CALDWELL & ORKIN
INVESTMENT COUNSEL
THE AGGRESSIVE GROWTH FUND
Annual Report to Shareholders
DEAR FELLOW SHAREHOLDER: JUNE 21, 1996
The Caldwell & Orkin Aggressive Growth Fund has re-established
its high performance rankings over short and longer term time
periods in the Lipper and Morningstar ranking systems <F1>. Just
as significant, the Fund is accomplishing these feats with modest
levels of market risk<F2>. The Fund has outperformed the S&P 500
since August 24, 1992 (commencement of the Fund's hedged
management style) during which time the S&P 500 has enjoyed
notable appreciation without even so much as a 10% correction.
For the calendar year to date, the Fund is up 13% versus 11.7%
for the NASDAQ and 9.4% for the S&P 500. We believe the Fund's
relative performance will be even more enhanced when the stock
market has its inevitable setback. Although the goal is strong
performance, we believe that to achieve solid returns over time
means attention must be paid to how those returns are attained.
We are a manager of risk, not just of returns.
Stocks remain in a high risk market. Since 1920, there have been
three long-term bull and two long-term bear markets. The current
bull market has just about run the length of and performed as
strongly as average past bull markets. Most valuation measures
including price-to-dividends, price-to-gross domestic product and
price-to-replacement asset cost are at peak levels. Complacency
is widespread. Investors have learned that "being smart" means
buying on any dip, no matter what the reason - eventually this
will not be the case.
SIX MONTHS IN REVIEW:
Over the past several months we remained cautiously poised in the
market and focused on stock selection in both shorts and longs.
The Fund's largest long exposure has focused on the oil service
industry, while the short emphasis shifted from technology to low
quality loan companies. We have maintained close to our maximum
(25%) short position while generally remaining above 70% invested
in our long position. Through this strategy and excellent equity
selection we have had strong performance.
Performance figures shown represent past performance and do not
indicate future results.
<PAGE>
OUTLOOK:
The Fund continues to be postured for a high risk, but rising
stock market. The short position remains close to its maximum
allowable level of 25%. In essence, we are hedging some of the
high risk market through stock selection on the short side. We
are monitoring indicators for signs of a pop in this speculative
bubble and we are working hard to determine when to turn
defensive.
We look forward to serving your investment needs now and in the
future.
Sincerely,
Michael B. Orkin, CFA
President, Chief Investment Officer
June 21, 1996
[FN]
<F1> For information about the different ranking entities and services, please
call the Fund at 800-237-7073.
<F2> From August 24, 1992 through March 31, 1996, the Fund's R-squared or
correlation to the S&P 500 is only 12%. The Fund's beta or volatility
relative to the S&P 500 is only .30 or 30% of the market's volatility. An
S&P 500 index fund has a 100% correlation with the market and a beta of
1.00. The Fund's monthly standard deviation is 0.36% vs. 2.28% for the
S&P 500.
2<PAGE>
CALDWELL & ORKIN AGGRESSIVE GROWTH FUND
TOTAL RETURN PERFORMANCE SUMMARY THROUGH APRIL 30, 1996 <F1>
<TABLE>
<CAPTION>
YEAR ENDING C&O AGF NASDAQ INDEX S&P 500 INDEX
----------- ------- ------------ -------------
<S> <C> <C> <C>
1991 1.25% 2.02% 0.60%
1992 11.86% 19.38% 14.07%
1993* 15.09% 14.30% 8.83%
1993** 19.16% 17.34% 7.84%
1994 16.48% 10.95% 5.27%
1995 (2.28)% 15.01% 17.47%
1996 31.80% 41.06% 30.07%
Since Inception
(8/24/92) <F2> 81.70% 114.36% 75.19%
Since Inception
(03/11/91) 95.75% 154.85% 101.89%
AVERAGE ANNUAL RETURNS
Since Inception
(8/24/92)<F2> 16.49% 21.64% 16.45%
Since Inception
(03/11/91) 13.27% 19.08% 14.70%
* For full fiscal year ending 4/30/93
** From 8/24/92 through 4/30/93 - the portion of the year using the
Caldwell & Orkin Multifactor style of investment management.
