SEMIANNUAL REPORT
DECEMBER 31, 1999
(EASTCLIFF FUNDS LOGO)
Eastcliff Total Return Fund
Eastcliff Growth Fund
Eastcliff Emerging
Growth Fund
Eastcliff Regional Small
Capitalization Value Fund
Eastcliff Contrarian
Value Fund
NO-LOAD MUTUAL FUNDS
Eastcliff Total
Return Fund
February 9, 2000
Dear Shareholder:
For the twelve months ending December 31, 1999, the Eastcliff Total Return
Fund gained 25.12%, outpacing the S&P 500 Index, which returned 21.14%. The
Fund's average annual compounded rate of return for the five and ten years
ending December 31, 1999, were 27.35% and 17.46%, respectively. The historical
annual average return for the market is about 11%. An annual return of 15%-
compounded will double your investment in 5 years. It's important to
realistically set your expectations going forward.
As we have passed Y2K, investors no longer have to worry about a financial
debacle or worldwide recession. However, at least two issues remain: will the
Federal Reserve continue to raise rates, and by how much? And, how can
companies with no earnings and some with no revenue stream continue to
appreciate?
Technology was the name of the game. The Fund's three top performing
companies over the past twelve months were: Nokia Corp. (+217.3%), Cisco
Systems Inc. (+130.8%), and Sun Microsystems, Inc. (+78.41%). Nokia is the
premier name in wireless telecommunication equipment. Businesses rely on
Internet-related technologies to increase production and reduce costs. Cisco
easily dominates the data communications equipment market. Sun Microsystems'
focus is on optimizing computer systems for e-commerce. Sun continues to
outpace the competition.
Drug companies fell short of expectations this past year. Higher interest
rates and pending Medicare reform weakened the pharmaceutical sector. Pfizer
and Bristol Myers under-performed, however, we remain optimistic about their
prospects.
The asset allocation as of December 31, 1999, was 96.8% equities and 3.2%
cash equivalents. As of December 22, 1999, the Board of Directors declared a
distribution of $1.23052 per share from net long-term capital gains, payable
December 23, 1999, to shareholders of record on December 21, 1999.
In closing, I want to emphasize that we are focused on finding high-quality,
growth oriented companies with outstanding management teams and leading market
positions.
Thank you for your continued confidence and investment in the Eastcliff Total
Return Fund.
Sincerely,
/s/ Patrice J. Neverett
Patrice J. Neverett
Portfolio Manager
Past performance cannot guarantee future results. Prices will fluctuate and
redemption value may be more or less than original investment. This Fund is not
insured by the FDIC and is not a deposit or other obligation of or guaranteed by
Resource Trust Company or any of its affiliates.
Eastcliff Total Return Fund
STATEMENT OF NET ASSETS
December 31, 1999 (Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
------ ---- -----
LONG-TERM INVESTMENTS -- 96.8% (A)<F2>
COMMON STOCKS -- 96.8% (A)<F2>
CAPITAL GOODS SECTOR -- 5.3%
- ----------------------------
ELECTRICAL EQUIPMENT -- 5.3%
9,000 General Electric Co. $ 241,832 $ 1,392,750
COMMUNICATION SERVICES SECTOR -- 7.8%
- -------------------------------------
TELECOMMUNICATION-LONG DISTANCE -- 7.8%
15,000 MCI WorldCom Inc.*<F1> 379,350 795,937
6,000 Qwest Communications
International, Inc.*<F1> 192,735 258,000
20,000 Vodafone AirTouch
PLC SP ADR 505,480 990,000
----------- -----------
1,077,565 2,043,937
CONSUMER CYCLICALS SECTOR -- 8.6%
- ---------------------------------
RETAIL-BUILDING SUPPLIES -- 3.9%
15,000 The Home Depot, Inc. 487,475 1,028,437
RETAIL-GENERAL MERCHANTS -- 4.7%
6,000 Costco Wholesale Corp.*<F1> 468,625 547,500
10,000 Wal-Mart Stores, Inc. 458,350 691,250
----------- -----------
926,975 1,238,750
CONSUMER STAPLES SECTOR -- 2.4%
- -------------------------------
BROADCAST MEDIA -- 2.4%
7,000 Clear Channel
Communications, Inc.*<F1> 583,814 624,750
FINANCIALS SECTOR -- 4.6%
- -------------------------
INSURANCE-MULTILINE -- 4.6%
11,250 American International
Group, Inc. 273,556 1,216,406
HEALTHCARE SECTOR -- 11.9%
- --------------------------
DIVERSE -- 8.1%
18,500 Bristol-Myers Squibb Co. 303,059 1,187,469
10,000 Johnson & Johnson 299,675 931,250
----------- -----------
602,734 2,118,719
DRUGS MAJOR -- 3.8%
30,500 Pfizer Inc. 203,678 989,344
TECHNOLOGY SECTOR -- 55.1%
- --------------------------
COMMUNICATION-EQUIPMENT -- 19.6%
14,588 Lucent Technologies Inc. 298,780 1,091,365
18,000 Nokia Corp. "A" ADR 288,270 3,420,000
10,000 Tellabs, Inc.*<F1> 593,750 641,875
----------- -----------
1,180,800 5,153,240
COMPUTER HARDWARE -- 10.6%
5,500 Hewlett-Packard Co. 531,767 626,656
10,000 International Business
Machines Corp. 199,463 1,080,000
14,000 Sun Microsystems, Inc.*<F1> 607,670 1,084,125
----------- -----------
1,338,900 2,790,781
COMPUTER SOFTWARE/SERVICES -- 5.9%
13,300 Microsoft Corp.*<F1> 190,959 1,552,775
COMPUTERS-NETWORKING -- 6.5%
16,000 Cisco Systems Inc.*<F1> 440,925 1,714,000
COMPUTERS-PERIPHERAL -- 6.8%
9,000 EMC Corp. (Mass.)*<F1> 631,621 983,250
9,000 Lexmark International
Group, Inc.*<F1> 583,583 814,500
----------- -----------
1,215,204 1,797,750
ELECTRONICS-SEMICONDUCTORS -- 5.7%
7,600 Intel Corp. 133,422 625,575
9,000 Texas Instruments Inc. 790,604 871,875
----------- -----------
924,026 1,497,450
UTILITIES SECTOR -- 1.1%
- ------------------------
NATURAL GAS -- 1.1%
7,000 Kinder Morgan Energy
Partners, L.P. 287,983 290,063
----------- -----------
Total common stocks 9,976,426 25,449,152
----------- -----------
Total long-term
investments 9,976,426 25,449,152
SHORT-TERM INVESTMENTS -- 3.3% (A)<F2>
VARIABLE RATE DEMAND NOTE
$856,528 Firstar Bank U.S.A., N.A. 856,528 856,528
----------- -----------
Total short-term
investments 856,528 856,528
----------- -----------
Total investments $10,832,954 26,305,680
-----------
-----------
Liabilities, less cash and
receivables (0.1%) (A)<F2> (16,938)
-----------
Net Assets $26,288,742
-----------
-----------
Net Asset Value Per Share
($0.01 par value 300,000,000
shares authorized), offering
and redemption price
($26,288,742 / 1,137,191
shares outstanding) $ 23.12
-----------
-----------
*<F1> Non-income producing security.
(a)<F2> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Total Return Fund
STATEMENT OF OPERATIONS
For the Period Ending December 31, 1999 (Unaudited)
INCOME:
Dividends $ 58,273
Interest 24,028
----------
Total income 82,301
----------
EXPENSES:
Management fees 121,142
Administrative services 24,143
Professional fees 12,557
Transfer agent fees 7,197
Custodian fees 3,012
Printing and postage expense 2,601
Registration fees 2,408
Board of Directors fees 250
Other expenses 2,533
----------
Total expenses before reimbursement 175,843
Less expenses assumed by adviser (18,443)
----------
Net expenses 157,400
----------
NET INVESTMENT LOSS (75,099)
----------
NET REALIZED GAIN ON INVESTMENTS 1,807,813
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 2,436,344
----------
NET GAIN ON INVESTMENTS 4,244,157
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,169,058
----------
----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending December 31, 1999 (Unaudited) and
For the Year Ended June 30, 1999
DECEMBER 31, JUNE 30,
1999 1999
------------ ------------
OPERATIONS:
Net investment (loss) income $ (75,099) $ 108,705
Net realized gain on investments 1,807,813 3,979,587
Net increase in unrealized appreciation
on investments 2,436,344 901,682
----------- -----------
Net increase in net assets resulting
from operations 4,169,058 4,989,974
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.02364
and $0.16696 per share, respectively) (24,713) (192,872)
Distributions from net realized gains ($3.73142
and $2.35253 per share, respectively) (3,957,048) (2,719,992)
----------- -----------
Total distributions (3,981,761) (2,912,864)
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (13,979 and
119,629 shares, respectively) 307,026 2,609,981
Net asset value of shares issued in distributions
(180,696 and 120,051 shares, respectively) 3,595,034 2,587,962
Cost of shares redeemed (127,935 and 352,993
shares, respectively) (2,802,201) (7,727,554)
----------- -----------
Net increase (decrease) in net assets
derived from Fund share activities 1,099,859 (2,529,611)
----------- -----------
TOTAL INCREASE (DECREASE) 1,287,156 (452,501)
NET ASSETS AT THE BEGINNING OF THE PERIOD 25,001,586 25,454,087
----------- -----------
NET ASSETS AT THE END OF THE PERIOD
(including undistributed net investment income
of $-0- and $24,705, respectively) $26,288,742 $25,001,586
----------- -----------
----------- -----------
The accompanying notes to financial statements are an integral part of these
statements.
