[LIGHTHOUSE CONTRARIAN FUND LOGO]
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SEMI-ANNUAL REPORT
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February 29, 2000
<PAGE>
LIGHTHOUSE CONTRATIAN FUND
Semi-Annual Report
For the Six Months Ending February 29, 2000
March 31, 2000
Dear Shareholder,
The Lighthouse Contrarian Fund began on September 29, 1995, with an NAV of
$12.00 and closed on February 29, 2000 at $11.22. Distributions since inception
total $0.949 per share.
After assuming the role of Portfolio Manager fourteen months ago, the research
team and I began to reposition the Fund's portfolio to better navigate the
peculiarities of the market environment. Rather than using short positions to
take advantage of a decline in extremely overvalued large capitalization stocks,
we instead began to concentrate on building long positions in the stocks of
smaller companies that had been ignored by investors. The disparities in value
between the large and small-cap sectors were so incredible, we believed that
investment flows would eventually move out of the large capitalization stocks
and into smaller companies similar to the ones we owned. Of course, successful
contrarian investing requires patience, since stocks are generally added to the
portfolio when they are out of favor. While waiting on the return of investor
interest, our job is to watch the companies to see how they're doing
operationally -- checking to see whether earnings are growing, whether new
products are on track and whether management is successfully executing its game
plan. If so, we can be confident that value is growing, even if it is not
immediately reflected in the price of the stock.
Our effort now appears to be bearing some fruit. Although the time period is
extremely short to draw any firm conclusions, trends appear to be in the early
stages of potentially significant changes. For the past three months (through
March 13, 2000), the S&P 500 and the Dow Jones Industrial Average have DECLINED
by 2.2% and 11.1%, respectively. Over this same period, the S&P Mid-Cap Index,
the S&P Small-Cap Index, and Lighthouse Contrarian Fund are up 12.2%, 17.2%, and
27.2%, respectively. If these trends continue, investors will become impatient
with the returns available through large-cap index funds. In fact, recent
reports show net inflows into S&P 500 index funds are already far below levels
of a year ago. As less money continues to flow into - or even begins to leave -
large capitalization stocks, the much more reasonably priced small and mid-cap
sectors could benefit enormously.
1
<PAGE>
CURRENT INVESTING CLIMATE
The economic expansion in the U.S. is now the longest in history, beginning over
eight years ago in the late stages of the Bush presidency and continuing through
today. Rather than slowing from old age as many predicted, the growth in GDP has
instead accelerated to almost a 7% annual rate based on the latest reading. This
of course makes Alan Greenspan and the Fed nervous. Too many people are finding
jobs, buying goods and services and generally feeling positive about the future
to suit the Fed. Their argument is that too much of a good thing is not
sustainable without inflation. Therefore, the Fed's preferred path is to slow
the economy through a series of interest rate increases, but not so much as to
cause a recession or a stock market crash. Investors have reacted to this in
different ways, depending on the type of company involved. If the company
represents the "old economy" such as retail, transportation, manufacturing and
the like, stock prices have been discounted to levels characteristic of past
recessions. On the other hand, if the company is considered to be part of the
"new economy" such as technology, communications, fuel cells, internet and
biotechnology, the response is quite different. The stocks of these companies
have continued to rise sharply despite the increases in interest rates.
Investors rationalize that these companies don't need to borrow and can just
issue stock to fund their operations, a view we believe will eventually be seen
as irrelevant and inaccurate. Nonetheless, this has caused the market to narrow
in terms of industry participation, even as the market appears to be broadening
in terms of capitalization size.
The enduring strength of the U.S. economy, along with resurgent economies
throughout most of the rest of the world, has provided fuel on the earnings
front. Based on consensus analyst estimates, earnings for the large-cap S&P 500,
the S&P Mid-cap, and the S&P Small-cap indices are expected to rise by 10%, 19%,
and 33%, respectively in the current year. It is interesting that these same
analysts, when identifying industries that will have the greatest growth in
earnings this year, include only four "new economy" industries in the top
twenty. Energy, aluminum, textiles, paper, agricultural products, machinery,
railroads, gold mining, iron, steel, and power producers, all "old economy"
participants, represent the remaining industries. We believe investors will
eventually realize that it makes sense to pursue a more diversified approach,
and we've positioned the Fund to benefit from such a broadening.
