<PAGE> 1
[CALDWELL & ORKIN LETTERHEAD]
<TABLE>
<S> <C> <C>
INVESTMENT ADVISER MARKET OPPORTUNITY FUND SHAREHOLDER ACCOUNTS
C&O Funds Advisor, Inc. c/o Integrated Fund Services, Inc.
Suite 150 P.O. Box 5354
6200 The Corners Parkway Cincinnati, Ohio 45201-5354
Norcross, Georgia 30092 (800) 467-7903
(800) 237-7073
A member of Caldwell & Orkin, Inc. ANNUAL REPORT TO SHAREHOLDERS
</TABLE>
DEAR FELLOW SHAREHOLDER: JUNE 23, 2000
The Caldwell & Orkin Market Opportunity Fund (the "Fund") rose 6.49% in the
6-month period ended April 30, 2000. For the full fiscal year (the 12-month
period ended April 30, 2000), the Fund's performance was essentially flat -- a
loss of 0.02%. And, since its commencement of active management on August 24,
1992 through April 30, 2000, the Fund has generated a 17.08% average annual
return, an achievement made without a heavy reliance on the upward movement of
the stock market (as highlighted in the last paragraph on this page and on pages
6 and 7). Of course, past performance is no guarantee of future results.
The Market Opportunity Fund's results are impressive given its "market-risk
sensitive" investment approach. In fact, the Fund earned a spot on Business Week
magazine's "A List" (January 24, 2000 issue), putting it in the top tier of
equity funds for delivering the best risk-adjusted total returns during the
five-year period from 1995 through 1999 (to adjust for risk, each fund's monthly
returns were compared to the comparable month's return on Treasury bills, and
adjustments were made for both frequency and magnitude of underperformance).
Nearly 3,000 funds were evaluated, and 121 (the top 12.5%) made the list. We're
proud of the recognition.
The Fund's investment objective is to provide long-term capital growth with a
short-term focus on capital preservation through asset allocation and investment
selection. When a stock is purchased, two principal types of risk are assumed,
market risk and stock risk. Market risk is the risk that the broad market
declines, taking good companies down with it. Stock risk is the risk that a
stock underperforms due to company-specific reasons. The Fund uses active asset
allocation -- the opportunistic shifting of assets between long stock positions,
short stock positions (selling borrowed stock and then attempting to purchase it
at a lower price), high quality bonds and cash equivalents -- to manage exposure
to market risk. Short positions are taken with the intent of making money when
stock prices fall.
The Fund's market exposure can be anywhere from 100% net long to 60% net short.
Historically, the Fund's asset allocation has not approached those extremes, and
it is unlikely that we would be postured either fully net long or net short. The
Equity Investment Position chart on page 4 provides a graphical representation
of the Fund's historical asset allocation.
The Fund's low market risk profile is highlighted as evidence of our investment
approach (see page 5). From its August 24, 1992 commencement of active
management through the month ended April 30, 2000, the Fund's price movements
have had almost no correlation (0.66%) to the price movements of the S&P 500
with Income index, indicating the Fund's performance is not attributable to the
performance of the index. The Fund's beta (a measure of volatility) is just
0.04. An S&P 500 index fund has a 100% correlation with the market and a beta of
1.00. In essence, the Fund has not been generating its performance by riding the
market's one-
<PAGE> 2
directional wave. Of additional interest, the semi-variance (a measure of
downside volatility) of the S&P during this period was 14.55. The Fund's
semi-variance was just 8.05, indicating that the Fund's downward price movements
were significantly less volatile than those of the index (computations by Ned
Davis Research, Inc.). A cost of this approach is that the Fund may lag a rising
stock market while a hedged position is maintained.
SIX MONTHS IN REVIEW
The wealth effect resulting from the rising stock market has been credited with
fueling the turbo-charged U.S. economy. A ready supply of cheap imports has
helped satiate consumers' voracious appetites, allowing for a best-of-all-worlds
scenario -- a strong economy with little inflation. At the same time the nation
has enjoyed full employment with the unemployment rate holding steady in a
record low 3.9% to 4.1% range. There is a very thin "float" of workers
available. Although the economy has continued to grow, wage pressures were kept
at bay thanks in part to productivity gains made by the existing workforce from
investments in technology, which offset the need for additional workers. U.S.
business has been able to maximize the utilization of its current resources.
Economic growth, on both a domestic and global basis, surged beyond
expectations. Consequently, a year ago in June, 1999, the Federal Reserve began
a series of monetary policy tightening actions in an effort to slow an
overheated U.S. economy that threatened to create, in the Fed's words,
"imbalances between aggregate demand and supply" which would drive up inflation.
While the Fed has claimed it was not directly targeting the stock market, there
was an implicit indirect link given the market's contribution to the wealth
effect, and the wealth effect's relationship to demand.
As the Fed's intentions became clear, we adopted a cautious investment posture
for the Market Opportunity Fund. The Fed's monetary policy is a central factor
in our work since it is a major determinant of liquidity pressure and can cause
higher and lower stock prices. A policy of tightening (raising interest rates)
constricts liquidity flows, while loosening has the opposite effect. Generally
speaking, less liquidity is a negative for financial assets and tends to put
downward pressure on prices, whereas greater liquidity asserts upward pressure
on prices.
The Market Opportunity Fund opened the latest review period on November 1, 1999
positioned 42.4% long, 57.4% short and 0.2% in cash, effectively fully invested
and 15.0% net short. The Fund's short exposure had a decidedly internet focus,
the thinking being that any liquidity crunch would hit hardest those stocks that
were overvalued the most and lacked realistic business models. We felt (and
continue to feel) that certain internet companies have illogical business plans,
and will only be able to tread water for so long before they exhaust their cash
resources and eventually sink. Many others are extraordinarily overvalued and
have no room for error should they underperform expectations.
