SEMIANNUAL REPORT
MARCH 31, 1999
REYNOLDS FUNDS
NO-LOAD MUTUAL FUNDS
REYNOLDS
BLUE CHIP GROWTH FUND
SEEKING LONG-TERM CAPITAL APPRECIATION,
WITH CURRENT INCOME A SECONDARY OBJECTIVE
REYNOLDS
OPPORTUNITY FUND
SEEKING LONG-TERM CAPITAL APPRECIATION
REYNOLDS
U.S. GOVERNMENT BOND FUND
SEEKING A HIGH LEVEL OF CURRENT INCOME
REYNOLDS
MONEY MARKET FUND
SEEKING A HIGH LEVEL OF CURRENT INCOME
CONSISTENT WITH A STABLE NET ASSET VALUE
1-800-773-9665
REYNOLDS FUNDS
April 16, 1999
Dear Fellow Shareholders:
We appreciate your continued confidence in the Reynolds Funds and would like
to welcome our many new shareholders. The Reynolds Blue Chip Growth Fund was
ranked #1 among Growth and Income Funds by Lipper Inc. for the five years ended
March 31, 1999.
The Reynolds Blue Chip Growth and Opportunity Funds had strong appreciation
for the twelve months ended March 31, 1999:
April 1, 1998 through March 31, 1999
+49.9%
REYNOLDS
BLUE CHIP
GROWTH FUND
+61.8%
REYNOLDS
OPPORTUNITY FUND
The Blue Chip and Opportunity Funds also had strong appreciation for the
three years ended March 31, 1999:
Average Annual Total Returns
April 1, 1996 through March 31, 1999
+42.0%
REYNOLDS
BLUE CHIP
GROWTH FUND
+34.0%
REYNOLDS
OPPORTUNITY FUND
The Blue Chip and Opportunity Funds also had strong appreciation for the five
years ended March 31, 1999:
Average Annual Total Returns
April 1, 1994 through March 31, 1999
+32.8%
REYNOLDS
BLUE CHIP
GROWTH FUND
+28.9%
REYNOLDS
OPPORTUNITY FUND
The Blue Chip Fund has received many awards for its recent performance
including:
(1) America Online - Featured on Sage Online - March 23, 1999.
(2) CNBC - Featured on March 19, 1999.
(3) Investor's Business Daily - The Blue Chip Fund has received an A+ ranking
from Investor's Business Daily. Investor's Business Daily ranks mutual
funds on the basis of a moving 36-month performance. The top 5% of all
mutual funds receive an A+ ranking. Investor's Business Daily considered
4,408 mutual funds for the three years ended March 31, 1999 in determining
this ranking.
(4) Lipper Inc. - #1 ranking out of 321 Growth and Income Funds for the five
years ended March 31, 1999. Ranked #3 out of 808 Growth and Income Funds
for the one year ended March 31, 1999 and ranked #1 out of 499 Growth and
Income Funds for the three years ended March 31, 1999. Ranked #3 out of
150 Growth and Income Funds for the ten years ended March 31, 1999.
(5) Wall $treet Week With Louis Rukeyser - Fritz Reynolds, the portfolio
manager of the Reynolds Funds, appeared as the special guest on December
11, 1998 on the PBS television network. The Blue Chip Fund was also
featured in Louis Rukeyser's Mutual Funds in August, 1998.
THE REYNOLDS BLUE CHIP GROWTH FUND
The Reynolds Blue Chip Growth Fund has investments in many of the premier
larger worldwide growth companies. These companies have proven management,
strong financials including low debt and high return on equity, leading research
and development, and dominant worldwide products with good unit growth. In
addition, many of these companies are not significantly affected by economic
fluctuations. The probabilities highly favor that the diversified group of
industry leading companies held in the Blue Chip Fund will remain industry
leaders over the long-term, continue to strongly increase their earnings, and
continue to significantly increase future shareholder wealth.
For the period ending March 31, 1999, the Blue Chip Fund's return was +13.7%
for the three months, +49.9% for one-year, +186.2% for three years and +312.4%
for five years. These were average annual compounded rates of return of +42.0%
and +32.8%, respectively. The Blue Chip Fund's return was +496.6% for the ten
years ended March 31, 1999, which was an average annual compounded rate of
return of +19.6%, and +515.9% from August 12, 1988 (effective date of the Fund's
registration statement) through March 31, 1999, an average annual compounded
rate of return of +18.6%.
THE REYNOLDS OPPORTUNITY FUND
The Reynolds Opportunity Fund generally invests in medium and large size high
quality companies that have proven themselves in the marketplace and are leaders
in their industries. These well-managed companies usually have sales of more
than $500 million and are demonstrating strong earnings growth from proprietary
innovative products.
A long-term investment in the Reynolds Opportunity Fund should be a good
complement to a long-term investment in the Reynolds Blue Chip Growth Fund. We
are making a high probability bet with the companies in the Opportunity Fund,
just as we are with the companies in the Blue Chip Fund, that the majority of
the companies within a well diversified group of proven worldwide leading
companies will continue to be leaders and strongly increase their earnings and
shareholder wealth in the future.
For the period ending March 31, 1999, the Reynolds Opportunity Fund increased
+19.1% for the three months, +61.8% for one-year, +140.6% for three years and
+256.1% for five years, which were average annual compounded rates of return of
+34.0% and +28.9%, respectively. The Opportunity Fund increased +245.5% from
January 30, 1992 (effective date of the Fund's registration statement) through
March 31, 1999. This was an average annual compounded rate of return of +18.9%.
THE REYNOLDS U.S. GOVERNMENT BOND FUND
The Reynolds U.S. Government Bond Fund emphasizes high quality investments in
U.S. Treasury Bonds, Treasury Notes and Treasury Bills of varying maturities.
As of March 31, 1999, the assets were invested approximately 33% in U.S.
Treasury Securities, 41% in Federal Agencies, and 26% in high quality cash
equivalents.
The Reynolds U.S. Government Bond Fund is designed to satisfy many of the
fixed income objectives of investors. For example, the Bond Fund is actively
managed and is invested in bonds of many different maturities, which reduces the
risk that a large percentage of the bonds in the Fund mature at an inopportune
time for reinvestment. The Bond Fund had a dollar weighted average maturity of
less than 1 year on March 31, 1999. The average maturity of the bonds in the
Fund is continually reevaluated and adjusted based on short- and long-term
economic, inflation and interest rate forecasts.
For the period ending March 31, 1999, the Reynolds U.S. Government Bond Fund's
return was +4.8% for one-year, +16.2% for three years and +27.7% for five years.
These were average annual returns of +5.1% and +5.0%, respectively. The Bond
Fund's return was +42.5% from January 30, 1992 (effective date of the Fund's
registration statement) through March 31, 1999. This was an average annual
compounded rate of return of +5.1%.
THE REYNOLDS MONEY MARKET FUND
The Reynolds Money Market Fund is designed to provide short-term cash
management needs for investors. For ease of redemption, the Money Market Fund
offers: (1) free check writing (in amounts of $500 or more); or (2) telephone
redemption where either a check is mailed to the shareholder, or money may be
wired to the shareholder's bank account ($12.00 wiring charge). As of March 31,
1999, the assets of the Reynolds Money Market Fund were invested approximately
77% in high quality commercial paper, 14% in Federal Agencies, and 9% in high
quality cash equivalents. As of March 31, 1999, the dollar weighted average
days to maturity of the Money Market Fund was 38 days.
The Reynolds Money Market Fund's yield should vary with the rate of inflation
over the years. Its yield is usually higher than inflation and higher than or
approximately the same as most brokerage-firm sponsored money market funds.
Brokerage-firm sponsored money market funds typically have higher expense
structures due to their higher marketing costs. The Reynolds Money Market
Fund's yield is almost always higher than rates paid by most short-term bank
accounts. The rates paid by banks are lower because banks typically have higher
overhead.
For the period ending March 31, 1999, the Reynolds Money Market Fund's return
was +4.8% for one-year, +15.2% for three years and +26.4% for five years.
These were average annual compounded rates of returns of +4.8% and +4.8%,
respectively. The Money Market Fund returned +41.2% since inception (January
30, 1991) through March 31, 1999. This was an average annual compounded rate
of return of +4.3%.
ECONOMIC DISCUSSION
THE WORLD ECONOMY
Economic growth has slowed in several regions of the world. However, these
economies should improve in the future. Over the long-term, there are more than
1.5 billion people in the world who will be experiencing a higher standard of
living and using and consuming many products as Capitalism grows and Communism
declines in many countries such as China and Eastern Europe. Many other
countries, such as India and Latin America, have rapidly emerging middle
classes, which desire western goods and services and governments that are
encouraging foreign investment.
Worldwide inflation remains low. There are many reasons for this including:
the current slowdown in worldwide growth; committed central bankers; fiscal
restraint by governments; worldwide competition for products and labor is
keeping costs low; and the collapse of Communism is making economic systems more
efficient. In addition, cost cutting and restructuring is spreading to many
countries, more efficient private-sector operations are replacing inefficient
state-run enterprises, excess capacity exists in many markets and advances in
technology are helping to improve efficiency. The Blue Chip and Opportunity
Funds are well positioned to participate in these long-term worldwide growth
trends through their investments in U.S. headquartered and foreign headquartered
companies.
THE U.S. ECONOMY
The majority of government and private sector data indicate that the U.S.
economy will continue to have moderate, but not excessive, broad based growth.
Gross Domestic Product (GDP) increased 4.3% in 1998 after increasing 3.8% in
1997. GDP is estimated to increase 3.0% in 1999. The U.S. economy is affected
by the strengths and weaknesses of other economies, but not as much as is
sometimes implied in the financial press. For example, exports are only 14% of
U.S. GDP.
U.S. inflation is at its lowest level since the 1960s due to slowing
worldwide growth and good decisions made by the Federal Reserve. The current
absence of widespread worldwide labor and raw materials shortages and the
slowdown in many countries should keep inflation in check. U.S. inflation
increased at a manageable 1.6% rate in 1998 and at a 2.3% rate in 1997. U.S.
inflation is estimated to increase at a 2.1% rate in 1999.
