<PAGE> 1
DEAR CURRENT AND FUTURE SHAREHOLDERS:
THE PORTFOLIO
At June 30, 2000, the net assets in the Large-Cap Growth Fund amounted to
$2,486,601 with 192 shareholders. The top ten positions in order were: BroadCom
(5.3% of the Fund's net assets), JDS Uniphase (4.4%), EMC Corp. (4.2%), Cisco
Systems (3.9%), Qwest Communications (3.9%), Sanmina Corp. (3.9%), WorldCom
(3.9%), AT&T Liberty Media (3.8%), Sun Microsystems (3.8%), and Altera Corp.
(3.7%). The sector weightings were as follows: Technology 46.8%, Healthcare
13.4%, Financials 11.8%, Consumer Staples 10.0%, Communication Services 7.8%,
Capital Goods 7.4%, Consumer Cyclicals 2.8%. The Fund outperformed the S&P 500
Index from inception (December 8, 1999) through June 30, 2000: Large-Cap Growth
Fund rose 7.50% compared to the S&P 500 Index of 4.28%.
REVIEW AND OUTLOOK
The U.S. Equity markets were down in the first half of the year, for the first
time since 1994. The seemingly modest 0.4% decline in the S&P 500 belies the
severe individual stock volatility that occurred in the first six months of the
year. The NASDAQ index was typical of the "boom/bust" movement: rising double
digits in the first three months, and giving back all of the gain in the
April-May period. We view the market correction as a positive event, removing
the speculative excesses and paving the way for the next advance upward in the
market.
The U.S. economy is beginning to slow from clearly unsustainable levels of
growth, though the health of the economy is still generally sound. We see little
chance of a recession this year or next. Six increases in short-term interest
rates by the Federal Reserve Board, along with tightening of lending standards
by commercial banks and dramatically higher energy prices, are among the causes
of the slowdown. Corporate profit comparisons will be likewise slowing, however
reported corporate profits should be relatively strong for the June quarter.
Therefore, while additional economic data in the next month could change things,
the odds now slightly favor the Fed not raising interest rates at its August
meeting, though it could still act after the presidential election in November.
Spending on technology is helping to offset the slowdown in the consumer sector;
70% of the growth in industrial production in the past year has come from
technology. The technology sector is responsible for approximately one-third of
the growth in the U.S. economy. Investment in technology has improved the
efficiency of both the business and the consumer sectors. As a result, there is
increasing evidence that technology has smoothed economic cycles; inventory-led
recessions are less likely. Technology's impact on productivity has helped to
offset wage growth keeping inflation under control.
In sum, the U.S. is still in remarkably good shape. Our longer term thesis of
low inflation, sustained economic growth with positive corporate earnings
growth, aided by the technology revolution, remains very much intact. We may
look back on 2000 as a year of transition, where earnings had the chance to
catch up to high market valuations. Growth companies, whose earnings have some
independence from general economic trends, tend to outperform the market in
periods of slowing growth. Another reason for optimism is the possibility that
the Federal Reserve is finished raising interest rates; in previous years the
market has seen double digit increases following the last three periods of Fed
tightening. Our focus continues to be on high-quality, industry leading growth
companies in fundamentally attractive industries at reasonable prices with a
focus on the top 100 of the S&P 500 Index.
Sincerely,
/s/ ROBERT J. VILE
Robert J. Vile
Managing Director
Trainer Wortham & Company, Inc.
Past performance is no guarantee of future results. Share prices fluctuate and
you may have a gain or loss when you redeem shares.
This material is to be preceded or accompanied by a prospectus. Shares of the
Trainer Wortham Funds are distributed by Provident Distributors, Inc. which is
not affiliated with First Republic Bank and is not a bank. Trainer Wortham &
Co., Inc. is the investment advisor to the Funds, for which it receives a fee.
SHARES OF THE FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED OR OTHERWISE SUPPORTED BY, ANY BANK, IT'S AFFILIATES, AND ARE NOT
FEDERALLY INSURED, OR GUARANTEED BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT
INSURANCE CORPORATION, FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY.
