<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
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.
THE ACCOMPANYING FINANCIALS AS OF JUNE 30, 1997, WERE NOT AUDITED AND,
ACCORDINGLY, NO OPINION IS EXPRESSED ON THEM.
[LOGO]
JUNDT
GROWTH FUND
JUNDT
U.S. EMERGING
GROWTH FUND
JUNDT
OPPORTUNITY FUND
SEMI-ANNUAL REPORT
JUNE 30, 1997
SEARCHING TODAY FOR THE
GENIUSES OF TOMORROW-SM-
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder,
This semiannual letter provides Jundt Associates with an opportunity to review
the performance and strategies of the Jundt mutual funds since the end of 1996.
The first half of 1997 saw the market continue its preference for large
capitalization companies. Because of the effects of indexing, the 50 largest
companies in the S&P 500 Stock Index continued to drive the market higher. The
returns for the Jundt mutual funds reflect the difficult first four months of
the year. Beginning in May and continuing to the present, the market began to
broaden, and our funds have shown very strong absolute and relative performance
gains. For instance, if July results are included, the Opportunity Fund's Class
A shares total return was up 38.1%* year-to-date versus 18.2% for the Lipper
Capital Appreciation Fund Index. For the same period, the U.S. Emerging Growth
Fund's Class A shares gained 31.8%* on a total return basis compared to 12.2%
for the Lipper Small Cap Growth Fund Index. The large cap oriented Growth Fund
Class I shares total return also surpassed both the Lipper Growth Fund Index and
the S&P 500 Stock Index for the month of July. The year-to-date performance of
the Growth Fund's Class I shares was 17.5%* for seven months ending July 31,
1997. On a longer-term basis, we continue to believe that quality growth stocks
represent the best value among various investment alternatives.
JUNDT GROWTH FUND
As in 1996, the market in 1997, at least through April, placed great importance
and value on size. The blue chip stocks continued their march upward while the
market essentially overlooked many of the fine growth stocks in your portfolio.
The second quarter began with a correction as interest rates broke through 7%
after the Federal Reserve Board raised rates in late March. When the Federal
Reserve Board did not raise rates again as predicted in May, due to weakening
economic numbers, the stock and bond markets rallied dramatically. The Dow Jones
Industrial Average increased from 6,300 to almost 8,000 over an eight-week
period. The breadth of the market rally also expanded in May and June, aiding
performance in the Growth Fund, where the Class I shares experienced a 10.8%*
total return during the second quarter. The six-month total return was 4.5%.*
The Lipper Growth Fund Index rose by 15.4% for the first six months of 1997.
The Growth Fund's holdings in oil service, telecommunications and healthcare
were the strongest contributors to performance in the second quarter.
JUNDT U.S. EMERGING GROWTH FUND
The first half of 1997 was a difficult period for most small cap investors. The
underperformance that started in the second half of 1996 continued through the
first four months of the year, accentuated by massive index fund buying.
Following very good performance in 1996, which saw the U.S. Emerging Growth
Fund's Class A shares up more than 43%* versus 14.5% for the Lipper Small Cap
Fund Index, the U.S. Emerging Growth Fund's net asset value lost some ground in
the first quarter after the Federal Reserve Board raised interest rates.
However, in the second quarter, when the economy showed signs of slowing, the
U.S. Emerging Growth Fund's performance turned
*Without applicable sales charges.
<PAGE>
LETTER TO SHAREHOLDERS (concluded)
- --------------------------------------------------------------------------------
dramatically. The U.S. Emerging Growth Fund's Class A shares posted a total
return of more than 20%* for the second quarter versus a gain of 17.1% for the
Lipper Small Cap Fund Index. Purchases that we made at attractive valuations in
April definitely paid off. With many small cap growth funds flat to down for the
first six months of 1997, the U.S. Emerging Growth Fund's Class A net asset
value on a total return basis was up approximately 13%* compared to a 6% return
on the Lipper Small Cap Fund Index.
The economic backdrop of slow growth and low inflation historically has been
ideal for small cap growth stocks. As a result, we are positive about the second
half of 1997 and beyond.
JUNDT OPPORTUNITY FUND
The Opportunity Fund's investment objective is to provide capital appreciation.
The Opportunity Fund may take positions that are different from those taken by
most other mutual funds. For example, the Opportunity Fund may sell the stocks
of some issuers short and may take positions in options and futures contracts in
anticipation of a market decline. The Opportunity Fund also may borrow money
to purchase portfolio securities. Additionally, being a nondiversified mutual
fund, the Opportunity Fund may from time to time hold larger individual stock
positions than a diversified mutual fund.
The first half of 1997 was the initial phase of operations for the Opportunity
Fund. Jundt Associates found suitable investment opportunities, as the
Opportunity Fund's 14.8%* Class A total return for the six months would
indicate. The comparable return of the Lipper Capital Appreciation Fund Index
was 10.2%.
With the change in the investment climate that occurred in late April, we
employed a more aggressive strategy and leveraged the portfolio to take
advantage of the market upswing. The Opportunity Fund also has taken larger than
normal positions in a number of companies.
The unprecedented cyclical growth in profits during the past six years appears
to be moderating. In the past, this type of economic environment has led
investors to place greater emphasis on growth stocks.
We again thank you for placing your trust in Jundt Associates. We value your
business and will continue to diligently and prudently manage your assets.
Sincerely,
/s/ James R. Jundt
James R. Jundt
Chairman
*Without applicable sales charges.
<PAGE>
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 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. See the Fund's prospectus for a description of the risks that may be
associated with an investment in the Fund.
INDUSTRY SECTORS REPRESENTED IN THE FUND'S PORTFOLIO ON JUNE 30, 1997
(AS A PERCENTAGE OF NET ASSETS)
- --------------------------------------------------------------------------------
[CHART]
Restaurants 3.9%
Healthcare Services 6.3%
Retail 9.2%
Telecommunications 14.6%
Energy 16.2%
Miscellaneous 2.0%
Computer Services/Hardware & Software 17.9%
Internet Technology 1.9%
Medical Devices/Drugs 18.5%
3
<PAGE>
PERFORMANCE DATA: GROWTH FUND (unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[GRAPH]
<TABLE>
<CAPTION>
9/3/91 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 6/30/97
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JUNDT GROWTH FUND(1)
(Class I shares without sales charge)* $ 10,000 $ 11,073 $ 11,152 $ 11,159 $ 11,681 $ 13,761 $ 15,857 $ 16,575
JUNDT GROWTH FUND(1)
(Class I shares with sales charge) 9,475 10,492 10,567 10,573 11,068 13,039 15,024 15,705
RUSSELL 1000 INDEX(2) 10,000 10,756 11,728 12,919 12,968 17,865 21,876 25,947
LIPPER GROWTH FUND INDEX(3) 10,000 10,801 11,625 13,017 12,813 16,997 19,968 23,043
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS (for periods ended June 30, 1997)
- --------------------------------------------------------------------------------
SINCE SINCE
1-YEAR 5-YEAR INCEPTION(4) INCEPTION(5)
(Fund-9/3/91; (Fund-12/29/95;
Index-8/31/91) Index-12/31/95)
- -------------------------------------------------------------------------------
JUNDT GROWTH CLASS A
Without sales charge* 8.01% -- -- 14.06%
With sales charge (a) 2.34 -- -- 10.04
- -------------------------------------------------------------------------------
JUNDT GROWTH CLASS B
Without sales charge* 7.28 -- -- 13.30
With sales charge (b) 3.28 -- -- 10.80
- -------------------------------------------------------------------------------
JUNDT GROWTH CLASS C
Without sales charge* 7.29 -- -- 13.21
With sales charge (c) 6.29 -- -- 13.21
- -------------------------------------------------------------------------------
JUNDT GROWTH CLASS I
Without sales charge* 8.30 10.92% 9.06% --
With sales charge (a) 2.61 9.73 8.05 --
- -------------------------------------------------------------------------------
RUSSELL 1000 INDEX 32.26 19.45 17.76 28.25
- -------------------------------------------------------------------------------
LIPPER GROWTH FUND INDEX 25.57 17.20 15.39 22.49
- -------------------------------------------------------------------------------
*Applicable to investors who purchased shares at net asset value (without sales
charges), including Class I shareholders at the time of the Fund's conversion to
an open-end fund on December 29, 1995.