INVESTMENT OUTLOOK
There are many investment positives. Among them are: (1) the current
environment of moderate U.S. economic growth, inflation and interest rates is a
strong positive; (2) U.S. industry is more competitive than at any time in the
past quarter century; (3) U.S. companies are the leaders in the majority of
industries worldwide; and (4) the U.S. budget is running a surplus versus a
deficit in the early 1990s. The recent lowering of short-term interest rates by
the Federal Reserve is an important positive.
INFORMATION ABOUT THE REYNOLDS FUNDS
FOR AUTOMATIC CURRENT DAILY NET ASSET VALUES: Call 1-800-773-9665 (1-800-
7REYNOLDS) twenty-four hours-a-day, seven days a week and press "1" then "2".
The updated current net asset values for all of the Reynolds Funds are usually
available each business day after 5 P.M. (PST).
FOR REYNOLDS MONEY MARKET FUND AND U.S. GOVERNMENT BOND FUND CURRENT ONE AND
SEVEN DAY YIELDS: Call 1-800-773-9665 and press "1" then "2".
FOR SHAREHOLDERS TO AUTOMATICALLY ACCESS THEIR CURRENT ACCOUNT INFORMATION:
Call 1-800-773-9665 (twenty-four hours-a-day, seven days a week), press "1" then
"3" and enter your 16 digit account number which appears at the top right of
your statement.
TO SPEAK TO A FUND REPRESENTATIVE REGARDING QUESTIONS, CURRENT DAILY NET
ASSET VALUES AND CURRENT ACCOUNT INFORMATION: Call 1-800-773-9665 and press "1"
then "0" from 6 A.M. to 5 P.M. (PST).
INFORMATION AVAILABLE ON THE REYNOLDSFUNDS.COM WEB SITE: Most recent
quarterly top ten holdings and industry percentages, current net asset values
(usually available about one hour earlier than by calling the 800 number),
detailed financial statistics and graphs of past performance.
SHAREHOLDER STATEMENT FREQUENCY: Consolidated statements summarizing all
Reynolds Funds held by a shareholder are sent quarterly. In addition,
individual Fund statements are sent whenever a transaction occurs. These
transactions are: (1) Reynolds Money Market and U.S. Government Bond Fund
statements are sent monthly when each month's accrued dividends are posted; (2)
Reynolds Blue Chip and Opportunity Fund statements are sent twice a year when
any ordinary income or capital gains are distributed; and (3) statements are
sent for any of the Funds when a shareholder purchases or redeems shares.
TAX REPORTING: Individual 1099 Forms, which summarize any dividend income
and any long- or short-term capital gains, are sent annually to shareholders
each January. The percentage of income earned from various government
securities, if any, for the Reynolds Funds are also reported in January.
NEWSPAPER LISTING OF NET ASSET VALUE: The Blue Chip and Opportunity Funds
are listed in many major daily newspapers including Investor's Business Daily,
The New York Times, The Wall Street Journal and USA Today. Many newspapers have
a separate heading listed alphabetically for the Reynolds Funds. The Blue Chip
Fund and Opportunity Fund appear under that heading. The Blue Chip Fund has the
symbol Reynolds BC, Reynolds BCG, Rey BC, ReynBlCh, ReynBluCh or Blue Chip. The
Opportunity Fund has the symbol Reynolds Opport, Reynolds Opp or Opportunity.
The U.S. Government Bond Fund will be listed in newspapers once it has either
$25 million of net assets or 1,000 shareholders.
NASDAQ SYMBOLS: Reynolds Blue Chip Growth Fund - RBCGX; Reynolds Opportunity
Fund - ROPPX; Reynolds U.S. Government Bond Fund - RUSGX; Reynolds Money Market
Fund - REYXX.
MINIMUM INVESTMENT: $1,000 for regular and retirement accounts. ($100 for
additional investments for all accounts - except for the Automatic Investment
Plan, which is $50 for regular and retirement plan accounts).
PROTOTYPE PLANS FOR RETIREMENT PLANS: All types are offered including the
Roth IRA, Education IRA, SIMPLE IRA Plan, 401k, SEP-IRA, 403b and Keogh Plans.
AUTOMATIC INVESTMENT PLAN: There is no charge to automatically debit your
checking or savings account or your account in any of the Reynolds Funds at
periodic intervals to make automatic purchases in any of the Reynolds Funds.
This is useful for dollar cost averaging.
SYSTEMATIC WITHDRAWAL PLAN: For shareholders with a $10,000 minimum starting
balance, there is no charge to automatically redeem shares ($100 minimum) in any
of the Reynolds Funds as often as monthly and send a check to you or wire to
your bank account.
EXCHANGES OR REGULAR REDEMPTIONS: As often as desired - no charge.
PORTFOLIO MANAGER: Frederick Reynolds is the portfolio manager of each of the
Reynolds Funds.
THE REYNOLDS FUNDS ARE NO-LOAD: No front-end sales commissions or redemption
fees ("loads") are charged. Over 40% of all mutual funds impose these marketing
charges that are ultimately paid by the shareholder. These marketing charges
are either: (1) a front-end fee or "load" in which up to 5% of a shareholder's
assets are deducted from the original investment (some funds even charge a fee
when a shareholder reinvests capital gains or dividends); or (2) a back-end
penalty fee or "load" which is typically deducted from a shareholder's account
if a shareholder redeems within five years of the original investment. These
fees reduce a shareholder's return. The Reynolds Funds are No-Load as they do
not have these extra charges.
One hundred percent of our company's pension plan is invested in the Reynolds
Funds. We look forward to strong results in the future.
Sincerely,
/s/ Frederick L. Reynolds
Frederick L. Reynolds
President
80 East Sir Francis Drake Blvd. o Larkspur, CA 94939 o 415-461-7860
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Reynolds Funds unless accompanied or preceded by
the Funds' current prospectus. Past performance is not indicative of future
performance. Investment return and principal value of an investment may
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Reynolds Blue Chip Growth Fund
STATEMENT OF NET ASSETS
March 31, 1999 (Unaudited)
QUOTED
SHARES MARKET VALUE
- ------ ------------
LONG-TERM INVESTMENTS -- 93.1% (A)<F2>
COMMON STOCKS -- 93.1% (A)<F2>
AIRLINES/AEROSPACE -- 1.0%
2,000 AlliedSignal Inc. $ 98,376
11,000 AMR Corp.*<F1> 644,193
13,000 Boeing Co. 443,625
11,500 Delta Air Lines, Inc. 799,250
1,000 General Motors Corp. Cl H*<F1> 50,438
9,500 UAL Corp.*<F1> 738,625
3,000 United Technologies Corp. 406,314
-----------
3,180,821
AUTOMOTIVE -- 0.3%
2,000 Federal-Mogul Corp. 86,000
3,000 Ford Motor Co. 170,250
8,500 General Motors Corp. 738,437
-----------
994,687
BANKS -- 1.2%
13,526 BankAmerica Corp. 955,274
1,000 The Chase Manhattan Corp. 81,313
25,250 Citigroup Inc. 1,612,844
7,500 J.P. Morgan & Co. Inc. 925,312
11,000 Wells Fargo & Co. 385,693
-----------
3,960,436
BEVERAGES -- 2.9%
4,000 Anheuser-Busch Companies, Inc. 304,752
88,000 The Coca-Cola Co. 5,401,000
500 The Pepsi Bottling Co.*<F1> 10,844
93,000 PepsiCo, Inc. 3,644,484
-----------
9,361,080
BIOTECHNOLOGY -- 0.6%
1,000 Agouron Pharmaceuticals, Inc.*<F1> 56,563
18,000 Amgen Inc.*<F1> 1,347,750
4,000 Biogen, Inc.*<F1> 457,252
-----------
1,861,565
BUILDING -- 1.5%
62,500 The Home Depot, Inc. 3,890,625
16,000 Lowe's Companies, Inc. 968,000
-----------
4,858,625
CABLE TV/BROADCASTING -- 0.1%
2,000 Clear Channel
Communications, Inc.*<F1> 134,126
2,000 Cox Communications, Inc.*<F1> 151,250
2,000 General Instrument Corp.*<F1> 60,626
-----------
346,002
CHEMICALS -- 0.3%
1,000 Dow Chemical Co. 93,188
2,000 E.I. du Pont de Nemours & Co. 116,126
1,000 Great Lakes Chemical Corp. 36,750
7,500 Minnesota Mining &
Manufacturing Co. 530,625
1,000 Monsanto Co. 45,938
2,500 Waters Corp.*<F1> 262,657
-----------
1,085,284
COMPUTER NETWORKING -- 4.5%
43,000 3Com Corp.*<F1> 1,002,459
15,000 Ascend Communications, Inc.*<F1> 1,255,320
101,250 Cisco Systems Inc.*<F1> 11,093,254
