INTERACTIVE INVESTMENTS
Technology Value Fund
1996
Annual
Report
<PAGE>
1996 Results .......... 2
Portfolio
Discussion ............. 3
Portfolio Detail ...... 4
Auditor's Report .... 6
Financial
Statements ............. 7
1996 Results
1996 was an excellent year for the Technology Value Fund. Returns of 60.5 %
for the full year far exceeded our expectations and easily outpaced all of our
performance yardsticks (including the broad market indices shown at right).
This marks the second consecutive year that the TVF has returned over 60%.
Peer group comparisons were equally impressive. For 1996 TVF was the #1
no-load fund in America (ranked third overall) and ranked #1 among our peer
group, science & technology funds. (As reported in the Wall Street Journal -
source: Lipper Analytical)
Although we are pleased by our recent results, it is important to note that
our historical returns are well above reasonable long-term expectations. We
expect that the industries and companies we invest in will remain volatile,
and will continue to offer excellent investment opportunities for years to
come.
(Note: All performance and ranking data are net of expenses.)
<TABLE>
<CAPTION>
Performance
=================================================
Q496 1 5/20/94 -
year 12/31/96
- -------------------------------------------------
<S> <C> <C> <C>
TVF 7.0% 60.5% 224.2%
DJIA 9.6% 26.0% 71.2%
S&P 500 7.8% 20.3% 77.7%
NASDAQ 5.2% 22.7% 62.8%
</TABLE>
Long Term Performance
The chart below shows the monthly performance of the Technology Value Fund
(since inception) versus the three most commonly referenced market indices:
The Dow Jones Industrial Average, the Standard & Poor's 500 index and the
NASDAQ composite. (Note: Each of these indices represent an unmanaged,
broad-based basket of stocks. They are typically used as a proxy for overall
market performance.)
<TABLE>
<CAPTION>
MOUNTAIN CHART COMPARING CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
TECHNOLOGY VALUE FUND (TVF), THE STANDARD & POOR's 500 INDEX (S&P 500), THE
DOW JONES INDUSTRIAL AVERAGE (DJIA) AND THE NASDAQ COMPOSITE (NASDAQ)
TVF S&P 500 DJIA NASDAQ
--- ------- ---- ------
<S> <C> <C> <C> <C>
May 1994 $10,000 $10,000 $10,000 $10,000
June 1994 9,190 9,766 9,625 9,714
September 1994 11,190 10,171 10,204 10,519
December 1994 12,530 10,096 10,181 10,348
March 1995 13,344 11,007 11,039 11,246
June 1995 15,743 11,975 12,097 12,845
September 1995 20,680 12,846 12,715 14,360
December 1995 20,195 13,539 13,586 14,478
March 1996 21,586 14,189 14,834 15,156
June 1996 27,971 14,742 15,014 16,307
September 1996 30,292 15,108 15,618 16,883
December 1996 32,423 16,283 17,121 17,766
TVF PERFORMANCE AS OF DECEMBER 31, 1996
1996 Annual Return +60.5%
Average Annual Return Since Inception* +56.7%
Average Annual Return Since Effectiveness** +63.4%
* TVF inception on 05/20/94
** TVF effectiveness: 12/15/94 (per SEC)
- -- Past performance is no guarantee of future results --
</TABLE>
<PAGE>
Portfolio Discussion
Assets under management more than doubled during the fourth quarter. Strong
cash inflows afforded us a great deal of flexibility in adjusting our sector
weightings. Although the Fund's overall Q4 performance was a steady 7.0%,
there was tremendous volatility beneath the surface, as sector performance
diverged significantly. At a more granular level, the performance of specific
stocks ran the gamut from spectacular to appalling. In our view, this
divergence vividly illustrates the importance of individual stock selection
within each sector.
