<PAGE>
PRESIDENT'S LETTER
Dear Oberweis Funds Shareholder:
The Oberweis Funds invest in extraordinarily rapidly growing, profitable
companies. This requirement of profits differentiates us from many growth funds
which buy companies before they achieve profitability. In 1999, buying
unprofitable companies worked. In 1999, many of the best stock market winners
lost money on an operating basis. In fact had you bought shares in every company
that lost money last year, you would have done quite well as an investor. We
believe this year and most future years will be quite different. We believe
investors are beginning to return to more traditional demands for corporate
profits.
Even though we do not invest in unprofitable companies, Internet or otherwise,
your Oberweis Funds had a great year. In 1999, the Mid-Cap Portfolio gained
112.7%, the Emerging Growth Portfolio gained 53.2%, and the Micro-Cap Portfolio
gained 19.5%. Investor interest seemed to spread from the large-caps in 1997 and
1998 to the mid-caps in 1999. It seems quite possible that investor interest may
continue to spread to small-cap stocks such as those held by the Emerging Growth
and Micro-Cap Portfolios. While the valuation of companies in the Mid-Cap
Portfolio has now approached what we consider to be reasonable in relation to
over-all market valuations, we consider the Emerging Growth Portfolio and
especially the Micro-Cap Portfolio to still be quite undervalued in relation to
the market. In fact, while the average growth rate for the companies in all
three portfolios is in excess of 50%, the Price/Earnings Ratio for the Micro-Cap
Fund at year's end was only 19.8 times this year's estimated earnings. For the
Emerging Growth Portfolio it was a still moderately low 29.8 while for the
Mid-Cap it was a more expensive 56.8. The Micro-Cap Portfolio was selling at a
low P.E. to growth rate ratio of .6, the Emerging Growth Portfolio at .9, and
the Mid-Cap Portfolio at 1.3. The weighted average market cap in the Micro was
$301 million; in the Emerging Growth, $1.6 billion; and in the Mid-Cap, $3.4
billion. Those averages are likely to decline this year as profits are realized
on some of the holdings which have experienced huge gains and the proceeds are
reinvested in new ideas. The median market caps are much smaller at $90 million
for Micro-Cap, $418 million for Emerging Growth, and $2 billion for Mid-Cap. The
average Price to Sales ratios for the three portfolios are 1.7, 2.0, and 5.6,
respectively. Average return on equity for the companies in the three portfolios
was 18.1%, 21.9%, and 16.9%, respectively.
Last year in my letter to you I pointed out that I was hopeful that market
psychology towards our type of profitable, rapidly growing companies had
changed. It appears that such a change has in fact occurred. I suggested looking
at the market bottom on October 8, 1998, as possibly the turning point. Since
that day, the Micro-Cap Portfolio has risen 107%, the Emerging Growth 156%, and
the Mid-Cap 283%, compared to 53% for the S&P 500 Index (not including
dividends), an amazing change after a couple of difficult years.
Finally, I would like to sincerely thank you for investing with me in our funds.
Short term volatility can be frustrating; but over the long term, accepting that
volatility- or even taking advantage of it by buying on dips - may produce
reasonably attractive investment results.
If you have any questions about your account, please contact your investment
counselor or call shareholder services at 800-245-7311. If you have questions
about the fund's investment policies, please feel free to call me at
800-323-6166 (or 630-801-6000 in the Chicago area).
Sincerely,
/s/ James D. Oberweis
James D. Oberweis
President
1
<PAGE>
THE OBERWEIS FUNDS
MANAGEMENT DISCUSSION AND ANALYSIS
The Oberweis Funds are positioned to take advantage of the long-term price
appreciation that occurs when the market places an appropriately high value on
fast growing, profitable companies. The market for such stocks continued to
progress quite strongly in 1999, especially for medium sized companies. For the
full year, the Mid-Cap Portfolio gained 112.7%, beating the 14.7% gain for the
S&P 400 Mid-Cap index by a very wide margin. The Emerging Growth Portfolio
gained a hefty 53.2%, well ahead of the 21.3% gain for the Russell 2000 index
and the 43.1 gain for the Russell 2000 Growth index. The Micro-Cap Portfolio
gained 19.5%.
Unprofitable company stocks, including Internet related companies, had a
generally good year in 1999. Yet the market also responded favorably to strong
earnings reports, even those from smaller companies. The Mid-Cap Portfolio had
strong gains in software companies like Citrix, Siebel Systems, and Check Point
Software, as well as in technology companies like Uniphase (now JDS Uniphase)
and Vitesse, and biotechnology company Biogen. The Emerging Growth Portfolio
had large gains in Abacus Direct when it was acquired by Double Click, in
Micromuse and Veritas Software, and in Broadvision, Qlogic, RF Micro Devices,
Qiagen, and King Pharmaceuticals. The Micro-Cap Portfolio had nice profits in
Gilat Communications, toy company JAKKS Pacific, and Verity, Inc.
The Portfolio turnover rate for the Mid-Cap Portfolio was 153%. For the Emerging
Growth, it was a quite low 63%, and for the Micro-Cap, only 46%. The expense
ratios for the three portfolios were 1.59% for Emerging Growth and 2% for
Mid-and Micro-Cap after expense reimbursement. The expense ratios would have
been 1.59%, 2.43%, and 2.17%, respectively, had there been no reimbursement.
Surprisingly, the Portfolio with the highest turnover rate and highest expense
ratio (the Mid-Cap) also had the highest returns last year. (We don't believe
there is any cause and effect relationship there.) The average commission rate
paid by each portfolio for agency transactions (generally on the NYSE, Instinet,
and Bloomberg Trading System) was again approximately three cents per share
traded. We believe this rate compares quite favorably to most other mutual
funds. The lower spreads now present in the NASDAQ market also helped lower our
total transaction costs in 1999.