8,000 Citrix Systems, Inc.*<F1> 305,000
9,000 Legato Systems, Inc.*<F1> 464,625
5,000 Newbridge Networks Corp.*<F1> 155,000
4,000 Novell, Inc.*<F1> 100,752
2,000 Xylan Corp.*<F1> 73,626
-----------
14,450,036
COMPUTER & PERIPHERALS -- 7.8%
11,000 Apple Computer, Inc.*<F1> 395,318
87,500 Compaq Computer Corp. 2,772,700
130,000 Dell Computer Corp.*<F1> 5,313,750
1,000 Electronics for Imaging, Inc.*<F1> 39,000
23,000 EMC Corp. (Mass.)*<F1> 2,938,250
15,500 Gateway 2000, Inc.*<F1> 1,062,726
42,000 Hewlett-Packard Co. 2,848,146
30,500 International Business
Machines Corp. 5,406,125
7,000 Iomega Corp.*<F1> 35,875
7,000 Lexmark International Group, Inc.*<F1> 782,250
2,000 Network Appliance, Inc.*<F1> 101,250
3,000 Seagate Technology, Inc.*<F1> 88,689
27,500 Sun Microsystems, Inc.*<F1> 3,439,233
-----------
25,223,312
COMPUTER SOFTWARE & SERVICES -- 6.0%
3,000 Adobe Systems Inc. 170,250
17,000 Automatic Data Processing, Inc. 703,375
4,000 BMC Software, Inc.*<F1> 148,252
33,625 Computer Associates
International, Inc. 1,195,806
15,000 Computer Sciences Corp.*<F1> 827,820
1,000 Computer Task Group, Inc.*<F1> 21,375
4,000 Compuware Corp.*<F1> 95,500
1,000 Electronic Data Systems Corp. 48,688
3,000 Fiserv, Inc.*<F1> 160,875
7,000 Intuit Inc.*<F1> 712,250
137,000 Microsoft Corp.*<F1> 12,278,625
400 Momentum Business
Applications, Inc.*<F1> 3,575
6,000 Networks Associates, Inc.*<F1> 184,128
51,716 Oracle Corp.*<F1> 1,364,010
21,000 PeopleSoft, Inc.*<F1> 307,125
2,000 SAP AG ADR*<F1> 52,626
10,000 Siebel Systems, Inc.*<F1> 475,000
5,500 VERITAS Software Corp.*<F1> 444,125
-----------
19,193,405
DRUGS -- 9.3%
43,200 Bristol-Myers Squibb Co. 2,778,321
38,000 Eli Lilly & Co. 3,225,250
92,200 Merck & Co., Inc. 7,393,334
53,500 Pfizer Inc. 7,423,125
87,000 Schering-Plough Corp. 4,812,231
66,500 Warner-Lambert Co. 4,401,502
-----------
30,033,763
ELECTRICAL EQUIPMENT -- 1.3%
5,000 Emerson Electric Co. 264,690
35,000 General Electric Co. (U.S.) 3,871,875
1,000 W. W. Grainger, Inc. 43,063
-----------
4,179,628
ENERGY -- 1.7%
2,000 Atwood Oceanics, Inc.*<F1> 60,000
8,000 Chevron Corp. 707,504
7,000 Cooper Cameron Corp.*<F1> 237,125
7,000 Exxon Corp. 493,941
4,000 Halliburton Co. 154,000
7,500 Mobil Corp. 660,000
4,000 Noble Affiliates, Inc. 116,000
3,000 Rowan Companies, Inc.*<F1> 38,064
8,000 Royal Dutch Petroleum Co. ADR*<F1> 416,000
26,000 Schlumberger Ltd. 1,564,888
12,000 Smith International, Inc.*<F1> 480,000
4,000 Texaco Inc. 227,000
2,000 Tidewater Inc. 51,750
6,000 Transocean Offshore Inc. 172,878
-----------
5,379,150
ENTERTAINMENT/MEDIA -- 1.9%
1,000 CBS Corp.*<F1> 40,938
112,147 Walt Disney Co. 3,490,575
1,000 Eastman Kodak Co. 63,875
7,500 Sony Corp. ADR 684,848
25,000 Time Warner Inc. 1,776,575
-----------
6,056,811
FINANCIAL SERVICES -- 3.2%
23,500 American Express Co. 2,761,250
2,000 AmeriTrade Holding Corp.*<F1> 123,500
524 Associates First Capital Corp. 23,580
2,500 Donaldson, Lufkin & Jenrette, Inc. 174,375
8,000 DST Systems, Inc.*<F1> 480,504
8,500 E*TRADE Group, Inc.*<F1> 495,660
6,000 Equifax Inc. 206,250
6,000 Fair, Isaac and Co., Inc. 222,378
7,000 Fannie Mae 484,750
4,000 First Data Corp. 171,000
1,000 Kansas City Southern Industries, Inc. 57,000
11,000 Merrill Lynch & Co., Inc. 972,818
8,500 Morgan Stanley, Dean Witter & Co. 849,473
6,000 National Discount Brokers Group, Inc.*<F1> 168,750
2,000 Paychex, Inc. 94,876
29,000 Charles Schwab Corp. 2,787,625
4,000 State Street Corp. 328,752
-----------
10,402,541
FOODS -- 1.2%
4,000 Bestfoods 188,000
8,000 Campbell Soup Co. 325,504
10,000 General Mills, Inc. 755,630
3,000 H.J. Heinz Co. 142,125
20,000 Kellogg Co. 676,260
23,000 Philip Morris Companies Inc. 809,324
7,000 Quaker Oats Co. 437,941
7,000 Sara Lee Corp. 173,250
450 Vlasic Foods International, Inc.*<F1> 5,822
3,000 Wm. Wrigley Jr. Co. 271,314
-----------
3,785,170
GROCERY STORES -- 0.4%
1,000 Albertson's, Inc. 54,313
12,000 The Kroger Co.*<F1> 718,500
11,000 Safeway Inc.*<F1> 564,443
1,000 Whole Foods Market, Inc.*<F1> 34,375
-----------
1,371,631
HOUSEHOLD PRODUCTS -- 4.6%
38,000 American Home Products Corp. 2,479,500
6,000 Clorox Co. 703,128
44,000 Colgate-Palmolive Co. 4,048,000
44,000 Gillette Co. 2,615,272
1,000 Newell Rubbermaid Inc.
(formerly Newell Co.) 47,500
48,000 Procter & Gamble Co. 4,701,024
1,000 Unilever NV 66,438
-----------
14,660,862
INSURANCE -- 1.0%
26,437 American International Group, Inc. 3,188,963
1 Berkshire Hathaway Inc.*<F1> Cl. A 71,400
22 Berkshire Hathaway Inc.*<F1> Cl. B 51,722
-----------
3,312,085
INTERNET -- 14.1%
16,500 Amazon.com, Inc.*<F1> 2,841,102
154,300 America Online Inc.*<F1> 22,527,800
14,500 At Home Corp. - Series A*<F1> 2,283,750
3,500 Broadcast.com Inc.*<F1> 413,658
3,000 Broadcom Corp.*<F1> 184,875
3,000 CDnow, Inc.*<F1> 48,375
3,500 CMGI Inc.*<F1> 640,720
4,500 CNET, Inc.*<F1> 414,563
10,000 DoubleClick Inc.*<F1> 1,820,630
12,500 EarthLink Network, Inc.*<F1> 750,000
12,000 eBay Inc.*<F1> 1,647,756
20,000 Excite, Inc.*<F1> 2,800,000
12,500 Infoseek Corp.*<F1> 925,000
1,500 Inktomi Corp.*<F1> 128,625
29,000 Lycos, Inc.*<F1> 2,495,827
5,500 MindSpring Enterprises, Inc.*<F1> 473,346
1,000 ONSALE, Inc.*<F1> 33,563
2,000 RealNetworks, Inc.*<F1> 244,376
2,000 Spyglass, Inc.*<F1> 18,000
1,000 theglobe.com, inc.*<F1> 52,500
3,000 USWeb Corp.*<F1> 123,750
3,000 Verio Inc.*<F1> 138,375
1,000 Xoom.com, Inc.*<F1> 67,063
25,000 Yahoo! Inc.*<F1> 4,209,375
-----------
45,283,029
MACHINERY -- 0.1%
5,000 Caterpillar Inc. 229,690
MEDICAL SERVICES -- 0.5%
1,000 Aetna Inc. 83,000
2,500 Cardinal Health, Inc. 165,000
1,000 Healtheon Corp.*<F1> 42,531
3,000 IMS Health Inc. 99,375
10,370 McKesson HBOC, Inc. 684,420
23,500 Oxford Health Plans, Inc.*<F1> 367,187
1,500 Shared Medical Systems Corp. 83,532
-----------
1,525,045
MEDICAL SUPPLIES -- 3.5%
73,000 Abbott Laboratories 3,417,349
3,000 Bausch & Lomb Inc. 195,000
16,000 Boston Scientific Corp.*<F1> 649,008
9,000 Guidant Corp. 544,500
66,500 Johnson & Johnson 6,230,252
4,500 Medtronic, Inc. 322,875
1,000 St. Jude Medical, Inc.*<F1> 24,375
-----------
11,383,359
OFFICE EQUIPMENT & SUPPLIES -- 0.9%
1,000 Avery Dennison Corp. 57,500
30,000 Office Depot, Inc.*<F1> 1,104,390
4,000 Pitney Bowes Inc. 255,000
18,500 Staples, Inc.*<F1> 608,187
13,000 Xerox Corp. 693,875
-----------
2,718,952
PAPER & FOREST PRODUCTS -- 0.3%
9,000 Georgia-Pacific Group 668,250
3,000 International Paper Co. 126,564
1,000 Kimberly-Clark Corp. 47,938
3,000 Weyerhaeuser Co. 166,500
-----------
1,009,252
PUBLISHING -- 0.3%
8,000 Gannett Co., Inc. 504,000
2,000 The McGraw-Hill Companies, Inc. 109,000
2,000 New York Times Co. 57,000
2,000 Reuters Holdings PLC ADR 173,750
1,000 Tribune Co. 65,438
-----------
909,188
RESTAURANTS -- 1.6%
75,000 McDonald's Corp. 3,398,475
9,000 Outback Steakhouse, Inc.*<F1> 294,750
17,000 Tricon Global Restaurants, Inc.*<F1> 1,194,250
9,000 Wendy's International, Inc. 255,942
-----------
5,143,417
RETAIL-SPECIALTY -- 1.7%
2,000 Abercrombie & Fitch Co.*<F1> 184,000
3,000 Barnes & Noble, Inc.*<F1> 96,375
5,000 Bed Bath & Beyond Inc.*<F1> 182,500
44,000 Best Buy Co., Inc.*<F1> 2,288,000
2,000 Borders Group, Inc.*<F1> 28,126
2,500 Circuit City Stores-Circuit
City Group 191,563
1,000 Dollar Tree Stores, Inc.*<F1> 30,938
1,000 Gucci Group NV*<F1> 80,500
1,000 Intimate Brands, Inc. 48,125
4,000 Jones Apparel Group, Inc.*<F1> 111,752
2,000 Liz Claiborne, Inc. 65,250
10,000 NIKE, Inc. Cl B 576,880
2,000 Payless ShoeSource, Inc.*<F1> 93,000
2,000 PC Connection, Inc.*<F1> 34,750
2,000 Revlon, Inc. Cl A*<F1> 40,500
14,000 Rite Aid Corp. 350,000
2,000 Ross Stores, Inc. 87,626
14,000 Starbucks Corp.*<F1> 392,882
2,000 TJX Companies, Inc. 68,000
1,000 Tommy Hilfiger Corp.*<F1> 68,875
18,000 Walgreen Co. 508,500
-----------
5,528,142