Eastcliff Total Return Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
FOR THE
PERIOD
(UNAUDITED) FROM
FOR THE PERIOD OCTOBER 1,
ENDING YEARS ENDED JUNE 30, 1994 TO
DECEMBER 31, ------------------------------------------- JUNE 30,
1999 1999 1998 1997 1996 1995
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $23.36 $21.50 $16.86 $14.62 $11.96 $11.92
Income from investment operations:
Net investment (loss) income (0.07) 0.10 0.23 0.23 0.09 0.14
Net realized and unrealized
gains on investments 3.58 4.28 5.19 3.47 2.90 0.71
------ ------ ------ ------ ------ ------
Total from investment operations 3.51 4.38 5.42 3.70 2.99 0.85
Less distributions:
Dividends from net investment income (0.02) (0.17) (0.25) (0.12) (0.17) (0.14)
Distributions from net realized gains (3.73) (2.35) (0.53) (1.34) (0.16) (0.67)
------ ------ ------ ------ ------ ------
Total from distributions (3.75) (2.52) (0.78) (1.46) (0.33) (0.81)
------ ------ ------ ------ ------ ------
Net asset value, end of period $23.12 $23.36 $21.50 $16.86 $14.62 $11.96
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN (d)<F7> 18.4%*<F3> 21.7% 33.3% 28.1% 25.4% 10.4%(a)<F4>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 26,289 25,002 25,454 21,626 17,799 15,806
Ratio of expenses (after reimbursement)
to average net assets(b)<F5> 1.3%(a)<F4> 1.3% 1.3% 1.3% 1.3% 1.5%(a)<F4>
Ratio of net investment (loss) income
to average net assets(c)<F6> (0.6%)(a)<F4> 0.4% 1.2% 1.5% 0.7% 2.5%(a)<F4>
Portfolio turnover rate 28.9% 32.9% 38.4% 58.3% 95.1% 89.4%
</TABLE>
*<F3> Not annualized.
(a)<F4> Annualized.
(b)<F5> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been, for the period ending December 31, 1999, and for the
years ended June 30, 1999, 1998, 1997 and 1996 and for the period from
October 1, 1994 to June 30, 1995, as follows: 1.5%(a)<F4>, 1.4%, 1.4%,
1.5%, 1.6% and 2.6%(a)<F4>, respectively.
(c)<F6> If the Fund had paid all of its expenses, the ratios would have been,
for the period ending December 31, 1999, and for the years ended June
30, 1999, 1998, 1997 and 1996 and for the period from October 1, 1994
to June 30, 1995, as follows: (0.8%)(a)<F4>, 0.3%, 1.1%, 1.3%, 0.4%
and 1.4%(a)<F4>, respectively.
(d)<F7> Effective December 31, 1994, the Fund changed investment advisers from
Fiduciary Management, Inc. to Resource Capital Advisers, Inc.
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff
Growth Fund
February 9, 2000
Dear Shareholder:
It happened again. For a record fifth consecutive year, the U.S. equity
market in 1999 gained over 20%. Although returns in 1999, ranging from 21% for
the S&P 500 to a record smashing 86% for the NASDAQ, were more than pleasing --
and better than anyone expected a year ago -- the gains were very narrowly
distributed. Again as in 1998, more stocks declined for all of 1999 than
--------
advanced. Excluding technology and telecommunications companies, the S&P 500
Index was flat for the year. According to one market analyst, stocks with
no earnings gained on average more than 50%, while those with earnings were down
- ----------- -------------
an average of 20%. On the New York Stock Exchange, 36% of all common stocks
declined 20% or more for the year. The Eastcliff Growth Fund returned 19.1% for
the twelve months ending December 31, 1999. This compares with the 21.1% return
for the S&P 500 Index and the Russell 1000 Growth's 33.2% upward move for the
year. Since the Fund's inception on July 1, 1995, it has delivered an
annualized return of 21.4%.
The Internet is a transforming event that is changing the world, a new era of
technological innovation. The success to date and tremendous potential can be
explained by conventional economics. The technology-based sector of the economy
keeps producing products that are cheaper, while performance gets better. As
prices drop, demand rises. And increased volume helps spread overhead and
reduce costs further. Through relentless innovation and brutal competition,
technology and all of its manifestations is accelerating its growth with good
profits for the leaders. These companies are increasing their return-on-equity
and their share of profits in the world economy. As technology based "stuff"
gets cheaper it puts pressure on the prices of other goods and services. This
critical factor may be the primary cause of the narrowness in 1999 equity market
returns.
The strongest performing sector in the equity market for 1999 was Technology.
It comes as no surprise that a majority of the return in the Eastcliff Growth
Fund was also realized in technology companies. The best performing stocks in
the Fund included long-time holding Cisco Systems, Oracle Corp., JDS Uniphase
and Veritas Software. In addition, our strong stock selection in Consumer
Service companies added value relative to the Russell 1000 Growth Index with
companies like Wal-Mart, Home Depot and CBS Corp. leading the way. The fear of
reduced government payments for hospital services continued to overhang the
entire Healthcare sector. For the quarter and year, healthcare services
performed poorly and detracted from the Fund's absolute return. Our slight
overweight in Financial Service companies also negatively impacted results.
As of December 22, 1999, your Board of Directors declared a distribution of
$1.5660 per share from net short-term gains and $2.8339 per share from long-term
capital gains, payable December 23, 1999, to shareholders of record on December
21, 1999.
We appreciate all of your support and interest in the Fund and look forward
to providing each of our shareholders with favorable investment returns over the
long term.
Respectfully submitted,
/s/ Clark J. Winslow
Clark J. Winslow
Portfolio Manager
Past performance cannot guarantee future results. Prices will fluctuate and
redemption value may be more or less than original investment. This Fund is not
insured by the FDIC and is not a deposit or other obligation of or guaranteed by
Resource Trust Company or any of its affiliates.
Eastcliff Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1999 (Unaudited)
ASSETS:
Investments in securities, at value (cost $6,976,548) $12,772,289
Receivable from investments sold 2,573,699
Dividend receivable 3,093
Interest receivable 3,134
Deferred organizational expenses 3,150
-----------
Total assets $15,355,365
-----------
LIABILITIES:
Payable to brokers for investments purchased $ 73,144
Payable to adviser for management fees
and deferred expenses 17,505
Other liabilities 11,176
-----------
Total liabilities $ 101,825
-----------
NET ASSETS:
Capital Stock, $0.01 per value; 300,000,000 shares
authorized; 1,356,517 shares outstanding 5,058,973
Net unrealized appreciation on investments 5,795,741
Undistributed net realized gains on investments 4,398,826
-----------
Net assets 15,253,540
-----------
Total liabilities and net assets $15,355,365
-----------
-----------
CALCULATION OF REDEMPTION PRICE:
Net asset value and redemption price per share
($15,253,540 / 1,356,517 shares outstanding) $ 11.24
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Growth Fund
SCHEDULE OF INVESTMENTS
December 31, 1999 (Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
- --------- ---- ------
LONG-TERM INVESTMENTS -- 98.3% (A)<F9>
COMMON STOCKS -- 98.3% (A)<F9>
CAPITAL GOODS SECTOR -- 6.4%
- ----------------------------
ELECTRICAL EQUIPMENT -- 6.4%
2,400 General Electric Co. $ 261,594 $ 371,400
4,700 Solectron Corp.*<F8> 406,756 447,087
----------- -----------
668,350 818,487
COMMUNICATION SERVICES SECTOR -- 5.4%
- -------------------------------------
TELECOMMUNICATION-LONG DISTANCE -- 5.4%
7,950 MCI WorldCom Inc.*<F8> 229,065 421,847
5,400 Vodafone AirTouch
PLC SP ADR 190,426 267,300
----------- -----------
419,491 689,147
CONSUMER CYCLICALS SECTOR -- 8.2%
- ---------------------------------
LODGING-HOTELS -- 2.1%
5,700 Carnival Corp. 131,442 272,531
RETAIL-BUILDING SUPPLIES -- 3.3%
6,200 The Home Depot, Inc. 53,485 425,088
RETAIL-GENERAL MERCHANTS -- 2.8%
5,100 Wal-Mart Stores, Inc. 152,917 352,537
CONSUMER STAPLES SECTOR -- 9.4%
- -------------------------------
BROADCAST MEDIA -- 8.0%
4,000 AMFM Inc.*<F8> 221,569 313,000
6,700 CBS Corp.*<F8> 187,112 428,381
3,185 Clear Channel
Communications, Inc.*<F8> 163,035 284,261
----------- -----------
571,716 1,025,642
ENTERTAINMENT -- 1.4%
2,500 Time Warner Inc. 159,751 181,094
FINANCIALS SECTOR -- 6.1%
- -------------------------
BANKS-MAJOR REGIONAL -- 1.8%
5,800 Wells Fargo Co. 184,046 234,537
CONSUMER FINANCE -- 4.3%
10,875 MBNA Corp. 72,317 296,344
2,800 Providian Financial Corp. 267,883 254,975
----------- -----------
340,200 551,319
HEALTHCARE SECTOR -- 1.7%
- -------------------------