2
<PAGE>
INVESTMENT STRATEGY
Our strategy has not changed significantly. We continue to look for investments
that make sense from a "businessperson's perpective". Many times, this leads us
to industries that are temporarily out of favor. The greatest opportunities
still lie in "old economy" industries that have been discarded by investors in
order to chase the hot sector of the moment. Also, smaller capitalization stocks
across many industries are just beginning to stir.
One promising area is in companies that produce commodities. Commodity prices as
measured by the Commodity Research Bureau Index (CRB Index) have risen by 16.3%
during the past twelve months after losing almost 30% over the previous three
years. Common sense tells us that commodity prices can't decline forever.
Producers will shutter capacity and exit the business if conditions continue to
deteriorate. Such actions eventually shift the balance between supply and demand
resulting in higher prices. Many of the industries expected to produce the
biggest earnings gains in 2000 are those that benefit directly from improving
commodity price trends. Companies such as this comprise almost 32% of our
portfolio.
Energy continues to be a major sector for the Fund, as the stocks of energy
companies have not kept pace with the price of oil. As the year 2000 unfolds,
energy company earnings are likely to outpace those of most other sectors. If
this occurs, we believe the energy sector should attract a growing number of
investors looking for earnings growth.
Retail and other consumer-related stocks are on sale. The fear of recession due
to higher interest rates, internet competition paranoia, and a general
disinterest in anything not tech-related has caused the valuations of these
companies to fall to one of their lowest levels in the past ten years. This has
occurred even while fundamental performance of the companies is robust and
improving. We have been selectively adding to our holdings in this area as
opportunities permit, many times at prices that would be reasonable at twice the
price we paid.
3
<PAGE>
Another area in which we hope to increase our position is in the out-of-favor
financial sector. Fears of higher interest rates have recently reduced the
prices of many financial shares. However, with the repeal of the Glass-Steagall
Act and the likely disappearance of pooling as a business combination accounting
method by the end of this year, we believe the financial sector will be a hotbed
of merger activity during the year. This should lift the entire sector.
A couple of areas that have provided excellent returns for the Fund recently are
from our holdings in small-cap technology and small-cap biotechnology stocks.
Last year these groups were out of favor and this year, they're all the rage.
IN CONCLUSION
We continue to apply a disciplined, contrarian strategy in management of the
Fund. This type of strategy requires patience, but can deliver excellent returns
when trends reverse. We have experienced some of this lately as the Fund has
outperformed the S&P 500 by almost 30% over the last three months. There is no
doubt that there will be setbacks from time to time. Yet, we are confident that
over the long term, the contrarian investment strategy can provide excellent
risk-adjusted returns for the patient investor.
Sincerely,
/s/ Lanny C. Barbee
Lanny C. Barbee
Portfolio Manager
The total return for the twelve months ended March 31, 2000 was 8.87%. The
average annual total return from inception on September 29, 1995 through March
31, 2000 was 0.28%. Results shown are past performance, which should not be
regarded as an indicator of future results. Share value and returns fluctuate
and investors may have a gain or loss when they sell shares.
