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[LOGO]
JUNDT
GROWTH FUND
JUNDT
U.S. EMERGING
GROWTH FUND
JUNDT
OPPORTUNITY FUND
ANNUAL REPORT
DECEMBER 31, 1996
[PHOTO]
SEARCHING TODAY FOR THE GENIUSES OF TOMORROW-SM-
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LETTER TO SHAREHOLDERS
Dear Shareholder,
With the dawning of a new year come changes, new opportunities and challenges
for the Jundt mutual funds. One such change is that you will now receive one
annual report and one semi-annual report that integrate information pertaining
to all three funds. We hope you find this combined-report format beneficial and
convenient.
INTRODUCTION OF THE JUNDT OPPORTUNITY FUND
In December 1996, the Jundt Opportunity Fund was added to the Jundt family of
mutual funds. The Opportunity Fund employs an aggressive yet flexible investment
program emphasizing investments in domestic companies that are believed to have
significant potential for capital appreciation. In normal market conditions,
the Opportunity Fund anticipates that at least 65% of the portfolio will consist
of common stocks of large and small domestic companies.
As a nondiversified fund, the Opportunity Fund has the flexibility to invest in
a more limited and concentrated number of companies from time to time than a
diversified mutual fund would. Under certain market conditions, the Opportunity
Fund may employ its flexible investment strategy by investing in certain debt
securities and leveraging the portfolio to a degree. Options and futures
contracts also may be employed for hedging purposes. In addition, the
Opportunity Fund may short positions within the portfolio if warranted. The
Opportunity Fund is most appropriate as a portfolio complement for the
aggressive, risk-oriented investor seeking capital appreciation.
JUNDT GROWTH FUND
With the closing of 1996, the Jundt Growth Fund completed its first full year as
an open-end mutual fund. The Growth Fund continues to invest in 30 to 50 of what
we believe are among the fastest-growing companies in the United States, with an
emphasis on companies that have annual revenues of $750 million or more. The
Growth Fund's investment performance was impacted during the first half of the
year by our large cash position, which was necessitated by the Growth Fund's
conversion from a closed-end to an open-end fund. Now fully invested, the Growth
Fund will continue to invest in companies we believe will meet or exceed our
target revenue growth of 15% annually. We believe the Growth Fund's portfolio
reflects our disciplined investment strategy, as evidenced by its composite
annual revenue growth rate, which exceeds 30%.
Despite what many predict will be a volatile market in 1997, the Growth Fund
will remain a long-term investor in stocks and industries we feel will provide
long-term growth for our shareholders. The Growth Fund will continue to hold
positions in industries such as computer services/software and medical
devices/drugs, whose products and services affect our economy and our lives
every day. A significant new industry sector in which the Growth Fund recently
has invested is offshore oil servicing. We believe this industry, for the first
time in many years, exhibits potential for capital appreciation with selective
holdings.
1
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LETTER TO SHAREHOLDERS (CONCLUDED)
JUNDT U.S. EMERGING GROWTH FUND
The Jundt U.S. Emerging Growth Fund seeks to provide long-term capital
appreciation by identifying and investing in 30 to 50 of what we believe are
among the fastest-growing companies in the United States, with an emphasis on
companies that have annual revenues of $750 million or less and that are growing
25% annually.
True to our style of seeking companies with strong top-line revenue growth, the
U.S. Emerging Growth Fund's portfolio currently has a composite annual revenue
growth rate that exceeds 50%. Despite investors' inclination to take a defensive
position by seeking greater security in traditional "blue chip" stocks in the
last two quarters of 1996, the U.S. Emerging Growth Fund posted a very strong
1996 total return, as shown in the total return chart that precedes the Schedule
of Investments for the U.S. Emerging Growth Fund.
We believe there are many investment opportunities in today's marketplace. Our
challenge is to discover emerging industries and companies and give our
shareholders an opportunity to share in their growth. We believe significant
opportunities exist in companies operating in the telecommunication
infrastructure, healthcare services and internet technology industries. Our goal
and mission will continue to be the identification of emerging industries and
investment in companies that are creating value within these industries.
Thank you for placing your trust us. We take our obligation to shareholders
seriously and pledge our most diligent efforts in the care of your investments.
Sincerely,
/s/ James R. Jundt
James R. Jundt
Chairman
2
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JUNDT ASSOCIATES' APPROACH TO INVESTING: GROWTH FUND
JUNDT ASSOCIATES IS GROWTH-ORIENTED; OUR FOCUS IS ON COMPANIES GENERATING
significant revenue increases. We believe the U.S. economy's heterogeneous
nature and multitrillion-dollar size generally afford investors significant
growth opportunities. We emphasize the fundamental prospects of individual
companies rather than macroeconomic trends.
The Jundt Growth Fund concentrates on medium- to large-capitalization companies,
with at least half the equity securities consisting of companies that have
annual revenues greater than $750 million. Within these parameters, the Growth
Fund's mission is to establish equity positions in 30 to 50 companies we believe
to be among the fastest-growing corporations in America. Particular emphasis is
placed on companies we believe will achieve annual rates of revenue growth of
15% or greater.
INDUSTRY SECTORS REPRESENTED IN THE FUND'S PORTFOLIO ON DECEMBER 31, 1996
(as a percentage of net assets)
- --------------------------------------------------------------------------------
[CHART]
3
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PERFORMANCE DATA: GROWTH FUND (UNAUDITED)
TOTAL RETURN BASED ON A $10,000 INVESTMENT
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[GRAPH]
AVERAGE ANNUAL TOTAL RETURNS
(for periods ended December 31, 1996)
- --------------------------------------------------------------------------------
SINCE SINCE
1-YEAR 5-YEAR INCEPTION(4) INCEPTION(5)
- --------------------------------------------------------------------------------
CLASS A
Without sales charge* 15.22% 7.45% 9.03% --
With sales charge 9.18 6.29 7.93 --
- --------------------------------------------------------------------------------
CLASS B
Without sales charge* 14.14 -- -- 15.98%
With sales charge 10.14 -- -- 11.98
- --------------------------------------------------------------------------------
CLASS C
Without sales charge* 13.97 -- -- 15.81
With sales charge 12.97 -- -- 15.81
- --------------------------------------------------------------------------------
CLASS D
Without sales charge* 14.81 -- -- 16.66
With sales charge 8.78 -- -- 10.54
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RUSSELL 1000 INDEX 22.45 15.26 15.81 22.45
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LIPPER INDEX 17.48 13.08 13.85 17.48
- --------------------------------------------------------------------------------
*Applicable to investors who purchased shares at net asset value (without sales
charges), including Class A shareholders at the time of the Fund's conversion to
an open-end fund on December 29, 1995.
(1)Total return is based on a hypothetical investment at the Fund's inception on
September 3, 1991. ACTUAL PERFORMANCE OF INVESTORS WILL VARY DEPENDING UPON THE
TIMING OF THEIR INVESTMENTS IN THE FUND. One line reflects total return without
deduction of the current maximum initial sales charge of 5.25%, and the other
line reflects total return after deduction of such sales charge. Total return
prior to December 29, 1995 reflects the Fund's performance as a closed-end fund.
As an open-end fund, the Fund incurs certain additional expenses as a result of
the continuous offering and redemption of its shares. Total return assumes
reinvestment of all dividends and distributions. Since December 29, 1995, the
Fund has offered its shares in four classes (Class A, B, C and D). Class B,
Class C and Class D performance will vary from Class A performance due to the
differences in sales charges and expenses applicable to an investment in each
such class.