MEDICAL PRODUCTS & SUPPLIES -- 1.7%
5,800 Medtronic, Inc. 204,436 211,338
TECHNOLOGY SECTOR -- 53.3%
- --------------------------
COMMUNICATION-EQUIPMENT -- 13.7%
1,900 Comverse
Technology, Inc.*<F8> 146,109 275,025
3,700 General Instrument Corp.*<F8> 188,339 314,500
3,100 Nokia Corp. "A" ADR 294,625 589,000
1,200 QUALCOMM Inc.*<F8> 74,076 211,350
5,600 Tellabs, Inc.*<F8> 92,342 359,450
----------- -----------
795,491 1,749,325
COMPUTER HARDWARE -- 4.2%
5,700 Dell Computer Corp.*<F8> 206,159 290,700
3,200 Sun Microsystems, Inc.*<F8> 144,257 247,800
----------- -----------
350,416 538,500
COMPUTER SOFTWARE/SERVICES -- 16.0%
6,700 America Online, Inc.*<F8> 346,835 505,431
1,800 Legato Systems, Inc.*<F8> 94,764 123,863
5,900 Microsoft Corp.*<F8> 98,623 688,825
700 MicroStrategy, Inc.*<F8> 77,141 147,000
3,300 Oracle Corp.*<F8> 118,736 369,806
3,200 Synopsys, Inc.*<F8> 145,200 213,600
----------- -----------
881,299 2,048,525
COMPUTERS-NETWORKING -- 5.3%
6,300 Cisco Systems Inc.*<F8> 36,488 674,888
COMPUTERS-PERIPHERAL -- 2.8%
3,300 EMC Corp. (Mass.)*<F8> 204,447 360,525
ELECTRONICS-SEMICONDUCTORS -- 8.7%
5,200 Intel Corp. 308,941 428,025
2,200 JDS Uniphase Corp.*<F8> 91,112 354,887
2,200 Linear Technology Corp. 146,708 157,438
1,700 Texas Instruments Inc. 143,752 164,688
----------- -----------
690,513 1,105,038
SERVICES-DATA PROCESSING -- 2.6%
8,500 Fiserv, Inc.*<F8> 158,799 325,656
TRANSPORTATION SECTOR -- 2.6%
- -----------------------------
RAILROADS -- 2.6%
4,400 Kansas City Southern
Industries, Inc. 203,771 328,350
UTILITIES SECTOR -- 5.2%
- ------------------------
NATURAL GAS -- 2.2%
6,300 Enron Corp. 260,149 279,563
POWER PRODUCERS-INDEPENDENT -- 3.0%
5,200 AES Corp.*<F8> 297,842 388,700
----------- -----------
Total common stocks 6,765,049 12,560,790
----------- -----------
Total long-term
investments 6,765,049 12,560,790
SHORT-TERM INVESTMENTS -- 1.7% (A)<F9>
VARIABLE RATE DEMAND NOTES
$ 83,499 Firstar Bank U.S.A., N.A. 83,499 83,499
128,000 Wisconsin Corporate
Central Credit Union 128,000 128,000
----------- -----------
Total short-term
investments 211,499 211,499
----------- -----------
TOTAL INVESTMENTS
- 100% $ 6,976,548 $12,772,289
----------- -----------
----------- -----------
*<F8> Non-income producing security.
(a)<F9> Percentages for the various classifications relate to total
investments.
The accompanying notes to financial statements are an integral part of this
schedule.
Eastcliff Growth Fund
STATEMENT OF OPERATIONS
For the Period Ending December 31, 1999 (Unaudited)
INCOME:
Dividends $ 35,330
Interest 46,434
----------
Total income 81,764
----------
EXPENSES:
Management fees 116,702
Administrative services 21,305
Professional fees 16,342
Transfer agent fees 6,917
Custodian fees 5,670
Amortization of organizational expenses 3,151
Registration fees 2,245
Printing and postage expense 1,096
Board of Directors fees 250
Other expenses 2,394
----------
Total expenses before reimbursement 176,072
----------
Less expenses assumed by adviser (27,186)
----------
Net expenses 148,886
----------
NET INVESTMENT LOSS (67,122)
----------
NET REALIZED GAIN ON INVESTMENTS 9,782,013
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (8,508,343)
----------
NET GAIN ON INVESTMENTS 1,273,670
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,206,548
----------
----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending December 31, 1999 (Unaudited) and
For the Year Ended June 30, 1999
DECEMBER 31, JUNE 30,
1999 1999
------------ ------------
OPERATIONS:
Net investment loss $ (67,122) $ (338,893)
Net realized gain on investments 9,782,013 6,333,970
Net decrease in unrealized appreciation
on investments (8,508,343) (3,348,005)
----------- -----------
Net increase in net assets resulting
from operations 1,206,548 2,647,072
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains ($6.42145
and $3.2244 per share, respectively) (10,647,441) (10,153,275)
----------- -----------
Total distributions (10,647,441) (10,153,275)
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (40,484 and
119,876 shares, respectively) 514,522 1,729,497
Net asset value of shares issued in distributions
(211,223 and 704,428 shares, respectively) 2,338,609 9,744,911
Cost of shares redeemed (1,675,923 and
1,214,807 shares, respectively) (21,532,554) (17,188,048)
----------- -----------
Net decrease in net assets derived
from Fund share activities (18,679,423) (5,713,640)
----------- -----------
TOTAL DECREASE (28,120,316) (13,219,843)
NET ASSETS AT THE BEGINNING OF THE PERIOD 43,373,856 56,593,699
----------- -----------
NET ASSETS AT THE END OF THE PERIOD $15,253,540 $43,373,856
----------- -----------
----------- -----------
The accompanying notes to financial statements are an integral part of these
statements.
Eastcliff Growth Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
(UNAUDITED) FOR THE
FOR THE PERIOD YEARS ENDED JUNE 30, FOR THE PERIOD FROM
ENDING DECEMBER 31, -------------------------------- JULY 1, 1995+<F10> TO
1999 1999 1998 1997 JUNE 30, 1996
------------------- ------ ------ ------ -------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $15.60 $17.85 $13.92 $12.56 $10.00
Income from investment operations:
Net investment loss (b)<F13> (0.04) (0.18) (0.15) (0.14) (0.08)
Net realized and unrealized gains on investments 2.10 1.15 4.71 1.50 2.64
------ ------ ------ ------ ------
Total from investment operations 2.06 0.97 4.56 1.36 2.56
Less distributions:
Dividend from net investment income -- -- -- -- --
Distributions from net realized gains (6.42) (3.22) (0.63) -- --
------ ------ ------ ------ ------
Total from distributions (6.42) (3.22) (0.63) -- --
------ ------ ------ ------ ------
Net asset value, end of period $11.24 $15.60 $17.85 $13.92 $12.56
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 18.5%*<F11> 8.0% 33.9% 10.8% 25.6%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 15,254 43,374 56,594 46,389 46,193
Ratio of expenses (after reimbursement)
to average net assets (c)<F14> 1.3%(a)<F12> 1.3% 1.3% 1.3% 1.3%
Ratio of net investment loss to
average net assets (d)<F15> (0.6%)(a)<F12> (0.7%) (0.9%) (1.0%) (0.8%)
Portfolio turnover rate 50.1% 86.3% 93.3% 54.3% 40.3%
</TABLE>
+<F10> Commencement of operations.
(*)<F11> Not annualized.
(a)<F12> Annualized.
(b)<F13> For the period ending December 31, 1999, net investment loss per
share is calculated using average shares outstanding. For all other
periods, net investment loss per share is calculated using ending
balances prior to consideration of adjustments for permanent book
and tax differences.
(c)<F14> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been, for the period ending December 31, 1999 and for the
years ended June 30, 1997 and 1996, 1.5%(a)<F12>, 1.3% and 1.4%,
respectively.
(d)<F15> If the Fund had paid all of its expenses, the ratios would have
been, for the period ending December 31, 1999 and for the years
ended June 30, 1997 and 1996, (0.8%)(a)<F12>, (1.0%) and (0.9%),
respectively.
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Emerging Growth Fund
February 9, 2000
Dear Shareholder:
The Eastcliff Emerging Growth Fund completed its first full quarter on
December 31, 1999. We were pleased to record a 29.9% gain for the quarter. By
comparison, the Russell 2000 Growth rose 33.4% in the same period. While
technology stocks contributed over 100% of the year's performance for the Index,
our diversified portfolio benefited from stellar returns in a variety of
industries. In the technology sector, which comprised 35% of the portfolio, we
had solid returns in both software stocks and satellite-related companies.
Equally important to performance were our four radio station consolidators with
returns exceeding the benchmark. Our specialty pharmaceutical companies also
contributed to a good quarter.
After five years of underperformance, small-cap growth stocks outperformed
the S&P 500 and larger growth stocks in 1999. The Russell 2000 Index rose 21.3%
for the year, but the median stock in the Index declined 4.9% and more than half
of the industry sub-sectors showed losses. Thanks to the technology sector, the
growth component of this Index rose 42.5%, making 1999 the biggest single year
gain since the Index was established in 1993. The lack of breadth in the
market, however, made 1999 a year of stock selection and industry focus.
As of December 22, 1999, your Board of Directors declared a distribution of
$0.14382 per share from net short-term gains, payable December 23, 1999, to
shareholders of record on December 21, 1999.
We are very optimistic about future opportunities in the Fund. Small
capitalization stocks remain significantly undervalued versus larger companies.