The chart below shows the Fund's holdings by sector as of year end. Our
weighting in semiconductors rose from 33.1% to 44.7%. Among the biggest winners
were Lattice, Altera, Intel and Triquint. We lost money on C-Cube, Cirrus
Logic and S-3. Our investment in the semiconductor capital equipment sector
declined from 5.3% to 1.8%. Opal was purchased by Applied Materials.
The Fund's weighting in Electronic Design Automation (EDA) rose
from 11.0% to 12.8%. We added to our holdings in Avanti, Epic and,
unfortunately, Silicon Valley Research, which lost more than half its value.
Software fell from 1.3% to 0.2%.
We dramatically increased our weighting in the networking sector, from 4.5% to
20.8%. In addition to increasing our holding in Cisco Systems, we also
established new positions in 3 Com, Cabletron and US Robotics. We added to
our position in Iomega, causing our investment in the computer peripherals
sector to expand from 1.5% to 3.0%. Our weighting in medical stocks
contracted from 19.0% to 12.4%. We added to our position in Arterial Vascular
Engineering and established new positions in Medwave and TheraTx.
Portfolio Snapshot
The accompanying table shows the Fund's positions as of year end. Portfolio
snapshots are available through the Fund's e-mail auto-responder. To obtain a
snapshot, send any e-mail message to: [email protected]. The quarter-end
snapshot will be posted near the end of the following month.
<TABLE>
<CAPTION>
pie chart:
Fund Holdings by Sector as of 12/31/96
<S> <C>
Semiconductors 44.7%
Software 0.2%
Cash 4.4%
EDA 12.7%
Medical 12.4%
Networking 20.8%
Peripheral 3.0%
Semi Equip 1.8%
</TABLE>
<PAGE>
Investment Philosophy
We believe that a thorough understanding of the industries we follow enables
us to buy great companies at bargain prices.
Because these industries are characterized by rapid rates of innovation,
and therefore obsolescence, companies can fall in and out of favor very
quickly, causing drastic swings in valuation. Often these sudden mark-ups or
mark-downs are deserved, sometimes not.
We look for situations in which a quality company is unjustly punished by
the investment community. This misunderstanding allows us to buy a strong
company near the low end of its normal valuation range. If we are right,
continued success leads to eventual reassessment, and a healthy return on
investment.
But why are technology companies so often, and so easily,
misunderstood? We believe that the most common reasons are the lofty
expectations and perceptions of risk associated with innovation. Just as great
teams seldom enjoy an undefeated season, great companies occasionally have a
bad quarter. When they do, the market tends to build more risk and less growth
into their company models.
An excellent example of this phenomenon is the current sell-off in
networking stocks. As we write this (in mid-February), several networking
companies have reported results below street expectations, and the group is
being marked down as a result. Clearly, the expected growth outlook is being
revised downward for the entire sector.
<TABLE>
<CAPTION>
=====================================================
Top 5 Stocks by $ Gain in Q4 1996
- -----------------------------------------------------
Stock Symbol $ Gain % Inc.
- -----------------------------------------------------
<S> <C> <C> <C>
Intel INTC 674,113 34.6
Lattice Semi LSCC 640,763 53.4
Opal Inc. OPAL 506,250 83.9
Altera ALTR 413,663 39.8
Triquint TQNT 273,800 52.9
- -----------------------------------------------------
</TABLE>
We believe this is a mistake. Our view is that the growth in demand for
data communications in general, and networking products in particular, is
still in its infancy, and that the current sell off represents an excellent
entry point. We plan on participating in the growth of the networking group
for years to come.
We also believe that basic industry research can reveal undiscovered gems.
Companies with great products can go unnoticed due to the technical nature of
their products - They simply take a great deal of time and effort to understand.
Those of us who are already following the business closely have an investment
advantage in the form of an early discovery window.
Last year's examples include companies such as Corvita, EP Technologies,
Iomega, Ikos, Opal and Vitesse, and we believe many current opportunities
lie in the EDA, semiconductor and medical sectors today.
<TABLE>
<CAPTION>
Technology Value Fund 12/31/96
=================================================================
Security Shares Price ...Balance...