<FN>
<F1> Performance figures represent past performance and do not indicate
future results. The investment return and principal value will
fluctuate so that upon redemption you may receive more or less than
the original investment. The NASDAQ and S&P 500 figures do not
reflect any fees or expenses. Both are widely recognized unmanaged
indices of U.S. stocks.
<F2> The Caldwell & Orkin Aggressive Growth Fund commenced operations on
August 24, 1992. A prior fund passively managed and indexed to the
largest 100 OTC stocks began operations on March 11, 1991.
</TABLE>
CALDWELL & ORKIN AGGRESSIVE GROWTH FUND ASSET ALLOCATION
[PIE CHARTS APPEAR HERE]
<TABLE>
<CAPTION>
October 31, 1995 April 30, 1996
---------------- --------------
<S> <C> <C>
Short-Term Investments and Other Assets 22.85% 9.06%
Common Stock Sold Short 24.16% 17.04%
Common Stock Owned 52.99% 73.90%
</TABLE>
<PAGE>
Caldwell & Orkin Aggressive Growth Fund Versus Major Market Indices
Results of a Hypothetical $10,000 Investment
Combined Old and Active Style of Investment Management
March 11, 1991 Through April 30, 1996
[Graph appears here]
<TABLE>
<CAPTION>
NASDAQ S&P 500
C&O AGF Composite Index
------- --------- -------
<S> <C> <C> <C>
3/11/91 10,000.00 10,000.00 10,000.00
3/28/91 10,415.06 10,151.33 10,029.52
4/31/91 10,125.48 10,202.27 10,059.51
5/31/91 10,550.20 10,652.48 10,477.13
6/28/91 9,845.561 10,017.05 10,000.76
7/31/91 10,357.14 10,566.82 10,478.58
8/30/91 10,752.90 11,064.39 10,713.61
9/30/91 10,492.28 11,089.64 10,534.72
10/31/91 10,501.93 11,428.51 10,690.06
11/29/91 10,077.22 11,026.92 10,246.58
12/31/91 11,520.30 12,341.14 11,420.04
1/31/92 12,102.13 13,054.03 11,221.19
2/28/92 12,470.62 13,333.12 11,354.08
3/31/92 11,820.91 12,708.01 11,135.28
4/30/92 11,326.35 12,179.92 11,474.48
5/29/92 11,326.35 12,319.46 11,512.64
6/30/92 10,763.91 11,862.52 11,343.20
7/31/92 11,297.26 12,225.17 11,820.13
8/31/92 10,831.79 11,852.41 11,564.86
9/30/92 11,209.99 12,276.53 11,698.83
10/30/92 11,850.00 12,737.47 11,753.97
11/30/92 12,907.00 13,738.50 12,137.57
12/31/92 13,278.19 14,248.28 12,247.13
1/29/93 13,429.42 14,656.40 12,361.01
2/26/93 13,409.25 14,118.21 12,516.74
3/31/93 13,510.08 14,525.90 12,782.80
4/30/93 13,046.30 13,921.41 12,487.18
5/28/93 13,641.14 14,744.59 12,798.14
6/30/93 13,772.21 14,816.57 12,838.99
7/30/93 13,721.80 14,832.36 12,800.70
8/31/93 14,336.81 15,635.33 13,273.06
9/30/93 14,588.87 16,055.02 13,170.38
10/29/93 14,911.49 16,401.68 13,456.30
11/30/93 14,669.52 15,878.43 13,311.97
12/31/93 15,258.34 16,350.11 13,477.88
1/31/94 15,543.43 16,848.31 13,946.80
2/28/94 15,754.14 16,680.35 13,554.42
3/31/94 15,109.60 15,648.17 12,965.85
4/29/94 15,196.36 15,445.69 13,145.80
5/31/94 15,022.83 15,474.10 13,341.54
6/30/94 15,208.73 14,858.88 13,017.26
7/29/94 15,146.78 15,199.85 13,457.52