We also believe that growth stocks are poised again to outperform the value
sector. We will continue to explore the investment potential of exciting, new
concepts and technologies being created.
Sincerely,
/s/ Gail M. Knappenberger
Gail M. Knappenberger
Portfolio Manager
Past performance cannot guarantee future results. Prices will fluctuate and
redemption value may be more or less than original investment. This Fund is not
insured by the FDIC and is not a deposit or other obligation of or guaranteed by
Resource Trust Company or any of its affiliates.
Eastcliff Emerging Growth Fund
STATEMENT OF NET ASSETS
December 31, 1999 (Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
- --------- ---- ------
LONG-TERM INVESTMENTS -- 94.7% (A)<F17>
COMMON STOCKS -- 94.7% (A)<F17>
CAPITAL GOODS SECTOR -- 2.4%
- ----------------------------
CONTAINERS-METAL/GLASS -- 1.6%
5,900 Mobile Mini, Inc.*<F16> $ 124,006 $ 126,850
MANUFACTURER-SPECIAL -- 0.8%
4,000 Yankee Candle Co., Inc.*<F16> 64,240 65,250
COMMUNICATION SERVICES SECTOR -- 1.6%
- -------------------------------------
TELECOMMUNICATION-CELLULAR -- 1.6%
3,900 Crown Castle
International Corp.*<F16> 72,637 125,287
CONSUMER CYCLICALS SECTOR -- 23.4%
- ----------------------------------
BUILDING MATERIALS -- 0.9%
2,650 Trex Company, Inc.*<F16> 66,798 70,888
LEISURE TIME-PRODUCTS -- 1.4%
5,900 JAKKS Pacific, Inc.*<F16> 139,111 110,256
PUBLISHING -- 1.6%
5,200 Penton Media, Inc. 82,287 124,800
RETAIL-APPAREL -- 4.9%
4,200 Abercrombie & Fitch Co.*<F16> 133,958 112,087
2,600 American Eagle
Outfitters, Inc.*<F16> 139,213 117,000
2,500 Chico's FAS, Inc.*<F16> 106,461 94,063
5,500 David's Bridal, Inc.*<F16> 55,000 61,531
---------- ----------
434,632 384,681
RETAIL-COMPUTERS & ELECTRONICS -- 3.4%
3,550 Tweeter Home Entertainment
Group, Inc.*<F16> 125,736 126,025
5,500 Ultimate Electronics, Inc.*<F16> 105,103 136,125
---------- ----------
230,839 262,150
RETAIL-DISCOUNTERS -- 1.1%
5,000 Family Dollar Stores, Inc. 107,800 81,563
RETAIL-SPECIALTY -- 5.4%
4,000 Linens 'n Things, Inc.*<F16> 136,228 118,500
9,200 O'Reilly Automotive, Inc.*<F16> 216,075 197,800
6,700 School Specialty, Inc.*<F16> 110,550 101,338
---------- ----------
462,853 417,638
SERVICES-COMMERCIAL & CONSUMER -- 4.7%
2,650 The Corporate Executive
Board Co.*<F16> 107,100 148,069
1,000 Digital Island Inc.*<F16> 28,421 95,125
4,100 NCO Group, Inc.*<F16> 174,925 123,512
---------- ----------
310,446 366,706
CONSUMER STAPLES SECTOR -- 12.9%
- --------------------------------
BROADCAST MEDIA -- 8.8%
2,600 Citadel Communications
Corp.*<F16> 89,375 168,675
1,600 Emmiss Communications
Corp.*<F16> 140,837 199,425
1,600 Radio One, Inc.*<F16> 95,625 147,200
4,350 Spanish Broadcasting
System, Inc.*<F16> 125,797 175,087
---------- ----------
451,634 690,387
HOUSEHOLD PRODUCTS -- 1.4%
7,800 Koala Corp.*<F16> 120,713 109,200
RESTAURANTS -- 2.7%
6,100 O'Charleys Inc.*<F16> 89,975 80,063
5,200 P.F. Chang's China
Bistro, Inc.*<F16> 107,900 129,350
---------- ----------
197,875 209,413
FINANCIALS SECTOR -- 1.8%
- -------------------------
BANKS-MAJOR REGIONAL -- 1.4%
2,200 Silicon Vally Bancshares*<F16> 98,363 108,900
INVESTMENT BANKS/BROKERS -- 0.4%
900 eSPEED, Inc.*<F16> 22,025 32,006
HEALTHCARE SECTOR -- 4.0%
- -------------------------
DRUGS MAJOR -- 2.9%
3,400 Jones Pharma Inc. 116,512 147,687
1,800 Medicis Pharmaceutical
Corp.*<F16> 58,946 76,613
---------- ----------
175,458 224,300
MEDICAL PRODUCTS & SUPPLIES -- 1.1%
3,600 Sybron International
Corp.*<F16> 97,379 88,875
TECHNOLOGY SECTOR -- 45.3%
- --------------------------
COMMUNICATION-EQUIPMENT -- 10.4%
4,400 Alaska Communications
Systems Holdings, Inc.*<F16> 62,252 54,450
2,700 American Mobile Satellite
Corp.*<F16> 30,626 56,869
2,300 Ancor Communications,
Inc.*<F16> 107,275 156,112
7,200 Globecomm Systems Inc*<F16> 144,206 181,800
6,300 Integral Systems, Inc.*<F16> 188,450 277,988
4,000 Metalink Ltd.*<F16> 94,000 81,500
---------- ----------
626,809 808,719
COMPUTER SOFTWARE/SERVICES -- 24.6%
4,200 Advent Software, Inc.*<F16> 248,921 270,637
3,900 Exchange Applications,
Inc.*<F16> 118,950 217,912
3,000 Great Plains Software,
Inc.*<F16> 165,898 224,250
7,500 The InterCept Group*<F16> 134,062 222,656
3,900 Legato Systems, Inc.*<F16> 177,937 268,369
3,000 Peregrine Systems, Inc.*<F16> 126,938 252,563
1,400 Quintus Corp.*<F16> 70,000 64,225
5,700 SalesLogix, Corp.*<F16> 116,850 234,056
9,800 Zamba Corp.*<F16> 118,184 170,275
---------- ----------
1,277,740 1,924,943
ELECTRONICS-SEMICONDUCTORS -- 4.2%
2,800 ANADIGICS, Inc.*<F16> 136,168 132,125
3,800 Semtech Corp.*<F16> 157,906 198,075
---------- ----------
294,074 330,200
SERVICES-DATA PROCESSING -- 6.1%
1,800 DST Systems, Inc.*<F16> 120,662 137,362
4,600 Fiserv, Inc.*<F16> 131,444 176,238
4,300 National Computer
Systems, Inc. 162,111 161,788
---------- ----------
414,217 475,388
TRANSPORTATION SECTOR -- 3.3%
- -----------------------------
AIR FREIGHT -- 3.3%
5,900 Eagle USA
Airfreight, Inc.*<F16> 172,206 254,438
---------- ----------
Total common stocks 6,044,142 7,392,838
---------- ----------
Total long-term
investments 6,044,142 7,392,838
SHORT-TERM INVESTMENTS -- 5.4% (A)<F17>
VARIABLE RATE DEMAND NOTE
$ 41,000 Firstar Bank U.S.A., N.A. 41,000 41,000
380,851 Wisconsin Corporate
Central Credit Union 380,851 380,851
---------- ----------
Total short-term
investments 421,851 421,851
---------- ----------
Total investments $6,465,993 7,814,689
----------
----------
Liabilities, less cash and
receivables (0.1%) (A)<F17> (3,938)
----------
Net Assets $7,810,751
----------
----------
Net Asset Value Per Share
($0.01 par value 300,000,000
shares authorized), offering
and redemption price
($7,810,751 / 608,466
shares outstanding) $ 12.84
----------
----------
*<F16> Non-income producing security.
(a)<F17> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Emerging Growth Fund
STATEMENT OF OPERATIONS
For the Period from September 30, 1999 (commencement of operations)
to December 31, 1999 (Unaudited)
INCOME:
Dividends $ 688
Interest 14,548
----------
Total income 15,236
----------
EXPENSES:
Management fees 15,338
Professional fees 5,345
Registration fees 3,607
Administrative services 3,068
Transfer agent fees 3,046
Custodian fees 2,265
Printing and postage expense 130
Other expenses 532
----------
Total expenses before reimbursement 33,331
Less expenses assumed by adviser (13,392)
----------
Net expenses 19,939
----------
NET INVESTMENT LOSS (4,703)
----------
NET REALIZED GAIN ON INVESTMENTS 351,045
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 1,348,696
----------
NET GAIN ON INVESTMENTS 1,699,741
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,695,038
----------
----------
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Emerging Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
For the Period from September 30, 1999 (commencement of operations)
to December 31, 1999 (Unaudited)
OPERATIONS:
Net investment loss $ (4,703)
Net realized gain on investments 351,045
Net increase in unrealized appreciation on investments 1,348,696
----------
Net increase in net assets resulting from operations 1,695,038
----------
DISTRIBUTION TO SHAREHOLDERS:
Distribution from net realized gains ($0.14382 per share) (83,872)
----------
Total distribution (83,872)
----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (601,796 shares) 6,118,684
Net asset value of shares issued in
distribution (6,670 shares) 80,901
Cost of shares redeemed --
----------
Net increase in net assets derived from
Fund share activities 6,199,585
----------
TOTAL INCREASE 7,810,751
NET ASSETS AT THE BEGINNING OF THE PERIOD --
----------
NET ASSETS AT THE END OF THE PERIOD $7,810,751
----------
----------
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout the period)
(UNAUDITED)
FOR THE PERIOD FROM
SEPTEMBER 30, 1999+<F18> TO
DECEMBER 31, 1999
---------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $10.00
Income from investment operations:
Net investment loss (0.01)
Net realized and unrealized gains on investments 2.99
------
Total from investment operations 2.98
Less distributions:
Dividend from net investment income --
Distribution from net realized gains (0.14)
------
Total from distributions (0.14)
------
Net asset value, end of period $12.84
------
------
TOTAL INVESTMENT RETURN 29.9%*<F19>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 7,811
Ratio of expenses (after reimbursement)
to average net assets (b)<F21> 1.3%(a)<F20>
Ratio of net investment loss
to average net assets (c)<F22> (0.3%)(a)<F20>
Portfolio turnover rate 29.5%
+<F18> Commencement of operations.
