[LOGO]
TITAN FINANCIAL SERVICES FUND
TITAN GROWTH FUND
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ANNUAL REPORT
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For the Year Ended
April 30, 2000
<PAGE>
[LETTERHEAD OF TITAN FUNDS]
June 19, 2000
Dear Shareholder:
I am pleased to report that the Titan Financial Services Fund, although slightly
down for the fiscal year, has done extremely well during the beginning of this
new fiscal year, and we believe it shows great promise for the balance of the
year. The uncertainty as to interest rates and inflation has been unsettling for
the Financial Sector. However, we feel that the worst is behind us and the
fundamentals of the financials are stronger than ever. During the past several
months we have reduced our position in nonfinancial stocks, and at the present
time the financials represent approximately 85% of our entire portfolio. We have
continued to use hedging strategies to avoid the periodic sharp and severe
pullbacks that both the banks and brokerages have experienced over the last 10
months.
The Titan Growth Fund opened on April 4, 2000, in order to offer our investors
an alternative to sector investing, and a greater exposure to growth stocks. Our
aim is to provide a vehicle in which our investors can gain access to growth
stocks with reasonable price levels, relative to their expected growth rates.
With this value element in mind, it is our intention to manage at risk levels
lower than those of more aggressive funds.
As previously indicated the financial service sector has been in such an
oversold situation that a rally appears to be imminent. We saw a substantial
rally during the month of March. However, with the fear of additional interest
rate increases, the financials gave up a substantial part of their March gains
in April.
The reasons to invest in Financial Services remains still in focus and more
relevant today than ever. I would like to review the salient reasons that
support that opinion:
1. Stocks, particularly small regional banks and brokerages have continued to
sell at a 45% discount to the S&P. Bear Stearns and Lehman have been
selling at slightly more than a 50% premium to book value, and 10 times
next year's estimated earnings.
2. We believe the proposed FASB accounting rules relative to the pooling of
interest should accelerate mergers and consolidations of banks and other
financial institutions. The success of Citicorp in bringing together all of
the financial services for the benefit of cross selling and economy of
operation has proven, in our opinion, the advantage of one-stop shopping
financial institutions. It is our opinion we will see an increase in the
number of consolidations not only in banks and brokerages in the United
1
<PAGE>
States, but also the European and Asian Banks seeking to acquire American
Banks and brokerages. We have seen many example of large European banks
acquiring not only commercial banks but also brokerages. We believe we will
see a continuation of this trend.
3. We have taken a stronger position in the insurance industries because many
insurance companies are still selling under book value and at what we
believe are incredibly low multiples. We have taken strong positions in
Metlife, John Hancock Financial, and a number of other insurance companies.
We intend to increase our position in this sector.
4. With signs of economic slowdown, it is apparent to us that the Federal
Reserve's substantial increase of interest rates is taking effect. The
Federal Reserve's substantial increase of interest rates has had an adverse
effect on the entire financial sector, with brokerages as well as the banks
being substantially effected. We have seen a long substantial correction in
the financial sector, which we believe will create excellent opportunities
for future appreciation.
5. The market has failed to distinguish between banking institutions that have
substantial fee income and those banks that still rely on interest income.
Banks such as PNC, Mellon Bank, First Tennessee, and FleetBoston have a
majority of income coming from fees. They should be less affected by
interest rates. We believe they have been oversold and represent
outstanding value during this prolonged correction.
We thank you for your loyalty and support during this prolonged period of
correction. We look optimistically to the future recognizing the sound
fundamentals of the financial sector.
Very truly yours,
Gilbert R. Giordano
President
The Titan Financial Services Fund commenced operation on May 22, 1996. The
Fund's total return for the one year period and average annual return since
inception on May 22, 1996 through April 30, 2000 were -4.55% and 18.87%,
respectively. The Titan Growth Fund commenced operation on April 4, 2000. The
Fund's cumulative total return from April 4, 2000 through April 30, 2000 was
-4.80%. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Investment return
and principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than the original cost.
2
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TITAN FINANCIAL SERVICES FUND
Value of $10,000 vs S&P 500 Index
Average Annual Total Return
Period Ended April 30, 2000
1 Year.......................... (4.55)%
Since Inception (5/22/96)....... 18.87%
Titan Financial S&P 500 Index
Qtr Services Fund with Income
--- ------------- -----------
5/22/96 10,000 10,000
6/30/96 9,950 9,903
9/30/96 10,763 10,213
12/31/96 11,913 11,068
3/31/97 12,285 11,362
6/30/97 14,407 13,341
9/30/97 16,910 14,342
12/31/97 18,532 14,759
3/31/98 20,084 16,816
6/30/98 19,725 17,361
9/30/98 14,593 15,639
12/31/98 16,841 18,976
3/31/99 18,827 19,914
6/30/99 20,297 21,320
9/30/99 17,702 19,988
12/31/99 19,941 22,960
3/31/00 21,204 23,486
4/30/00 19,734 22,779
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The S&P 500 Index is a broad market-weighted average of U.S. blue-chip
companies. The S&P 500 Index is unmanaged and returns include reinvested
dividends.