(2)The Russell 1000 Index measures the performance of the 1,000 largest U.S.
companies based on total market capitalization. THE INDEX DOES NOT REFLECT THE
DEDUCTION OF SALES CHARGES AND EXPENSES THAT ARE BORNE BY MUTUAL FUND INVESTORS.
Inception date for index data is August 31, 1991.
(3)The Lipper Growth Fund Index is the composite performance of the 30 largest
"growth" mutual funds,
as categorized by Lipper Analytical Services, Inc. Performance is presented net
of the funds' fees and expenses and assumes reinvestment of all dividends and
distributions. HOWEVER, APPLICABLE SALES CHARGES ARE NOT TAKEN INTO
CONSIDERATION. Inception date for index data
is August 31, 1991.
(4)Inception dates are September 3, 1991 for the Fund's Class A shares and
August 31, 1991 for index data.
(5)Inception dates are December 29, 1995 for the Fund's Class B, Class C and
Class D shares and December 31, 1995 for index data.
PAST PERFORMANCE OF THE FUND SHOULD NOT BE CONSIDERED PREDICTIVE OF FUTURE FUND
PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE OF FUND SHARES WILL FLUCTUATE
SO THAT SUCH SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
4
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<TABLE>
<CAPTION>
Jundt Growth Fund
SCHEDULE OF INVESTMENTS December 31, 1996
COMMON STOCKS
Industry Description and Issue Number of Shares Cost Market Value(a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
CLIENT SERVER SOFTWARE (4.9%)
HBO & Company 33,200 $ 1,960,875 $ 1,971,250
Peoplesoft Inc. (b) 58,900 1,290,242 2,823,519
--------------------------------
3,251,117 4,794,769
--------------------------------
COMPUTER SERVICES/SOFTWARE (13.9%)
3Com Corporation (b) 46,800 2,070,900 3,433,950
cisco Systems, Inc. (b) 62,400 2,917,607 3,970,200
Computer Sciences Corporation (b) 23,300 1,816,099 1,913,512
Microsoft Corporation (b) 50,600 2,364,592 4,180,825
--------------------------------
9,169,198 13,498,487
--------------------------------
DATABASE SOFTWARE (3.1%)
Oracle Systems Corp. (b) 70,875 2,183,002 2,959,031
--------------------------------
ENERGY (10.5%)
Baker Hughes Incorporated 43,400 1,406,938 1,497,300
ENSCO International Incorporated (b) 29,700 1,049,204 1,440,450
Global Marine Inc. (b) 56,300 1,061,696 1,161,188
Schlumberger Limited 23,400 2,050,101 2,337,075
Smith International, Inc. (b) 37,200 1,164,118 1,669,350
Tidewater Inc. 46,500 2,107,444 2,104,125
--------------------------------
8,839,501 10,209,488
--------------------------------
HEALTHCARE SERVICES (4.4%)
Oxford Health Plans, Inc. (b) 48,900 2,013,856 2,863,706
Phycor, Inc. (b) 12,150 358,425 344,756
United HealthCare Corporation 22,400 1,069,533 1,008,000
--------------------------------
3,441,814 4,216,462
--------------------------------
INTERACTIVE MEDIA (1.0%)
CUC International Inc. (b) 41,700 994,823 990,375
--------------------------------
INTERNET TECHNOLOGY (2.7%)
Netscape Communications Corporation (b) 45,300 2,775,455 2,576,438
--------------------------------
See accompanying notes to schedule of investments. 5
</TABLE>
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<TABLE>
<CAPTION>
Jundt Growth Fund
SCHEDULE OF INVESTMENTS (continued) December 31, 1996
COMMON STOCKS (CONCLUDED)
Industry Description and Issue Number of Shares Cost Market Value (a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
MEDICAL DEVICES/DRUGS (17.2%)
Biogen, Inc. (b) 89,100 $ 2,904,038 $ 3,452,625
Boston Scientific Corporation (b) 59,100 2,671,648 3,546,000
Eli Lilly and Company 37,900 2,376,057 2,766,700
Genzyme Corporation (b) 80,000 2,411,803 1,740,000
Medtronic, Inc. 20,500 1,160,653 1,394,000
Merck & Co., Inc. 46,900 3,134,678 3,716,825
--------------------------------
14,658,877 16,616,150
--------------------------------
RESTAURANTS (5.0%)
Boston Chicken, Inc. (b) 45,400 1,567,735 1,628,725
Starbucks Corp. (b) 112,800 2,884,400 3,228,900
--------------------------------
4,452,135 4,857,625
--------------------------------
RETAIL (14.2%)
AutoZone, Inc. (b) 41,000 1,416,960 1,127,500
Lowe's Companies, Inc. 45,100 1,522,276 1,601,050
NIKE, Inc. 17,000 1,061,613 1,015,750
PETsMART, Inc. (b) 142,600 2,266,128 3,119,375
Staples, Inc. (b) 166,362 3,008,165 3,004,914
The Home Depot, Inc. 77,883 3,095,301 3,903,885
--------------------------------
12,370,443 13,772,474
--------------------------------
TELECOMMUNICATION INFRASTRUCTURE (8.8%)
ADC Telecommunications, Inc. (b) 50,600 1,476,515 1,574,925
Ascend Communications, Inc. (b) 16,200 1,022,585 1,006,425
Cascade Communications Corp. (b) 43,600 1,906,948 2,403,450
Tellabs, Inc. (b) 94,400 1,832,807 3,551,800
--------------------------------
6,238,855 8,536,600
--------------------------------
WIRELESS/TELECOMMUNICATION SERVICES (6.4%)
Airtouch Communications, Inc. (b) 38,000 1,074,830 959,500
LCI International, Inc. (b) 32,400 1,018,750 696,600
WorldCom, Inc. (b) 173,000 2,821,962 4,508,813
--------------------------------
4,915,542 6,164,913
--------------------------------
Miscellaneous (1.4%)
First Data Corporation 36,800 1,248,127 1,343,200
--------------------------------
TOTAL COMMON STOCKS (93.5%) 74,538,889 90,536,012
--------------------------------
--------------------------------
See accompanying notes to schedule of investments. 6
</TABLE>
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<TABLE>
<CAPTION>
Jundt Growth Fund
SCHEDULE OF INVESTMENTS (continued) December 31, 1996
CONVERTIBLE CORPORATE BONDS
Industry Description and Issue Principal Amount Cost Market Value (a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
HEALTHCARE SERVICES (1.1%)
PhyCor, Inc., 4.50%, 2/15/03 $1,051,000 $ 1,065,364 $ 1,039,176
--------------------------------
TOTAL CONVERTIBLE CORPORATE BONDS (1.1%) 1,065,364 1,039,176
--------------------------------
--------------------------------
SHORT-TERM SECURITIES
Issue
REPURCHASE AGREEMENT (5.4%)
Repurchase agreement with Merrill Lynch
Government Securities, Inc., 5.75%
acquired on 12/31/96 and due 1/02/97
with accrued interest of $1,683
(collateralized by $5,270,000 U.S.
Treasury Note 6.75%, due 6/30/99,
value including accrued
interest, $5,540,088) 5,267,000 5,267,000 5,267,000
--------------------------------
MONEY MARKET FUND (0.0%)
Norwest Treasury Fund, 4.69% 26,492 26,492 26,492
--------------------------------
TOTAL SHORT-TERM SECURITIES (5.4%) 5,293,492 5,293,492
--------------------------------
--------------------------------
Total investments in securities (100.0%) $80,897,745(c) 96,868,680
------------
------------
Liabilities in excess of other assets (0.0%) (31,647)
-----------
NET ASSETS (100.0%) $96,837,033
-----------
-----------
</TABLE>
Notes to Schedule of Investments:
Percentage of investments as shown is the ratio of the total
market value to total net assets.
