<PAGE>
PRESIDENT'S LETTER JULY 15, 1996
Dear Oberweis Funds Shareholder:
I'm delighted to report another exceptionally strong six month's performance
for your fund portfolio. The Emerging Growth Portfolio gained 21.2% during the
first half of this year compared to 10.5% for the Dow Jones Industrial
Average, 10.1% for the S&P 500 total return index, 12.6% for the NASDAQ
Composite, and 10.4% for the Russell 2000. Thus, the Emerging Growth Portfolio
beat virtually every major market index. The new Micro-Cap Portfolio did even
better, gaining 39.2% for the same period. As I'm sure you are aware, not
every semi-annual report will be this exceptional!
The first half of this year was marked by growing investor confidence. Money
poured into the Emerging Growth Portfolio at a faster rate than we had ever
before experienced. In addition, we started the new Micro-Cap Portfolio on
January 1, stating that we intended to limit it to $50 million. We reached
that level on May 21st and closed the fund to new investments on May 22. Many
shareholders have asked us why we closed the fund at $50 million. We believe
that we can only invest a very limited sum in such small companies (the
average market cap is just over $100 million). So we had to limit the amount
of money we would manage in this area or limit the performance of the fund. We
chose to limit the amount of money.
We have more good news! The expense ratio of the Emerging Growth Portfolio
continued to fall this year, declining to 1.41%, primarily as a result of its
larger size and the January 1 reduction of 12b-1 fees to .25% from .50%
previously. The expense ratio of the Micro-Cap Portfolio was 1.75%.
And we have even more good news. We hope to have a third portfolio, the Mid-
Cap Portfolio, available approximately September 15th. This portfolio will
invest in the same type of rapid growth companies that the current portfolios
invest in, but will focus on somewhat larger companies, typically companies in
the $1 to $5 billion market cap range. You will be able to switch from the
Mid-Cap Portfolio to the Emerging Growth Portfolio with a phone call to your
brokerage firm or to our shareholder service center (800-245-7311) though a
one quarter of one percent redemption charge would apply to redemptions of the
Mid-Cap Portfolio only. In addition, in the near future we hope to be able to
provide a money market fund for you to switch into should you choose to do so.
We suggest that trying to trade between different portfolios is not a
particulary good idea, but diversifying your investments among the different
portfolios may be.
Finally, I would again like to sincerely thank you for investing with me in
our funds. Share prices can be quite volatile on a day-to-day basis, but over
the long run, accepting that volatility should produce reasonable rewards. If
you have any questions about your account, please call shareholder services at
800-245-7311 between 8:00 AM and 5:00 PM central time, Monday through Friday.
If you have any questions about the fund's portfolios or investment policies,
please feel free to call me or any of our three portfolio managers, Matin
Yokosawa, Chip Roberts, or my son Jim Oberweis. We're usually available from
7:30 AM until 6:00 PM during the week and from 9:30 until noon on Saturday. If
you are in the Chicago area, we would be glad to have you visit our new
offices at 951 Ice Cream Drive in North Aurora, Illinois. We're located on the
East-West Tollway (I-88) at Randall Road (take the Route 31 exit). You might
even get to try some of the world's best ice cream!
Sincerely,
LOGO
James D. Oberweis
President
1
<PAGE>
OBERWEIS EMERGING GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (Value in thousands)
Equity Securities - 96.8%
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
COMMERCIAL SERVICES--2.8%
30,000 Apac Teleservices, [email protected] $ 1,080
30,000 Employee Solutions, [email protected] 945
30,000 Investment Technology [email protected] 405
40,000 ITI Technologies, [email protected] 1,320
46,500 RTW, [email protected] 1,465
30,000 Sterling Healthcare [email protected] 600
5,815
COMPUTER--INTEGRATED SYSTEMS--2.5%
130,500 Brooktrout Technology, Inc. @28.000 3,654
10,000 Jack Henry & Associates @34.000 340
60,000 PC Docs Group International, [email protected] 1,192
5,186
COMPUTER--LOCAL NETWORKS--0.7%
20,000 Auspex Systems, Inc. @15.000 300
**6,000 Ascend Communications, Inc. @56.250 337
50,000 Vanstar Corp. @16.750 837
1,474
COMPUTER--MEMORY DEVICES--5.2%
40,000 Ciprico, Inc. @15.250 610
155,000 HMT Technology Corp. @15.750 2,441
20,000 Komag, Inc. @26.375 527
20,000 Network Appliance, Inc. @29.750 595
160,000 Silicon Storage Technology, Inc. @13.750 2,200
160,000 Smart Modular Technologies, Inc. @16.000 2,560
97,000 Stormedia, Inc. @10.875 1,055
20,000 Veritas Software Corp. @43.000 860
10,848
COMPUTER--MINI/MICRO--0.1%
22,000 *Scientific Technologies, Inc. @11.000 242
COMPUTER--OPTICAL RECOGNITION--0.5%
57,500 Robotic Vision Systems, [email protected] 1,028
COMPUTER PERIPHERALS--6.1%
40,000 Centennial Technologies, Inc. @29.875 1,195
30,000 Dialogic Corp. @59.625 1,789
110,000 Eltron International, [email protected] 2,998
**132,000 Mylex [email protected] 2,343
**50,000 *U.S. Robotics [email protected] 4,275
12,600
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
COMPUTER SERVICES--1.0%
11,900 AmeriData Technologies, Inc.