(a) maximum initial sales charge of 5.25%.
(b) a contingent deferred sales charge of up to 4% will be imposed if shares are
redeemed within six years of purchase.
(c) a contingent deferred sales charge of 1% will be imposed if shares are
redeemed within one year of purchase.
(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 (currently,
Class A, B, C and I). Class A, Class B and Class C performance will vary from
Class I 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 I shares and
August 31, 1991 for index data.
(5) Inception dates are December 29, 1995 for the Fund's Class A, Class B and
Class C 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
<PAGE>
JUNDT GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS
Industry Description and Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
CLIENT SERVER SOFTWARE (4.7%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
HBO & Company 38,800 $ 2,282,761 $ 2,672,350
Peoplesoft Inc. (b) 27,600 717,127 1,455,900
--------------------------------
2,999,888 4,128,250
--------------------------------
COMPUTER HARDWARE (4.3%)
- -------------------------------------------------------------------------------------------------------------------
Dell Computer Corporation (b) 13,900 1,323,473 1,632,381
Intel Corporation 6,000 952,909 850,875
Texas Instruments Incorporated 15,300 1,309,442 1,286,156
--------------------------------
3,585,824 3,769,412
--------------------------------
COMPUTER SERVICES/SOFTWARE (5.7%)
- -------------------------------------------------------------------------------------------------------------------
Computer Sciences Corporation (b) 21,700 1,652,059 1,565,112
McAfee Associates, Inc. (b) 23,500 1,320,807 1,483,437
Microsoft Corporation (b) 8,700 523,144 1,099,463
Sterling Commerce, Inc. (b) 27,800 812,269 913,925
--------------------------------
4,308,279 5,061,937
--------------------------------
DATABASE SOFTWARE (3.2%)
- -------------------------------------------------------------------------------------------------------------------
Oracle Corporation (b) 56,375 2,188,402 2,839,891
--------------------------------
ENERGY (16.2%)
- -------------------------------------------------------------------------------------------------------------------
Baker Hughes Incorporated 30,100 1,004,581 1,164,494
ENSCO International Incorporated (b) 21,300 902,696 1,123,575
Global Marine Inc. (b) 88,400 1,711,900 2,055,300
Rowan Companies, Inc. (b) 106,300 2,551,118 2,996,331
Santa Fe International Corporation (b) 27,200 874,396 924,800
Schlumberger Limited 25,600 2,526,505 3,200,000
Smith International, Inc. (b) 45,600 1,541,555 2,770,200
--------------------------------
11,112,751 14,234,700
--------------------------------
</TABLE>
See accompanying notes to schedule of investments.
5
<PAGE>
JUNDT GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (CONTINUED)
Industry Description and Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
HEALTHCARE SERVICES (5.4%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Inc. 16,400 $ 1,428,136 $ 1,678,950
Oxford Health Plans, Inc. (b) 19,100 1,170,054 1,370,425
PhyCor, Inc. (b) 10,250 301,307 352,984
United Healthcare Corporation 25,200 1,286,569 1,310,400
--------------------------------
4,186,066 4,712,759
--------------------------------
INTERACTIVE MEDIA (1.0%)
- -------------------------------------------------------------------------------------------------------------------
CUC International Inc. (b) 34,300 820,385 885,369
--------------------------------
INTERNET TECHNOLOGY (1.9%)
- -------------------------------------------------------------------------------------------------------------------
Netscape Communications Corporation (b) 52,000 1,676,955 1,667,250
--------------------------------
MEDICAL DEVICES/DRUGS (18.5%)
- -------------------------------------------------------------------------------------------------------------------
Agouron Pharmaceuticals, Inc. (b) 17,400 1,297,849 1,407,225
BioChem Pharmaceutical Inc. (b) 37,400 815,382 832,150
Biogen, Inc. (b) 64,800 2,175,715 2,195,100
Boston Scientific Corporation (b) 14,300 695,664 878,556
Eli Lilly and Company 29,400 2,190,180 3,213,787
Genzyme Corporation (b) 33,100 988,940 918,525
Guidant Corporation 16,200 1,361,422 1,377,000
Medtronic, Inc. 17,100 1,004,707 1,385,100
Merck & Co., Inc. 28,900 2,494,846 2,991,150
Pfizer Inc. 8,700 836,565 1,039,650
--------------------------------
13,861,270 16,238,243
--------------------------------
RESTAURANTS (3.9%)
- -------------------------------------------------------------------------------------------------------------------
Starbucks Corp. (b) 87,300 2,278,887 3,399,244
--------------------------------
RETAIL (9.2%)
- -------------------------------------------------------------------------------------------------------------------
Lowe's Companies, Inc. 46,700 1,651,478 1,733,738
Staples, Inc. (b) 80,462 1,501,734 1,870,742
The Home Depot, Inc. 65,483 2,809,521 4,514,234
--------------------------------
5,962,733 8,118,714
--------------------------------
</TABLE>
See accompanying notes to schedule of investments.
6
<PAGE>
JUNDT GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (CONCLUDED)
Industry Description and Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION INFRASTRUCTURE (10.5%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ADC Telecommunications, Inc. (b) 42,500 $ 1,276,408 $ 1,418,437
Cisco Systems, Inc. (b) 28,500 1,787,465 1,913,063
Lucent Technologies Inc. 27,900 1,765,700 2,010,544
Newbridge Networks Corporation (b) 20,200 840,087 878,700
Tellabs, Inc. (b) 53,300 1,372,042 2,978,138
--------------------------------
7,041,702 9,198,882
--------------------------------
WIRELESS/TELECOMMUNICATION SERVICES (4.1%)
- -------------------------------------------------------------------------------------------------------------------
AirTouch Communications, Inc. (b) 35,800 874,035 980,025
WorldCom, Inc. (b) 83,600 1,585,592 2,675,200
--------------------------------
2,459,627 3,655,225
--------------------------------
MISCELLANEOUS (1.0%)
- -------------------------------------------------------------------------------------------------------------------
MBNA Corporation 24,300 845,782 889,987
--------------------------------
TOTAL COMMON STOCKS (89.6%) 63,328,551 78,799,863
--------------------------------
--------------------------------
</TABLE>
See accompanying notes to schedule of investments.
7
<PAGE>
JUNDT GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONCLUDED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONVERTIBLE CORPORATE BONDS
Principal Amount/
Industry Description and Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
HEALTHCARE SERVICES (0.9%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PhyCor Inc., 4.50%, 2/15/03 $ 720,000 $ 730,245 $ 784,800
--------------------------------
TOTAL CONVERTIBLE CORPORATE BONDS (0.9%) 730,245 784,800
--------------------------------
--------------------------------
SHORT-TERM SECURITIES
Issue
- ------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT (9.9%)
- ------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Merrill Lynch
Government Securities, Inc., 5.50% acquired on
6/30/97 and due 7/1/97 with accrued interest of
$1,335 (collateralized by $8,740,000 U.S. Treasury
note 6.00%, due 8/31/97, value including accrued
interest, $9,088,650) 8,736,000 8,736,000 8,736,000
--------------------------------
MONEY MARKET FUND (0.0%)
- -------------------------------------------------------------------------------------------------------------------
Norwest Treasury Fund, 5.00% (c) 29 29 29
--------------------------------
TOTAL SHORT-TERM SECURITIES (9.9%) 8,736,029 8,736,029
--------------------------------
--------------------------------
Total investments in securities (100.4%) $ 72,794,825 (d) 88,320,692
------------
------------
Liabilities in excess of other assets (-0.4%) (381,908)
------------
NET ASSETS (100.0%) $87,938,784
-----------
-----------
</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) Rate changes to reflect market conditions. Rate disclosed is
as of June 30, 1997.