2
<PAGE>
THE OBERWEIS FUNDS
MANAGEMENT DISCUSSION AND ANALYSIS
Average Annual Total Returns (1)
Periods ended 12/31/99
Since
One Five Ten Inception
Year Years Years 1/7/87
-----------------------------------------
OBEGX +53.2% +18.8% +18.3% +15.4%
Russell 2000 +21.3% +16.7% +13.4% +12.0%
Growth of an Assumed $10,000 Investment
from January 7, 1987 to December 31, 1999
Oberweis Emerging Growth
Portfolio (OBEGX) Russell 2000
----------------- ------------
10,000 10,000
1987 9,094 8,537
1988 9,612 10,664
1989 12,012 12,395
1990 12,062 9,977
1991 22,573 14,571
1992 25,653 17,254
1993 28,147 20,515
1994 27,157 20,166
1995 38,716 25,902
1996 47,413 30,169
1997 43,340 36,915
1998 42,009 35,974
1999 64,348 43,622
- --------------------------------------------------------------------------------
Average Annual Total Returns (1)
Periods ended 12/31/99
Since
One Inception
Year 1/1/96
-------------------------------
OBMCX +19.5% +14.1%
Russell 2000 +21.3% +13.9%
Growth of an Assumed $10,000 Investment
from January 1, 1996 to December 31, 1999
Oberweis Micro-Cap
Russell 2000 Portfolio (OBMCX)
------------ -----------------
1/1/96 9,999.71 10,000
12/31/96 11,647.2 12,280
12/31/97 14,252 13,556
12/31/98 13,888.66 14,180
12/31/99 16,840.84 16,940
- --------------------------------------------------------------------------------
Average Annual Total Returns (1)
Periods ended 12/31/99
Since
One Inception
Year 9/15/96
-------------------------------
OBMDX +112.7% +37.1%
Russell 2000 +21.3% +14.2%
S&P 400 Mid-Cap +14.7% +22.2%
Growth of an Assumed $10,000 Investment
from September 15, 1996 to December 31, 1999
Oberweis Mid-Cap Standard & Poor's
Portfolio (OBMDX) 400 Mid-Cap Russell 2000
----------------- ----------- ------------
9/15/96 10,000 10,000 10,000
12/31/96 10,290 10,749 10,693
12/31/97 10,846 14,189 13,084
12/31/98 13,271 16,872 12,751
12/31/99 28,230 19,351 15,467
(1)Performance is historical and does not represent future results. Investment
returns and principal value vary, and you may have a gain or loss when you sell
shares. Results include the reinvestment of all dividends and capital gains
distributions. The Standard & Poor's 400 Mid-Cap Index is a
capitalization-weighted index that measures the performance of the mid-range
sector of the U.S. stock market. The Russell 2000 Index is an unmanaged index
consisting of 2000 small cap securities with an average market capitalization of
approximately $644 million. A sales load of 4% was charged on the Oberweis
Emerging Growth Portfolio until December 31, 1991 and is not reflected in the
total return figures or graph above.
3
<PAGE>
OBERWEIS EMERGING GROWTH PORTFOLIO
Portfolio of Investments
December 31, 1999 (value in thousands)
Shares Company (Closing Price) Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 98.9%
Aerospace / Defense Equipment - 0.2%
10,000 Heico Corp @ 21.812 $ 218
---------
Computer - Integrated Systems - 5.2%
20,000 Corsair Communications, Inc. @ 8.125 163
200,000 Javelin Systems, Inc. @ 9.187 1,837
*100,000 Mercury Computer Systems @ 35.000 3,500
---------
5,500
---------
Computer - Local Networks - 2.3%
50,000 Performance Technologies @ 17.375 869
*20,000 Visual Networks, Inc. @ 79.250 1,585
---------
2,454
---------
Computer - Manufacturers - 2.4%
40,000 Digital Lightwave, Inc. @ 64.000 2,560
---------
Computer - Memory Devices - 1.7%
140,000 Eccs, Inc. @ 12.625 1,767
---------
Computer Peripherials - 2.5%
80,000 Cam Data Systems, Inc. @ 17.875 1,430
*30,000 Cybex Computer Products @ 40.500 1,215
---------
2,645
---------
Computer Services - 6.6%
32,500 CGI Group, Inc. Class A@ 42.812 1,391
25,000 Cognizant Tech Solutions @ 109.312 2,733
10,000 Diamond Tech Partners, Inc. @ 85.937 859
30,000 4Front Technologies, Inc. @ 13.375 402
12,000 Photon Dynamics, Inc. @ 38.750 465
65,000 Source Information Management Company
@ 16.750 1,089
---------
6,939
---------
Computer Software - Desktop - 2.0%
*50,000 Verity, Inc. @ 42.562 2,128
---------
Computer Software - Education - 0.5%
40,000 Take-Two Interactive Software @ 12.937 517
---------
Computer Software - Enterprise - 11.5%
10,000 AVT Corp. @ 47.000 470
*90,000 Intranet Solutions, Inc. @ 37.000 3,330
40,000 Lightbridge,Inc. @ 27.750 1,110
30,000 Magic Software Enterprise @ 62.000 1,860
*20,000 Peregrine Systems @ 82.625 1,653
60,000 Radiant Systems @ 40.187 2,411
75,000(a) Softworks, Inc. @ 9.060 679
30,000 TTI Team Telecom @ 18.125 544
---------
12,057
---------
Electrical - Equipment / Components - 0.5%
10,000 Nice Systems Ltd. ADR @ 49.187 492
---------
Electronics - Components /
Semiconductors - 19.8%
15,000 ACT Manufacturing, Inc. @ 37.500 563
125,000 Candela Corp. @ 18.625 2,328
60,000 Ess Technology @ 22.187 1,331
62,500 Excel Technology, Inc. @ 17.937 1,121
*40,000 QLogic Corp. @ 159.875 6,395
6,000 Radisys Corp. @ 51.000 306
*80,000 RF Micro Devices, Inc. @ 68.437 5,475
*45,000 Transwitch Corp. @ 72.562 3,265
---------
20,784
---------
Food - Miscellaneous - 1.5%
30,000 Hain Food Group, Inc. @ 22.375 671
32,000 Monterey Pasta Company @ 3.937 126
100,000 Suprema Specialities @ 7.875 788
---------
1,585
---------
Household Appliances - 4.8%
150,000 Salton, Inc. @ 33.437 5,016
---------
Leisure - Products - 0.3%
10,000 Meade Instruments Corp. @ 28.500 285
---------
Medical - Biomed Genetics - 1.4%
20,000 Qiagen N.A. @ 75.500 1,510
---------
Medical / Dental Services - 5.4%
*230,000 Advance Paradigm, Inc. @ 21.562 4,960
73,000 Premier Research Worldwide @ 9.812 716
---------
5,676
---------
Medical - Ethical Drugs - 10.8%
80,000 Andrx Corp. @ 42.312 3,385
*120,000 King Pharmaceuticals, Inc. @ 56.062 6,727
70,000 Noven Pharmaceuticals @ 18.125 1,269
---------
11,381
---------
Medical - Instruments - 0.9%
10,000 Surmodics, Inc. @ 30.000 300
25,000 Ventana Medical Systems @ 24.875 622
---------
922
---------
Medical - Products - 3.9%
7,000 Inamed Corp. @ 43.875 307
100,000 Polymedia Corp. @ 23.125 2,312
40,000 Zoll Medical Corp. @ 38.187 1,528
---------
4,147
---------
Pollution Control - 0.9%
50,000 Stericycle, Inc. @ 18.812 941
---------
4
<PAGE>
OBERWEIS EMERGING GROWTH PORTFOLIO
Portfolio of Investments (cont'd.)
