... 1.2%
Financial Services............................................ 1.8%
Information Services.......................................... 1.9%
Home Products................................................. 2.7%
Food & Beverage............................................... 3.3%
Internet...................................................... 3.5%
Broadcasting & Cable TV....................................... 3.8%
Medical Products & Supplies................................... 4.1%
Cash Equivalents & Other Assets/Liabilities................... 4.3%
Telecommunications............................................ 5.9%
Retail-General................................................ 6.1%
Conglomerates................................................. 6.9%
Semiconductors................................................ 9.3%
Drugs......................................................... 9.8%
Electronics...................................................11.0%
Computers.....................................................23.4%
</TABLE>
TEN LARGEST HOLDINGS April 30, 2000
<TABLE>
<CAPTION>
PERCENT OF
NET
VALUE ASSETS
---------- ----------
<S> <C> <C>
General Electric Co........................................ $ 381,331 5.3%
Cisco Systems, Inc......................................... 353,573 4.9
Intel Corp................................................. 326,542 4.5
Microsoft Corp............................................. 247,613 3.4
Oracle Corp................................................ 241,811 3.3
Texas Instruments, Inc..................................... 228,025 3.1
Wal-Mart Stores, Inc....................................... 204,888 2.8
Sun Microsystems, Inc...................................... 202,263 2.8
EMC Corp................................................... 201,459 2.8
Nortel Networks Corp....................................... 201,019 2.8
---------- ----
$2,588,524 35.7%
========== =====
</TABLE>
INVESTMENT RESULTS For the Period Ended April 30, 2000
<TABLE>
<CAPTION>
TOTAL RETURN
-------------------------------
DLJDIRECT S&P500/BARRA
STRATEGIC GROWTH GROWTH
FUND INDEX
---------------- ------------
<S> <C> <C>
From Inception 11/18/99.............................. 12.80% 5.32%
</TABLE>
The performance data quoted represents past performance, which is no
indication of future performance. Investment return and principal value
will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. No adjustment has been made for any
income taxes payable by shareholders on dividends or capital gains.
Investments in the Fund are not subject to any sales charge. The Fund
commenced operations on November 18, 1999. Total returns calculated for a
period of less than one year are not annualized.
The S&P500/Barra Growth Index is a widely accepted, unmanaged index that
is a subset of the S&P 500 Composite Stock Price Index. It includes
companies with higher than average price to book ratios and does not take
into account charges, fees and other expenses.
<PAGE>
DLJDIRECT CHOICE TECHNOLOGY FUND -- STATEMENT OF INVESTMENTS April 30, 2000
(unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 98.6% ----------- -----------
<S> <C> <C>
BUSINESS & INFORMATION TECHNOLOGY
SERVICES - 1.7%
Electronic Data Systems Corp.*...... 7,325 $ 503,594
-----------
COMMUNICATIONS SERVICES - 5.2%
Amdocs Ltd.*........................ 4,900 331,669
Nextel Communications, Inc.*........ 3,200 350,200
Pegasus Communication Corp.*........ 2,400 261,900
Portal Software, Inc.*.............. 7,600 348,650
Qwest Communications International,
Inc.*............................. 5,175 224,466
-----------
1,516,885
-----------
COMPUTER NETWORKING - 4.9%
3Com Corp.*......................... 10,325 407,192
Cisco Systems, Inc.*................ 14,800 1,026,056
-----------
1,433,248
-----------
COMPUTER SYSTEMS MANUFACTURERS - 6.3%
Network Appliance, Inc.*............ 12,650 935,309