INVESTMENT IN THE FUND INVOLVES RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE> 2
TRAINER WORTHAM LARGE-CAP GROWTH FUND
SCHEDULE OF INVESTMENTS JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------- ----------
<C> <S> <C>
COMMON STOCK - 99.93%
COMPUTER SOFTWARE & SERVICES - 17.12%
1,025 CMGI, Inc.*................................................. $ 46,958
1,350 EMC Corp.*.................................................. 103,866
775 Inktomi Corp.*.............................................. 91,644
1,125 Microsoft Corp.*............................................ 90,000
1,025 Sun Microsystems, Inc.*..................................... 93,211
----------
425,679
----------
DIVERSIFIED OPERATIONS - 6.28%
1,650 General Electric Co. ....................................... 87,450
1,375 Home Depot, Inc. ........................................... 68,664
----------
156,114
----------
ELECTRONICS - SEMICONDUCTOR - 12.84%
900 Altera Corp.*............................................... 91,744
600 BroadCom Corp., Class A*.................................... 131,363
1,125 Sanmina Corp.*.............................................. 96,188
----------
319,295
----------
FINANCIAL - 11.82%
625 American International Group, Inc. ......................... 73,437
1,225 Bank of America Corp. ...................................... 52,675
1,300 Citigroup, Inc. ............................................ 78,325
1,075 Morgan Stanley, Dean Witter & Co. .......................... 89,494
----------
293,931
----------
MEDIA/BROADCASTING - 9.98%
3,850 AT&T Corp. - Liberty Media Group, Class A*.................. 93,362
1,075 Clear Channel Communications, Inc.*......................... 80,625
975 Time Warner, Inc. .......................................... 74,100
----------
248,087
----------
MEDICAL - PHARMACEUTICAL - 13.43%
1,300 Amgen, Inc.*................................................ 91,325
1,300 Medtronic, Inc. ............................................ 64,756
1,350 PE Corp. - PE Biosystems Group.............................. 88,931
1,856 Pfizer, Inc................................................. 89,100
----------
334,112
----------
TECHNOLOGY & COMPUTERS - 7.53%
1,525 Cisco Systems, Inc.*........................................ 96,933
675 Intel Corp. ................................................ 90,239
----------
187,172
----------
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 3
TRAINER WORTHAM LARGE-CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED) JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-------- -----------
<C> <S> <C>
TELECOMMUNICATIONS - 20.93%
900 JDS Uniphase Corp.*......................................... $ 107,887
1,375 Lucent Technologies, Inc. .................................. 81,469
1,500 Nokia Oyj Corp., ADR........................................ 74,906
1,050 QUALCOMM, Inc.*............................................. 63,000
1,925 Qwest Communications International, Inc.*................... 95,648
2,125 WorldCom, Inc.*............................................. 97,484
-----------
520,394
-----------
TOTAL COMMON STOCKS (COST $2,379,848)................... 2,484,784
-----------
SHORT TERM INVESTMENTS - 1.72%
42,855 UMB Bank, Money Market Fiduciary, 4.90%
(Cost $42,855).............................................. 42,855
-----------
TOTAL INVESTMENTS (COST $2,422,703**) - 101.65%......... 2,527,639
OTHER LIABILITIES LESS OTHER ASSETS - (1.65)%........... (41,038)
-----------
NET ASSETS - 100.00%.................................... $ 2,486,601
===========
* Non-income producing security
** Cost for Federal income tax purposes is $2,422,703 and net unrealized appreciation
consists of:
Gross unrealized appreciation............................... $ 252,037
Gross unrealized depreciation............................... (147,101)
-----------
Net unrealized appreciation............................. $ 104,936
===========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 4
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE-CAP
GROWTH FUND
-----------
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$2,422,703) (Note 1).................................... $2,527,639
Receivables:
Dividends and interest.................................. 366
Capital stock sold...................................... 10,100
Other assets.............................................. 171
----------
TOTAL ASSETS............................................ 2,538,276
----------
LIABILITIES
Payables:
Investment securities purchased......................... 29,350
Advisory fee............................................ 411
Distribution fee........................................ 496
Accrued expenses.......................................... 21,418
----------
TOTAL LIABILITIES....................................... 51,675
----------
NET ASSETS
(applicable to outstanding shares of 231,400; unlimited
shares of $0.001 par value authorized).................. $2,486,601
==========
Net asset value, offering and redemption price per
share................................................... $ 10.75
==========
SOURCE OF NET ASSETS
Paid-in capital........................................... $2,452,039
Accumulated net realized loss on investments.............. (70,374)
Net unrealized appreciation of investments................ 104,936
