ANNUAL REPORT
SEPTEMBER 30, 2000
REYNOLDS FUNDS
NO-LOAD MUTUAL FUNDS
REYNOLDS
FUND
SEEKING LONG-TERM CAPITAL APPRECIATION
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
WWW.REYNOLDSFUNDS.COM
REYNOLDS FUNDS
Dear Fellow Shareholders: October 27, 2000
We appreciate your continued confidence in the Reynolds Funds and would like
to welcome our many new shareholders. The inception of the Reynolds Fund, our
third equity fund, was October 1, 1999. The Reynolds Money Market Fund now has
unlimited check writing with no minimum amount.
The Reynolds, Blue Chip and Opportunity Funds had strong appreciation for the
twelve months ended September 30, 2000:
October 1, 1999 through September 30, 2000
+31.4%
REYNOLDS
FUND
+23.3%
REYNOLDS
BLUE CHIP
GROWTH FUND
+26.9%
REYNOLDS
OPPORTUNITY FUND
The Blue Chip and Opportunity Funds also had strong appreciation for the
three years ended September 30, 2000:
Average Annual Total Returns
October 1, 1997 through September 30, 2000
+28.9%
REYNOLDS
BLUE CHIP
GROWTH FUND
+31.6%
REYNOLDS
OPPORTUNITY FUND
The Blue Chip and Opportunity Funds also had strong appreciation for the five
years ended September 30, 2000:
Average Annual Total Returns
October 1, 1995 through September 30, 2000
+29.4%
REYNOLDS
BLUE CHIP
GROWTH FUND
+25.7%
REYNOLDS
OPPORTUNITY FUND
THE REYNOLDS FUND
The Reynolds Fund is a general stock fund and is intended to be a long-term
investment holding. The Fund may own common stocks of all types and sizes and
will mainly invest in high quality common stocks of U.S. headquartered
companies. While the Fund will generally invest in "growth" stocks, it may also
invest in "value" stocks. I am the portfolio manager of this Fund in addition to
continuing to manage the four other No-Load Reynolds Funds.
The Reynolds Fund's return was +31.4% for the one-year ended September 30,
2000 and -5.7% for the nine months ended September 30, 2000. The Reynolds Fund
increased +31.4% since inception (October 1, 1999) through September 30, 2000.
This was an average annual compounded rate of return of +31.4%. The Reynolds
Fund had net assets of $69.3 million as of September 30, 2000. Its NASDAQ symbol
is REYFX and it is usually listed in the newspapers under the Reynolds Funds
heading as Reyn Fd or Reynlds Fnd.
THE REYNOLDS BLUE CHIP GROWTH FUND
The Reynolds Blue Chip Growth Fund has investments in many of the premier
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 sales growth. 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 shareholder wealth.
The Blue Chip Fund's return was +23.3% for the one-year ended September 30,
2000 and -7.6% for the nine months ended September 30, 2000. The Blue Chip
Fund's return was +114.3% for the three years ended September 30, 2000 and
+262.6% for the five years ended September 30, 2000. These were average annual
compounded rates of return of +28.9% and +29.4%, respectively. The Blue Chip
Fund's return was +558.6% for the ten years ended September 30, 2000. This was
an average annual compounded rate of return of +20.7%. The Blue Chip Fund
increased +655.1% since inception (August 12, 1988), through September 30, 2000.
This was an average annual compounded rate of return of +18.1%.
The Blue Chip Fund has received many awards for its recent performance
including:
(1) America Online - Featured on Sage Online July 6, 2000 and June 5, 2000.
(2) Business Week - Featured in the January 24, 2000 issue.
(3) CNBC - Featured on July 28, 2000 and March 2, 2000.
(4) Consumer Reports - Featured in the April 2000 issue.
(5) Investor's Business Daily - The Blue Chip Fund has 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 10% of all mutual
funds receive an A ranking. Investor's Business Daily considered 5,819
mutual funds for the three years ended September 30, 2000 in determining
this ranking. Featured in the October 13, 2000 and May 12, 2000 editions.
(6) Louis Ruykeyser's Mutual Funds - Featured in the October 2000 issue.
(7) Mutual Funds Magazine - Chosen as the #1 growth mutual fund for 2000 in
the December 1999 issue. Also featured in the November 2000 and June 2000
issues.
(8) Schwab - Included in the Schwab Mutual Fund Select List - Second Quarter
2000.
(9) Smart Money - Featured in the February 7, 2000 issue.
(10) Standard & Poor's - Designated as a Standard & Poor's Select Fund as of
September 2000. Featured in Standard & Poor's - The Outlook in the
September 20, 2000 issue.
(11) USA Today - Featured as one of 25 USA Today All-Star Mutual Funds in the
February 28, 2000 edition. Chosen from 3,950 funds in the Morningstar
universe.
(12) Wall Street Journal - Featured in the May 2, 2000 edition.
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 and
the new Reynolds 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 and
Reynolds Funds, 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.
The Reynolds Opportunity Fund increased +26.9% for the one-year ended
September 30, 2000 and -10.8% for the nine months ended September 30, 2000. The
Opportunity Fund increased +127.9% for the three years ended September 30, 2000
and increased +213.5% for the five years ended September 30, 2000. These were
average annual compounded rates of return of +31.6% and +25.7%, respectively.
The Opportunity Fund increased +344.3% since inception (January 30, 1992)
through September 30, 2000. This was an average annual compounded rate of return
of +18.8%. The Opportunity Fund has 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 5,819 mutual funds for the three years
ended September 30, 2000 in determining this ranking. The Opportunity Fund was
featured in Louis Ruykeyser's Mutual Funds in the October 2000 issue and was
featured in Mutual Funds Magazine in the June 2000 issue.
The Board of Directors declared a distribution of $0.43493 from net short-
term realized gains on October 27, 2000. This distribution will be paid on
October 30, 2000 to shareholders of record on October 26, 2000.
THE REYNOLDS U.S. GOVERNMENT BOND FUND
The Reynolds U.S. Government Bond Fund emphasizes high quality investments in
U.S. Treasury Bonds, Treasury Notes and Treasury Bills of varying maturities. As
of September 30, 2000, the assets were invested approximately 6.6% in U.S.
Treasury Securities, 73.5% in Federal Agencies, and 18.9% in high quality cash
equivalents.
The Reynolds U.S. Government Bond Fund is designed to satisfy many of the
fixed income objectives of investors. For example, the Bond Fund is actively
managed and is invested in bonds having many different maturities, which reduces
the risk that a large percentage of the bonds in the Fund mature at an
inopportune time for reinvestment. The Bond Fund had a dollar weighted average
maturity of .8 years on September 30, 2000. The average maturity of the bonds in
the Fund is continually reevaluated and adjusted based on short- and long-term
economic, inflation and interest rate forecasts.
The Reynolds U.S. Government Bond Fund's return was +4.9% for the one-year
ended September 30, 2000. The Bond Fund's return was +14.8% for the three years
ended September 30, 2000 and +26.7% for the five years ended September 30, 2000.
These were average annual compounded rates of return of +4.7% and +4.9%,
respectively. The Bond Fund's return was +51.6% since inception (January 30,
1992) through September 30, 2000. This was an average annual compounded rate of
return of +4.9%.
THE REYNOLDS MONEY MARKET FUND
The Reynolds Money Market Fund now has unlimited check writing with no
minimum amount per check. The Reynolds Money Market Fund is designed to provide
for investor's short-term cash management needs. For ease of redemption, the
Money Market Fund offers: (1) check writing ($.20 printing charge per check);
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 - no
charge if part of the systematic withdrawal plan which has a $100 minimum
withdrawal). As of September 30, 2000, the dollar weighted average days to
maturity of the Money Market Fund was 31 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.
The Reynolds Money Market Fund's return was +5.3% for the one-year ended
September 30, 2000. The Money Market Fund's return was +15.5% for the three
years ended September 30, 2000 and +27.1% for the five years ended September 30,
2000. These were average annual compounded rates of returns of +4.9% and +4.9%,
respectively. The Money Market Fund returned +51.9% since inception (January 30,
1991) through September 30, 2000. This was an average annual compounded rate of
return of +4.4%.
ECONOMIC DISCUSSION
THE WORLD ECONOMY
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 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:
worldwide growth is at reasonable levels, committed central bankers, fiscal
restraint by governments, the worldwide competition for products and labor is
keeping costs low and economic systems are more efficient. In addition, cost
cutting and restructuring is spreading to many countries, more efficient
private-sector operations are replacing inefficient state-run enterprises, and
excess capacity exists in many markets. The Blue Chip and Opportunity Funds and
the new Reynolds Fund 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 4.2% in 1999 after increasing 4.4% in
1998 and 4.4% in 1997. GDP is estimated to increase 4.7% in 2000 and 3.5% in
2001. 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 low relative to the last thirty years due to such factors
as global competition, good decisions made by the Federal Reserve, advances in
technology resulting in increasing productivity, better inventory controls and
the internet is helping to lower costs. U.S. inflation increased at a manageable
2.2% rate in 1999 after increasing 1.6% in 1998 and 2.3% in 1997. U.S. inflation
is estimated to increase 3.0% in 2000 and 2.6% in 2001.
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
positive; (2) U.S. industry is more competitive than at any time in the past
quarter century and U.S. companies are the leaders in the majority of industries
worldwide; (3) the U.S. budget is running a surplus versus a deficit in the
early 1990s; (4) productivity is increasing and; (5) the internet is beginning
to produce efficiencies.
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 ACCOUNT
INFORMATION AND CURRENT DAILY NET ASSET VALUES: Call 1-800-773-9665 and press
"1" then "1" from 6 A.M. to 5 P.M. (PST).
REYNOLDSFUNDS.COM WEB SITE: Information available online includes the most
recent quarterly top ten holdings and industry percentages, current net asset
values (usually available about one hour earlier than by calling the Reynolds
Funds 800 number), and detailed financial statistics and graphs of past
performance. Also links to Quicken and Morningstar information regarding the
Reynolds Funds.
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 months' accrued dividends are posted; (2) Reynolds Fund, 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 Reynolds, 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 Reynolds Fund, Blue Chip Fund and Opportunity Funds appear under that
heading. The Reynolds Fund has the symbol Reyn Fd or Reynlds Fnd, the Blue Chip
Fund has the symbol BluChpGr or Blue Chip, and the Opportunity Fund has the
symbol Oppty 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 Fund - REYFX, 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
traditional IRA, Roth IRA, Education IRA, Simple IRA, 401(k), SEP-IRA, 403(b)(7)
and Keogh Plans.
AUTOMATIC INVESTMENT PLAN: There is no charge to automatically debit your
checking account or your account in any of the Reynolds Funds ($50 minimum) 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 transfer
funds 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.