Sun Microsystems, Inc.*............. 9,725 894,092
-----------
1,829,401
-----------
ELECTRONIC MANUFACTURING SERVICES - 7.2%
Flextronics International Ltd.*..... 8,525 598,881
Sanmina Corp.*...................... 8,250 495,516
SCI Systems, Inc.*.................. 8,825 469,931
Solectron Corp.*.................... 11,300 528,981
-----------
2,093,309
-----------
INTERNET BUSINESS-TO-BUSINESS &
CONSUMER - 4.1%
RealNetworks, Inc.*................. 9,850 469,106
Yahoo! Inc.*........................ 5,675 739,169
-----------
1,208,275
-----------
INTERNET BUSINESS-TO-BUSINESS - 8.9%
Agile Software Corp.*............... 6,175 228,861
Concentric Network Corp.*........... 8,025 349,088
DoubleClick, Inc.*.................. 6,725 510,259
Exodus Communications, Inc.*........ 9,000 795,938
PSINet, Inc.*....................... 11,000 255,063
Verio, Inc.*........................ 12,075 453,567
-----------
2,592,776
-----------
INTERNET BUSINESS-TO-CONSUMER - 6.3%
Amazon.Com, Inc.*................... 6,500 358,719
America OnLine, Inc.*............... 10,250 613,078
eBay, Inc.*......................... 4,425 704,405
Wink Communications, Inc.*.......... 8,675 171,331
-----------
1,847,533
-----------
INTERNET PROFESSIONAL SERVICES - 0.7%
MarchFirst Inc.*.................... 8,825 188,083
-----------
INTERNET SERVICES - 0.7%
Media Metrix, Inc.*................. 6,500 208,813
-----------
PERSONAL COMPUTER MANUFACTURERS -3.2%
Apple Computer, Inc.*............... 5,700 707,156
Gateway, Inc.*...................... 4,200 232,050
-----------
939,206
-----------
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C>
SEMICONDUCTOR MANUFACTURERS - LARGE - 8.0%
Analog Devices, Inc.*............... 10,025 $ 770,045
Linear Technology Corp.............. 12,750 728,344
Texas Instruments, Inc.............. 5,225 851,022
-----------
2,349,411
-----------
SEMICONDUCTOR MANUFACTURERS -
FABLESS - 4.4%
Lattice Semiconductor Corp.*........ 8,725 587,847
Xilinx, Inc.*....................... 9,425 690,381
-----------
1,278,228
-----------
SEMICONDUCTOR CAPITAL EQUIPMENT - 6.2%
Applied Materials, Inc.*............ 9,950 1,013,034
Kla-Tencor Corp.*................... 10,600 793,675
-----------
1,806,709
-----------
SOFTWARE PRODUCTS - 18.0%
BEA Systems, Inc.*.................. 8,150 393,238
BMC Software, Inc.*................. 7,425 347,583
Cognos, Inc.*....................... 26,250 984,375
Microsoft Corp.*.................... 7,500 523,125
Oracle Corp.*....................... 13,500 1,079,156
Peregrine Systems, Inc.*............ 14,875 357,930
Quest Software, Inc.*............... 6,200 233,663
Siebel Systems, Inc.*............... 3,975 488,428
Veritas Software Corp.*............. 8,000 858,125
-----------
5,265,623
-----------
STORAGE NETWORKS & SYSTEMS - 4.8%
EMC Corp.*.......................... 5,350 743,316
QLogic Corp.*....................... 6,600 662,063
-----------
1,405,379
-----------
TELECOMMUNICATIONS EQUIPMENT - 8.0%
ANTEC Corp.*........................ 8,225 442,093
CIENA Corp.*........................ 5,350 661,393
Covad Communications Group, Inc.*... 7,426 206,057
Scientific-Atlanta, Inc.*........... 9,350 608,334
Tellabs, Inc.*...................... 7,600 416,575
-----------
2,334,452
-----------
TOTAL COMMON STOCKS
(cost $28,334,069)................ 28,800,925
-----------
COMMERCIAL PAPER -- 4.4% PRINCIPAL
(amortized cost $1,288,000) AMOUNT
-----------
UBS Finance LLC
6.040%, 05/01/00**................ $ 1,288,000 1,288,000
-----------
TOTAL INVESTMENTS -- 103.0%
(cost $29,622,069)................ 30,088,925
-----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- (3.0)%........ (802,773)
-----------
NET ASSETS -- 100.0%................. $29,286,152
===========
</TABLE>
* Non-income producing
** Commercial paper is traded on a discount basis; the interest rate shown
reflects the discount rate paid at the time of purchase by the Fund.
See notes to financial statements.