Shares Company (Closing Price) Value
- --------------------------------------------------------------------------------
Restaurants - 1.0%
30,000 Papa John's International, Inc. @ 26.062 $ 782
10,000 P.F. Changs China Bistro @ 24.875 249
---------
1,031
---------
Retail - Apparel - 5.1%
*60,000 American Eagle Outfitters @ 45.000 2,700
50,000 Chico's Fas, Inc. @ 37.625 1,881
46,000 Children's Place @ 16.437 756
---------
5,337
---------
Retail / Wholesale - Computers - 1.6%
40,000 Scansource, Inc. @ 40.562 1,622
---------
Telecommunications - Equipment - 5.2%
60,000 Audiovox Corp. @ 30.375 1,822
12,000 Carrier Access Corp. @ 67.312 808
30,000 C-Cor.net Corp. @ 76.625 2,299
15,000 Xeta Corp. @ 33.187 498
---------
5,427
---------
Telecommunications - Services - 0.9%
30,000 US Lec Corp. @ 32.250 967
---------
Total Common Stocks
(Cost: $53,443,000) $ 103,908
---------
Contracts Value
- --------------------------------------------------------------------------------
LONG PUT OPTIONS - 0.4%
30 NASDAQ 100 Stock Index 449
---------
Total Put Options
(Cost: $498,000) 449
---------
Total Investments - 99.3%
(Cost: $53,941,000) 104,357
---------
COVERED CALL OPTIONS - (1.1%)
100 Advance Paradigm, Inc., January $30 $ (2)
200 Advance Paradigm, Inc., March $35 (3)
100 American Eagle Outfitters, February $60 (4)
50 Cybex Computer Products, January $55 --
200 Intranet Solutions, Inc, January $30 (140)
200 Intranet Solutions, Inc., January $35 (75)
100 Intranet Solutions, Inc., January $40 (14)
200 King Pharmaceuticals, Inc., January $65 (31)
100 Mercury Computer Systems, February $35 (36)
200 Peregrine Systems, January $95 (57)
200 QLogic Corp., January $150 (340)
50 QLogic Corp., January $165 (48)
50 QLogic Corp., February $165 (82)
200 RF Micro Devices, Inc., January $95 (4)
300 RF Micro Devices, Inc., February $90 (66)
100 RF Micro Devices, Inc., February $95 (16)
100 Transwitch Corp., January $70 (58)
200 Verity, Inc., January $50 (36)
100 Verity, Inc., January $55 (8)
100 Verity, Inc., March $60 (32)
100 Visual Networks, Inc., January $75 (72)
100 Visual Networks, Inc., January $80 (44)
---------
Total Covered Call Options
(Premiums received : $873,000) (1,168)
Other Assets less Liabilities - 1.8% 1,939
---------
NET ASSETS - 100% $ 105,128
=========
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
* All or a portion of these stocks were held in escrow at December 31, 1999
to cover call options written. The aggregate market value was $18,859,000.
Based on the cost of investments of $53,941,000 for federal income tax purposes
at December 31, 1999, the aggregate gross unrealized appreciation was
$51,161,000, the aggregate gross unrealized depreciation was $745,000 and the
net unrealized appreciation of investments was $50,416,000.
All investments are non-income producing securities.
(a) The following security is subject to legal or contractual restrictions on
sale. It was valued at cost on the date of acquisition and at fair value as
determined by the board of trustees of the Fund as of December 31, 1999. The
aggregate value of the restricted security was $679,000 at December 31, 1999.
Softworks, Inc. 75,000 shares purchased in April, 1999 at a cost of
$675,000.