(a) Securities are valued by procedures described in note 2 to
the financial statements.
(b) Presently non-income producing.
(c) Cost for federal income tax purposes at December 31, 1996
was $81,264,480. The aggregate gross unrealized appreciation
and depreciation on investments in securities based on this cost were:
--------------------------------------------
Gross unrealized appreciation $17,448,692
Gross unrealized depreciation (1,844,492)
Net unrealized appreciation $15,604,200
--------------------------------------------
7
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JUNDT ASSOCIATES' APPROACH TO INVESTING: U.S. EMERGING GROWTH FUND
JUNDT ASSOCIATES IS GROWTH-ORIENTED; OUR FOCUS IS ON COMPANIES GENERATING
significant revenue increases. We believe the U.S. economy's heterogeneous
nature and multitrillion-dollar size generally afford investors significant
growth opportunities. We emphasize the fundamental prospects of individual
companies rather than macroeconomic trends.
The Jundt U.S. Emerging Growth Fund concentrates on smaller-capitalization
companies, with at least half the equity securities consisting of companies with
annual revenues less than $750 million. Within these parameters, the U.S.
Emerging Growth Fund's mission is to establish equity positions in 30 to 50
companies we believe to be among the fastest-growing corporations in America.
Particular emphasis is placed on companies we believe will achieve annual rates
of revenue growth of 25% or greater.
INDUSTRY SECTORS REPRESENTED IN THE FUND'S PORTFOLIO ON DECEMBER 31, 1996
(as a percentage of net assets)
- --------------------------------------------------------------------------------
[CHART]
8
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PERFORMANCE DATA: U.S. EMERGING GROWTH FUND (unaudited)
TOTAL RETURN BASED ON A $10,000 INVESTMENT
[GRAPH]
AVERAGE ANNUAL TOTAL RETURNS
(for period ended December 31, 1996)
- --------------------------------------------------------------------------------
SINCE
INCEPTION(4)
- -----------------------------------
CLASS A 44.32%
- -----------------------------------
CLASS B
Without sales charge* 42.90
With sales charge 38.90
- -----------------------------------
CLASS C
Without sales charge* 42.82
With sales charge 41.82
- -----------------------------------
CLASS D
Without sales charge* 43.40
With sales charge 35.88
- -----------------------------------
RUSSELL 2000 INDEX 16.49
- -----------------------------------
LIPPER INDEX 14.51
- -----------------------------------
*Applicable to investors who purchased shares at net asset value (without sales
charges).
(1)Total return is based on a hypothetical investment at the Fund's inception on
January 2, 1996. ACTUAL PERFORMANCE OF INVESTORS WILL VARY DEPENDING UPON THE
TIMING OF THEIR INVESTMENTS IN THE FUND. One line reflects the deduction
of the maximum initial sales charge of 5.25%, and the other line does not
reflect such charge. The ending value
of investments in the Fund's Class A shares (which are not subject to any sales
charges), Class B shares (reflecting the deduction of the maximum deferred sales
charge of 4%) and Class C shares (reflecting the deduction of the maximum
deferred sales charge of 1%) over the same time period was $14,432, $13,890 and
$14,182, respectively.
(2)The Russell 2000 Index measures the performance of the 2,000 smallest
companies represented in the Russell 3000 Index (comprised of the 3,000 largest
U.S. companies based on total market capitalization).THE INDEX DOES NOT REFLECT
THE DEDUCTION OF SALES CHARGES AND EXPENSES THAT ARE BORNE BY MUTUAL FUND
INVESTORS. Inception date for index data is December 31, 1995.
(3)The Lipper Small Company Growth Fund Index is the composite performance of
the 30 largest "small company growth" mutual funds, as categorized by Lipper
Analytical Services, Inc. Performance is presented net of the funds'
fees and expenses and assumes reinvestment of all dividends and distributions.
HOWEVER, APPLICABLE SALES CHARGES ARE NOT TAKEN INTO CONSIDERATION. Inception
date for index data is December 31, 1995.
(4)Inception dates are January 2, 1996 for the Fund's shares and December 31,
1995 for index data.
PAST PERFORMANCE OF THE FUND SHOULD NOT BE CONSIDERED PREDICTIVE OF FUTURE FUND
PERFORMANCE. INVESTMENT RETURN
AND PRINCIPAL VALUE OF FUND SHARES WILL FLUCTUATE SO THAT
SUCH SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS
THAN THEIR ORIGINAL COST.
9
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Jundt U.S. Emerging Growth Fund
SCHEDULE OF INVESTMENTS December 31, 1996
<TABLE>
<CAPTION>
COMMON STOCKS
Industry Description and Issue Number of Shares Cost Market Value (a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
CLIENT SERVER SOFTWARE (2.1%)
Baan Company N.V. (b) 8,300 $ 307,297 $ 288,425
--------------------------------
COMPUTER SERVICES/SOFTWARE (13.6%)
Aurum Software, Inc. (b) 4,900 123,438 113,313
HNC Software Inc. (b) 9,000 295,428 282,375
McAFee Associates, Inc. (b) 12,900 441,525 567,600
Rational Software Corporation (b) 5,800 194,550 229,462
Siebel Systems, Inc. (b) 8,800 92,850 237,600
Superior Consultant Holdings Corporation (b) 10,000 160,000 247,500
Veritas Software Corporation (b) 4,050 183,787 201,487
--------------------------------
1,491,578 1,879,337
--------------------------------
DATABASE SOFTWARE (0.8%)
Forte Software, Inc. (b) 3,300 103,125 108,075
--------------------------------
ENERGY (8.1%)
Diamond Offshore Drilling, Inc. (b) 9,900 566,599 564,300
Seitel, Inc. (b) 4,400 179,733 176,000
Transocean Offshore Inc. 5,900 395,930 369,488
--------------------------------
1,142,262 1,109,788
--------------------------------
HEALTHCARE SERVICES (8.4%)
Access Health, Inc. (b) 8,300 279,900 371,425
American Medserve Corporation (b) 15,000 225,000 232,500
Enterprise Systems, Inc. (b) 23,300 461,074 547,550
--------------------------------
965,974 1,151,475
--------------------------------
INTERNET TECHNOLOGY (5.2%)
Netscape Communications Corporation (b) 12,600 603,978 716,625
--------------------------------
MEDICAL DEVICES/DRUGS (18.0%)
Biochem Pharma, Inc. (b) 14,300 543,457 718,575
Biogen, Inc. (b) 13,000 342,250 503,750
Dura Pharmaceuticals, Inc. (b) 10,000 250,000 477,500
Target Therapeutics, Inc. (b) 18,400 774,271 772,800
--------------------------------
1,909,978 2,472,625
--------------------------------
See accompanying notes to schedule of investments. 10
</TABLE>
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<TABLE>
<CAPTION>
Jundt U.S. Emerging Growth Fund
SCHEDULE OF INVESTMENTS (continued) December 31, 1996
COMMON STOCKS (CONCLUDED)
Industry Description and Issue Number of Shares Cost Market Value (a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
RESTAURANTS (8.6%)
Einstein/Noah Bagel Corp. (b) 5,800 $ 136,858 $ 172,550
Famous Dave's of America, Inc. (b) 65,100 687,388 634,725
Rainforest Cafe, Inc. (b) 5,800 156,146 136,300
Starbucks Corp. (b) 8,600 232,175 246,175
--------------------------------
1,212,567 1,189,750
--------------------------------
RETAIL (3.2%)
Petco Animal Supplies, Inc. (b) 21,200 524,268 439,900
--------------------------------
TELECOMMUNICATION INFRASTRUCTURE (15.5%)
ADC Telecommunications, Inc. (b) 4,000 148,000 124,500
Advanced Fibre Communications, Inc. (b) 2,400 94,793 133,500
Ascend Communications, Inc. (b) 7,800 414,181 484,575
Cascade Communications Corp. (b) 4,000 252,250 220,500
FORE Systems, Inc. (b) 4,400 167,798 144,650
GeoTel Communications Corporation, Inc. (b) 20,000 240,000 260,000
PairGain Technologies, Inc. (b) 12,800 352,600 389,600
Tellabs, Inc. (b) 6,000 154,500 225,750
Xylan Corporation (b) 5,500 146,345 155,375
--------------------------------
1,970,467 2,138,450