(d) Cost for federal income tax purposes at June 30, 1997 was
$72,794,825. The aggregate gross unrealized appreciation and
depreciation on investments in securities based on this cost were:
--------------------------------------------------------------
Gross unrealized appreciation $15,818,252
Gross unrealized depreciation (292,385)
-----------
Net unrealized appreciation $15,525,867
--------------------------------------------------------------
8
<PAGE>
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 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. Investments in smaller-capitalization companies may
experience greater daily price fluctuations than investments in larger
companies. See the Fund's prospectus for a description of the risks that may be
associated with an investment in the Fund.
INDUSTRY SECTORS REPRESENTED IN THE FUND'S PORTFOLIO ON JUNE 30, 1997
(AS A PERCENTAGE OF NET ASSETS)
- --------------------------------------------------------------------------------
[CHART]
Healthcare Services 5.3%
Restaurants 6.3%
Retail 7.0%
Internet Technology 7.4%
Energy 11.1%
Telecommunications 12.2%
Medical Devices/Drugs 14.0%
Miscellaneous 2.5%
Computer Services/Software 23.4%
9
<PAGE>
PERFORMANCE DATA: U.S. EMERGING GROWTH FUND (UNAUDITED)
- --------------------------------------------------------------------------------
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[GRAPH]
1/2/96 12/31/96 6/30/97
-------- -------- --------
JUNDT U.S. EMERGING GROWTH FUND(1)
(Class A shares without sales charge)* $ 10,000 $ 14,340 $ 16,199
JUNDT U.S. EMERGING GROWTH FUND(1)
(Class A shares with sales charge) 9,475 13,588 15,349
RUSSELL 2000 INDEX(2) 10,000 11,649 12,838
LIPPER SMALL CAP GROWTH FUND INDEX(3) 10,000 11,451 12,128
AVERAGE ANNUAL TOTAL RETURNS (for periods ended June 30, 1997)
- --------------------------------------------------------------------------------
[GRAPH]
Since
1-year Inception(4)
(Fund-1/2/96;
Index-12/31/95)
- -------------------------------------------------------------------------------
JUNDT U.S EMERGING GROWTH CLASS A
Without sales charge* 8.07% 38.14%
With sales charge (a) 2.39 33.24
- -------------------------------------------------------------------------------
JUNDT U.S EMERGING GROWTH CLASS B
Without sales charge* 7.35 37.46
With sales charge (b) 3.57 35.16
- -------------------------------------------------------------------------------
JUNDT U.S EMERGING GROWTH CLASS C
Without sales charge* 7.44 37.41
With sales charge (c) 6.49 37.41
- -------------------------------------------------------------------------------
JUNDT U.S EMERGING GROWTH CLASS I 8.46 38.85
- -------------------------------------------------------------------------------
RUSSELL 2000 INDEX 16.33 18.12
- -------------------------------------------------------------------------------
LIPPER SMALL CAP GROWTH FUND INDEX 6.35 13.72
- -------------------------------------------------------------------------------
*Applicable to investors who purchased shares at net asset value (without sales
charges).
(a) maximum initial sales charge of 5.25%.
(b) a contingent deferred sales charge of up to 4% will be imposed if shares are
redeemed within six years of purchase.
(c) a contingent deferred sales charge of 1% will be imposed if shares are
redeemed within one year of purchase.
(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 B shares (reflecting
the deduction of the maximum deferred sales charge of 4%), Class C shares and
Class I shares (which are not subject to any sales charges) over the same time
period was $15,681, $16,073 and $16,324, 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 Cap 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.
10
<PAGE>
JUNDT U.S. EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS
Industry Description and Issue Number of Shares Cost Market Value (a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLIENT SERVER SOFTWARE (1.9%)
- ------------------------------------------------------------------------------------------------------------------
Peoplesoft Inc. (b) 5,600 $ 264,449 $ 295,400
--------------------------------
COMPUTER SERVICES/SOFTWARE (21.5%)
- ------------------------------------------------------------------------------------------------------------------
Aurum Software, Inc. (b) 9,500 119,938 228,000
Clarify Inc. (b) 27,500 327,886 311,094
Compuware Corporation (b) 6,200 298,815 296,050
Great Plains Software, Inc. (b) 12,500 200,000 337,500
McAfee Associates, Inc. (b) 5,900 203,117 372,438
Remedy Corporation (b) 15,700 594,890 628,000
Siebel Systems, Inc. (b) 20,600 386,250 664,350
The Vantive Corporation (b) 20,400 499,159 576,300
--------------------------------
2,630,055 3,413,732
--------------------------------
ENERGY (11.1%)
- ------------------------------------------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc. (b) 7,800 448,348 609,375
Falcon Drilling Company, Inc. (b) 3,000 155,310 172,875
Global Marine Inc. (b) 11,500 275,728 267,375
Rowan Companies, Inc. (b) 19,500 476,286 549,656
Transocean Offshore Inc. 2,200 139,527 159,775
--------------------------------
1,495,199 1,759,056
--------------------------------
HEALTHCARE SERVICES (5.3%)
- ------------------------------------------------------------------------------------------------------------------
Oxford Health Plans, Inc. (b) 3,300 226,769 236,775
PAREXEL International Corporation (b) 6,100 180,775 193,675
Quintiles Transnational Corp. (b) 6,000 347,500 417,750
--------------------------------
755,044 848,200
--------------------------------
INTERNET TECHNOLOGY (7.4%)
- ------------------------------------------------------------------------------------------------------------------
Netscape Communications Corporation (b) 13,400 401,089 429,637
Security Dynamics Technologies, Inc. (b) 20,000 562,500 737,500
--------------------------------
963,589 1,167,137
--------------------------------
MEDICAL DEVICES/DRUGS (14.0%)
- ------------------------------------------------------------------------------------------------------------------
Agouron Pharmaceuticals, Inc. (b) 7,700 525,309 622,738
BioChem Pharmaceutical Inc. (b) 33,200 687,089 738,700
Biogen, Inc. (b) 10,000 313,000 338,750
Dura Pharmaceuticals, Inc. (b) 5,000 184,375 199,375
Spine-Tech, Inc. (b) 8,600 258,233 319,275
--------------------------------
1,968,006 2,218,838
--------------------------------
</TABLE>
See accompanying notes to schedule of investments.