8/31/94 14,874.09 16,114.58 13,999.38
9/30/94 15,047.62 16,086.59 13,654.35
10/31/94 14,998.04 16,364.63 13,971.84
11/30/94 15,035.23 15,792.55 13,450.98
12/30/94 15,108.58 15,827.07 13,649.89
1/31/95 14,811.83 15,895.27 14,014.33
2/28/95 14,824.76 16,706.45 14,559.15
3/31/95 14,927.95 17,200.44 14,992.97
4/28/95 14,850.18 17,763.89 15,442.37<PAGE>
5/30/95 14,954.13 18,197.33 16,060.07
6/30/95 15,176.94 19,647.65 16,432.66
7/31/95 15,386.39 21,074.07 16,978.23
8/31/95 15,635.65 21,472.37 17,020.67
9/30/95 15,857.67 21,966.24 17,738.94
10/31/95 15,713.37 21,808.08 17,675.08
11/30/95 16,145.48 22,294.40 18,451.02
12/31/95 17,606.65 22,145.03 18,807.12
1/31/96 17,699.97 22,306.69 19,446.57
2/29/96 18,363.72 23,154.34 19,627.42
3/31/96 18,762.21 23,182.12 19,815.84
4/30/96 19,576.49 25,057.56 20,107.13
</TABLE>
Caldwell & Orkin Aggressive Growth Fund Versus Major Market Indices
Results of a Hypothetical $10,000 Investment
Since Inception of Active Style of Investment Management
August 24, 1992 Through April 30, 1996
[Graph appears here]
<TABLE>
<CAPTION>
NASDAQ S&P 500
C&O AGF Composite Index
------- --------- -------
<S> <C> <C> <C>
8/24/92 10,000.00 10,000.00 10,000.00
8/31/92 9,893.711 9,989.711 9,987.323
9/30/92 10,239.15 10,347.17 10,103.02
10/30/92 10,823.74 10,735.67 10,150.64
11/30/92 11,789.19 11,579.39 10,481.91
12/31/92 12,128.24 12,009.05 10,576.53
1/29/93 12,266.37 12,353.02 10,674.87
2/26/93 12,247.95 11,899.41 10,809.36
3/31/93 12,340.04 12,243.04 11,039.13
4/30/93 11,916.43 11,733.55 10,783.83
5/28/93 12,459.76 12,427.36 11,052.38
6/30/93 12,579.47 12,488.03 11,087.66
7/30/93 12,533.43 12,501.33 11,054.59
8/31/93 13,095.18 13,178.11 11,462.52
9/30/93 13,325.40 13,531.84 11,373.84
10/29/93 13,620.09 13,824.02 11,620.76
11/30/93 13,399.08 13,383.01 11,496.12
12/31/93 13,936.90 13,780.56 11,639.39
1/31/94 14,197.30 14,200.46 12,044.35
2/28/94 14,389.76 14,058.90 11,705.49
3/31/94 13,801.04 13,188.93 11,197.21
4/29/94 13,880.29 13,018.27 11,352.61
5/31/94 13,721.79 13,042.22 11,521.65
6/30/94 13,891.61 12,523.68 11,241.61
7/29/94 13,835.00 12,811.07 11,621.81
8/31/94 13,585.93 13,582.05 12,089.76
9/30/94 13,744.43 13,558.45 11,791.79
10/31/94 13,699.14 13,792.80 12,065.98
11/30/94 13,733.11 13,310.63 11,616.17
12/30/94 13,800.11 13,339.72 11,787.95
1/31/95 13,529.06 13,397.20 12,102.67
2/28/95 13,540.84 14,080.89 12,573.17
3/31/95 13,635.12 14,497.25 12,947.81
4/28/95 13,564.08 14,980.00 13,335.92
5/30/95 13,659.03 15,345.51 13,869.35
6/30/95 13,862.55 16,568.55 14,191.12
7/31/95 14,053.86 17,771.43 14,662.27<PAGE>
8/31/95 14,253.42 18,107.31 14,698.92
9/30/95 14,492.88 18,523.77 15,319.22
10/31/95 14,360.99 18,390.40 15,264.07
11/30/95 14,755.92 18,800.51 15,934.16
12/31/95 16,091.33 18,674.55 16,241.69
1/31/96 16,176.61 18,810.87 16,793.91