3
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TITAN FINANCIAL SERVICES FUND
SCHEDULE OF INVESTMENTS AT APRIL 30, 2000
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SHARES COMMON STOCKS: 99.4% VALUE
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AIRLINES: 0.1%
1,000 AMR Corp.* $ 34,064
-----------
BANKS: 27.4%
6,000 Amsouth BanCorp. 87,375
6,500 Banc One Corp. 198,250
3,329 Banco Bilbao Vizcaya ADR 48,272
8,000 Bank of America Corp. 392,000
3,000 Bank Of New York Co., Inc. 123,188
12,500 BB&T Corp. 332,812
2,000 Canadian Imperial 52,875
2,200 Cathay BanCorp., Inc. 100,100
4,500 Chase Manhattan Corp. 324,281
6,500 Comerica, Inc. 275,437
2,000 Fidelity National Corp. 13,875
14,400 First Regional BanCorp.* 111,600
8,000 First Security Corp. 113,000
16,000 First Tennessee National Corp. 304,000
11,500 First Union Corp. 366,562
4,000 Firstar Corp. 99,500
19,500 FleetBoston Financial Corp. 691,031
11,000 Hibernia Corp., Class A 116,875
2,500 HSBC Holdings Plc 142,970
3,594 Hudson United BanCorp. 81,097
9,436 Imperial BanCorp.* 185,181
11,000 KeyCorp 203,500
8,000 Mellon Bank 257,000
2,300 National Bank of Canada 31,822
8,000 North Fork BanCorp., Inc. 129,500
19,000 Patriot National Bank* 190,000
8,000 PNC Bank Corp. 349,000
3,400 Redwood Empire BanCorp. 53,975
2,000 Southtrust Corp. 47,750
3,500 Summit BanCorp. 88,813
2,000 Summit Bancshares, Inc. 31,500
2,600 Texas Regional Bancshares, Inc. 74,263
1,500 Three Rivers BanCorp. 13,219
20,100 Toronto-Dominion Bank 464,813
5,000 Unibanco, Sponsored GDR 124,688
15,100 Union Bankshares, Ltd* 143,450
8,000 Union Planters Corp. 226,500
9,500 U. S. BanCorp., Inc. 192,969
3,000 US BANCORP., Inc. 16,313
7,000 Wells Fargo & Company 287,438
-----------
7,086,794
-----------
BIOTECHNOLOGY: 0.6%
8,500 CryoLife, Inc.* 164,689
-----------
BROKERAGE SERVICES: 44.3%
5,000 Advanta Corp., Class B 57,500
12,000 A.G. Edwards, Inc. 451,500
23,600 Ameritrade Holding Corp., Class A 395,300
2,000 Associates First Captial
Corp., Class A 44,375
30,955 Bear Stearns Companies, Inc. 1,327,196
10,000 Blackrock, Inc.* 260,000
10,000 Charles Schwab Corp. (a) 445,000
17,250 Citigroup, Inc. 1,025,297
13,000 Donaldson Lufkin &
Jenrette, Inc. - Direct* 139,750
16,000 Donaldson, Lufkin &
Jenrette, Inc. (a) 667,000
19,000 E*TRADE Group, Inc. (a)* 408,500
3,000 Finova Group, Inc. 38,438
3,000 Franklin Resources, Inc. 96,750
4,000 Household International, Inc. 167,000
10,866 Legg Mason, Inc. 410,871
15,100 Lehman Brothers Holdings, Inc. (a) 1,239,144
6,000 Merrill Lynch & Company, Inc. (a) 611,625
4,000 Morgan Keegan, Inc. 63,750
10,600 Morgan Stanley Dean
Witter & Co. (a) 813,550
11,500 National Discount Brokers
Group, Inc. (a)* 335,656
32,450 Paine Webber Group, Inc. (a) 1,423,743
8,000 Raymond James Financial, Inc. 161,000
6,000 Southwest Secs Group, Inc. 246,750
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TITAN FINANCIAL SERVICES FUND
SCHEDULE OF INVESTMENTS AT APRIL 30, 2000 (CONTINUED)
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SHARES VALUE
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3,000 T. Rowe Price Associates, Inc. $ 114,375
19,000 TD Waterhouse Group, Inc.* 381,187
2,000 Tucker Anthony Sutro 33,500
1,500 Waddell & Reed Financial 39,937
8,000 WIT Capital Group, Inc.* 84,500
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11,483,194
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CHEMICALS: 0.2%
1,000 PPG Industries, Inc. 54,375
-----------
COMPUTER SERVICES: 2.3%
3,000 Ceridian Corp.* 65,063
6,000 Compaq Computer Corp. 175,500
4,500 Oracle Corp. (a)* 359,719
-----------
600,282
-----------
COMPUTER SOFTWARE: 2.0%
6,500 First Data Corp. 316,469
500 Microsoft Corp.* 34,875
3,800 Novell, Inc. (a)* 74,575
1,500 Remedy Corp.* 79,688
-----------