RETAIL STORES -- 5.9%
27,500 Costco Companies, Inc.*<F1> 2,517,982
37,000 Dayton Hudson Corp. 2,465,125
53,750 Gap, Inc. 3,618,074
21,000 Kohl's Corp.*<F1> 1,488,375
2,000 The Neiman Marcus Group, Inc.*<F1> 45,250
51,000 Nordstrom, Inc. 2,084,625
74,500 Wal-Mart Stores, Inc. 6,868,006
-----------
19,087,437
SEMICONDUCTORS -- 4.8%
14,000 Altera Corp.*<F1> 833,000
2,000 Atmel Corp.*<F1> 30,376
74,500 Intel Corp. 8,856,188
1,000 Lattice Semiconductor Corp.*<F1> 45,563
2,000 Level One Communications Inc.*<F1> 97,250
4,000 Linear Technology Corp. 205,000
13,000 LSI Logic Corp.*<F1> 405,444
1,000 Maxim Integrated Products Inc.*<F1> 54,125
7,000 Micron Technology, Inc.*<F1> 337,750
1,000 Rambus Inc.*<F1> 64,375
37,000 Texas Instruments Inc. 3,672,250
22,000 Xilinx, Inc.*<F1> 892,386
-----------
15,493,707
SEMICONDUCTOR CAPITAL SPENDING -- 1.2%
35,500 Applied Materials, Inc.*<F1> 2,189,924
10,500 KLA-Tencor Corp.*<F1> 509,912
1,000 Kulicke & Soffa Industries, Inc.*<F1> 25,250
9,000 Novellus Systems, Inc.*<F1> 496,125
2,500 Sanmina Corp.*<F1> 159,375
11,000 Teradyne, Inc.*<F1> 600,193
-----------
3,980,779
SERVICES -- 0.2%
4,500 FDX Corp.*<F1> 417,659
1,000 Robert Half International Inc.*<F1> 32,813
-----------
450,472
TELECOMMUNICATIONS -- 5.4%
1,000 AirTouch Communications, Inc.*<F1> 96,625
4,000 CIENA Corp.*<F1> 90,000
10,000 L.M. Ericsson Telephone Co. ADR 238,130
27,000 Lucent Technologies Inc. 2,909,250
46,000 Motorola, Inc. 3,369,500
12,000 Nextel Communications, Inc.*<F1> 439,500
29,500 Nokia Corp. "A" ADR 4,594,625
19,000 Northern Telecom Limited 1,180,375
6,000 PairGain Technologies, Inc.*<F1> 58,500
3,000 PictureTel Corp.*<F1> 21,000
7,000 QUALCOMM Inc.*<F1> 870,625
1,000 Qwest Communications
International, Inc.*<F1> 72,094
27,000 Tellabs, Inc.*<F1> 2,639,250
5,000 Vodafone Group plc ADR 938,750
-----------
17,518,224
TELEPHONE SERVICES -- 1.8%
2,000 Ameritech Corp. 115,750
12,500 AT&T Corp. 997,663
6,000 BellSouth Corp. 240,378
3,000 Bell Atlantic Corp. 155,064
1,000 GTE Corp. 60,500
31,000 MCI WorldCom Inc.*<F1> 2,745,453
4,000 SBC Communications Inc. 188,500
11,000 Sprint Corp. 1,079,375
3,000 Sprint PCS Group*<F1> 132,939
------------
5,715,622
------------
Total common stocks
(cost $195,606,754) 299,673,209
PREFERRED STOCKS -- 0.0% (A)<F2>
205 Aetna Inc., 6.25%,
Cl C, 07/19/00 Series,
Voting Preferred 15,503
3,000 Motorola Capital Trust,
6.68%, Pfd. Series A 71,250
------------
Total preferred stocks
(cost $88,386) 86,753
------------
Total long-term investments
(cost $195,695,140) 299,759,962
PRINCIPAL
AMOUNT
- -----------
SHORT-TERM INVESTMENTS -- 8.4% (A)<F2>
VARIABLE RATE DEMAND NOTES
$ 7,700,000 American Family Financial Services 7,700,000
15,000,000 Firstar Bank U.S.A., N.A. 15,000,000
3,132,967 Wisconsin Electric Power Co. 3,132,967
1,316,000 Wisconsin Corporate
Central Credit Union 1,316,000
------------
Total short-term investments
(cost $27,148,967) 27,148,967
------------
Total investments
(cost $222,844,107) 326,908,929
Liabilities, less cash and
receivables (1.5%) (A)<F2> $ (4,923,727)
------------
NET ASSETS $321,985,202
------------
------------
Net Asset Value Per Share
($0.01 par value, 20,000,000
shares authorized), offering
and redemption price
($321,985,202 / 5,929,474
shares outstanding) $ 54.30
------------
------------
*<F1> Non-income producing security.
(a)<F2> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of
this statement.
Reynolds Blue Chip Growth Fund
STATEMENT OF OPERATIONS
For the Six Months Ending March 31, 1999 (Unaudited)
INCOME:
Dividends $ 547,186
Interest 330,336
------------
Total income 877,522
------------
EXPENSES:
Management fee 900,773
Distribution fee 181,725
Administrative services 105,036
Registration fees 35,635
Custodian fees 32,657
Transfer agent fees 21,618
Printing and postage expense 19,518
Professional fees 7,686
Board of Directors fees 1,000
Other expenses 13,286
------------
Total expenses 1,318,934
------------
NET INVESTMENT LOSS (441,412)
------------
NET REALIZED LOSS ON INVESTMENTS (84,616)
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 65,128,596
------------
NET GAIN ON INVESTMENTS 65,043,980
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 64,602,568
------------
------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ending March 31, 1999 (Unaudited) and For the Year Ended
September 30, 1998
1999 1998
---------- ----------
OPERATIONS:
Net investment loss $ (441,412) $ (323,508)
Net realized (loss) gain on investments (84,616) 2,116,406
Net increase in unrealized appreciation on
investments 65,128,596 7,045,499
----------- ----------
Net increase in net assets resulting from
operations 64,602,568 8,838,397
----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividend from net investment income
($0.008 per share) -- (15,315)
Distributions from net realized gains
($0.649542 and $0.3781 per share, respectively) (1,651,594) (722,590)
----------- ----------
Total distributions (1,651,594) (737,905)
----------- ----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (4,264,498 and
1,609,369 shares, respectively) 205,495,859 61,280,880
Net asset value of shares issued in
distributions (38,410 and 23,530 shares,
respectively) 1,473,014 699,554
Cost of shares redeemed (796,543 and 1,156,569
shares, respectively) (37,467,852) (42,842,077)
------------ -----------
Net increase in net assets derived from
Fund share activities 169,501,021 19,138,357
------------ -----------
TOTAL INCREASE 232,451,995 27,238,849
NET ASSETS AT THE BEGINNING OF THE PERIOD 89,533,207 62,294,358
------------ -----------
NET ASSETS AT THE END OF THE PERIOD $321,985,202 $89,533,207
------------ -----------
------------ -----------
The accompanying notes to financial statements are an integral part of these
statements.
Reynolds Blue Chip Growth Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
(UNAUDITED)
FOR THE SIX
MONTHS ENDING YEARS ENDED SEPTEMBER 30,
MARCH 31, ------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $36.95 $32.00 $22.69 $19.25 $14.46 $14.22 $14.98 $13.96 $11.14 $11.92 $10.06
Income from investment
operations:
Net investment
income (loss) 0.03 (0.12) (0.01) (0.03) 0.02 0.09 0.12 0.09 0.14 0.07 0.25
Net realized and
unrealized gain (loss)
on investments 17.97 5.46 9.67 3.52 5.00 0.28 (0.79) 1.02 2.83 (0.65) 1.73
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 18.00 5.34 9.66 3.49 5.02 0.37 (0.67) 1.11 2.97 (0.58) 1.98
Less distributions:
Dividends from net
investment income -- (0.01) -- (0.02) (0.06) (0.13) (0.09) (0.09) (0.15) (0.15) (0.12)
Distributions from net
realized gains (0.65) (0.38) (0.35) (0.03) (0.17) -- -- -- -- (0.05) --
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from distributions (0.65) (0.39) (0.35) (0.05) (0.23) (0.13) (0.09) (0.09) (0.15) (0.20) (0.12)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $54.30 $ 36.95 $ 32.00 $ 22.69 $ 19.25 $ 14.46 $ 14.22 $ 14.98 $ 13.96 $ 11.14 $ 11.92
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN 49.4%* 17.0% 43.2% 18.1% 35.3% 2.6% (4.5%) 8.0% 26.9% (5.0%) 19.9%
<F3>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's $) 321,985 89,533 62,294 30,807 29,357 24,771 38,929 40,580 27,735 10,009 5,260
Ratio of expenses (after
reimbursement) to average
net assets 1.5%** 1.4% 1.4% 1.5% 1.5% 1.5% 1.4% 1.5% 1.7% 2.1% 2.0%***<F5>
<F4>
Ratio of net investment
(loss) income to average
net assets (0.5%)**(0.4%) (0.1%) (0.1%) 0.1% 0.5% 0.8% 0.6% 1.2% 0.8% 2.7%****<F6>
<F4>
Portfolio turnover rate 0.5% 35.5% 25.0% 21.5% 49.2% 43.3% 38.1% 0.2% 0.9% 66.2% 32.5%
</TABLE>
*<F3> Not Annualized.
**<F4> Annualized.
***<F5> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratio would
have been 2.7% for the year ended September 30, 1989.