Warrants @2.375 $ 28
50,000 Innodata Corp. @3.437 171
25,000 Renaissance Solutions, [email protected] 709
70,000 Ozemail, Ltd. [email protected] 901
34,500 Techforce Corp. @6.000 207
2,016
COMPUTER SOFTWARE--15.6%
**100,000 Applix, Inc. @28.750 2,875
30,000 Aspen Technology, Inc. @55.000 1,650
**28,000 Citrix Systems, Inc. @38.000 1,064
50,000 Datastream Systems, Inc. @35.250 1,762
140,000 Elcom International, Inc. @12.750 1,785
**40,000 Electronics for Imaging, Inc. @69.375 2,775
5,000 Enterprise Systems, Inc. @27.500 137
15,000 Gemstar International Group, Ltd. @30.000 450
60,000 Gensym Corp. @22.000 1,320
30,000 Hummingbird Communications, Ltd. @30.500 915
85,000 Isocor @15.250 1,296
20,000 Legato Systems, Inc. @55.000 1,100
10,000 Macromedia, Inc. @21.875 219
15,000 Mcaffee Associates, Inc. @49.00 735
30,000 MDL Information Sytems @29.750 892
25,000 Natural MicroSystems Corp. @35.000 875
20,000 Periphonics Computer Network @34.000 680
100,000 Physician Computer Network @11.562 1,156
25,000 Project Software & Development @46.875 1,172
26,250 Remedy Corp. @73.000 1,916
35,000 Saville Systems Ireland @27.625 967
22,500 Smith Micro Software, Inc. @12.000 270
30,000 Structural Dynamics Research @22.000 660
**55,000 Systemsoft Corp. @47.000 2,585
45,000 TCSI Corporation @24.125 1,086
85,000 Technomatix Technologies, Inc. @19.000 1,615
15,600 Unison Software, Inc. @25.250 394
32,351
CONSUMER PRODUCTS--0.2%
10,000 Blyth Industries, Inc. @45.375 454
</TABLE>
See notes to Portfolio of Investments.
2
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
COSMETICS/PERSONAL CARE--0.3%
70,000 Parlux Frangrances, [email protected] $ 709
DRUGS--1.1%
**20,000 Dura Pharmaceuticals, Inc. @56.000 1,120
31,000 Watson Pharmaceuticals, [email protected] 1,174
2,294
ELECTRICAL & ELECTRONIC
EQUIPMENT--3.4%
45,000 Nu Horizons Electronics Corp. @11.062 498
47,500 Proxim, Inc. @40.250 1,912
35,000 *Robbins & Meyers, [email protected] 1,557
70,000 Zygo [email protected] 3,063
7,030
ELECTRONICS--COMPONENTS/
SEMICONDUCTORS--10.0%
10,000 ADE Corp. @14.250 142
50,000 Aetrium, Inc. @18.000 900
60,000 Atmel [email protected] 1,807
35,000 C.P. Clare Corp. @25.750 901
30,000 DSP Communications, Inc. @51.375 1,541
72,000 ESS Technology @18.500 1,332
60,000 ETEC Systems, Inc. @22.250 1,335
100,000 Flextronics International, Ltd. @26.250 2,625
112,000 IKOS Systems @21.125 2,366
175,000 Photon Dynamics, Inc. @9.500 1,662
50,000 Quickturn Design Systems @14.500 725
60,000 Ross Technology, Inc. @12.000 720
50,000 SDL Inc. @27.750 1,388
50,000 Speedfam International, Inc. @16.250 812
110,000 Supertex, Inc. @16.125 1,774
36,500 Zoran Corp. @19.250 702
20,732
ELECTRONICS--LASER SYSTEMS/
COMPONENTS--0.9%
10,000 Chicago Minature Lamp, Inc. @38.000 380
10,000 Coherent, [email protected] 520
50,000 Electro Scientific Industries, Inc. @21.000 1,050
1,950
ELECTRONICS--MEASURING
EQUIPMENT--0.8%
50,000 Integrated Measurement, Inc. @25.750 1,288
20,000 Thermospectra Corp. @15.750 315
1,603
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
ELECTRONICS--MISCELLANEOUS
COMPONENTS--2.3%
50,000 Sawtech, Inc. @34.500 $ 1,725
20,000 Technitrol, Inc. @39.625 793
225,000 WPI Group, Inc. @9.750 2,193
4,711
FINANCIAL/BUSINESS SERVICES--0.3%
20,000 Nova Corp. @33.750 675
FINANCIAL--CONSUMER LOANS--0.6%
44,000 Olympic Financial, Ltd. @23.000 1,012
10,000 Southern Pacific Funding @17.500 175
1,187
FINANCIAL--INVESTMENT BANKERS--0.6%
15,000 Cityscape Financial Corp. @51.250 769
10,000 Waterhouse Investor Services @37.125 371
1,140
FOOD--MISCELLANEOUS--0.8%
95,000 Unimark Group, Inc. @16.625 1,579
HEALTH MAINTENANCE
ORGANIZATION--0.3%
15,000 Compdent Corp. @46.500 698
HOUSEHOLD--AUDIO/VIDEO--0.2%
30,000 Nimbus CD International @13.125 394
INSURANCE--0.6%
8,100 *Capmac Holdings, Inc. @28.500 231
58,000 Riscorp, Inc. CL A @18.250 1,059
1,290
LEISURE & RECREATION PRODUCTS--2.4%
50,000 IMAX Corp. @36.750 1,838
67,500 Regal Cinemas, Inc. @45.750 3,088
4,926
MACHINERY--6.6%
50,000 *Gleason Corp. @39.000 1,950
10,000 *Greenfield Industries, Inc. @33.000 330
**100,000 *JLG Industries, Inc. @74.250 7,425
20,000 PRI Automation, Inc. @30.500 610
100,000 Zoltek Companies, Inc. @34.250 3,425
13,740
MEDICAL EQUIPMENT & SUPPLIES--3.5%
45,000 ESC Medical Systems, Ltd. @28.250 1,271
100,000 Conmed Corp. @26.625 2,663
</TABLE>
See notes to Portfolio of Investments.