- -----------------------------------------------------------------
<S> <C> <C> <C>
3 Com 25,000 73 3/8 1,834,375.00
Advanced Micro 40,000 25 3/4 1,030,000.00
Altera 20,000 72 11/16 1,453,750.00
Amgen 4,000 54 3/8 217,500.00
Applied Materials 10,000 35 15/16 359,375.00
Arterial Vascular 70,000 12 1/2 875,000.00
Avanti 60,000 31 3/4 1,905,000.00
C-Cube Microsystems 10,000 36 15/16 369,375.00
Cabletron Systems 25,000 33 1/4 831,250.00
Centocor 6,000 35 3/4 214,500.00
Cisco Systems 50,000 63 5/8 3,181,250.00
Endosonics 26,100 15 1/4 398,025.00
Epic Design Tech 50,000 25 1,250,000.00
Everest Medical 35,000 2 3/4 96,250.00
IKOS 55,000 20 1,100,000.00
Informix 3,000 20 3/8 61,125.00
Intel 20,000 130 15/16 2,618,750.00
Iomega 60,000 17 3/8 1,042,500.00
Lam Research 4,000 28 1/8 112,500.00
Lattice Semi 40,000 46 1,840,000.00
Level One 40,000 35 3/4 1,430,000.00
MedCath 8,000 16 128,000.00
Medtronic 9,000 68 612,000.00
Medwave 8,700 11 1/4 97,875.00
Mentor 4,000 29 1/2 118,000.00
Mini-Med 20,000 32 1/4 645,000.00
Novellus 3,000 54 3/16 162,562.50
Quality Semi 175,000 9 1,575,000.00
S - 3, Inc. 100,000 16 1/4 1,625,000.00
Sierra Semi 170,000 15 2,550,000.00
Silicon Valley Rsrch 110,000 2 220,000.00
Target Therapeutics 5,900 42 247,800.00
Theratx 69,800 10 1/4 715,450.00
Triquint 30,000 26 3/8 791,250.00
US Robotics 20,000 72 1,440,000.00
Vitesse 1,000 45 1/2 45,500.00
Xilinx 10,000 36 13/16 368,125.00
- -Cash- 1,526,524 1 1,526,523.68
- -----------------------------------------------------------------
Total Investments 35,088,611.18
=================================================================
</TABLE>
<PAGE>
Cardiometrics, CFLO
Endosonics has committed to acquire Cardiometrics for a combination of cash
and stock valued at a minimum of $9.00 - a little more than a 40% premium to
CFLO's market price of 6 3/8 prior to the announcement.
<TABLE>
<CAPTION>
======================================================
Bottom 5 Stocks by $ Loss in Q4 1996
- ------------------------------------------------------
Stock Symbol $ Loss % Dec.
- ------------------------------------------------------
<S> <C> <C> <C>
Arterial Vascular AVEI 676,425 43.6
S-3, Inc. SIII 389,894 19.4
Silicon Valley Re SVRI 288,068 56.7
Iomega IOM 227,875 17.9
Cabletron Systems CS 140,350 14.4
- ------------------------------------------------------
</TABLE>
When the acquisition is completed each share of Cardiometrics will be
converted into: $2.00 in cash, 0.35 shares of newly issued Endosonics stock,
and between 0.20 and 0.2636 shares of Cardiovascular Dynamics (Nasdaq:CCVD).
The exact number of shares of CCVD will be determined so as to make the
total package worth at least $9.00 per CFLO share.
The strange thing is even now, two weeks after the announcement, you can
still buy Cardiometrics shares for about $7 1/2. When the deal closes, you
will essentially receive $9.00 - a gain of $1.50 per Cardiometrics share or
20%. If you assume that it takes 3 months to close the deal, buying
Cardiometrics at $7 1/2 will give you an annualized return of 107.36%. Of
course, you have to remember to subtract transactions costs, but
this looks almost to good to be true.