2/29/96 16,783.24 19,525.68 16,950.09
3/31/96 17,147.43 19,549.11 17,112.81
4/30/96 17,891.63 21,130.64 17,364.37
</TABLE>
<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Schedule of Investments
April 30, 1996
<TABLE>
<CAPTION>
Market
Shares Value
<S> <C> <C>
Common Stock - 73.90%
Aerospace/Aircraft Equipment - .94%
Tracor, Inc.* 19,000 $358,625
Finance-Savings & Loan - 4.64%
Astoria Financial Corporation 14,400 766,800
FFVA Financial Corp. 19,700 615,625
Palfed, Inc. 29,800 381,812
Financial Services-Miscellaneous - 6.61%
Dime Bancorp, Inc.* 58,600 732,500
Fidelity Federal Bank* 38,375 350,172
First Savings Bank of Washington 48,300 730,537
Flushing Financial* 44,400 699,300
Media-Cable Television - 2.58%
Cox Communications* 47,800 979,900
Medical-Biomed/Genetics - 1.51%
Protein Design Labs* 21,700 575,050
Medical Products - .76%
Resound Corporation* 23,300 288,338
Metal Ores-Gold - 4.98%
Barrick Gold Corp. 23,600 722,750
Homestake Mining Co. 58,100 1,169,262
Oil & Gas - Field Services - 1.15%
Dawson Production Services, Inc.* 30,600 436,050
Oil & Gas Offshore Drilling - 19.40%
Cairn Energy USA, Inc.* 21,400 264,825
Diamond Offshore* 18,744 932,514
Dual Drilling Company* 47,700 870,525
Ensco International, Inc.* 20,800 624,000
Falcon Drilling, Inc.* 27,400 736,375
Marine Drilling Companies, Inc.* 113,300 1,118,838
Reading & Bates Corp.* 55,300 1,354,850
Rowan Companies, Inc.* 100,000 1,475,000
</TABLE>
* Non-income producing
The accompanying notes are an integral part of these financial statements.<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Schedule of Investments
April 30, 1996
<TABLE>
<CAPTION>
Market
Shares Value
<S> <C> <C>
Oil Field Machinery & Equipment - 6.06%
Global Industries, Inc.* 34,600 890,950
Seacor Holdings, Inc.* 18,200 750,750
Tidewater, Inc. 15,611 663,468
Retail-Supermarkets - 4.79%
Riser Foods 44,300 841,700
The Vons Companies, Inc.* 30,600 979,200
Retail-Other - .95%
Eckerd Corporation 7,600 362,900
Retail/Wholesale Jewelry - 1.65%
Zale Corporation* 33,700 627,663
Telecommunications Services - 8.59%
Ericsson Telecommunications Co. 17,400 354,525
Intermedia Communications* 45,400 1,123,650
LCI International Worldwide Telecom* 20,400 530,400
Telecommunications, Inc.* 33,700 644,512
US West Media Group* 31,500 614,250
Textile-Apparel Manufacturing - .65%
Liz Claiborne, Inc. 6,800 247,350
Textile Machinery & Equipment - 3.03%
National Service Industries, Inc. 31,100 1,150,700
Titanium - 4.89%
Oregon Metallurgical Corporation 45,500 1,450,313
Tremont Corporation 11,100 409,312
Utilities - .74%
Bangor Hydroelectric Company 27,700 280,462
__________
Total Common Stocks (Cost $22,139,387) $28,105,753
==========
* Non-income producing
</TABLE>
The accompanying notes are an integral part of these financial statements.