5
<PAGE>
OBERWEIS MICRO-CAP PORTFOLIO
Portfolio of Investments
December 31, 1999 (value in thousands)
Shares Company (Closing Price) Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.8%
Building - A/C & Heating Products - 0.3%
4,300 AAON, Inc. @ 14.375 $ 62
---------
Commercial Services - Misc. - 3.4%
20,000 Core, Inc. @ 9.562 191
20,000 Ict Group, Inc. @ 12.250 245
20,000 RMH Teleservices, Inc. @ 6.312 126
9,000 U.S. - China Industrial Exchange @ 18.250 164
---------
726
---------
Commercial Services - Security /
Safety - 1.3%
50,000 Digital Biometrics @ 3.375 169
10,000 Printrak International, Inc. @ 9.750 98
---------
267
---------
Commercial Services - Schools - 1.1%
12,500 New Horizons Worldwide, Inc. @ 11.875 148
10,000 Quest Education Corp. @ 8.750 88
---------
236
---------
Computer - Integrated Systems - 2.6%
60,000 Javelin Systems, Inc. @ 9.187 551
---------
Computer Local Networks - 1.2%
15,000 Performance Technologies @ 17.375 261
---------
Computer Memory Devices - 3.6%
60,000 Eccs, Inc. @ 12.625 758
---------
Computer Peripherials - 3.3%
20,000 Cam Data Systems, Inc. @ 17.875 357
5,000 Hauppauge Digital, Inc. @ 20.125 101
6,000 Loronix Information System @ 19.750 119
20,000 Manatron, Inc. @ 6.375 127
---------
704
---------
Computer Software - Desktop - 8.0%
*40,000 Verity, Inc. @ 42.562 1,703
---------
Computer Software - Enterprise - 9.8%
10,000 Aremissoft Corp. @ 32.500 325
10,000 Intranet Solutions, Inc. @ 37.000 370
10,000 Magic Software Enterprise @ 62.000 620
60,000 Netsmart Technologies, Inc. @ 6.375 383
30,000 Talx Corp. @ 13.250 397
---------
2,095
---------
Computer Software - Medical - 4.4%
*30,000 Infocure Corp. @ 31.187 936
---------
Consumer Products - Miscellaneous- 0.4%
6,000 Koala Corp. @ 14.000 84
---------
Electrical - Military Systems - 3.6%
40,000 Advanced Communication Systems
@ 19.125 765
---------
Electronics - Measuring Instruments - 1.0%
10,000 Measurement Specialities, Inc. @ 20.875 209
---------
Electronics - Semiconductors /
Components - 11.6%
40,000 Candela Corp. @ 18.625 745
*50,000 Genesis Microchip, Inc. @ 21.125 1,056
70,000 Ikos Systems @ 9.687 678
---------
2,479
---------
Financial Services - 0.5%
20,000 Crown Group, Inc. @ 4.937 99
---------
Food - Misc. - 2.3%
45,000 Monterey Pasta Company @ 3.937 177
40,000 Suprema Specialities @ 7.875 315
---------
492
---------
Household / Office Furniture - 0.5%
20,000 Business Resource Group @ 5.312 106
---------
Leisure - Toys / Games - 4.6%
56,000 Creative Master International, Inc. @ 2.562 143
20,000 Fotoball USA, Inc. @ 6.312 126
37,500 JAKKS Pacific, Inc. @ 18.687 701
---------
970
---------
Medical / Dental Services - 0.6%
12,000 Premier Research Worldwide @ 9.812 118
---------
Medical / Dental Supplies - 0.7%
20,000 Interpore International @ 7.875 158
---------
Medical / Ethical Drugs - 1.1%
50,000 Akorn, Inc. @ 4.875 244
---------
Medical Instruments - 0.9%
10,000 Exactech, Inc. @ 11.812 118
20,000 Rehabilicare, Inc. @ 4.000 80
---------
198
---------
Medical - Products - 2.3%
6,700 I-Flow Corp. @ 3.968 27
20,000 Polymedia Corp. @ 23.125 462
---------
489
---------
Oil - Domestic Integrated - 0.6%
40,000 Meridian Resources Corp. @ 3.062 123
---------
See notes to Portfolio of Investments.
6
<PAGE>
OBERWEIS MICRO-CAP PORTFOLIO
Portfolio of Investments (cont'd.)
Shares Company (Closing Price) Value
- --------------------------------------------------------------------------------
Pollution Control - Equipment - 0.5%
15,000 Strategic Diagnostics @ 6.562 $ 98
---------
Retail - Apparel - 2.8%
16,000 Chico's Fas, Inc. @ 37.625 602
---------
Shoes & Related Apparel - 3.1%
35,000 Steven Madden Ltd. @ 19.062 667
---------
Telecommunications - 7.9%
70,000 Gilat Communications Ltd. @ 24.062 1,684
---------
Telecommunications - Equipment - 8.1%
100,000 Gentner Communications @ 14.000 1,400
30,000 Spectralink Corp. @ 7.125 214
10,000 Veramark Technologies @ 12.250 122
---------
1,736
---------
Textile - Manufacturing - 4.9%
67,500 Cutter & Buck, Inc. @ 15.125 1,021
25,000 Frenchtex @ .937 23
---------
1,044
---------
Transportation - Rail - 0.8%
20,000 RailAmerica, Inc. @ 8.562 171
---------
Total Common Stocks
(Cost: $11,668,000) $ 20,835
---------
Total Investments - 97.8%
(Cost : $11,668,000) 20,835
---------
Contracts Value
- --------------------------------------------------------------------------------
COVERED CALLOPTIONS - (0.2%)
100 Genesis Microchip, Inc., March $35 $ (6)
100 Infocure Corp., January $35 (11)
100 Verity, Inc., January $57.5 (6)
300 Verity, Inc., January $60 (17)
---------
Total Covered Call Options
(Premiums received : $53,000) (40)
Other Assets less Liabilities - 2.4% 506
---------
NETASSETS - 100% $ 21,301
=========
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
* All or a portion of these stocks were held in escrow at December 31, 1999
to cover call options written. The aggregate market value was $2,226,000.
Based on the cost of investments of $11,668,000 for federal income tax
purposes at December 31, 1999, the aggregate gross unrealized appreciation
was $9,622,000, the aggregate gross unrealized depreciation was $455,000
and the net unrealized appreciation of investments was $9,167,000.
All investments are non-income producing securities.
7
<PAGE>
OBERWEIS MID-CAP PORTFOLIO
Portfolio of Investments
December 31, 1999 (value in thousands)
Shares Company (Closing Price) Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 98.6%
Commercial Services - 2.1%
3,500 Diamond Tech Partners, Inc. @ 85.937 $ 301
---------
Computer Integrated Systems - 3.0%
12,000 Mercury Computer Systems @ 35.000 420
---------
Computer Local Networks - 3.4%
6,000 Visual Networks, Inc. @ 79.250 475
---------
Computer Manufacturers - 3.7%
8,000 Digital Lightwave, Inc. @ 64.000 512
---------
Computer Memory Devices - 3.5%
10,000 Advanced Digital Information @ 48.625 486
---------
Computer Services - 1.2%
5,000 Amdocs, Ltd. @ 34.500 172
---------
Computer Software - Desktop - 3.0%
*10,000 Verity, Inc. @ 42.562 426
---------
Computer Software - Enterprise - 12.5%
2,000 Citrix Systems, Inc. @ 123.000 246
4,000 Compuware Corp. @ 37.250 149
*5,000 Legato Systems, Inc. @ 68.812 344
*4,000 Mercury Interactive Corp. @ 107.937 432
*2,000 Micromuse, Inc. @ 170.000 340
3,000 Siebel Systems, Inc. @ 84.000 252
---------
1,763
---------
Computer Software - Finance - 1.9%
4,500 Intuit, Inc. @ 59.937 270
---------
Computer Software - Medical - 3.3%
15,000 Infocure Corp. @ 31.187 468
---------
Computer Software - Security - 4.2%
3,000 Check Point Software Technologies, Ltd.