Since the January 27, 1997 acquisition announcement, the fund has been
buying Cardiometrics shares. As of this writing, the fund owns 212,500
shares at an average price (including commissions) of $7.542. We look
forward to the completion of this acquisition.
TheraTx, THTX
TheraTx first attracted our attention because its sales and earnings have
grown at about 20% per year while the stock trades at a PE of 9.5. The company
operates 29 nursing homes, provides rehabilitation services on contract to
other nursing home companies, and runs several occupational health clinics.
With the help of several acquisitions, sales have grown from $40 million 3
years ago to a revenue run-rate of $400 million today.
During the 2nd half of 1996, the stock was hit hard because of uncertainty
regarding Medicare contract rehabilitation rates. Medicare represents
roughly 50% of the company's revenues. The other 50% of TheraTx's revenues
looks like a mini-OccuSystems (OSYS), a company which trades roughly at a
PE of 30. If you apply OccuSystem's PE to the earnings associated with this
half of TheraTx's operations, you get a valuation of about $19. So, if
Medicare sets its reimbursement rate so low that TheraTx is forced to exit
the business, shareholders would be left with a business unit that the market
might value at $19.
Based on this analysis, the fund purchased a total of 113,800 shares at an
average price of $11.58 in late December and early January. On February 11,
1997, Vencor, Inc. (NYSE:VC) announced an agreement to acquire TheraTx for
$17.10 per share in cash.
Outlook
We remain convinced that the medical and electronic technology sectors will
continue to offer excellent investment opportunities for years to come. These
companies continue to improve people's lives through constant innovation; the
art, science and business of making new things possible will enrich all
parties concerned.
We are bullish about the business prospects of each and every company in
which we invest. While we are likely to make mistakes from time to time,
we believe we are right to focus the bulk of our time and energy on the
all-important company selection process. We are comfortable that our
approach will continue to lead to good company selection within the right
sectors, positioning the Technology Value Fund well for future success.
/s/ Kevin Landis /s/ Ken Kam
KEVIN LANDIS KEN KAM
Portfolio Manager Portfolio Manager
Technology Value Fund Technology Value Fund
<PAGE>
Getting the most Current information on
THE TECHNOLOGY VALUE FUND
Ticker symbol: TVFQX
Newspaper listing: TECH VALUE
Toll-Free number: 888-TVF-FUND
888-883-3863
Website: WWW.IINVEST.COM
E-mail Auto-responder:
To receive TVF information send an e-mail to:
[email protected]
Important Legal Disclosures
This report is provided for the general information of TVF shareholders and is
not authorized for distribution to prospective investors in the Fund unless
preceeded or accompanied by a current prospectus.
Past performance is not a guarantee of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
Investing in high technology and medical technology stocks entails certain
risks, including increased volatility of share value. Investors are encouraged
to read the prospectus carefully. Copies of the most recent prospectus are
available on the Fund's web site, or by calling (888) TVF-FUND.
You may also request the most recent prospectus from the following brokers:
Fidelity Investments, Jack White & Co. and National Investors
Service Corporation..