TAX EFFICIENCY: The Reynolds Stock Funds do not attempt to achieve their
investment objectives by active and frequent trading of common stocks. When
making investment decisions, we consider the tax consequences of the Fund's
portfolio transactions. We attempt to be highly tax efficient.
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 Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Reynolds Fund's performance was positively affected during the first half
of its fiscal year ended September 30, 2000 by the strong earnings growth of
many of the stocks in its portfolio and by the market leadership of high quality
growth stocks. During the first half of its fiscal year ended September 30,
2000 much of the gains in the equity markets were attributable to a relatively
small group of larger capitalization growth companies. Many of these stocks were
held by the Reynolds Fund as its principal investment strategy is to invest in
"blue chip" companies like these market leaders. The Reynolds Fund also
invested in stocks of smaller capitalization companies that outperformed the
market leaders during the first half of its fiscal year. The Reynolds Fund was
also positively affected by the continuing economic recovery, which positively
influenced equity markets during the first half of its fiscal year. In the
second half of the Reynolds Fund's fiscal year it was negatively affected by the
stock market's correction particularly for leading technology and other high
quality growth stocks.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS FUND AND S&P 500 INDEX(1)<F2>
DATE REYNOLDS FUND S&P 500 INDEX
---- ------------- -------------
10/1/99*<F1> $10,000 $10,000
12/31/99 $13,930 $11,488
3/31/00 $15,160 $11,752
6/30/00 $13,430 $11,439
9/30/00 $13,140 $11,328
*<F1> INCEPTION DATE
AVERAGE ANNUAL TOTAL RETURN
SINCE INCEPTION
1-YEAR 10/1/99
------ -------
31.4% 31.4%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
(1)<F2> The Standard & Poor's 500 Index consists of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The
Standard & Poor's Ratings Group designates the stocks to be included
in the Index on a statistical basis. A particular stock's weighting
in the Index is based on its relative total market value (i.e., its
market price per share times the number of shares outstanding).
Stocks may be added or deleted from the Index from time to time.
Reynolds Fund
STATEMENT OF NET ASSETS
September 30, 2000
QUOTED
SHARES MARKET VALUE
------ ------------
COMMON STOCKS -- 98.8% (A)<F4>
APPLICATION SOFTWARE -- 13.4%
4,000 Adobe Systems Inc. $ 621,000
4,000 Business Objects S.A.-SP ADR*<F3> 452,250
5,000 Commerce One, Inc.*<F3> 392,500
6,000 Computer Associates
International, Inc. 151,125
5,000 i2 Technologies, Inc.*<F3> 935,312
6,000 Intuit Inc.*<F3> 342,000
9,000 Legato Systems, Inc.*<F3> 120,937
11,000 Microsoft Corp.*<F3> 663,437
21,000 Oracle Corp.*<F3> 1,653,750
5,000 Peregrine Systems, Inc.*<F3> 94,688
27,000 Siebel Systems, Inc.*<F3> 3,005,438
5,750 VERITAS Software Corp.*<F3> 816,500
-----------
9,248,937
BEVERAGES -- 1.0%
7,000 The Coca-Cola Co. 385,875
7,000 PepsiCo, Inc. 322,000
-----------
707,875
BIOTECHNOLOGY -- 2.8%
3,000 Affymetrix, Inc.*<F3> 149,625
3,000 Amgen Inc.*<F3> 209,484
2,000 Biogen, Inc.*<F3> 122,000
2,000 COR Therapeutics, Inc.*<F3> 124,625
500 Genentech, Inc.*<F3> 92,844
1,000 Genzyme Corp. (General Division)*<F3> 68,187
5,500 Human Genome Sciences, Inc.*<F3> 952,188
1,000 Immunex Corp.*<F3> 43,500
2,000 PE Corp.-Celera Genomics Group*<F3> 199,250
-----------
1,961,703
BUILDING -- 0.6%
7,500 The Home Depot, Inc. 397,969
BUSINESS SOFTWARE & SERVICES -- 1.2%
500 Akamai Technologies, Inc.*<F3> 26,258
4,000 Ask Jeeves, Inc.*<F3> 76,750
500 E.piphany, Inc.*<F3> 38,531
1,000 Netcentives Inc.*<F3> 7,656
4,000 Razorfish Inc.*<F3> 41,312
3,000 Sapient Corp.*<F3> 122,063
6,000 TIBCO Software Inc.*<F3> 506,625
-----------
819,195
COMMUNICATION EQUIPMENT -- 3.0%
1,000 Corning Inc. 297,000
20,000 L.M. Ericsson Telephone Co. ADR 296,250
12,000 General Motors Corp. Cl H*<F3> 446,160
2,000 Proxim, Inc.*<F3> 89,000
11,000 QUALCOMM Inc.*<F3> 783,750
4,000 Tellabs, Inc.*<F3> 191,000
-----------
2,103,160
COMPUTER NETWORKING -- 2.8%
5,000 3Com Corp.*<F3> 95,937
25,000 Cisco Systems Inc.*<F3> 1,381,250
4,500 Sycamore Networks, Inc.*<F3> 486,000
-----------
1,963,187
COMPUTER & PERIPHERALS -- 11.9%
9,000 Apple Computer, Inc.*<F3> 231,750
4,500 Brocade Communications
Systems, Inc.*<F3> 1,062,000
2,000 Compaq Computer Corp. 55,160
1,000 Dell Computer Corp.*<F3> 30,813
12,000 EMC Corp. (Mass.)*<F3> 1,189,500
1,000 Emulex Corp.*<F3> 122,500
1,000 Gateway, Inc.*<F3> 46,750
5,500 Hewlett-Packard Co. 533,500
5,000 International Business
Machines Corp. 562,500
15,000 Network Appliance, Inc.*<F3> 1,910,625
7,416 Palm, Inc.*<F3> 392,584
18,000 Sun Microsystems, Inc.*<F3> 2,101,500
-----------
8,239,182
COMPUTER SOFTWARE & SERVICES -- 0.2%
2,000 Computer Sciences Corp.*<F3> 148,500
4,000 Informix Corp.*<F3> 16,500
-----------
165,000
DRUGS -- 1.8%
1,000 Bristol-Myers Squibb Co. 57,125
5,000 Eli Lilly & Co. 405,625
4,000 Merck & Co., Inc. 297,750
7,750 Pfizer Inc. 348,266
3,000 Schering-Plough Corp. 139,500
-----------
1,248,266
ELECTRICAL EQUIPMENT -- 3.2%
17,000 EchoStar Communications Corp.*<F3> 896,750
7,000 General Electric Co. 403,813
31,725 Motorola, Inc. 896,231
-----------
2,196,794
ELECTRONICS -- 2.2%
8,097 Agilent Technologies, Inc.*<F3> 396,247
10,100 JDS Uniphase Corp.*<F3> 956,344
2,000 Sanmina Corp.*<F3> 187,250
-----------
1,539,841
ENERGY -- 0.7%
1,000 BJ Services Co.*<F3> 61,125
5,000 Schlumberger Ltd. 411,562
-----------
472,687
ENTERTAINMENT/MEDIA -- 1.1%
2,000 Walt Disney Co. 76,500
5,000 Emmis Communications Corp.*<F3> 123,750
7,000 Time Warner Inc. 547,750
-----------
748,000
FINANCIAL SERVICES -- 1.1%
4,000 American Express Co. 243,000
13,500 The Charles Schwab Corp. 479,250
-----------
722,250
HOUSEHOLD PRODUCTS-- 0.3%
1,000 American Home Products Corp. 56,562
1,000 Colgate-Palmolive Co. 47,200
2,000 Gillette Co. 61,750
1,000 Procter & Gamble Co. 67,000
-----------
232,512
INSURANCE -- 0.4%
3,000 American International Group, Inc. 287,062
INTERNET INFORMATION PROVIDER -- 4.9%
3,000 About.com, Inc.*<F3> 97,125
16,000 America Online, Inc.*<F3> 860,000
2,000 At Home Corp.*<F3> 28,250
8,000 Chinadot Com Corp.*<F3> 106,500
2,000 CNET Networks, Inc.*<F3> 48,719
2,000 HomeStore.com, Inc.*<F3> 93,500
4,000 InfoSpace, Inc.*<F3> 121,000
7,000 Lycos, Inc.*<F3> 481,359
6,000 PSINet Inc.*<F3> 57,750
14,000 VerticalNet, Inc.*<F3> 491,750
2,000 WebMD Corp.*<F3> 30,500
11,000 Yahoo! Inc.*<F3> 1,001,000
-----------
3,417,453
INTERNET SOFTWARE & SERVICES -- 13.0%
3,000 Amazon.com, Inc.*<F3> 115,312
13,000 Ariba, Inc.*<F3> 1,862,453
8,500 BroadVision, Inc.*<F3> 218,344
16,000 Citrix Systems, Inc.*<F3> 321,000
17,500 CMGI Inc.*<F3> 488,906
9,500 DoubleClick Inc.*<F3> 304,000
9,000 eBay Inc.*<F3> 618,187
19,000 Exodus Communications, Inc.*<F3> 938,125
8,500 Inktomi Corp.*<F3> 969,000
4,000 Internet Capital Group, Inc.*<F3> 69,750
2,000 Internet Security Systems*<F3> 150,250
5,000 Juniper Networks, Inc.*<F3> 1,094,687
4,150 Kana Communications, Inc.*<F3> 92,338
4,000 MyPoints.com, Inc.*<F3> 22,000
1,000 Phone.com, Inc.*<F3> 113,625
3,000 Priceline.com Inc.*<F3> 35,625
3,000 Rare Medium Group, Inc.*<F3> 22,313
6,000 RealNetworks, Inc.*<F3> 238,500
8,000 Red Hat, Inc.*<F3> 136,500
7,000 Redback Networks Inc.*<F3> 1,148,000
2,000 Scient Corp.*<F3> 41,875
-----------
9,000,790
MEDICAL SUPPLIES -- 0.6%
3,000 Abbott Laboratories 142,687
3,000 Johnson & Johnson 281,813
-----------
424,500
RETAIL-SPECIALTY -- 0.3%
3,000 Best Buy Co., Inc.*<F3> 190,875
RETAIL STORES -- 1.0%
8,000 Costco Wholesale Corp.*<F3> 279,500
5,000 Gap, Inc. 100,625
7,000 Wal-Mart Stores, Inc. 336,875
-----------
717,000