*<F19> Not annualized.
(a)<F20> Annualized.
(b)<F21> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratio
would have been 2.2%(a)<F20>.
(c)<F22> If the Fund had paid all of its expenses, the ratio would have been
(1.2%)(a)<F20>.
The accompanying notes to financial statements are an integral part of these
statements.
Eastcliff Regional
Small Capitalization
Value Fund
February 9, 2000
Dear Shareholder:
A philosopher once stated "life is understood backwards, but must be lived
forwards." We are not sure the "understanding" part of this truism holds for the
year 1999. For those practitioners of financial analysis who cling tenaciously
to a belief in value versus price, 1999 has been a very trying time. The
remarkable number of records set over this past year dwarfs almost anything seen
in modern financial history if not the twentieth century. While it may be
obvious we believe it bears repeating that all previous "new economies"
eventually became old economies, and in those transitions, a tremendous amount
of money was made and lost. In 1998, the battle was large versus small, in 1999
---
it was growth versus value. In both cases, we have been on the defensive.
Eventually, usually when least expected or forecasted an unwinding of the value
compression occurs and a more rational environment prevails. A comment made
repeatedly by us in the past year is that tending to the portfolio by investing
in the most undervalued companies we can find and staying true to our discipline
until the pendulum "swings back" to our favor has generally produced excellent
rewards for our patience and diligence. That comment is no less true today than
it was then. A twist on our opening sentence, "time will tell."
Your portfolio of small capitalization companies provided a return of 0.05%
for the year ending December 31, 1999 versus the Russell 2000 Composite Index
which provided a return of 21.3% for the same period, the Russell 2000 Growth
43.1%, and the Russell 2000 Value -1.5%. The annualized return since
inception, September 16, 1996, was 7.54%. At December 31, 1999 the Fund's
assets were $48,282,524 and the net asset value was $12.38.
As of December 22, 1999, your Board of Directors declared a distribution of
$0.09215 per share from long-term capital gains, payable December 23, 1999, to
shareholders of record on December 21, 1999.
We appreciate your continued support.
Sincerely,
/s/ Richard W. Jensen /s/ Elizabeth M. Lilly /s/ Richard J. Rinkoff
Richard W. Jensen Elizabeth M. Lilly Richard J. Rinkoff
Portfolio Manager Portfolio Manager Portfolio Manager
Past performance cannot guarantee future results. Prices will fluctuate and
redemption value may be more or less than original investment. This Fund is not
insured by the FDIC and is not a deposit or other obligation of or guaranteed by
Resource Trust Company or any of its affiliates.
Eastcliff Regional Small Capitalization Value Fund
STATEMENT OF NET ASSETS
December 31, 1999 (Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
- --------- ---- ------
LONG-TERM INVESTMENTS -- 96.4% (A)<F24>
COMMON STOCKS -- 96.4% (A)<F24>
BASIC MATERIALS SECTOR -- 15.0%
- -------------------------------
AGRICULTURAL PRODUCTS -- 3.1%
45,200 Corn Products
International, Inc. $ 1,469,625 $ 1,480,300
CHEMICALS-SPECIALTY -- 10.1%
68,900 Ferro Corp. 1,601,122 1,515,800
39,900 H.B. Fuller Co. 2,067,955 2,231,906
108,500 Material Sciences Corp.*<F23> 1,426,771 1,105,344
----------- -----------
5,095,848 4,853,050
PAPER & FOREST PRODUCTS -- 1.8%
18,500 Rayonier Inc. 857,171 893,781
CAPITAL GOODS SECTOR -- 27.3%
- -----------------------------
AEROSPACE/DEFENSE -- 3.6%
27,800 Alliant Techsystems Inc.*<F23> 1,584,807 1,732,287
CONTAINERS-METAL/GLASS -- 3.6%
87,300 U.S. Can Corp.*<F23> 1,468,661 1,735,087
ELECTRICAL EQUIPMENT -- 5.2%
23,600 MagneTek, Inc.*<F23> 370,933 181,425
29,000 SPX Corp.*<F23> 1,147,085 2,343,562
----------- -----------
1,518,018 2,524,987
MACHINERY-DIVERSE -- 4.0%
69,000 Terex Corp.*<F23> 1,541,602 1,914,750
MANUFACTURER-DIVERSE -- 9.3%
64,400 Graco Inc. 1,399,436 2,310,350
27,800 Sames Corp.*<F23> 986,000 423,950
126,580 U.S. Industries, Inc. 2,472,489 1,772,120
----------- -----------
4,857,925 4,506,420
MANUFACTURER-SPECIAL -- 1.6%
31,500 Donaldson Company, Inc. 550,980 757,969
CONSUMER CYCLICALS SECTOR -- 30.1%
- ----------------------------------
AUTO PARTS & EQUIPMENT -- 8.7%
93,700 Meritor Automotive, Inc. 1,987,718 1,815,437
49,100 Standard Motor
Products, Inc. 874,605 791,738
102,500 Tower Automotive, Inc.*<F23> 1,814,346 1,582,344
----------- -----------
4,676,669 4,189,519
CONSUMER-JEWELRY/GIFT -- 0.2%
8,100 Enesco Group Inc. 207,180 89,606
FOOTWEAR -- 1.5%
108,500 The Stride Rite Corp. 1,349,802 705,250
LEISURE TIME-PRODUCTS -- 4.7%
62,300 Polaris Industries Inc. 2,128,081 2,258,375
PUBLISHING-NEWSPAPER -- 2.5%
30,200 Central Newspapers, Inc. 742,763 1,189,125
RETAIL-DISCOUNTERS -- 0.7%
21,600 Damark International, Inc.*<F23> 283,703 340,200
RETAIL-SPECIALTY -- 1.4%
61,700 Funco, Inc.*<F23> 941,102 690,269
SERVICES-ADVERTISING/MARKETING -- 5.9%
71,400 AC Nielsen Corp.*<F23> 1,364,863 1,758,225
24,800 True North
Communications, Inc. 716,208 1,108,250
----------- -----------
2,081,071 2,866,475
SERVICES-COMMERCIAL & CONSUMER -- 4.5%
57,000 Alternative Resources Corp.*<F23> 606,115 313,500
41,000 Midas, Inc. 1,250,212 896,875
50,900 Regis Corp. 1,000,588 960,737
----------- -----------
2,856,915 2,171,112
CONSUMER STAPLES SECTOR -- 12.8%
- --------------------------------
BROADCAST MEDIA -- 7.3%
61,600 ValueVision
International, Inc.*<F23> 1,613,467 3,530,450
ENTERTAINMENT -- 2.0%
39,700 LodgeNet Entertainment
Corp.*<F23> 404,289 987,537
FOODS -- 2.8%
100,300 International Multifoods
Corp. 2,189,070 1,328,975
RESTAURANTS -- 0.7%
21,382 VICORP Restaurants, Inc.*<F23> 288,956 344,785
FINANCIALS SECTOR -- 7.5%
- -------------------------
BANKS-MAJOR REGIONAL -- 4.4%
33,600 Community First
Bankshares, Inc. 438,286 529,200
63,700 TCF Financial Corp. 1,451,656 1,584,538
----------- -----------
1,889,942 2,113,738
INSURANCE-LIFE/HEALTH -- 0.8%
67,900 RTW, Inc.*<F23> 564,385 390,425
INSURANCE-PROPERTY -- 2.3%
57,000 Horace Mann Educators
Corp. 1,258,339 1,118,625
HEALTHCARE SECTOR -- 0.7%
- -------------------------
MEDICAL PRODUCTS & SUPPLIES -- 0.7%
46,900 Rochester Medical Corp.*<F23> 745,026 334,163
TECHNOLOGY SECTOR -- 3.0%
- -------------------------
ELECTRONICS-INSTRUMENTS -- 1.8%
68,100 Bolder Technologies Corp.*<F23> 815,112 868,275
ELECTRONICS-SEMICONDUCTORS -- 0.8%
61,500 Aetrium Inc.*<F23> 1,003,800 405,513
SERVICES-DATA PROCESSING -- 0.4%
5,600 National Computer
Systems, Inc. 57,400 210,700
----------- -----------
Total common stocks 45,041,709 46,531,748
----------- -----------
Total long-term
investments 45,041,709 46,531,748
SHORT-TERM INVESTMENTS -- 3.5% (A)<F24>
VARIABLE RATE DEMAND NOTE
$1,672,959 Firstar Bank U.S.A., N.A. 1,672,959 1,672,959
----------- -----------
Total short-term
investments 1,672,959 1,672,959
----------- -----------
Total investments $46,714,668 48,204,707
-----------
-----------
Cash and receivables, less
liabilities 0.1% (A)<F24> 77,817
-----------
Net Assets $48,282,524
-----------
-----------
Net Asset Value Per Share
($0.01 par value 300,000,000
shares authorized), offering
and redemption price
($48,282,524/ 3,899,385
shares outstanding) $ 12.38
-----------
-----------
*<F23> Non-income producing security.