--------------------------------
WIRELESS/TELECOMMUNICATION SERVICES (4.2%)
Edify Corporation (b) 8,200 123,000 131,200
Snyder Communciations, Inc. (b) 5,100 96,182 137,700
Sykes Enterprises, Incorporated (b) 3,300 140,428 123,750
Teleport Communications Group Inc. (b) 6,000 111,000 183,000
--------------------------------
470,610 575,650
--------------------------------
MISCELLANEOUS (3.3%)
ABR Information Services, Inc. (b) 6,800 289,000 267,750
USA Detergents, Inc. (b) 4,600 180,419 191,475
--------------------------------
469,419 459,225
--------------------------------
TOTAL COMMON STOCKS (91.0%) 11,171,523 12,529,325
--------------------------------
--------------------------------
See accompanying notes to schedule of investments. 11
</TABLE>
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<TABLE>
<CAPTION>
Jundt U.S. Emerging Growth Fund
SCHEDULE OF INVESTMENTS (concluded) December 31, 1996
SHORT-TERM SECURITIES
Issue Principal Amount Cost Market Value (a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT (8.7%)
Repurchase agreement with
Merrill Lynch Government
Securities, Inc., 5.75% acquired
on 12/31/96 and due 1/02/97 with
accrued interest of $385
(collateralized by $1,205,000
U.S. Treasury Note 6.75%, due
6/30/99, value including
accrued interest, $1,266,756) $1,205,000 $ 1,205,000 $ 1,205,000
-------------------------------
MONEY MARKET FUND (0.5%)
Norwest Treasury Fund, 4.69% 66,784 66,784 66,784
-------------------------------
TOTAL SHORT-TERM SECURITIES (9.2%) 1,271,784 1,271,784
Total investments in securities (100.2%) $12,443,307(c) 13,801,109
-----------
Liabilities in excess of other assets (-0.2%) (26,472)
-----------
NET ASSETS (100.0%) $13,774,637
-----------
</TABLE>
Notes to Schedule of Investments:
Percentage of investments as shown is the ratio of the total market
value to total net assets.
(a) Securities are valued by procedures described in note 2
to the financial statements.
(b) Presently non-income producing.
(c) Cost for federal income tax purposes at December 31, 1996
was $12,502,636. The aggregate gross unrealized appreciation
and depreciation on investments in securities based on this cost were:
-------------------------------------------------------
Gross unrealized appreciation $1,669,796
Gross unrealized depreciation (371,323)
Net unrealized appreciation $1,298,473
-------------------------------------------------------
12
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JUNDT ASSOCIATES' APPROACH TO INVESTING: OPPORTUNITY FUND
THE JUNDT OPPORTUNITY FUND'S INVESTMENT OBJECTIVE IS TO PROVIDE CAPITAL
APPRECIATION by utilizing an aggressive yet very flexible investment program.
While a percentage of equity holdings in the Fund may at times mirror those in
the Jundt Growth and the Jundt U.S. Emerging Growth Funds, the Jundt Opportunity
Fund also may sell securities short, invest in options and futures contracts and
leverage the portfolio. These investment techniques, among others, may be
utilized by the Investment Adviser to enable the Opportunity Fund to achieve its
objective of capital appreciation.
13
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<TABLE>
<CAPTION>
Jundt Opportunity Fund
SCHEDULE OF INVESTMENTS December 31, 1996
COMMON STOCKS
Industry Description and Issue Number of Shares Cost Market Value (a)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
COMPUTER SERVICES/SOFTWARE (5.5%)
McAfee Associates, Inc. (b) 500 $ 22,000 $ 22,000
-------------------------------
MEDICAL DEVICES/DRUGS (5.2%)
Target Therapeutics, Inc. (b) 500 21,750 21,000
-------------------------------
RESTAURANTS (18.3%)
Famous Dave's of America, Inc. (b) 7,500 76,500 73,125
-------------------------------
TELECOMMUNICATION INFRASTRUCTURE (6.9%)
Cascade Communications Corp. (b) 500 28,500 27,562
-------------------------------
TOTAL COMMON STOCKS (35.9%) 148,750 143,687
-------------------------------
Total investments in securities (35.9%) $148,750(c) 143,687
-----------
Other assets in excess of liabilities (64.1%) 256,448
--------
NET ASSETS (100.0%) $400,135
--------
</TABLE>
Notes to Schedule of Investments:
Percentage of investments as shown is the ratio of the total market
value to total net assets.
(a)Securities are valued by procedures described in note 2
to the financial statements.
(b)Presently non-income producing.
(c)Cost for federal income tax purposes as of December 31, 1996
was $148,750. The aggregate gross unrealized appreciation
and depreciation on investments in securities based on this cost were:
-------------------------------------------------------
Gross unrealized appreciation $ --
Gross unrealized depreciation (5,063)
Net unrealized depreciation $(5,063)
-------------------------------------------------------
14
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<TABLE>
<CAPTION>
FINANCIAL STATEMENTS December 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES
Jundt U.S. Jundt
Jundt Emerging Opportunity
Growth Fund Growth Fund Fund
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Investment in Securities, at
Market Value (note 2) including
Repurchase Agreements of $5,267,000,
$1,205,000 and $0, respectively
(identified cost: $80,897,745,
$12,443,307 and $148,750,
respectively) $96,868,680 $13,801,109 $143,687
Cash -- 3,946 112,306
Receivable for capital shares sold -- 9,734 293,000
Receivable for securities sold 291,338 -- --
Dividends and accrued interest receivable 49,340 192 --
Receivable from investment adviser -- 11,325 115
Deferred organization costs -- 69,435 41,885
Prepaid expenses 22,605 18,695 --
---------------------------------------------------
Total assets 97,231,963 13,914,436 590,993
---------------------------------------------------
LIABILITIES
Payable for capital shares redeemed 155,558 79,644 --
Payable for securities purchased -- -- 148,750
Accrued investment management fee 84,576 12,132 71
Accrued administrative fee 16,915 2,426 11
Accrued distribution fee 75 3,357 4
Accrued expenses and other liabilities 137,806 42,240 42,022
---------------------------------------------------
Total liabilities 394,930 139,799 190,858
---------------------------------------------------
Net assets applicable to outstanding
capital stock $96,837,033 $13,774,637 $400,135
---------------------------------------------------
NET ASSETS CONSIST OF
Capital stock (note 1) $85,214,687 $12,831,819 $405,198
Accumulated net realized loss
on investments (4,348,589) (414,984) --
Unrealized appreciation (depreciation)
on investments 15,970,935 1,357,802 (5,063)
---------------------------------------------------
Total, representing net assets applicable to
outstanding capital stock $96,837,033 $13,774,637 $400,135
---------------------------------------------------
Net assets applicable to outstanding
Class A shares $96,458,007 $ 9,024,764 $286,373
---------------------------------------------------
Net assets applicable to outstanding
Class B shares $ 37,243 $ 1,708,503 $ 1,056
---------------------------------------------------
Net assets applicable to outstanding
Class C shares $ 2,275 $ 1,766,202 $ 1,066
---------------------------------------------------
Net assets applicable to outstanding
Class D shares $ 339,508 $ 1,275,168 $111,640
---------------------------------------------------
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Class A shares of capital stock outstanding:
7,048,097, 721,363 and 29,007, respectively $13.69 $12.51 $9.87
---------------------------------------------------
Class B shares of capital stock outstanding:
2,747, 138,164 and 107, respectively $13.56 $12.37 $9.87
---------------------------------------------------
Class C shares of capital stock outstanding:
168, 142,943 and 108, respectively $13.54 $12.36 $9.87
---------------------------------------------------
Class D shares of capital stock outstanding:
24,884, 102,695 and 11,309, respectively $13.64 $12.42 $9.87
---------------------------------------------------
See accompanying notes to financial statements. 15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS (continued) December 31, 1996
STATEMENTS OF OPERATIONS
Jundt U.S. Jundt
Jundt Emerging Opportunity
Growth Fund Growth Fund Fund
-----------------------------------------------------
Period from Period from
Year ended 1/2/96* 12/26/96*
12/31/96 to 12/31/96 to 12/31/96
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
INCOME
DIVIDENDS $ 217,494 $ -- $ --
INTEREST 125,260 48,731 --
---------------------------------------------------
342,754 48,731 --
---------------------------------------------------
EXPENSES (note 4)
Investment management fee 1,054,008 108,940 71
Transfer agent fee 282,159 64,497 --
Administrative fee 210,802 21,788 11
Audit and legal fees 186,998 39,544 --
Registration fee 80,207 68,404 --
Directors' fees 56,972 13,739 --
Custodian fee 35,503 18,260 --
Reports to shareholders 25,137 2,732 --
Amortization of deferred organization costs -- 17,345 115
Account maintenance fee:
Class B 69 1,792 --
Class C 4 3,388 --
Class D 293 3,968 4
Distribution fee:
Class B 208 5,377 --
Class C 11 10,163 --
Other 54,898 14,242 22
---------------------------------------------------
Total expenses before reimbursement 1,987,269 394,179 223
Reimbursement of expenses -- (200,664) (115)
---------------------------------------------------
Expenses after reimbursement 1,987,269 193,515 108
---------------------------------------------------
Investment loss-net (1,644,515) (144,784) (108)
---------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss)
on investments (note 3) (3,183,866) 1,574,974 --
Net change in unrealized appreciation
(depreciation) on investments 18,490,415 1,357,802 (5,063)
---------------------------------------------------
NEt gain (loss) on investments 15,306,549 2,932,776 (5,063)
---------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $13,662,034 $2,787,992 $(5,171)
---------------------------------------------------
---------------------------------------------------
- ----------------------------------------------------------------------------------------------------
*Commencement of investment operations.
see accompanying notes to financial statements. 16
</TABLE>
<PAGE>
FINANCIAL STATEMENTS (continued) December 31, 1996
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Jundt U.S. Jundt
Emerging Opportunity
Jundt Growth Fund Growth Fund Fund
-------------------------------------------------------------------------
Period from Period from
Year ended Year ended 1/2/96* 12/26/96*
12/31/96 12/31/96 to 12/31/96 to 12/31/96
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS
Investment loss-net $ (1,644,515) $ (1,775,720) $ (144,784) $ (108)
Net realized gain (loss) on investments (3,183,866) 87,197,971 1,574,974 --
Net change in unrealized appreciation
(depreciation) on investments 18,490,415 (46,279,923) 1,357,802 (5,063)
-------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 13,662,034 39,142,328 2,787,992 (5,171)
-------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Realized capital gains-net (564,175) (83,541,012) (1,862,519) --
-------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from shares sold:
Class A shares 6,424,907 1,492 8,657,503 290,060
Class B shares 41,423 1,000 1,761,699 1,060
Class C shares 1,058 1,000 2,033,013 1,070
Class D shares 343,477 1,000 2,926,089 113,076
Distributions reinvested:
Class A shares 90,076 27,275,924 303,212 --
Class B shares 7 -- 140,248 --
Class C shares 7 -- 75,849 --
Class D shares 1,684 -- 175,743 --
Cost of shares redeemed:
Class A shares (63,771,073) (65,556,384) (976,443) --
Class B shares (10,397) -- (25,044) --
Class C shares -- -- (314,960) --
Class D shares (24,053) -- (2,007,745) --
-------------------------------------------------------------------------
Net increase (decrease)
in net assets from capital
share transactions (56,902,884) (38,275,968) 12,749,164 405,266
-------------------------------------------------------------------------
NET ASSETS
Total increase (decrease) in net assets (43,805,025) (82,674,652) 13,674,637 400,095
net assets at beginning of period 140,642,058 223,316,710 100,000 40
-------------------------------------------------------------------------
Net assets at end of period $ 96,837,033 $140,642,058 $13,774,637 $400,135
-------------------------------------------------------------------------
-------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
*COMMENCEMENT OF INVESTMENT OPERATIONS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17
</TABLE>
<PAGE>
FINANCIAL STATEMENTS (CONCLUDED) December 31, 1996
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
Jundt U.S. Jundt
Emerging Opportunity
Jundt Growth Fund Growth Fund Fund
-------------------------------------------------------------------------
Period from Period from
Year ended Year ended 1/2/96* 12/26/96*
12/31/96 12/31/96 to 12/31/96 to 12/31/96
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTION
Shares sold:
Class A shares 523,768 125 751,525 29,006
Class B shares 3,403 83 128,454 106
Class C shares 83 84 159,854 107
Class D shares 26,465 84 239,635 11,308
Shares issued for dividends reinvested:
Class A shares 6,532 2,311,519 24,433 --
Class B shares 1 -- 11,420 --
Class C shares 1 -- 6,187 --
Class D shares 122 -- 14,253 --
Shares redeemed:
Class A shares (5,248,054) (5,485,890) (64,295) --
Class B shares (740) -- (1,810) --
Class C shares -- -- (23,198) --
Class D shares (1,787) -- (151,293) --
-------------------------------------------------------------------------
Net increase (decrease)
in shares outstanding (4,690,206) (3,173,995) 1,095,165 40,527
-------------------------------------------------------------------------
-------------------------------------------------------------------------
*Commencement of investment operations.
See accompanying notes to financial statements.
18
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS December 31, 1996
1. ORGANIZATION
The funds are registered under the Investment Company Act of 1940 (as amended)
(the "Act") as open-end management investment companies, each of which has
different investment objectives and their own investment portfolios and net
asset values. The Jundt Growth Fund, Inc. ("Growth Fund") commenced operations
on September 3, 1991 as a diversified, closed-end investment company. Growth
Fund converted to an open-end investment company immediately following the close
of business on December 28, 1995 (the "Open-End Conversion"). Jundt U.S.
Emerging Growth Fund ("U.S. Emerging Growth Fund") and Jundt Opportunity Fund
("Opportunity Fund") are series of Jundt Funds, Inc. (the "Company"). The
Company accounts separately for the assets, liabilities and operations of each
such fund. U.S. Emerging Growth Fund, a diversified series of the Company,
commenced operations on January 2, 1996. The only transaction of U.S. Emerging
Growth Fund prior to commencement of investment operations was the sale of 9,700
shares of Class A and 100 shares of each of Class B, Class C and Class D to a
principal of Jundt Associates, Inc. (the "Adviser") for $100,000 ($10 per
share). Opportunity Fund, a non-diversified series of the Company, commenced
operations on December 26, 1996. The only transaction of Opportunity Fund prior
to commencement of investment operations was the sale of 1 share of each Class
A, Class B, Class C and Class D to a principal of the Adviser for $40 ($10 per
share).