505,607
-----------
DISTRIBUTION/WHOLESALE: 0.2%
3,000 Advanced Marketing Services, Inc. 59,579
-----------
FOOD: 0.4%
5,000 Kroger Co.* 92,814
-----------
HEALTH CARE: 0.1%
4,000 Imatron, Inc.* 11,626
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INSURANCE: 8.3%
2,000 Allmerica Financial Corp. 108,250
14,000 Allstate Corp. 330,750
2,000 CNA Financial Corp.* 61,500
15,700 Fidelity National Financial, Inc.* 231,575
2,000 First American Financial Corp. 30,875
3,000 Hartford Life, Class A 147,750
4,000 John Hancock Financial Services* 73,000
4,000 Lincoln National Corp. 139,250
1,000 MetLife, Inc.* 16,563
5,000 Mony Group, Inc. 154,688
5,000 Nationwide Financial Services, Inc. 139,062
4,000 Ohio Casualty Corp. 66,500
3,000 Protective Life Corp. 71,437
7,000 Reliastar Financial Corp. 301,438
2,000 Safeco Corp. 44,250
6,000 Sun Life Financial Services
Canada* 72,375
10,000 Unumprovident Corp. 170,000
-----------
2,159,263
-----------
INVESTMENT COMPANY: 0.1%
2,000 India Growth Fund 25,000
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OIL & GAS PRODUCERS: 1.1%
7,000 Sunoco, Inc. 212,188
4,000 Union Pacific Resources Group 76,750
-----------
288,938
-----------
PHARMACEUTICALS: 0.6%
4,000 Schering-Plough Corp. 161,250
-----------
RETAIL: 5.2%
6,000 BJ's Wholesale Club, Inc.* 212,625
5,000 Home Depot, Inc. 280,313
6,000 Outback Steakhouse, Inc.* 196,500
1,000 Tandy Corp.* 57,375
7,500 Topps Co. 65,625
2,000 Tricon Global Restaurants, Inc.* 68,250
7,000 Wal-Mart Stores, Inc. 387,625
3,000 Wendys International, Inc. 67,125
-----------
1,335,438
-----------
TELECOMMUNICATIONS EQUIPMENT AND SERVICES: 1.9%
2,000 Nortel Networks Corp. (a) 226,500
2,000 Qwest Communications International, Inc.* 86,750
2,000 Sprint Corp. (PCS Group) (a)* 110,000
1,000 Sprint Corp. 61,500
-----------
484,750
-----------
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TITAN FINANCIAL SERVICES FUND
SCHEDULE OF INVESTMENTS AT APRIL 30, 2000 (CONTINUED)
SHARES VALUE
------ -----------
THRIFT AND SAVINGS/SAVINGS BANKS: 4.3%
3,388 Access Anytime BanCorp. $ 19,058
3,000 Coastal BanCorp., Inc. 45,937
9,000 Dime BanCorp., Inc. 168,750
3,000 Golden State BanCorp., Inc. 46,125
6,500 Haven BanCorp., Inc. 106,843
2,000 ITLA Capital Corp. 27,375
7,000 Net Bank, Inc.* 72,625
2,000 Peoples Bancshares, Inc. 38,000
6,000 People's Bank 122,250
13,453 PSB BanCorp., Inc.* 67,265
9,000 Washington Mutual, Inc. 230,063
8,000 Webster Financial Corp. 171,000
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1,115,291
-----------
TRANSPORTATION: 0.3%
1,000 Kansas City Southern Industries 71,875
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TOTAL COMMON STOCKS
(cost $21,579,872) 25,734,829
CONTRACTS
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LONG EQUITY CALL OPTIONS: 1.5%
COMMON STOCKS/
EXPIRATION DATE/EXERCISE PRICE
30 A.G. Edwards, Inc. /
May/30 22,313
40 America On Line /
Jul/50 51,000
30 BB&T Corp. /
May/25 6,563
20 Bear Stearns Co., Inc. /
Jul/35 17,500
20 Cigna Corp. /
May/60 38,250
20 Comerica, Inc. /
Jul/30 25,000
20 Dain Rauscher Corp. /
May/50 24,250
30 Ford Motor Company /
Jun/35 60,375
20 Ford Motor Company /
Jun/45 20,875
30 First Union Corp. /
May/30 7,875
20 First Union Corp. /
Jul/25 15,000
30 Legg Mason /
May/40 4,125
10 Microsoft Corp. /
May/85 188
30 Pfizer, Inc. /
Jun/30 37,313
20 Paine Webber Group, Inc. /
Jul/30 28,750
20 Wells Fargo Company /
Jul/25 33,000
-----------
TOTAL LONG EQUITY CALL OPTIONS
(cost $378,466) 392,377
-----------
TOTAL INVESTMENTS IN SECURITIES
(cost $21,958,338+): 100.9% 26,127,206
Liabilities in excess of Other Assets: (0.9)% (235,139)
-----------
NET ASSETS: 100.0% $25,892,067
===========
+ At April 30, 2000, the cost of securities for federal income tax purposes
was $22,390,372.