As we related in our Semi-Annual Report to Shareholders dated December 17, 1999,
while the Fed had been talking tough about fighting inflation and tightening
monetary policy during the latter part of 1999, it had also been printing money
at a furious pace in preparation for a potential Y2K-related run on banks.
Various money supply measures reflected the record increase -- the largest in
over 15 years (a period which includes the early 1990's S&L crisis and the 1987
market crash). Thus, the Fed was actually loosening while tightening, and the
net effect was to pump more liquidity into the financial system. A significant
portion of that liquidity went into the stock market, putting upward pressure on
asset prices, primarily technology shares. As a proxy, the NASDAQ Composite
Index, which is heavily weighted with tech stocks, rose 12.46% in November and
another 21.98% in December. Another important contributing factor to the
end-of-year market rally was borrowed money. Margin debt at NYSE member firms
increased 25% in November and December to $229 billion.
Given our views on monetary policy, we chose not to fight the Fed, and so we got
out of the way. By the end of November, 1999, the Fund's asset allocation had
changed dramatically to a 6.1% net long exposure, and we had built up a 12.1%
cash position. Our short exposure to
2
<PAGE> 3
internet stocks had been pared back significantly to a scant 0.2% of assets
(from 7.2% at the end of October), and we added names in the technology and
telecommunication sectors to the Fund's long exposure. We also re-established a
presence to the oil and gas drillers given the group's rising utilization and
day rates and accelerating earnings. Within the drillers we focused on the land
rig and shallow-water drillers which have more earnings leverage in the near
term (lower risk than deep-water drillers). Although the Fund declined 2.65% in
November, further losses were minimized by repositioning the portfolio.
We continued raising cash in December, selling off extended longs. By year-end
the Fund was almost 26% in cash, and 4.7% net short. The Fund made money in
December, up over 3%.
The Fed giveth and the Fed taketh away. When the clock struck midnight on
December 31st, the lights stayed on, planes stayed aloft and Y2K fears quickly
subsided. The Fed began to reverse its course of stimulating the nation's money
supply, and the financial markets felt the impact, with the S&P 500 falling
5.04% in January and the NASDAQ giving back 3.17%. We sold more longs and added
more shorts in January, gaining 0.11% and finishing the month 15.5% net short.
The sizzling U.S. economy showed increasing signs of inflationary pressures
during the first quarter, and the Fed continued its tightening assault. The
markets reacted with some of the most volatile activity in market history. Such
volatility has only been seen during four periods since 1900, and all of those
periods included bear markets. The rift between "Old Economy" and "New Economy"
stocks became blatantly apparent as capital sloshed about freely in a rotational
market with little regard to fundamentals, valuations or other measures of an
asset's worth.
The Market Opportunity Fund continued to post gains in the volatile February
through April timeframe, 0.92%, 0.81% and 4.26%, respectively. We also lowered
the Fund's cash position somewhat in April, and closed the fiscal year
positioned 35.4% long, 53.7% short and 10.9% in cash, effectively 18.3% net
short.
Finally, in deference to the extreme volatility of stocks, we adapted our
investment discipline on both the long and short side to generally take smaller
positions in individual companies. We were therefore invested in more names,
giving the portfolio greater diversification. The number of companies we were
invested in on the long side increased from 36 to 52 (November 1, 1999 to April
30, 2000). On the short side, the roster grew from 63 to 106.
OUTLOOK
The Fed has raised its overnight lending rate six times since last June. Rates
are now 1.75% higher than they were a year ago, and a full percentage point
higher than they were on February 1, 2000. With a delay, those tightening
actions are affecting the economy. At the margin, with each successive increase,
more and more individuals and businesses are abandoning, delaying or downsizing
purchase and expansion decisions. In the aggregate, that translates into lower
demand, and slows economic growth.
While the Fed may praise a slowing economy (which has been reported by 11 of the
12 Fed districts), rising inflation is still their major concern. The
combination of a slowing economy and accelerating inflation brings back memories
of stagflation from the 1970's. Stagflation, if it develops, is not at this time
expected to last long. It is something we will watch for, however, since it
presents another source of risk to the financial markets.
We believe the economy will continue to slow. Ed Hyman's ISI Group forecasts
that the slowdown won't be temporary, as it has been during more recent business
cycles, but may be sustained. The risks in this volatile market are real, and we
will focus on managing the Market Opportunity Fund for both risk and return.
3
<PAGE> 4
SHAREHOLDER MEETING NEWS
A Special Meeting of the Fund's shareholders was held on June 21, 2000. I'm
pleased to announce that the six nominated individuals were elected to the
Fund's Board of Directors, that the Fund's Investment Restriction No. 5 was
amended as proposed, and that the selection of Tait, Weller and Baker to act as
the Fund's independent accountants was ratified. I would like to welcome Randall
P. Martin to the Board, and my sincere appreciation goes out to all Fund
shareholders who exercised their right to vote. Details of the vote appear on
page 22.
IN CONCLUSION
On October 27, 1999, the Fund's exposure was 31.7% net short (the most bearish
exposure in the Fund's history). The Fund opened November 1st positioned 15.0%
net short, and closed that month 6.1% net long. That quick transition
demonstrates precisely why we closed the Fund to new investment back in 1998. We
want to keep it to a manageable size and preserve our investment flexibility
during these abnormally volatile times, so that when we have to move quickly and
decisively, we can. We sincerely appreciate the many inquiries as to if, and
when, the Fund might re-open to new investment. At this time we have no plans to
re-open the Fund.
On behalf of my team and myself, we appreciate your investment in the Caldwell &
Orkin Market Opportunity Fund, and we thank you for your continued support of
our perceived risk-sensitive investment style.
Sincerely,
Michael B. Orkin, CFA
Portfolio Manager and Chief Investment Officer
Caldwell & Orkin Market Opportunity Mutual Fund
Equity Investment Position
[CHART]
Chart Courtesy of Ned Davis Research, Inc.