4
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
SCHEDULE OF INVESTMENTS at February 29, 2000 (Unaudited)
SHARES VALUE
- ------ ----------
COMMON STOCKS: 94.6%
AEROSPACE/DEFENSE EQUIPMENT: 1.2%
19,000 AVTEAM, Inc.* $ 117,562
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AGRICULTURAL OPERATIONS: 4.2%
10,000 Delta and Pine Land Company 179,375
5,200 Potash Corp. 235,300
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414,675
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AUTO/TRUCK PARTS & EQUIPMENT: 2.5%
2,500 DaimlerChrysler AG 169,375
11,700 OEA, Inc. 79,706
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249,081
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BANKS: 0.6%
3,600 Pacific Century Financial Corp. 54,675
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CONSUMER GOODS - APPAREL: 3.6%
7,000 Jones Apparel Group, Inc.* 158,375
11,000 Nautica Enterprises, Inc.* 116,188
11,700 Tarrant Apparel Group* 86,288
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360,851
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CONSUMER GOODS - RESTAURANTS: 2.7%
6,600 CEC Entertainment, Inc.* 150,150
6,000 Jack in the Box, Inc.* 120,375
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270,525
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CONSUMER GOODS - RETAIL, SPECIALTY: 1.2%
6,800 Claire's Stores, Inc. 118,575
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ELECTRONIC COMPONENTS: 8.7%
1,300 Altera Corp.* 103,675
900 Analog Devices, Inc.* 141,300
2,300 Burr-Brown Corp.* 134,981
3,500 Keithley Instruments, Inc. 204,531
9,500 Trikon Technologies, Inc.* 133,000
3,000 Sawtek, Inc.* 144,000
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861,487
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ENERGY - OIL, SECONDARY: 21.3%
9,500 Anadarko Petroleum Corp. 292,125
6,000 Barrett Resources Corp.* 174,750
30,000 Basin Exploration, Inc.* 316,875
30,000 Benton Oil and Gas Company* 60,000
8,300 Louis Dreyfus Natural Gas Corp.* 171,188
10,300 Nuevo Energy Company* 182,825
15,500 Patina Oil & Gas Corp. 139,500
23,500 Plains Resources, Inc.* 326,063
15,000 Pogo Producing Company 346,875
3,700 St. Mary Land & Exploration Co. 102,906
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2,113,107
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ENERGY - PIPELINES: 3.3%
22,000 Plains All American Pipeline, L.P. 325,875
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ENERGY - SEISMIC: 1.3%
29,200 Mitcham Industries, Inc.* 127,750
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FOOD: 1.5%
3,800 Suiza Foods Corp.* 148,675
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HEALTH CARE - ASSISTED LIVING: 0.7%
17,700 Capital Senior Living Corp.* 74,119
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HEALTH CARE - BIOTECHNOLOGY: 10.9%
12,000 Ligand Pharmaceuticals Inc.* 261,000
8,000 Maxim Pharmaceuticals, Inc.* 602,000
23,200 Xoma Corp.* 214,600
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1,077,600
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HEALTH CARE - PHARMACEUTICALS: 4.0%
2,800 Aventis - Sponsored ADR 145,600
11,600 GelTex Pharmaceuticals, Inc.* 254,475
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400,075
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HUMAN RESOURCES: 1.5%
6,700 RemedyTemp, Inc., Class A* 149,075
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MEDICAL PRODUCTS: 3.3%
15,000 Cohesion Technologies, Inc.* 158,437
8,500 CryoLife, Inc.* 168,937
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327,374
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5
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
SCHEDULE OF INVESTMENTS at February 29, 2000 (Unaudited), Continued
SHARES VALUE
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OPTICAL SUPPLIES: 5.4%
5,000 Coherent, Inc.* $ 530,000
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PRECIOUS METALS - GOLD MINING: 3.2%
10,300 Barrick Gold Corp. 168,019
17,200 Placer Dome, Inc. 150,500
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318,519
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REAL ESTATE INVESTMENT: 1.6%
13,700 Kennedy-Wilson Incorporated* 82,200
3,300 Public Storage, Inc. 72,806
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155,006
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TECHNOLOGY - SOFTWARE: 9.2%
30,000 Informix Corp.* 480,000
10,800 Progress Software Corp.* 269,325
8,000 THQ, Inc.* 161,500
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910,825
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TRANSPORTATION - TRUCK: 2.7%
5,500 American Freightways Corp.* 59,813
2,500 CNF Transportation, Inc. 80,156
11,000 J.B. Hunt Transport Services, Inc. 126,500
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266,469
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TOTAL COMMON STOCKS
(Cost $8,356,642) 9,371,900
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PRINCIPAL
AMOUNT VALUE
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SHORT-TERM INVESTMENT: 5.8%
MONEY MARKET INVESTMENT: 5.8%
$570,483 Firstar Stellar
Treasury Fund
(Cost $570,483) $ 570,483
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TOTAL INVESTMENT IN SECURITIES: 100.4%
(Cost $8,927,125+) 9,942,383
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CONTRACTS
LONG INDEX PUT OPTIONS: 0.3%
73 S&P 500 Index / December / 120*
(Cost $54,056) 31,481
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Liabilities in Excess of Other Assets: (0.7)% (70,285)
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TOTAL NET ASSETS: 100.0% $9,903,579
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* Non-income producing security.