SECURITY SOFTWARE & SERVICES -- 4.9%
5,000 Check Point Software
Technologies Ltd.*<F3> 787,500
2,000 Network Associates, Inc.*<F3> 45,250
11,875 VeriSign, Inc.*<F3> 2,405,430
4,000 Vignette Corp.*<F3> 119,500
-----------
3,357,680
SEMICONDUCTOR CAPITAL SPENDING -- 2.9%
11,000 Applied Materials, Inc.*<F3> 652,438
13,500 KLA-Tencor Corp.*<F3> 556,031
14,000 Novellus Systems, Inc.*<F3> 651,875
4,000 Teradyne, Inc.*<F3> 140,000
-----------
2,000,344
SEMICONDUCTORS -- 12.9%
26,000 Altera Corp.*<F3> 1,241,500
1,000 ANADIGICS, Inc.*<F3> 22,125
4,000 Atmel Corp.*<F3> 60,750
3,500 Broadcom Corp.*<F3> 853,125
1,000 Conexant Systems, Inc.*<F3> 41,875
24,000 Intel Corp. 997,500
5,500 Lattice Semiconductor Corp.*<F3> 295,625
5,000 Linear Technology Corp. 323,750
17,000 LSI Logic Corp.*<F3> 497,250
3,500 Maxim Integrated Products Inc.*<F3> 281,531
3,000 PMC-Sierra, Inc.*<F3> 645,750
6,000 Rambus Inc.*<F3> 473,625
1,500 SDL, Inc.*<F3> 463,969
6,000 STMicroelectronics N.V. 285,750
24,000 Texas Instruments Inc. 1,132,500
17,000 TriQuint Semiconductor, Inc.*<F3> 619,438
2,000 Vitesse Semiconductor Corp.*<F3> 177,875
6,000 Xilinx, Inc.*<F3> 513,750
-----------
8,927,688
SYSTEM SOFTWARE -- 1.4%
1,000 Autodesk, Inc. 25,375
6,000 Mercury Interactive Corp.*<F3> 940,500
-----------
965,875
TELECOMMUNICATION SERVICES -- 0.7%
3,000 Global Crossing Ltd.*<F3> 93,000
2,000 Globalstar
Telecommunications Ltd.*<F3> 17,250
6,000 NEXTLINK Communications, Inc.*<F3>
(DBA XO Communications) 211,125
3,000 Qwest Communications
International, Inc.*<F3> 144,188
-----------
465,563
TELECOMMUNICATIONS -- 5.1%
10,000 CIENA Corp.*<F3> 1,228,125
6,000 Lucent Technologies Inc. 183,375
35,400 Nortel Networks Corp. 2,108,513
2,000 WinStar Communications, Inc.*<F3> 31,000
-----------
3,551,013
TELEPHONE SERVICES -- 0.3%
2,000 Net2Phone, Inc.*<F3> 45,000
1,000 Vodafone Group PLC SP ADR 37,000
3,000 WorldCom, Inc.*<F3> 91,125
-----------
173,125
WIRELESS COMMUNICATION -- 3.1%
17,000 Nextel Communications, Inc.*<F3> 794,750
25,000 Nokia Corp. "A" ADR 995,312
11,000 Sprint Corp. (PCS Group)*<F3> 385,688
-----------
2,175,750
-----------
Total common stocks
(cost $64,001,452) 68,421,276
PRINCIPAL
AMOUNT
------
SHORT-TERM INVESTMENTS -- 1.2% (A)<F4>
VARIABLE RATE DEMAND NOTE -- 1.2%
$824,986 Firstar Bank U.S.A., N.A. 824,986
-----------
Total short-term investments
(cost $824,986) 824,986
-----------
Total investments
(cost $64,826,438) 69,246,262
Cash and receivables, less
liabilities -- 0.0% (A)<F4> 8,876
-----------
NET ASSETS $69,255,138
-----------
-----------
Net Asset Value Per Share
($0.01 par value 40,000,000
shares authorized), offering
and redemption price
($69,255,138 / 5,269,960
shares outstanding) $ 13.14
-----------
-----------
*<F3> Non-income producing security.
(a)<F4> Percentages for the various classifications relate to net assets.
ADR - American Depository Receipt
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Fund
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2000
INCOME:
Dividends $ 82,366
Interest 78,264
----------
Total income 160,630
----------
EXPENSES:
Management fees 558,963
Administrative services 82,802
Registration fees 31,116
Transfer agent fees 26,988
Professional fees 26,179
Custodian fees 25,252
Distribution fees 24,712
Printing and postage expense 5,150
Board of Directors fees 4,000
Other expenses 26,150
----------
Total operating expenses before interest expense 811,312
Interest expense 278
----------
Total expenses 811,590
----------
NET INVESTMENT LOSS (650,960)
----------
NET REALIZED LOSS ON INVESTMENTS (1,275,784)
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 4,419,824
----------
NET GAIN ON INVESTMENTS 3,144,040
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,493,080
----------
----------
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended September 30, 2000
OPERATIONS:
Net investment loss $ (650,960)
Net realized loss on investments (1,275,784)
Net increase in unrealized appreciation on investments 4,419,824
-----------
Net increase in net assets resulting from operations 2,493,080
-----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (6,667,683 shares) 86,240,737
Cost of shares redeemed (1,397,723 shares) (19,478,679)
-----------
Net increase in net assets derived
from Fund share activities 66,762,058
-----------
TOTAL INCREASE 69,255,138
NET ASSETS AT THE BEGINNING OF THE YEAR --
-----------
NET ASSETS AT THE END OF THE YEAR $69,255,138
-----------
-----------
The accompanying notes to financial statements are an integral part of these
statements.
Reynolds Fund
FINANCIAL HIGHLIGHTS
(Selected Data for each share of the Fund outstanding throughout the year)
FOR THE
YEAR ENDED
SEPTEMBER 30,
2000+<F5>
-------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 10.00
Income from investment operations:
Net investment loss (0.12)
Net realized and unrealized gain on securities 3.26
-------
Total from investment operations 3.14
Less distributions:
Dividend from net investment income --
Distribution from net realized gains --
-------
Total from distributions --
-------
Net asset value, end of year $ 13.14
-------
-------
TOTAL INVESTMENT RETURN 31.4%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 69,255
Ratio of operating expenses before interest
expense to average net assets 1.5%
Ratio of interest expense to average net assets 0.0%
Ratio of net investment loss to average net assets (1.2%)
Portfolio turnover rate 23.6%
+<F5> Commencement of operations October 1, 1999.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Blue Chip Growth Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Reynolds Blue Chip Growth Fund's performance was positively affected
during the first half of its fiscal year ended September 30, 2000 by the strong
earnings growth of many of the stocks in its portfolio and by the market
leadership of high quality growth stocks. During the first half of its fiscal
year ended September 30, 2000 much of the gains in the equity markets were
attributable to a relatively small group of larger capitalization growth
companies. Many of these stocks were held by the Blue Chip Growth Fund as its
principal investment strategy is to invest in "blue chip" companies like these
market leaders. The Blue Chip Fund also invested in stocks of smaller
capitalization companies that during the first half of the fiscal year
outperformed the market leaders. In addition, the Blue Chip Fund was positively
affected by the continuing economic recovery, which positively influenced equity
markets during the first half of its fiscal year. In the second half of the
Blue Chip Fund's fiscal year it was negatively affected by the slowing economy
and the stock market's correction particularly for leading technology and other
high quality growth stocks.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS BLUE CHIP GROWTH FUND AND S&P 500 INDEX(1)<F6>
DATE REYNOLDS BLUE CHIP GROWTH FUND S&P 500 INDEX
---- ------------------------------ -------------
9/30/90 $10,000 $10,000
9/30/91 $12,690 $13,140
9/30/92 $13,705 $14,599
9/30/93 $13,088 $16,496
9/30/94 $13,429 $17,090
9/30/95 $18,169 $22,183
9/30/96 $21,458 $26,708
9/30/97 $30,727 $37,579
9/30/98 $35,942 $41,017
9/30/99 $53,395 $52,420
9/30/00 $65,858 $59,384
AVERAGE ANNUAL TOTAL RETURN
1-YEAR 5-YEAR 10-YEAR
------ ------ -------
23.3% 29.4% 20.7%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
(1)<F6> The Standard & Poor's 500 Index consists of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The
Standard & Poor's Ratings Group designates the stocks to be included
in the Index on a statistical basis. A particular stock's weighting
in the Index is based on its relative total market value (i.e., its
market price per share times the number of shares outstanding).
Stocks may be added or deleted from the Index from time to time.