4
<PAGE> 5
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
STATISTICAL RISK PROFILE 8/31/1992 -- 4/30/2000
TEN WORST S&P 500 WITH INCOME DAYS
<TABLE>
<CAPTION>
Date C&O MOF S&P 500 Variance
---- ------- ------- --------
<S> <C> <C> <C>
10/27/97 -1.60% -6.86% 5.26%
08/31/98 0.42 -6.77 7.19
04/14/00 1.81 -5.77 7.58
01/04/00 0.27 -3.83 4.10
08/27/98 -0.19 -3.83 3.64
08/04/98 0.10 -3.62 3.72
03/08/96 -1.30 -3.07 1.77
09/30/98 0.55 -3.04 3.59
02/18/00 0.16 -3.03 3.19
10/01/98 0.82 -3.00 3.82
</TABLE>
The Caldwell & Orkin Market Opportunity Fund outperformed the S&P 500 with
Income on all ten of the ten worst days, and was positive on seven of the ten
days.
TEN WORST S&P 500 WITH INCOME WEEKS
<TABLE>
<CAPTION>
Week Ended C&O MOF S&P 500 Variance
---------- ------- ------- --------
<S> <C> <C> <C>
04/14/00 4.51% -10.52% 15.03%
10/15/99 2.86 -6.61 9.47
01/28/00 0.27 -5.61 5.88
09/04/98 0.33 -5.15 5.48
08/28/98 0.65 -4.98 5.63
01/09/98 -0.11 -4.83 4.72
07/23/99 0.01 -4.34 4.35
09/24/99 -0.83 -4.32 3.49
10/02/98 1.80 -4.00 5.80
07/24/98 0.20 -3.85 4.05
</TABLE>
The Caldwell & Orkin Market Opportunity Fund outperformed the S&P 500 with
Income in all ten of the ten worst weeks, and was positive eight of the ten
weeks.
TEN WORST S&P 500 WITH INCOME MONTHS
<TABLE>
<CAPTION>
Month C&O MOF S&P 500 Variance
----- ------- ------- --------
<S> <C> <C> <C>
August 1998 3.12% -14.46% 17.58%
August 1997 4.00 -5.61 9.61
January 2000 0.11 -5.00 5.11
July 1996 -0.82 -4.40 3.58
March 1994 -4.10 -4.35 0.25
March 1997 4.50 -4.10 8.60
November 1994 0.27 -3.72 3.99
October 1997 4.21 -3.31 7.52
February 1999 -1.11 -3.12 2.01
July 1999 1.74 -3.10 4.84
</TABLE>
The Caldwell & Orkin Market Opportunity Fund outperformed the S&P 500 with
Income in all ten of the ten worst months, and was positive seven of the ten
months.
<TABLE>
<CAPTION>
C&O MOF S&P 500
------- -------
<S> <C> <C>
Correlation Coefficient 0.66% 100.0%
Beta 0.04 1.00
Sharpe Ratio 2.11
</TABLE>
PERFORMANCE DURING THE LAST THREE MARKET DOWNTURNS OF 10% OR MORE
<TABLE>
<CAPTION>
C&O MOF S&P 500
------- -------
<S> <C> <C>
July 16, 1999 through October 15, 1999 -0.45% -11.78%
July 17, 1998 through August 31, 1998 4.02 -19.17
October 7, 1997 through October 27, 1997 0.18 -10.74
</TABLE>
Short selling began May 2, 1994.
Past performance is no guarantee of future results.
Computations by Ned Davis Research, Inc.
5
<PAGE> 6
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
TOTAL RETURN PERFORMANCE SUMMARY THROUGH APRIL 30, 2000(1)
<TABLE>
<CAPTION>
C&O MARKET S&P 500
FISCAL OPPORTUNITY WITH INCOME
YEAR ENDED FUND INDEX(2)
---------- ----------- -----------
<S> <C> <C>
1991 1.25% 0.57%
1992(3) 11.96% 14.07%
1993(*) 15.09% 9.23%
1993(**) 21.09% 9.28%
1994 16.48% 5.30%
1995 (2.28)% 17.40%
1996 31.80% 30.18%
1997 23.24% 25.11%
1998 25.77% 41.02%
1999 19.43% 21.80%
2000 (0.02)% 10.09%
Six months ended 4/30/00 6.49% 7.15%
Since (08/24/92)(4) 236.24% 316.02%
Since Inception (03/11/91) 262.26% 377.02%
</TABLE>
AVERAGE ANNUAL RETURN
<TABLE>
<S> <C> <C>
One Year (0.02)% 10.09%
Three Years 14.52% 23.66%
Five Years 19.52% 25.23%
Since (08/24/92)(4) 17.08% 20.37%
Since Inception (03/11/91) 15.09% 18.61%
</TABLE>
NET ASSET ALLOCATION
[CHART] [CHART]
Common Stock Sold Short represents the market value, excluding margin
requirements.
------------------
(1) 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
your original investment.
(2) The S&P 500 with Income index ("S&P 500") is a widely recognized
unmanaged index of U.S. Stocks. The S&P 500 figures do not reflect any
fees or expenses, nor do they reflect the use of short positions. There
is no unmanaged index currently available which reflects the use of
both long and short positions. We cannot predict the Fund's future
performance, but we expect that our investment strategy, which includes
the use of short sales, will cause the Fund's performance to fluctutate
independently from the S&P 500. While the portfolio is hedged, our
strategy may prevent the Fund from participating in market advances,
yet it may offer the Fund downside protection during market declines.
(3) Total return for the fiscal year ended April 30, 1992 has been restated
to 11.96% from the previously reported 11.86% due to mathematical
rounding.
(4) Effective August 24, 1992, the Caldwell & Orkin Market Opportunity Fund
changed its investment objectives to provide long-term capital growth
with a short-term focus on capital preservation through investment
selection and asset allocation. A prior fund passively managed and
indexed to the largest 100 over-the-counter (OTC) stocks began
operations on March 11, 1991.