<PAGE>
DLJDIRECT STRATEGIC GROWTH FUND -- STATEMENT OF INVESTMENTS April 30, 2000
(unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS -- 95.7% ----------- ----------
<S> <C> <C>
CAPITAL GOODS -- 8.1%
AEROSPACE & DEFENSE - 1.2%
Honeywell International, Inc......... 1,582 $ 88,592
----------
CONGLOMORATES - 6.9%
General Electric Co.................. 2,425 381,331
Tyco International Ltd............... 2,650 121,734
----------
503,065
----------
591,657
----------
CONSUMER CYCLICAL -- 13.4%
BROADCASTING & CABLE TV - 3.8%
Comcast Corp. Special Cl. A*......... 2,300 92,144
Time Warner, Inc..................... 2,050 184,372
----------
276,516
----------
INTERNET - 3.5%
America Online, Inc.*................ 2,550 152,522
Exodus Communications, Inc.*......... 650 57,484
PSINet, Inc.*........................ 1,850 42,897
----------
252,903
----------
RETAIL - GENERAL - 6.1%
Costco Wholesale Corp.*.............. 1,500 81,094
Home Depot, Inc...................... 2,850 159,778
Wal - Mart Stores, Inc............... 3,700 204,888
----------
445,760
----------
975,179
----------
CONSUMER STAPLES -- 19.9%
DRUGS - 9.8%
American Home Products Corp.......... 950 53,378
Amgen, Inc.*......................... 2,400 134,400
Bristol-Myers Squibb Co.............. 2,400 125,850
Merck & Co., Inc..................... 2,800 194,600
Pharmacia & Upjohn, Inc.............. 2,142 106,966
Schering-Plough Corp................. 2,425 97,758
----------
712,952
----------
FOOD & BEVERAGE - 3.3%
Coca-Cola Company.................... 3,400 160,013
General Mills, Inc................... 2,150 78,206
----------
238,219
----------
HOME PRODUCTS - 2.7%
Colgate-Palmolive Co................. 1,800 102,825
Procter & Gamble Co.................. 1,550 92,419
----------
195,244
----------
MEDICAL PRODUCTS & SUPPLIES - 4.1%
Johnson & Johnson.................... 1,925 158,813
Medtronic, Inc....................... 2,725 141,530
----------
300,343
----------
1,446,758
----------
FINANCIAL -- 2.8%
BANKING - 1.0%
Citigroup, Inc....................... 1,200 71,325
----------
FINANCIAL SERVICES - 1.8%
Lehman Brothers Holdings, Inc........ 800 65,650
Providian Financial Corp............. 700 61,644
----------
127,294
----------
198,619
----------
<CAPTION>
SHARES VALUE
----------- ----------
<S> <C> <C>
INFORMATION SERVICES -- 1.9%
Omnicom Group, Inc................... 1,500 $ 136,594
----------
TECHNOLOGY -- 49.6%
COMPUTERS - 23.4%
BMC Software, Inc.*.................. 1,275 59,686
Cisco Systems, Inc.*................. 5,100 353,573
Computer Associates International,
Inc................................ 1,625 90,695
EMC Corp.*........................... 1,450 201,459
Microsoft Corp.*..................... 3,550 247,613
Network Appliance, Inc.*............. 850 62,847
Oracle Corp.*........................ 3,025 241,811
Siebel Systems, Inc.*................ 700 86,013
Sun Microsystems, Inc.*.............. 2,200 202,263
Veritas Software Corp.*.............. 1,375 147,490
----------
1,693,450
----------
ELECTRONICS - 11.0%
Corning, Inc.*....................... 600 118,500
Flextronics International Ltd.*...... 875 61,469
Nortel Networks Corp................. 1,775 201,019
SCI Systems, Inc.*................... 1,400 74,550
Scientific-Atlanta, Inc.*............ 2,550 165,909
Solectron Corp.*..................... 1,900 88,944
Tellabs, Inc.*....................... 1,600 87,700
----------
798,091
----------
SEMICONDUCTORS - 9.3%
Applied Materials, Inc.*............. 1,150 117,084
Intel Corp........................... 2,575 326,542
Texas Instruments, Inc............... 1,400 228,025
----------
671,651
----------
TELECOMMUNICATIONS - 5.9%
AT&T Corp............................ 3,000 140,063
MCI WorldCom, Inc.*.................. 2,050 93,146
Nextel Communications, Inc.*......... 700 76,605
Qwest Communications International,
Inc.*.............................. 1,250 54,218
Sprint Corp. (FON Group)............. 1,050 64,575
----------
428,607
----------
3,591,799
----------
TOTAL COMMON STOCKS
(cost $6,554,608)................... 6,940,606
----------
<S> <C> <C>
<CAPTION>
PRINCIPAL
AMOUNT
COMMERCIAL PAPER -- 4.3% -----------
(amortized cost $314,000)
<S> <C> <C>
UBS Finance LLC
6.040%, 05/01/00**.................. $314,000 314,000
----------
TOTAL INVESTMENTS -- 100.0%
(cost $6,868,608)................................ 7,254,606
----------
CASH AND OTHER ASSETS
NET OF LIABILITIES -- 0.0%....................... (50,820)
----------
NET ASSETS -- 100.0%............................... $7,203,786
==========
</TABLE>
* Non-income producing
** Commercial paper is traded on a discount basis; the interest rate shown
reflects the discount rate paid at the time of purchase by the Fund.