3
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
40,000 Lumisys, Inc. @16.250 $ 650
50,000 Medicore, Inc. @4.250 213
24,100 Minimed, Inc. @29.750 717
30,000 Orthologic Corp. @12.750 383
52,500 Qiagen N.V. @15.125 794
10,000 Quintiles Transnational @65.750 658
7,349
MEDICAL--NURSING HOMES, OUTPATIENT HOMECARE--3.0%
25,000 American Homepatient, Inc. @44.250 1,106
10,000 American Medical Response @35.250 353
100,000 FPA Medical Management, Inc. @15.562 1,556
6,750 National Surgery Centers @26.500 179
100,000 Prime Medical Services, Inc. @17.375 1,738
21,000 Retirement Care Associates, Inc. @11.000 231
106,252(a) Retirement Care Associates, Inc. @8.580 912
10,000 Veterinary Centers of America @22.375 223
6,298
METAL PRODUCTS/FABRICATION--1.5%
60,000 Cedar Group, Inc. @3.156 189
20,000 *Kaydon Corp. @43.000 860
70,000 Oregon Metallurgical, Inc. @29.500 2,065
3,114
OIL & GAS--2.4%
60,000 Basic Petroleum Int'l Ltd. @26.750 1,605
20,000 Belco Oil & Gas Corp. @35.500 710
10,000 Chesapeake Energy Corp. @89.875 899
100,000 Marine Drilling Company, Inc. @10.125 1,012
20,000 Noble Affiliates, Inc. @37.750 755
4,981
PERSONNEL PLACEMENT--0.2%
10,000 Alternative Resources [email protected] 368
POLLUTION CONTROL--0.8%
50,000 U.S. Filter Corp. @34.750 1,737
RESTAURANTS--7.1%
255,000 Logan's Roadhouse, Inc. @18.750 4,781
120,000 Lone Star Steakhouse &
Saloon, [email protected] 4,530
50,000 Manhattan Bagel Company @14.750 737
30,000 Outback Steakhouse, [email protected] 1,035
30,000 Papa John's International, [email protected] 1,463
100,000 Pollo Tropical, [email protected] 425
40,000 Quality Dining, Inc. @32.750 1,310
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
10,000 Rainforest Cafe, Inc. @50.000 $ 500
14,781
RETAIL--APPAREL--2.6%
117,000 Gadzooks, Inc. @32.250 3,773
**30,000 Just for Feet, Inc. @52.875 1,586
5,359
RETAIL--MISCELLANEOUS--1.1%
10,000 Global Directmail Corp. @39.500 395
35,000 The Maxim Group, Inc. @14.125 494
25,000 Officemax, Inc. @23.875 597
30,000 Sunglass Hut International @24.375 731
2,217
RETAIL--WHOLESALE--COMPUTERS--0.8%
91,100 En Pointe Technologies, Inc. @11.125 1,013
40,500 Pomeroy Computer Resources @15.000 608
1,621
SCHOOLS--0.1%
5,400 Youth Services International,
[email protected] 96
SOAP & CLEANING PREPARATIONS--0.6%
30,000 USA Detergents, Inc. @39.875 1,196
TELECOMMUNICATIONS--7.0%
50,000 Anicom, Inc. @15.750 788
102,500 Brightpoint, Inc. @21.500 2,204
19,000 Coherent Communication
Systems Corp. @21.250 404
40,000 Digital Systems International, Inc. @15.125 605
12,000 Excel Communications, [email protected] 324
10,000 I.C.T. Group, Inc. @19.250 193
45,000 MRV Communications, Inc. @42.750 1,924
80,000 Mastec, Inc. @25.250 2,020
35,000 P-COM, Inc. @31.500 1,103
30,000 Polycom, Inc. @7.000 210
2,200 Premiere Technologies, Inc.@ 31.500 69
**15,000 Premisys Communications, Inc. @ 61.000 915
30,000 STM Wireless, Inc. @10.000 300
60,000 Spectralink Corp. @9.625 578
40,000 Stratacom, Inc. @56.250 2,250
40,000 Teledata Communications, [email protected] 485
5000 Verilink Corp. @25.500 128
14,500
</TABLE>
See notes to Portfolio of Investments.
4
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
TRUCKING--0.2%
25,000 Knight Transportation, [email protected] $ 513
TOTAL EQUITY SECURITIES 200,802
(COST: $139,327,000)
Convertible Debt Obligations - 3.0%
<CAPTION>
Face
Amount Value
<C> <S> <C>
MEDICAL--NURSING HOMES--1.2%
$1,500,000 *GranCare, Inc.
6.50% due 1-15-03 @95.500 $ 1,432
1,000,000 *Theratx, Inc.
8.00% due [email protected] 1,020
2,452
OIL & GAS--0.2%
500,000 *Snyder Oil Corp.
7.00% due [email protected] 457
POLLUTION CONTROL--0.0%
580,000(a) Growth Environmental, Inc.
9.00% due [email protected] --
RESTAURANTS 0.7%
1,250,000 *Hometown Buffet, Inc.
7.00% due 12-1-02 @121.250 1,516
RETAIL--0.0%
600,000(a) Zam's, Inc.
7.50% due 10-31-00 @0.000 --
SCHOOLS--0.9%
1,250,000 *Youth Services International, Inc.
7.00% due 2-01-06 @142.455 1,781
TOTAL CONVERTIBLE DEBT OBLIGATIONS
(COST $7,721,000) 6,206
Commercial Paper - 2.3%
<CAPTION>
Face
Amount Value
<C> <S> <C>
$4,792,000 American Express Corp.