----------
NET ASSETS.............................................. $2,486,601
==========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 5
STATEMENT OF OPERATIONS
PERIOD ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE-CAP
GROWTH FUND*
------------
<S> <C>
INVESTMENT INCOME
Dividends................................................. $ 2,483
Interest.................................................. 1,784
--------
TOTAL INCOME............................................ 4,267
--------
EXPENSES
Advisory fees (Note 3).................................... 6,145
Distribution expense (Note 3)............................. 2,048
Administrator expense..................................... 10,052
Transfer agent fees....................................... 18,956
Bookkeeping and pricing................................... 13,703
Insurance expense......................................... 30
Custodian fees............................................ 9,228
Legal expense............................................. 4,723
Registration expense...................................... 19,457
Trustees' fees and expenses............................... 282
Reports to shareholders................................... 205
Other..................................................... 5,753
--------
TOTAL EXPENSES.......................................... 90,582
Expenses waived and reimbursed (Note 3)................... (78,292)
--------
NET EXPENSES............................................ 12,290
--------
NET INVESTMENT LOSS..................................... (8,023)
--------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized loss from security transactions.............. (70,374)
Net change in unrealized appreciation of investments...... 104,936
--------
Net realized and unrealized gain on investments........... 34,562
--------
Net increase in net assets resulting from operations...... $ 26,539
========
</TABLE>
------------------------------------------
*Trainer Wortham Large-Cap Growth Fund commenced operations on December 8, 1999.
The notes to financial statements are an integral part of these statements.
<PAGE> 6
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE-CAP
GROWTH FUND
-----------
PERIOD
ENDED
JUNE 30,
2000*
-----------
<S> <C>
OPERATIONS
Net investment loss....................................... $ (8,023)
Net realized loss on investments.......................... (70,374)
Net change in unrealized appreciation of investments...... 104,936
----------
Net increase in net assets resulting from operations...... 26,539
----------
CAPITAL SHARE TRANSACTIONS
Receipt from shares sold.................................. 2,698,904
Receipt from shares issued on reinvestment of
distributions........................................... --
Shares redeemed........................................... (238,842)
----------
Net increase in net assets resulting from capital share
transactions(a)......................................... 2,460,062
----------
Total increase in net assets............................ 2,486,601
NET ASSETS
Beginning of period....................................... --
----------
End of period............................................. $2,486,601
==========
(a) Transactions in capital stock were:
Shares sold........................................... 254,536
Shares issued on reinvestment of distributions........ --
Shares redeemed....................................... (23,136)
----------
Net increase.......................................... 231,400
Beginning balance..................................... --
----------
Ending balance........................................ 231,400
==========
</TABLE>
-------------------------------------------
*Trainer Wortham Large-Cap Growth Fund commenced operations on December 8, 1999.
The notes to financial statements are an integral part of these statements.
<PAGE> 7
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The tables below set forth financial data for a share of capital stock
outstanding throughout the period presented.
<TABLE>
<CAPTION>
LARGE-CAP
GROWTH FUND(1)
--------------
PERIOD
ENDED
JUNE 30,
2000
--------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.00
-------
INCOME FROM INVESTMENT OPERATIONS
-----------------------------------------
Net investment loss....................................... (0.03)
Net gains on securities (both realized and unrealized).... 0.78
-------
Total from investment operations........................ 0.75
-------
NET ASSET VALUE, END OF PERIOD.............................. $10.75
=======
TOTAL RETURN................................................ 7.50%+
RATIOS/SUPPLEMENTAL DATA
----------------------------
Net assets, end of period (in 000's)...................... $2,487
Ratio of expenses to average net assets
before reimbursement of expenses by Advisor............. 11.06%*
after reimbursement of expenses by Advisor.............. 1.50%*
Ratio of net investment loss to average net assets
before reimbursement of expenses by Advisor............. (10.54%)*
after reimbursement of expenses by Advisor.............. (0.98%)*
Portfolio turnover rate................................... 33%+
</TABLE>
-------------------------------------------
( 1 )The Large-Cap Growth Fund commenced operations on December 8, 1999.