(a)<F24> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Regional Small Capitalization Value Fund
STATEMENT OF OPERATIONS
For the Period Ending December 31, 1999 (Unaudited)
INCOME:
Dividends $ 246,911
Interest 74,456
-----------
Total income 321,367
-----------
EXPENSES:
Management fees 255,594
Administrative services 36,659
Professional fees 8,781
Transfer agent fees 8,621
Custodian fees 6,581
Printing and postage expense 5,737
Registration fees 3,653
Amortization of organizational expenses 2,487
Board of Director fees 250
Other expenses 8,490
-----------
Total expenses 336,853
-----------
NET INVESTMENT LOSS (15,486)
-----------
NET REALIZED GAIN ON INVESTMENTS 2,272,185
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (5,529,662)
-----------
NET LOSS ON INVESTMENTS (3,257,477)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,272,963)
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Regional Small Capitalization Value Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending December 31, 1999 (Unaudited) and
For the Year Ended June 30, 1999
<TABLE>
DECEMBER 31, JUNE 30,
1999 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment loss $ (15,486) $ (118,169)
Net realized gain (loss) on investments 2,272,185 (875,261)
Net decrease in unrealized appreciation on investments (5,529,662) (1,017,084)
----------- -----------
Net decrease in net assets resulting from operations (3,272,963) (2,010,514)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains ($0.09215 and $0.1144 per share, respectively) (363,868) (522,086)
----------- -----------
Total distributions (363,868) (522,086)
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (210,630 and 819,149 shares, respectively) 2,693,128 9,853,719
Net asset value of shares issued in distributions (27,783 and 40,053 shares, respectively) 330,895 499,462
Cost of shares redeemed (390,808 and 1,389,608 shares, respectively) (4,915,138) (16,148,675)
----------- -----------
Net decrease in net assets derived from Fund share activities (1,891,115) (5,795,494)
----------- -----------
TOTAL DECREASE (5,527,946) (8,328,094)
NET ASSETS AT THE BEGINNING OF THE PERIOD 53,810,470 62,138,564
----------- -----------
NET ASSETS AT THE END OF THE PERIOD $48,282,524 $53,810,470
----------- -----------
----------- -----------
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
(UNAUDITED) FOR THE PERIOD FROM
FOR THE PERIOD FOR THE YEARS ENDED JUNE 30, SEPTEMBER 16, 1996+<F25> TO
ENDING DECEMBER 31, ----------------------------
1999 1999 1998 JUNE 30, 1997
------------------- -------- -------- ---------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.28 $ 13.56 $ 12.23 $ 10.00
Income from investment operations:
Net investment (loss) income (0.01) (0.03) (0.01) 0.02
Net realized and unrealized (losses)
gains on investments (0.80) (0.14) 1.43 2.23
------- ------- ------- -------
Total from investment operations (0.81) (0.17) 1.42 2.25
Less distributions:
Dividends from net investment income -- -- (0.00) (0.02)
Distributions from net realized gains (0.09) (0.11) (0.09) --
------- ------- ------- -------
Total from distributions (0.09) (0.11) (0.09) (0.02)
------- ------- ------- -------
Net asset value, end of period $ 12.38 $ 13.28 $ 13.56 $ 12.23
------- ------- ------- -------
------- ------- ------- -------
TOTAL INVESTMENT RETURN (6.1%)*<F26> (1.2%) 11.7% 22.5%*<F26>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 48,283 53,810 62,139 29,231
Ratio of expenses (after reimbursement)
to average net assets (b)<F28> 1.3%(a)<F27> 1.3% 1.3% 1.3%(a)<F27>
Ratio of net investment (loss) income
to average net assets (c)<F29> (0.1%)(a)<F27> (0.2%) (0.1%) 0.3%(a)<F27>
Portfolio turnover rate 19.2% 29.2% 35.5% 29.4%
</TABLE>
+<F25> Commencement of operations.
*<F26> Not annualized.
(a)<F27> Annualized.
(b)<F28> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses for the period
September 16, 1996+<F25> to June 30, 1997, the ratio would have been
1.6%(a)<F27>.
(c)<F29> If the Fund had paid all of its expenses for the period September
16, 1996+<F25> to June 30, 1997, the ratio would have been
(0.0)%(a)<F27>.
The accompanying notes to financial statements are an integral part of these
statements.
Eastcliff Contrarian Value Fund
February 9, 2000
Dear Shareholder:
Despair and Euphoria describe the investment landscape in 1999, another even
more difficult year than 1998 for deep value investors. While value stocks
initially rebounded from their lows in the second quarter, rising interest rates
in the summer caused these gains to dissipate by year-end. Only the immense
speculation in technology and communication stocks were fueling this bull market
by year-end.
Since the Eastcliff Contrarian Value Fund's inception on December 30, 1997
the annualized rate of return was -4.8%. The Fund was -0.7% versus +18.2% for
the Russell Mid-Cap benchmark in 1999. Without the hot technology and
telecommunications sector, the Russell Mid-Cap would have been +3.8%. History
teaches us that all bubbles eventually burst and the current one will not likely
be any exception. How high these technology asset prices will rise before this
happens and what will be the trigger is anybody's guess, but this time will not
be different and this amazing speculation and over-valuation will be corrected
in due course.
Our strategy and approach to deep value investing has not changed as a result
of a difficult 1998/1999. We have maintained the integrity of our style and
will not style drift into growth stocks to keep up with benchmarks skewed by one
or two overvalued sectors. We will remain fully invested in out-of-favor,
deeply undervalued companies where earnings will benefit from a stronger
worldwide economy as well as value enhancing restructuring. If investors
continue to ignore these compelling values, strategic buyers will step in as we
have seen happen. While we are clearly not market timers nor sector rotators,
we believe that the stage is now set for an extended period of outperformance by
small/mid-cap value stocks. There is absolutely no room in the red-hot
technology stocks for even the slightest disappointment. This feels like a
classic set-up for outperformance. We are looking forward to it and we know you
are too. Thank you for your support.
As of December 22, 1999, your Board of Directors declared a distribution of
$0.05410 per share from net investment income, payable December 23, 1999, to
shareholders of record on December 21, 1999.
Respectfully submitted,
/s/ Lee C. Garcia /s/ Bruce D. Bottomley
Lee C. Garcia Bruce D. Bottomley
Portfolio Manager Portfolio Manager
Past performance cannot guarantee future results. Prices will fluctuate and
redemption value may be more or less than original investment. This Fund is not
insured by the FDIC and is not a deposit or other obligation of or guaranteed by
Resource Trust Company or any of its affiliates.
Eastcliff Contrarian Value Fund
STATEMENT OF NET ASSETS
December 31, 1999 (Unaudited)
SHARES OR QUOTED
PRINCIPAL MARKET
AMOUNT COST VALUE
- --------- ---- ------
LONG-TERM INVESTMENTS -- 98.8% (A)<F31>
COMMON STOCKS -- 98.8% (A)<F31>
BASIC MATERIALS SECTOR -- 22.4%
- -------------------------------
ALUMINUM -- 4.2%
4,700 Reynolds Metals Co. $ 271,086 $ 360,137
CHEMICALS-DIVERSE -- 3.5%
16,000 Engelhard Corp. 313,219 302,000
CHEMICALS-SPECIALTY -- 6.6%
21,900 W.R. Grace & Co.*<F30> 283,342 303,862
9,500 Hercules Inc. 333,836 264,813
---------- ----------
617,178 568,675
CONTAINERS & PACKAGING -- 2.1%
17,400 Pactiv Corp.*<F30> 181,197 184,875
IRON & STEEL -- 6.0%
16,800 AK Steel Holding Corp. 288,922 317,100
8,750 Allegheny Technologies, Inc.