Growth Fund, U.S. Emerging Growth Fund and Opportunity Fund currently offer
shares in four classes (Class A, Class B, Class C and Class D). Effective upon
the Open-End Conversion, each issued and outstanding Growth Fund share was
converted to a Class A share. Shares of Class A of U.S. Emerging Growth Fund and
Opportunity Fund (which are not subject to a front-end or deferred sales charge)
are available for investment only by certain individuals and entities associated
with the funds. Shares of Class A of Growth Fund (which are available only to
persons that may purchase the other Funds' Class A shares and to Growth Fund
shareholders at the time of the Open-End Conversion) and Class D of each fund
are generally sold with a front-end sales charge. Shares of Class B and Class C
of each fund may be subject to a contingent deferred sales charge when redeemed.
All classes of shares have identical liquidation and other rights and the same
terms and conditions except that Class B, Class C, and Class D shares bear
certain expenses related to the account maintenance of such shares and Class B
and Class C shares also bear certain expenses related to the distribution of
such shares. Shareholder servicing costs attributable to a particular class will
be allocated to such class. Each class has exclusive voting rights with respect
to matters relating to its account maintenance and distribution expenditures and
to certain other matters relating exclusively to such class; otherwise, all
classes of shares have the same voting rights.
Growth Fund is authorized to issue up to 10 billion shares, par value $.01 per
share. The Company is authorized to issue up to 1 trillion common shares, par
value $.01 per share. Currently 10 billion shares have been designated to each
U.S. Emerging Growth Fund and Opportunity Fund.
The investment objective of each fund is as follows:
- - Growth Fund--to provide long-term capital appreciation by investing
primarily in a diversified portfolio of equity securities of companies that
are believed by the Adviser to have significant potential for growth in
revenue and earnings.
- - U. S. Emerging Growth Fund--to provide long-term capital appreciation by
investing primarily in a diversified portfolio of equity securities of
emerging growth companies that are believed by the Adviser to have
significant potential for growth in revenue and earnings.
- - Opportunity Fund--to provide capital appreciation by employing an
aggressive yet flexible investment
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1996
program emphasizing investments in domestic companies that are believed by
the Adviser to have significant potential for capital appreciation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the funds are as follows:
INVESTMENT IN SECURITIES
Investments in securities traded on U.S. securities exchanges or included in a
national market system and open short sale transactions are valued at the last
quoted sales price as of the close of business on the date of valuation or,
lacking any sales, at the mean between the most recently quoted bid and asked
prices. Securities traded in the over-the-counter market are valued at the mean
between the most recently quoted bid and asked prices. Options and futures
contracts are valued at market value or fair value if no market exists, except
that open futures contracts sales are valued using the closing settlement price
or, in the absence of such a price, the most recently quoted asked price. Other
securities for which market quotations are not readily available are valued at
fair value in good faith by or under the direction of the Board of Directors.
Short-term securities with maturities of fewer than 60 days when acquired, or
which subsequently are within 60 days of maturity, are valued at amortized cost,
which approximates market value.
Security transactions are accounted for on the date the securities are purchased
or sold. Realized gains and losses are calculated on the identified cost basis.
Dividend income is recognized on the ex-dividend date. Interest income,
including level-yield amortization of discount, is accrued daily.
FEDERAL TAXES
The funds intend to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and also intend to distribute all
of their investment company taxable income to shareholders. Therefore, no income
tax provision is required. In addition, on a calendar year basis, the funds will
make sufficient distributions of their net investment income and realized gains,
if any, to avoid the payment of any federal excise taxes.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily due to wash sales and net
operating losses. The character of distributions made during the period from net
investment income or net realized gains, if any, may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the period in which amounts are distributed may differ
from the year the income or realized gains (losses) were recorded by the funds.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, the following reclassifications were made: Growth Fund --
accumulated net investment loss has been decreased by $1,644,515 and accumulated
net realized loss on investments has been decreased by $22, resulting in a
reclassification adjustment to decrease paid-in capital by $1,644,537; U.S.
Emerging Growth -- accumulated net investment loss has been decreased by
$144,784 and accumulated net realized loss on investments has been increased by
$127,439, resulting in a reclassification adjustment to decrease paid-in capital
by $17,345; Opportunity Fund -- accumulated net investment loss has been
decreased by $108, resulting in a reclassification adjustment to decrease
paid-in capital by $108. These reclassifications have no effect on net assets or
net asset value per share.
For federal income tax purposes, the Growth Fund had a capital loss carryforward
of $3,981,855 at December 31, 1996, which, if not offset by subsequent capital
gains, will expire in 2004. U.S. Emerging Growth Fund has available
approximately $373,000 of accumulated capital losses to offset subsequent
capital gains.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1996
REPURCHASE AGREEMENTS
The funds may enter into repurchase agreements with member banks of the Federal
Reserve System or primary dealers in U.S. government securities. Under such
agreements, the bank or primary dealer agrees to repurchase the security (U.S.
government securities) at a mutually agreed upon time and price. The funds take
possession of the underlying securities, mark to market such securities daily
and, if necessary, receive additional securities to ensure that the contract is
adequately collateralized.
DERIVATIVE FINANCIAL INSTRUMENTS AND OTHER
INVESTMENT STRATEGIES
Opportunity Fund may engage in various portfolio strategies to hedge against
changes in net asset value or to attempt to realize a greater current return.
OPTIONS TRANSACTIONS: For hedging purposes, Opportunity Fund may purchase and
sell put and call options on its portfolio securities.
The risk associated with purchasing an option is that Opportunity Fund pays a
premium whether or not the option is exercised. Additionally, Opportunity Fund
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of securities
acquired through the exercise of call options is increased by the premiums paid.
The proceeds from securities sold through the exercise of put options are
decreased by the premium paid.
When Opportunity Fund writes an option, the premium received by Opportunity Fund
is recorded as a liability and is subsequently adjusted to the current market
value of the option written. Premiums received from writing options which expire
unexercised are recorded by Opportunity Fund on the expiration date as realized
gains from option transactions. The difference between the premium received and
the amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium is less than
the amount paid for the closing purchase transaction, as a realized loss. If a
call option is exercised, the premium is added to the proceeds from the sale of
the underlying security in determining whether Opportunity Fund has realized a
gain or loss. If a put option is exercised, the premium reduces the cost basis
of the security purchased by Opportunity Fund. In writing an option, Opportunity
Fund bears the market risk of an unfavorable change in the price of the security
underlying the written option. Exercise of an option written by Opportunity Fund
could result in Opportunity Fund selling or buying a security at a price
different from the current market price.
FINANCIAL FUTURES CONTRACTS: Opportunity Fund may purchase or sell financial
futures contracts to attempt to increase investment return. A futures contract
is an agreement between two parties to buy or sell a security for a set price on
a future date. Upon entering into a contract, Opportunity Fund deposits and
maintains as collateral such initial margin as required by the exchange on which
the transaction is effected. Pursuant to the contract, Opportunity Fund agrees
to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known as
variation margin and are recorded by Opportunity Fund as unrealized gains or
losses. When the contract is closed, Opportunity Fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed.