5.39%, due 7-1-96 $ 4,792
TOTAL COMMERCIAL PAPER
(COST: $4,792,000) 4,792
--------
TOTAL INVESTMENTS--102.1%
(COST: $151,840,000) 211,800
</TABLE>
Covered Call Options - (0.7%)
<TABLE>
<CAPTION>
Contracts Value
<S> <C> <C>
100 Applix, Inc. July $45 $ --
60 Ascend Communications, Inc. July $70 (4)
100 Citrix Sysytems, Inc. July $40 (22)
40 Dura Pharmaceuticals, Inc. July $55 (14)
160 Dura Pharmaceuticals, Inc. July $65 (18)
250 Electronics for Imaging, Inc. October $70 (256)
200 JLG Industries, Inc. July $85 (55)
25 JLG Industries, Inc. July $90 (6)
150 Just For Feet, Inc. September $55 (60)
40 Mylex Corp. August $30 --
150 Premisys Communications, Inc. July $65 (32)
65 Systemsoft Corp. July $65 (4)
450 Systemsoft Corp. August $65 (110)
100 U.S. Robotics Corp. August $70 (194)
300 U.S. Robotics Corp. November $70 (701)
--------
Total Covered Call Options (1,476)
(Premium received: $1,727,000)
LIABILITIES LESS OTHER ASSETS--(1.4)% (2,874)
--------
NET ASSETS--100.0% $207,450
========
</TABLE>
Notes to Portfolio of Investments
* Income producing security during the period ended June 30, 1996.
**The aggregate market value of stocks held in escrow at June 30, 1996
covering open covered call options written was $13,150,000.
Based on the cost of investments of $151,840,000 for federal income tax
purposes at June 30, 1996, the aggregate gross unrealized appreciation was
$70,315,000, the aggregate gross unrealized depreciation was $10,355,000 and
the net unrealized appreciation of investments was $59,560,000.
(a) The following securities are subject to legal or contractual restrictions
on sale. They were valued at cost on the dates of acquisition and at fair
value as determined by the board of trustees of the Fund as of June 30, 1996.
The aggregate value of restricted securities was $912,000, or 0.4% of net
assets, at June 30, 1996.
Retirement Care Associates, Inc. 88,888 shares purchased in July, 1995 at a
cost of $683,000 and 17,364 shares purchased in August, 1995 at a cost of
$133,000.
Growth Environmental, Inc. $580,000 face amount convertible debt purchased
in May, 1994 at a cost of $580,000.
Zam's, Inc. $600,000 face amount convertible debt purchased in November,
1993 at a cost of $600,000.
See notes to Portfolio of Investments.
5
<PAGE>
OBERWEIS MICRO-CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (Value in thousands)
Equity Securities - 85.6%
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
AIRLINES--1.3%
60,000 Frontier [email protected] $ 578
CHEMICALS--0.4%
10,000 CFC International [email protected] 163
COMMERCIAL--LEASING--0.9%
22,000 Rockford Industries, [email protected] 393
COMMERCIAL SERVICES--3.3%
28,000 ATC [email protected] 368
15,000 Analytical Surveys, [email protected] 334
20,000 Automobile Protection [email protected] 79
5,000 Clinitrials Research, [email protected] 208
20,000 Digital Solutions, [email protected] 99
5,000 ITI Technologies, [email protected] 165
26,000 RCM Technologies, [email protected] 234
1,487
COMMUNICATIONS--1.6%
40,000 Technology Service Units @11.125 445
30,000 World Access, [email protected] 285
730
COMPUTER--EQUIPMENT/HARDWARE--0.6%
9,000 Brooktrout Technology [email protected] 252
COMPUTER MEMORY DEVICES--6.2%
30,000 Ciprico, [email protected] 458
70,000 Interpoint [email protected] 980
35,000 Intevac, [email protected] 516
35,000 Silicon Storage [email protected] 481
25,000 Smart Modular [email protected] 400
2,835
COMPUTER--OPTICAL RECOGNITION--0.5%
15,000 Percon, [email protected] 210
COMPUTER PERIPHERALS--0.8%
35,000 Alpharel, [email protected] 212
7,000 Trident International, [email protected] 152
364
COMPUTER SERVICES--0.8%
10,000 Innodata [email protected] 34
15,000 Metatec Corporation--CL [email protected] 154
15,000 TechForce [email protected] 90
2,000 Whitmann-Hart, [email protected] 72
350
COMPUTER SOFTWARE--1.6%
25,000 [email protected] 381
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
30,000 Mathsoft, [email protected] $ 176
2,000 Project Software & [email protected] 94
8,000 Smith Micro Software, [email protected] 96
747
CONSUMER PODUCTS--
MISCELLANEOUS--0.8%
25,000 Platinum Entertainment, [email protected] 387
COSMETICS--0.7%
15,000 Amrion, [email protected] 233
10,000 Parlux Fragrances, [email protected] 101
334
DIRECT MARKETING--2.3%
80,000 Multiple Zones Int'l, [email protected] 1,060
DIVERSIFIED OPERATIONS--0.8%
4,000 Lynch [email protected] 352
ELECTRICAL--CONTROL INSTRUMENTS--0.8%
26,000 Unit Instruments, [email protected] 361
ELECTRICAL EQUIPMENT--2.1%
100,000 WPI Group, [email protected] 975
ELECTRONICS--COMPONENTS/
SEMICONDUCTORS--9.9%
60,000 CFM [email protected] 600
60,000 Ferrofluids [email protected] 810
30,000 JPM [email protected] 251
50,000 Photon Dynamics, [email protected] 475
37,500 Praegitzer Industries, [email protected] 645
120,000 R F Power [email protected] 758
19,000 Ross Technology, [email protected] 228
30,000 Smartflex [email protected] 450
10,000 Vitesse Semiconductor [email protected] 240
20,000 Vitronics [email protected] 40
4,497
ELECTRONICS--LASER SYSTEM/
COMPONENTS--1.9%
60,000 Excel Technology @9.250 555
15,000 Electro Scientific [email protected] 315
870
ELECTRONICS--MEASURING
INSTRUMENTS--1.8%
40,000 KVH Industries, [email protected] 365
10,000 Thermo Voltek [email protected] 193
3,000 Thermospectra [email protected] 47
5,000 Zygo [email protected] 219
824
</TABLE>
See notes to Portfolio of Investments.