@ 198.750 596
---------
Electronics - Components /
Semiconductors - 14.3%
*4,000 Cree Research, Inc. @ 85.375 342
10,000 Ess Technology @ 22.187 222
*4,000 Qlogic Corp. @ 159.875 639
6,000 RF Micro Devices, Inc. @ 68.437 411
4,000 Transwitch Corp. @ 72.562 290
2,000 Vitesse Semiconductor Corp. @ 52.437 105
---------
2,009
---------
Electrical - Equipment / Components - 7.4%
3,000 Commscope, Inc. @ 40.312 121
4,000 Kemet Corp. @ 45.062 180
6,000 Powerwave Technologies, Inc. @ 58.375 350
3,000 Siliconix, Inc. @ 131.500 395
---------
1,046
---------
Electrical - Military Systems - 3.3%
10,000 Titan Corp. @ 47.125 471
---------
Internet - Network Services - 1.0%
3,000 USWeb Corp. @ 44.437 133
---------
Medical - Ethical Drugs - 8.1%
2,500 Andrx Corp. @ 42.312 106
3,000 Biovail Corp. International @ 93.750 281
13,500 King Pharmaceuticals, Inc. @ 56.062 757
---------
1,144
---------
Medical - Products - 1.3%
3,000 Cytyc Corp. @ 61.062 183
---------
Oil & Gas Exploration - 2.9%
7,000 Barret Resources Corp. @ 29.437 206
10,000 Triton Energy @ 20.625 206
---------
412
---------
Retail - 1.9%
6,000 American Eagle Outfitters @ 45.000 270
---------
Retail / Wholesale - Computers - 2.2%
7,500 Insight Enterprises, Inc. @ 40.625 305
---------
Telecommunications -
Equipment - 12.1%
8,000 Audiovox Corp. @ 30.375 243
6,000 Carrier Access Corp. @ 67.312 404
2,000 C-Cor.net Corp. @ 76.625 153
*2,500 E-Tek Dynamics, Inc. @ 134.625 337
2,000 Harmonic Lightwaves, Inc. @ 94.937 190
6,000 Polycom, Inc. @ 63.687 382
---------
1,709
---------
Telecommunications - Services - 2.3%
10,000 US Lec Corp. @ 32.250 323
---------
Total Common Stocks
(Cost: $7,721,000 ) $ 13,894
---------
See notes to Portfolio of Investments.
8
<PAGE>
OBERWEIS MID-CAP PORTFOLIO
Portfolio of Investments (cont'd.)
Contracts Value
- --------------------------------------------------------------------------------
LONG PUT OPTIONS - 1.1%
100 NASDAQ 100 Stock Index $ 154
---------
Total Put Options
(Cost: $165,000) 154
---------
Total Investments - 99.7%
(Cost: $7,886,000) 14,048
---------
Contracts Value
- --------------------------------------------------------------------------------
COVERED CALL OPTIONS - (2.2%)
40 Cree Research, Inc., March $80 $ (53)
25 E-Tek Dynamics, Inc., January $100 (94)
50 Legato Systems, Inc., January $80 (10)
40 Mercury Interactive Corp., January $115 (21)
20 Micromuse, Inc., January $155 (44)
40 QLogic Corp., January $150 (68)
40 Verity, Inc., January $52.5 (4)
55 Verity, Inc., March $60 (18)
---------
Total Covered Call Options
(Premiums received : $162,000) (312)
Other Assets less Liabilities - 2.5% 349
---------
NET ASSETS - 100% $ 14,085
=========
Notes to Portfolio of Investments
- --------------------------------------------------------------------------------
* All or a portion of these stocks were held in escrow at December 31, 1999
to cover call options written. The aggregate market value was $2,838,000.
Based on the cost of investments of $7,886,000 for federal income tax
purposes at December 31, 1999, the aggregate gross unrealized appreciation
was $6,243,000, the aggregate gross unrealized depreciation was $81,000 and
the net unrealized appreciation of investments was $6,162,000.
All investments are non-income producing securities.