* For the full fiscal year ending April 30, 1993.
** From August 24, 1992 through April 30, 1993 -- the portion of the year
using the Caldwell & Orkin Multifactor style of investment management.
The total return for the Caldwell & Orkin Market Opportunity Fund for
this period has been restated to 21.09% from the previously reported
19.16% to accurately reflect the inception NAV when active management
of the Fund began.
6
<PAGE> 7
CALDWELL & ORKIN MARKET OPPORTUNITY FUND VERSUS S&P 500 WITH INCOME INDEX
Results of a Hypothetical $10,000 Investment
Combined Old and Active Style of Investment Management
March 11, 1991 through April 30, 2000
[GRAPH]
CALDWELL & ORKIN MARKET OPPORTUNITY FUND VERSUS S&P 500 WITH INCOME INDEX
Results of a Hypothetical $10,000 Investment
Since Commencement of Active Style of Investment Management
August 24, 1992 through April 30, 2000
[GRAPH]
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
7
<PAGE> 8
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
------ ------------
<S> <C> <C> <C>
COMMON STOCK (LONG POSITIONS) 35.42%
=====
AEROSPACE/DEFENSE EQUIPMENT 1.05%
UNITED TECHNOLOGIES CORP 36,300 $ 2,257,406
AUTO/TRUCK -TIRES & MISC 0.37%
GOODYEAR TIRE & RUBBER 29,200 806,650
CHEMICALS - BASIC 0.95%
DOW CHEMICAL 18,000 2,034,000
COMPUTER - MANUFACTURERS 1.24%
APPLE COMPUTER, INC.* 8,700 1,079,344
COMPAQ COMPUTER CORP 54,500 1,594,125
COMPUTER - SERVICES 0.41%
ELECTRONIC DATA SYSTEMS 12,900 886,875
DIVERSIFIED OPERATIONS 3.62%
HARSCO CORP 73,800 2,190,938
HONEYWELL INTERNATIONAL 30,900 1,730,400
MINNESOTA MINING & MFG. CO 44,600 3,857,900
ELEC - MISC COMPONENTS 1.41%
COMMSCOPE INC.* 22,900 1,087,750
KEMET CORP* 26,200 1,951,900
ELEC - SEMICONDUCTOR EQUIPMENT 0.79%
APPLIED MATERIALS, INC.* 11,800 1,201,387
VEECO INSTRUMENTS, INC.* 8,000 497,000
ELEC - SEMICONDUCTOR MFG 1.40%
AMKOR TECHNOLOGY INC.* 4,300 263,106
ANALOG DEVICES* 8,000 614,500
ATMEL CORPORATION* 12,200 597,037
INTEL CORP 8,700 1,103,268
TAIWAN SEMICONDUCTOR ADR* 8,300 434,194
FINANCE - INVESTMENT MGMT 1.16%
BERKSHIRE HATHAWAY INC-B* 1,300 2,490,963
INSURANCE - LIFE 4.33%
RELIASTAR FINANCIAL CORP 216,500 9,323,031
LEISURE - SERVICES 0.05%
THE WALT DISNEY CO 2,600 112,612
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 9
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
------- ------------
<S> <C> <C> <C>
MACHINERY - FARM 0.56%
DEERE & CO 30,000 $1,211,250
MEDIA - RADIO/TV 0.77%
CBS CORPORATION* 13,600 799,000
CLEAR CHANNEL COMM., INC* 11,900 856,800
MEDICAL - ETHICAL DRUGS 0.20%
FOREST LABORATORIES* 5,100 428,719
MEDICAL - GENERIC DRUGS 0.49%
KV PHARMACEUTICAL - CL A* 41,800 1,055,450
OIL & GAS - DRILLING 7.61%
ENSCO INTERNATIONAL 72,100 2,392,819
GLOBAL MARINE INC.* 85,900 2,061,600
MARINE DRILLING CO., INC* 36,200 941,200
NABORS INDUSTRIES* 86,500 3,411,344
PATTERSON ENERGY, INC.* 61,100 1,726,075
PRIDE INTERNATIONAL * 115,200 2,606,400
R & B FALCON CORPORATION* 67,200 1,394,400
ROWAN COMPANIES, INC.* 66,200 1,849,463
OIL & GAS - PROD/PIPELINE 1.89%
DYNEGY, INC 27,500 1,799,531
EL PASO ENERGY CORP 53,300 2,265,250
POLLUTION CONTROL - SERVICES 0.44%
NEWPARK RESOURCES, INC.* 114,300 942,975
RETAIL/WHOLESALE - COMPUTER/CELL 0.93%
TANDY CORPORATION 35,200 2,006,400
RETAIL - APPAREL/SHOE 0.48%
NORDSTROM, INC 37,100 1,031,844
RETAIL - MAJOR DISC CHAINS 0.86%
COSTCO WHOLESALE CORP 16,200 875,813
WAL-MART STORES, INC 17,600 974,600
RETAIL - MISC/DIVERSIFIED 0.58%
PIER 1 IMPORTS, INC/DEL 110,100 1,252,388
STEEL - SPECIALTY ALLOYS 0.48%
ALLEGHENY TECHNOLOGIES 42,700 1,032,806
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 10
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
------- ------------
<S> <C> <C> <C>
TELECOMMUNICATIONS - CELLULAR 0.66%
NEXTEL COMMUNICATIONS, INC.* 6,200 $ 678,512
SPRINT PCS GROUP* 10,500 577,500
VODAFONE AIRTOUCH PLC 3,200 150,400
TELECOMMUNICATIONS - EQUIP 0.60%
TELLABS, INC.* 23,400 1,282,613
TELECOMMUNICATIONS - SERVICES 0.10%
ALLEGIANCE TELECOM, INC.* 2,900 205,175
TEXTILE - APPAREL MANUFACTURING 1.22%
JONES APPAREL GROUP, INC* 61,000 1,810,937
LIZ CLAIBORNE, INC 17,700 819,731
UTILITY - ELECTRIC POWER 0.30%
DPL, INC 27,900 648,675
UTILITY - GAS DISTRIBUTION 0.47%
KINDER MORGAN, INC 33,500 1,015,469
TOTAL INVESTMENT IN SECURITIES (COST $68,432,531): 35.42% ............................. 76,219,525
OTHER ASSETS LESS LIABILITIES: 64.58%.................................................. 138,969,408
------------
TOTAL NET ASSETS 100.00% .............................................................. $215,188,933
============
</TABLE>
* Non-income producing security
- At April 30, 2000, the cost of securities for federal tax purposes was
$69,248,001. Unrealized appreciation and depreciation of securities
were as follows:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 8,817,656