SHORT SALE TRANSACTIONS: Opportunity Fund may engage in short-selling which
obligates Opportunity Fund to replace the security borrowed by purchasing the
security at current market value. Opportunity Fund would incur a loss if the
price of the security increases between the date of the short sale and the date
on which Opportunity Fund replaces the
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1996
borrowed security. Opportunity Fund would realize a gain if the price of the
security declines between those dates. Until Opportunity Fund replaces the
borrowed security, Opportunity Fund will maintain daily, a segregated account
with a broker and/or custodian, of cash and/or other liquid securities
sufficient to cover its short position. For the period from December 26, 1996
(commencement of investment operations) to December 31, 1996, Opportunity Fund
did not engage in any short selling.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions are recorded as of the close of business on the ex-dividend date.
Such distributions are payable in cash or reinvested in additional shares of
each fund.
EXPENSES
Expenses directly attributable to each fund are charged to that fund's
operations; expenses which are applicable to all funds are allocated among the
funds on a pro rata basis.
ORGANIZATION COSTS
Organization costs were incurred in connection with the start-up and initial
registration of U.S. Emerging Growth Fund and Opportunity Fund. These costs are
amortized over 60 months on a straight-line basis from the commencement of
investment operations of such fund.
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 in the financial statements. Actual results could
differ from those estimates.
3. INVESTMENT SECURITY TRANSACTIONS
For the year ended December 31, 1996 for Growth Fund, the period from January 2,
1996 (commencement of investment operations) to December 31, 1996 for U.S.
Emerging Growth Fund and the period from December 26, 1996 (commencement of
investment operations) to December 31, 1996 for Opportunity Fund, the cost of
purchases and proceeds from sales of securities, other than temporary
investments in short-term securities were as follows:
Cost of Proceeds
Purchases from Sales
- -----------------------------------------------------
Growth Fund $62,958,504 $192,143,096
U.S. Emerging
Growth Fund $30,574,017 $ 20,977,468
Opportunity Fund $ 148,750 $ --
- -----------------------------------------------------
4. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS AND TRANSACTIONS WITH
AFFILIATES
The funds have entered into investment advisory agreements with the Adviser. The
Adviser is responsible for the management of each fund's portfolio and provides
the necessary personnel, facilities, equipment and certain other services
necessary to the operations of each fund. For such services, each fund pays a
monthly investment management fee calculated at the following annualized rates:
Growth Fund and U.S. Emerging Growth Fund-- 1% of each fund's average daily net
assets; Opportunity Fund--1.3% of Opportunity Fund's average daily net assets.
The Adviser has voluntarily agreed to pay certain U.S. Emerging Growth Fund and
Opportunity Fund expenses incurred during the first year of each fund's
operation. Thereafter, such voluntary expense reimbursement may be discontinued
or modified at the Adviser's sole discretion.
The funds have entered into administration agreements with Princeton
Administrators, L.P. (the "Administrator") which provide the Administrator with
a monthly administrative fee in an amount equal to an annualized rate of 0.20%
of each fund's average daily net assets not exceeding $600,000,000 and 0.175% of
each fund's average daily net assets in excess of $600,000,000, subject to an
annual minimum fee of $125,000 for each fund. For the period through December
31, 1996, the Administrator has agreed to waive the annual minimum fee provision
for U.S. Emerging Growth Fund and Opportunity Fund. For its fee, the
Administrator
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1996
provides certain administrative, accounting, clerical and record keeping
services for each fund.
The funds have entered into distribution agreements with the Distributor, an
affiliate of the Adviser. The Distributor serves as the principal underwriter of
each fund's shares. Pursuant to the Distribution Plans adopted by each fund in
accordance with Rule 12b-1 under the Act, each fund pays the Distributor ongoing
account maintenance and distribution fees. The fees are accrued daily and paid
monthly at annual rates based upon the average daily net assets of each fund's
shares as follows:
Account
Maintenance Distribution
Fee Fee
- -----------------------------------------------
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
- -----------------------------------------------
In addition to the investment management fee, the administrative fee and account
maintenance and distribution fees, each fund is responsible for paying most
other operating expenses, including directors' fees and expenses, custodian
fees, registration fees, printing and shareholder reports, transfer agent fees
and expenses, legal, auditing and accounting services, insurance and other
miscellaneous expenses.
Legal fees of $119,376 for the year ended December 31, 1996 for Growth Fund and
$15,570 for the period from January 2, 1996 (commencement of investment
operations) to December 31, 1996 for U.S. Emerging Growth Fund were paid to a
law firm of which the secretary of each fund is a partner. Certain officers
and/or directors of each fund are officers and/or directors of the Adviser
and/or the Distributor. The Company and Growth Fund pay each director who is not
an "affiliated person" as defined in the Act a combined fee of $13,000 per year
plus $1,300 for each meeting attended.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued) December 31, 1996
5. FINANCIAL HIGHLIGHTS -- GROWTH FUND
Per share data for a share of capital stock outstanding throughout each period
and selected supplemental and ratio information for each period indicated are as
follows. (For periods prior to December 31, 1995, the Fund operated as a
closed-end investment company.)
<TABLE>
<CAPTION>
Period
Year ended 12/31/96 Year from Year Year
------------------- ended 7/1/94 to ended ended
Per Share Data Class A Class B Class C Class D 12/31/95 12/31/94 6/30/94 6/30/93
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.95 $11.95 $11.95 $11.95 $14.95 $13.53 $15.10 $13.78
Operations:
Investment loss-net (0.23) (0.36) (0.36) (0.26) (0.12) (0.07) (0.11) (0.05)
Net realized and unrealized
gain (loss) on investments 2.05 2.05 2.03 2.03 2.71 1.83 (0.57) 1.38
Total from operations 1.82 1.69 1.67 1.77 2.59 1.7 (0.68) 1.33
Distributions to shareholders:
From investment income-net -- -- -- -- -- -- -- (0.01)
From realized capital gains-net (0.08) (0.08) (0.08) (0.08) (5.59) -- (0.52) --
Tax return of capital -- -- -- -- -- (0.34) (0.37) --
-----------------------------------------------------------------------------
Net asset value, end of period $13.69 $13.56 $13.54 $13.64 $11.95 $14.95 $13.53 $15.10
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Total investment return (1) 15.22% 14.14% 13.97% 14.81% 17.81% 13.06% (4.53)% 9.64%
Net assets at end of period
(000s omitted) $96,458 $37 $2 $340 $140,642 $223,317 $202,192 $473,768
Ratio of expenses to average net assets 1.88% 2.88% 2.88% 2.13% 1.60% 1.58%(2) 1.55% 1.40%
Ratio of net investment loss
to average net assets (1.56)% (2.53)% (2.49)% (1.81)% (0.72)% (0.98)%(2) (0.63)% (0.36)%
Portfolio turnover rate
(excluding short-term securities) 57% 57% 57% 57% 155% 19% 70% 66%
Average commission per share (3) $0.0599 $0.0599 $0.0599 $0.0599 N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Total investment return is based on the change in net asset value of a share
during the period, assumes reinvestment of distributions and excludes the
effects of sales loads. Total investment returns prior to December 29, 1995
reflect performance of the Growth Fund as a closed-end fund (assuming
dividend reinvestment pursuant to the Growth Fund's Dividend Reinvestment
Plan as then in effect); as an open-end fund, the Growth Fund incurs certain
additional expenses as a result of the continuous offering and redemption of
its shares.
(2) Adjusted to an annual basis.