9
<PAGE>
THE OBERWEIS FUNDS
Statement of Assets and Liabilities
December 31, 1999 (in thousands, except pricing of shares)
<TABLE>
<CAPTION>
Emerging Growth Micro-Cap Mid-Cap
Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investment securities at value $ 103,908 $ 20,835 $ 13,894
(Cost: $53,443, $11,668 and $7,721, respectively)
Options purchased at value
(Cost: $498, $0, and $ 165, respectively) 449 -- 154
Cash 2,948 324 498
Receivable from fund shares sold 234 85 129
Receivable from securities sold 1,358 819 14
Deferred organizational costs -- 12 20
Prepaid expenses 17 16 7
------------- ------------ ------------
Total Assets 108,914 22,091 14,716
------------- ------------ ------------
Liabilities:
Options written at value
(Premiums received: $873, $53 and $162, respectively) 1,168 40 312
Payable for fund shares redeemed 240 151 48
Payable for securities purchased 2,180 533 243
Payable to advisor 70 23 10
Payable to distributor 21 4 3
Accrued expenses 107 39 15
------------- ------------ ------------
Total Liabilities 3,786 790 631
------------- ------------ ------------
Net Assets $ 105,128 $ 21,301 $ 14,085
============= ============ ============
Analysis of net assets:
Aggregate paid in capital $ 44,239 $ 14,825 $ 6,638
Accumulated net realized gain (loss) on investments 10,768 (2,704) 1,435
Net unrealized appreciation of investments 50,121 9,180 6,012
------------- ------------ ------------
Net Assets $ 105,128 $ 21,301 $ 14,085
============= ============ ============
The Pricing of Shares:
Net asset value and offering price per share
Emerging Growth Portfolio:
($105,128,353 divided by 2,907,977 shares outstanding) $ 36.15
=============
Micro-Cap Portfolio:
($21,301,137 divided by 1,257,746 shares outstanding) $ 16.94
============
Mid-Cap Portfolio:
($14,085,303 divided by 579,853 shares outstanding) $ 24.29
============
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE OBERWEIS FUNDS
Statement of Operations
Year Ended December 31, 1999 (in thousands)
<TABLE>
<CAPTION>
Emerging Growth Micro-Cap Mid-Cap
Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income:
Interest $ 13 $ 4 $ 6
Dividends 5 -- --
-------- -------- --------
Total Investment Income 18 4 6
-------- -------- --------
Expenses:
Investment advisory fees 362 120 33
Management fees 337 80 33
Distribution fees 211 50 20
Transfer agent fees and expenses 149 55 36
Custodian fees and expenses 127 66 47
Professional fees 77 23 5
Shareholder reports 29 10 1
Federal and state registration fees 25 13 12
Insurance 9 2 --
Organizational expenses -- 13 11
Trustees' fees 9 2 --
Miscellaneous 5 1 --
-------- -------- --------
Total Expenses 1,340 435 198
-------- -------- --------
Net Investment Loss Before Expense Reimbursement (1,322) (431) (192)
Expense Reimbursement and earnings credits 9 35 35
-------- -------- --------
Net Investment Loss (1,313) (396) (157)
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments 23,497 3,784 3,235
Net realized gain (loss) from covered call options written (174) 447 11
-------- -------- --------
Total net realized gain 23,323 4,231 3,246
Increase (decrease) in net unrealized appreciation of investments 15,640 (807) 3,876
-------- -------- --------
Net realized and unrealized gain on investments 38,963 3,424 7,122
-------- -------- --------
Net increase in net assets resulting from operations $ 37,650 $ 3,028 $ 6,965
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE OBERWEIS FUNDS
Statements of Changes in Net Assets (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Emerging Growth Portfolio
-------------------------
Years ended December 31,
1999 1998
-------------------------
<S> <C> <C>
From Operations:
Net investment loss $ (1,313) $ (1,510)
Net realized gain (loss) on investments 23,323 (11,356)
Increase in net unrealized appreciation of investments 15,640 9,514
--------- ---------
Net increase (decrease) in net assets resulting from operations 37,650 (3,352)
--------- ---------
From Distributions:
Distributions from net realized gains on investments -- (4,764)
--------- ---------
From Capital Share Transactions:
Net proceeds from sale of shares 17,537 52,192
Shares issued in reinvestment of distribution -- 4,426
Redemption of shares (43,174) (95,370)
--------- ---------
Net decrease from capital share transactions (25,637) (38,752)
--------- ---------
Total increase (decrease) in net assets 12,013 (46,868)
Net Assets:
Beginning of year 93,115 139,983
--------- ---------
End of year $105,128 $ 93,115
========= =========
Transactions in Shares:
Shares sold 699 2,120
Shares issued in reinvestment of dividends -- 213
Less shares redeemed (1,737) (3,831)
--------- ---------
Net decrease from capital share transactions (1,038) (1,498)
========= =========
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
THE OBERWEIS FUNDS
Statements of Changes in Net Assets (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Micro-Cap Portfolio
-----------------------------
Years ended December 31,
1999 1998
-----------------------------
<S> <C> <C>
From Operations:
Net investment loss $ (396) $ (486)
Net realized gain (loss) on investments 4,231 (2,976)
Increase (decrease) in net unrealized appreciation of investments (807) 4,769
----------- -----------
Net increase in net assets resulting from operations 3,028 1,307
----------- -----------
From Capital Share Transactions:
Net proceeds from sale of shares 6,833 10,556
Redemption of shares (16,850) (20,410)
----------- -----------
Net decrease from capital share transactions (10,017) (9,854)
----------- -----------
Total decrease in net assets (6,989) (8,547)
Net Assets:
Beginning of year 28,290 36,837
----------- -----------
End of year $ 21,301 $ 28,290
=========== ===========
Transactions in Shares:
Shares sold 490 868
Less shares redeemed (1,227) (1,583)
----------- -----------
Net increase (decrease) from capital share transactions (737) (715)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
THE OBERWEIS FUNDS
Statements of Changes in Net Assets (in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mid-Cap Portfolio
-----------------------------
Years ended December 31,
-----------------------------
1999 1998
<S> <C> <C>
From Operations:
Net investment loss $ (157) $ (119)
Net realized gain (loss) on investments 3,246 (165)
Increase in net unrealized appreciation of investments 3,876 1,554
----------- -----------
Net increase in net assets resulting from operations 6,965 1,270
----------- -----------
From Distributions:
Distributions from net realized gains on investments (1,280) --
----------- -----------
From Capital Share Transactions:
Net proceeds from sale of shares 11,702 2,053
Shares issued in reinvestment of distribution 1,230 --
Redemption of shares (11,448) (2,754)
----------- -----------
Net increase (decrease) from capital share transactions 1,484 (701)
----------- -----------
Total increase in net assets 7,169 569
Net Assets:
Beginning of year 6,916 6,347
----------- -----------
End of year $ 14,085 $ 6,916
=========== ===========
Transactions in Shares:
Shares sold 663 184
Shares issued in reinvestment of dividends 62 --
Less shares redeemed (683) (250)
----------- -----------
Net increase (decrease) from capital share transactions 42 (66)
=========== ===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
THE OBERWEIS FUNDS
Notes to Financial Statements
December 31, 1999,
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. The Trust consists of three portfolios: the Oberweis
Emerging Growth Portfolio, the Oberweis Micro-Cap Portfolio, and the Oberweis
Mid-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 closing bid
price determined on the basis of reasonable inquiry. Options are valued at the
last reported bid price. 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 each Fund's investments and other assets, less liabilities, by
the number of each Fund's 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
recognized on the date of expiration.
Repurchase agreements. Repurchase agreements are fully collateralized by U.S.