Gross Unrealized Depreciation (1,846,132)
-----------
Net Unrealized Appreciation $ 6,971,524
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 11
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
-------- ------------
<S> <C> <C> <C>
COMMON STOCK (SHORT POSITIONS) (53.66)%
======
BANKS - MONEY CENTER (1.52)%
BANK OF AMERICA CORP (66,900) $(3,278,100)
BANKS - NORTHEAST (0.74)%
PEOPLE'S BANK BRIDGEPORT (78,300) (1,595,363)
BANKS - SUPER REGIONAL (1.13)%
BANK ONE CORP (31,300) (954,650)
FIRST UNION CORP (46,200) (1,472,625)
BEVERAGES - SOFT DRINKS (0.39)%
COCA-COLA CO (17,700) (833,006)
BLDG - HAND TOOLS (0.42)%
BLACK & DECKER CORP (21,300) (895,931)
BLDG - MOBILE/MFG. & RV (2.51)%
CLAYTON HOMES, INC (274,200) (2,604,900)
FLEETWOOD ENTERPRISES (191,300) (2,797,762)
COMMERCIAL SERVICES - MISC (0.47)%
MEDQUIST, INC (28,700) (1,017,056)
COMPUTER - INTEGRATED SYSTEMS (0.05)%
VA LINUX SYSTEMS, INC (2,700) (112,388)
COMPUTER - LOCAL NETWORKS (0.84)%
ECHELON CORPORATION (20,100) (654,506)
GADZOOX NETWORKS, INC (31,300) (1,154,187)
COMPUTER - SERVICES (0.58)%
MARCHFIRST, INC (58,700) (1,251,044)
COMPUTER SOFTWARE - FIN (0.05)%
INTUIT, INC (3,200) (115,000)
COMPUTER SOFTWARE - MED (0.23)%
CERNER CORP (22,700) (500,819)
COMPUTER SOFTWARE - EDUC/ENTR (0.35)%
TAKE-TWO INTERACTIVE SFTW (35,600) (342,650)
THQ, INC (26,300) (407,650)
COMPUTER SOFTWARE - DESKTOP (0.55)%
RED HAT, INC (46,900) (1,175,431)
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 12
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
-------- ------------
<S> <C> <C> <C>
COMPUTER SOFTWARE - ENTERPRISE (1.07)%
SAP AG - SPONSORED ADR (44,300) $(2,176,238)
E. PIPHANY, INC (1,800) (118,912)
ELEC PRODUCTS - MISC (0.57)%
AMERICAN SUPERCONDUCTOR (32,500) (1,241,094)
ELEC - LASER SYS/COMPONENT (0.37)%
VISX, INC (49,700) (785,881)
FINANCE - CONSUMER/CML LNS (1.50)%
ASSOCIATES FIRST CAPITAL (91,100) (2,021,281)
HOUSEHOLD INTERNATIONAL (28,900) (1,206,575)
FINANCE - INVESTMENT BANKERS (1.93)%
KNIGHT/TRIMARK GROUP CL-A (22,700) (855,506)
MORGAN STANLEY DEAN WITTER (19,400) (1,488,950)
NATIONAL DISCOUNT BROKERS (20,300) (592,506)
TD WATERHOUSE GROUP, INC (61,100) (1,225,819)
FINANCE - INVESTMENT MGMT (0.52)%
FRIEDMAN BILLINGS RAMSEY (15,300) (119,531)
KANSAS CITY SOUTHERN INDS (13,900) (999,062)
FINANCE - MRTG&REL SERVICES (1.33)%
COUNTRYWIDE CREDIT INDS (75,200) (2,077,400)
INDYMAC MORTGAGE HOLDINGS (60,000) (783,750)
FINANCE - SAVINGS & LOAN (2.62)%
GREENPOINT FINANCIAL CORP (228,400) (4,253,950)
WASHINGTON MUTUAL, INC (53,800) (1,375,263)
FINANCIAL SERVICES - MISC (2.51)%
CAPITAL ONE FINANCIAL (7,900) (345,625)
MBNA CORP (190,500) (5,060,156)
FINANCIAL - PUB TRD INV FD-EQT (1.06)%
INTERNET HOLDERS TRUST (17,700) (2,278,875)
FOOD - CANNED (0.37)%
CAMPBELL SOUP COMPANY (30,800) (800,800)
INSURANCE - LIFE (0.76)%
CONSECO, INC (302,400) (1,644,300)
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 13
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
-------- ------------
<S> <C> <C> <C>
INTERNET - E COMMERCE (9.52)%
24/7 MEDIA, INC (26,700) $ (523,987)
AMAZON.COM, INC (28,400) (1,567,325)
BUY.COM, INC (42,400) (288,850)
CYBERGOLD, INC (40,400) (333,300)
DLJDIRECT (52,000) (559,000)
DRUGSTORE.COM, INC (70,000) (546,875)
E*TRADE GROUP, INC (105,900) (2,276,850)
EBAY, INC (17,400) (2,769,862)
ETOYS, INC (97,800) (782,400)
GETTY IMAGES, INC (27,700) (841,387)
INTERNET CAPITAL GROUP (50,900) (2,156,887)
NET.B@NK, INC (81,900) (849,713)
NETCENTIVES, INC (27,400) (279,138)
NEXTCARD, INC (130,100) (1,374,181)
PRICELINE.COM, INC (20,900) (1,321,925)
PURCHASEPRO.COM, INC (43,700) (1,311,000)
SHOPNOW.COM, INC (47,300) (301,537)
SPORTSLINE USA, INC (26,500) (508,469)
STAMPS.COM, INC (73,300) (1,172,800)
STYLECLICK.COM, INC (39,600) (331,650)
UBID, INC (7,500) (138,281)
WEBVAN GROUP, INC (36,400) (240,012)
INTERNET - ISP/CONTENT (5.68)%
ABOUT.COM, INC (7,900) (271,069)
ASK JEEVES, INC (20,800) (631,800)
AVENUE A, INC (21,000) (666,750)
CNET NETWORKS, INC (33,400) (1,154,387)
ENGAGE TECHNOLOGIES (25,500) (637,500)
GIGAMEDIA LIMITED (12,800) (307,200)
HOMESTORE.COM, INC (18,400) (335,800)
INFOSPACE, INC (5,200) (373,425)
IVILLAGE, INC (12,900) (129,806)
JUNO ONLINE SERVICES, INC (64,200) (637,988)
L90, INC (23,000) (230,000)
LYCOS, INC (5,200) (241,800)
MYPOINTS.COM, INC (41,200) (721,000)
NETZERO, INC (83,100) (1,002,394)
PRODIGY COMMUNICATIONS (127,100) (1,429,875)
RARE MEDIUM GROUP, INC (41,500) (853,344)
STARMEDIA NETWORK, INC (49,500) (1,082,813)
THEGLOBE.COM, INC (45,700) (162,806)
VERTICALNET, INC (20,500) (1,107,000)
YAHOO (1,900) (247,475)
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
<TABLE>
<CAPTION>
Shares Market Value
-------- -------------
<S> <C> <C> <C>
INTERNET - NETWORK SECURITY/SLTNS (1.31)%