Reynolds Blue Chip Growth Fund
STATEMENT OF NET ASSETS
September 30, 2000
QUOTED
SHARES MARKET VALUE
------ ------------
COMMON STOCKS -- 98.9% (A)<F8>
APPLICATION SOFTWARE -- 9.5%
32,000 Adobe Systems Inc. $ 4,968,000
9,000 BMC Software, Inc.*<F7> 172,125
15,000 Commerce One, Inc.*<F7> 1,177,500
47,625 Computer Associates
International, Inc. 1,199,555
11,500 i2 Technologies, Inc.*<F7> 2,151,219
36,000 Intuit Inc.*<F7> 2,052,000
47,000 Legato Systems, Inc.*<F7> 631,562
204,000 Microsoft Corp.*<F7> 12,303,750
162,432 Oracle Corp.*<F7> 12,791,520
22,000 PeopleSoft, Inc.*<F7> 614,625
9,000 Peregrine Systems, Inc.*<F7> 170,438
3,000 SAP AG ADR 184,500
90,000 Siebel Systems, Inc.*<F7> 10,018,125
51,625 VERITAS Software Corp.*<F7> 7,330,750
------------
55,765,669
BANKS -- 0.4%
37,833 Citigroup Inc. 2,045,347
2,500 J.P. Morgan & Co. Inc. 408,437
------------
2,453,784
BEVERAGES -- 2.1%
110,000 The Coca-Cola Co. 6,063,750
133,000 PepsiCo, Inc. 6,118,000
------------
12,181,750
BIOTECHNOLOGY -- 1.6%
56,000 Amgen Inc.*<F7> 3,910,374
21,500 Biogen, Inc.*<F7> 1,311,500
5,000 Genentech, Inc.*<F7> 928,437
20,000 Human Genome Sciences, Inc.*<F7> 3,462,500
------------
9,612,811
BUILDING -- 1.3%
139,750 The Home Depot, Inc. 7,415,484
BUSINESS SOFTWARE & SERVICES -- 0.6%
15,000 BEA Systems, Inc.*<F7> 1,168,125
22,000 Razorfish Inc.*<F7> 227,218
9,000 Sapient Corp.*<F7> 366,187
18,500 TIBCO Software Inc.*<F7> 1,562,094
------------
3,323,624
COMMUNICATION EQUIPMENT -- 2.5%
5,000 Corning Inc. 1,485,000
124,000 L.M. Ericsson Telephone Co. ADR 1,836,750
34,000 General Motors Corp. Cl H*<F7> 1,264,120
90,500 QUALCOMM Inc.*<F7> 6,448,125
79,000 Tellabs, Inc.*<F7> 3,772,250
------------
14,806,245
COMPUTER NETWORKING -- 5.1%
73,000 3Com Corp.*<F7> 1,400,687
475,000 Cisco Systems Inc.*<F7> 26,243,750
22,500 Sycamore Networks, Inc.*<F7> 2,430,000
------------
30,074,437
COMPUTER & PERIPHERALS -- 13.6%
45,000 Apple Computer, Inc.*<F7> 1,158,750
14,500 Brocade Communications
Systems, Inc.*<F7> 3,422,000
62,500 Compaq Computer Corp. 1,723,750
156,000 Dell Computer Corp.*<F7> 4,806,750
158,000 EMC Corp. (Mass.)*<F7> 15,661,750
51,000 Gateway, Inc.*<F7> 2,384,250
87,500 Hewlett-Packard Co. 8,487,500
84,500 International Business
Machines Corp. 9,506,250
6,000 Lexmark International, Inc.*<F7> 225,000
45,000 Network Appliance, Inc.*<F7> 5,731,875
108,274 Palm, Inc.*<F7> 5,731,755
174,000 Sun Microsystems, Inc.*<F7> 20,314,500
------------
79,154,130
COMPUTER SOFTWARE & SERVICES -- 0.2%
16,500 Computer Sciences Corp.*<F7> 1,225,125
DRUGS -- 7.0%
49,200 Bristol-Myers Squibb Co. 2,810,550
48,000 Eli Lilly & Co. 3,894,000
124,200 Merck & Co., Inc. 9,245,137
432,330 Pfizer Inc. 19,427,830
113,000 Schering-Plough Corp. 5,254,500
------------
40,632,017
ELECTRICAL EQUIPMENT -- 3.3%
39,000 EchoStar Communications Corp.*<F7> 2,057,250
153,500 General Electric Co. 8,855,031
290,925 Motorola, Inc. 8,218,631
------------
19,130,912
ELECTRONICS -- 1.0%
41,609 Agilent Technologies, Inc.*<F7> 2,036,241
28,000 JDS Uniphase Corp.*<F7> 2,651,250
11,000 Sanmina Corp.*<F7> 1,029,875
------------
5,717,366
ENERGY -- 0.8%
41,000 Schlumberger Ltd. 3,374,812
13,000 Smith International, Inc.*<F7> 1,060,313
------------
4,435,125
ENTERTAINMENT/MEDIA -- 1.8%
124,147 Walt Disney Co. 4,748,623
17,000 Emmis Communications Corp.*<F7> 420,750
17,000 Sony Corp. ADR 1,715,937
45,000 Time Warner Inc. 3,521,250
------------
10,406,560
FINANCIAL SERVICES -- 2.3%
94,000 American Express Co. 5,710,500
1,000 The Goldman Sachs Group, Inc. 113,938
24,000 Merrill Lynch & Co., Inc. 1,584,000
21,500 Morgan Stanley Dean Witter & Co. 1,965,906
120,000 The Charles Schwab Corp. 4,260,000
------------
13,634,344
HOUSEHOLD PRODUCTS -- 2.0%
49,000 American Home Products Corp. 2,771,563
95,000 Colgate-Palmolive Co. 4,484,000
48,000 Gillette Co. 1,482,000
46,000 Procter & Gamble Co. 3,082,000
------------
11,819,563
INSURANCE -- 1.0%
60,000 American International
Group, Inc. 5,741,250
INTERNET INFORMATION PROVIDER -- 6.4%
335,600 America Online, Inc.*<F7> 18,038,500
80,382 At Home Corp.*<F7> 1,135,396
18,000 Chinadot Com Corp.*<F7> 239,625
22,000 CNET Networks, Inc.*<F7> 535,904
23,975 Walt Disney Internet Group*<F7> 254,734
16,000 Go2Net, Inc.*<F7> 868,250
4,000 InfoSpace, Inc.*<F7> 121,000
81,000 Lycos, Inc.*<F7> 5,570,014
14,000 PSINet Inc.*<F7> 134,750
43,000 VerticalNet, Inc.*<F7> 1,510,375
10,500 WebMD Corp.*<F7> 160,125
94,266 Yahoo! Inc.*<F7> 8,578,206
------------
37,146,879
INTERNET SOFTWARE & SERVICES -- 5.9%
57,000 Amazon.com, Inc.*<F7> 2,190,937
29,000 Ariba, Inc.*<F7> 4,154,702
15,500 BroadVision, Inc.*<F7> 398,156
40,000 Citrix Systems, Inc.*<F7> 802,500
69,500 CMGI Inc.*<F7> 1,941,656
58,500 DoubleClick Inc.*<F7> 1,872,000
50,000 eBay Inc.*<F7> 3,434,375
45,000 Exodus Communications, Inc.*<F7> 2,221,875
44,000 Inktomi Corp.*<F7> 5,016,000
6,500 Internet Capital Group, Inc.*<F7> 113,344
35,000 Juniper Networks, Inc.*<F7> 7,662,813
7,000 Priceline.com Inc.*<F7> 83,125
38,000 RealNetworks, Inc.*<F7> 1,510,500
19,000 Red Hat, Inc.*<F7> 324,188
18,000 Redback Networks Inc.*<F7> 2,952,000
------------
34,678,171
INSTRUMENTS -- 0.1%
6,000 Waters Corp.*<F7> 534,000
MEDICAL SUPPLIES -- 2.5%
95,000 Abbott Laboratories 4,518,438
10,000 Guidant Corp.*<F7> 706,875
99,500 Johnson & Johnson 9,346,781
------------
14,572,094
OFFICE EQUIPMENT & SUPPLIES -- 0.1%
50,000 Office Depot, Inc.*<F7> 390,625
28,500 Staples, Inc.*<F7> 404,344
------------
794,969
RESTAURANTS -- 0.5%
95,000 McDonald's Corp. 2,867,812
RETAIL-SPECIALTY -- 0.7%
54,000 Best Buy Co., Inc.*<F7> 3,435,750
16,000 Rite Aid Corp. 64,000
15,000 Starbucks Corp.*<F7> 600,938
------------
4,100,688
RETAIL STORES -- 3.9%
107,000 Costco Wholesale Corp.*<F7> 3,738,312
109,625 Gap, Inc. 2,206,203
59,000 Kohl's Corp.*<F7> 3,403,563
66,000 Nordstrom, Inc. 1,027,125
112,000 Target Corp. 2,870,000
201,000 Wal-Mart Stores, Inc. 9,673,125
------------
22,918,328
SECURITY SOFTWARE & SERVICES -- 1.9%
10,000 Check Point Software
Technologies Ltd.*<F7> 1,575,000
13,000 Network Associates, Inc.*<F7> 294,125
6,000 RSA Security Inc.*<F7> 258,750
44,125 VeriSign, Inc.*<F7> 8,938,070
------------
11,065,945
SEMICONDUCTOR CAPITAL SPENDING -- 2.1%
103,000 Applied Materials, Inc.*<F7> 6,109,188
49,500 KLA-Tencor Corp.*<F7> 2,038,781
62,500 Novellus Systems, Inc.*<F7> 2,910,156
37,000 Teradyne, Inc.*<F7> 1,295,000
------------
12,353,125
SEMICONDUCTORS -- 9.6%
84,000 Altera Corp.*<F7> 4,011,000
10,000 Atmel Corp.*<F7> 151,875
22,000 Broadcom Corp.*<F7> 5,362,500
410,880 Intel Corp. 17,077,200
16,000 Linear Technology Corp. 1,036,000
64,000 LSI Logic Corp.*<F7> 1,872,000
6,000 Maxim Integrated Products Inc.*<F7> 482,625
16,000 Micron Technology, Inc.*<F7> 736,000
16,000 PMC-Sierra, Inc.*<F7> 3,444,000
14,000 Rambus Inc.*<F7> 1,105,125
6,500 SDL, Inc.*<F7> 2,010,531
208,000 Texas Instruments Inc. 9,815,000
30,000 TriQuint Semiconductor, Inc.*<F7> 1,093,125
23,000 Vitesse Semiconductor Corp.*<F7> 2,045,563
71,000 Xilinx, Inc.*<F7> 6,079,375
------------
56,321,919
SYSTEM SOFTWARE -- 0.2%
8,000 Mercury Interactive Corp.*<F7> 1,254,000
TELECOMMUNICATION SERVICES -- 0.3%
11,000 Global Crossing Ltd.*<F7> 341,000
25,000 Qwest Communications
International, Inc.*<F7> 1,201,563
------------
1,542,563
TELECOMMUNICATIONS -- 4.1%
60,000 CIENA Corp.*<F7> 7,368,750
34,000 EarthLink, Inc.*<F7> 310,250
114,750 Lucent Technologies Inc. 3,507,047
211,600 Nortel Networks Corp. 12,603,425
------------
23,789,472
TELEPHONE SERVICES -- 0.8%
42,000 Sprint Corp. 1,231,125
33,500 Vodafone Group PLC SP ADR 1,239,500
75,000 WorldCom, Inc.*<F7> 2,278,125
------------
4,748,750
WIRELESS COMMUNICATION -- 3.7%
83,000 Nextel Communications, Inc.*<F7> 3,880,250
404,000 Nokia Corp. "A" ADR 16,084,250
40,000 Sprint Corp. (PCS Group)*<F7> 1,402,500
------------
21,367,000
------------
Total common stocks
(cost $369,785,389) 577,585,911
PRINCIPAL
AMOUNT
------
SHORT-TERM INVESTMENTS -- 2.5% (A)<F8>
FEDERAL AGENCIES -- 1.7%
$10,000,000 Federal Home Loan Bank,
6.05%, due 10/02/00 9,998,320
------------
Total federal agencies
(cost $9,998,320) 9,998,320
------------
VARIABLE RATE DEMAND NOTE -- 0.8%
4,715,611 Firstar Bank U.S.A., N.A. 4,715,611
------------
Total variable rate demand note
(cost $4,715,611) 4,715,611
------------
Total short-term investments
(cost $14,713,931) 14,713,931
------------
Total investments
(cost $384,499,320) 592,299,842
Liabilities, less cash and
receivables -- (1.4%) (A)<F8> (8,415,587)
------------
NET ASSETS $583,884,255
------------
------------
Net Asset Value Per Share
($0.01 par value 40,000,000
shares authorized), offering
and redemption price
($583,884,255 / 8,770,689
shares outstanding) $ 66.57
------------
------------
*<F7> Non-income producing security.