****<F6> If the Fund had paid all of its expenses, the ratio would have been
2.0% for the year ended September 30, 1989.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Opportunity Fund
STATEMENT OF NET ASSETS
March 31, 1999 (Unaudited)
QUOTED
SHARES MARKET VALUE
------ ------------
LONG-TERM INVESTMENTS -- 98.9% (A)<F8>
COMMON STOCKS -- 98.9% (A)<F8>
AIRLINES/AEROSPACE -- 0.9%
3,000 AMR Corp.*<F7> $ 175,689
7,000 Boeing Co. 238,875
2,000 Delta Air Lines, Inc. 139,000
2,500 UAL Corp.*<F7> 194,375
-----------
747,939
BANKS -- 0.4%
2,000 BankAmerica Corp. 141,250
2,025 Bank One Corp. 111,503
2,000 Citigroup Inc. 127,750
-----------
380,503
BEVERAGES -- 2.0%
20,500 The Coca-Cola Co. 1,258,187
12,000 PepsiCo, Inc. 470,256
-----------
1,728,443
BIOTECHNOLOGY -- 0.5%
4,000 Amgen Inc.*<F7> 299,500
1,000 Biogen, Inc.*<F7> 114,313
-----------
413,813
BUILDING -- 1.3%
15,598 The Home Depot, Inc. 970,975
2,000 Lowe's Companies, Inc. 121,000
-----------
1,091,975
CABLE TV/BROADCASTING -- 0.2%
2,400 Clear Channel
Communications, Inc.*<F7> 160,951
1,000 Scientific-Atlanta, Inc. 27,250
-----------
188,201
COMPUTER-NETWORKING -- 6.2%
10,995 3Com Corp.*<F7> 256,326
3,000 Ascend Communications, Inc.*<F7> 251,064
41,650 Cisco Systems Inc.*<F7> 4,563,299
2,000 Citrix Systems, Inc.*<F7> 76,250
1,000 Legato Systems, Inc.*<F7> 51,625
4,000 Newbridge Networks Corp.*<F7> 124,000
-----------
5,322,564
COMPUTER & PERIPHERALS -- 11.1%
11,500 Compaq Computer Corp. 364,412
78,200 Dell Computer Corp.*<F7> 3,196,425
12,000 EMC Corp. (Mass.)*<F7> 1,533,000
8,500 Gateway 2000, Inc.*<F7> 582,785
4,300 Hewlett-Packard Co. 291,596
6,700 International Business
Machines Corp. 1,187,575
10,800 Iomega Corp.*<F7> 55,350
18,300 Sun Microsystems, Inc.*<F7> 2,288,653
-----------
9,499,796
COMPUTER SOFTWARE & SERVICES -- 9.6%
3,000 BMC Software, Inc.*<F7> 111,189
10,187 Computer Associates
International, Inc. 362,280
3,000 Computer Sciences Corp.*<F7> 165,564
2,400 Compuware Corp.*<F7> 57,300
2,000 Fiserv, Inc.*<F7> 107,250
6,500 Intuit Inc.*<F7> 661,375
61,000 Microsoft Corp.*<F7> 5,467,125
232 Momentum Business
Applications, Inc.*<F7> 2,074
1,000 Networks Associates, Inc.*<F7> 30,688
23,587 Oracle Corp.*<F7> 622,107
4,000 Parametric Technology Corp.*<F7> 79,000
11,600 PeopleSoft, Inc.*<F7> 169,650
3,000 Siebel Systems, Inc.*<F7> 142,500
3,000 VERITAS Software Corp.*<F7> 242,250
-----------
8,220,352
DRUGS -- 8.5%
8,000 Bristol-Myers Squibb Co. 514,504
11,000 Eli Lilly & Co. 933,625
26,044 Merck & Co., Inc. 2,088,416
15,000 Pfizer Inc. 2,081,250
19,000 Schering-Plough Corp. 1,050,947
10,200 Warner-Lambert Co. 675,118
-----------
7,343,860
ELECTRICAL EQUIPMENT -- 0.6%
5,000 General Electric Co. (U.S.) 553,125
ENERGY -- 1.3%
5,500 Halliburton Co. 211,750
11,500 Schlumberger Ltd. 692,162
5,500 Smith International, Inc.*<F7> 220,000
-----------
1,123,912
ENTERTAINMENT/MEDIA -- 1.7%
23,000 Walt Disney Co. 715,875
4,000 Sony Corp. ADR 365,252
5,000 Time Warner Inc. 355,315
-----------
1,436,442
FINANCIAL SERVICES -- 4.6%
13,500 American Express Co. 1,586,250
2,000 AmeriTrade Holding Corp.*<F7> 123,500
2,000 Data Broadcasting Corp.*<F7> 27,750
2,000 Diebold, Inc. 48,000
3,000 E*TRADE Group, Inc.*<F7> 174,939
1,000 Equifax Inc. 34,375
2,000 Fannie Mae 138,500
900 Franklin Resources, Inc. 25,312
1,000 Knight/Trimark Group, Inc.*<F7> 67,000
2,000 Merrill Lynch & Co., Inc. 176,876
2,500 Morgan Stanley, Dean Witter & Co. 249,845
1,200 T. Rowe Price Associates, Inc. 41,250
12,687 Charles Schwab Corp. 1,219,538
1,000 State Street Corp. 82,188
-----------
3,995,323
FOODS -- 0.1%
1,000 Quaker Oats Co. 62,563
100 Vlasic Foods International, Inc.*<F7> 1,294
-----------
63,857
GROCERY STORES -- 0.2%
1,000 The Kroger Co.*<F7> 59,875
1,000 Safeway Inc.*<F7> 51,313
1,000 Whole Foods Market, Inc.*<F7> 34,375
-----------
145,563
HOUSEHOLD PRODUCTS -- 3.4%
9,000 American Home Products Corp. 587,250
1,500 Clorox Co. 175,782
10,000 Colgate-Palmolive Co. 920,000
12,000 Gillette Co. 713,256
5,000 Procter & Gamble Co. 489,690
-----------
2,885,978
INSURANCE -- 0.4%
3,125 American International Group, Inc. 376,953
INTERNET -- 19.0%
7,000 Amazon.com, Inc.*<F7> 1,205,316
43,350 America Online Inc.*<F7> 6,329,100
3,500 At Home Corp. - Series A*<F7> 551,250
2,500 Broadcast.com Inc.*<F7> 295,470
500 Broadcom Corp.*<F7> 30,812
5,500 CMGI Inc.*<F7> 1,006,846
2,000 DoubleClick Inc.*<F7> 364,126
5,500 EarthLink Network, Inc.*<F7> 330,000
1,500 EarthWeb Inc.*<F7> 82,219
5,500 eBay Inc.*<F7> 755,221
10,000 Excite, Inc.*<F7> 1,400,000
6,000 Infoseek Corp.*<F7> 444,000
1,000 Inktomi Corp.*<F7> 85,750
7,500 Lycos, Inc.*<F7> 645,473
500 MarketWatch.com, Inc.*<F7> 36,938
2,500 MindSpring Enterprises, Inc.*<F7> 215,158
1,000 ONSALE, Inc.*<F7> 33,563
1,000 USWeb Corp.*<F7> 41,250
14,500 Yahoo! Inc.*<F7> 2,441,438
-----------
16,293,930
MEDICAL SERVICES -- 0.5%
5,406 McKesson HBOC, Inc. 356,796
6,000 Oxford Health Plans, Inc.*<F7> 93,750
-----------
450,546
MEDICAL SUPPLIES -- 3.0%
24,000 Abbott Laboratories 1,123,512
5,698 Boston Scientific Corp.*<F7> 231,128
1,600 Guidant Corp. 96,800
11,676 Johnson & Johnson 1,093,901
-----------
2,545,341
OFFICE EQUIPMENT & SUPPLIES -- 0.7%
2,000 CompUSA Inc.*<F7> 14,000
1,000 Corporate Express, Inc.*<F7> 5,188
1,000 Office Depot, Inc.*<F7> 36,813
10,500 Staples, Inc.*<F7> 345,188
4,000 Xerox Corp. 213,500
-----------
614,689
PUBLISHING -- 0.3%
1,000 Gannett Co., Inc. 63,000
3,000 The McGraw-Hill Companies, Inc. 163,500
-----------
226,500
RESTAURANTS -- 1.1%
18,600 McDonald's Corp. 842,822
1,500 Outback Steakhouse, Inc.*<F7> 49,125
900 Tricon Global Restaurants, Inc.*<F7> 63,225
-----------
955,172
RETAIL-SPECIALTY -- 1.8%
17,000 Best Buy Co., Inc.*<F7> 884,000
1,000 Borders Group, Inc.*<F7> 14,063
1,000 Dollar Tree Stores, Inc.*<F7> 30,938
1,000 Jones Apparel Group, Inc.*<F7> 27,938
4,500 NIKE, Inc. Cl B 259,596
4,000 Rite Aid Corp. 100,000
1,000 Saks Inc.*<F7> 26,000
1,000 Starbucks Corp.*<F7> 28,063
1,000 Tiffany & Co. 74,750
4,000 Walgreen Co. 113,000
-----------
1,558,348
RETAIL STORES -- 4.0%
5,500 Costco Companies, Inc.*<F7> 503,597
5,000 Dayton Hudson Corp. 333,125
20,375 Gap, Inc. 1,371,502
2,000 Kohl's Corp.*<F7> 141,750
1,000 The Neiman Marcus Group, Inc.*<F7> 22,625
8,000 Nordstrom, Inc. 327,000
8,000 Wal-Mart Stores, Inc. 737,504
-----------
3,437,103
SEMICONDUCTORS -- 6.3%
5,100 Altera Corp.*<F7> 303,450
23,800 Intel Corp. 2,829,225
1,000 Linear Technology Corp. 51,250
6,500 LSI Logic Corp.*<F7> 202,722
1,600 Maxim Integrated Products Inc.*<F7> 86,600
500 Rambus Inc.*<F7> 32,188
14,000 Texas Instruments Inc. 1,389,500
12,000 Xilinx, Inc.*<F7> 486,756
-----------
5,381,691
SEMICONDUCTOR CAPITAL SPENDING -- 1.4%
9,000 Applied Materials, Inc.*<F7> 555,192
5,600 KLA-Tencor Corp.*<F7> 271,953
3,600 Novellus Systems, Inc.*<F7> 198,450
2,600 Sanmina Corp.*<F7> 165,750
-----------
1,191,345
SERVICES -- 0.1%
1,000 Cendant Corp.*<F7> 15,750
1,000 FDX Corp.*<F7> 92,813
-----------
108,563
TELECOMMUNICATIONS -- 6.2%
1,000 EchoStar Communications Corp.*<F7> 81,625
11,500 Lucent Technologies Inc. 1,239,125
15,000 Motorola, Inc. 1,098,750
1,000 Nextel Communications, Inc.*<F7> 36,625
8,500 Nokia Corp. "A" ADR 1,323,875
1,000 Northern Telecom Limited 62,125
1,500 QUALCOMM Inc.*<F7> 186,563
2,000 Qwest Communications
International, Inc.*<F7> 144,188
9,500 Tellabs, Inc.*<F7> 928,625
1,000 Vodafone Group plc ADR 187,750
-----------
5,289,251
TELEPHONE SERVICES -- 1.5%
3,000 AT&T Corp. 239,439
8,000 MCI WorldCom Inc.*<F7> 708,504
3,000 Sprint Corp. 294,375
1,000 Sprint PCS Group*<F7> 44,313
-----------
1,286,631
-----------
Total common stocks
(cost $51,554,491) 84,857,709
PREFERRED STOCKS -- 0.0% (A)<F8>
101 Aetna Inc., 6.25%, Cl C,
07/19/00 Series, Voting Preferred 7,638
-----------
Total preferred stocks
(cost $6,595) 7,638
REITS -- 0.0% (A)<F8>
525 Prison Realty Corp. 9,155
-----------
Total REITS (cost $4,316) 9,155
-----------
Total long-term investments
(cost $51,565,402) 84,874,502
SHORT-TERM INVESTMENTS -- 2.6% (A)<F8>
VARIABLE RATE DEMAND NOTE
$2,191,292 Firstar Bank U.S.A., N.A. 2,191,292
-----------
Total short-term investments
(cost $2,191,292) 2,191,292
-----------
Total investments
(cost $53,756,694) 87,065,794
Liabilities, less cash and
receivables (1.5%) (A)<F8> (1,253,132)
-----------
NET ASSETS $85,812,662
-----------
-----------
Net Asset Value Per Share
($0.01 par value, 20,000,000
shares authorized), offering
and redemption price
($85,812,662 / 2,540,213
shares outstanding) $ 33.78
-----------
-----------
*<F7> Non-income producing security.