KEYNOTE SYSTEMS, INC (16,500) $ (740,438)
SCIENT CORP (19,600) (1,058,400)
VERISIGN, INC (7,300) (1,017,438)
INTERNET - SOFTWARE (2.44)%
ACRUE SOFTWARE (38,800) (923,925)
CMGI (37,800) (2,693,250)
F5 NETWORKS, INC (14,700) (686,306)
HEALTHEON/WEBMD CORP (44,900) (945,706)
LEISURE - SERVICES (0.33)%
EXPEDIA, INC - CL A (24,300) (366,019)
TRAVELOCITY.COM, INC (19,000) (334,875)
MEDICAL/DENTAL/SERVICES (0.33)%
QUINTILES TRANSNATIONAL (49,700) (711,331)
MEDICAL - BIOMEDICAL/GENETICS (1.88)%
CELGENE CORP (6,200) (291,788)
ENZO BIOCHEMICAL, INC (10,800) (437,400)
IMCLONE SYSTEMS (11,100) (1,010,100)
IMMUNEX CORP (39,900) (1,571,063)
SEQUENOM, INC (30,100) (729,925)
MEDICAL - HEALTH MAINTENANCE ORG (1.43)%
PACIFICARE HEALTH SYSTEMS (60,000) (3,086,250)
OFFICE - EQUIP & AUTOMATION (0.46)%
COINSTAR, INC (88,000) (984,500)
RETAIL - APPAREL/SHOE (0.58)%
ABERCROMBIE & FITCH CO (112,700) (1,239,700)
RETAIL - DEPARTMENT STORES (1.20)%
DILLARD'S, INC (123,400) (1,719,888)
SAKS INCORPORATED (75,000) (857,813)
RETAIL - RESTAURANTS (1.07)%
TRICON GLOBAL RESTAURANTS (67,600) (2,306,850)
TELECOMMUNICATIONS - EQUIPMENT (0.81)%
LUCENT TECHNOLOGIES, INC (16,400) (1,019,875)
PACIFIC GATEWAY EXCHANGE (115,800) (730,988)
TRUCKS & PARTS - HEAVY DUTY (2.18)%
CUMMINS ENGINE COMPANY (79,000) (2,809,438)
PACCAR, INC (39,700) (1,888,231)
-------------
TOTAL SECURITIES SOLD SHORT (PROCEEDS $140,101,825) $(115,475,700)
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 15
THE CALDWELL & ORKIN MARKET OPPORTUNITY FUND
STATEMENT OF ASSETS & LIABILITIES
APRIL 30, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $68,432,531) $ 76,219,525
Segregated cash with brokers and other financial institutions 110,011,010
Deposits with brokers for securities sold short 140,392,129
Receivables:
Investment securities sold 6,045,288
Interest and dividends 855,171
Capital shares sold 67,807
Other 31,417
-------------
TOTAL ASSETS 333,622,347
-------------
LIABILITIES:
Securities sold short, not yet purchased (proceeds $140,101,825) 115,475,700
Payables:
Investment securities purchased 1,412,947
Capital shares redeemed 1,279,274
Investment advisory fee 145,891
Accrued expenses 119,602
-------------
TOTAL LIABILITIES 118,433,414
-------------
TOTAL NET ASSETS $ 215,188,933
=============
NET ASSETS CONSIST OF:
Undistributed net investment income $ 12,742,377
Accumulated net realized gain (loss) (26,786,066)
Net unrealized appreciation on investments 32,413,119
Paid-in capital applicable to 10,998,650 shares
outstanding; par value $0.10 per share;
30,000,000 shares authorized 196,819,503
-------------
$ 215,188,933
=============
NET ASSET VALUE AND OFFERING/REDEMPTION
PRICE PER SHARE $ 19.57
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
THE CALDWELL & ORKIN MARKET OPPORTUNITY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $ 14,262,292
Dividends 541,101
------------
TOTAL INVESTMENT INCOME 14,803,393
------------
EXPENSES:
Investment advisory fees 2,336,790
Transfer agent fees 77,679
Professional fees 72,008
Dividend expense on securities sold short 1,441,474
Directors' fees and expenses 37,339
Registration and filing fees 63,920
Custodian fees 28,411
Legal fees 99,377
Insurance 23,517
Other 17,069
------------
TOTAL EXPENSES 4,197,584
------------
NET INVESTMENT INCOME 10,605,809
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (37,032,384)
Change in unrealized appreciation 18,037,099
------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (18,995,285)
------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $( 8,389,476)
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
THE CALDWELL & ORKIN MARKET OPPORTUNITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
APRIL 30, 2000 APRIL 30, 1999
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 10,605,809 $ 10,823,588
Net realized gain (loss) from investments (37,032,384) 49,324,492
Net change unrealized appreciation on investments 18,037,099 (14,659,048)
------------- -------------
Net increase (decrease) in net assets resulting
from operations (8,389,476) 45,489,032
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (784,760) (7,355,977)
Net realized gains on investments (19,326,589) (13,237,758)
------------- -------------
Net distributions to shareholders (20,111,349) (20,593,735)
------------- -------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares 44,145,283 305,456,611
Distributions reinvested in shares 18,325,045 17,776,857
Cost of shares redeemed (215,816,216) (108,916,091)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM CAPITAL SHARE TRANSACTIONS (153,345,888) 214,317,377
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS: (181,846,713) 239,212,674
NET ASSETS:
Beginning of year 397,035,646 157,822,972
------------- -------------