(a)<F8> Percentages for the various classifications relate to net assets.
ADR - American Depository Receipt
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Blue Chip Growth Fund
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2000
INCOME:
Dividends $ 1,971,751
Interest 653,856
------------
Total income 2,625,607
------------
EXPENSES:
Management fees 5,882,116
Administrative services 618,211
Distribution fees 385,575
Transfer agent fees 274,771
Custodian fees 161,017
Printing and postage expense 130,303
Registration fees 80,859
Professional fees 39,628
Board of Directors fees 4,000
Other expenses 16,672
------------
Total operating expenses before interest expense 7,593,152
Interest expense 519
------------
Total expenses 7,593,671
------------
NET INVESTMENT LOSS (4,968,064)
------------
NET REALIZED LOSS ON INVESTMENTS (17,570,332)
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 108,581,921
------------
NET GAIN ON INVESTMENTS 91,011,589
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 86,043,525
------------
------------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 2000 and 1999
2000 1999
-------- --------
OPERATIONS:
Net investment loss $ (4,968,064) $ (1,736,389)
Net realized (loss) gain on investments (17,570,332) 1,586,354
Net increase in unrealized appreciation
on investments 108,581,921 60,282,375
------------ ------------
Net increase in net assets resulting
from operations 86,043,525 60,132,340
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains
($0.00526 and $0.6495 per share,
respectively) (38,019)*<F9> (1,651,594)
------------ ------------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (8,537,517
and 7,038,893 shares, respectively) 591,844,227 357,704,329
Net asset value of shares issued in
distributions (621 and 38,410 shares,
respectively) 34,219 1,473,014
Cost of shares redeemed (6,936,431 and
2,331,430 shares, respectively) (480,950,612) (120,240,381)
------------ ------------
Net increase in net assets derived
from Fund share activities 110,927,834 238,936,962
------------ ------------
TOTAL INCREASE 196,933,340 297,417,708
NET ASSETS AT THE BEGINNING OF THE YEAR 386,950,915 89,533,207
------------ ------------
NET ASSETS AT THE END OF THE YEAR $583,884,255 $386,950,915
------------ ------------
------------ ------------
*<F9> See Note 8.
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 year)
<TABLE>
YEARS ENDED SEPTEMBER 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of year $ 53.98 $ 36.95 $ 32.00 $ 22.69 $ 19.25
Income from investment operations:
Net investment loss (0.51) (0.33)*<F10> (0.12) (0.01) (0.03)
Net realized and unrealized gain on investments 13.11 18.01 5.46 9.67 3.52
------- ------- ------- ------- -------
Total from investment operations 12.60 17.68 5.34 9.66 3.49
Less distributions:
Dividends from net investment income -- -- (0.01) -- (0.02)
Distributions from net realized gains (0.01) (0.65) (0.38) (0.35) (0.03)
------- ------- ------- ------- -------
Total from distributions (0.01) (0.65) (0.39) (0.35) (0.05)
------- ------- ------- ------- -------
Net asset value, end of year $ 66.57 $ 53.98 $ 36.95 $ 32.00 $ 22.69
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN 23.3% 48.6% 17.0% 43.2% 18.1%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 583,884 386,951 89,533 62,294 30,807
Ratio of operating expenses before interest expense
to average net assets 1.3% 1.5% 1.4% 1.4% 1.5%
Ratio of interest expense to average net assets 0.0% N/A N/A N/A N/A
Ratio of net investment loss to average net assets (0.8%) (0.6%) (0.4%) (0.1%) (0.1%)
Portfolio turnover rate 17.3% 6.2% 35.5% 25.0% 21.5%
</TABLE>
*<F10> Net investment loss per share is calculated using average shares
outstanding.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Opportunity Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Reynolds Opportunity Fund's performance was positively affected by the
strong earnings growth of many of the stocks in its portfolio during the first
half of its fiscal year ended September 30, 2000. The Opportunity Fund was also
positively affected by the market leadership of high quality growth stocks
during the first half of its fiscal year ended September 30, 2000. During the
first half of its fiscal year, much of the gains in the equity markets were
attributable to a relatively small group of larger capitalization growth
companies. Many of these stocks were held by the Opportunity Fund as one of its
principal investment strategies is to invest in "blue chip" companies like these
market leaders. The Opportunity Fund was also positively affected by the
continuing economic recovery, which positively influenced equity markets during
the first half of its fiscal year. In the second half of the Opportunity Fund's
fiscal year it was negatively affected by the slowing economy and the stock
market's correction particularly for leading technology and other high quality
growth stocks.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS OPPORTUNITY FUND AND S&P 500 INDEX(1)<F12>
DATE REYNOLDS OPPORTUNITY FUND S&P 500 INDEX
---- ------------------------- -------------
1/30/92*<F11> $10,000 $10,000
9/30/92 $8,850 $10,270
9/30/93 $9,779 $11,605
9/30/94 $10,092 $12,023
9/30/95 $14,169 $15,606
9/30/96 $15,643 $18,789
9/30/97 $19,491 $26,436
9/30/98 $21,881 $28,855
9/30/99 $35,005 $36,877
9/30/00 $44,428 $41,775
*<F11> INCEPTION DATE
AVERAGE ANNUAL TOTAL RETURN
SINCE INCEPTION
1-YEAR 5-YEAR 1/30/92
------ ------ -------
26.9% 25.7% 18.8%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
(1)<F12> The Standard & Poor's 500 Index consists of 500 selected common
stocks, most of which are listed on the New York Stock Exchange.
The Standard & Poor's Ratings Group designates the stocks to be
included in the Index on a statistical basis. A particular stock's
weighting in the Index is based on its relative total market value
(i.e., its market price per share times the number of shares
outstanding). Stocks may be added or deleted from the Index from
time to time.
Reynolds Opportunity Fund
STATEMENT OF NET ASSETS
September 30, 2000
QUOTED
SHARES MARKET VALUE
------ ------------
COMMON STOCKS -- 98.1% (A)<F14>
APPLICATION SOFTWARE -- 13.0%
3,000 Adobe Systems Inc. $ 465,750
3,000 BMC Software, Inc.*<F13> 57,375
2,000 Business Objects S.A.-SP ADR*<F13> 226,125
10,187 Computer Associates
International, Inc. 256,585
1,000 i2 Technologies, Inc.*<F13> 187,062
11,500 Intuit Inc.*<F13> 655,500
7,000 Legato Systems, Inc.*<F13> 94,063
62,500 Microsoft Corp.*<F13> 3,769,531
39,174 Oracle Corp.*<F13> 3,084,953
11,600 PeopleSoft, Inc.*<F13> 324,075
18,000 Siebel Systems, Inc.*<F13> 2,003,625
17,250 VERITAS Software Corp.*<F13> 2,449,500
------------
13,574,144
BEVERAGES -- 1.1%
13,500 The Coca-Cola Co. 744,187
8,000 PepsiCo, Inc. 368,000
------------
1,112,187
BIOTECHNOLOGY -- 1.3%
11,000 Amgen Inc.*<F13> 768,109
2,000 Biogen, Inc.*<F13> 122,000
2,000 Human Genome Sciences, Inc.*<F13> 346,250
3,000 Immunex Corp.*<F13> 130,500
------------
1,366,859
BUILDING -- 1.4%
27,397 The Home Depot, Inc. 1,453,753
BUSINESS SOFTWARE & SERVICES -- 0.2%
1,500 Akamai Technologies, Inc.*<F13> 78,773
2,000 Critical Path, Inc.*<F13> 121,500
5,000 Netcentives Inc.*<F13> 38,281
------------
238,554
CABLE TV/BROADCASTING -- 0.1%
2,400 Clear Channel
Communications, Inc.*<F13> 135,600
COMMUNICATION EQUIPMENT -- 3.4%
1,000 Corning Inc. 297,000
33,500 QUALCOMM Inc.*<F13> 2,386,875
19,000 Tellabs, Inc.*<F13> 907,250
------------
3,591,125
COMPUTER NETWORKING -- 7.7%
9,995 3Com Corp.*<F13> 191,779
139,600 Cisco Systems Inc.*<F13> 7,712,900
1,000 Sycamore Networks, Inc.*<F13> 108,000
------------
8,012,679
COMPUTER & PERIPHERALS -- 14.6%
2,000 Apple Computer, Inc.*<F13> 51,500
6,500 Compaq Computer Corp. 179,270
36,200 Dell Computer Corp.*<F13> 1,115,413
34,000 EMC Corp. (Mass.)*<F13> 3,370,250
8,000 Gateway, Inc.*<F13> 374,000
5,300 Hewlett-Packard Co. 514,100
8,900 International Business
Machines Corp. 1,001,250
14,824 Palm, Inc.*<F13> 784,745
67,200 Sun Microsystems, Inc.*<F13> 7,845,600
------------
15,236,128
COMPUTER SOFTWARE & SERVICES -- 0.3%
2,000 Computer Sciences Corp.*<F13> 148,500
2,000 Rational Software Corp.*<F13> 138,750
------------
287,250
DRUGS -- 6.3%
7,000 Bristol-Myers Squibb Co. 399,875
8,000 Eli Lilly & Co. 649,000
26,044 Merck & Co., Inc. 1,938,650
68,300 Pfizer Inc. 3,069,231
11,000 Schering-Plough Corp. 511,500
------------
6,568,256
ELECTRICAL EQUIPMENT -- 2.6%
9,000 EchoStar Communications Corp.*<F13> 474,750
11,000 General Electric Co. 634,562
55,500 Motorola, Inc. 1,567,875
------------
2,677,187
ELECTRONICS -- 0.8%
2,021 Agilent Technologies, Inc.*<F13> 98,903
8,200 Sanmina Corp.*<F13> 767,725
------------
866,628
ENERGY -- 0.6%
7,500 Schlumberger Ltd. 617,344
ENTERTAINMENT/MEDIA -- 1.1%
16,000 Walt Disney Co. 612,000
2,000 Sony Corp. ADR 201,875
4,000 Time Warner Inc. 313,000
------------
1,126,875
FINANCIAL SERVICES -- 3.0%
21,500 American Express Co. 1,306,125
4,000 Merrill Lynch & Co., Inc. 264,000
2,000 Morgan Stanley Dean Witter & Co. 182,875
39,561 The Charles Schwab Corp. 1,404,416
------------
3,157,416
HOUSEHOLD PRODUCTS -- 0.7%
3,000 American Home Products Corp. 169,688
10,000 Colgate-Palmolive Co. 472,000
2,000 Procter & Gamble Co. 134,000
------------
775,688
INSURANCE -- 0.4%
4,359 American International
Group, Inc. 417,102
