Dear Fellow Shareholders,
We want to welcome you as investors in the DCM Growth Fund. This is your first
semi annual report and we are excited about having this opportunity to inform
you of our progress since the Fund's commencement of operations on October 19,
1999.
The principal objective of the Fund is to invest in the common stocks of 20-30
medium and large capitalization companies that we believe have a high
probability of achieving above average long-term growth. In determining whether
a particular company is suitable for investment by the Fund, we focus on a
number of different attributes, including the company's market dominance; its
franchise durability and pricing power; consistent earnings history; profit
margins; strong stable management; and reasonable valuations in the context of
projected growth.
We are pleased to report that we have been true to those principles and the
result is a successful first six months of operations for your Fund. During this
period, October 19, 1999 through March 31, 2000, the total return of the Fund
has been 24%. The companies held by the Fund continue to generally meet or beat
our estimates, Wall Street's estimates, and their own estimates. Accordingly, we
believe that the long-term investment outlook of the Fund is favorable.
Many periods are marked by unique events and circumstances that help define
them. This one is no different. The two dominating themes of late have been the
roller coaster performance of the NASDAQ index and technology stocks in
particular, and the continued effort by the Federal Reserve to control inflation
by raising short term interest rates.
Though we believe that these events will prove to be just another short-term
historical footnote, we know these factors only play a small role in our
decision-making. One of the tenets of our philosophy is to discount the
short-term gyrations of the financial markets and to invest in those companies
that have the management strength to focus on their core business.
Although our discipline implies a low turnover of the portfolio, we have been
successful in using this market volatility to your advantage. We have been able
to reduce certain positions at market highs while adding to others during the
downturns. As long-term investors, we have seen many instances in which the
"baby gets thrown out with the bathwater". Quality companies have seen their
stocks get over sold during the time that more speculative companies have seen
their stocks come back to earth. We try to be patient and wait for these times
to become aggressive buyers of these high quality companies.
We continue to be excited about the future. We believe that there are great
opportunities for investors as we proceed. Thank you again for your confidence
and your support.
Sincerely,
Mark Derby Jonathan Derby
President Vice President
<PAGE>
<TABLE>
<CAPTION>
DCM GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
ASSETS:
<S> <C>
Investments in securities, at value
(cost $8,585,937) (Note 2) .......................... $ 9,221,271
Cash ....................................................... 138,813
Subscriptions receivable ................................... 192,321
Dividends and interest receivable .......................... 3,468
Due from advisor (Note 3) .................................. 6,280
Prepaid expenses ........................................... 6,208
Total Assets ........................................ 9,568,361
LIABILITIES:
Payables:
Securities purchased ................................ 165,531
Fund shares redeemed ................................ 13,399
Accrued expenses .................................... 30,204
Total Liabilities ................................... 209,134
Net Assets .......................................... $ 9,359,227
NET ASSETS CONSIST OF:
Additional paid in capital .......................... $ 8,693,834
Accumulated net investment loss ..................... (18,527)
Accumulated net realized gain from
investment transactions (Note 6 ) ................. 48,586
Net unrealized appreciation on
investments ....................................... 635,334
Net Assets .......................................... $ 9,359,227
Net asset value and redemption
price per share
($9,359,227/754,664 shares
of capital stock outstanding)
(Note 6 ) ........................................... $ 12.40
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
DCM GROWTH FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MARCH 31, 2000(1)
(UNAUDITED)
INVESTMENT INCOME:
<S> <C>
Dividends .................................................... $ 8,257
Interest ..................................................... 4,016
---------
12,273
EXPENSES:
Investment advisory fee (Note 3) ............................. $ 20,470
Administration fee ........................................... 18,218
Legal fee .................................................... 7,098
Transfer agent fee ........................................... 5,745
Audit fee .................................................... 3,549