Gross unrealized appreciation and depreciation of securities and options were as
follows:
Gross unrealized appreciation $ 4,669,120
Gross unrealized depreciation (932,286)
-----------
Net unrealized appreciation $ 3,736,834
===========
* Non-income producing security.
(a) Security subject to call option.
ADR - American Depositary Receipt.
GDR - Global Depositary Receipt.
See accompanying Notes to Financial Statements.
6
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TITAN FINANCIAL SERVICES FUND
SCHEDULE OF CALL OPTIONS WRITTEN AT APRIL 30, 2000
CONTRACTS
SUBJECT
TO CALL COMMON STOCKS/EXPIRATION DATE/EXERCISE PRICE VALUE
------- -------------------------------------------- ---------
30 Charles Schwab Corp./May/45 $ (11,250)
30 Donaldson, Lufkin & Jenrette, Inc./May/60 (750)
30 E*TRADE Group, Inc./May/25 (2,063)
40 Lehman Brothers Holdings, Inc./May/100 (2,750)
30 Lehman Brothers Holdings Inc./Jul/80 (34,688)
30 Merrill Lynch & Co./May/110 (6,562)
20 Merrill Lynch & Co./May/90 (25,750)
20 Morgan Stanley Dean Witter & Co./May/90 (1,125)
30 National Discount Brokers/May/30 (7,875)
20 National Discount Brokers/Jul/30 (10,750)
20 National Discount Brokers/Jul/35 (7,375)
20 Nortel Networks Corp./May/105 (25,500)
30 Novell, Inc./May/40 (563)
20 Oracle Corp./May/70 (21,000)
15 Oracle Corp./May/80 (6,093)
30 Paine Webber Group, Inc./Jul/45 (11,437)
20 Sprint Corp. (PCS Group)/May/50 (13,250)
---------
TOTAL CALL OPTIONS WRITTEN (premiums received $230,064) $(188,781)
=========
See accompanying Notes to Financial Statements.
7
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TITAN GROWTH FUND
SCHEDULE OF INVESTMENTS AT APRIL 30, 2000
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SHARES COMMON STOCKS: 91.4% VALUE
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AUTO MANUFACTURERS: 12.0%
1,500 Ford Motor Co. $ 82,031
1,800 General Motors Corp. 168,525
-----------
250,556
-----------
COMMERCIAL SERVICES: 4.7%
2,000 Cendant Corp.* 30,875
3,000 Concord EFS, Inc.* 67,125
-----------
98,000
-----------
COMPUTER SERVICES: 1.3%
2,000 Mentor Graphics Corp. 26,250
COMPUTER SOFTWARE: 22.9%
800 America Online, Inc.* 47,850
2,500 MapQuest.com, Inc.* 46,563
1,900 Microsoft Corp.* 132,525
2,000 National Data Corp. 55,500
2,500 Novell, Inc.(a)* 49,063
4,000 PSINet, Inc.(a)* 92,750
1,000 Sanchez Computer Associates* 19,375
600 Verticalnet, Inc.* 32,400
-----------
476,026
-----------
HEALTH CARE: 4.0%
1,000 Johnson & Johnson 82,500
-----------
INVESTMENT COMPANY: 3.1%
2,500 H&Q Healthcare Investors Fund 64,531
-----------
OFFICE/BUSINESS EQUIP: 3.2%
2,500 Xerox Corp. 66,094
-----------
PHARMACEUTICALS: 1.9%
1,000 Schering-Plough Corp. 40,313
-----------
RETAIL: 3.5%
800 Home Depot, Inc. 44,850
500 Wal-Mart Stores, Inc. 27,688
-----------
72,538
-----------
SEMICONDUCTOR: 8.6%
1,000 Advanced Micro Devices* 87,750
500 LSI Logic Corp.* 31,250
1,000 National Semiconductor Corp.(a) 60,750
-----------
179,750
-----------
TELECOMMUNICATIONS: 26.2%
500 ALLTEL Corp. 33,313
500 AT&T Wireless Group* 15,905
1,000 Bell Atlantic Corp. 59,250
600 General Motors Corp. Class H
(Hughes Electronics) 57,787
1,000 Global Crossing, Ltd* 31,500
1,000 IDT Corp.* 31,625
1,300 Lucent Technologies 80,843
1,300 MCI WorldCom, Inc.* 59,069
2,000 Qwest Communications International, Inc.* 86,750
1,400 SBC Communications 61,338
500 Sprint Corp. (PCS Group)* 27,500
-----------
544,880
-----------
TOTAL COMMON STOCKS (cost $1,911,609) 1,901,438
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8
<PAGE>
TITAN GROWTH FUND
SCHEDULE OF INVESTMENTS AT APRIL 30, 2000 (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------- -----------
REPURCHASE AGREEMENT: 5.6%
$116,000 Firstar Bank Repurchase Agreement, 3.75%, dated
4/28/00, due 5/1/00, [collateralized by $118,313
GNMA, 6.50%, due 8/15/11] (proceeds $116,036)
(cost $116,000) $ 116,000
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TOTAL INVESTMENTS IN SECURITIES
(cost $2,027,609+): 97.0% 2,017,438
Other Assets less Liabilities: 3.0% 62,909
-----------
NET ASSETS: 100.0% $ 2,080,347
===========
+ At April 30, 2000, the cost of securities for federal income tax purposes
was $2,078,265. Gross unrealized appreciation and depreciation of se-
curities were as follows:
Gross unrealized appreciation $ 75,319
Gross unrealized depreciation (136,146)
-----------
Net unrealized depreciation $ (60,827)
===========
* Non-income producing security.