11
<PAGE>
JUNDT U.S. EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (CONCLUDED)
Industry Description and Issue Number of Shares Cost Market Value (a)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESTAURANTS (6.3%)
- ------------------------------------------------------------------------------------------------------------------
Famous Dave's of America, Inc. (b) 65,100 $ 499,575 $ 846,300
Starbucks Corp. (b) 4,000 138,900 155,750
--------------------------------
638,475 1,002,050
--------------------------------
RETAIL (7.0%)
- ------------------------------------------------------------------------------------------------------------------
Guitar Center, Inc. (b) 17,600 273,075 297,000
Petco Animal Supplies, Inc. (b) 21,200 524,268 636,000
Polo Ralph Lauren Corporation (b) 6,700 174,200 183,412
--------------------------------
971,543 1,116,412
--------------------------------
TELECOMMUNICATION INFRASTRUCTURE (1.9%)
- ------------------------------------------------------------------------------------------------------------------
Advanced Fibre Communications, Inc. (b) 2,700 149,512 163,013
CIENA Corporation (b) 3,000 126,750 141,375
--------------------------------
276,262 304,388
--------------------------------
WIRELESS/TELECOMMUNICATION SERVICES (10.3%)
- ------------------------------------------------------------------------------------------------------------------
Genesys Telecommunications Laboratories, Inc. (b) 20,250 364,500 561,937
Pacific Gateway Exchange, Inc. (b) 6,300 153,840 177,975
Sykes Enterprises, Incorporated (b) 11,100 267,776 288,600
Teleport Communications Group Inc. (b) 18,000 483,000 614,250
--------------------------------
1,269,116 1,642,762
--------------------------------
MISCELLANEOUS (2.5%)
- ------------------------------------------------------------------------------------------------------------------
ABR Information Services, Inc. (b) 13,600 289,000 394,400
--------------------------------
TOTAL COMMON STOCKS (89.2%) 11,520,738 14,162,375
--------------------------------
--------------------------------
</TABLE>
See accompanying notes to schedule of investments.
12
<PAGE>
JUNDT U.S. EMERGING GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONCLUDED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM SECURITIES
Principal Amount/
Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REPURCHASE AGREEMENT (6.5%)
- -------------------------------------------------------------------------------------------------------------------
Repurchase agreement with Merrill Lynch
Government Securities, Inc., 5.50% acquired
on 6/30/97 and due 7/1/97 with accrued interest
of $159 (collateralized by $1,040,000 U.S. Treasury
Note 6.00%, due 8/31/97, value including
accrued interest, $1,081,487) $1,040,000 $ 1,040,000 $ 1,040,000
--------------------------------
MONEY MARKET FUND (0.0%)
- ------------------------------------------------------------------------------------------------------------------
Norwest Treasury Fund, 5.00% (c) 819 819 819
--------------------------------
TOTAL SHORT-TERM SECURITIES (6.5%) 1,040,819 1,040,819
--------------------------------
--------------------------------
Total investments in securities (95.7%) $ 12,561,557 (d) 15,203,194
------------
------------
Assets in excess of other liabilities (4.3%) 681,256
------------
NET ASSETS (100.0%) $ 15,884,450
------------
------------
</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) Rate changes to reflect market conditions. Rate disclosed is
as of June 30, 1997.
(d) Cost for federal income tax purposes at June 30, 1997 was
$12,561,557. The aggregate gross unrealized appreciation and
depreciation on investments in securities based on this cost were:
------------------------------------------------------------
Gross unrealized appreciation $2,669,547
Gross unrealized depreciation (27,910)
----------
Net unrealized appreciation $2,641,637
------------------------------------------------------------
13
<PAGE>
JUNDT ASSOCIATES' APPROACH TO INVESTING: OPPORTUNITY FUND
- --------------------------------------------------------------------------------
THE 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 Opportunity Fund may at times mirror those
in the Growth and the U.S. Emerging Growth Funds, the 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 Jundt
Associates, the Investment Adviser, to enable the Opportunity Fund to achieve
its objective of capital appreciation. However, the use of any of these
investment techniques involves unique investment risk to the Fund and its
shareholders. See the Fund's prospectus for a description of the risks that may
be associated with an investment in the Fund.
INDUSTRY SECTORS REPRESENTED IN THE FUND'S PORTFOLIO ON JUNE 30, 1997
(AS A PERCENTAGE OF NET ASSETS)
- --------------------------------------------------------------------------------
[CHART]
Retail 3.9%
Restaurants 8.7%
Internet Technology 9.2%
Telecommunications 11.8%
Energy 14.6%
Computer Hardware 2.5%
Miscellaneous 17.4%
Medical Devices/Drugs 17.9%
Healthcare Services 1.8%
Computer Services/Software 24.7%
14
<PAGE>
PERFORMANCE DATA: OPPORTUNITY FUND (UNAUDITED)
- --------------------------------------------------------------------------------
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
[GRAPH]
12/26/96 6/30/97
-------- -------
JUNDT OPPORTUNITY FUND(1)
(Class A shares without sales charge)* $ 10,000 $ 11,330
JUNDT OPPORTUNITY FUND(1)
(Class A shares with sales charge) 9,475 10,735
LIPPER CAPITAL APPRECIATION FUND INDEX(2) 10,000 11,027
AGGREGATE TOTAL RETURNS (for period ended June 30, 1997)
- --------------------------------------------------------------------------------
Since
Inception(3)
(12/26/96)
- --------------------------------------------------------------------------------
JUNDT OPPORTUNITY CLASS A
Without sales charge* 13.30%
With sales charge (a) 7.35
- --------------------------------------------------------------------------------
JUNDT OPPORTUNITY CLASS B
Without sales charge* 12.90
With sales charge (b) 8.90
- --------------------------------------------------------------------------------
JUNDT OPPORTUNITY CLASS C
Without sales charge* 12.90
With sales charge (c) 11.90
- --------------------------------------------------------------------------------
JUNDT OPPORTUNITY CLASS I 13.50
- --------------------------------------------------------------------------------
LIPPER CAPITAL APPRECIATION
FUND INDEX 10.27
- --------------------------------------------------------------------------------
*Applicable to investors who purchased shares at net asset value (without sales
charges).
(a) maximum initial sales charge of 5.25%.
(b) a contingent deferred sales charge of up to 4% will be imposed if shares
are redeemed within six years of purchase.
(c) a contingent deferred sales charge of 1% will be imposed if shares are
redeemed within one year of purchase.
(1) Total return is based on a hypothetical investment at the Fund's inception
on December 26, 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 B shares
(reflecting the deduction of the maximum deferred sales charge of 4%), Class C
shares (reflecting the deduction of the maximum deferred sales charge of 1%) and
Class I shares (which are not subject to any sales charges) over the same time
period was $10,890, $11,190 and $11,350, respectively.
(2) The Lipper Capital Appreciation Fund Index is the composite performance of
the 30 largest "capital appreciation" 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 26, 1996.
(3) Inception date is December 26, 1996 for both the Fund's shares and 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.
15
<PAGE>
JUNDT OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS
Industry Description and Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE (2.5%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dell Computer Corporation (b) 600 $ 64,320 $ 70,463
Intel Corporation 200 31,745 28,363
-----------------------------
96,065 98,826
-----------------------------
CLIENT SERVER SOFTWARE (3.0%)
- -------------------------------------------------------------------------------------------------------------------
Peoplesoft Inc. (b) 2,200 103,793 116,050
-----------------------------
COMPUTER SERVICES/SOFTWARE (17.8%)
- -------------------------------------------------------------------------------------------------------------------
Aurum Software, Inc. (b) 7,000 95,861 168,000
Clarify Inc. (b) 6,600 78,859 74,662
Compuware Corporation (b) 1,500 72,294 71,625
McAfee Associates, Inc. (b) 2,800 144,175 176,750
Remedy Corporation (b) 5,100 178,725 204,000
-----------------------------
569,914 695,037
-----------------------------
DATABASE SOFTWARE (3.9%)
- -------------------------------------------------------------------------------------------------------------------
Oracle Corporation (b) 3,000 131,625 151,125
-----------------------------
ENERGY (14.6%)
- -------------------------------------------------------------------------------------------------------------------
Diamond Offshore Drilling, Inc. (b) 1,600 98,946 125,000
ENSCO International Incorporated (b) 1,000 42,810 52,750
Global Industries, Ltd. (b) 2,600 57,737 60,734
Global Marine Inc. (b) 2,000 40,995 46,500
Rowan Companies, Inc. (b) 4,400 93,236 124,025
Schlumberger Limited 1,000 107,810 125,000
Santa Fe International Corporation (b) 1,100 35,466 37,400
-----------------------------
477,000 571,409
-----------------------------
HEALTHCARE SERVICES (1.8%)
- -------------------------------------------------------------------------------------------------------------------
Aetna Inc. 700 65,517 71,662
-----------------------------
INTERNET TECHNOLOGY (9.2%)
- -------------------------------------------------------------------------------------------------------------------
Netscape Communications Corporation (b) 5,300 168,810 169,931
Security Dynamics Technologies, Inc. (b) 5,100 154,837 188,063
-----------------------------
323,647 357,994
-----------------------------
</TABLE>
See accompanying notes to schedule of investments.