INTERNET INFORMATION PROVIDER -- 7.7%
73,700 America Online, Inc.*<F13> 3,961,375
25,962 At Home Corp.*<F13> 366,713
3,000 InfoSpace, Inc.*<F13> 90,750
8,050 Walt Disney Internet Group*<F13> 85,531
16,000 Lycos, Inc.*<F13> 1,100,250
5,000 VerticalNet, Inc.*<F13> 175,625
24,632 Yahoo! Inc.*<F13> 2,241,512
------------
8,021,756
INTERNET SOFTWARE & SERVICES -- 5.1%
18,000 Amazon.com, Inc.*<F13> 691,875
6,000 Citrix Systems, Inc.*<F13> 120,375
21,000 CMGI Inc.*<F13> 586,687
12,000 DoubleClick Inc.*<F13> 384,000
15,000 eBay Inc.*<F13> 1,030,313
4,000 Exodus Communications, Inc.*<F13> 197,500
9,000 Inktomi Corp.*<F13> 1,026,000
5,000 Juniper Networks, Inc.*<F13> 1,094,688
6,000 NetZero, Inc.*<F13> 12,750
1,000 Redback Networks Inc.*<F13> 164,000
------------
5,308,188
MEDICAL SUPPLIES -- 1.7%
13,000 Abbott Laboratories 618,313
1,600 Guidant Corp.*<F13> 113,100
11,676 Johnson & Johnson 1,096,814
------------
1,828,227
OFFICE EQUIPMENT & SUPPLIES -- 0.1%
10,500 Staples, Inc.*<F13> 148,969
RESTAURANTS -- 0.3%
9,600 McDonald's Corp. 289,800
RETAIL-SPECIALTY -- 0.8%
13,000 Best Buy Co., Inc.*<F13> 827,125
1,000 Starbucks Corp.*<F13> 40,063
------------
867,188
RETAIL STORES -- 2.1%
20,000 Costco Wholesale Corp.*<F13> 698,750
17,562 Gap, Inc. 353,435
4,000 Kohl's Corp.*<F13> 230,750
20,000 Wal-Mart Stores, Inc. 962,500
------------
2,245,435
SECURITY SOFTWARE & SERVICES -- 2.2%
3,000 Check Point Software
Technologies Ltd.*<F13> 472,500
4,000 Network Associates, Inc.*<F13> 90,500
2,000 RSA Security Inc.*<F13> 86,250
8,075 VeriSign, Inc.*<F13> 1,635,692
------------
2,284,942
SEMICONDUCTOR CAPITAL SPENDING -- 2.4%
20,000 Applied Materials, Inc.*<F13> 1,186,250
19,200 KLA-Tencor Corp.*<F13> 790,800
8,800 Novellus Systems, Inc.*<F13> 409,750
3,000 Teradyne, Inc.*<F13> 105,000
------------
2,491,800
SEMICONDUCTORS -- 11.9%
16,400 Altera Corp.*<F13> 783,100
3,000 Applied Micro Circuits Corp.*<F13> 621,187
3,000 Broadcom Corp.*<F13> 731,250
87,200 Intel Corp. 3,624,250
13,000 LSI Logic Corp.*<F13> 380,250
5,200 Maxim Integrated Products Inc.*<F13> 418,275
4,000 Micron Technology, Inc.*<F13> 184,000
1,000 PMC-Sierra, Inc.*<F13> 215,250
2,000 Rambus Inc.*<F13> 157,875
1,500 STMicroelectronics N.V. 71,438
60,000 Texas Instruments Inc. 2,831,250
2,000 TriQuint Semiconductor, Inc.*<F13> 72,875
2,000 Vitesse Semiconductor Corp.*<F13> 177,875
25,000 Xilinx, Inc.*<F13> 2,140,625
------------
12,409,500
SYSTEM SOFTWARE -- 0.4%
3,000 Mercury Interactive Corp.*<F13> 470,250
TELECOMMUNICATIONS -- 1.6%
2,000 CIENA Corp.*<F13> 245,625
7,960 EarthLink, Inc.*<F13> 72,635
20,950 Lucent Technologies Inc. 640,284
12,000 Nortel Networks Corp. 714,750
------------
1,673,294
TELEPHONE SERVICES -- 0.2%
2,000 Vodafone Group PLC SP ADR 74,000
5,000 WorldCom, Inc.*<F13> 151,875
------------
225,875
WIRELESS COMMUNICATION -- 3.0%
4,000 Nextel Communications, Inc.*<F13> 187,000
72,000 Nokia Corp. "A" ADR 2,866,500
2,000 Sprint Corp. (PCS Group)*<F13> 70,125
------------
3,123,625
------------
Total common stocks
(cost $44,014,553) 102,603,624
PRINCIPAL
AMOUNT
------
SHORT-TERM INVESTMENTS -- 6.4% (A)<F14>
VARIABLE RATE DEMAND NOTES -- 6.4%
$5,100,000 Firstar Bank U.S.A., N.A. 5,100,000
935,000 Sara Lee Corp. 935,000
657,827 Wisconsin Electric Power Co. 657,827
------------
Total short-term investments
(cost $6,692,827) 6,692,827
------------
Total investments
(cost $50,707,380) 109,296,451
Liabilities, less cash and
receivables -- (4.5%) (A)<F14> (4,686,904)
------------
NET ASSETS $104,609,547
------------
------------
Net Asset Value Per Share
($0.01 par value 40,000,000
shares authorized), offering
and redemption price
($104,609,547 / 2,415,093
shares outstanding) $ 43.31
------------
------------
*<F13> Non-income producing security.
(a)<F14> Percentages for the various classifications relate to net assets.
ADR - American Depository Receipt
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Opportunity Fund
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2000
INCOME:
Dividends $ 244,750
Interest 153,647
-----------
Total income 398,397
-----------
EXPENSES:
Management fees 1,156,067
Administrative services 145,606
Transfer agent fees 59,905
Professional fees 29,683
Custodian fees 28,882
Printing and postage expense 24,041
Registration fees 21,105
Distribution fees 18,607
Board of Directors fees 4,000
Other expenses 26,884
-----------
Total operating expenses before interest expense 1,514,780
Interest expense 208
-----------
Total expenses 1,514,988
-----------
NET INVESTMENT LOSS (1,116,591)
-----------
NET REALIZED GAIN ON INVESTMENTS 1,177,190
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 25,108,069
-----------
NET GAIN ON INVESTMENTS 26,285,259
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $25,168,668
-----------
-----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 2000 and 1999
2000 1999
---------- ----------
OPERATIONS:
Net investment loss $ (1,116,591) $ (768,513)
Net realized gain on investments 1,177,190 743,672
Net increase in unrealized appreciation
on investments 25,108,069 22,020,669
------------ -----------
Net increase in net assets
resulting from operations 25,168,668 21,995,828
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net realized gains
($0.10485 and $0.50355 per share,
respectively) (288,281)*<F15> (689,257)
------------ -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (4,338,174
and 2,618,497 shares, respectively) 197,704,441 83,448,456
Net asset value of shares issued in
distribution (7,470 and 27,402 shares,
respectively) 259,533 610,241
Cost of shares redeemed (4,773,535 and
1,135,443 shares, respectively) (215,551,811) (37,202,490)
------------ -----------
Net (decrease) increase in net
assets derived from Fund share
activities (17,587,837) 46,856,207
------------ -----------
TOTAL INCREASE 7,292,550 68,162,778
NET ASSETS AT THE BEGINNING OF THE YEAR 97,316,997 29,154,219
------------ -----------
NET ASSETS AT THE END OF THE YEAR $104,609,547 $97,316,997
------------ -----------
------------ -----------
*<F15> See Note 8.
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 year)
<TABLE>
FOR THE YEARS ENDED SEPTEMBER 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 34.23 $ 21.88 $ 19.49 $ 15.64 $ 14.17
Income from investment operations:
Net investment loss (0.56)*<F16> (0.34)*<F16> (0.09)*<F16> (0.13) (0.06)
Net realized and unrealized gain on securities 9.74 13.19 2.48 3.98 1.53
------- ------- ------- ------- -------
Total from investment operations 9.18 12.85 2.39 3.85 1.47
Less distributions:
Dividend from net investment income -- -- -- -- --
Distribution from net realized gains (0.10) (0.50) -- -- --
------- ------- ------- ------- -------
Total from distributions (0.10) (0.50) -- -- --
------- ------- ------- ------- -------
Net asset value, end of year $ 43.31 $ 34.23 $ 21.88 $ 19.49 $ 15.64
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN 26.9% 60.0% 12.3% 24.6% 10.4%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 104,610 97,317 29,154 22,702 17,104
Ratio of operating expenses before interest expense
to average net assets 1.3% 1.5% 1.5% 1.5% 1.5%
Ratio of interest expense to average net assets 0.0% N/A N/A N/A N/A
Ratio of net investment loss to average net assets (1.0%) (1.1%) (0.8%) (0.9%) (1.1%)
Portfolio turnover rate 8.8% 30.3% 39.4% 60.2% 11.8%
</TABLE>
*<F16> In 1999, net investment loss per share was calculated using average
shares outstanding. In 2000 and 1998, net investment loss per share is
calculated using ending balances prior to consideration of adjustments
for permanent book and tax differences.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds U.S. Government Bond Fund
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
The Reynolds U.S. Government Bond Fund's short average maturity during a
period of rising interest rates was the main factor contributing to the Bond
Fund's performance in the fiscal year ended September 30, 2000. The Federal
Reserve raised interest rates during the Fund's fiscal year ended September 30,
2000 to head off inflationary pressures. The U.S. Government Bond Fund's
portfolio of U.S. Government securities had an average maturity of approximately
.8 years on September 30, 2000 which was at the low end of its expected average
maturity. Consequently by keeping its average maturity short the U.S.
Government Bond Fund reduced portfolio risk.
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
REYNOLDS U.S. GOVERNMENT BOND FUND AND LEHMAN GOVERNMENT BOND INDEX(1)<F18>
DATE REYNOLDS U.S. GOVERNMENT BOND FUND LEHMAN GOVERNMENT BOND INDEX
---- ---------------------------------- ----------------------------
1/30/92*<F17> $10,000 $10,000
9/30/92 $10,668 $10,890
9/30/93 $11,679 $12,088
9/30/94 $11,032 $11,604
9/30/95 $11,961 $13,183
9/30/96 $12,498 $13,763
9/30/97 $13,211 $15,029
9/30/98 $14,014 $17,071
9/30/99 $14,460 $16,781
9/30/00 $15,161 $17,986
*<F17> INCEPTION DATE
AVERAGE ANNUAL TOTAL RETURN
SINCE INCEPTION
1-YEAR 5-YEAR 1/30/92
------ ------ -------
4.9% 4.9% 4.9%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
(1)<F18> The Lehman Government Bond Index is made up of the Treasury Bond
Index (all public obligations at the U.S. Treasury, excluding flower
bonds and foreign-targeted issues) and the Agency Bond Index (all
publicly issued debt of U.S. Government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. Government).