See notes to financial statements.
<PAGE>
DLJDIRECT MUTUAL FUNDS -- STATEMENT OF ASSETS AND LIABILITIES April 30, 2000
(unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
--------------- -----------
<S> <C> <C>
ASSETS:
Investment in securities, at value (cost $29,622,069 and
$6,868,608, respectively)................................ $30,088,925 $7,254,606
Cash....................................................... 1,035 887
Receivable for capital stock sold.......................... 111,930 3,815
Dividends and interest receivable.......................... 590 3,189
Reimbursement due from advisor............................. 28,669 28,968
----------- ----------
Total assets............................................. 30,231,149 7,291,465
----------- ----------
LIABILITIES:
Payable for investment securities purchased................ 832,496 --
Payable for capital stock redeemed......................... 49,889 51,791
Accrued expenses and other liabilities..................... 62,612 35,888
----------- ----------
Total liabilities........................................ 944,997 87,679
----------- ----------
NET ASSETS.................................................. $29,286,152 $7,203,786
=========== ==========
NET ASSETS CONSIST OF:
Capital paid-in............................................ $28,878,865 $6,852,913
Accumulated net investment loss............................ (68,256) (7,563)
Accumulated net realized gain (loss) on investments........ 8,687 (27,562)
Net unrealized appreciation of investments................. 466,856 385,998
----------- ----------
$29,286,152 $7,203,786
=========== ==========
Shares outstanding......................................... 2,116,678 638,775
=========== ==========
Net asset value and redemption value per share............. $13.84 $11.28
====== ======
</TABLE>
See notes to financial statements.
<PAGE>
DLJDIRECT MUTUAL FUNDS -- STATEMENT OF OPERATIONS for the period ended April 30,
2000*'D'
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
--------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividend income............................................ $ 29,265 $ 10,159
Interest income............................................ 753 7,044
-------- --------
Total investment income.................................. 30,018 17,203
-------- --------
EXPENSES:
Investment advisory fees (Note B).......................... 61,863 15,609
Distribution fees (Note B)................................. 17,675 5,203
Shareholder servicing fees (Note B)........................ 15,670 4,430
Transfer agent fees........................................ 2,800 3,000
Custodian fees............................................. 19,000 13,000
Registration fees.......................................... 8,000 6,800
Printing fees.............................................. 6,500 4,000
Legal fees................................................. 6,500 3,000
Auditing fees.............................................. 6,500 4,000
Trustees' fees............................................. 5,000 1,000
Miscellaneous.............................................. 3,044 1,594
-------- --------
Total expenses........................................... 152,552 61,636
Less expenses reimbursed by advisor (Note B)............. (54,278) (36,870)
-------- --------
Net expenses............................................. 98,274 24,766
-------- --------
NET INVESTMENT LOSS......................................... (68,256) (7,563)
-------- --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments.................... 8,687 (27,562)
Net change in unrealized appreciation on investments....... 466,856 385,998
-------- --------
Net realized and unrealized gain (loss) on investments..... 475,543 358,436
-------- --------
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $407,287 $350,873
======== ========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS'D'
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
--------------- ------------
PERIOD ENDED PERIOD ENDED
04/30/00* 04/30/00*
--------- ---------
<S> <C> <C>
OPERATIONS:
Net investment loss........................................ $ (68,256) $ (7,563)
Net realized gain (loss) on investments.................... 8,687 (27,562)
Net change in unrealized appreciation on investments....... 466,856 385,998
----------- ----------
Net increase in net assets from operations................. 407,287 350,873
----------- ----------
CAPITAL STOCK TRANSACTIONS -- (NET) Note D.................. 28,828,865 6,802,913
----------- ----------
Total increase in net assets............................. 29,236,152 7,153,786
NET ASSETS:
Beginning of period........................................ 50,000 50,000
----------- ----------
End of period.............................................. $29,286,152 $7,203,786
=========== ==========
</TABLE>
* Commencement of operations was November 18, 1999.