16
<PAGE>
JUNDT OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCKS (CONCLUDED)
Industry Description and Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
MEDICAL DEVICES/DRUGS (17.9%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Agouron Pharmaceuticals, Inc. (b) 2,000 $ 133,250 $ 161,750
BioChem Pharmaceutical Inc. (b) 6,200 128,470 137,950
Biogen, Inc. (b) 5,900 226,650 199,862
Guidant Corporation (b) 700 58,674 59,500
Spine-Tech, Inc. (b) 1,800 55,800 66,825
Warner-Lambert Company 600 58,949 74,550
-----------------------------
661,793 700,437
-----------------------------
RESTAURANTS (8.7%)
- -------------------------------------------------------------------------------------------------------------------
Famous Dave's of America, Inc. (b) 18,500 155,138 240,500
Starbucks Corp. (b) 2,500 82,350 97,344
-----------------------------
237,488 337,844
-----------------------------
RETAIL (3.9%)
- -------------------------------------------------------------------------------------------------------------------
Polo Ralph Lauren Corporation (b) 3,000 81,930 82,125
The Home Depot, Inc. 1,000 53,310 68,938
-----------------------------
135,240 151,063
-----------------------------
TELECOMMUNICATION INFRASTRUCTURE (7.4%)
- -------------------------------------------------------------------------------------------------------------------
ADC Telecommunications, Inc. (b) 3,000 92,625 100,125
CIENA Corporation (b) 700 17,587 32,987
Newbridge Networks Corporation (b) 3,600 156,402 156,600
-----------------------------
266,614 289,712
-----------------------------
WIRELESS/TELECOMMUNICATION SERVICES (4.4%)
- -------------------------------------------------------------------------------------------------------------------
Teleport Communications Group Inc. (b) 5,000 158,125 170,625
-----------------------------
MISCELLANEOUS (17.4%)
- -------------------------------------------------------------------------------------------------------------------
Racing Champions Corporation (b) 29,000 406,000 449,500
Ryanair Holdings PLC - ADR (b) (c) 2,000 29,460 54,250
Waste Industries, Inc. (b) 10,000 135,000 176,250
-----------------------------
570,460 680,000
-----------------------------
TOTAL COMMON STOCKS (112.5%) 3,797,281 4,391,784
-----------------------------
-----------------------------
</TABLE>
See accompanying notes to schedule of investments.
17
<PAGE>
JUNDT OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONCLUDED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM SECURITY
Issue Number of Shares Cost Market Value (a)
- -------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND (0.1%)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Norwest Treasury Fund, 5.00% (d) 3,400 $ 3,400 $ 3,400
------------------------------
TOTAL SHORT-TERM SECURITY (0.1%) 3,400 3,400
------------------------------
------------------------------
Total investments in securities (112.6%) $3,800,681 (e) 4,395,184
----------
Liabilities in excess of other assets (-12.6%) (491,027)
------------
NET ASSETS (100.0%)
$ 3,904,157
------------
------------
</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) American Depositary Receipt.
(d) Rate changes to reflect market conditions. Rate disclosed
is as of June 30, 1997.
(e) Cost for federal income tax purposes as of June 30, 1997
was $3,800,681. The aggregate gross unrealized appreciation and
depreciation on investments in securities based on this cost were:
----------------------------------------------------------------------
Gross unrealized appreciation $629,538
Gross unrealized depreciation (35,035)
--------
Net unrealized appreciation $594,503
----------------------------------------------------------------------
18
<PAGE>
FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1997
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
Jundt Jundt U.S. Jundt
Growth Fund Emerging Growth Fund Opportunity Fund
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------------------------
Investment in securities, at market value (note 2)
including repurchase agreements of $8,736,000,
$1,040,000 and $0, respectively (identified cost:
$72,794,825, $12,561,557 and $3,800,681, respectively) $88,320,692 $ 15,203,194 $ 4,395,184
Cash -- -- 3,275
Receivable for capital shares sold 34,010 45,764 105,112
Receivable for securities sold -- 694,905 71,185
Dividends and accrued interest receivable 41,541 295 406
Receivable from investment adviser -- 20,678 20,230
Deferred organization costs -- 60,834 69,401
Prepaid expenses 22,605 18,695 --
-----------------------------------------------------
Total assets 88,418,848 16,044,365 4,664,793
-----------------------------------------------------
LIABILITIES
- -------------------------------------------------------------------------------------------------------------------------
Loan payable (note 5) -- -- 603,373
Payable for capital shares redeemed 250,534 23,967 3,291
Payable for securities purchased -- 35,086 87,589
Accrued investment advisory fee 71,720 12,366 3,930
Accrued administrative fee 14,344 2,473 605
Interest payable (note 5) -- -- 3,074
Accrued distribution fee 151 3,516 313
Accrued expenses and other liabilities 143,315 82,507 58,461
-----------------------------------------------------
Total liabilities 480,064 159,915 760,636
-----------------------------------------------------
Net assets applicable to outstanding capital stock $87,938,784 $ 15,884,450 $ 3,904,157
-----------------------------------------------------
-----------------------------------------------------
NET ASSETS CONSIST OF
- -------------------------------------------------------------------------------------------------------------------------
Capital stock (note 1) $72,496,255 $ 13,155,172 $ 3,533,126
Net investment loss (479,902) (68,881) (21,400)
Accumulated net realized gain (loss) on investments 396,564 156,522 (202,072)
Unrealized appreciation on investments 15,525,867 2,641,637 594,503
-----------------------------------------------------
Total, representing net assets applicable to
outstanding capital stock $87,938,784 $ 15,884,450 $ 3,904,157
-----------------------------------------------------
-----------------------------------------------------
Net assets applicable to outstanding Class A shares $ 401,416 $ 1,612,375 $ 377,169
-----------------------------------------------------
-----------------------------------------------------
Net assets applicable to outstanding Class B shares $ 95,022 $ 2,188,407 $ 196,545
-----------------------------------------------------
-----------------------------------------------------
Net assets applicable to outstanding Class C shares $ 18,350 $ 1,849,478 $ 184,585
-----------------------------------------------------
-----------------------------------------------------
Net assets applicable to outstanding Class I shares $87,423,996 $ 10,234,190 $ 3,145,858
-----------------------------------------------------
-----------------------------------------------------
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
- -------------------------------------------------------------------------------------------------------------------------
Class A shares of capital stock outstanding:
28,166, 114,926 and 33,291, respectively $ 14.25 $ 14.03 $ 11.33
-----------------------------------------------------
-----------------------------------------------------
Class B shares of capital stock outstanding:
6,736, 157,200 and 17,404, respectively $ 14.11 $ 13.92 $ 11.29
-----------------------------------------------------
-----------------------------------------------------
Class C shares of capital stock outstanding:
1,302, 132,972 and 16,344, respectively $ 14.09 $ 13.91 $ 11.29
-----------------------------------------------------
-----------------------------------------------------
Class I shares of capital stock outstanding:
6,107,949, 723,074 and 277,265, respectively $ 14.31 $ 14.15 $ 11.35
-----------------------------------------------------
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements. 19
<PAGE>
FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
Jundt Jundt U.S. Jundt
For the six months ended 6/30/97 Growth Fund Emerging Growth Fund Opportunity Fund
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
- -------------------------------------------------------------------------------------------------------------------------
Interest $ 255,301 $ 56,303 $ 9,160
Dividends 134,415 264 1,890
-----------------------------------------------------
389,716 56,567 11,050
-----------------------------------------------------
EXPENSES (note 4)
- -------------------------------------------------------------------------------------------------------------------------
Investment advisory fee 452,756 68,368 17,338
Transfer agent fee 127,597 68,434 32,965
Administrative fee 90,551 13,674 2,667
Audit and legal fees 66,655 11,234 9,460
Registration fee 39,788 36,946 36,668
Directors' fees 32,704 5,886 3,597
Reports to shareholders 25,233 4,095 396
Custodian fee 13,934 8,335 7,060
Amortization of deferred organizational costs -- 8,601 22,756
Account maintenance fee:
Class A 497 1,634 339
Class B 63 2,328 75
Class C 9 2,133 175
Distribution fee:
Class B 190 6,985 225
Class C 26 6,398 525
Other 19,615 15,976 14,592
-----------------------------------------------------