6<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Schedule of Investments
April 30, 1996
<TABLE>
<CAPTION>
Market
Shares Value
<S> <C> <C>
Common Stock Sold Short
ABC Rail Products 16,400 $395,650
Broderbund Software, Inc. 7,700 338,800
Capital One Financial Corporation 14,200 418,900
Cooper Tire & Rubber 13,000 318,500
Credit Acceptance Corp. 24,500 459,375
First Merchants Acceptance Corporation 20,100 487,425
Heilig Meyers Co. 9,900 204,188
Jayhawk Acceptance Corporation 26,300 345,188
Maxim Integrated Products, Inc. 5,900 202,075
McDonalds Corporation 7,900 379,200
Micrion Corporation 6,500 187,687
Mikasa, Inc. 14,500 172,187
Molten Metal Technologies, Inc. 9,100 293,475
National Auto Credit, Inc. 35,430 504,878
Olympic Financial Ltd. 22,100 491,725
Rainforest Cafe 13,100 484,700
Varity Corporation 9,500 404,937
Xicor, Inc. 4,000 41,500
XTRA Corporation 7,700 350,350
---------
Total Securities Sold Short $6,480,740
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Statement of Assets and Liabilities
April 30, 1996
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at value (cost $22,139,387) $28,105,753
Cash 1,131,416
Segregated cash 8,992,527
Deposits with brokers for securities sold short 5,918,381
Receivables:
Investment securities sold 474,260
Interest and dividends 42,549
Capital shares sold 745,198
Other 13,065
----------
Total assets 45,423,149
----------
LIABILITIES:
Securities sold short, not yet purchased (proceeds $5,918,381) 6,480,740
Payables:
Investment securities purchased 857,072
Dividends payable on short securities 1,829
Capital shares redeemed 1,032
Accrued advisory fees 28,699
Accrued expenses 23,583
----------
Total liabilities 7,392,955
----------
Total net assets $38,030,194
==========
NET ASSETS CONSIST OF:
Undistributed net investment income $638,749
Undistributed net realized gain 1,470,889
Net unrealized appreciation on investments 5,404,007
Paid-in capital applicable to 2,624,439 shares
outstanding; par value $0.10 per share;
15,000,000 shares authorized 30,516,549
----------
$38,030,194
==========
NET ASSET VALUE AND OFFERING/REDEMPTION PRICE PER SHARE $14.49
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Statement of Operations
For the Year Ended April 30, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $1,004,192
Dividends 148,350
Other 137
---------
Total investment income 1,152,679
EXPENSES:
Investment advisory fees 296,800
Dividend expense on securities sold short 60,098
Professional fees 19,555
Amortization of organizational costs 29,317
Directors' fees and expenses 30,082
Insurance 7,077
Transfer agent fees 19,107
Custodian fees 11,122
Legal fees 13,612
Registration and filing fees 14,007
Other 13,362
----------
Total expense 514,139
----------
Net investment income 638,540
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 3,040,435
Change in unrealized appreciation 5,540,943
----------
Net realized gain and unrealized appreciation
on investments 8,581,378
----------
Net increase in net assets resulting from operations $9,219,918
=========
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Statement of Changes in Net Assets
For the Years Ended April 30, 1996 and 1995
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 1996 APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income $638,540 $1,113,789
Net realized gain (loss) from investments 3,040,435 (1,565,285)
Net unrealized appreciation (depreciation) on investments 5,540,943 (212,521)
---------- -----------
Net increase (decrease) in net assets resulting
from operations 9,219,918 (664,017)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,111,925) (733,574)
Net realized gains on investments - (1,070,066)
---------- ----------
Net distributions to shareholders (1,111,925) (1,803,640)
CAPITAL SHARE TRANSACTIONS
Net proceeds from sales of shares 2,244,738 22,694,980
Distributions reinvested in shares 828,129 1,545,178
Cost of shares redeemed (5,411,750) (8,341,673)
Net increase (decrease) in net assets resulting