End of year $ 215,188,933 $ 397,035,646
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 18
THE CALDWELL & ORKIN MARKET OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended April 30,
-------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Selected Per Share Data:
Net asset value, beginning of year $ 21.12 $ 18.68 $ 15.77 $ 14.49 $ 11.35
-------- -------- -------- -------- --------
Income (loss) from Investment Operations:
Net investment income 1.06 0.53 0.25 0.22 0.27
Net realized and unrealized gain (loss)
on investments (1.17) 3.08 3.75 2.95 3.31
-------- -------- -------- -------- --------
Total from investment operations (0.11) 3.61 4.00 3.17 3.58
-------- -------- -------- -------- --------
Less Distributions:
From net investment income (0.06) (0.42) (0.21) (0.24) (0.44)
From net realized gain on investments (1.38) (0.75) (0.88) (1.65) --
-------- -------- -------- -------- --------
Total distributions (1.44) (1.17) (1.09) (1.89) (0.44)
-------- -------- -------- -------- --------
Net asset value, end of year $ 19.57 $ 21.12 $ 18.68 $ 15.77 $ 14.49
======== ======== ======== ======== ========
Total Return (0.02)% 19.43% 25.77% 23.24% 31.80%
Ratios and Supplemental Data:
Net assets, end of year (in 000's) $215,189 $397,036 $157,823 $ 60,632 $ 38,030
Ratios to average net assets:
Expenses before dividends on securities
sold short 0.92% 0.89% 1.17% 1.26% 1.38%
Expenses from dividends sold short 0.48% 0.49% 0.05% 0.08% 0.18%
-------- -------- -------- -------- --------
Total expenses 1.40% 1.38% 1.22% 1.34% 1.56%
Net investment income 3.53% 3.21% 2.54% 2.01% 1.94%
Portfolio turnover 392% 378% 200% 229% 222%
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
The Caldwell & Orkin Market Opportunity 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 objectives are to provide long-term
capital growth with a short-term focus on capital preservation through
investment selection and asset allocation. The Fund seeks to outperform the
stock market over the long-term, as measured by indices such as the S&P 500 with
Income.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
Securities are stated at the closing price on the date at which the 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
proceeding the date of determination. Short-term investments having a
maturity of 60 days or less at the time of the 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 plus one
day. 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 using 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.
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."
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.
19
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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:
<TABLE>
<CAPTION>
Advisory Fee Average Daily Net Assets
------------ ------------------------
<S> <C>
.90% Up to $100 million
.80% In excess of $100 million but not greater than $200 million
.70% In excess of $200 million but not greater than $300 million
.60% In excess of $300 million but not greater than $500 million
.50% In excess of $500 million
</TABLE>
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 year ended April 30, 2000.
The Fund has entered into a distribution agreement with IFS Fund
Distributors, 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 does not charge the Fund for these
services.
C&O Funds Advisor, Inc. is a wholly-owned subsidiary of Caldwell &
Orkin, Inc. IFS Fund Distributors, Inc. is a wholly-owned subsidiary of
Integrated Fund Services, Inc.
3. INVESTMENT PORTFOLIO TRANSACTIONS:
INVESTMENT PURCHASES AND SALES:
For the year ended April 30, 2000, purchases and proceeds from sales of
investments (excluding securities sold short and short-term
investments) aggregated $489,839,795 and $606,034,904, 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.
20
<PAGE> 21
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENT PORTFOLIO TRANSACTIONS (CONTINUED):
SHORT SALES AND SEGREGATED CASH (CONTINUED):
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 segregated accounts consisting of cash and/or U.S.
Government securities sufficient to collateralize the market value of
its short positions. Typically, the segregated cash with brokers and
other financial institutions exceeds the minimum requirements.
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.
The Fund limits the value of its short positions (excluding short sales
"against the box") to 60% of the Fund's total net assets. At April 30,
2000, the Fund had 53.66% of its total net assets in short positions.
For the year ended April 30, 2000, the cost of investments purchased to
cover short sales and proceeds from investments sold short were
$674,496,696 and $648,002,385, respectively.