(a) Security subject to call option.
SCHEDULE OF CALL OPTIONS WRITTEN AT APRIL 30, 2000
CONTRACTS
SUBJECT
TO CALL COMMON STOCKS/EXPIRATION DATE/EXERCISE PRICE VALUE
--------------------------------------------------------------------------------
20 Novell, Inc./May/22.50 $ (2,000)
10 National Semiconductor Corp./May/80 (500)
10 PSINet, Inc./Jun/30 (2,750)
10 PSINet, Inc./Jul/25 (5,875)
10 PSINet, Inc./Jul/35 (3,094)
---------
TOTAL CALL OPTIONS WRITTEN (premiums received $22,349) $ (14,219)
=========
See accompanying Notes to Financial Statements.
9
<PAGE>
TITAN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES AT APRIL 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINANCIAL
SERVICES GROWTH
FUND FUND
----------- -----------
<S> <C> <C>
ASSETS
Investments in securities, at value
(cost $21,958,338 and $2,027,609, respectively) ...... $26,127,206 $ 2,017,438
Cash ................................................... 9,568 949
Receivables:
Securities sold ...................................... 103,624 99,066
Fund shares sold ..................................... 7,269 86,200
Dividends and interest ............................... 35,476 812
Due from advisor ..................................... -- 5,401
Prepaid expenses ....................................... 11,107 --
----------- -----------
Total assets ....................................... 26,294,250 2,209,866
----------- -----------
LIABILITIES
Options written, at value (premiums received
$230,064 and $22,349, respectively) .................. 188,781 14,219
Payables:
Securities purchased ................................. 41,624 107,482
Fund shares redeemed ................................. 105,039 --
Due to advisor ....................................... 22,038 --
Distribution fees .................................... 5,509 268
Administration fees .................................. 4,726 2,049
Other expenses ......................................... 34,466 5,501
----------- -----------
Total liabilities .................................. 402,183 129,519
----------- -----------
NET ASSETS ............................................. $25,892,067 $ 2,080,347
=========== ===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($25,892,067/1,506,605 and $2,080,347/218,632)
shares outstanding; unlimited number of shares
authorized without par value) ........................ $ 17.19 $ 9.52
=========== ===========
COMPONENTS OF NET ASSETS
Paid-in capital ........................................ $21,637,998 $ 2,152,198
Accumulated net realized gain (loss)
on investments and written options ................... 43,918 (69,810)
Net unrealized appreciation (depreciation)
on investments and written options ................... 4,210,151 (2,041)
----------- -----------
Net assets ......................................... $25,892,067 $ 2,080,347
=========== ===========
</TABLE>
See accompanying Notes to Financial Statements.
10
<PAGE>
TITAN FUNDS
STATEMENTS OF OPERATIONS FOR THE PERIODS ENDED APRIL 30, 2000
--------------------------------------------------------------------------------
FINANCIAL
SERVICES GROWTH
FUND FUND*
----------- -----------
INVESTMENT INCOME
Income
Dividends .................................... $ 329,515 $ 776
Interest ..................................... 7,054 738
----------- -----------
Total income ............................... 336,569 1,514
----------- -----------
Expenses
Advisory fees ................................ 274,483 1,073
Custody fees ................................. 66,549 1,366
Distribution fees ............................ 68,621 268
Administration fees .......................... 54,896 2,049
Transfer agent fees .......................... 30,167 1,366
Registration expense ......................... 28,807 273
Fund accounting fees ......................... 26,440 1,366
Audit fees ................................... 20,099 --
Reports to shareholders ...................... 12,033 273
Trustee fees ................................. 4,071 342
Legal fees ................................... 1,686 205
Miscellaneous ................................ 350 308
----------- -----------
Total expenses ............................. 588,202 8,889
Less: fees waived and expenses absorbed .... -- (6,474)
----------- -----------
Net expenses ............................... 588,202 2,415
----------- -----------
NET INVESTMENT LOSS ...................... (251,633) (901)
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on
investments and written options .............. 3,132,563 (69,810)
Net unrealized depreciation on
investments and written options .............. (4,516,701) (2,041)
----------- -----------
Net realized and unrealized loss on
investments and written options ............ (1,384,138) (71,851)
----------- -----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................ $(1,635,771) $ (72,752)
=========== ===========
* Commenced operations on April 4, 2000.