(a)<F8> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Opportunity Fund
STATEMENT OF OPERATIONS
For the Six Months Ending March 31, 1999 (Unaudited)
INCOME:
Dividends $ 124,742
Interest 27,736
-----------
Total income 152,478
-----------
EXPENSES:
Management fees 251,211
Distribution fees 49,545
Administrative services 39,968
Registration fees 14,688
Custodian fees 13,614
Professional fees 10,075
Transfer agent fees 8,733
Printing and postage expense 3,419
Board of Directors fees 500
Other expenses 2,371
-----------
Total expenses 394,124
-----------
NET INVESTMENT LOSS (241,646)
-----------
NET REALIZED LOSS ON INVESTMENTS (279,778)
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 21,848,767
-----------
NET GAIN ON INVESTMENTS 21,568,989
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $21,327,343
-----------
-----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ending March 31, 1999 (Unaudited) and For the Year Ended
September 30, 1998
1999 1998
----------- -----------
OPERATIONS:
Net investment loss $ (241,646) $ (198,376)
Net realized (loss) gain on investments (279,778) 1,014,034
Net increase in unrealized appreciation
on investments 21,848,767 1,850,126
----------- -----------
Net increase in net assets resulting
from operations 21,327,343 2,665,784
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains
($0.50355 per share) (689,257) --
----------- -----------
Total distributions (689,257) --
FUND SHARE ACTIVITIES:
Proceeds from shares issued (1,383,879
and 490,190 shares, respectively) 41,272,446 10,516,157
Net asset value of shares issued in
distributions (27,402 shares) 610,241 --
Cost of shares redeemed (203,596 and
322,195 shares, respectively) (5,862,330) (6,729,286)
----------- -----------
Net increase in net assets derived
from Fund share activities 36,020,357 3,786,871
----------- -----------
TOTAL INCREASE 56,658,443 6,452,655
NET ASSETS AT THE BEGINNING OF THE PERIOD 29,154,219 22,701,564
----------- -----------
NET ASSETS AT THE END OF THE PERIOD $85,812,662 $29,154,219
----------- -----------
----------- -----------
The accompanying notes to financial statements are an integral part of these
statements.
Reynolds Opportunity Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
FOR THE
(UNAUDITED) PERIOD FROM
FOR THE SIX MONTHS FOR THE YEARS ENDED SEPTEMBER 30, JANUARY 30, 1992+<F9>
ENDING MARCH 31,------------------------------------------------------TO SEPTEMBER 30,
1999 1998 1997 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $21.88 $19.49 $15.64 $14.17 $10.09 $ 9.78 $ 8.85 $10.00
Income from investment
operations:
Net investment
income (loss) 0.18 (0.09)++ (0.13) (0.06) (0.11) (0.09) (0.10) 0.00
Net realized and <F10>
unrealized gain (loss)
on securities 12.22 2.48 3.98 1.53 4.19 0.40 1.03 (1.15)
------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 12.40 2.39 3.85 1.47 4.08 0.31 0.93 (1.15)
Less distributions:
Dividend from net
investment income -- -- -- -- -- -- 0.00 --
Distributions from
net realized gains (0.50) -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total from distributions (0.50) -- -- -- -- -- 0.00 --
------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $ 33.78 $ 21.88 $ 19.49 $ 15.64 $ 14.17 $ 10.09 $ 9.78 $ 8.85
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 57.9%* 12.3% 24.6% 10.4% 40.4% 3.2% 10.5% (11.5%)*
RATIOS/SUPPLEMENTAL DATA: <F11> <F11>
Net assets, end of period
(in 000's $) 85,813 29,154 22,702 17,104 10,983 6,132 3,834 1,844
Ratio of expenses
(after reimbursement)
to average net assets***<F13> 1.6%** 1.5% 1.5% 1.5% 1.9% 2.0% 2.0% 2.0%**
Ratio of net investment <F12> <F12>
(loss) income to
average net assets****<F14> (1.0%)** (0.8%) (0.9%) (1.1%) (1.5%) (1.6%) (1.3%) 0.0%**
<F12> <F12>
Portfolio turnover rate 10.4% 39.4% 60.2% 11.8% 38.4% 16.8% 67.6% 30.1%
</TABLE>
+<F9> Commencement of operations.
++<F10> Net investment loss per share is calculated using ending balances
prior to consideration of adjustments for permanent book and tax
differences.
*<F11> Not annualized.
**<F12> Annualized.
***<F13> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been, for the years ended September 30, 1994 and 1993 and
for the period ended September 30, 1992, 2.1%, 2.4% and 3.8%**<F12>,
respectively.
****<F14> The ratios of net investment income prior to adviser's expense
limitation undertaking to average net assets for the years ended
September 30, 1994 and 1993 and for the period ended September 30,
1992 would have been (1.7%), (1.7%) and (1.8%)**<F12>, respectively.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds U.S. Government Bond Fund
STATEMENT OF NET ASSETS
March 31, 1999 (Unaudited)
PRINCIPAL QUOTED
AMOUNT MARKET VALUE
- --------- ------------
LONG-TERM INVESTMENTS -- 25.3% (A)<F15>
U.S. TREASURY SECURITIES -- 17.0%
$300,000 U. S. Treasury Notes,
6.00%, due 08/15/00 $ 303,984
300,000 U.S. Treasury Notes,
8.50%, due 11/15/00 316,078
----------
Total U.S. treasury securities
(cost $635,909) 620,062
FEDERAL AGENCIES -- 8.3%
300,000 Federal Farm Credit,
6.28%, due 06/20/01 305,629
----------
Total federal agencies
(cost $300,109) 305,629
----------
Total long-term investments
(cost $936,018) 925,691
SHORT-TERM INVESTMENTS -- 74.3% (A)<F15>
U.S. TREASURY SECURITIES -- 16.5%
200,000 U.S. Treasury Notes,
6.75%, due 05/31/99 200,594
400,000 U.S. Treasury Notes,
6.375%, due 07/15/99 401,938
----------
Total U.S. treasury securities
(cost $598,462) 602,532
FEDERAL AGENCIES -- 32.6%
400,000 Federal National Mortgage Association,
4.62%, due 04/16/99 399,132
400,000 Federal Home Loan Bank,
4.55%, due 05/26/99 397,078
400,000 Federal National Mortgage Association,
4.65%, due 08/11/99 393,055
----------
Total federal agencies
(cost $1,189,390) 1,189,265
COMMERCIAL PAPER -- 4.5%
165,000 Norwest Financial, Inc.,
4.75%, due 05/24/99 163,846
----------
Total commercial paper
(cost $163,846) 163,846
VARIABLE RATE DEMAND NOTES -- 20.7%
76,329 American Family Financial Services 76,329
170,000 Firstar Bank U.S.A., N.A. 170,000
170,000 Warner-Lambert Co. 170,000
170,000 Wisconsin Electric Power Co. 170,000
170,000 Wisconsin Corporate
Central Credit Union 170,000
----------
Total variable rate demand notes
(cost $756,329) 756,329
----------
Total short-term investments
(cost $2,708,027) 2,711,972
----------
Total investments
(cost $3,644,045) 3,637,663
Cash and receivables, less
liabilities 0.4% (A)<F15> 13,779
----------
NET ASSETS $3,651,442
----------
----------
Net Asset Value Per Share
($0.01 par value, 20,000,000
shares authorized), offering
and redemption price
($3,651,442 / 374,726
shares outstanding) $ 9.74
----------
----------
(a)<F15> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds U.S. Government Bond Fund
STATEMENT OF OPERATIONS
For the Six Months Ending March 31, 1999 (Unaudited)
INCOME:
Interest $95,247
-------
EXPENSES:
Management fees 12,687
Professional fees 10,445
Transfer agent fees 6,092
Registration fees 3,184
Administrative services 1,691
Printing and postage expense 1,017
Custodian fees 574
Board of Directors fees 300
Other expenses 1,358
-------
Total expenses before reimbursement and
management fee waiver 37,348
Less expenses assumed by adviser (22,124)
-------
Net expenses 15,224
-------
NET INVESTMENT INCOME 80,023
-------
NET REALIZED LOSS ON INVESTMENTS (8,750)
NET DECREASE IN UNREALIZED APPRECIATION ON INVESTMENTS (15,952)
-------
NET LOSS ON INVESTMENTS (24,702)
-------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $55,321
-------
-------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ending March 31, 1999 (Unaudited) and For the Year Ended
September 30, 1998
1999 1998
---------- ----------
OPERATIONS:
Net investment income $ 80,023 $ 147,987
Net realized loss on investments (8,750) --
Net (decrease) increase in unrealized
appreciation on investments (15,952) 15,938
---------- ----------
Net increase in net assets resulting
from operations 55,321 163,925
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.2310
and $0.5281 per share, respectively) (80,023) (147,987)
---------- ----------
Total distributions (80,023) (147,987)
---------- ----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (95,440 and
71,430 shares, respectively) 932,903 697,445
Net asset value of shares issued in
distributions (7,231 and 13,420 shares,
respectively) 70,753 131,107
Cost of shares redeemed (41,110 and 40,601
shares, respectively) (401,203) (396,565)
---------- ----------
Net increase in net assets derived from
Fund share activities 602,453 431,987
---------- ----------
TOTAL INCREASE 577,751 447,925
NET ASSETS AT THE BEGINNING OF THE PERIOD 3,073,691 2,625,766
---------- ----------
NET ASSETS AT THE END OF THE PERIOD $3,651,442 $3,073,691
---------- ----------
---------- ----------
The accompanying notes to financial statements are an integral part of these
statements.