Registration fees ............................................ 2,821
Directors' fees and expenses ................................. 2,746
Insurance .................................................... 2,517
Custody fee .................................................. 2,456
Printing ..................................................... 2,456
Other ........................................................ 1,559
---------
Total expenses ........................................ 69,635
Less: Expense reimbursement (Note 3) ................. (38,835)
---------
Net expenses .......................................... 30,800
---------
Net investment loss ................................... (18,527)
NET REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
(Note 2)
Net realized gain from investment
transactions .......................................... 48,586
Net change in unrealized apprecation of
investments ........................................... 635,334
---------
Net realized and unrealized gain
on investments ........................................ 683,920
---------
Net increase in net assets resulting
from operations ....................................... $ 665,393
=========
<FN>
(1) The fund commenced operations on October 19, 1999.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
DCM GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
ENDED
MARCH 31, 2000(1)
(UNAUDITED)
------------------
<S> <C>
Net investment loss .................................................... $ (18,527)
Net realized gain from investment transactions ......................... 48,586
Net change in unrealized appreciation of investments ................... 635,334
-----------
Net increase in net assets resulting from operations ................... 665,393
Net capital share transactions (Note 4) ................................ 8,593,834
-----------
Net increase (decrease) in net assets .................................. 9,259,227
NET ASSETS:
Beginning of period .................................................... 100,000
-----------
End of period (including accumulated undistributed net investment income
of $0.) ................................................................ $ 9,359,227
===========
<FN>
(1) The fund commenced operations on October 19, 1999.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
DCM GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
FOR THE
PERIOD ENDED
MARCH 31, 2000 (1)
(UNAUDITED)
<S> <C>
Net asset value, beginning of period ......................... $ 10.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss .......................................... (0.05)
Net realized and unrealized gain (loss) on
investments .............................................. 2.45
Total from investment operations ............................. 2.40
LESS DISTRIBUTIONS:
Dividends from net investment income ......................... 0.00
Distribution from realized gains from security
transactions ............................................ 0.00
Total distributions .......................................... 0.00
Net asset value, end of period ............................... $ 12.40
Total return ................................................. 24.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets end of period (in 000's) .......................... 9,359
Ratio of expenses to average net assets ...................... 3.36%
Ratio of net expenses to average net assets .................. 1.49%
Ratio of net investment income (loss) to average
net assets (gross) ...................................... (2.96%)
Ratio of net investment income (loss) to average
net assets .............................................. (1.09%)
Portfolio turnover rate ...................................... 12.91%
<FN>
(1) The fund commenced operations on October 19, 1999.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
<TABLE>
<CAPTION>
DCM GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 2000
(UNAUDITED)
MARKET
SHARES VALUE
------ -----
COMMON STOCKS - 94.49%
BANK/FINANCIAL SERVICES- 2.71%
<C> <S> <C>
4,500 + Fannie Mae.................................. $ 253,969
-----------
BANK/INSURANCE- 6.66%
10,502 Citigroup Inc............................... 622,900
-----------
BANK/MONEY CENTER- 5.33%
5,724 Chase Manhattan Corp........................ 499,061
-----------
BROADCAST SERVICES/PROGRAM- 4.80%
6,500 + Clear Channel Communications................ 448,906
-----------
BUILDING SUPPLY- 7.24%
10,500 Home Depot Inc.............................. 677,250
-----------
COMPUTER SOFTWARE- 6.17%
400 + Citrix Systems Inc.......................... 26,500
5,000 + Microsoft Corp.............................. 531,250
250 + Oracle Corporation.......................... 19,516
-----------
577,266
-----------
COMPUTER/NETWORKS- 10.06%
273 + Brocade Communications System Inc....... 48,952
9,358 + Cisco Systems Inc........................... 723,490
3,137 + Dell Computer Corp.......................... 169,202
-----------
941,644
-----------
COMPUTERS-MEMORY DEVICES- 1.34%
1,000 + EMC Corp.................................... 125,000