6
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
ELECTRONICS--MILITARY SYSTEMS--1.4%
20,000 Computer Research, [email protected] $ 25
30,200 Diagnostic/Retrieval [email protected] 332
5,000 Nu Horizons [email protected] 55
4,000 Stanford [email protected] 225
637
ELECTRONICS--MISCELLANEOUS--1.6%
25,000 Nice Systems, Ltd [email protected] 475
6,000 Proxim, [email protected] 242
717
ELECTRONICS--PARTS DISTRIBUTOR--0.3%
10,000 Sterling [email protected] 135
ENERGY DEVELOPMENT--0.7%
10,000 York [email protected] 319
FINANCE--CONSUMER LOANS--0.9%
55,000 ACC Consumer Finance [email protected] 413
FOOD--MISCELLANEOUS--2.2%
60,000 Unimark Group [email protected] 998
HOUSEHOLD APPLIANCE--0.6%
40,000 Iona Appliance, [email protected] 255
LEISURE--0.8%
6,250 CPAC [email protected] 64
5,000 Golf Enterprises, [email protected] 59
10,000 NTN Canada, [email protected] 73
10,000 *Todd AO [email protected] 165
361
MACHINERY--MISCELLANEOUS--3.9%
25,000 A.S.V. [email protected] 469
100,000 Impact [email protected] 306
60,000 PPT Vision, [email protected] 743
20,000 Schmitt Industries, [email protected] 253
1,771
MEDIA--BOOKS--2.1%
37,000 Advanced Marketing [email protected] 476
6,000 Educational Development [email protected] 53
45,000 Individual Investor [email protected] 405
934
MEDICAL/DENTAL SUPPLIES--4.1%
50,000 Cohr [email protected] 1,187
8,000 Conmed [email protected] 213
85,000 Contour Medical, [email protected] 446
</TABLE>
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
5,000 Medicore [email protected] $ 21
1,867
MEDICAL--DRUGS--1.4%
15,000 Medicis [email protected] 619
MEDICAL--OUTPATIENT CARE--4.9%
135,000 Diagnostic Health [email protected] 911
97,900 *Health [email protected] 1,138
10,000 Housecall Medical [email protected] 191
2,240
MEDICAL--PRODUCTS--2.6%
52,500 Biosource International, [email protected] 474
10,000 Capstone Pharmacy [email protected] 129
10,000 Cedar Group, [email protected] 31
70,000 Exactech, [email protected] 560
1,194
METAL--PRODUCTION/FABRICATION--0.5%
50,000 Dynamic Materials [email protected] 237
PAPER & PAPER PRODUCTS--0.2%
5,000 *Republic Group, [email protected] 71
PHARMACEUTICAL PRODUCTS--0.1%
1,412 Polfa [email protected] 29
POLLUTION CONTROL/EQUIPMENT--1.9%
40,000 American ECO [email protected] 340
37,500 CET Enviromental [email protected] 361
10,000 United Air [email protected] 41
45,000 Waste Technology [email protected] 110
852
RESTAURANTS--3.2%
28,000 Blimpie International, [email protected] 409
55,000 Logan's Roadhouse, [email protected] 1,031
1,440
RETAIL--MISCELLANEOUS--2.7%
15,000 Gadzooks, [email protected] 484
10,000 Maxim Group, [email protected] 141
10,000 Alrenco, [email protected] 180
30,000 Rent-Way, [email protected] 409
1,214
RETAIL--WHOLESALE COMPUTERS--1.7%
70,000 En Pointe Technologies, [email protected] 779
</TABLE>
See notes to Portfolio of Investments.
7
<PAGE>
Equity Securities - continued
<TABLE>
<CAPTION>
Shares Company (Closing Price) Value
<C> <S> <C>
TELECOMMUNICATIONS--5.9%
40,000 AML Communications, [email protected] $ 910
10,000 Anicom, [email protected] 157
5,000 Computer Telephone [email protected] 65
25,000 Osicom Technologies, [email protected] 409
40,000 Spectralink [email protected] 385
8,000 Tollgrade Communications, [email protected] 184
44,000 Vaughn Communications, [email protected] 561
2,671
TEXTILE APPAREL--2.5%
60,000 Sport-Haley, [email protected] 877
200,000 U S Transportation [email protected] 244
1,121
TRANSPORTATION--SERVICES--0.3%
40,000 Golden Eagle [email protected] 158
TOTAL EQUITY SECURITIES
(COST: $35,906,000) 38,801
Commercial Paper--22.8%
<CAPTION>
Face Amount Value
<C> <S> <C>
$2,231,000 American Express Corp. $ 2,231
5.39% due 7-1-96
2,200,000 Associated Corp. 2,200
5.37% due 7-2-96
2,200,000 Cigna Corp. 2,200
5.10% due 7-1-96
2,200,000 Ford Motor Credit 2,199
5.37% due 7-3-96
1,520,000 General Electric Corp. 1,520
5.35% due 7-3-96
TOTAL COMMERCIAL PAPER
(COST: $10,350,000) 10,350
-------
TOTAL INVESTMENTS--108.4%
(COST: $46,256,000) 49,151
LIABILITIES LESS OTHER ASSETS--(8.4%) (3,799)
-------
NET ASSETS $45,352
=======
</TABLE>
Notes to Portfolio of Investments
* Income producing security during the period ended June 30, 1996.