See accompanying Notes to Financial Statements.
11
<PAGE>
TITAN FINANCIAL SERVICES FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
APRIL 30, 2000 APRIL 30, 1999
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss .......................... $ (251,633) $ (173,523)
Net realized gain (loss) on
investments and written options ............ 3,132,563 (2,770,137)
Net unrealized appreciation (depreciation)
on investments and written options ......... (4,516,701) 2,335,548
------------ ------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................ (1,635,771) (608,112)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gain ....................... -- (2,013,790)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets derived
from net change in outstanding shares (a) .. (3,262,800) 306,490
------------ ------------
TOTAL DECREASE IN NET ASSETS ............... (4,898,571) (2,315,412)
NET ASSETS
Beginning of year ............................ 30,790,638 33,106,050
------------ ------------
END OF YEAR .................................. $ 25,892,067 $ 30,790,638
============ ============
(a) A summary of capital shares transactions is as follows:
YEAR ENDED YEAR ENDED
APRIL 30, 2000 APRIL 30, 1999
----------------------- -----------------------
Shares Value Shares Value
--------- ----------- --------- -----------
Shares sold 307,480 $ 5,345,002 270,436 $ 4,538,355
Shares issued in reinvestment
of distributions -- -- 145,278 1,983,046
Shares redeemed (510,779) (8,607,802) (394,340) (6,214,911)
--------- ----------- --------- -----------
Net increase (decrease) (203,299) $(3,262,800) 21,374 $ 306,490
========= =========== ========= ===========
See accompanying Notes to Financial Statements.
12
<PAGE>
TITAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
APRIL 4, 2000*
THROUGH
APRIL 30, 2000
--------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss ........................................... $ (901)
Net realized loss on investments and written options .......... (69,810)
Net unrealized depreciation on
investments and written options ............................. (2,041)
----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ (72,752)
----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived
from net change in outstanding shares (a) ................... 2,153,099
----------
TOTAL INCREASE IN NET ASSETS ................................ 2,080,347
NET ASSETS
Beginning of period ........................................... --
----------
END OF PERIOD ................................................. $2,080,347
==========
(a) A summary of capital shares transactions is as follows:
APRIL 4,2000*
THROUGH
APRIL 30,2000
-------------------------
Shares Value
---------- ----------
Shares sold 218,632 $2,153,099
Shares redeemed -- --
---------- ----------
Net increase 218,632 $2,153,099
========== ==========
* Commencement of operations.
See accompanying Notes to Financial Statements.
13
<PAGE>
TITAN FINANCIAL SERVICES FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30, MAY 22,1996*
-------------------------------------- THROUGH
2000 1999 1998 APRIL 30, 1997
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 18.01 $ 19.61 $ 12.60 $ 10.00
---------- ---------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............... (0.17) (0.10) (0.06) 0.04
Net realized and unrealized gain (loss)
on investments and written options ....... (0.65) (0.31) 7.93 2.62
---------- ---------- ---------- ---------
Total from investment operations ............. (0.82) (0.41) 7.87 2.66
---------- ---------- ---------- ---------
LESS DISTRIBUTIONS:
From net investment income ................. -- -- -- (0.06)
From net realized gain ..................... -- (1.19) (0.86) --
---------- ---------- ---------- ---------
Total distributions .......................... -- (1.19) (0.86) (0.06)
---------- ---------- ---------- ---------
Net asset value, end of period ............... $ 17.19 $ 18.01 $ 19.61 $ 12.60
========== ========== ========== =========
Total return ................................. (4.55%) (0.15%) 63.47% 26.67%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) ....... $ 25.9 $ 30.8 $ 33.1 $ 7.6
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed.... 2.14% 2.06% 2.10% 3.14%+
After fees waived and expenses absorbed..... 2.14% 2.06% 2.27% 2.49%+
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS:
Before fees waived and expenses absorbed ... (0.91%) (0.62%) (0.44%) (0.33%)+
After fees waived and expenses absorbed..... (0.91%) (0.62%) (0.61%) 0.33%+
Portfolio turnover rate .................... 180.47% 205.86% 107.12% 97.84%++
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not Annualized
See accompanying Notes to Financial Statements.