(3) For fiscal years beginning in 1996, the Growth Fund is required to disclose
its average commission rate paid per share for purchases and sales of
investment securities.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued) December 31, 1996
5. FINANCIAL HIGHLIGHTS -- U.S. EMERGING GROWTH FUND
Per share data for a share of capital stock outstanding throughout the period
and selected supplemental and ratio information for the period indicated are as
follows:
<TABLE>
<CAPTION>
Period from 1/2/96*
to 12/31/96
Per Share Data Class A Class B Class C Class D
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
-------------------------------------------------------------------
Operations:
Investment loss-net (0.11) (0.24) (0.24) (0.14)
Net realized and unrealized gain on investments 4.53 4.52 4.51 4.47
-------------------------------------------------------------------
Total from operations 4.42 4.28 4.27 4.33
Distributions to shareholders:
From realized capital gains-net (1.91) (1.91) (1.91) (1.91)
-------------------------------------------------------------------
Net asset value, end of period $12.51 $12.37 $12.36 $12.42
-------------------------------------------------------------------
-------------------------------------------------------------------
Total investment return (1) 44.32% 42.90% 42.82% 43.40%
Net assets at end of period (000s omitted) $9,025 $1,709 $1,766 $1,275
Ratio of expenses, before reimbursement,
to average net assets 3.44%(2) 3.62%(2) 4.32%(2) 3.83%(2)
Ratio of expenses, net of reimbursement,
to average net assets 1.55%(2) 2.55%(2) 2.55%(2) 1.80%(2)
Ratio of net investment loss to average net assets (1.09)%(2) (2.15)%(2) (2.13)%(2) (1.36)%(2)
Portfolio turnover rate (excluding
short-term securities) 204% 204% 204% 204%
Average commission per share $0.0600 $0.0600 $0.0600 $0.0600
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Commencement of investment operations.
(1) Total investment return is based on the change in net asset value of a share
during the period, assumes reinvestment of distributions and excludes the
effects of sales loads. Total investment returns for periods of less than
one full year are not annualized.
(2) Adjusted to an annual basis.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded) December 31, 1996
5. FINANCIAL HIGHLIGHTS -- OPPORTUNITY FUND
Per share data for a share of capital stock outstanding throughout the period
and selected supplemental and ratio information for the period indicated are as
follows:
<TABLE>
<CAPTION>
Period from 12/26/96*
to 12/31/96
Per Share Data Class A Class B Class C Class D
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
-------------------------------------------------------------------
Operations:
Investment loss-net -- -- -- --
Net realized and unrealized loss on investments (0.13) (0.13) (0.13) (0.13)
-------------------------------------------------------------------
Total from operations (0.13) (0.13) (0.13) (0.13)
-------------------------------------------------------------------
Net asset value, end of period $9.87 $9.87 $9.87 $9.87
-------------------------------------------------------------------
Total investment return (1) (1.30)% (1.30)% (1.30)% (1.30)%
Net assets at end of period (000s omitted) $286 $1 $1 $112
Ratio of expenses, before reimbursement,
to average net assets 3.98%(2) 4.98%(2) 4.98%(2) 4.23%(2)
Ratio of expenses, net of reimbursement,
to average net assets 1.89%(2) 2.89%(2) 2.89%(2) 2.14%(2)
Ratio of net investment loss to
average net assets (1.89)%(2) (2.98)%(2) (3.02)%(2) (2.14)%(2)
Portfolio turnover rate (excluding
short-term securities) 0% 0% 0% 0%
Average commission per share (3) N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Commencement of investment operations.
(1) Total investment return is based on the change in net asset value of a share
during the period, assumes reinvestment of distributions and excludes the
effects of sales loads. Total investment returns for periods of less than
one full year are not annualized.
(2) Adjusted to an annual basis.
(3) For fiscal year ended December 31, 1996, the Opportunity Fund did not incur
commissions as a result of securities being purchased in the
over-the-counter market.
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDERS
The Jundt Growth Fund, Inc. and Jundt Funds, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of The Jundt Growth Fund, Inc., and
Jundt U.S. Emerging Growth Fund and Jundt Opportunity Fund (funds within Jundt
Funds, Inc.) as of December 31, 1996, and the related statements of operations
for the year then ended (the period from January 2, 1996, commencement of
operations, to December 31, 1996, for Jundt U.S. Emerging Growth Fund, and the
period from December 26, 1996, commencement of operations, to December 31, 1996,
for Jundt Opportunity Fund), the statements of changes in net assets for each of
the years in the two-year period then ended (the period from January 2, 1996 to
December 31, 1996, for Jundt U.S Emerging Growth Fund, and the period from
December 26, 1996 to December 31, 1996, for Jundt Opportunity Fund) and the the
financial highlights for the periods presented in note 5 to the financial
statements. These financial statements and the financial highlights are the
responsibility of the funds' management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and preform the audit to obtain
reasonable assurance about whether the financial statements and the 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. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold, but not received or delivered,
we request confirmations from brokers and, where replies are not received, we
carry out other appropriate auditing procedures. 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of The
Jundt Growth Fund, Inc., Jundt U.S. Emerging Growth Fund and Jundt Opportunity
Fund as of December 31, 1996, and the results of their operations, the changes
in their net assets and the financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 31, 1997
FEDERAL TAX INFORMATION (unaudited)
Information for federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions for the year ended December
31, 1996, shown below. Shareholders should consult a tax adviser on how to
report these distributions for federal and state income tax purposes.
Per share distributions are as follows (distributions of short-term capital
gains are included in ordinary income):
<TABLE>
<CAPTION>
Domestic Interest Other Non-
Qualifying from Qualifying Total Long-Term
Record Payable Ordinary Federal Ordinary Ordinary Capital
Date Date Income Obligations Income Income Gains
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth Fund:
12/23/96 12/31/96 $0.002396 $0.004407 $0.073157 $0.079960 $0.00
U.S. Emerging Growth Fund:
12/23/96 12/31/96 $0.00 $0.00 $1.906510 $1.906510 $0.00
The law varies in each state as to whether and what percentage of dividend income attributable to federal obligations
is exempt from state income tax. We recommend that you consult your tax adviser to determine if any portion of the
dividends you received is exempt from state income tax.
</TABLE>
27
<PAGE>
INVESTMENT ADVISER
Jundt Associates, Inc.
1550 Utica Avenue South
Suite 950
Minneapolis, MN 55416
DISTRIBUTOR
U.S. Growth Investments, Inc.
1550 Utica Avenue South
Suite 935
Minneapolis, MN 55416
ADMINISTRATOR
Princeton Administrators, L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
TRANSFER AGENT
National Financial Data Services
P.O. Box 419168
Kansas City, MO 64141-6168
1-800-370-0612
CUSTODIAN
Norwest Bank Minnesota, N.A.
Sixth & Marquette
Minneapolis, MN 55479
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
4200 Norwest Center
Minneapolis, MN 55402
LEGAL COUNSEL
Faegre & Benson LLP
2200 Norwest Center
Minneapolis, MN 55402
FOR MORE INFORMATION CONCERNING EACH FUND (INCLUDING FEES, EXPENSES AND RISKS
ASSOCIATED WITH AN INVESTMENT IN EACH FUND), CONTACT THE FUND AT 1-800-370-0612
OR YOUR INVESTMENT PROFESSIONAL FOR THE FUND'S CURRENT PROSPECTUS. PLEASE READ
IT CAREFULLY BEFORE INVESTING. PAST PERFORMANCE SHOWN IN THIS REPORT SHOULD NOT
BE CONSIDERED A REPRESENTATION OF FUTURE PERFORMANCE. INVESTMENT RETURN AND
PRINCIPAL VALUE OF SHARES WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
GENERAL INFORMATION REGARDING EACH FUND'S PORTFOLIO, UPDATED MONTHLY, IS
AVAILABLE BY CALLING PRINCETON ADMINISTRATORS, L.P.,
AT 1-800-543-6217 OR 1-609-282-4600.