Treasury and Government agency securities. All collateral is held through the
Funds' custodian bank and is monitored daily by each Fund 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 each Fund on the ex-dividend date.
Dividends are determined in accordance with income tax principles which may
treat certain transactions differently from generally accepted accounting
principles. The Oberweis Mid-Cap Portfolio paid a dividend consisting of net
long term realized gains from the sale of securities of $900,000 and net short
term realized gains from the sale of securities of $380,000 in 1999 to
shareholders of record on November 11, 1999. The Micro-Cap Portfolio has a
capital loss carry-forward of $2,704,000, which if not used to offset future net
realized capital gains will expire in 2006.
Organizational costs. Organizational costs of the Micro-Cap Portfolio and Mid-
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 preparation 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 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. Oberweis.net, Inc.
("Oberweis.net"), an affiliate of OAM, is the Funds' principal distributor.
Investment advisory agreement. For investment advisory services, 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
15
<PAGE>
daily net assets. The Mid-Cap Portfolio paid monthly investment advisory fees
at an annual rate equal to .40% of average daily net assets. For the year ended
December 31, 1999, the Emerging Growth Portfolio, Micro-Cap Portfolio, and Mid-
Cap Portfolio incurred investment advisory fees totaling $362,000, $120,000, and
$33,000, respectively.
Management agreement. For management services and facilities furnished, the
Emerging Growth Portfolio, Micro-Cap Portfolio, and Mid-Cap Portfolio each paid
a monthly fee at an annual rate equal to .40% of average daily net assets. For
the year ended December 31, 1999, the Emerging Growth Portfolio, Micro-Cap
Portfolio, and Mid-Cap Portfolio incurred management fees totaling $337,000,
$80,000 and $33,000, respectively.
Expense reimbursement. OAM is obligated to reduce its management fees or
reimburse the Funds to the extent that total ordinary operating expenses, 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. OAM reimbursed the Micro-Cap Portfolio and Mid-Cap Portfolio
$34,000 and $31,000, respectively, for the year ended December 31, 1999.
Officers and trustees. Certain officers or trustees of the Funds are also
officers or directors of OAM and Oberweis.net. During the year ended December
31, 1999, the Funds made no direct payments to its officers and paid $11,000 to
its unaffiliated trustees.
Distribution and shareholder service expense. The Funds have a distribution and
shareholder services agreement with Oberweis.net. For services under the
distribution and shareholder servicing agreement, the Funds pay Oberweis.net a
fee at the annual rate of .25% of the average daily net assets and reimbursement
for certain out-of-pocket expenses. For the year ended December 31, 1999, the
Emerging Growth Portfolio, Micro-Cap Portfolio, and Mid-Cap Portfolio incurred
distribution fees totaling $211,000, $50,000 and $20,000, respectively.
Commissions. The Funds pay Oberweis.net for executing some of each Fund's agency
security transactions at competitive rates, typically $.03 per share. For the
year ended December 31, 1999, the Emerging Growth Portfolio, Micro-Cap
Portfolio, and Mid-Cap Portfolio paid commissions of $3,000, $0 and $1,000,
respectively to Oberweis.net.
3. Investment transactions
The cost of securities purchased and proceeds from securities sold during the
year ended December 31, 1999, other than options written and money market
investments, aggregated $54,661,000 and $86,151,000, respectively, for the
Emerging Growth Portfolio, $9,474,000 and $19,434,000, respectively, for the
Micro-Cap Portfolio, and $12,521,000 and $12,890,000, respectively, for the Mid-
Cap Portfolio.
Transactions in options written for the year ended December 31, 1999 were as
follows:
<TABLE>
<CAPTION>
Emerging Growth Micro-Cap Mid-Cap
Portfolio Portfolio Portfolio
----------------------- ----------------------- -----------------------
Number Number Number
of Premiums of Premiums of Premiums
Contracts Received Contracts Received Contracts Received
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning of year 3,347 $ 716,000 460 $ 69,000 142 $ 28,000
Options written 20,147 7,225,000 3,570 758,000 1,697 546,000
Options expired (11,360) (3,260,000) (2,652) (645,000) (882) (230,000)
Options closed (5,985) (2,215,000) (550) (97,000) (522) (132,000)
Options assigned (3,099) (1,593,000) (228) (32,000) (125) (50,000)
------------------------ -------------------- --------------------
Options outstanding at end of year 3,050 $ 873,000 600 $ 53,000 310 $ 162,000
</TABLE>
The premiums received provide a partial hedge (protection) against declining
prices and enables each 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 each Fund.
4. Redemption fee
A.25% redemption fee is charged on redemptions from the Micro-Cap and Mid-Cap
Portfolios. The redemption fee is retained by the Funds and is intended to
reimburse the Funds for the expense they incur in connection with shareholder
redemptions. Redemption fees received by the Micro-Cap and Mid-Cap Portfolios
were $42,000 and $29,000, respectively, for the year ended December 31, 1999,
and were recorded as a reduction of shares redeemed in the statements of changes
in net assets.
16
<PAGE>
5. Earnings credits and interest charges
The Trust, as part of the agreement with the Custodian, receives credits against
its custodian fees on its uninvested cash balances and is allowed to borrow for
temporary purposes. Borrowings are not to exceed 5% of the value of each Fund's
total assets at the time of any such borrowing. Interest on amounts borrowed is
calculated at the prime rate and is payable monthly. During the year ended
December 31, 1999, the Emerging Growth Portfolio, Micro-Cap Portfolio and the
Mid-Cap Portfolio received credits of $9,000, $1,000 and $4,000, respectively.
During the year ended December 31, 1999, the Emerging Growth Portfolio, Micro-
Cap Portfolio and the Mid-Cap Portfolio incurred interest charges of $40,000,
$13,000 and $2,000, respectively, which is included in custodian fees and
expenses in the statement of operations.