from capital share transactions (2,338,883) 15,898,485
---------- ----------
Total increase in net assets 5,769,110 13,430,828
NET ASSETS:
Beginning of year 32,261,084 18,830,256
---------- ----------
End of year $38,030,194 $32,261,084
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
The Caldwell & Orkin Aggressive Growth Fund
Financial Highlights
Years Ended April 30,
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Selected Per Share Data:
Net asset value, beginning of period $11.35 $12.26 $12.94 $11.69 $10.49
----- ----- ----- ----- -----
Income (loss) from Investment Operations:
Net investment income (loss)* 0.27 0.54 0.06 (0.01) (0.08)
Net realized and unrealized gain (loss)
on investments 3.31 (0.81) 1.99 1.77 1.33
----- ----- ----- ----- -----
Total from investment operations 3.58 (0.27) 2.05 1.76 1.25
----- ----- ----- ----- -----
Less Distributions:
From net investment income (0.44) (0.41) 0.04) - -
From net realized gain on investments - (0.23) (2.69) (0.51) (0.05)
----- ----- ----- ----- -----
Total distributions (0.44) (0.64) (2.73) (0.51) (0.05)
----- ----- ----- ----- -----
Net asset value, end of period $14.49 $11.35 $12.26 $12.94 $11.69
----- ----- ----- ----- -----
Total Return 31.80% (2.28)% 16.48% 15.09% 11.86%
Ratios and Supplemental Data:
Net assets, end of period (in 000's) $38,030 $32,261 $18,830 $15,116 $12,385
Ratios to average net assets:
Expenses before dividends on securities
sold short (After Reimbursement) 1.38% 1.18% 1.21% 1.30% 1.64%
Expenses from dividends sold short 0.18% 0.45% - - -
----- ----- ----- ----- -----
Total expenses (After Reimbursement) 1.56% 1.63% 1.21% 1.30% 1.64%
Total expenses (Before Reimbursement) 1.56% 1.79% 1.77% 2.00% 1.88%
Net investment income (loss) 1.94% 3.55% 0.44% (0.01)% (0.76)%
Portfolio turnover 222% 331% 292% 223% 50%
</TABLE>
*Had the Distributor and Advisor not waived a portion of the expenses,
net investment income (loss) per share would have been $.52, ($.01), ($.09),
and ($.10) for the years ended April 30, 1995 through 1992, respectively.
No expenses were waived for the year ended April 30, 1996.
The accompanying notes are an integral part of these financial statements.
11<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Caldwell & Orkin Aggressive Growth Fund, (the "Fund"), is the
only active investment portfolio of The Caldwell & Orkin Funds,
Inc., an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended.
The Fund's investment objectives are to provide capital growth
and capital preservation through investment selection and asset
allocation and to out perform the NASDAQ Composite Index.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
Securities are stated at the closing price on the date at
which net asset value is being determined. If the date of
determination is not a trading date, the securities are valued
as of the last trading date preceding the date of
determination. Short-term investments having a maturity date
of 60 days or less at the time of purchase are stated at
amortized cost, which approximates market value.
SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME:
Securities transactions are accounted for on the trade date.
Dividend income is recorded on the ex-dividend date and
interest income is recorded as earned. Realized gains and
losses from investment transactions are determined on the
specific identification method.
CASH:
The Fund maintains cash available for the settlement of
securities transactions and capital shares reacquired.
Available cash is invested daily in money-market instruments.
ORGANIZATIONAL COSTS:
Organizational costs are amortized and repaid to Caldwell &
Orkin, Inc. on a straight-line basis over 60 months. As of
April 30, 1996, all organizational costs have been amortized
and repaid.
INCOME TAXES:
As a qualified investment company under Subchapter M of the
Internal Revenue Code, the Fund is not subject to income taxes
to the extent that it distributes all of its taxable income.
It is the Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders.