Reynolds U.S. Government Bond Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
FOR THE
(UNAUDITED) PERIOD FROM
FOR THE SIX MONTHS FOR THE YEARS ENDED SEPTEMBER 30, JANUARY 30, 1992+<F16>
ENDING MARCH 31,------------------------------------------------------TO SEPTEMBER 30,
1999 1998 1997 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $ 9.81 $ 9.76 $ 9.75 $ 9.85 $ 9.61 $10.76 $10.36 $10.00
Income from investment
operations:
Net investment
income 0.23 0.53 0.53 0.53 0.54 0.56 0.55 0.30
Net realized and
unrealized (loss) gain
on investments (0.07) 0.05 0.01 (0.10) 0.24 (1.14) 0.40 0.36
------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 0.16 0.58 0.54 0.43 0.78 (0.58) 0.95 0.66
Less distributions:
Dividends from net
investment income (0.23) (0.53) (0.53) (0.53) (0.54) (0.56) (0.55) (0.30)
Distribution from
net realized gains -- -- -- -- -- (0.01) -- --
------ ------ ------ ------ ------ ------ ------ ------
Total from distributions (0.23) (0.53) (0.53) (0.53) (0.54) (0.57) (0.55) (0.30)
------ ------ ------ ------ ------ ------ ------ ------
Net asset value,
end of period $ 9.74 $ 9.81 $ 9.76 $ 9.75 $ 9.85 $ 9.61 $10.76 $10.36
------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT
RETURN 1.7%* 6.08% 5.70% 4.49% 8.42% (5.54%) 9.48% 6.68%*
RATIOS/SUPPLEMENTAL DATA: <F17> <F17>
Net assets, end of period
(in 000's $) 3,651 3,074 2,626 2,766 2,799 4,367 6,376 3,223
Ratio of expenses
(after reimbursement)
to average net assets***<F19> 0.90%** 0.90% 0.90% 0.90% 0.91% 0.86% 0.83% 0.75%**
Ratio of net investment <F18> <F18>
income to average
net assets****<F20> 4.73%** 5.40% 5.45% 5.43% 5.59% 5.42% 5.34% 4.95%**
<F18> <F18>
Portfolio turnover rate -- -- 25.28% 28.65% -- 19.59% 6.34% --
</TABLE>
+<F16> Commencement of operations.
*<F17> Not annualized.
**<F18> Annualized.
***<F19> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been 2.2%**<F18>, 2.4%, 2.3%, 2.2%, 2.0%, 1.5% and 1.5%
for the six months ending March 31, 1999 and for the years ended
September 30, 1998, 1997, 1996, 1995, 1994 and 1993, respectively,
and 2.8%**<F18> for the period ended September 30, 1992.
****<F20> The ratios of net investment income prior to adviser's expense
limitation undertaking to average net assets for the six months
ending March 31, 1999 and for the years ended September 30, 1998,
1997, 1996, 1995, 1994 and 1993 and the period ended September 30,
1992 would have been 3.4%**<F18>, 3.9%, 4.0%, 4.1%, 4.5%, 4.8%, 4.6%
and 2.9%**<F18>, respectively.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Money Market Fund
STATEMENT OF NET ASSETS
March 31, 1999 (Unaudited)
<TABLE>
PRINCIPAL
AMOUNT RATING VALUE
------ ------ -----
<S> <C> <C>
COMMERCIAL PAPER -- 76.8% (A)<F21>
$500,000 Ford Motor Credit Co., 4.70%, due 04/05/99 A1P1 $ 499,739
325,000 Prudential Funding Corp., 4.81%, due 04/09/99 A1P1 324,653
325,000 Merrill Lynch & Co., Inc., 4.78%, due 04/16/99 A1+P1 324,353
500,000 Eastman Kodak Co., 4.70%, due 04/22/99 A1P1 498,629
350,000 Bell South Capital Funding, 4.65%, due 04/26/99 A1+P1 348,870
540,000 Motorola Inc., 4.68%, due 04/29/99 A1+P1 538,034
350,000 Walt Disney Corp., 4.71%, due 05/07/99 A1P1 348,351
540,000 Texaco Inc., 4.78%, due 05/10/99 A1P1 537,204
470,000 American Express Credit Corp., 4.82%, due 05/13/99 A1P1 467,357
500,000 General Electric Capital Corp., 4.85%, due 05/13/99 A1+P1 497,171
490,000 American General Corp., 4.83%, due 05/14/99 A1+P1 487,173
500,000 IBM Credit Corp., 4.72%, due 05/17/99 A1P1 496,985
500,000 Sears Roebuck Acceptance Corp., 4.84%, due 05/21/99 F1P1 496,639
350,000 Norwest Financial, Inc., 4.75%, due 05/24/99 A1P1 347,552
350,000 Associates Corp. of North America, 4.70%, due 05/25/99 A1+P1 347,532
500,000 Morgan Stanley Dean Witter & Co. Inc., 4.76%, due 05/27/99 A1P1 496,298
500,000 Dupont EI De Nemours, 4.75%, due 06/22/99 A1+P1 494,590
500,000 Deere & Co., 4.81%, due 07/06/99 A1P1 493,587
300,000 JC Penny Funding Corp., 4.82%, due 07/12/99 A1P1 295,903
-----------
Total commercial paper 8,340,620
FEDERAL AGENCIES -- 13.8% (A)<F21>
500,000 Federal National Mortgage Corp., 4.61%, due 04/06/99 499,680
500,000 Federal Home Loan Mortgage Corp., 4.61%, due 04/26/99 498,399
500,000 Federal Home Loan Bank, 4.60%, due 04/28/99 498,275
-----------
Total federal agencies 1,496,354
VARIABLE RATE DEMAND NOTES -- 9.7% (A)<F21>
495,000 Firstar Bank U.S.A., N.A. A1P1 495,000
70,241 Warner-Lambert Co. A1+P1 70,241
495,000 Wisconsin Corporate Central Credit Union A1+P1 495,000
-----------
Total variable rate demand notes 1,060,241
-----------
Total investments (amortized cost $10,897,215) 10,897,215
Liabilities, less cash and receivables (0.3%) (A)<F21> (34,417)
-----------
NET ASSETS $10,862,798
-----------
-----------
Net Asset Value Per Share ($0.01 par value, 500,000,000 shares
authorized), offering and redemption price
($10,862,798 / 10,862,798 shares outstanding) $ 1.00
-----------
-----------
</TABLE>
(a)<F21> Percentages for the various classifications relate to net assets.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Money Market Fund
STATEMENT OF OPERATIONS
For the Six Months Ending March 31, 1999 (Unaudited)
INCOME:
INTEREST $205,462
--------
EXPENSES:
MANAGEMENT FEES 20,363
REGISTRATION FEES 12,888
PROFESSIONAL FEES 10,883
TRANSFER AGENT FEES 6,588
ADMINISTRATIVE SERVICES 4,072
PRINTING AND POSTAGE EXPENSE 3,564
CUSTODIAN FEES 2,198
BOARD OF DIRECTORS FEES 600
OTHER EXPENSES 1,760
--------
TOTAL EXPENSES BEFORE REIMBURSEMENT AND MANAGEMENT FEE WAIVER 62,916
LESS EXPENSES ASSUMED BY ADVISER (36,444)
--------
NET EXPENSES 26,472
--------
NET INVESTMENT INCOME 178,990
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $178,990
--------
--------
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ending March 31, 1999 (Unaudited) and For the Year Ended
September 30, 1998
1999 1998
----------- -----------
OPERATIONS:
Net investment income $ 178,990 $ 184,522
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0221
and $0.0488 per share, respectively) (178,990) (184,522)
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (25,518,416 and
10,462,294 shares, respectively) 25,518,416 10,462,294
Net asset value of shares issued in
distributions (154,893 and 172,920 shares,
respectively) 154,893 172,920
Cost of shares redeemed (19,689,780 and
8,788,422 shares, respectively) (19,689,780) (8,788,422)
----------- -----------
Net increase in net assets derived from
Fund share activities. 5,983,529 1,846,792
----------- -----------
TOTAL INCREASE 5,983,529 1,846,792
NET ASSETS AT THE BEGINNING OF THE PERIOD 4,879,269 3,032,477
----------- -----------
NET ASSETS AT THE END OF THE PERIOD $10,862,798 $ 4,879,269
----------- -----------
----------- -----------
The accompanying notes to financial statements are an integral part of these
statements.
Reynolds Money Market Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout each period)
<TABLE>
(UNAUDITED)
FOR THE SIX MONTHS YEARS ENDED SEPTEMBER 30,
ENDING MARCH 31,------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991+<F22>
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment
operations:
Net investment income 0.02 0.05 0.05 0.05 0.05 0.03 0.03 0.04 0.04
Less distributions:
Dividends from net
investment income (0.02) (0.05) (0.05) (0.05) (0.05) (0.03) (0.03) (0.04) (0.04)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 2.2%* 5.0% 4.9% 4.9% 5.2% 3.1% 2.6% 3.6% 3.6%*
RATIOS/SUPPLEMENTAL DATA: <F23> <F23>
Net assets, end of period
(in 000's $) 10,863 4,879 3,032 3,980 3,743 3,192 6,798 6,166 3,617
Ratio of expenses (after
reimbursement)
to average net assets***<F25> 0.65%** 0.65% 0.65% 0.65% 0.65% 0.63% 0.67% 0.64% 0.61%**
Ratio of net investment <F24> <F24>
income to
average net assets****<F26> 4.38%** 4.88% 4.77% 4.78% 5.08% 2.84% 2.62% 3.53% 5.43%**
<F24> <F24>
</TABLE>
+<F22> For the period from January 30, 1991 (commencement of operations) to
September 30, 1991.