'D' Unaudited
See notes to financial statements.
<PAGE>
DLJDIRECT MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS April 30, 2000
(unaudited)
--------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES. DLJdirect Mutual Funds ('DLJdirect' or
'Funds') consists of two portfolios (the 'Portfolios'), the DLJdirect Choice
Technology Fund (the 'Technology Fund') and the DLJdirect Strategic Growth Fund
(the 'Growth Fund'). DLJdirect, organized as a Delaware business trust on
August 3, 1999, constitutes a diversified, open-end investment company
registered under the Investment Company Act of 1940, as amended ('Act'). Prior
to the commencement of operations on November 18, 1999, the Funds had no
operations other than the sale and issuance to each of DLJ Asset Management
Group (the 'Advisor') and DLJdirect Inc. of 2,500 shares of beneficial interest
of each of the Technology Fund and the Growth Fund.
The investment objective of the Technology Fund is growth of capital which the
Fund seeks to achieve by investing in a broad number of industries that comprise
the U.S. domestic technology sector. The Growth Fund seeks to achieve long-term
growth of capital by investing in equity securities of a limited number of
large, carefully selected companies that the Advisor believes will achieve
superior growth.
The Funds account separately for the assets, liabilities and operations of each
Portfolio. Expenses directly attributable to each Portfolio are charged to that
Portfolio's operations; expenses which are applicable to both Portfolios are
allocated among them on a pro rata basis. The Funds' financial statements are
prepared in accordance with generally accepted accounting principles which may
require the use of management estimates and assumptions. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies consistently followed by DLJdirect.
(1) SECURITY VALUATION: Securities and options traded on national exchanges
and over-the-counter securities listed in the NASDAQ National Market System
are valued at the last reported sales price at the close of the New York Stock
Exchange. Securities for which there have been no sales on such day are valued
at the mean of the current bid and asked prices. Over-the-counter securities
not listed on the NASDAQ National Market System are valued at the mean of the
current bid and asked prices. Short-term investments, those with a remaining
maturity of 60 days or less, are valued at amortized cost, which approximates
market value.
(2) REPURCHASE AGREEMENTS: The Funds may enter into repurchase agreements with
financial institutions, deemed to be creditworthy by the Funds' Advisor,
subject to the seller's agreement to repurchase and the Funds' agreement to
resell such securities at a mutually agreed-upon price. Securities purchased
subject to repurchase agreements are deposited with the Funds' custodian and,
pursuant to the terms of the repurchase agreement, must have an aggregate
market value greater than or equal to the repurchase price plus accrued
interest at all times. If the value of the underlying securities falls below
the value of the repurchase price plus accrued interest, the Funds will
require the seller to deposit additional collateral by the next business day.
If the request for additional collateral is not met, or the seller defaults on
its repurchase obligation, the Funds maintain the right to sell the underlying
securities at market value and may claim any resulting loss against the
seller.
(3) FEDERAL INCOME TAXES: The Funds intend to be treated as 'regulated
investment companies' under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their net taxable income. Accordingly, no
provisions for Federal income taxes have been made in the accompanying
financial statements.
(4) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is recorded
on the ex-dividend date or as soon as the Fund is informed of the dividend.
Interest income is accrued daily. Security transactions are accounted for on
the date securities are purchased or sold. Security gains and losses are
determined on the identified cost basis. Discounts and premiums on securities
purchased are amortized in accordance with income tax regulations which
approximate generally accepted accounting principles.
(5) DIVIDENDS AND DISTRIBUTIONS: Dividends and distributions to shareholders
are recorded on the ex-dividend date.