Total expenses before interest expense
and reimbursement 869,618 261,027 148,838
Interest expense (note 5) -- -- 5,513
Reimbursement of expenses -- (135,579) (121,901)
-----------------------------------------------------
Expenses after interest expense and reimbursement 869,618 125,448 32,450
-----------------------------------------------------
Investment loss-net (479,902) (68,881) (21,400)
-----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
- -------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments (note 3) 4,745,153 571,506 (152,204)
Net realized loss on short sale transactions (note 3) -- -- (49,868)
-----------------------------------------------------
Net realized gain (loss) on investments and
short sale transactions 4,745,153 571,506 (202,072)
Net change in unrealized appreciation (depreciation)
on investments (445,068) 1,283,835 599,566
-----------------------------------------------------
Net gain on investments 4,300,085 1,855,341 397,494
-----------------------------------------------------
Net increase in net assets resulting from operations $ 3,820,183 $ 1,786,460 $ 376,094
-----------------------------------------------------
-----------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements. 20
<PAGE>
FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
For the six months ended 6/30/97 Jundt Opportunity Fund
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
- --------------------------------------------------------------------------------
Cash flows used for operating activities
Dividends and interest received $ 10,644
Operating expenses paid (85,637)
Organizational expenses paid (90,637)
Reimbursement from investment adviser 101,786
Interest expense paid (2,439)
Purchases of short-term investments, net (3,400)
Purchases of long-term investments (6,795,818)
Proceeds from sales of long-term investments 2,862,737
Proceeds from short sale transactions 389,626
Purchases to close short sale transactions (439,494)
Other 21,121
-----------
Net cash used for operating activities (4,031,511)
-----------
Cash flows provided by financing activities
Net capital share transactions 3,319,107
Proceeds from borrowings 1,684,281
Repayment of borrowings (1,080,908)
-----------
Net cash provided by financing activities 3,922,480
-----------
Net decrease in cash (109,031)
Cash at beginning of period 112,306
-----------
Cash at end of period $ 3,275
-----------
-----------
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM OPERATIONS
TO NET CASH USED FOR OPERATING ACTIVITIES
- --------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 376,094
-----------
Increase in investments (3,854,003)
Net realized loss on investments 152,204
Net realized loss on short sale transactions 49,868
Net change in unrealized appreciation on investments (599,566)
Increase in dividends and accrued interest receivable (406)
Increase in receivable for securities sold (71,185)
Increase in receivable from investment adviser (20,115)
Decrease in other assets 23,121
Decrease in payable for securities purchased (61,161)
Increase in interest payable 3,074
Decrease in accrued expenses and other liabilities (29,436)
-----------
Total adjustments (4,407,605)
-----------
Net cash used for operating activities $(4,031,511)
-----------
-----------
- --------------------------------------------------------------------------------
See accompanying notes to financial statements. 21
<PAGE>
FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Jundt Growth Fund
------------------------------------------------
For the six months ended Year ended
6/30/97 (unaudited) 12/31/96
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- --------------------------------------------------------------------------------------------------------
Investment loss-net $ (479,902) $ (1,644,515)
Net realized gain (loss) on investments and
short sale transactions 4,745,153 (3,183,866)
Net change in unrealized appreciation
(depreciation) on investments (445,068) 18,490,415
------------------------------------
Net increase (decrease) in net assets
resulting from operations 3,820,183 13,662,034
------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------
Realized capital gains-net -- (564,175)
------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------------------------------
Net proceeds from shares sold:
Class A shares 127,401 343,477
Class B shares 53,927 41,423
Class C shares 15,988 1,058
Class I shares 302,140 6,424,907
Distributions reinvested:
Class A shares -- 1,684
Class B shares -- 7
Class C shares -- 7
Class I shares -- 90,076
Cost of shares redeemed:
Class A shares (80,097) (24,053)
Class B Shares -- (10,397)
Class C shares -- --
Class I shares (13,137,791) (63,771,073)
------------------------------------
Net increase (decrease)
in net assets from capital
share transactions (12,718,432) (56,902,884)
------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (8,898,249) (43,805,025)
Net assets at beginning of period 96,837,033 140,642,058
------------------------------------
Net assets at end of period $ 87,938,784 $ 96,837,033
------------------------------------
------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
*Commencement of investment operations.
See accompanying notes to financial statements. 22
<PAGE>
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Jundt U.S. Emerging Growth Fund
------------------------------------------------------
For the six months ended Period from
6/30/97 (unaudited) 1/2/96* to 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Investment loss-net $ (68,881) $ (144,784)
Net realized gain (loss) on investments and short sale transactions 571,506 1,574,974
Net change in unrealized appreciation
(depreciation) on investments 1,283,835 1,357,802
------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 1,786,460 2,787,992
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Realized capital gains-net -- (1,862,519)
------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net proceeds from shares sold:
Class A shares 334,788 2,926,089
Class B shares 387,291 1,761,699
Class C shares 209,555 2,033,013
Class I shares 515,384 8,657,503
Distributions reinvested:
Class A shares -- 175,743
Class B shares -- 140,248
Class C shares -- 75,849
Class I shares -- 303,212
Cost of shares redeemed:
Class A shares (172,106) (2,007,745)
Class B Shares (146,553) (25,044)
Class C shares (330,884) (314.960)
Class I shares (474,122) (976,443)
------------------------------------------------------
Net increase (decrease)
in net assets from capital
share transactions 323,353 12,749,164
------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 2,109,813 13,674,637
Net assets at beginning of period 13,774,637 100,000
------------------------------------------------------
Net assets at end of period $15,884,450 $13,774,637
------------------------------------------------------
------------------------------------------------------
<CAPTION>
Jundt Opportunity Fund
------------------------------------------------------
For the six months ended Period from
6/30/97 (unaudited) 12/26/96* to 12/31/96
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Investment loss-net $ (21,400) $ (108)
Net realized gain (loss) on investments and short sale transactions (202,072) --
Net change in unrealized appreciation
(depreciation) on investments 599,566 (5,063)
------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 376,094 (5,171)
------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Realized capital gains-net -- --
------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net proceeds from shares sold:
Class A shares 225,592 113,076
Class B shares 183,535 1,060
Class C shares 167,335 1,070
Class I shares 2,620,663 290,060
Distributions reinvested:
Class A shares -- --
Class B shares -- --
Class C shares -- --
Class I shares -- --
Cost of shares redeemed:
Class A shares (3,291) --
Class B Shares -- --
Class C shares (9) --
Class I shares (65,897) --
------------------------------------------------------
Net increase (decrease)
in net assets from capital
share transactions 3,127,928 405,266
------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 3,504,022 400,095
Net assets at beginning of period 400,135 40
------------------------------------------------------
Net assets at end of period $ 3,904,157 $ 400,135
------------------------------------------------------
------------------------------------------------------
</TABLE>
23
<PAGE>
FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
<TABLE>
<CAPTION>
Jundt Growth Fund
---------------------------------------------------
For the six months ended Year ended
6/30/97 (unaudited) 12/31/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A shares 9,213 26,465
Class B shares 3,989 3,403
Class C shares 1,134 83
Class I shares 21,443 523,768
Shares issued for dividends reinvested:
Class A shares -- 122
Class B shares -- 1
Class C shares -- 1
Class I shares -- 6,532
Shares redeemed:
Class A shares (5,931) (1,787)
Class B shares -- (740)
Class C shares -- --
Class I shares (961,591) (5,248,054)
---------------------------------------------------
Net increase (decrease) in shares outstanding (931,743) (4,690,206)
---------------------------------------------------
---------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
*Commencement of investment operations.