* Annualized.
+ Since inception, not annualized.
The notes to financial statements are an integral part of these financial
statements.
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000
--------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Trainer Wortham Funds (the "Trust") is an open-end investment management company
which currently offers shares of four series: Trainer Wortham First Mutual Fund
("First Mutual Fund"); Trainer Wortham Large-Cap Growth Fund ("Large-Cap Growth
Fund"); Trainer Wortham Total Return Bond Fund ("Total Return Bond Fund"); and
Trainer Wortham California Intermediate Tax-Free Fund ("California Intermediate
Tax-Free Fund"). Each Fund has distinct investment objectives and policies. This
Annual Report relates to the Large-Cap Growth Fund. Information on the First
Mutual Fund, Total Return Bond Fund and the California Intermediate Tax-Free
Fund is provided in separate reports. Large-Cap Growth Fund commenced operations
on December 8, 1999. Trainer Wortham & Co., Inc., the Trust's investment
advisor, has agreed to bear all of the costs incurred in connection with the
organization and initial registration of the Fund's shares.
The Large-Cap Growth Fund seeks capital appreciation. The Fund invests primarily
in equity securities of large capitalization companies that the Advisor believes
have above average growth rates.
Due to the inherent risk in any investment program, the Fund can not ensure that
its investment objectives will be realized. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of financial statements. The policies are in conformity with
generally accepted accounting principles for investment companies.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last reported sales price on the last
business day of the period. Unlisted securities, or listed securities in which
there were no sales, are valued at the mean of the closing bid and ask prices.
Short-term obligations with remaining maturities of 60 days or less are valued
at amortized cost which approximates market value. All other securities are
valued at their fair value as determined in good faith by the Board of Trustees.
B. OTHER. As is common in the industry, security transactions are accounted for
on the date the securities are purchased or sold (trade date). Cost is
determined and gains and losses are based on the identified cost basis for both
financial statement and Federal income tax purposes. Dividend income and
distributions to shareholders are reported on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Discounts and premiums on
securities purchased are amortized over the life of the respective securities.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Those differences are
primarily due to different treatments for net operating losses and post-October
capital losses.
C. NET ASSET VALUE PER SHARE. Net asset value per share of the capital stock of
a Fund is determined daily as of the close of trading on the New York Stock
Exchange by dividing the value of its net assets by the number of Fund shares
outstanding. The offering price and redemption price per share is the same as
the net asset value per share.
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2000
--------------------------------------------------------------------------------
D. FEDERAL INCOME TAXES. It is the policy of each Fund to comply with
requirements of the Internal Revenue Code applicable to regulated investment
companies, if such qualification is in the best interest of its stockholders,
and to make distributions of net investment income and capital gains (after
reduction for any amounts available for Federal income tax purposes as capital
loss carryovers) sufficient to relieve it from all, or substantially all,
Federal income taxes. As of June 30, 2000, the Fund had realized $70,374 of
capital losses for financial reporting purposes which have been deferred for
Federal income tax purposes.
E. USE OF ESTIMATES IN FINANCIAL STATEMENTS. In preparing financial statements
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, as well as the reported
amounts of income and expenses during the reporting period. Actual results may
differ from these estimates.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments, for the
period ended June 30, 2000 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------- --------
<S> <C> <C>
Large-Cap Growth Fund....................................... $2,962,591 $512,368
</TABLE>
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Trainer Wortham & Co., Inc. (the "Advisor") is the investment advisor for the
Trust pursuant to four separate investment advisory agreements (the
"Agreements"). Under the terms of the Agreement, the Advisor receives an annual
fee, accrued daily and paid monthly, of 0.75% of the average daily net assets of
the Large-Cap Growth Fund. During the period ended June 30, 2000, the Trust
accrued management fees payable to the Advisor of $6,145 on behalf of Large-Cap
Growth Fund. For the period December 8, 1999 (commencement of operations)
through its current fiscal year, June 30, 2000, the Advisor has voluntarily
elected to waive advisory fees and reimburse other operating expenses to the
extent necessary to cause total operating expenses not to exceed 1.50% for the
Large-Cap Growth Fund. For the period ended June 30, 2000, the Advisor waived
and reimbursed expenses amounting to $78,292 for the Large-Cap Growth Fund.