Based on the cost of investments of $46,256,000 for federal income tax
purposes at June 30, 1996, the aggregate gross unrealized appreciation was
$4,516,000 the aggregate gross unrealized depreciation was $1,621,000 and the
net unrealized appreciation of investments was $2,895,000.
See notes to Portfolio of Investments.
8
<PAGE>
THE OBERWEIS FUNDS
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(in thousands)
<TABLE>
<CAPTION>
EMERGING GROWTH MICRO-CAP
PORTFOLIO PORTFOLIO
--------------- ---------
<S> <C> <C>
ASSETS:
Investments securities at market value
(Cost: $151,840,000 and $46,256,000 respectively) $211,800 $49,151
Cash -- 251
Receivable from fund shares sold 1,423 --
Receivable from securities sold 2,398 364
Dividends and interest receivable 132 --
Deferred organization expense -- 56
Prepaid expenses 26 3
-------- -------
Total Assets 215,779 49,825
LIABILITIES:
Cash overdraft 1,032 --
Options written, at value (Premiums received:
$1,727,000) 1,476 --
Payable for fund shares repurchased 2,834 1,623
Payable for securities purchased 2,754 2,773
Payable to adviser 156 49
Payable to distributor 48 11
Accrued expenses 29 17
-------- -------
Total Liabilities 8,329 4,473
-------- -------
NET ASSETS $207,450 $45,352
======== =======
ANALYSIS OF NET ASSETS:
Aggregate paid in capital $131,829 $41,625
Accumulated net realized gain from investment
transactions 15,410 832
Net unrealized appreciation of investments 60,211 2,895
-------- -------
Net assets $207,450 $45,352
======== =======
THE PRICING OF SHARES:
Net asset value and offering price per share
EMERGING GROWTH PORTFOLIO:
($207,449,692 divided by 5,883,684 shares
outstanding) $ 35.26
========
MICRO-CAP PORTFOLIO:
($45,352,154 divided by 3,257,523 shares
outstanding) $ 13.92
=======
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
THE OBERWEIS FUNDS
STATEMENT OF OPERATIONS
Six months ended June 30, 1996
(in thousands)
<TABLE>
<CAPTION>
EMERGING GROWTH MICRO-CAP
PORTFOLIO PORTFOLIO
--------------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 30 $ 2
Interest 628 200
------- ------
Total Investment Income 658 202
EXPENSES:
Advisory fees 362 69
Management fees 349 46
Distribution fees 218 29
Transfer agent fees 116 28
Custodian fees 74 16
Professional fees 53 5
Shareholder reports 31 2
Registration fees 12 1
Insurance 8 --
Organization expenses -- 6
Trustee fees 5 1
Other 2 --
------- ------
Total Expenses 1,230 203
------- ------
NET INVESTMENT LOSS (572) (1)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain from investment transactions 9,911 832
Net realized loss from covered call options
written (662) --
------- ------
Total net realized gain on investments 9,249 832
Increase in net unrealized appreciation of
investments 17,562 2,895
------- ------
Net realized and unrealized gain on investments 26,811 3,727
------- ------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $26,239 $3,726
======= ======
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE OBERWEIS FUNDS
STATEMENT OF CHANGES IN NET ASSETS
(in thousands)
<TABLE>
<CAPTION>
EMERGING GROWTH PORTFOLIO MICRO-CAP PORTFOLIO
------------------------------- -------------------
PERIOD ENDED YEAR ENDED JANUARY 1, 1996-
JUNE 30, 1996 DECEMBER 31, 1995 JUNE 30, 1996
------------- ----------------- -------------------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment loss $ (572) $ (1,441) $ (1)
Net realized gain (loss) from investment transactions 9,249 12,380 832
Increase (decrease) in unrealized appreciation of investments 17,562 27,643 2,895
-------- -------- -------
Net increase (decrease) in net assets resulting from operations 26,239 38,582 3,726
-------- -------- -------
FROM DISTRIBUTIONS:
Distributions from net realized gains on investments -- (6,202) --
-------- -------- -------
FROM CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 131,317 54,110 50,948
Shares issued in reinvestment of distribution -- 5,983 --
Redemption of shares (84,769) (47,824) (9,422)
-------- -------- -------
Net increase (decrease) from capital share transactions 46,548 12,269 41,526
-------- -------- -------
Total increase (decrease) in net assets 72,787 44,649 45,252
NET ASSETS:
Beginning of period 134,663 90,014 100
-------- -------- -------
End of period $207,450 $134,663 $45,352
======== ======== =======
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Description of Business. The Oberweis Funds (the "Trust") is registered under
the Investment Company Act of 1940 as a diversified open-end management
investment company. The Trust is authorized to operate numerous portfolios
under various trading strategies. Effective January 1, 1996, the Trust
consists of two portfolios: the Oberweis Emerging Growth Portfolio, which
prior to January 1, 1996 was known as the Oberweis Emerging Growth Fund and
the Oberweis Micro-Cap Portfolio (collectively, the Funds).
Investment valuation. Investments are stated at value. Each listed and
unlisted security for which last sale information is regularly reported is
valued at the last reported sales price on that day. If there has been no sale
on such day, then such security is valued at the current day's bid price. Any
unlisted security for which last sale information is not regularly reported
and any listed debt security which has an inactive listed market for which
over-the-counter market quotations are readily available is valued at the
highest closing bid price determined on the basis of reasonable inquiry.