17
<PAGE>
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout each
year is as follows :
<TABLE>
<CAPTION>
Emerging Growth Portfolio
Years ended December 31,
------------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $23.60 $25.71 $32.86 $29.09 $21.41
Income (loss) from investment operations:
Net investment loss (a) (.41) (.33) (.37) (.32) (.33)
Net realized and unrealized gain (loss) on investments 12.96 (.63) (2.14) 6.73 9.43
--------- --------- --------- --------- ---------
Total from investment operations 12.55 (.96) (2.51) 6.41 9.10
Less distributions:
Distribution from net realized gains on investments -- (1.15) (4.64) (2.64) (1.42)
--------- --------- --------- --------- ---------
Net asset value at end of year $36.15 $23.60 $25.71 $32.86 $29.09
========= ========= ========= ========= =========
Total Return (%) 53.2 (3.1) (8.6) 22.5 42.6
Ratio/Supplemental Data
Net Assets at end of year (in thousands) $105,128 $93,115 $139,983 $185,595 $134,663
Ratio of expenses to average net assets (%) 1.59 1.55 1.44 1.48 1.73(b)
Ratio of net investment loss to average net assets (%) (1.56) (1.37) (1.18) (0.97) (1.24)
Portfolio turnover rate (%) 63 49 75 64 79
Average commission rate paid $.0305 $.0280 $.0337 $.0413 --
</TABLE>
- ------------
Notes:
(a) The net investment loss per share data was determined using average shares
outstanding during the year.
(b) Net of expense reimbursement from related parties. The expense ratio would
have been 1.77%, for 1995 before expense reimbursement.
18
<PAGE>
FINANCIAL HIGHLIGHTS
Per share income and capital changes for a share outstanding throughout the
period is as follows:
<TABLE>
<CAPTION>
Micro-Cap Portfolio
----------------------------------------------------------
Years ended December 31, *January 1, 1996-
1999 1998 1997 December 31, 1996
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of year $14.18 $13.59 $12.28 $10.00
Income (loss) from investment operations:
Net investment loss (a) (.28) (.24) (.21) (.15)
Net realized and unrealized gain on investments 3.04 .83 1.52 2.43
--------- --------- --------- ---------
Total from investment operations 2.76 .59 1.31 2.28
--------- --------- --------- ---------
Net asset value at end of year $16.94 $14.18 $13.59 $12.28
========= ========= ========= =========
Total Return (%) 19.5 4.3 10.7 22.8
Ratio/Supplemental Data
Net Assets at end of year (in thousands) $21,301 $28,290 $36,837 $30,733
Ratio of expenses to average net assets (%) 2.00(b) 1.99(b) 1.81 1.94
Ratio of net investment loss to average net assets (%) (1.98) (1.83) (1.52) (1.15)
Portfolio turnover rate (%) 46 41 89 70
Average commission rate paid $.0328 $.0288 $.0343 $.0371
</TABLE>
Notes:
(a) The net investment loss per share data was determined using average shares
outstanding during the year.
(b) Net of expense reimbursement from related parties. The expense ratios would
have been 2.17% and 2.06%, for 1999 and 1998, respectively, before expense
reimbursement.
* Commencement of operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Mid-Cap Portfolio
----------------------------------------------------------
Years ended December 31, *September 15, 1996-
1999 1998 1997 December 31, 1996
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value at beginning of year $12.86 $10.51 $10.29 $10.00
Income (loss) from investment operations:
Net investment loss (a) (.31) (.21) (.19) (.05)
Net realized and unrealized gain on investments 14.22 2.56 .76 .34
--------- --------- --------- ---------
Total from investment operations 13.91 2.35 .57 .29
Less distributions:
Distributions from net realized gains on investments (2.48) -- (.35) --
--------- --------- --------- ---------
Net asset value at end of year $24.29 $12.86 $10.51 $10.29
========= ========= ========= =========
Total Return (%) 112.7 22.4 5.4 2.9(d)
Ratio/Supplemental Data
Net Assets at end of year (in thousands) $14,085 $6,916 $6,347 $7,295
Ratio of expenses to average net assets (%) 2.00(b) 2.00(b) 2.00(b) 2.00(b)(c)
Ratio of net investment loss to average net assets (%) (1.93) (1.94) (1.81) (1.62)(c)
Portfolio turnover rate (%) 153 72 106 21(c)
Average commission rate paid $.0345 $.0305 $.0318 $.0371
</TABLE>
Notes:
(a) The net investment loss per share data was determined using average shares
outstanding during the year.
(b) Net of expense reimbursement from related parties. The expense ratios would
have been 2.43%, 2.61%, 2.46% and 3.42%, for 1999, 1998, 1997 and 1996,
respectively, before expense reimbursement and earnings credits.
(c) Annualized.
(d) Not annualized.
* Commencement of operations.
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Trustees and Shareholders
The Oberweis Funds --
Emerging Growth Portfolio
Micro-Cap Portfolio
Mid-Cap Portfolio
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of The Oberweis Funds--Emerging Growth Portfolio,
Micro-Cap Portfolio, and Mid-Cap Portfolio as of December 31, 1999, the related
statements of operations, changes in net assets and the financial highlights for
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements and
financial highlights are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
owned as of December 31, 1999, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Oberweis Funds--Emerging Growth Portfolio, Micro-Cap Portfolio, and Mid-Cap
Portfolio at December 31, 1999, the results of their operations, the changes in
their net assets and the financial highlights for the periods therein in
conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Chicago, Illinois
January 28, 2000
20
<PAGE>
Trustees & Officers
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 W. Oberweis Steven J. LeMire
Vice President Secretary
Manager and Investment Advisor
Oberweis Asset Management, Inc.
951 Ice Cream Dr., North Aurora, IL 60542
1-800-323-6166
Distributor
Oberweis.net, Inc.
951 Ice Cream Dr., North Aurora, IL 60542
1-630-801-6000
Custodian and Transfer Agent
Investors Fiduciary Trust Company
P.O. Box 419042, Kansas City, MO 64141
1-800-245-7311
Counsel
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Chicago, IL 60601
Independent Auditors Ernst & Young LLP
233 South Wacker Drive, Chicago, IL 60606
[LOGO OF THE OBERWEIS FUNDS]
The Oberweis Funds
Emerging Growth Portfolio
Micro-Cap Portfolio
Mid-Cap Portfolio
[LOGO OF THE OBERWEIS FUNDS]
The
Oberweis
Funds
Annual Report
---------------------
Audited
December 31, 1999