See accompanying notes to financial statements.
24
<PAGE>
JUNE 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Jundt U.S. Emerging Growth Fund
---------------------------------------------------
For the six months ended Period from
6/30/97 (unaudited) 1/2/96* to 12/31/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A shares 25,696 239,635
Class B shares 30,753 128,454
Class C shares 16,713 159,854
Class I shares 37,701 751,525
Shares issued for dividends reinvested:
Class A shares -- 14,253
Class B shares -- 11,420
Class C shares -- 6,187
Class I shares -- 24,433
Shares redeemed:
Class A shares (13,465) (151,293)
Class B shares (11,717) (1,810)
Class C shares (26,684) (23,198)
Class I shares (35,990) (64,295)
---------------------------------------------------
Net increase (decrease) in shares outstanding 23,007 1,095,165
---------------------------------------------------
---------------------------------------------------
<CAPTION>
Jundt Opportunity Fund
---------------------------------------------------
For the six months ended Period from
6/30/97 (unaudited) 12/26/96* to 12/31/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL SHARE TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Shares sold:
Class A shares 22,276 11,308
Class B shares 17,297 106
Class C shares 16,237 107
Class I shares 254,762 29,006
Shares issued for dividends reinvested:
Class A shares -- --
Class B shares -- --
Class C shares -- --
Class I shares -- --
Shares redeemed:
Class A shares (294) --
Class B shares -- --
Class C shares (1) --
Class I shares (6,504) --
---------------------------------------------------
Net increase (decrease) in shares outstanding 303,773 40,527
---------------------------------------------------
---------------------------------------------------
</TABLE>
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 1997
- --------------------------------------------------------------------------------
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 100
shares of each of Class A, Class B and Class C and 9,700 shares of Class I 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 I 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 I). PRIOR TO APRIL
22, 1997, CLASS I SHARES OF EACH FUND WERE REFERRED TO AS CLASS A SHARES, AND
THE CURRENT CLASS A SHARES OF EACH FUND WERE REFERRED TO AS CLASS D SHARES.
Effective upon the Open-End Conversion, each issued and outstanding Growth Fund
share was converted to a Class I share. Shares of Class I 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 I of Growth Fund (which
are available only to persons that may purchase the other Fund's Class I shares
and to Growth Fund shareholders at the time of the Open-End Conversion) and
Class A 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 A, Class B, and Class C 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 $0.01 per
share. The Company is authorized to issue up to 1 trillion common shares, par
value $0.01 per share. Currently 10 billion shares have been designated to each
U.S. Emerging Growth Fund and Opportunity Fund.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
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 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
Investment in securities traded on U.S. securities exchanges or included in a
national market system and open short sales 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
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
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.
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 had available
approximately $373,000 of accumulated capital losses at December 31, 1996 to
offset subsequent capital gains.
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 for hedging purposes. A futures contract is an agreement
between two parties to buy or sell a security for a set price on a
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
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 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. At June 30, 1997,
there were no open short sales.
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 six months ended June 30, 1997 for Growth Fund, U.S. Emerging Growth
Fund and 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 $61,179,980 $77,184,863
U.S. Emerging Growth Fund $15,969,385 $16,191,675
Opportunity Fund
Long transactions $ 6,734,657 $ 2,933,922
Short sale transactions $ 439,494 $ 389,626
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
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 advisory 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. For U.S. Emerging Growth Fund, the Adviser has voluntarily agreed to
pay certain expenses during the year ending December 31, 1997. 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 ended December 31,
1996 and for the year ending December 31, 1997, 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 provides certain
administrative, accounting, clerical and record keeping services for each fund.
The funds have entered into distribution agreements with U.S. Growth
Investments, Inc. (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 A 0.25% --
Class B 0.25% 0.75%
Class C 0.25% 0.75%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In addition to the investment advisory 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 $52,272 for the six months ended June 30, 1997 for Growth Fund,
$13,823 for U.S. Emerging Growth Fund and $5,162 for Opportunity 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.
30
<PAGE>
- --------------------------------------------------------------------------------
5. BANK BORROWING
Opportunity Fund entered into a Line of Credit Agreement with Norwest Bank,
Minnesota, N.A., for an amount not to exceed the lesser of $3,000,000 or 30% of
the Fund's assets. At June 30, 1997, Opportunity Fund had loans outstanding of
$603,373 at an interest rate of 8.50%. For the six months ended June 30, 1997,
the average daily balance of loans outstanding was $424,518 at a weighted
average interest rate of 8.50%. The maximum amount of loans outstanding at any
time during the period was $726,617, or 15.6% of total assets. The loan is
collateralized by certain Opportunity Fund investments.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. 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>
Six months ended 6/30/97 (unaudited)
---------------------------------------------------------
Per Share Data Class A Class B Class C Class I
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.64 $13.56 $13.54 $13.69
---------------------------------------------------------
Operations:
Investment loss-net (0.09) (0.15) (0.15) (0.08)
Net realized and unrealized gain (loss) on investments 0.70 0.70 0.70 0.70
---------------------------------------------------------
Total from operations 0.61 0.55 0.55 0.62
Distributions to shareholders:
From investment income-net -- -- -- --
From realized capital gains-net -- -- -- --
Tax return of capital -- -- -- --
---------------------------------------------------------
Net asset value, end of period $14.25 $14.11 $14.09 $14.31
---------------------------------------------------------
---------------------------------------------------------
Total investment return (1) 4.47% 4.06% 4.06% 4.53%
Net assets at end of period (000s omitted) $401 $95 $18 $87,424
Ratio of expenses to average net assets 2.18% (2) 2.92% (2) 2.92% (2) 1.92% (2)
Ratio of net investment loss to average net assets (1.30)% (2) (2.05)% (2) (2.07)% (2) (1.06)% (2)
Portfolio turnover rate (excluding short-term securities) 73% 73% 73% 73%
Average commission per share (3) $0.0600 $0.0600 $0.0600 $0.0600
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</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.