ADR - American depositary receipt.
+ At February 29, 2000, the basis of securities for federal income tax
purposes was the same as their cost for financial reporting purposes.
Unrealized appreciation and depreciation of securities were as follows:
Gross unrealized appreciation $2,362,566
Gross unrealized depreciation (1,369,883)
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Net unrealized appreciation $ 992,683
==========
See accompanying Notes to Financial Statements.
6
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LIGHTHOUSE CONTRARIAN FUND
STATEMENT OF ASSETS AND LIABILITIES at February 29, 2000 (Unaudited)
ASSETS
Investments in securities, at value (cost $8,927,125) ..... $ 9,942,383
Put options purchased (cost $54,056) ...................... 31,481
Margin deposits with brokers for options .................. 31,976
Receivables:
Fund shares sold ........................................ 58,575
Dividends and interest .................................. 4,394
Deferred organization costs ............................... 3,903
Prepaid expenses .......................................... 15,548
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Total assets .......................................... 10,088,260
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LIABILITIES
Payables:
Investment securities purchased ......................... 142,147
Fund shares redeemed .................................... 5,636
Distribution fees ....................................... 3,889
Advisory fees ........................................... 2,527
Administration fees ..................................... 1,876
Accrued expenses .......................................... 28,606
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Total liabilities ..................................... 184,681
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NET ASSETS .................................................. $ 9,903,579
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
($9,903,579/882,820 shares outstanding; unlimited number of
shares authorized without par value) ...................... $ 11.22
============
COMPONENTS OF NET ASSETS
Paid-in capital ........................................... $ 15,911,103
Accumulated net investment loss ........................... (177,437)
Accumulated net realized loss on investments .............. (6,822,770)
Net unrealized appreciation on investments ................ 992,683
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Net assets ............................................ $ 9,903,579
============
See accompanying Notes to Financial Statements.
7
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
STATEMENT OF OPERATIONS For the six months ended February 29, 2000 (Unaudited)
INVESTMENT INCOME
Income Dividends ........................................... $ 26,934
Interest ................................................... 16,414
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Total income ............................................. 43,348
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Expenses
Advisory fees .............................................. 62,694
Administration fees ........................................ 14,930
Audit fees ................................................. 12,671
Distribution fees .......................................... 12,539
Registration fees .......................................... 12,518
Fund accounting fees ....................................... 8,935
Reports to shareholders .................................... 6,259
Transfer agent fees ........................................ 6,020
Custody fees ............................................... 4,607
Amortization of deferred organization costs ................ 3,334
Trustee fees ............................................... 2,214
Legal, Insurance, Miscellaneous ............................ 240
-----------
Total expenses ........................................... 146,961
Less: fees waived and expenses absorbed .................. (46,650)
-----------
Net expenses ............................................. 100,311
-----------
NET INVESTMENT LOSS .................................... (56,963)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments ........................... (186,752)
Net realized loss on put options ........................... (669,434)
Net change in unrealized appreciation on investments ....... 1,411,621
-----------
Net realized and unrealized gain on investments .......... 555,435
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ 498,472
===========
See accompanying Notes to Financial Statements.