<PAGE>
DLJDIRECT MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS April 30, 2000
(continued)
--------------------------------------------------------------------------------
NOTE (B) ADVISORY AND DISTRIBUTION SERVICES AGREEMENT: The Advisor is a
wholly-owned subsidiary of Donaldson, Lufkin & Jenrette Securities Corporation,
which is a wholly-owned subsidiary of Donaldson, Lufkin and Jenrette, Inc.
('DLJ'). DLJ is an independently operated, indirect subsidiary of AXA Financial,
Inc., a holding company controlled by AXA, a member of a large French insurance
group. AXA is indirectly controlled by a group of four French insurance
companies.
Under its Advisory Agreement with DLJdirect, the Advisor will provide investment
advisory services and order placement facilities and pay all compensation of
Trustees of the Funds who are affiliated persons of the Advisor. The Advisor or
its affiliates will also furnish DLJdirect, without charge, management
supervision and assistance and office facilities. DLJdirect will pay the Advisor
at the following annual percentage rates of the average daily net assets of each
Fund: Technology Fund, .875 of 1% of the first $500,000,000, .750 of 1% the next
$500,000,000 and .625 of 1% of the balance; and Growth Fund, .750 of 1% of the
first $500,000,000 and .625 of 1% of the balance. Such fees will be accrued
daily and paid monthly.
The Advisor has undertaken, in writing, to limit total expenses of the
Technology Fund and the Growth Fund to 1.39% and 1.19%, respectively, of the
average daily net assets of each Fund. This arrangement will remain in place at
least until October 31, 2002 as long as the Advisor continues to act as advisor
to the Funds and may be extended thereafter at the discretion of the Advisor and
may only be terminated by the Board of Trustees. As a result of the limitation
of expenses, the Advisor reimbursed the Technology Fund and Growth Fund $54,278
and $36,870, respectively, during the period ended April 30, 2000.
Pursuant to Rule 12b-1 under the Act, DLJ Winthrop has entered into a
Distribution Services Agreement (the 'Agreement') with Donaldson, Lufkin &
Jenrette Securities Corporation, DLJdirect's Distributor. Under the agreement,
each portfolio will pay a distribution services fee to the Distributor at an
annual rate of .25 of 1% of the aggregate average daily net assets attributable
to shares of each Fund. Under the Agreement, each Fund is obligated to pay
distribution and/or service fees to the Distributor as compensation for its
distribution and service activities, not as reimbursement for specific expenses
incurred. If the Distributor's expenses exceed its distribution and service
fees, the Fund will not be obligated to pay additional expenses. If the
Distributor's expenses are less than such distribution and service fees, it will
retain its full fees and realize a profit. In addition, the Agreement provides
that the Advisor may use its own resources including fees from investment
companies (including DLJdirect) to finance the distribution of DLJdirect's
shares.
The Funds' Shareholder Servicing Plan permits each Fund to pay banks,
broker-dealers or other financial institutions for shareholder support services
they provide, at a rate of up to .25 of 1% of the average daily net assets of
each Fund. The services may include, among other services, providing general
shareholder liaison services, providing information on shareholder investments,
and establishing and maintaining shareholder accounts and records.
Effective May 16, 2000, each Trustee who is not an affiliated person will be
paid a fee of $500 for each board meeting attended, a $500 fee for each special
meeting attended, a $250 fee for each audit committee meeting and an annual
retainer of $500. Prior to May 16, 2000, each Trustee who is not an affiliated
person received an attendance fee of $1,000 per meeting and $500 per audit
committee meeting. Trustees' fees are allocated to the portfolios on a pro rata
basis.