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Certified Public Accountants
KEVANE PETERSON SOTO & PASARELL Donald Kevane
To the Board of Trustees and John Peterson
Shareholders of Adamina Soto
Interactive Investments Jorge Pasarell
(Technology Value Fund): Waldemar Gonzalez
Luis Valenzuela
Nelly Ruiz
Miguel Ocasio
Alfredo Rivera
We have audited the accompanying statement of assets and liabilities of
INTERACTIVE INVESTMENTS (TECHNOLOGY VALUE FUND), including the schedule of
portfolio investments (Schedule I), as of December 31, 1996, the related
statements of operations, changes in net assets and financial highlights for
the periods indicated in the accompanying financial statements and the per
share data as of December 31, 1996. These financial statements and per share
data are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and on the per share data
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements, financial highlights, and
per share data referred to above present fairly, in all material respects, the
financial position of Interactive Investments (Technology Value Fund) as of
December 31, 1996, the results of its operations, changes in its net assets,
financial highlights, for the periods indicated, and the per share data as of
December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Kevane, Peterson, Soto & Pasarell
San Juan, Puerto Rico,
January 15, 1997, except for
Note (9) which date is January 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996December 31, 1996
<S> <C>
ASSETS:
Cash in bank $ 58
Accrued interest receivable 15,433
Investment securities, at value
(cost--$32,863,373) 35,088,611
------------
Total assets $ 35,104,102
------------
LIABILITIES: $ 0
------------
Total liabilities 0
------------
NET ASSETS--at value $ 35,104,102
===========
NET ASSETS COMPRISED OF:
Paid-in capital $ 32,703,582
Net unrealized gain on investments 2,225,238
Undistributed net realized gains from sale
of securities 300,692
Accumulated net investment loss (125,410)
------------
Total net assets $ 35,104,102
===========
NET ASSET VALUE/OFFERING PRICE/REDEMPTION PRICE
PER SHARE BASED ON 1,316,631.691 SHARES $ 26.66
===========
</TABLE>
The accompanying notes and schedule are an
integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<S> <C>
INVESTMENT INCOME:
Interest $ 5,393
Dividends 114,196
------------
Total investment income $ 119,589
------------
EXPENSES--investment advisory fees (administration
fees of $101,257 and management fees of $122,185) $ (223,442)
------------
NET INVESTMENT LOSS $ (103,853)
===========
REALIZED GAINS AND UNREALIZED
APPRECIATION ON INVESTMENTS:
Realized gains from security transactions-
Proceeds from sales 4,377,520
Cost of securities sold 1,831,380
------------
Realized gains $ 2,546,140
------------
Amount of unrealized appreciation-
December 31, 1995 549,516
December 31, 1996 2,225,238
------------
Increase in unrealized appreciation
during 1996 1,675,722
------------
Realized gains and increase in unrealized
appreciation $ 4,221,862
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 4,118,009
===========
</TABLE>
The accompanying notes and schedule are an
integral part of these statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1996 and 1995
Year Ended
-----------------------------
December 31, December 31,
1996 1995
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment loss ($ 103,853) ($ 20,937)
Net realized gain from investment
transactions 2,546,140 54,123
Increase in unrealized appreciation on
securities 1,675,722 526,841
------------ ------------
Net increase from operating results 4,118,009 560,027
DISTRIBUTIONS TO SHAREHOLDERS FROM
REALIZED GAINS ON SECURITIES: (2,244,807) (55,432)
REINVESTMENT OF DIVIDENDS BY
SHAREHOLDERS: 1,153,485 66,554
CAPITAL TRANSACTIONS--Proceeds from sale of
shares, net of redemption of $6,274,508 in 1996
and $14,643 in 1995 29,396,421 1,953,122
------------ ------------
Total increase in net assets 32,423,108 2,524,271
NET ASSETS:
Beginning of year 2,680,994 156,723
------------ ------------
End of year $ 35,104,102 $ 2,680,994
============ ============
</TABLE>
The accompanying notes and schedule are an
integral part of these statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
(1) HISTORY:
The Trust was formed and registered with the office of the Secretary of
State of Delaware on November 8, 1993. The purpose of the Trust is to offer
shares in series in an open-ended management investment company. The Trust has
authorized only one series of shares designated as Technology Value Fund (the
"Fund"). All costs and expenses incurred in the organization of the Fund were
absorbed by the investment advisor.
(2) ESTIMATES:
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(3) SECURITY VALUATION:
Portfolio securities traded on a securities exchange are valued at the
last sale price on such exchange on the day of valuation or, if there was no
sale on such day, the last bid price quoted on such day. Listed securities not
traded are valued at the mean between the most recent quoted bid and asked
prices provided by the principal market makers.