8
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS YEAR
ENDED ENDED
FEBRUARY 29, AUGUST 31,
2000* 1999
------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss .......................... $ (56,963) $ (64,240)
Net realized gain (loss) on investments....... (186,752) 1,102,332
Net realized loss from short sale
transactions ................................ -- (3,101,741)
Net realized loss on put options ............. (669,434) (2,024,255)
Net change in unrealized appreciation on
investments ................................. 1,411,621 3,388,473
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............... 498,472 (699,431)
------------ ------------
DISTRIBUTION TO SHAREHOLDERS
From net investment income ................. -- (16,726)
------------ ------------
TOTAL DISTRIBUTION TO SHAREHOLDERS ..... -- (16,726)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets from net change
in outstanding shares (a) ................ (2,979,725) (8,642,202)
------------ ------------
TOTAL DECREASE IN NET ASSETS ........... (2,481,253) (9,358,359)
NET ASSETS
Beginning of period ........................ 12,384,832 21,743,191
------------ ------------
END OF PERIOD .............................. $ 9,903,579 $ 12,384,832
============ ============
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2000* AUGUST 31, 1999
------------------------ ------------------------
Shares Value Shares Value
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold -- $ -- 103,469 $ 1,113,248
Shares issued in reinvestment
of distribution 9,462 97,836 1,589 16,385
Shares redeemed (314,163) (3,077,561) (920,664) (9,771,835)
-------- ----------- -------- -----------
Net decrease (304,701) $(2,979,725) (815,606) $(8,642,202)
======== =========== ======== ===========
</TABLE>
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* Unaudited.
See accompanying Notes to Financial Statements.
9
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
FINANCIAL HIGHLIGHTS For a capital share outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED AUGUST 31, SEPTEMBER 29,
FEBRUARY 29, -------------------------------- 1995* THROUGH
2000# 1999 1998 1997 AUGUST 31, 1996
------- ------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.43 $ 10.85 $ 15.76 $ 13.57 $ 12.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.10) (0.07) 0.01 0.05 (0.09)
Net realized and unrealized
gain (loss) on investments 0.89 (0.34) (4.31) 2.41 1.72
------- ------- ------- ------- -------
Total from investment operations 0.79 (0.41) (4.30) 2.46 1.63
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income -- (0.01) -- -- --
From net realized gain -- -- (0.61) (0.27) (0.06)
------- ------- ------- ------- -------
Total distributions -- (0.01) (0.61) (0.27) (0.06)
------- ------- ------- ------- -------
Net asset value, end of period $ 11.22 $ 10.43 $ 10.85 $ 15.76 $ 13.57
======= ======= ======= ======= =======
Total return 7.57% (3.78%) (28.46%) 18.22% 13.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 9.9 $ 12.4 $ 21.7 $ 30.5 $ 14.0
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed 2.93%+ 2.47% 2.13% 2.24% 2.95%+
After fees waived and
expenses absorbed 2.00%+ 2.00% 2.00% 2.00% 2.00%+
RATIO OF NET INVESTMENT INCOME
(LOSS) TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed (2.07%)+ (0.85%) (0.06%) (0.13%) (2.14%)+
After fees waived and expenses
absorbed (1.14%)+ (0.39%) 0.08% 0.11% (1.19%)+
Portfolio turnover rate 28.45% 122.00% 44.09% 21.94% 20.56%
</TABLE>
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# Unaudited.
* Commencement of operations.
+ Annualized.
See accompanying Notes to Financial Statements.