*<F23> Not annualized.
**<F24> Annualized.
***<F25> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been 1.54%**<F24>, 1.96%, 2.02%, 1.39%, 1.95%, 1.47%,
1.22% and 1.73% for the six months ending March 31, 1999 and for
the years ended September 30, 1998, 1997, 1996, 1995, 1994, 1993
and 1992, respectively, and 1.85%**<F24> for the period ended
September 30, 1991.
****<F26> If the Fund had paid all of its expenses, the ratios would have been
3.49%**<F24>, 3.57%, 3.39%, 4.05%, 3.79%, 2.01%, 2.08% and 2.44% for
the six months ending March 31, 1999 and for the years ended
September 30, 1998, 1997, 1996, 1995, 1994, 1993 and 1992,
respectively, and 4.18%**<F24> for the period ended
September 30, 1991.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Funds, Inc.
NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (Unaudited)
(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
The following is a summary of significant accounting policies of the
Reynolds Funds, Inc. (the "Company"), which is registered as a diversified,
open-end management investment company under the Investment Company Act of
1940. This Company consists of a series of four funds: the Reynolds Blue
Chip Growth Fund ("Blue Chip Fund"), the Reynolds Money Market Fund ("Money
Market Fund"), the Reynolds Opportunity Fund ("Opportunity Fund") and the
Reynolds U.S. Government Bond Fund ("Government Bond Fund") (collectively
the "Funds"). The assets and liabilities of each Fund are segregated and a
shareholder's interest is limited to the Fund in which the shareholder owns
shares. The Company was incorporated under the laws of Maryland on April
28, 1988.
The investment objective of the Blue Chip Fund is to produce long-term
growth of capital, with current income as a secondary objective, by
investing in common stocks of well-established growth companies commonly
referred to as "blue chip" companies; the investment objective of the Money
Market Fund is to provide a high level of current income, consistent with
liquidity, the preservation of capital and a stable net asset value, by
investing in a diversified portfolio of high-quality, highly liquid money
market instruments; the investment objective of the Opportunity Fund is to
produce long-term growth of capital by investing in a diversified portfolio
of common stocks of companies having above average growth characteristics;
and the investment objective of the Government Bond Fund is to provide a
high level of current income by investing primarily in a diversified
portfolio of securities issued or guaranteed as to principal and interest by
the U.S. Government, its agencies or instrumentalities.
(a) Each security for the Blue Chip Fund, Opportunity Fund and Government
Bond Fund, excluding short-term investments, is valued at the last sale
price reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest bid price. Securities which
are traded over-the-counter are valued at the latest bid price. Short-term
investments with maturities of 60 days or less held by these Funds and all
instruments held by the Money Market Fund are valued at amortized cost which
approximates quoted market value. Securities for which quotations are not
readily available are valued at fair value as determined by the investment
adviser under the supervision of the Board of Directors. For financial
reporting purposes, investment transactions are recorded on trade date.
Cost amounts for the Blue Chip Fund and the Opportunity Fund, as reported on
the statement of net assets and the schedule of investments, respectively,
are substantially the same for Federal income tax purposes. Cost amounts,
as reported on the statements of net assets for the Government Bond Fund and
the Money Market Fund, are the same for Federal income tax purposes.
(b) Net realized gains and losses on common stock of the Blue Chip Fund and
the Opportunity Fund are computed on the identified cost basis.
(c) Provision has not been made for Federal income taxes since the Funds
have elected to be taxed as "regulated investment companies" and intend to
distribute substantially all income to shareholders and otherwise comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies. The Government Bond Fund has $231,245, $19,651 and
$2,405 of net capital losses which expire September 30, 2003, 2004 and 2005,
respectively.
(d) The Blue Chip Fund and the Opportunity Fund record dividend income on
the ex-dividend date and interest income on the accrual basis. The
Government Bond Fund and the Money Market Fund record interest income on the
accrual basis.
(e) The Funds have investments in short-term variable rate demand notes,
which are unsecured instruments. The Funds may be susceptible to credit
risk with respect to these notes to the extent the issuer defaults on its
payment obligation. The Funds' policy is to monitor the creditworthiness of
the issuer and the Funds do not anticipate nonperformance by these
counterparties.
(f) Generally accepted accounting principles require that permanent
differences between income for financial reporting and tax purposes be
reclassified in the capital accounts.
(g) The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
(2)INVESTMENT ADVISER AND MANAGEMENT AGREEMENT AND TRANSACTIONS WITH RELATED
PARTIES --
The Funds have management agreements with Reynolds Capital Management
("RCM"), with whom certain officers and directors of the Funds are
affiliated, to serve as investment adviser and manager. Under the terms of
the agreements, the Blue Chip Fund and the Opportunity Fund will pay RCM a
monthly management fee at the annual rate of 1% of such Funds' daily net
assets; from the Government Bond Fund a monthly fee of 0.75% of such Fund's
daily net assets; and from the Money Market Fund a monthly fee of 0.5% of
such Fund's daily net assets. For the six months ending March 31, 1999, RCM
voluntarily waived $12,687 and $20,363 of the management fees due from the
Government Bond Fund and the Money Market Fund, respectively, under the
agreements. Additionally, RCM assumed $9,437 and $16,081 of other expenses
of the Government Bond Fund and the Money Market Fund, respectively.
In addition to the reimbursement required under the management agreements,
RCM has voluntarily reimbursed the Government Bond Fund and the Money Market
Fund for expenses over 0.90% and 0.65% of the daily net assets of the Funds,
respectively. These voluntary reimbursements to the Government Bond Fund
and the Money Market Fund may be modified or discontinued at any time by
RCM.
The Funds have administrative agreements with Fiduciary Management, Inc.
("FMI"), with whom certain officers of the Funds are affiliated, to
supervise all aspects of the Funds' operations except those per#formed by
RCM pursuant to the management agreements. Under the terms of the
agreements, the Blue Chip Fund and the Opportunity Fund will pay FMI a
monthly administrative fee at the annual rate of 0.2% of such Funds' daily
net assets up to and including $30,000,000 and 0.1% of such Funds' daily net
assets in excess of $30,000,000; and the Government Bond Fund and the Money
Market Fund will pay FMI a monthly administrative fee at the annual rate of
0.1% of such Funds' daily net assets.
The Blue Chip Fund and the Opportunity Fund have entered into Distribution
Plans (the "Plans"), pursuant to Rule 12b-1 under the Investment Company Act
of 1940 with RCM. The Plans provide that the Funds may incur certain costs
which may not exceed the lesser of a monthly amount equal to 0.25% of the
Funds' daily net assets or the actual distribution costs incurred by RCM
during the year. Amounts payable under the Plans are paid monthly to RCM
for any activities or expenses primarily intended to result in the sale of
shares of such Fund.
(3)DISTRIBUTION TO SHAREHOLDERS --
Net investment income and net realized gains, if any, are distributed to
shareholders.
(4)INVESTMENT TRANSACTIONS --
For the six months ending March 31, 1999, purchases and proceeds of sales of
investment securities of the Blue Chip Fund (excluding short-term
securities) were $147,883,810 and $804,261, respectively; purchases and
proceeds of sales of investment securities of the Opportunity Fund
(excluding short-term securities) were $39,687,401 and $5,331,560,
respectively; there were no purchases or sales of long-term investment
securities for the Government Bond Fund.
(5)ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of March 31, 1999, liabilities of the Funds included the following:
<TABLE>
BLUE CHIP MONEY MARKET OPPORTUNITY GOVERNMENT
FUND FUND FUND BOND FUND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PAYABLE TO BROKERS FOR INVESTMENTS PURCHASED $ 4,770,167 $ -- $ 1,229,995 $ --
PAYABLE TO RCM FOR MANAGEMENT FEES 246,760 -- 66,396 --
PAYABLE FOR DISTRIBUTION FEES 116,608 -- 22,317 --
OTHER LIABILITIES 55,504 4,318 30,676 2,186
</TABLE>
(6)SOURCES OF NET ASSETS --
As of March 31, 1999, the sources of net assets were as follows:
<TABLE>
BLUE CHIP MONEY MARKET OPPORTUNITY GOVERNMENT
FUND FUND FUND BOND FUND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FUND SHARES ISSUED AND OUTSTANDING $218,180,103 $ 10,862,798 $ 52,801,461 $ 3,919,875
NET UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS 104,064,822 -- 33,309,100 (6,382)
ACCUMULATED NET REALIZED LOSS ON INVESTMENTS (259,723) -- (297,899) (262,051)
------------ ------------ ------------ ------------
$321,985,202 $ 10,862,798 $ 85,812,662 $ 3,651,442
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Aggregate net unrealized appreciation (depreciation) for
the Funds as of March 31, 1999 consisted of the following:
<TABLE>
BLUE CHIP OPPORTUNITY GOVERNMENT
FUND FUND BOND FUND
------------ ------------ ------------
<S> <C> <C> <C>
AGGREGATE GROSS UNREALIZED APPRECIATION $110,901,155 $ 34,711,321 $ 13,728
AGGREGATE GROSS UNREALIZED DEPRECIATION (6,836,333) (1,402,221) (20,110)
------------ ------------ ------------
NET UNREALIZED APPRECIATION (DEPRECIATION) $104,064,822 $ 33,309,100 $ (6,382)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
REYNOLDS FUNDS
Wood Island, Third Floor
80 East Sir Francis Drake Boulevard
Larkspur, California 94939
www.reynoldsfunds.com
BOARD OF DIRECTORS
FREDERICK L. REYNOLDS
ROBERT E. SNADER
ROBERT E. STAUDER
INVESTMENT ADVISER
REYNOLDS CAPITAL MANAGEMENT
Wood Island, Third Floor
80 East Sir Francis Drake Boulevard
Larkspur, California 94939
ADMINISTRATOR
FIDUCIARY MANAGEMENT, INC.
225 East Mason Street
Milwaukee, Wisconsin 53202
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
FIRSTAR MUTUAL FUND SERVICES, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
1-800-773-9665
OR 1-800-7REYNOLDS
1-414-765-4124
CUSTODIAN
FIRSTAR BANK MILWAUKEE, NA
615 East Michigan Street
Milwaukee, Wisconsin 53202
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