(4) INVESTMENT ADVISER:
The Fund's adviser is Interactive Research Advisers, Inc. (IRAI), a
company owned and controlled by the same individuals who have organized the
Trust. The investment advisory contract between the Fund and IRAI has been
approved by the Board of Trustees of the Fund including the disinterested
trustees.
IRAI is responsible for the management and administration of the Fund's
portfolio and provides the necessary personnel, facilities, equipment, and
other services necessary for the operations of the Fund. Fees paid by the Fund
for such services are payable monthly, calculated and accrued on a daily basis
by applying an annual rate (1% for the management fee and 1% of the first $10
million invested in the Fund and 1/2 of 1% of the amount of funds in excess of
$10 million, for fund administration) to the net assets of the Fund,
determined at the close of business each day. Total annual expenses of the
Fund, exclusive of taxes, interest, all brokers' commissions and other normal
charges incidental to the purchase and sale of portfolio securities, but
including fees paid to IRAI, do not exceed the limits prescribed by any state
in which the Fund's shares are offered for sale, and IRAI will reimburse the
Fund for any expenses in excess of such limits.
(5) DISTRIBUTOR:
The Fund has been and is presently being self-distributed. Shares are
sold at the net asset value per share, without a sales load. The adviser bears
any sales or promotional costs incurred in connection with the sale of the
Fund's shares out of its own resources.
(6) OPERATIONS:
Management fees have been accrued daily at the rate of 1/365 of 1% of
net assets as stipulated in the investment advisory contract.
Administrative fees also have been accrued daily at the rate of 1/365 of
1% of the first $10 million and 1/2 of 1% of amounts in excess of $10 million
of net assets as stipulated in the investment advisory contract.
Interest is accrued daily on the cash balance maintained in the
securities account at the rate of interest in effect at the first of each
month. On the first of each month, the custodian bank credits the securities
account with interest earned during the previous month.
<PAGE>
(7) FEDERAL INCOME TAXES:
It is the Fund's policy to comply with the requirements of the U.S.
Internal Revenue Code applicable to regulated investment companies and to
distribute its taxable income to shareholders; accordingly, no Federal income
tax provision is required [see Notes (8) and (9), below].
(8) DIVIDENDS:
On November 29, 1996, the Fund's Board of Trustees approved the payment
of a dividend of $2.90 per share payable on November 22, 1996, to stockholders
of record as of November 18, 1996. Shareholders owning approximately 51% of
the total shares outstanding elected to reinvest their dividends in the Fund
[see also Note (12), below].
(9) INVESTMENT TRANSACTIONS:
At December 31, 1996, the cost of portfolio securities for federal income
tax purposes was the same as the cost for financial reporting purposes. At
December 31, 1996, the Fund had a net capital loss carry-forward of $70,378.
During the year ended December 31, 1996, the Fund purchased securities having
a cost of $31,153,233 and sold securities having total sales proceeds of
$4,377,520.
(10) TRANSACTIONS IN SHARES:
There is no specified limit to the number of shares that may be issued.
Transactions during 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
(rounded to the nearest share)
1996 1995
<S> <C> <C>
Shares sold 1,435,204 129,835
Shares issued on reinvestment
of dividends 43,942 3,135
Shares redeemed (307,953) (931)
---------- ----------
Net increase 1,171,193 132,039
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(11) FINANCIAL HIGHLIGHTS:
Selected data for a share outstanding throughout each period:
Year Ended December 31,
--------------------------------------------------
1996 1995 1994 (a)
--------- -------------- --------
<S> <C> <C> <C>
Net asset value, beginning of period $ 18.44 $ 11.70 $ 10.00
--------- -------------- --------
Investment operations:
Net investment income (loss) (.08) (.14) (.03)
Net realized and unrealized gain
(loss) on investments 11.20 7.28 2.56
Total from investment operations 11.12 7.14 2.53
Capital gains distributions (2.90) (.40) (.83)
--------- -------------- --------
Net asset value, end of period $ 26.66 $ 18.44 $ 11.70
========= ============== ========
Total return (b) 60.5% 61.2% 25.3%
Ratios/supplemental data:
Net assets, end of period (millions) $ 35.1 $ 2.7 $ 0.2
Ratio of expenses to average net assets 1.81% 1.98% 1.96%(c)
Ratio of net investment income (loss)
to average net assets (0.55%) (1.45%) (1.29%)(c)
Portfolio turnover rate 43% 45% 56%
Average commission rate for securi-
ties transactions (cost per share) $ .0426 N/A N/A
<FN>
(a) The Fund commenced operations on 05/20/94; therefore, 1994
statistics do not reflect an entire year of operations.