10
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS at February 29, 2000 (Unaudited)
NOTE 1 - ORGANIZATION
The Lighthouse Contrarian Fund (the "Fund") is a diversified series of
shares of beneficial interest of Professionally Managed Portfolios (the
"Trust"), which is regis- tered under the Investment Company Act of 1940 (the
"1940 Act") as an open-end management investment company. The Fund began
operations on September 29, 1995. The investment objective of the Fund is to
seek growth of capital. The Fund seeks to achieve its objective by investing
primarily in equity securities. Prior to November 12, 1997, the Fund was known
as the Lighthouse Growth Fund.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITIES VALUATION. Securities traded on a national securities
exchange or Nasdaq are valued at the last reported sale price at the
close of regular trading on the last business day of the period;
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 Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
C. SECURITY TRANSACTIONS, INVESTMENT INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. The cost of
securities sold is determined on a specific identification basis.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis.
D. DEFERRED ORGANIZATION COSTS. All of the expenses incurred by the
Advisor in connection with the organization and registration of the
Fund's shares have been borne by the Fund and are being amortized on a
straight-line basis over a period of five years.
11
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
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.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
Lighthouse Capital Management, Inc. (the "Advisor") provides the Fund with
investment management services under an Investment Advisory Agreement. The Ad-
visor furnishes all investment advice, office space, facilities, and most of the
personnel needed by the Fund. As compensation for its services, the Advisor is
entitled to a monthly fee at the annual rate of 1.25% based upon the average
daily net assets of the Fund. For the six months ended February 29, 2000, the
Fund incurred $62,694 in advisory fees.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to limit the Fund's total expenses to not more than 2.00% of average
daily net assets. Any fee withheld 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 third 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. Any such reimbursement is also
contingent upon Board of Trustees review and approval prior to the time the
reimbursement is initiated. The Fund must pay its current ordinary operating
expenses before the Advisor is entitled to any reimbursement. For the six months
ended February 29, 2000, the Advisor voluntarily waived fees of $46,650.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's 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 Fund's 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
12
<PAGE>
LIGHTHOUSE CONTRARIAN FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited),Continued
For the six months ended February 29, 2000, the Fund incurred $14,930 in
administration fees.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's 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
The Fund has adopted a Distribution Plan (the "Plan"), in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will pay a fee at
an annual rate of 0.25% of the average daily net assets of the Fund to the
Advisor, as Distribution Coordinator. The Plan allows excess distribution costs,
if approved by the Board of Trustees, to be resubmitted by the Distribution
Coordinator during any of the three fiscal years following the year of their
initial submission. The Fund incurred $12,539 in distribution fees during the
six months ended February 29, 2000.
NOTE 5 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities during the
six months ended February 29, 2000, excluding short-term investments, were
$2,669,534 and $5,026,293, respectively.
Option transactions during the six months ended February 29, 2000 are
summarized as follows:
PUT OPTIONS
-----------
Options outstanding, beginning of period .................... $ 704,968
Options purchased ........................................... 135,705
Options closed .............................................. (309,560)
Options expired ............................................. (477,057)
---------
Options outstanding at February 29, 2000 .................... 54,056
Unrealized depreciation at February 29, 2000 ................ (22,575)
---------
Value of options at February 29, 2000 ....................... $ 31,481
=========
Average fair market value of options
for the six months ended February 29, 2000 ................ $ 102,356
=========
Net trading losses on options for
the six months ended February 29, 2000 .................... $(669,434)
=========
13
<PAGE>
================================================================================
Advisor
LIGHTHOUSE CAPITAL MANAGEMENT, INC.
10000 Memorial Drive, Suite 660
Houston, Texas 77024
(713) 688-6881
Account Inquiries (800) 282-2340
Distributor
FIRST FUND DISTRIBUTORS, INC.
4455 East Camelback Road, Suite 261E
Phoenix, Arizona 85018
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, Ohio 45202
Transfer and Dividend Disbursing Agent
AMERICAN DATA SERVICES, INC.
P.O. Box 5536
Hauppauge, New York 11788-0132
Auditors
ERNST & YOUNG LLP
725 South Figueroa
Los Angeles, California 90017
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER
345 California Street, 29th Floor
San Francisco, California 94104
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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.
