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The Wireless Fund
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Semi-Annual Report
September 30, 2000
Wireless Fund
Semi-Annual Report
September 30, 2000
Dear Shareholder:
It is a pleasure and honor to welcome you to Wireless Fund as we
present our inaugural semi-annual report to shareholders. We are at the
beginning of something very significant. The way people communicate is forever
being changed with the means wireless communications is providing. As
shareholders' of Wireless Fund it is a very exciting time to participate in one
of the World's most dynamic and exciting industries. Wireless growth rates
should outpace the overall World economy for many years to come as mobile
devices become more and more ubiquitous in business and society.
People will look back on this period and say it was a time of
communications breakthroughs. The mobile phone and personal digital assistants
have already had a profound impact on many areas of our lives. New technologies
such as 3G (Third Generation) for wireless are offering wider bandwidths
allowing users still further enhanced communications capabilities by
transmitting voice, data and video wirelessly.
There is no question that "the World is going Wireless", and as each
new subscriber uses more minutes for voice and data, carriers will be constantly
upgrading networks. The wireless space has many investment opportunities from
companies that provide components to handset manufacturers, companies that make
the base stations and network infrastructure to companies that make equipment
for wireless local area networks and fixed wireless networks.
As far back as October 1998, NTT Mobile Communications Network, Inc.,
Japan's leading mobile operator, piloted a cellular network that joined together
the cell phone and motion video. This will be a standard feature on mobile
devices around the globe in a short period of time.
At the beginning of 2000 there were less than 470 million total
cellular customers worldwide. In the next three years over one billion
wireless users could be transferring voice, data and video wirelessly. The
bottom line is that wireless communication is fundamentally changing the way
we work and live.
Fund Discussion
We are pleased to report that Wireless Fund has completed it's first
six months of operation. We have focused our efforts on companies that are
leaders of the wireless revolution and will continue to be. Despite the market
volatility we have seen since the Fund launched, we remain focused on companies
that will provide shareholder value over the long-term.
At the end of the period Nokia (NOK) was the largest holding in the
Fund at 5.50%. Nokia is the world's No. 1 mobile phone producer and one of the
largest communication network providers. Nortel Networks (NT) was the Fund's
second largest holding at 5.32%. Nortel has positioned itself as a key player in
the 3G build-out. 3G wireless networks are creating a mobile high-speed wireless
Internet that supports voice, video and data.
As a group, semiconductors represented the largest sector of the Fund
at 31.37%. Handset, broadband networks, RF base stations and wireless local
loops all utilized semiconductors. As the demand for high-speed communications
continues to boom, leading semiconductor companies will benefit. PMC-Sierra
(PMCS) was one of the Fund's top holdings in this area representing 4.61% of the
Fund. PMC-Sierra provides highly integrated semiconductor solutions for the
wireless infrastructure and communications industry.
Software providers for a wireless Internet will be a major catalyst for
revenue growth of the carriers. As end users get more advanced technologies they
spend more time on their wireless devices. Carriers are pushing hard to deploy
application that generate incremental revenues and reduce operating costs.
Phone.com (PHCM) is one of the leading companies involved in the wireless
Internet revolution that allows users to access data wirelessly. WAP or Wireless
Application Protocol is a protocol for wireless Internet access that will work
on all digital cellular networks. WAP was developed by Phone.com. The growth
opportunity for the combined market of Phone.com /Software.com's products
(wireless and wireline carriers, portal providers and cable operators) should
grow form approximately 2.1 Billion addressable subscribers this year to over
3.5 Billion in 2003. That compares to a market for PCs of 480 million today.
Going forward, we will continue to focus our efforts on companies that
are the leaders of the wireless revolution. As voice, data, video and Internet
technologies converge, we believe enormous opportunities will be created in the
wireless arena.
Sincerely,
Jeffrey R. Provence
/s/ Jeffrey R. Provence
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Ross C. Provence
/s/ Ross C. Provence
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Malcolm R. Fobes III
/s/ Malcolm R. Fobes III
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The Value of a $10,000 Investment In Wireless Fund From April 3, 2000 to
September 30, 2000 As Compared To The Standard & Poor's 500 Index
Chart
9/30/00 NAV $18.84 Total Return*
Through 9/30/00 From
Fund Inception 4/1/00
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Wireless Fund -5.40%
Standard & Poor's 500 Index** -3.23%
Total return includes change in share prices and in each case includes
reinvestment of any dividends and capital gain distributions.
**The S&P 500 is a broad market-weighted average dominated by blue-chip stocks
and is an unmanaged group of stocks whose composition is different from the
Fund.