Restricted securities and any other securities or other assets for which
market quotations are not readily available are valued by appraisal at their
fair value as determined in good faith under procedures established by and
under the general supervision and responsibility of the Board of Trustees.
Short-term debt obligations, commercial paper and repurchase agreements are
valued on the basis of quoted yields for securities of comparable maturity,
quality and type or on the basis of amortized costs.
Fund share valuation. Fund shares are sold and redeemed on a continuous basis
at net asset value. On each day the New York Stock Exchange is open for
trading, the net asset value per share is determined as of the later of the
close of the New York Stock Exchange or the Chicago Board Options Exchange by
dividing the total value of the Fund's investments and other assets, less
liabilities, by the number of Fund shares outstanding.
Investment transactions and investment income. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date, and interest income is
recorded on the accrual basis and includes amortization of premium and
discount. Realized gains and losses from investment transactions are reported
on an identified cost basis. Gains and losses on premiums from expired options
are realized on date of expiration.
Repurchase agreements. Repurchase agreements are fully collateralized by U.S.
Treasury and Government agency securities. All collateral is held through the
Fund's custodian bank and is monitored daily by the Funds so that its market
value exceeds the carrying value of the repurchase agreement.
Federal income taxes and dividends to shareholders. The Funds have complied
with the special provisions of the Internal Revenue Code available to
investment companies and therefore no federal income tax provision is
required. Dividends payable to its shareholders are recorded by the Fund on
the ex-dividend date. The Oberweis Emerging Growth Portfolio paid a dividend
consisting of net long term realized gains from the sale of securities of
$6,202,000 in 1995 to shareholders of record on November 27, 1995.
12
<PAGE>
Organizational Expenses. Organizational expenses of the Oberweis Micro-Cap
Portfolio have been capitalized and are being amortized on a daily basis using
the straight line method over five years.
Use of Estimates. The presentation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results may differ slightly from those
estimates.
2. TRANSACTIONS WITH AFFILIATES
The Funds have written agreements with Oberweis Asset Management, Inc. ("OAM")
as the Funds' investment adviser and manager, and The Chicago Corporation
("TCC") as the Fund's principal distributor.
Advisory agreement. During the period ended June 30, 1996, the Emerging Growth
Portfolio paid monthly investment advisory fees at an annual rate equal to
.45% of the first $50,000,000 of average daily net assets and .40% of average
daily net assets in excess of $50,000,000. The Micro-Cap Portfolio paid
monthly investment advisory fees at an annual rate equal to .60% of average
daily net assets. For the period ended June 30, 1996, the Emerging Growth
Portfolio and Micro-Cap Portfolio incurred advisory fees totalling $362,000
and $69,000, respectively.
Management agreement. During the period ended June 30, 1996, for management
services and facilities furnished, the Emerging Growth Portfolio and Micro-Cap
Portfolio each paid a monthly fee at an annual rate equal to .40% of average
daily net assets. For the period ended June 30, 1996, the Emerging Growth
Portfolio and Micro-Cap Portfolio incurred a management fees totalling
$349,000 and $46,000, respectively.
Expense Reimbursement. OAM is obligated to reduce its management fees or
reimburse the Funds to the extent that total ordinary operating expense, as
defined, exceed in any one year the following amounts expressed as a
percentage of each Fund's average daily net assets: 2% of the first
$25,000,000; plus 1.8% of the next $25,000,000; plus 1.6% of average daily net
assets in excess of $50,000,000; or such lower percentage as may be required
by any state where each Fund's shares are registered. For the period ended
June 30, 1996 no reimbursement was required.
Officers and trustees. Certain officers or trustees of the Funds are also
officers or directors of OAM. During the period ended June 30, 1996. The Funds
made no direct payments to its officers and paid $6,000 to its unaffiliated
trustees. James D. Oberweis, the Fund's portfolio manager, is employed by OAM
and TCC.
Distribution and shareholder service expense. The Funds have a distribution
and shareholder services agreement with The Chicago Corporation (TCC). For
services under the distribution and shareholder servicing agreement, each Fund
pays TCC a fee at the annual rate of .25% of the average daily net assets and
reimbursement for certain out-of-pocket expenses. For the period ended June
30, 1996, the Emerging Growth Portfolio and Micro-Cap Portfolio incurred
distribution fees totalling $218,000 and $29,000, respectively.
13
<PAGE>
Commissions. The Funds pay TCC for executing some of the Funds' agency
security transactions at competitive rates, typically $.03 per share for both
portfolios. For the period ended June 30, 1996, the Emerging Growth Portfolio
and Micro-Cap Portfolio paid commissions of $11,733 and $1,095, respectively
to TCC.
3. INVESTMENT TRANSACTIONS
The cost of securities purchased and proceeds from securities sold during the
period ended June 30, 1996, other than options written and money market
investments, aggregated $94,386,468 and $49,950,186, respectively for the
Emerging Growth Portfolio and $38,438,087 and $3,363,913, respectively for the
Micro-Cap Portfolio.
Transactions in options written for the period ended June 30, 1996 in the
Emerging Growth Portfolio were as follows:
<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Options outstanding at
beginning of period 3,870 $ 1,493,000
Options written 8,410 2,762,000
Options expired (6,315) (121,000)
Options closed (3,385) (899,000)
Options assigned (390) (1,508,000)
------ -----------
Options outstanding at end of
period 2,190 $ 1,727,000
</TABLE>
The premiums received provide a partial hedge (protection) against declining
prices and enables the Fund to generate a higher return during periods when
OAM does not expect the underlying security to make any major price moves in
the near future but still deems the underlying security to be, over the long
term, an attractive investment for the Fund.