(b) Total investment return is calculated assuming an initial
investment made at the net asset value at the beginning of
the period, reinvestment of all dividends and distributions
at net asset value during the period, and redemption in the
last day of the period.
(c) Annualized.
</FN>
</TABLE>
(12) SUBSEQUENT EVENT--DIVIDEND:
On January 31, 1997, the Fund's Board of Trustees approved the payment of
an additional dividend of $270,274 based on realized undistributed gains
during 1996 (without taking into consideration net long-term capital losses
realized subsequent to October 31, 1996) and after taking into consideration
the dividend paid on November 22, 1996.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO OF INVESTMENTS (NOTE 3)
December 31, 1996
NUMBER OF UNREALIZED
SHARES OR PERCENT OF INCOME CURRENT GAIN
COMMON STOCKS FACE AMOUNT TOTAL PRODUCING COST MARKET VALUE (LOSS)
- ------------------ ---------- ----------- ------------ -------- --------------- ------
<S> <C> <C> <C> <C> <C> <C>
ELECTRONIC DESIGN AUTOMATION:
IKOS 55,000 No $ 845,187 $ 1,100,000 $ 254,813
Avanti 60,000 No 1,792,013 1,905,000 112,987
Epic Design Tech 50,000 No 1,270,750 1,250,000 (20,750)
Silicon Valley Research 110,000 No 514,556 220,000 (294,556)
------------ ------------ ------------
Total Electronic Design Automation 12.7% 4,422,506 4,475,000 52,494
------------ ------------ ------------
MEDICAL:
Amgen 4,000 No 182,175 217,500 35,325
Arterial Vascular 70,000 No 1,442,555 875,000 (567,555)
Centocor 6,000 No 204,800 214,500 9,700
Endosonics 26,100 No 369,569 398,025 28,456
Everest Medical 35,000 No 135,513 96,250 (39,263)
Medcath 8,000 No 182,037 128,000 (54,037)
Medtronic 9,000 No 459,300 612,000 152,700
Medwave 8,700 No 100,423 97,875 (2,548)
Mentor 4,000 Yes 44,875 118,000 73,125
Mini-Med 20,000 No 480,726 645,000 164,274
Target Therapeutics 5,900 No 303,332 247,800 (55,532)
TheraTx 69,800 No 812,933 715,450 (97,483)
------------ ------------ ------------
Total Medical 12.4% 4,718,238 4,365,400 (352,838)
------------ ------------ ------------
NETWORKING:
3 Com 25,000 No 1,944,528 1,834,375 (110,153)
Cisco Systems 50,000 Yes 3,095,045 3,181,250 86,205
Cabletron Systems 25,000 No 971,600 831,250 (140,350)
U.S. Robotics 20,000 No 1,495,688 1,440,000 (55,688)
------------ ------------ ------------
Total Networking 20.8% 7,506,861 7,286,875 (219,986)
------------ ------------ ------------
PERIPHERAL:
Iomega 60,000 3.0% No 1,262,125 1,042,500 (219,625)
------------ ------------ ------------
SEMICONDUCTOR EQUIPMENT:
Applied Materials 10,000 No 399,974 359,375 (40,599)
Lam Research 4,000 No 177,450 112,500 (64,950)
Novellus 3,000 No 173,338 162,563 (10,775)
------------ ------------ ------------
Total Semiconductor Equipment 1.8% 750,762 634,438 (116,324)
------------ ------------ ------------
(continued on next page)
<PAGE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SEMICONDUCTORS:
Advanced Micro 40,000 Yes 831,600 1,030,000 198,400
Altera 20,000 No 1,017,542 1,453,750 436,208
C-Cube Microsystems 10,000 No 343,375 369,375 26,000