CAPITAL ACCOUNTS:
The Fund follows the provisions of Statement of Position 93-2
"Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies"("SOP").
USE OF ESTIMATES:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities 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 those
estimates.
2. AGREEMENTS WITH THE ADVISOR AND DISTRIBUTOR:
The Fund has entered into a management agreement with C&O
Funds Advisor, Inc. (the "Advisor") pursuant to which the
Advisor provides space, facilities, equipment, and personnel
necessary to perform administrative and management services
for the Fund. The management agreement provides that the
Advisor is responsible for the actual management of the Fund's
portfolio.
For such services and expenses assumed by the Advisor, the
Fund pays a monthly advisory fee at incremental annual rates
as follows:
Advisory Fee Average Daily Net Assets
------------ ------------------------
.90% Up to $100 million
.80% Not greater than $200 million
.70% Not greater than $300 million
.60% Not greater than $500 million
.50% In excess of $500 million
Under that management agreement, the Advisor agreed to waive
40 basis points of its compensation for the period August,
1992, through February, 1994, and 20 basis points for the
period March, 1994, through February, 1995.
The Advisor has agreed to reimburse the Fund to the extent
necessary to prevent the Fund's annual ordinary operating
expenses (excluding taxes, brokerage commissions and
extraordinary charges such as litigation costs) from exceeding
2.0% of the Fund's average daily net assets. No such
reimbursement was required for the period ended April 30,
1996.
The Fund has entered into a distribution agreement with C&O
Funds Distributor, Inc. (the "Distributor") pursuant to which
the Distributor provides broker/dealer services for the Fund.
The Distributor is responsible for the sales and redemptions
of the shares of the Fund. The Distributor has agreed to waive
all fees.
C&O Funds Advisor, Inc. and C&O Funds Distributor, Inc. are
wholly owned subsidiaries of Caldwell & Orkin, Inc.
3. INVESTMENT PORTFOLIO TRANSACTIONS:
INVESTMENT PURCHASES AND SALES:
For the year ended April 30, 1996, purchases and proceeds from
sales of investments, (excluding securities sold short and
short-term investments) aggregated $52,903,592 and
$44,544,601, respectively.
TAX BASIS OF INVESTMENTS:
At April 30, 1996, the cost of investments for federal income
tax purposes was $22,447,155. Accumulated net unrealized
appreciation of investments was $5,432,532, consisting of
gross unrealized appreciation and gross unrealized
depreciation of $6,228,200 and $795,668, respectively.
SHORT SALES AND SEGREGATED CASH:
Short sales are transactions in which the Fund sells a
security it does not own, in anticipation of a decline in the
market value of that security. To complete such a
transaction, the Fund must borrow the security to deliver to
the buyer upon the short sale; the Fund is then obligated to
replace the security borrowed by purchasing it in the open
market at some later date. The Fund will incur a loss if the
market price of the security increases between the date of the
short sale and the date on which the Fund replaces the
borrowed security. The Fund will realize a gain if the
security declines in value between those dates. All short
sales must be fully collateralized. The Fund maintains the
collateral in a segregated account consisting of cash and /or
U.S. Government securities sufficient to collateralize the
market value of its short positions. The Fund may also sell
short "against the box" (i.e. the Fund enters into a short
sale as described above, while holding an offsetting long
position in the security which it sold short). If the Fund
enters into a short sale against the box, it will segregate an
equivalent amount of securities owned by the Fund as
collateral while the short sale is outstanding. During 1996,
the Fund did not sell short "against the box". The Fund
limits the value of its short positions (excluding short sales
"against the box") to 25% of the Fund's total net assets. At
April 30, 1996, the Fund had 16.78% of its total net assets in
short positions. For the year ended April 30, 1996, the cost
of investments purchased to cover short sales and proceeds
from investments sold short were $43,552,739 and $42,456,285,
respectively.