Past Performance Is No Guarantee Of Future Results
Wireless Fund Schedule of Investments
September 30, 2000 (unaudited)
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Shares/Principal Amount Market Value % of Assets
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COMMON STOCKS
Circuit Boards
3,550 Flextronics* 291,543 0.99%
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Communications Equipment
6,638 Network Appliance* 845,515
40,651 Nokia 1,618,418
---------
2,463,933 8.37%
Computer Integrated Systems Design
3,282 Aether* 346,251
13,200 Sun Micro Systems* 1,541,100
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1,887,351 6.41%
Computer Peripheral Equipment, NEC
25,013 Cisco Systems Inc.* 1,381,968
9,500 EMC Corporation* 941,688
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2,323,656 7.89%
Computer Programming Services
5,684 Verisign* 1,187,827 4.03%
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Electronic Computers
12,500 Palm Inc.* 661,719 2.25%
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Information Retreival Services
38,700 InfoSpace* 1,170,675 3.98%
---------
Internet Services
22,352 Exodus* 1,103,630
6,000 Inktomi* 684,000
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1,787,630 6.07%
Prepackaged Software
5,400 Ariba Inc,* 773,634 2.63%
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Radio and Television Broadcasting Equipment
10,925 Netro* 647,306 2.20%
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Semiconductors and Related Services
6,900 Analog Devices* 569,681
6,178 Applied Micro Circuits* 1,279,232
5,280 Broadcom* 1,287,000
17,700 Cypress Semiconductors* 735,656
6,303 Pmc Sierra* 1,356,721
2,600 SDLI Inc. * 800,800
23,400 Silicon Storage Technology* 636,188
10,200 Texas Instruments Inc. 480,675
23,288 Transwitch* 1,484,610
16,254 Triquint Semiconductor* 592,255
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9,222,818 31.32%
Telephone and Telegraph Apparatus
21,662 Adc Telecommunications Inc.* 582,505
9,000 Alcaltel 565,875
4,800 Ciena * 589,500
6,470 Juniper Networks* 1,416,526
26,250 Nortel Networks 1,563,515
9,700 Phone.Com* 1,102,163
13,500 Plantronics* 513,000
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6,333,084 21.50%
Total for Common Stock 28,751,176 97.62%
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Cash and Equivalents
460,065 Firstar Treasury Fund 5.47% 460,065 1.56%
Total Investments 29,211,241 99.19%
(Identified Cost -$ 27,648,673)
Other Assets Less Liabilities 239,520 0.81%
Net Assets 29,450,761 100.00%
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Wireless Fund
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Statement of Assets and Liabilities
September 30, 2000 (unaudited)
Assets:
Investment Securities at Market Value $29,211,241
(Identified Cost -$ 27,648,673)
Cash 190,409
Receivables:
Receivable for Investment Securities Sold 1,111,312
Receivable for Shareholder Purchases 51,111
Dividends and Interest 2,256
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Total Assets 30,566,329
Liabilities
Accrued Expenses 46,394
Payable for Securities Purchased 1,069,174
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Total Liabilities 1,115,568
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Net Assets $29,450,761
Net Assets Consist of:
Capital Paid In 30,082,406
Accumulated Undistributed Net Investment Income (192,506)
Accumulated Undistributed Realized
Gain (Loss) on Investments - Net (2,001,707)
Unrealized Depreciation in Value
of Investments Based on Identified Cost - Net 1,562,568
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Net Assets, for 1,563,094 Shares Outstanding $29,450,761
===========
Net Asset Value and Redemption Price
Per Share ($29,450,761/1,563,094 shares) 18.84
Offering Price Per Share 18.84
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Wireless Fund
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Statement of Operations
For the period of April 3, 2000 (commencement of operations)
through September 30, 2000 (unaudited)
Investment Income:
Dividends 728
Interest 14,070
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Total Investment Income 14,798
Expenses: (Note 2)
Management Fees 207,304
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Total Expenses 207,304
Net Investment Income (192,506)
Realized and Unrealized Gain (Loss) on Investments:
Realized Gain (Loss) on Investments (2,001,707)
Unrealized Appreciation (Depreciation) on Investments 1,562,568
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Net Realized and Unrealized Gain (Loss) on Investments (439,139)
Net Increase (Decrease) in Net Assets from Operations (631,645)
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Wireless Fund
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Statement of Changes in Net Assets (unaudited)
4/03/00
to
9/30/00
From Operations:
Net Investment Income (192,506)
Net Realized Gain (Loss) on Investments (2,001,707)
Net Unrealized Appreciation (Depreciation) 1,562,568
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Increase (Decrease) in Net Assets from Operations (631,645)
From Capital Share Transactions:
Proceeds From Sale of Shares 38,245,973
Shares Issued on Reinvestment of Dividends 0
Cost of Shares Redeemed (8,263,567)
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Net Increase from Shareholder Activity 29,982,406
Net Increase in Net Assets 29,350,761
Net Assets at Beginning of Period 100,000
Net Assets at End of Period 29,450,761
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Share Transactions:
Issued 1,984,438
Reinvested -
Redeemed (426,344)
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Net increase (decrease) in shares 1,558,094
Shares outstanding beginning of period 5,000
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Shares outstanding end of period 1,563,094
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*commencement of operations
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Wireless Fund
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Financial Highlights (unaudited)
Selected data for a share outstanding throughout the period: 4/03/00**
to
9/30/00
Net Asset Value -
Beginning of Period 20.00
Net Investment Income (0.35)
Net Gains or Losses on Securities
(realized and unrealized) (0.81)
----
Total from Investment Operations (1.16)