14
<PAGE>
TITAN GROWTH FUND
FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH THE PERIOD
--------------------------------------------------------------------------------
APRIL 4, 2000*
THROUGH
APRIL 30, 2000
--------------
Net asset value, beginning of period ......................... $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss .......................................... (0.00)^
Net realized and unrealized loss
on investments and written options ......................... (0.48)
------
Total from investment operations ............................... (0.48)
------
Net asset value, end of period ................................. $ 9.52
======
Total return ................................................... (4.80%)++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) ......................... $ 2.1
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed ..................... 7.75%+
After fees waived and expenses absorbed ...................... 2.11%+
RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed ..................... (6.43%)+
After fees waived and expenses absorbed ...................... (0.79%)+
Portfolio turnover rate ...................................... 20.69%++
* Commencement of operations.
+ Annualized.
++ Not Annualized
^ Amount represents less than $0.01 per share.
See accompanying Notes to Financial Statements.
15
<PAGE>
TITAN FUNDS
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Titan Financial Services Fund (the "Financial Services Fund") and the
Titan Growth Fund (the "Growth Fund"), collectively, the "Funds", are
diversified series of shares of beneficial interest of Professionally Managed
Portfolios (the "Trust") which is registered under the Investment Company Act of
1940 (the "1940 Act") as an open-end management investment company. The
Financial Services Fund, whose primary objective is capital appreciation and
secondary objective of moderate income, began operations on May 22, 1996 and the
Growth Fund, whose objective is long-term capital growth, began operations on
April 4, 2000.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION. Securities traded on a national securities
exchange or Nasdaq are valued at the last reported sales price at the
close of regular trading on each day the exchanges are open for
trading; securities traded on an exchange or Nasdaq for which there
have been no sales, and other over-the-counter securities; are valued
at the last reported bid price. Securities for which quotations are
not readily available are stated at their respective fair values as
determined in good faith by the Board of Trustees. Short-term
investments are stated at cost, which when combined with accrued
interest, approximates market value.
B. FEDERAL INCOME TAXES. The Funds intend to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to their
shareholders. Therefore, no federal income tax provision is required.
At April 30, 2000, the Growth Fund has a capital loss carryforward of
approximately $19,154 expiring April 30, 2008, available to offset
future gains, if any.
C. SECURITY TRANSACTIONS, DIVIDEND INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. The cost of
securities sold is determined on a first-in, first-out basis. Dividend
income and distributions to sharehold- ers are recorded on the
ex-dividend date.
16
<PAGE>
TITAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
D. OPTIONS CONTRACTS. The Funds may purchase a call option on securities
and indices. As the holder of a call option, the Funds have the right
to purchase the underlying security at the exercise price at any time
until the expiration date. The Funds may enter into closing sale
transactions with respect to such options, exercise such options or
permit such options to expire. If an option expires on the stipulated
expiration date or if the Funds enter into a closing sale transaction,
a gain or loss is realized. If the Funds exercise a call option, the
cost of the security acquired is increased by the premium paid for the
call. The Funds may write (sell) call options on securities and
indices. When a Fund writes an option, an amount equal to the premium
received by a Fund is recorded as a liability and is subsequently
adjusted to reflect the current fair value of the options written.
Premiums received from writing options that expire unexercised are
treated by the Funds on the expiration date as realized gains from
investments. The difference between the premium and the amount paid on
effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain or loss. If a call
option is exercised, the premium is added to the proceeds from the
sale of the underlying security in determining whether a Fund has
realized a gain or loss. The Funds as writers of an option bears the
market risk of an unfavorable change in the price of the security
underlying the written option.
E. 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 reported
amounts of assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
F. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Funds account and report for
distributions to shareholders in accordance with the American
Institute of Certified Public Accountant's Statement of Position 93-2:
DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF
INCOME, CAPITAL AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT
COMPANIES. For the year ended April 30, 2000, the Financial Services
Fund decreased net realized gain on investments and written options by
$251,633 due to the Fund experiencing a net investment loss during the
year. For the year ended April 30, 2000, the Growth Fund decreased
paid-in-capital by $901 due to the Fund experiencing a net investment
loss during the year. Net assets were not affected by these changes.
17
<PAGE>
TITAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS.
Titan Investment Advisors, LLC (the "Advisor") provided the Funds with
investment management services under an Investment Advisory Agreement. The
Advisor furnished all investment advice, office space, facilities, and most of
the personnel needed by the Funds. As compensation for its services, the Advisor
was entitled to a monthly fee at the annual rate of 1.00% based upon the average
daily net assets of each Fund. For the periods ended April 30, 2000, the
Financial Services Fund and Growth Fund incurred $274,483 and $1,073 in advisory
fees.