4. CAPITAL SHARE TRANSACTIONS:
Capital share transactions were as follows:
<TABLE>
<CAPTION>
Year ended Year Ended
April 30, 2000 April 30, 1999
-------------- --------------
<S> <C> <C>
Shares sold 2,208,212 14,672,883
Shares issued in connections with
reinvestment of distributions 1,009,088 859,200
Shares reacquired (11,021,188) (5,178,851)
----------- ----------
Net increase (decrease) in
shares outstanding (7,803,888) 10,353,232
=========== ==========
</TABLE>
5. RELATED PARTY TRANSACTIONS:
As of April 30, 2000, Caldwell & Orkin, Inc. and Michael B. Orkin had
ownership of the Fund of 0.01% and 1.36%, respectively.
21
<PAGE> 22
THE CALDWELL & ORKIN FUNDS, INC.
June 23, 2000
To Shareholders of the Caldwell & Orkin Fund's, Inc.:
A Special Meeting of Shareholders (the "Meeting") of the Caldwell & Orkin Market
Opportunity Fund (the "Fund") was held on June 21, 2000 at 1:30pm EST at Suite
150, 6200 The Corners Parkway, Norcross, Georgia 30092. Notice of the Meeting
and a proxy statement were mailed on or about April 28, 2000 to Shareholders of
record April 14, 2000.
RESULTS OF VOTING (UNAUDITED)
Three proposals were presented at the Meeting. A total of 6,604,257.695 shares,
representing 59.938% of the shares outstanding, were voted. All proposals
passed. The proposals included:
PROPOSAL 1: Election of Directors. All Directors were nominees to the Board of
Directors as detailed in the proxy statement. The Directors elected will hold
office until their successors have been duly elected and qualified.
<TABLE>
Shares % of Shares Shares % of Shares
Voted For Outstanding Withheld Outstanding
------------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Michael B. Orkin 6,583,211.516 59.747% 21,046.179 0.191%
Frederick T. Blumer 6,583,927.516 59.753% 20,330.179 0.185%
David L. Eager 6,583,285.359 59.748% 20,972.336 0.190%
Robert H. Greenblatt 6,582,014.516 59.736% 22,243.179 0.202%
Randall P. Martin 6,583,927.516 59.753% 20,330.179 0.185%
Henry H. Porter, Jr 6,583,182.516 59.747% 21,075.179 0.191%
</TABLE>
PROPOSAL 2: Amend the Fund's Investment Restriction No. 5 to allow the Fund to
invest in securities of other investment companies to the extent allowed by the
Investment Company Act of 1940.
<TABLE>
<CAPTION>
Shares % of Shares
Voted Outstanding Voted
------------- ----------- -------
<S> <C> <C> <C>
For 5,980,863.235 54.280% 98.178%
Against 40,731.088 0.370% 0.669%
Abstain 70,249.372 0.638% 1.153%
Total 6,091,843.695 55.288% 100.000%
Not Voting 512,414.000 4.650%
</TABLE>
PROPOSAL 3: Ratify the selection of Tait, Weller & Baker as the Fund's
independent accountants.
<TABLE>
<CAPTION>
Shares % of Shares
Voted Outstanding Voted
------------- ----------- -------
<S> <C> <C> <C>
For 6,527,627.809 59.243% 98.840%
Against 28,907.722 0.262% 0.437%
Abstain 47,722.164 0.433% 0.723%
Total 6,604,257.695 59.938% 100.000%
Not Voting 512,414.000 4.650%
</TABLE>
By Order of the Directors,
Teresa Duncan
Secretary
22
<PAGE> 23
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
Market Opportunity Fund of the Caldwell & Orkin Funds, Inc. (the "Fund"),
including the schedules of investments and securities sold short, as of April
30, 2000, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for periods indicated thereon. 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 audit.
We conducted our audits in accordance with generally accepted accounting
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, 2000 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material aspects, the financial position of the
Market Opportunity Fund of the Caldwell & Orkin Funds, Inc. as of April 30,
2000, the results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period ended and the financial
highlights for the periods presented in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
June 21, 2000
23
<PAGE> 24
THE CALDWELL & ORKIN MARKET OPPORTUNITY FUND
<TABLE>
<S> <C>
BOARD OF DIRECTORS TRANSFER, REDEMPTION & DIVIDEND DISBURSING AGENT
Michael B. Orkin, President & Chairman Integrated Fund Services, Inc.
Frederick T. Blumer 312 Walnut Street, 21st Floor
David L. Eager Cincinnati, OH 45202
Robert H. Greenblatt
Randall P. Martin
Henry H. Porter, Jr. INDEPENDENT ACCOUNTANTS
Tait, Weller & Baker
Eight Penn Center Plaza
INVESTMENT ADVISER Suite 800
C&O Funds Advisor, Inc. Philadelphia, PA 19103-2108
Suite 150
6200 The Corners Parkway
Norcross, GA 30092 LEGAL COUNSEL
Kilpatrick Stockton LLP
1100 Peachtree Street
DISTRIBUTOR Suite 2800
IFS Fund Distributors, Inc. Atlanta, GA 30309-4530
312 Walnut Street, 21st Floor
Cincinnati, OH 45202
CUSTODIAN
Bank One Ohio Trust Company, N.A.
235 West Schrock Road
Westerville, OH 43081
</TABLE>
FUND INFORMATION
The Fund is closed to new investors.
For information please call (678) 533-7850 or (800) 237-7073.
For information about a specific Market Opportunity Fund account,
please call (800) 467-7903.
FUND LISTINGS
The Fund is listed in The Wall Street Journal, Investor's Business Daily,
The New York and many local newspapers as C&OMKTOPP or CALDORKMO.
Its quotation symbol is COAGX.
These financial statements are submitted for the general information
of the shareholders of The Caldwell & Orkin Market Opportunity Fund.
They are not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus.
THE CALDWELL & ORKIN MARKET OPPORTUNITY FUND
SUITE 150
6200 THE CORNERS PARKWAY
NORCROSS, GA 30092
E-MAIL: [email protected]