Net Asset Value -
End of Period 18.84
Total Return -5.80%
Ratios/Supplemental Data
Net Assets - End of Period (Thousands) 29,451
Ratio of Expenses to Average Net Assets * 1.93%
Ratio of Net Income to Average Net Assets * -1.79%
Portfolio Turnover Rate * 199.36%
* Annualized
** commencement of operations.
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WIRELESS FUND
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NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
1.)SIGNIFICANT ACCOUNTING POLICIES
Wireless Fund Trust is an open-end management investment company. The Trust
was organized in Massachusetts as a business trust and may offer shares of
beneficial interest in a number of separate series, each series
representing a distinct fund with its own investment objectives and
policies. At present, there is only one series authorized by the Trust,
which series has been designated as Wireless Fund (the "Fund"). The Fund's
primary investment objective is to seek long-term growth of capital.
Significant accounting policies of the Fund are presented below:
SECURITY VALUATION:
The Fund, under normal market conditions, invests a least 65% of its assets
in the securities of companies engaged in the development, production, or
distribution of wireless related products or services. The investments in
securities are carried at market value. The market quotation used for
common stocks, including those listed on the NASDAQ National Market System,
is the last sale price on the date on which the valuation is made or, in
the absence of sales, at the closing bid price. Over-the-counter securities
will be valued on the basis of the bid price at the close of each business
day. Securities for which market quotations are not readily available will
be valued at fair value as determined in good faith pursuant to procedures
established by the Board of Trustees.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service
when the Adviser believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data
processing techniques based on yield spreads relating to securities with
similar characteristics to determine prices for normal institutional-size
trading units of debt securities without regard to sale or bid prices. When
prices are not readily available from a pricing service, or when restricted
or illiquid securities are being valued, securities are valued at fair
value as determined in good faith by the Adviser, subject to review of the
Board of Trustees. Short term investments in fixed income securities with
maturities of less than 60 days when acquired, or which subsequently are
within 60 days of maturity, are valued by using the amortized cost method
of valuation.
SECURITY TRANSACTION TIMING:
Security transactions are recorded on the dates transactions are entered
into (the trade dates). Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded as
earned. The Fund uses the identified cost basis in computing gain or loss
on sale of investment securities. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
INCOME TAXES:
It is the Fund's policy to distribute annually, prior to the end of the
calendar year, dividends sufficient to satisfy excise tax requirements of
the Internal Revenue Service. This Internal Revenue Service requirement may
cause an excess of distributions over the book year-end accumulated income.
In addition, it is the Fund's policy to distribute annually, after the end
of the fiscal year, any remaining net investment income and net realized
capital gains.
ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2.)INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory agreement with Value Trend
Capital Management, LP. and a sub-advisory agreement with Berkshire Capital
Holdings, Inc. The Fund is authorized to pay the Adviser a fee equal to an
annual average rate of 1.95% for investment adviser services. As a result
of the above calculation, for the period of April 3, 2000 (commencement of
operations) through September 30, 2000, the advisor and sub-advisor
received management fees totaling $207,304.
3.)RELATED PARTY TRANSACTIONS
Control persons of Value Trend Capital Management, LP. (the "Advisor") also
serve as directors of the Company. These individuals receive benefits from
the Advisor resulting from management fees paid to the Advisor of the Fund.
4.)CAPITAL STOCK
The Trust is authorized to issue an unlimited number of shares without par
value. Paid in capital at September 30, 2000 was $30,082,406 representing
1,563,094.071 shares outstanding.
5.)PURCHASES AND SALES OF SECURITIES
During the six months ending September 30, 2000, purchases and sales of
investment securities other than U.S. Government obligations and short-term
investments aggregated $38,226,326 and $8,195,031 respectively. Purchases
and sales of U.S. Government obligations aggregated $0 and $0 respectively.
6.)SECURITY TRANSACTIONS
For Federal income tax purposes, the cost of investments owned at September
30, 2000 was the same as identified cost. At September 30, 2000, the
composition of unrealized appreciation (the excess of value over tax cost)
and depreciation (the excess of tax cost over value) was as follows:
Appreciation (Depreciation) Net Appreciation (Appreciation)
4,102,433 (2,539,865) 1,562,568
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WIRELESS FUND
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Board of Trustees
Thomas H. Addis III
George Cossolias, CPA
Bradley J. DeHaven
Jeffrey R. Provence
Ross C. Provence
Investment Adviser
Value Trend Capital Management, LP
411 West Madison Avenue
El Cajon, CA 92020
Sub-Adviser
Berkshire Capital Holdings, Inc.
475 Milan Drive, Suite #103
San Jose, CA 95134
Dividend Paying Agent,
Shareholders' Servicing Agent,
Transfer Agent
Mutual Shareholder Services
1301 E. 9th St., Suite 1005
Cleveland, Ohio 44114
Custodian
Firstar Bank, NA
425 Walnut Street
P.O. Box 1118
Cincinnati, OH 45201
Independent Auditors
McCurdy & Associates CPA's, Inc.
27955 Clemens Rd
Westlake, Ohio 44145