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year ended 12/31/96
---------------------------------------------------------
Per Share Data Class A Class B Class C Class I
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.95 $11.95 $11.95 $11.95
---------------------------------------------------------
Operations:
Investment loss-net (0.26) (0.36) (0.36) (0.23)
Net realized and unrealized gain (loss) on investments 2.03 2.05 2.03 2.05
---------------------------------------------------------
Total from operations 1.77 1.69 1.67 1.82
Distributions to shareholders:
From investment income-net -- -- -- --
From realized capital gains-net (0.08) (0.08) (0.08) (0.08)
Tax return of capital -- -- -- --
---------------------------------------------------------
Net asset value, end of period $13.64 $13.56 $13.54 $13.69
---------------------------------------------------------
---------------------------------------------------------
Total investment return (1) 14.81% 14.14% 13.97% 15.22%
Net assets at end of period (000s omitted) $340 $37 $2 $96,458
Ratio of expenses to average net assets 2.13% 2.88% 2.88% 1.88%
Ratio of net investment loss to average net assets (1.81)% (2.53)% (2.49)% (1.56)%
Portfolio turnover rate (excluding short-term securities) 57% 57% 57% 57%
Average commission per share (3) $0.0599 $0.0599 $0.0599 $0.0599
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Period from
Year ended 7/1/94 Year ended Year ended
12/31/95 to 12/31/94 6/30/94 6/30/93
---------------------------------------------------------
Per Share Data
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.95 $13.53 $15.10 $13.78
---------------------------------------------------------
Operations:
Investment loss-net (0.12) (0.07) (0.11) (0.05)
Net realized and unrealized gain (loss) on investments 2.71 1.83 (0.57) 1.38
---------------------------------------------------------
Total from operations 2.59 1.76 (0.68) 1.33
Distributions to shareholders:
From investment income-net -- -- -- (0.01)
From realized capital gains-net (5.59) -- (0.52) --
Tax return of capital -- (0.34) (0.37) --
---------------------------------------------------------
Net asset value, end of period $11.95 $14.95 $13.53 $15.10
---------------------------------------------------------
---------------------------------------------------------
Total investment return (1) 17.81% 13.06% (4.53)% 9.64%
Net assets at end of period (000s omitted) $140,642 $223,317 $202,192 $473,768
Ratio of expenses to average net assets 1.60% 1.58% (2) 1.55% 1.40%
Ratio of net investment loss to average net assets (0.72)% (0.98)% (2) (0.63)% (0.36)%
Portfolio turnover rate (excluding short-term securities) 155% 19% 70% 66%
Average commission per share (3) N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) JUNE 30, 1997
- --------------------------------------------------------------------------------
6. FINANCIAL HIGHLIGHTS -- U.S. EMERGING 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:
<TABLE>
<CAPTION>
Six months ended 6/30/97 (unaudited)
----------------------------------------------------
Per Share Data Class A Class B Class C Class I
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.42 $12.37 $12.36 $12.51
----------------------------------------------------
Operations:
Investment loss-net (0.06) (0.12) (0.12) (0.03)
Net realized and unrealized
gain on investments 1.67 1.67 1.67 1.67
----------------------------------------------------
Total from operations 1.61 1.55 1.55 1.64
Distributions to shareholders:
From realized capital gains-net -- -- -- --
----------------------------------------------------
Net asset value, end of period $14.03 $13.92 $13.91 $14.15
----------------------------------------------------
----------------------------------------------------
Total investment return (1) 12.96% 12.53% 12.54% 13.11%
Net assets at end of period
(000s omitted) $1,612 $2,188 $1,849 $10,234
Ratio of expenses, before
reimbursement, to
average net assets 3.78%(2) 4.53%(2) 4.53%(2) 3.53%(2)
Ratio of expenses, net of
reimbursement, to
average net assets 1.80%(2) 2.55%(2) 2.55%(2) 1.55%(2)
Ratio of net investment loss
to average net assets (0.98)%(2) (1.73)%(2) (1.73)%(2) (0.73)%(2)
Portfolio turnover rate
(excluding short-term securities) 135% 135% 135% 135%
Average commission per share $0.0600 $0.0600 $0.0600 $ 0.600
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Period from 1/2/96* to 12/31/96
----------------------------------------------------
Per Share Data Class A Class B Class C Class I
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.00 $10.00 $10.00 $10.00
----------------------------------------------------
Operations:
Investment loss-net (0.14) (0.24) (0.24) (0.11)
Net realized and unrealized
gain on investments 4.47 4.52 4.51 4.53
----------------------------------------------------
Total from operations 4.33 4.28 4.27 4.42
Distributions to shareholders:
From realized capital gains-net (1.91) (1.91) (1.91) (1.91)
----------------------------------------------------
Net asset value, end of period $12.42 $12.37 $12.36 $12.51
----------------------------------------------------
----------------------------------------------------
Total investment return (1) 43.40% 42.90% 42.82% 44.32%
Net assets at end of period
(000s omitted) $1,275 $1,709 $1,766 $9,025
Ratio of expenses, before
reimbursement, to
average net assets 3.83%(2) 3.62%(2) 4.32%(2) 3.44%(2)
Ratio of expenses, net of
reimbursement, to
average net assets 1.80%(2) 2.55%(2) 2.55%(2) 1.55%(2)
Ratio of net investment loss
to average net assets (1.36)%(2) (2.15)%(2) (2.13)%(2) (1.09)%(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.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED) JUNE 30, 1997
- --------------------------------------------------------------------------------
6. FINANCIAL HIGHLIGHTS -- OPPORTUNITY 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:
<TABLE>
<CAPTION>
Six months ended 6/30/97 (unaudited)
----------------------------------------------------
Per Share Data Class A Class B Class C Class I
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $9.87 $9.87 $9.87 $9.87
--------------------------------------------------
Operations:
Investment loss-net (0.08) (0.12) (0.12) (0.06)
Net realized and unrealized gain
(loss) on investments and short
sale transactions 1.54 1.54 1.54 1.54
--------------------------------------------------
Total from operations 1.46 1.42 1.42 1.48
--------------------------------------------------
Net asset value, end of period $11.33 $11.29 $11.29 $11.35
----------------------------------------------------
----------------------------------------------------
Total investment return (1) 14.79% 14.39% 14.39% 14.99%
Net assets at end of period
(000s omitted) $377 $196 $185 $3,146
Ratio of expenses, before
reimbursement, to
average net assets 12.20%(2) 12.08%(2) 12.16%(2) 11.45%(2)
Ratio of expenses, excluding
interest expense, to
average net assets 11.78%(2) 11.51%(2) 11.74%(2) 11.00%(2)
Ratio of expenses, net of
reimbursement and excluding
interest expense, to average
net assets 2.14%(2) 2.89%(2) 2.89%(2) 1.89%(2)
Ratio of net investment loss
to average net assets (1.70)%(2) (2.63)%(2) (2.48)%(2) (1.51)%(2)
Portfolio turnover rate
(excluding short-term securities) 122% 122% 122% 122%
Average commission per share (3) $0.0600 $0.0600 $0.0600 $0.0600
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Period from 12/26/96* to 12/31/96
----------------------------------------------------
Per Share Data Class A Class B Class C Class I
- ---------------------------------------------------------------------------------------------------
<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 gain
(loss) on investments and short
sale transactions (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) $112 $1 $1 $286
Ratio of expenses, before
reimbursement, to
average net assets 4.23%(2) 4.98%(2) 4.98%(2) 3.98%(2)
Ratio of expenses, excluding
interest expense, to
average net assets 4.23%(2) 4.98%(2) 4.98%(2) 3.98%(2)
Ratio of expenses, net of
reimbursement and excluding
interest expense, to average
net assets 2.14%(2) 2.89%(2) 2.89%(2) 1.89%(2)
Ratio of net investment loss
to average net assets (2.14)%(2) (2.98)%(2) (3.02)% (2) (1.89)%(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.
35