-----------
ELECTRICAL EQUIPMENT- 5.31%
3,200 General Electric Co......................... 496,600
-----------
FINANCIAL SERVICES- 2.71%
1,705 American Express Co......................... 253,938
-----------
INSURANCE DIVERSIFIED- 5.26%
4,500 American International Group Inc............ 492,750
-----------
INTERNET- 8.79%
7,500 America Online Inc.......................... 504,375
2,811 + CMGI Inc.................................... 318,521
-----------
822,896
-----------
MEDICAL SUPPLY- 1.24%
2,263 Medtronic Inc............................... 116,403
-----------
PHARMACEUTICAL- 5.87%
4,000 Bristol-Myers Squibb Co..................... 231,000
5,200 Pfizer Inc.................................. 190,125
3,495 Schering-Plough Corp........................ 128,441
-----------
549,566
-----------
RETAIL- 2.12%
3,985 GAP Inc..................................... 198,503
-----------
<PAGE>
SEMICONDUCTOR- 4.63%
3,282 Intel Corp.................................. 433,019
-----------
SOFTWARE- 2.13%
4,138 Automatic Data Processing................... 199,659
-----------
TELECOMMUNICATION EQUIPMENT- 12.12%
4,000 Lucent Technologies Inc..................... 243,000
11,046 + MCI Worldcom Inc............................ 500,499
835 Nokia Corp-Spon ADR......................... 181,404
1,400 + Qualcomm Inc................................ 209,038
-----------
1,133,941
-----------
TOTAL COMMON STOCK
(Cost $8,207,937)......................... 8,843,271
-----------
SHORT TERM INVESTMENTS- 4.04%
378,000 Firstar Stellar Treasury Fund............... 378,000
-----------
TOTAL INVESTMENTS
(Cost $8,585,937)......................... 98.53% 9,221,271
Other assets less liabilities............. 1.47% 137,956
------- -----------
TOTAL NET ASSETS..........................100.00% $ 9,359,227
======= ===========
<FN>
+ Non-income producing security
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
DCM GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1. ORGANIZATION
The DCM Growth Fund (the "Fund"), is organized as a series of the DCM
Series Trust a Massachusetts business trust formed on August 5, 1999, and
registered as an open-end, non-diversified, management investment company under
the Investment Company Act of 1940, as amended. The Fund commenced operations on
October 19, 1999. The Fund's business and affairs are managed by its officers
under the direction of its Board of Trustees. The Fund's investment objective is
to seek long-term growth of capital.
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
generally accepted accounting principles.
A. SECURITY VALUATION - Securities for which market quotations are readily
available are valued at market value. 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
approved by the Board of Trustees. The pricing service determines
valuations for normal, institutional-size trading units of such
securities using methods based on market transactions for comparable
securities and various relationships between securities that are
generally recognized by institutional traders. Short-term investments
held by the Fund that mature in 60 days or less are valued at amortized
cost, which approximates market value. All other securities and assets
are valued at their fair value following procedures approved by the
Board of Trustees.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Securities
transactions are accounted for on the trade date. 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 periods. Actual
results could differ from those estimates.
NOTE 3. INVESTMENT ADVISORY FEES AND OTHER
The Fund has an investment advisory agreement with Derby Capital Management
("Advisor"). Under this agreement, the Advisor provides the Fund with
investment advice and supervises the Fund's management and investment programs
for which the Fund pays a monthly advisory fee equal, on an annual basis, to
1.00% of its average daily net assets.
<PAGE>
The Advisor has voluntarily agreed to reimburse the Fund for expenses in
excess of 1.50% of average net assets for the fiscal year ending September 30,
2000. The amount reimbursed by the Advisor for the period ended March 31,
2000 is set forth in the Statement of Operations.
The Fund has a fund accounting and administrative agreement with American Data
Services, Inc., ("ADS"). ADS receives a fee, computed daily and payable
monthly, based on a percentage of average daily net assets, subject to certain
minimums.
NOTE 4. CAPITAL SHARE TRANSACTIONS
At March 31, 2000 there were an unlimited number of shares authorized
at $10.00 par value. Transactions in capital stock during the period ended
March 31, 2000 were as follows:
SHARES AMOUNT
------ ------
Shares sold.................................... 748,901 $8,642,839
Shares issued for dividend reinvestment........ 0 0
Shares repurchased............................. (4,237) (49,005)
------- ----------
744,664 $8,593,834
======= ==========
NOTE 5. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short term
securities, for the period ended March 31, 2000 aggregated $8,670,516, and
$511,165, respectively.