(Formerly Allegheny
Teledyne Inc.) 327,549 196,328
---------- ----------
616,471 513,428
CAPITAL GOODS SECTOR -- 15.0%
- -----------------------------
CONTAINERS-METAL/GLASS -- 7.6%
12,800 American National Can
Group, Inc. 164,371 166,400
8,600 Ball Corp. 286,614 338,625
6,700 Crown Cork & Seal Co., Inc. 212,581 149,912
---------- ----------
663,566 654,937
MANUFACTURER-DIVERSE -- 3.9%
24,000 U.S. Industries, Inc. 559,469 336,000
WASTE MANAGEMENT -- 3.5%
17,700 Waste Management, Inc. 387,411 304,219
CONSUMER CYCLICALS SECTOR -- 11.2%
- ----------------------------------
HARDWARE & TOOLS -- 3.7%
10,700 The Stanley Works 266,812 322,337
RETAIL-SPECIALTY -- 7.5%
10,200 Footstar, Inc.*<F30> 266,538 311,100
48,600 Venator Group, Inc.*<F30> 674,113 340,200
---------- ----------
940,651 651,300
CONSUMER STAPLES SECTOR -- 4.4%
- -------------------------------
HOUSEHOLD PRODUCTS -- 4.4%
13,700 Fort James Corp. 391,069 375,038
ENERGY SECTOR -- 16.3%
- ----------------------
OIL & GAS-DRILLING & EQUIPMENT -- 4.8%
4,300 Cooper Cameron Corp.*<F30> 100,108 210,431
15,600 R&B Falcon Corp.*<F30> 170,285 206,700
---------- ----------
270,393 417,131
OIL & GAS-REFINING & MARKETING -- 2.6%
9,519 Sunoco, Inc. 334,752 223,697
OIL-EXPLORATION & PRODUCTS -- 8.9%
8,972 Devon Energy Corp. 339,355 294,955
4,173 Kerr-McGee Corp. 152,268 258,726
27,800 Ocean Energy, Inc.*<F30> 283,049 215,450
---------- ----------
774,672 769,131
FINANCIALS SECTOR -- 6.5%
- -------------------------
FINANCIAL-DIVERSE -- 6.5%
2,366 Alleghany Corp.*<F30> 401,341 438,893
2,600 Chicago Title Corp. 93,498 120,250
---------- ----------
494,839 559,143
HEALTHCARE SECTOR -- 0.1%
- -------------------------
DIVERSE -- 0.1%
875 Water Pik Technologies, Inc.*<F30> 9,845 8,367
TECHNOLOGY SECTOR -- 3.6%
- -------------------------
Electronics-Instruments -- 0.3%
2,500 Teledyne Technologies Inc.*<F30> 32,718 23,594
PHOTOGRAPH/IMAGING -- 3.3%
4,300 Eastman Kodak Co. 265,389 284,875
UTILITIES SECTOR -- 19.3%
- -------------------------
ELECTRIC COMPANIES -- 10.3%
30,400 Citizens Utilities Co. Cl B*<F30> 236,600 431,300
10,400 Northeast Utilities 130,159 213,850
14,500 Western Resources, Inc. 535,512 246,500
---------- ----------
902,271 891,650
NATURAL GAS -- 9.0%
7,900 Atmos Energy Corp. 186,772 161,456
8,400 Kinder Morgan, Inc. 190,801 169,575
5,200 ONEOK, Inc. 151,321 130,650
15,250 UGI Corp. 366,575 311,672
---------- ----------
895,469 773,353
---------- ----------
Total common stocks 9,188,477 8,523,887
---------- ----------
Total long-term
investments 9,188,477 8,523,887
SHORT-TERM INVESTMENTS -- 1.0% (A)<F31>
VARIABLE RATE DEMAND NOTE
$89,321 Firstar Bank U.S.A., N.A. 89,321 89,321
---------- ----------
Total short-term
investments 89,321 89,321
---------- ----------
Total investments $9,277,798 8,613,208
----------
----------
Cash and receivables, less
liabilities 0.2% (A)<F31> 17,465
----------
Net Assets $8,630,673
----------
----------
Net Asset Value Per Share
($0.01 par value 300,000,000
shares authorized), offering
and redemption price
($8,630,673 / 1,004,725
shares outstanding) $ 8.59
----------
----------
*<F30> Non-income producing security.
(a)<F31> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Contrarian Value Fund
STATEMENT OF OPERATIONS
For the Period Ending December 31, 1999 (Unaudited)
INCOME:
Dividends $ 118,845
Interest 6,770
-----------
Total income 125,615
-----------
EXPENSES:
Management fees 55,682
Professional fees 13,393
Administrative services 11,136
Transfer agent fees 6,396
Custodian fees 4,261
Registration fees 3,158
Amortization of organizational expenses 2,326
Printing and postage expense 761
Board of Directors fees 250
Other expenses 1,733
-----------
Total expenses before reimbursement 99,096
Less expenses assumed by adviser (26,710)
-----------
Net expenses 72,386
-----------
NET INVESTMENT INCOME 53,229
-----------
NET REALIZED LOSS ON INVESTMENTS (1,012,713)
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (52,925)
-----------
NET LOSS ON INVESTMENTS (1,065,638)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,012,409)
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
Eastcliff Contrarian Value Fund
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ending December 31, 1999 (Unaudited) and
For the Year Ended June 30, 1999
<TABLE>
DECEMBER 31, JUNE 30,
1999 1999
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 53,229 $ 142,761
Net realized loss on investments (1,012,713) (1,010,104)
Net decrease in unrealized appreciation on investments (52,925) (975,472)
----------- -----------
Net decrease in net assets resulting from operations (1,012,409) (1,842,815)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.11224 and $0.07285 per share, respectively) (132,683) (137,368)
Distribution from net realized gains ($0.29322 per share) -- (547,599)
----------- -----------
Total distributions (132,683) (684,967)
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (20,975 and 360,391 shares, respectively) 197,422 3,450,436
Net asset value of shares issued in distributions
(1,155 and 58,268 shares, respectively) 9,853 524,234
Cost of shares redeemed (477,053 and 839,208 shares, respectively) (4,260,511) (7,187,121)
----------- -----------
Net decrease in net assets derived from Fund share activities (4,053,236) (3,212,451)
----------- -----------
TOTAL DECREASE (5,198,328) (5,740,233)
NET ASSETS AT THE BEGINNING OF THE PERIOD 13,829,001 19,569,234
----------- -----------
NET ASSETS AT THE END OF THE PERIOD
(including undistributed net investment income of $0 and $77,482, respectively) $ 8,630,673 $13,829,001
----------- -----------
----------- -----------
</TABLE>
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
(UNAUDITED) YEAR ENDED FOR THE PERIOD FROM
FOR THE PERIOD ENDING JUNE 30, DECEMBER 30, 1997+<F32> TO
DECEMBER 31, 1999 1999 JUNE 30, 1998
--------------------- ---------- --------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.47 $10.41 $10.00
Income from investment operations:
Net investment income 0.05 0.09 0.04
Net realized and unrealized (losses) gains on investments (0.82) (0.66) 0.37
------ ------ ------
Total from investment operations (0.77) (0.57) 0.41
Less distributions:
Dividends from net investment income (0.11) (0.07) --
Distributions from net realized gains -- (0.30) --
------ ------ ------
Total from distributions (0.11) (0.37) --
------ ------ ------
Net asset value, end of period $ 8.59 $ 9.47 $10.41
------ ------ ------
------ ------ ------
TOTAL INVESTMENT RETURN (8.1%)*<F33> (5.3%) 4.1%*<F33>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's $) 8,631 13,829 19,569
Ratio of expenses (after reimbursement)
to average net assets (b)<F35> 1.3%(a)<F34> 1.3% 1.3%(a)<F34>
Ratio of net investment income
to average net assets (c)<F36> 1.0%(a)<F34> 0.9% 0.7%(a)<F34>
Portfolio turnover rate 21.9% 45.0% 13.6%
</TABLE>
+<F32> Commencement of operations.
*<F33> Not annualized.
(a)<F34> Annualized.
(b)<F35> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been for the period ending December 31, 1999, for the
year ended June 30, 1999 and for the period December 30, 1997+<F32>
to June 30, 1998, 1.8%(a)<F34>, 1.5% and 1.5%(a)<F34>, respectively.
(c)<F36> If the Fund had paid all of its expenses, the ratios would have been
for the period ending December 31, 1999, for the year ended June 30,
1999 and for the period December 30, 1997+<F32> to June 30, 1998,
0.5%(a)<F34>, 0.7% and 0.5%(a)<F34>, respectively.
The accompanying notes to financial statements are an integral part of these
statements.
Eastcliff Funds
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 (Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
The following is a summary of significant accounting policies of the
Eastcliff Funds, Inc. (the "Company"), which is registered as an open-end
management investment company under the Investment Company Act of 1940.
This Company consists of a series of five funds: Eastcliff Total Return
Fund (the "Total Return Fund"), Eastcliff Growth Fund (the "Growth Fund"),
Eastcliff Emerging Growth Fund (the "Emerging Growth Fund"), Eastcliff
Regional Small Capitalization Value Fund (the "Regional Small Cap Fund")
and Eastcliff Contrarian Value Fund (the "Contrarian Value Fund")
(collectively the "Funds"). The assets and liabilities of each Fund are
segregated and a shareholder's interest is limited to the Fund in which the
shareholder owns shares. The Company was incorporated under the laws of
Wisconsin on May 23, 1986.
The investment objective of the Total Return Fund is to realize a
combination of capital appreciation and income which will result in the
highest total return by investing in a combination of equity and debt
securities, while assuming reasonable risks; the investment objective of
the Growth Fund is to produce long-term growth of capital by investing
principally in equity securities; the investment objective of the Emerging
Growth Fund is to produce long-term growth of capital by investing in
equity securities of small to small midcap companies; the investment
objective of the Regional Small Cap Fund is to produce capital appreciation
by investing principally in equity securities of small capitalization
companies headquartered in Colorado, Illinois, Indiana, Iowa, Michigan,
Minnesota, Montana, Nebraska, North and South Dakota, Ohio and Wisconsin;
and the investment objective of the Contrarian Value Fund is to produce
long-term capital by investing in out-of-favor, undervalued companies with
restructuring and turnaround potential.
(a) Each security, excluding short-term investments, is valued at the last
sale price reported by the principal security exchange on which the
issue is traded, or if no sale is reported, the latest bid price.