The Growth Fund is responsible for its own operating expenses. The Advisor
has contractually agreed to limit the Fund's total operating expenses, for an
indefinite period, by reducing all or a portion of its fees and reimbursing the
Fund for expenses, excluding interest and tax expense, so that its ratio of
expenses to average net assets will not exceed 2.25%. In the case of the Fund's
initial period of operations any fee waived or voluntarily reduced and/or any
Fund expense absorbed by the Advisor pursuant to an agreed upon expense cap
shall be reimbursed by the Fund to the Advisor, if so requested by the Advisor,
anytime before the end of the fifth fiscal year following the year to which the
fee waiver and/or expense absorption relates, provided the aggregate amount of
the Fund's current operating expenses for such fiscal year does not exceed the
applicable limitation on Fund expenses. For the period ended April 30, 2000, the
Advisor waived fees of $1,073 and absorbed expenses of $5,401. The Fund must pay
its current ordinary operating expenses before the Advisor is entitled to any
reimbursement of fees and/or expenses. Any such reimbursement is also contingent
upon Board of Trustees review and approval prior to the time the reimbursement
is initiated.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Funds' administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Funds' custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
the following annual rate:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
18
<PAGE>
TITAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
For the periods ended April 30, 2000, the Financial Services Fund and
Growth Fund incurred $54,896 and $2,049, respectively, in administration fees.
First Fund Distributors, Inc. (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Funds' shares. The
Distributor is an affiliate of the Administrator.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator and Distributor.
NOTE 4 - DISTRIBUTION PLAN
Each Fund has adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that each Fund will pay a fee
to the Advisor as Distribution Coordinator at an annual rate of up to 0.25% of
each Fund's average daily net assets. The fee is paid to the Advisor as
reimbursement for, or in anticipation of, expenses incurred for
distribution-related activity. For the periods ended April 30, 2000, the
Financial Services Fund and Growth Fund paid to the Advisor, as Distribution
Coordinator, $68,621 and $268, respectively.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, excluding
short-term investments for the periods ended April 30, 2000, were as follows:
Purchases Sales
----------- -----------
Financial Services Fund $49,651,655 $54,144,895
Growth Fund 2,375,330 393,436
The activity in call options written during the periods ended April 30,
2000 for the Financial Services Fund and Growth Fund are summarized as follows:
Financial Services Fund Growth Fund
----------------------- ----------------------
Premiums Premiums
Contracts Received Contracts Received
--------- ----------- --------- -----------
Options outstanding,
beginning of period .. (925) $(1,380,501) -- --
Options written ........ (6,542) (3,342,384) (130) $ (48,156)
Options closed ......... 5,280 3,631,105 70 25,807
Options exercised ...... 304 250,846 -- --
Options expiring ....... 1,448 610,870 -- --
------- ----------- ------- -----------
Options outstanding at
April 30, 2000 ....... (435) $ (230,064) (60) $ (22,349)
======= =========== ======= ===========
19
<PAGE>
TITAN FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
NOTE 6 - REPURCHASE AGREEMENTS
The Funds may enter into repurchase agreements with government securities
dealers recognized by the Federal Reserve Board, with member banks of the
Federal Reserve System or with such other brokers or dealers that meet the
credit guidelines established by the Board of Trustees. The Funds will always
receive and maintain, as collateral, securities whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount invested
by the Funds in each agreement, and the Funds will make payment for such
securities only upon physical delivery or upon evidence of book entry transfer
to the accounts of the custodian. To the extent that any repurchase transaction
exceeds one business day, the value of the collateral is marked-to-market on a
daily basis to ensure the adequacy of the collateral.
If the seller defaults and the value of the collateral declines, or if
bankruptcy proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Funds may be delayed or limited.
20
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS OF
TITAN FINANCIAL SERVICES FUND
TITAN GROWTH FUND
THE BOARD OF TRUSTEES OF
PROFESSIONALLY MANAGED PORTFOLIOS
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Titan Financial Services Fund and Titan Growth
Fund, each a series of shares of Professionally Managed Portfolios, as of April
30, 2000, and the related statement of operations for the year then ended, the
statement of changes in net assets and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are the
responsibility of the Funds' 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 2000, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe 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 Titan
Financial Services Fund and Titan Growth Fund as of April 30, 2000, the results
of their operations, the changes in its net assets and the financial highlights
for the periods presented in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
JUNE 26, 2000
21
<PAGE>
================================================================================
ADVISOR
TITAN INVESTMENT ADVISORS, LLC
9672 Pennsylvania Avenue
Upper Marlboro, MD 20772
888-44-TITAN
Account Inquiries 1-800-282-2340
DISTRIBUTOR
FIRST FUND DISTRIBUTORS, INC.
4455 E. Camelback Rd., Suite 261E
Phoenix, AZ 85018
CUSTODIAN
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT
AMERICAN DATA SERVICES, INC.
P.O. Box 5536
Hauppauge, NY 11788-0132
INDEPENDENT AUDITORS
TAIT, WELLER & BAKER
8 Penn Center Plaza, Suite 800
Philadelphia, PA 19103
COUNSEL TO THE TRUST
PAUL, HASTINGS, JANOFSKY & WALKER LLP
345 California Street, 29th Floor
San Francisco, CA 94104
================================================================================
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