The Trust has adopted a Distribution Plan (the "Plan" or "Plans"), with respect
to the Large-Cap Growth Fund, pursuant to Rule 12b-1 under the Investment
Company Act of 1940, which permits the Fund to pay certain expenses associated
with the distribution of its shares. The Plan provides that the Trust will
reimburse Provident Distributors, Inc. (the "Distributor"), the Trust's sole
Underwriter and Distributor as of December 1, 1999, for actual distribution and
shareholder servicing expenses incurred by the Distributor not exceeding, on an
annual basis, 0.25% of the average daily net assets of Large-Cap Growth Fund.
Certain officers and trustees of the Trust are affiliated persons of the
Advisor.
<PAGE> 10
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
Trainer Wortham Funds
New York, New York
We have audited the statement of assets and liabilities of Trainer Wortham
Large-Cap Growth Fund (one of the series constituting Trainer Wortham Funds),
including the schedule of investments, as of June 30, 2000, and the related
statements of operations and changes in net assets and the financial highlights
for the period December 8, 1999 (commencement of operations) to June 30, 2000.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 June 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 our
audit provides 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
Trainer Wortham Large-Cap Growth Fund series of Trainer Wortham Funds as of June
30, 2000, and the results of its operations, the changes in its net assets, and
the financial highlights for the period December 8, 1999 to June 30, 2000 in
conformity with generally accepted accounting principles.
BRIGGS, BUNTING & DOUGHERTY, LLP
Philadelphia, Pennsylvania
July 27, 2000
<PAGE> 11
ILLUSTRATION OF $10,000 INVESTMENT
--------------------------------------------------------------------------------
The graph below compares the increase in value of a $10,000 investment in the
Trainer Wortham Large-Cap Growth Fund with the performance of the Standard &
Poor's 500 Index. Unlike a mutual fund, an unmanaged index assumes no
transaction costs, taxes, management fees or other expenses.
[LINE CHART]
Total Return Since Inception 7.50%*
Past performance is not predictive of future performance.
<TABLE>
<S> <C> <C>
Large-Cap Growth Fund S&P 500 Index
12/9/99 10000.00 10000.00
12/31/99 10820.00 10434.00
3/31/00 12811.00 10642.00
6/30/00 13772.00 10280.00
</TABLE>
* Fund commenced operations December 8, 1999.
<PAGE> 12
TRAINER WORTHAM FUNDS
845 Third Avenue, 6th Floor
New York, NY 10022
<TABLE>
<S> <C>
OFFICERS AUDITORS
David P. Como Briggs, Bunting & Dougherty, LLP
President Two Logan Square, Suite 2121
John D. Knox Philadelphia, PA 19103
Vice President
Robert J. Vile
Vice President CUSTODIAN
Brian J. O'Neill UMB Bank KC, NA
Treasurer P.O. Box 412797
Kelly O'Neill Kansas City, MO 64141
Secretary
FUND ADMINISTRATION
INVESTMENT ADVISOR PFPC Inc.
Trainer Wortham & Co., Inc. 3200 Horizon Drive
845 Third Avenue, 6th Floor King of Prussia, PA 19406
New York, NY 10022
</TABLE>
Distributed by Provident Distributors, Inc., 3200 Horizon Drive, King of
Prussia, PA 19406 -- DFU 8/00
This report is submitted for the general information of the shareholders of the
Trust. It is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective Prospectus which includes
details regarding the Trust's objectives, policies, expenses and other
information.
<PAGE> 13
TRUSTEES:
Robert H. Breslin, Jr.
David P. Como
Raymond Eisenberg
Todd L. Eisenberg
David Elias
Robert S. Lazar
Martin S. Levine
Timothy J. O'Hara
James F. Twaddell
For more complete information including
charges and expenses, you may request
a prospectus by calling:
888.257.4450
[TRAINER WORTHAM FUNDS LOGO]
845 Third Avenue, New York, New York 10022
888.257.4450 - Fax: 415.288.1401 - www.trainerwortham.com
[TRAINER, WORTHAM FUNDS LOGO]
ANNUAL REPORT
JUNE 30, 2000
LARGE-CAP GROWTH FUND
888.257.4450