Securities which are traded over-the-counter are valued at the latest
bid price. Securities for which quotations are not readily available
are valued at fair value as determined by the investment adviser under
the supervision of the Board of Directors. Short-term investments are
valued at amortized cost which approximates quoted market value. For
financial reporting purposes, investment transactions are recorded on
trade date. The cost amounts as reported on the statements of net
assets for the Total Return Fund, Emerging Growth Fund, Regional Small
Cap Fund and Contrarian Value Fund, and on the schedule of investments
for the Growth Fund, are the same for Federal income tax purposes.
(b) The Funds may purchase securities on a when-issued or delayed delivery
basis. Although the payment and interest terms of these securities are
established at the time the purchaser enters into the agreement, these
securities may be delivered and paid for at a future date, generally
within 45 days. The Funds record purchases of when-issued securities
and reflect the value of such securities in determining net asset
value in the same manner as other portfolio securities.
(c) Net realized gains and losses on common stock are computed on the
identified cost basis.
(d) Provision has not been made for Federal income taxes since the
Emerging Growth Fund will elect and all other Funds have elected to be
taxed as "regulated investment companies" and intend to distribute
substantially all net investment company taxable income and net
capital gains to shareholders and otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment
companies. The Regional Small Cap Fund has $746,400 of a capital loss
carryover which expires June 30, 2007. To the extent the Regional
Small Cap Fund realizes future net capital gains, those gains will be
offset by any unused capital loss carryover. The Contrarian Value Fund
has $1,150,751 of post-October losses, which are deferred for tax
purposes until the year ending June 30, 2000.
(e) Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis.
(f) The Funds have investments in short-term variable rate demand notes,
which are unsecured instruments. The Funds may be susceptible to
credit risk with respect to these notes to the extent the issuer
defaults on its payment obligation. The Funds' policy is to monitor
the creditworthiness of the issuer and nonperformance by these
counterparties is not anticipated.
(g) Generally accepted accounting principles require that permanent
differences between income for financial reporting and tax purposes be
reclassified in the capital accounts.
(h) 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 these estimates.
(2) INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES --
The Funds have entered into management agreements with Resource Capital
Advisers, Inc. ("RCA"), with whom certain officers and directors of the
Funds are affiliated, to serve as investment adviser and manager. Under the
terms of the agreements, the Growth Fund, Emerging Growth Fund, Regional
Small Cap Fund and Contrarian Value Fund pay RCA a monthly fee at the
annual rate of 1% of such Funds daily net assets and for the Total Return
Fund, 1% on the first $30,000,000 of the daily net assets and 0.75% on the
daily net assets over $30,000,000.
In addition to the reimbursement required under the management
agreements, RCA has voluntarily reimbursed the Funds for expenses over 1.3%
of the daily net assets of the Funds. These reimbursements amounted to
$18,443, $27,186, $13,392 and $26,710 for the period ending December 31,
1999, for the Total Return Fund, Growth Fund, Emerging Growth Fund and the
Contrarian Value Fund, respectively. These voluntary reimbursements may be
modified or discontinued at any time by RCA.
The Funds have administrative agreements with Fiduciary Management, Inc.
("FMI"), with whom certain directors of the Funds are affiliated, to
supervise all aspects of the Funds' operations except those performed by
RCA. Under the terms of the agreements, the Funds will each pay FMI a
monthly administrative fee at the annual rate of 0.2% on the first
$25,000,000 of the daily net assets of such Fund, 0.1% on the daily net
assets of such Fund on the next $20,000,000 and 0.05% on the daily net
assets of such Fund over $45,000,000.
The Funds have entered into Distribution Plans (the "Plans"), pursuant
to Rule 12b-1 under the Investment Company Act of 1940 with RCA. The Plans
provide that the Funds may incur certain costs which may not exceed the
lesser of a monthly amount equal to 1% of the Funds' daily net assets or
the actual distribution costs incurred by RCA during the year. Amounts
payable under the Plans are paid monthly to RCA for any activities or
expenses primarily intended to result in the sale of shares of such Fund.
For the period ending December 31, 1999, no such expenses were incurred.
(3) DISTRIBUTION TO SHAREHOLDERS --
Net investment income and net realized gains are distributed to
shareholders. The distributions were paid on December 23, 1999, to
shareholders of record on December 21, 1999.
<TABLE>
TOTAL EMERGING REGIONAL CONTRARIAN
RETURN FUND GROWTH FUND GROWTH FUND SMALL CAP FUND VALUE FUND
----------- ----------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Dividend from net investment income $ -- $ -- $ -- $ -- $ 55,199
$ per share -- -- -- -- 0.05410
Short-term gains -- 1,909,579 83,872 -- --
$ per share -- 1.56600 0.14382 -- --
Long-term capital gains 1,342,593 3,455,655 -- 363,868 --
$ per share 1.23052 2.83390 -- 0.09215 --
</TABLE>
Shareholders were sent a 1999 Form 1099-DIV in January, 2000
representing their proportionate share of these distributions. The Form
1099-DIV would consider the impact of any retroactive tax law changes.
(4) DEFERRED EXPENSES --
Organizational expenses for the Growth Fund, Regional Small Cap Fund and
Contrarian Value Fund were deferred and are being amortized on a straight-
line basis over a period of five years beginning with the date of sales of
shares to the public. These expenses were advanced by RCA who will be
reimbursed by the Growth Fund, Regional Small Cap Fund and Contrarian Value
Fund over a period of five years. The unamortized organizational expenses
at December 31, 1999, were $3,150, $8,702 and $13,955, respectively.
(5) INVESTMENT TRANSACTIONS --
For the period ending December 31, 1999, purchases and proceeds of sales
of investment securities of the Total Return Fund (excluding short-term
securities) were $6,685,410 and $8,693,908, respectively; purchases and
proceeds of sales of investment securities of the Growth Fund (excluding
short-term securities) were $11,030,666 and $41,616,756, respectively;
purchases and proceeds of sales of investment securities of the Emerging
Growth Fund (excluding short-term securities) were $7,437,399 and
$1,744,301, respectively; purchases and proceeds of sales of investment
securities of the Regional Small Cap Fund, (excluding short-term
securities) were $9,262,769 and $12,150,907, respectively; and purchases
and proceeds of sales of investment securities of the Contrarian Value Fund
(excluding short-term securities) were $2,368,172 and $6,348,773,
respectively.
(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of December 31, 1999, liabilities of the Funds included the
following:
<TABLE>
TOTAL EMERGING REGIONAL CONTRARIAN
RETURN FUND GROWTH FUND GROWTH FUND SMALL CAP FUND VALUE FUND
----------- ----------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Payable to brokers for investments purchased $ -- $73,144 $ -- $387,921 $ --
Payable to RCA for management fees
and deferred expenses 21,693 17,505 6,016 49,391 21,268
Payable for redemptions -- -- -- 55,000 --
Other liabilities 7,594 11,176 1,805 17,608 2,194
</TABLE>
(7) SOURCES OF NET ASSETS -
<TABLE>
TOTAL EMERGING REGIONAL CONTRARIAN
RETURN FUND GROWTH FUND GROWTH FUND SMALL CAP FUND VALUE FUND
----------- ----------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
As of December 31, 1999, the sources of
net assets were as follows:
Fund shares issued and outstanding $10,491,014 $ 5,058,973 $6,199,585 $45,772,828 $11,639,712
Net unrealized appreciation (depreciation)
on investments 15,472,726 5,795,741 1,348,696 1,490,039 (664,590)
Undistributed net realized gains (losses)
on investments 325,002 4,398,826 262,470 1,019,657 (2,344,449)
----------- ----------- ---------- ----------- -----------
$26,288,742 $15,253,540 $7,810,751 $48,282,524 $ 8,630,673
----------- ----------- ---------- ----------- -----------
----------- ----------- ---------- ----------- -----------
Aggregate net unrealized appreciation (depreciation) as of December 31, 1999, consisted of the following:
Aggregate gross unrealized appreciation $15,472,726 $ 5,809,712 $1,627,963 $ 8,201,905 $ 963,645
Aggregate gross unrealized depreciation -- (13,971) (279,267) (6,711,866) (1,628,235)
----------- ----------- ---------- ----------- -----------
Net unrealized appreciation (depreciation) $15,472,726 $ 5,795,741 $1,348,696 $ 1,490,039 $ (664,590)
----------- ----------- ---------- ----------- -----------
----------- ----------- ---------- ----------- -----------
</TABLE>
EASTCLIFF FUNDS
1400 Peavey Building
730 Second Avenue South
Minneapolis, Minnesota 55402
612-336-1444
INVESTMENT ADVISER
RESOURCE CAPITAL ADVISERS, INC.
1400 Peavey Building
730 Second Avenue South
Minneapolis, Minnesota 55402
PORTFOLIO MANAGERS
EASTCLIFF TOTAL RETURN FUND
PALM BEACH INVESTMENT ADVISERS, INC.
EASTCLIFF GROWTH FUND
WINSLOW CAPITAL MANAGEMENT, INC.
EASTCLIFF EMERGING GROWTH FUND
KB GROWTH ADVISORS, LLC
EASTCLIFF REGIONAL SMALL CAPITALIZATION VALUE FUND
WOODLAND PARTNERS LLC
EASTCLIFF CONTRARIAN VALUE FUND
SASCO CAPITAL, INC.
ADMINISTRATOR
FIDUCIARY MANAGEMENT, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
FIRSTAR MUTUAL FUND SERVICES, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
1-800-595-5519
or
414-765-4124
CUSTODIAN
FIRSTAR BANK, NA
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