Intel 20,000 Yes 1,574,078 2,618,750 1,044,672
Lattice Semi 40,000 No 1,152,800 1,840,000 687,200
Level One 40,000 No 1,201,400 1,430,000 228,600
Quality Semi 175,000 No 1,492,319 1,575,000 82,681
S-3, Inc. 100,000 No 1,873,344 1,625,000 (248,344)
Sierra Semi 170,000 No 2,287,556 2,550,000 262,444
Triquint 30,000 No 517,450 791,250 273,800
Vitesse Semi 1,000 No 8,875 45,500 36,625
Xilinx 10,000 No 308,831 368,125 59,294
------------ ------------ ------------
Total Semiconductors 44.7% 12,609,170 15,696,750 3,087,580
------------ ------------ ------------
SOFTWARE:
Informix 3,000 .2% No 67,187 61,124 (6,063)
-------- ------------ ------------ ------------
Total Common Stocks 95.6% 31,336,849 33,562,087 2,225,238
CASH:
4.4% 1,526,524 1,526,524 --
-------- ------------ ------------ ------------
Total Investments 100.0% $ 32,863,373 $ 35,088,611 $ 2,225,238
======== ============ ============ ============
</TABLE>
<PAGE>
INTERACTIVE INVESTMENTS TRUST
446 Martil Way
Milpitas, CA 95035
BOARD OF TRUSTEES
Ken Kam
Kevin Landis
Michael Lynch
Mark Taguchi
OFFICERS
Kevin Landis, President
Kendrick Kam, Secretary
Yakoub Billawala, Operations
Steve Witt, Marketing
INVESTMENT ADVISER
Interactive Research Advisers, Inc.
446 Martil Way
Milpitas, CA 95035
TRANSFER AGENT / FUND ACCOUNTANT / FUND ADMINISTRATOR
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201
This report is authorized for distribution only when it is accompanied or
preceded by a current prospectus of Interactive Investments' Technology Value
Fund.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000917124
<NAME> INTERACTIVE INVESTMENTS - TECHNOLOGY VALUE FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 32,863,373
<INVESTMENTS-AT-VALUE> 35,088,611
<RECEIVABLES> 15,433
<ASSETS-OTHER> 58
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,104,102
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,703,582
<SHARES-COMMON-STOCK> 1,316,632
<SHARES-COMMON-PRIOR> 145,438
<ACCUMULATED-NII-CURRENT> (125,410)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 300,692
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,225,238
<NET-ASSETS> 35,104,102
<DIVIDEND-INCOME> 114,196
<INTEREST-INCOME> 5,393
<OTHER-INCOME> 0
<EXPENSES-NET> 223,442
<NET-INVESTMENT-INCOME> (103,853)
<REALIZED-GAINS-CURRENT> 2,546,140
<APPREC-INCREASE-CURRENT> 1,675,722
<NET-CHANGE-FROM-OPS> 4,118,009
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 2,244,807
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,435,204
<NUMBER-OF-SHARES-REDEEMED> 307,952
<SHARES-REINVESTED> 43,942
<NET-CHANGE-IN-ASSETS> 32,423,108
<ACCUMULATED-NII-PRIOR> (21,557)
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 641
<GROSS-ADVISORY-FEES> 122,185
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223,442
<AVERAGE-NET-ASSETS> 12,315,000
<PER-SHARE-NAV-BEGIN> 18.44
<PER-SHARE-NII> (.08)
<PER-SHARE-GAIN-APPREC> 11.20
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 2.90
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 26.66
<EXPENSE-RATIO> 1.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