All issues have at least one year to maturity and an outstanding par
value of at least $100 million.
Reynolds U.S. Government Bond Fund
STATEMENT OF NET ASSETS
September 30, 2000
PRINCIPAL QUOTED
AMOUNT MARKET VALUE
------ ------------
LONG-TERM INVESTMENTS -- 25.8% (A)<F19>
FEDERAL AGENCIES -- 25.8%
$400,000 Federal Home Loan Bank,
4.66%, due 10/15/01 $ 392,702
300,000 Federal Farm Credit Bank,
6.20%, due 07/01/02 298,432
200,000 Federal Home Loan Bank,
6.00%, due 08/15/02 198,197
300,000 Federal Home Loan Bank,
5.37%, due 01/16/03 292,711
----------
Total long-term investments
(cost $1,190,913) 1,182,042
SHORT-TERM INVESTMENTS -- 73.2% (A)<F19>
U.S. TREASURY SECURITIES -- 6.6%
300,000 U.S. Treasury Notes,
8.50%, due 11/15/00
(cost $336,063) 300,703
FEDERAL AGENCIES -- 47.7%
500,000 Federal Home Loan Bank,
5.215%, due 05/03/01 496,049
500,000 Federal Home Loan Bank,
5.57%, due 05/25/01 496,783
300,000 Federal Farm Credit Corp.,
6.28%, due 06/20/01 299,314
500,000 Federal Home Loan Bank,
5.50%, due 08/13/01 495,667
400,000 Federal Home Loan Bank,
5.295%, due 09/04/01 395,646
----------
Total federal agencies
(cost $2,196,377) 2,183,459
VARIABLE RATE DEMAND NOTES -- 18.9%
215,000 American Family Financial Services 215,000
215,000 Firstar Bank U.S.A., N.A. 215,000
4,796 Sara Lee Corp. 4,796
215,000 Wisconsin Electric Power Co. 215,000
215,000 Wisconsin Corporate
Central Credit Union 215,000
----------
Total variable rate demand notes
(cost $864,796) 864,796
----------
Total short-term investments
(cost $3,397,236) 3,348,958
----------
Total investments
(cost $4,588,149) 4,531,000
Cash and receivables, less
liabilities -- 1.0% (A)<F19> 44,041
----------
NET ASSETS $4,575,041
----------
----------
Net Asset Value Per Share
($0.01 par value 20,000,000
shares authorized), offering
and redemption price
($4,575,041 / 475,375
shares outstanding) $ 9.62
----------
----------
(a)<F19> 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 Year Ended September 30, 2000
INCOME:
Interest $242,762
--------
EXPENSES:
Management fees 30,636
Professional fees 20,224
Transfer agent fees 11,934
Registration fees 5,850
Administrative services 4,085
Printing and postage expense 1,573
Board of Directors fees 1,000
Custodian fees 873
Other expenses 2,602
--------
Total expenses before reimbursement
and management fee waiver 78,777
Less expenses assumed by adviser (42,014)
--------
Net expenses 36,763
--------
NET INVESTMENT INCOME 205,999
--------
NET INCREASE IN UNREALIZED DEPRECIATION ON INVESTMENTS (11,740)
--------
NET LOSS ON INVESTMENTS (11,740)
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $194,259
--------
--------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 2000 and 1999
2000 1999
---------- ----------
OPERATIONS:
Net investment income $ 205,999 $ 175,974
Net realized loss on investments -- (8,750)
Net increase in unrealized
depreciation on investments (11,740) (54,979)
---------- ----------
Net increase in net assets
resulting from operations 194,259 112,245
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income
($0.4852 and $0.4651 per share,
respectively) (205,999) (175,974)
---------- ----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (159,133 and
172,202 shares, respectively) 1,528,889 1,676,978
Net asset value of shares issued in
distributions (20,844 and 16,722 shares,
respectively) 199,943 162,660
Cost of shares redeemed (133,218 and
73,473 shares, respectively) (1,277,288) (714,363)
---------- ----------
Net increase in net assets derived from
Fund share activities 451,544 1,125,275
---------- ----------
TOTAL INCREASE 439,804 1,061,546
NET ASSETS AT THE BEGINNING OF THE YEAR 4,135,237 3,073,691
---------- ----------
NET ASSETS AT THE END OF THE YEAR $4,575,041 $4,135,237
---------- ----------
---------- ----------
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 year)
<TABLE>
FOR THE YEARS ENDED SEPTEMBER 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 9.65 $ 9.81 $ 9.76 $ 9.75 $ 9.85
Income from investment operations:
Net investment income 0.49 0.47 0.53 0.53 0.53
Net realized and unrealized (loss) gain on investments (0.03) (0.16) 0.05 0.01 (0.10)
------- ------- ------- ------- -------
Total from investment operations 0.46 0.31 0.58 0.54 0.43
Less distributions:
Dividends from net investment income (0.49) (0.47) (0.53) (0.53) (0.53)
Distribution from net realized gains -- -- -- -- --
------- ------- ------- ------- -------
Total from distributions (0.49) (0.47) (0.53) (0.53) (0.53)
------- ------- ------- ------- -------
Net asset value, end of year $ 9.62 $ 9.65 $ 9.81 $ 9.76 $ 9.75
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN 4.85% 3.18% 6.08% 5.70% 4.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 4,575 4,135 3,074 2,626 2,766
Ratio of expenses (after reimbursement)
to average net assets*<F20> 0.90% 0.90% 0.90% 0.90% 0.90%
Ratio of net investment income
to average net assets**<F21> 5.04% 4.78% 5.40% 5.45% 5.43%
Portfolio turnover rate 17.0% -- -- 25.28% 28.65%
</TABLE>
*<F20> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been 1.93%, 2.15%, 2.37%, 2.33% and 2.24% for the years
ended September 30, 2000, 1999, 1998, 1997 and 1996, respectively.
**<F21> The ratios of net investment income prior to adviser's expense
limitation undertaking to average net assets for the years ended
September 30, 2000, 1999, 1998, 1997 and 1996 would have been 4.01%,
3.53%, 3.93%, 4.02% and 4.09%, respectively.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Money Market Fund
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
ASSETS:
Investments in securities, at value
(amortized cost $15,520,760) $15,520,760
Cash 14,463,560
Interest receivable 7,621
-----------
Total assets 29,991,941
-----------
LIABILITIES:
Loan payable 1,760,000
Interest payable 960
Other liabilities 20,780
-----------
Total liabilities 1,781,740
-----------
NET ASSETS:
Capital Stock, $0.01 par value; 500,000,000 shares
authorized; 28,210,201 shares outstanding $28,210,201
-----------
-----------
CALCULATION OF NET ASSET VALUE AND REDEMPTION PRICE:
Net asset value and redemption price per share
($28,210,201 / 28,210,201 shares outstanding) $ 1.00
-----------
-----------
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Money Market Fund
SCHEDULE OF INVESTMENTS
September 30, 2000
PRINCIPAL
AMOUNT RATING VALUE
------ ------ -----
SHORT-TERM INVESTMENTS -- 99.9% (A)<F22>
COMMERCIAL PAPER -- 99.9%
$1,000,000 Dupont EI De Nemours Co.,
6.45%, due 10/04/00 A1+P1 $ 999,463
950,000 American Express Credit Corp.,
6.57%, due 10/12/00 A1P1 948,092
950,000 General Electric Capital Corp.,
6.62%, due 10/12/00 A1+P1 948,078
1,000,000 Bellsouth Telecomm Inc.,
6.42%, due 10/13/00 A1+P1 997,860
1,000,000 Eastman Kodak Co.,
6.41%, due 10/17/00 A1P1 997,151
1,000,000 Coca Cola Co.,
6.42%, due 10/27/00 A1P1 995,363
900,000 General Motors Acceptance Corp.,
6.53%, due 10/30/00 A1P1 895,266
1,000,000 Associate First Capital Corp.,
6.51%, due 10/31/00 A1P1 994,575
1,000,000 IBM Credit Corp.,
6.48%, due 10/31/00 A1P1 994,600
1,000,000 Merrill Lynch & Co., Inc.,
6.50%, due 10/31/00 A1+P1 994,584
1,100,000 Wal-mart Stores Inc.,
6.45%, due 10/31/00 A1+P1 1,094,087
1,000,000 Wells Fargo Financial Inc.,
6.53%, due 10/31/00 A1P1 994,559
900,000 Prudential Funding Corp.,
6.53%, due 11/17/00 A1P1 892,327
900,000 Motorola Inc.,
6.43%, due 11/21/00 A1P1 891,802
1,000,000 American General Corp.,
6.53%, due 11/22/00 A1+P1 990,568
900,000 AT&T Corp.,
6.45%, due 01/05/01 A1+P1 884,520
-----------
Total commercial paper 15,512,895
VARIABLE RATE DEMAND NOTE -- 0.1%
7,865 Firstar Bank U.S.A., N.A. A1+P1 7,865
-----------
Total investments (100%)
(amortized cost $15,520,760) $15,520,760
-----------
-----------
(a)<F22> Percentages for the various classifications relate to total
investments.
The accompanying notes to financial statements are an integral part of this
schedule.