<PAGE>
DLJDIRECT MUTUAL FUNDS -- NOTES TO FINANCIAL STATEMENTS April 30, 2000
(continued)
--------------------------------------------------------------------------------
NOTE (C) INVESTMENT TRANSACTIONS: For federal income tax purposes, the cost of
securities owned at April 30, 2000 was substantially the same as the cost of
securities for financial statement purposes. At April 30, 2000, the components
of the net unrealized appreciation (depreciation) on investments were as
follows:
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
--------------- -----------
<S> <C> <C>
Gross appreciation (investments having an excess
of value over cost)................................. $ 3,359,531 $ 817,844
Gross depreciation (investments having an excess
of cost over value)................................. (2,892,675) (431,846)
----------- ----------
Net unrealized appreciation of investments............ $ 466,856 $ 385,998
=========== ==========
</TABLE>
For the period ended April 30, 2000, total aggregate purchases and sales of
portfolio securities, excluding short-term securities, were as follows:
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
--------------- -----------
<S> <C> <C>
Purchases............................................. $30,008,333 $7,159,050
Sales................................................. 1,682,951 576,880
</TABLE>
NOTE (D) SHARES OF BENEFICIAL INTEREST: There is an unlimited number of shares
($0.001 par value) authorized. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
----------------------- ---------------------
PERIOD ENDED PERIOD ENDED
APRIL 30, 2000* APRIL 30, 2000*
----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold.......................... 2,468,740 $33,788,474 728,916 $ 7,858,993
Shares redeemed...................... (357,062) (4,959,609) (95,141) (1,056,080)
--------- ----------- ------- -----------
Net increase......................... 2,111,678 $28,828,865 633,775 $ 6,802,913
========= =========== ======= ===========
</TABLE>
* The Funds commenced operations on November 18, 1999.
<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The table below sets forth financial data for a share of capital stock
outstanding throughout the period presented. This information has been derived
from information provided in the financial statements.
<TABLE>
<CAPTION>
TECHNOLOGY FUND GROWTH FUND
----------------- -----------------
PERIOD ENDED PERIOD ENDED
APRIL 30, 2000(1) APRIL 30, 2000(1)
(UNAUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
Net asset value, beginning of period........................ $ 10.00 $10.00
Net investment loss......................................... (0.06)* (0.02)*
Net realized and unrealized gain on investments............. 3.90 1.30
------- ------
Net increase in net asset value from operations............. 3.84 1.28
------- ------
Net asset value, end of period.............................. $ 13.84 $11.28
======= ======
Total return'DD'............................................ 38.40% 12.80%
Ratio of expenses to average net assets..................... 1.39%'D' 1.19%'D'
Ratio of net investment loss to average net assets.......... (0.95)'D' (0.36)'D'
Portfolio turnover rate..................................... 12.0% 14.0%
Net assets, end of period (000 omitted)..................... $29,286 $7,204
</TABLE>
'D' Annualized.
'DD' Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions and redemption on the last day of the period. Total
returns calculated for a period of less than one year is not annualized.
* Based on average shares outstanding.
(1) The Funds commenced operations on November 18, 1999.
(2) Net of voluntary assumption by Advisor of expenses, expressed as a
percentage of average net assets, as follows: Technology Fund, .76%
(annualized) for the period ended 04/30/00; and Growth Fund, 1.76%
(annualized) for the period ended 04/30/00.
<PAGE>
TRUSTEES
G. Moffett Cochran
Robert E. Fischer
Martin Jaffe
Wilmot H. Kidd, III
OFFICERS
G. Moffett Cochran, Chairman and President
Martin Jaffe, Vice President, Secretary and Treasurer
Brian A. Kammerer, Vice President
Hugh M. Neuburger, Vice President
INVESTMENT ADVISOR
DLJ Asset Management Group, Inc.
277 Park Avenue, New York, NY 10172
CUSTODIAN
Citibank, N.A.
111 Wall Street, New York, NY 10043
TRANSFER AGENT
PFPC, Inc.
P.O. Box 61787 (211 South Gulph Road)
King of Prussia, PA 19406-0903
DISTRIBUTOR
Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue, New York, NY 10172
INDEPENDENT AUDITORS
Ernst & Young LLP
787 Seventh Avenue, New York, NY 10019
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street, New York, NY 10004
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors in the Fund
unless preceded or accompanied by an effective prospectus, which should be read
carefully before investing.
[Logo]
DLJDIRECT INC.
501 Plaza II, Jersey City, NJ 07311
1.800.825.5723
Semi Report 6/00 19000
DLJDIRECT
MUTUAL FUNDS
DLJDIRECT STRATEGIC GROWTH FUND
DLJDIRECT CHOICE TECHNOLOGY FUND
SEMI-ANNUAL REPORT
APRIL 30, 2000
[Logo]
DLJDIRECT INC.
Member NASD and SIPC
A Donaldson, Lufkin & Jenrette Company
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as.................................. 'D'
The double dagger symbol shall be expressed as........................... 'DD'