4. CAPITAL SHARE TRANSACTIONS:
Capital share transactions for the years ended April 30, 1996
and 1995, were:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Shares sold 164,910 1,877,870
Shares issued in connection with reinvestment
of distributions 60,400 132,649
Shares reacquired (442,987) (704,254)
--------- ---------
Net increase (decrease) in shares outstanding (217,677) 1,306,265
========= =========
</TABLE>
5. RELATED PARTY TRANSACTIONS:
C & O Funds Advisor, Inc. and its parent, Caldwell & Orkin,
Inc. have made investments in the Fund during the year in the
amounts of $205,000 and $150,000, respectively. All
transactions had been settled at year-end.
As of April 30, 1996, Caldwell & Orkin, Inc., C&O Funds
Advisor, Inc. and Michael B. Orkin had ownership in the Fund
of 1.68%, .57% and 3.30%, respectively.
6. SUBSEQUENT EVENT
During May 1996, a shareholder redeemed all of its shares in
the C & O Aggressive Growth Fund which represented
approximately 20% of the net assets of the Fund at April 30,
1996.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
The Caldwell & Orkin Funds, Inc.
We have audited the accompanying statement of assets and
liabilities of the Aggressive Growth Fund of the Caldwell & Orkin
Funds, Inc. (the "Fund"), including the schedules of investments
and securities sold short, as of April 30, 1996, and the related
statement of operations for the year then ended, the statements
of changes in net assets and the financial highlights for each of
the three years in the period then ended. These financial
statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on
our audits. The financial highlights for each of the two years
in the period ended April 30, 1993 were audited by other auditors
whose report dated May 21, 1993, expressed an unqualified opinion
on those financial highlights.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned as of April 30, 1996 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Aggressive Growth Fund of the Caldwell
& Orkin Funds, Inc. as of April 30, 1996, the results of its
operations for the year then ended, and the changes in its net
assets and its financial highlights for each of the three years
in the period then ended, in conformity with generally accepted
accounting principles.
Coopers & Lybrand, L.L.P.
Atlanta, Georgia
June 21, 1996
15<PAGE>
THE CALDWELL & ORKIN AGGRESSIVE GROWTH FUND
<TABLE>
<CAPTION>
<S> <C>
BOARD OF DIRECTORS TRANSFER, REDEMPTION AND
DIVIDEND DISBURSING AGENT
Michael B. Orkin, President & Chairman
H. Eugene Caldwell, Chairman Emeritus MGF Service Corp.
Frederick T. Blumer 312 Walnut Street
David L. Eager Cincinnati, Ohio 45202
Carl B. Harper, Jr.
Henry H. Porter, Jr. INDEPENDENT ACCOUNTANTS
INVESTMENT ADVISOR Coopers & Lybrand
1100 Campanile Building
C&O Funds Advisor, Inc. 1155 Peachtree Street, N.E.
2050 Tower Place Atlanta, Georgia 30309-3630
3340 Peachtree Road
Atlanta, Georgia 30326 LEGAL COUNSEL
DISTRIBUTOR Kilpatrick & Cody
1100 Peachtree Street
C&O Funds Distributor, Inc. Atlanta, Georgia 30309-4530
2050 Tower Place
3340 Peachtree Road
Atlanta, Georgia 30326
CUSTODIAN
Bank One Ohio Trust Company, N.A.
235 West Schrock Road
Westerville, Ohio 43081
</TABLE>
The Caldwell & Orkin Aggressive Growth Fund
2050 Tower Place
3340 Peachtree Road, N.E.
Atlanta, Georgia 30326
Fund Information
For prospectus and further information, please call 1-800-237-7073.
Fund Listings
The Fund is listed in THE WALL STREET JOURNAL, INVESTOR'S BUSINESS DAILY,
THE NEW YORK TIMES, and most local newspapers as C&OAggG. Its computer
quotation symbol is COAGX.
These financial statements are submitted for the general information of
the shareholders of The Caldwell & Orkin Aggressive Growth Fund. They
are not authorized for distribution to prospective investors unless
preceded or accompanied by an effective prospectus.
16