4. CAPITAL SHARE TRANSACTIONS
The following table summarizes the activity in capital shares of each Fund:
<TABLE>
<CAPTION>
EMERGING GROWTH EMERGING GROWTH
PORTFOLIO PORTFOLIO MICRO-CAP PORTFOLIO
SIX MONTHS ENDED JUNE YEAR ENDED DECEMBER 31, PERIOD ENDED JUNE 30,
30, 1996 1995 1996
------------------------ ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 3,681,000 $131,317,000 2,039,000 $ 54,110,000 3,922,000 $50,948,000
Shares issued in
reinvestment of
dividends -- -- 208,000 5,983,000 -- --
Less shares redeemed (2,427,000) (84,769,000) (1,820,000) (47,824,000) (674,000) (9,422,000)
---------- ------------ ---------- ------------ --------- -----------
Net increase (decrease)
from capital share
transactions 1,254,000 $ 46,548,000 427,000 $ 12,269,000 3,248,000 $41,526,000
</TABLE>
A .25% redemption fee is charged on the Micro-Cap Portfolio fund share
redemptions. The redemption proceeds are used to reimburse the Fund for
expenses it incurs in connection with shareholder redemptions.
14
<PAGE>
FINANCIAL HIGHLIGHTS
EMERGING GROWTH PORTFOLIO
Per share income and capital changes for a share outstanding throughout the
period is as follows (c):
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED ---------------------------------------------------
JUNE 30, 1996 1995 1994 1993 1992 1991
------------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period $ 29.09 $ 21.41 $ 22.19 $ 20.90 $ 18.39 $ 12.11
Income from investment
operations:
Net investment loss (.11) (.33) (.22) (.22) (.21) (.09)
Net realized and
unrealized gain (loss)
on investments 6.28 9.43 (.56) 2.25 2.72 10.64
-------- -------- ------- -------- ------- -------
Total from investment
operations 6.17 9.10 (.78) 2.03 2.51 10.55
Less Distributions:
Distribution from net
realized gains on
investments -- (1.42) -- (.74) -- (4.27)
-------- -------- ------- -------- ------- -------
Net asset value at end
of period $ 35.26 $ 29.09 $ 21.41 $ 22.19 $ 20.90 $ 18.39
======== ======== ======= ======== ======= =======
Total Return (%) 21.2(e) 42.6 (3.5) 9.7 13.7 87.1(b)
Ratio/Supplemental Data
Net Assets at end of
period (in thousands) $207,450 $134,663 $90,014 $104,324 $54,063 $19,730
Ratio of expenses to
average net assets (%) 1.41(d) 1.73(a) 1.78 1.80(a) 1.99(a) 2.13(a)
Ratio of net investment
loss to average net
assets (%) 0.65(d) (1.24) (1.06) (1.04) (1.14) (1.27)
Portfolio turnover rate
(%) 61 79 66 70 63 114
Average commission rate
paid 0.0311 -- -- -- -- --
</TABLE>
- --------
Notes:
(a) Net of expense reimbursement from related parties. Expense ratios would
have been 1.77%, 1.82%, 2.41% and 3.01% for 1995, 1993, 1992 and 1991,
respectively before expense reimbursement.
(b) A sales load of 4% was charged until December 31, 1991 and is not reflected
in the total return figures above.
(c) The per share data was determined using average shares outstanding during
the year.
(d) Annualized
(e) Total return has not been annualized.
15
<PAGE>
FINANCIAL HIGHLIGHTS
MICRO-CAP PORTFOLIO
Per share income and capital changes for a share outstanding throughout the
period is as follows (a):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
----------------
<S> <C>
Net asset value at beginning of period $ 10.00
Income from investment operations:
Net investment loss --
Net realized and unrealized gain (loss) on investments 3.92
-------
Total from investment operations 3.92
Less Distributions:
Distribution from net realized gains on investments --
-------
Net asset value at end of period $ 13.92
=======
Total Return (%) 39.2(c)
Ratio/Supplemental Data
Net Assets at end of period (in thousands) $45,352
Ratio of expenses to average net assets (%) (b) 1.75
Ratio of net investment loss to average net assets (%) (b) (0.01)
Portfolio turnover rate (%) 40
Average commission rate paid 0.0300
</TABLE>
- --------
Notes:
(a) The per share data was determined using average shares outstanding during
the period.
(b) Annualized.
(c) Total return has not been annualized.
16
<PAGE>
LOGO THE
OBERWEIS FUNDS
- --------------------------------------------------------------------------------
James D. Oberweis Thomas J. Burke
Trustee and President Trustee
Douglas P. Hoffmeyer Edward F. Streit
Trustee Trustee
Patrick B. Joyce Martin L. Yokosawa
Executive Vice President Vice President
Treasurer
James M. Roberts Anita I. Mraz
Vice President Secretary
MANAGER AND INVESTMENT ADVISOR
Oberweis Asset Management, Inc.
951 Ice Cream Dr., North Aurora, IL 60542
1-800-323-6166
DISTRIBUTOR
The Chicago Corporation
208 South LaSalle, Chicago, Illinois 60604
CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
P.O. Box 419042, Kansas City, Missouri 64141
1-800-245-7311
COUNSEL
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Chicago, Illinois 60601
SEMI-ANNUAL REPORT
---------------------------------------
UNAUDITED
LOGO THE OBERWEIS FUNDS
EMERGING GROWTH PORTFOLIO JUNE 30, 1996
MICRO-CAP PORTFOLIO
951 ICE CREAM DR.
NORTH AURORA, IL 60542
(800) 323-6166