Reynolds Money Market Fund
STATEMENT OF OPERATIONS
For the Year Ended September 30, 2000
INCOME:
Interest $1,064,725
----------
EXPENSES:
Management fees 90,357
Transfer agent fees 28,194
Professional fees 22,905
Registration fees 18,156
Administrative services 18,071
Printing and postage expense 10,563
Custodian fees 4,931
Board of Directors fees 3,000
Other expenses 11,644
----------
Total operating expenses before interest
expense and management fee waiver 207,821
Interest expense 960
----------
Total expenses before management fee waiver 208,781
Less expenses assumed by adviser (90,357)
----------
Net expenses 118,424
----------
NET INVESTMENT INCOME 946,301
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 946,301
----------
----------
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 2000 and 1999
2000 1999
----------- -----------
OPERATIONS:
Net investment income $ 946,301 $ 424,025
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ($0.0521
and $0.0437 per share, respectively) (946,301) (424,025)
----------- -----------
FUND SHARE ACTIVITIES:
Proceeds from shares issued (334,876,633 and
55,837,068 shares, respectively) 334,876,633 55,837,068
Net asset value of shares issued in
distributions (816,692 and 365,895
shares, respectively) 816,692 365,895
Cost of shares redeemed (323,944,885 and
44,620,471 shares, respectively) (323,944,885) (44,620,471)
----------- -----------
Net increase in net assets derived
from Fund share activities. 11,748,440 11,582,492
----------- -----------
TOTAL INCREASE 11,748,440 11,582,492
NET ASSETS AT THE BEGINNING OF THE YEAR 16,461,761 4,879,269
----------- -----------
NET ASSETS AT THE END OF THE YEAR $28,210,201 $16,461,761
----------- -----------
----------- -----------
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 year)
<TABLE>
YEARS ENDED SEPTEMBER 30,
------------------------------------------------------------------
2000 1999 1998 1997 1996
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income 0.05 0.04 0.05 0.05 0.05
Less distributions:
Dividends from net investment income (0.05) (0.04) (0.05) (0.05) (0.05)
------ ------ ------ ------ ------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------
------ ------ ------ ------ ------
TOTAL INVESTMENT RETURN 5.34% 4.46% 4.99% 4.87% 4.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's $) 28,210 16,462 4,879 3,032 3,980
Ratio of operating expenses before interest expense
(after reimbursement) to average net assets*<F23> 0.65% 0.65% 0.65% 0.65% 0.65%
Ratio of interest expense to average net assets 0.01% N/A N/A N/A N/A
Ratio of net investment income to average net assets**<F24> 5.24% 4.35% 4.88% 4.77% 4.78%
</TABLE>
*<F23> Computed after giving effect to adviser's expense limitation
undertaking. If the Fund had paid all of its expenses, the ratios
would have been 1.16%, 1.37%, 1.96%, 2.02% and 1.39% for the years
ended September 30, 2000, 1999, 1998, 1997 and 1996, respectively.
**<F24> If the Fund had paid all of its expenses, the ratios would have been
4.74%, 3.63%, 3.57%, 3.40% and 4.04% for the years ended September
30, 2000, 1999, 1998, 1997 and 1996, respectively.
The accompanying notes to financial statements are an integral part of this
statement.
Reynolds Funds, Inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(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 five funds: the Reynolds Fund
("Reynolds Fund"), the Reynolds Blue Chip Growth Fund ("Blue Chip Fund"),
the Reynolds Opportunity Fund ("Opportunity Fund"), the Reynolds U.S.
Government Bond Fund ("Government Bond Fund") and the Reynolds Money Market
Fund ("Money Market 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 Reynolds Fund is to produce long-term
growth of capital; 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 a diversified portfolio of common stocks issued
by well-established growth companies commonly referred to as "blue chip"
companies; the investment objective of the Opportunity Fund is to produce
long-term growth of capital by investing in a diversified portfolio of
common stocks having above average growth characteristics; the investment
objective of the Government Bond Fund is to provide a high level of current
income by investing in a diversified portfolio of securities issued or
guaranteed as to principal and interest by the U.S. Government, its
agencies or instrumentalities; and 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.
(a) Each security for the Reynolds Fund, 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 Reynolds Fund, the Blue Chip
Fund and the Opportunity Fund, as reported on the statements of net assets
are substantially the same for Federal income tax purposes. Cost amounts,
as reported on the statement of net assets and schedule of investments for
the Government Bond Fund and the Money Market Fund, respectively, are the
same for Federal income tax purposes.
(b) Net realized gains and losses on common stock of the Reynolds Fund,
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
Reynolds Fund will elect and all other 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
Reynolds Fund has $1,132,007 of post-October losses and the Blue Chip Fund
has $14,885,440 of post-October losses, which are deferred for tax purposes
until the year ending September 30, 2001. The Blue Chip Fund has $344,232
of net capital loss carryforwards which expire September 30, 2008. The
Government Bond Fund has $231,244, $19,651, $2,405 and $9,179 of net
capital loss carryforwards which expire September 30, 2003, 2004, 2005 and
2007, respectively.
(d) The Reynolds Fund, 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 Reynolds Fund, 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 year ended
September 30, 2000, RCM voluntarily waived $30,636 and $90,357 of the
management fees due from the Government Bond Fund and the Money Market
Fund, respectively, under the agreements.
In addition, RCM has voluntarily reimbursed the Government Bond Fund for
expenses over 0.90% of the daily net assets of such Fund totaling $11,378.
These voluntary reimbursements to the Government Bond 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 Reynolds Fund, 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 Reynolds Fund, the Blue Chip Fund and Opportunity Fund have adopted a
Service and Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. The Plan provides that each Fund adopting
it may incur certain costs which may not exceed a maximum amount equal to
0.25% per annum of such Fund's average daily net assets. Payments made
pursuant to the Plan may only be used to pay distribution expenses incurred
in the current year.
(3) CREDIT FACILITY --
Firstar Bank, N.A. has made available to Reynolds Fund, Blue Chip Fund,
Opportunity Fund and Money Market Fund a credit facility pursuant to the
respective Credit Agreements dated August 7, 2000 for the purpose of having
cash available to cover incoming redemptions. The Reynolds Fund can also
use the credit facility to purchase securities. The Credit Agreements
expire July 31, 2001. The terms of the respective agreements are as
follows:
<TABLE>
REYNOLDS BLUE CHIP OPPORTUNITY MONEY MARKET
FUND FUND FUND FUND
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Payment Terms Due in 90 days Due in 45 days Due in 45 days Due in 45 days
Interest Prime Rate - 1% Prime Rate - 1% Prime Rate - 1% Prime Rate - 1%
Unused Line Fees 0.10% 0.10% 0.10% 0.10%
Credit Limit $4,000,000 $5,000,000 $3,000,000 $2,000,000
Average Daily Balance Outstanding -- $41,520 -- $140,800
Maximum Amount Outstanding -- $738,000 -- $1,760,000
Interest Expense $278 $519 $208 $960
</TABLE>
(4) DISTRIBUTION TO SHAREHOLDERS --
Net investment income and net realized gains, if any, are distributed to
shareholders. The distributions were declared on October 27, 2000, and
will be paid on October 30, 2000 to shareholders of record on October 26,
2000.
<TABLE>
REYNOLDS BLUE CHIP OPPORTUNITY
FUND FUND FUND
---------- ---------- ----------
<S> <C> <C> <C>
Dividend from net investment income $ -- $ -- $ --
$ per share -- -- --
Short-term gains -- -- --
$ per share -- -- --
Long-term capital gains taxed at 20% -- -- 1,074,681
$ per share -- -- 0.43493
</TABLE>
(5) INVESTMENT TRANSACTIONS --
For the year ended September 30, 2000, purchases and proceeds of sales of
long-term investment securities of the Reynolds Fund (excluding short-term
securities) were $78,895,885 and $13,618,566, respectively; purchases and
proceeds of sales of investment securities of the Blue Chip Fund (excluding
short-term securities) were $208,489,197 and $97,987,749, respectively;
purchases and proceeds of sales of investment securities of the Opportunity
Fund (excluding short-term securities) were $9,778,514 and $27,561,661,
respectively; and purchases and proceeds of sales of long-term investment
securities for the Government Bond Fund (excluding short-term securities)
were $592,953 and $700,000, respectively.
(6) ACCOUNTS PAYABLE AND ACCRUED LIABILITIES --
As of September 30, 2000, liabilities of the Funds included the following:
<TABLE>
REYNOLDS BLUE CHIP OPPORTUNITY GOVERNMENT MONEY MARKET
FUND FUND FUND BOND FUND FUND
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Loan payable $ -- $ -- $ -- $ N/A $ 1,760,000
Payable to RCM for management fees 59,918 512,622 93,104 -- --
Payable to shareholders for redemptions -- 232,442 12,728 -- --
Interest payable 278 519 208 N/A 960
Other liabilities 61,422 260,252 86,450 378 20,675
</TABLE>
(7) SOURCES OF NET ASSETS --
As of September 30, 2000, the sources of net assets were as follows:
<TABLE>
REYNOLDS BLUE CHIP OPPORTUNITY GOVERNMENT MONEY MARKET
FUND FUND FUND BOND FUND FUND
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Fund shares issued and outstanding $66,111,098 $393,902,833 $ 45,174,566 $4,894,670 $28,210,201
Net unrealized appreciation (depreciation)
on investments 4,419,824 207,800,522 58,589,071 (57,149) --
Accumulated net realized (loss) gain
on investments (1,275,784) (17,819,100) 845,910 (262,480) --
----------- ------------ ------------ ---------- -----------
$69,255,138 $583,884,255 $104,609,547 $4,575,041 $28,210,201
----------- ------------ ------------ ---------- -----------
----------- ------------ ------------ ---------- -----------
</TABLE>
Aggregate net unrealized appreciation (depreciation) for the Funds as of
September 30, 2000 consisted of the following:
<TABLE>
REYNOLDS BLUE CHIP OPPORTUNITY GOVERNMENT
FUND FUND FUND BOND FUND
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Aggregate gross unrealized appreciation $17,710,564 $257,505,461 $62,403,091 $ 314
Aggregate gross unrealized depreciation (13,290,740) (49,704,939) (3,814,020) (57,463)
----------- ------------ ----------- --------
Net unrealized appreciation (depreciation) $ 4,419,824 $207,800,522 $58,589,071 $(57,149)
----------- ------------ ----------- --------
----------- ------------ ----------- --------
</TABLE>
(8) REQUIRED FEDERAL INCOME TAX DISCLOSURES (UNAUDITED) --
In early 2000, shareholders received information regarding all
distributions paid to them by the Funds during the fiscal year ended
September 30, 2000. The Funds hereby designate the following amounts as
long-term capital gains distributions.
BLUE CHIP OPPORTUNITY
FUND FUND
---------- -----------
Capital gains taxed at 20% $37,972 $30,746
For the Opportunity Fund, the percentage of ordinary income which is
eligible for the corporate dividend received deduction for the fiscal year
ended September 30, 2000, was 95%.
100 East Wisconsin Avenue
REPORT OF INDEPENDENT ACCOUNTANTS Suite 1500
Milwaukee, WI 53202
(PRICEWATERHOUSECOOPERS LOGO)
October 27, 2000
To the Shareholders and Board of Directors
of Reynolds Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, of Reynolds Money Market Fund and the
statements of net assets of Reynolds Fund, Reynolds Blue Chip Growth Fund,
Reynolds Opportunity Fund and Reynolds U.S. Government Bond Fund (constituting
Reynolds Funds, Inc., hereafter referred to as the "Funds") and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the Funds at September 30, 2000, the results of each of their operations, the
changes in each of their net assets and the financial highlights for each of the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 2000 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
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
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
FOLEY & LARDNER
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
