[IPS FUNDS LOGO APPEARS HERE]
Fellow Shareholders:
We are pleased to present our Annual Report for the year ended
November 30, 1998. We hope you have had a chance to visit your web
site at http://www.ipsfunds.com. We update all performance statistics
monthly and portfolio stocks daily. THE YAHOO! STOCKS button on the
home page gives daily quotes, insider trading, news and analysis
specifically on each company in your Fund. As far as we can
determine, IPS is the only fund family that gives you every stock in
your Fund, updated daily. Your Fund has again received more favorable
publicity since our mid-year report to you. MUTUAL FUNDS MAGAZINE gave
us a five star ranking, and MORNINGSTAR raised our ranking to four
stars. We have appeared in the top half-dozen mid-cap funds, based on
3-year compound return, for an extended period this year in
MORNINGSTAR. THE BOSTON GLOBE, KNOXVILLE NEWS-SENTINEL, YOUR MONEY
magazine, and SMART MONEY all carried articles favorable to the Fund.
AMERICA ON LINE in November included IPS Millennium Fund among the 40 stock
funds it recommended for 1999 and the next millennium. In particular,
FORBES DIGITAL TOOL in April, and SMART MONEY.COM again in November,
both ranked the Fund #1 in screens for mid-cap or Growth & Income funds
that gave investors at least some exposure to technology companies.
[figure 1 appears here in graph form
$10,000 Investment at Inception 1/3/95]
WE NEED TO INCLUDE A FAIR AND ACCURATE DESCRIPTION, TABULAR REPRESENTATION
OR TRANSCRIPT]
FIGURE 1. The data presented herein and below represent past performance
and are not a guarantee of future performance. The value of your shares
may fluctuate and be worth more or less at redemption than their original
cost.
<TABLE>
<CAPTION>
TOTAL ANNUAL RETURN FOR: IPS MILLENNIUM VALUE LINE S&P 500
FUND ARITHMETIC INDEX COMPOSITE
<S> <C> <C> <C>
12 months ended 11/30/98 23.40% 4.90% 22.46%
3 years ended 11/30/98 22.92% 18.13% 25.53%
</TABLE>
The total returns above include changes in the Fund's share price, plus
reinvestment of any dividends (income) and capital gains (profits from
the sale of a stock). The VALUE LINE ARITHMETIC INDEX and the S&P 500
COMPOSITE have been adjusted to reflect return with dividends reinvested.
Phone: 423.524.1676 Web site: 625 South Gay St.
800.232.9142 E-Mail: Suite 630
Fax: 423.544.0630 Knoxville, TN 37902
<PAGE>
<PAGE>
Recent News of Interest
-----------------------
For those of you who like frequent updates on your Fund's NAV,
please be sure to call our after-hours and weekend/holidays number at
423-544-1842. We also update the NAV and major indexes daily on our
website. Additional performance and sector allocation information is
updated monthly. Clicking on the title of any investment sector will
also bring up a list of all companies owned in that sector, updated
daily, so that you will always know what companies you own. Favorable
publicity has increased Fund assets by 45% in the past six months, to
$24.7 million as of November 30. We welcome your feedback, and any
suggestions you may have for your Fund's website.
<TABLE>
<CAPTION>
<C> <S>
--------------------------------------------- MANAGEMENT'S DISCUSSION & ANALYSIS
| Table 1: Breakdown by Market Cap | ----------------------------------
| ------- November 30, 1998 |
| |CLASSIFICATION BY MARKET CAPITALIZATION.
| Sector Number Percent |
| | TABLE 1 presents the Fund's makeup by market capitalization as of
|1. Large Caps (>$10b) 13 38.6% |11/30/98. 64.4% of the fund is composed of mid-and small-cap companies.
|2. Mid Caps 24 50.0% |(Market capitalization is price per share times number of shares outstanding,
|3. Small Caps (<$1b) 11 11.4% |one measure of a company's size.) We believe that median market cap is a
| ---- ----- |better measurement of the type of fund you own than is average market cap. The
| Total 48 100.0% |reason is that average market cap is strongly biased by single, large outliers
| |like MICROSOFT (MSFT, OTC), one of our ten largest ten positions.
| Median Market Capitalization: $5.9b |
---------------------------------------------
</TABLE>
Note that the Fund's median market cap has increased significantly
since the last report, and that the distribution among the three size segments
has shifted toward large-caps. MORNINGSTAR has moved the Fund from a mid-
cap to a large-cap growth classification. The largest reason by far for the
shift is the success of our investment strategy. Several large positions in
mid-cap companies have grown in six months into large-cap firms. As a
percentage of portfolio assets, large caps are up by 9%, mid-caps up 7%
and small-caps down 18%. MindSpring (MSPG.O) and Earthlink Networks (ELNK.O)
are up several hundred percent from small- to mid-cap size; Amazon.com (AMZN.O),
Broadcom (BRCM.O), @Home (ATHM.O) and Yahoo! (YHOO.O) have all increased in
size several hundred percent, moving to large-cap status. America On
Line (AOL.N) is the Fund's largest holding, and has increased several
hundred percent. AOL, YHOO and AMZN have all pushed up median market
cap dramatically. Large purchases of large-cap stocks like AOL, Qwest
Communications (QWST.O), Enron (ENE.N) and Global Crossing (GBLX.O) in
particular have also increased weighted market cap. These factors
combined have moved the fund into large-cap growth status, even though
we are not primarily a large-cap fund.
VOLATILITY OF RETURNS
In order to gain a better perspective on how your Fund's return
and risk characteristics compare to those of the overall stock market,
review FIGURE 2. Note that the Fund has outperformed the Value Line
Arithmetic Composite (VLAC) for each of the last seven quarters of
1997 and 1998, since our adjustments to the portfolio made during
Summer and Fall, 1996. We have increased the Fund's holdings of high
tech, and particularly Internet-related, companies over the last six
months. While this has increased our returns significantly, it has
also increased our overall risk, balanced somewhat with larger
investments in electric and gas utilities. As a result, we expect the
Fund to be more volatile over the coming year, and investors should be
prepared to tolerate larger and sharper percentage declines, as well
as gains, relative to the overall stock market. We use the VLAC
instead of the S&P 500 because it is a far more representative index,
covering nearly 1,800 companies, and weighted equally among the
companies comprising the index.
[FIGURE 2 APPEARS HERE in a graphical chart. The numbers
are, however, represented below]
- -----------------------------------------------------------
| |
| Quarter Returns: IPS Millennium Fund |
| vs. Value Line Arithmetic Composite |
| |
| IPS Value Line |
|Quarter ending Millennium Fund Returns |
| |
| 3/95 3.92% 7.28% |
| 6/95 8.27% 8.53% |
| 12/95 2.36% 2.04% |
| 6/96 9.51% 4.54% |
| 12/96 6.34% 7.08% |
| 6/97 17.81% 14.68% |
| 12/97 -0.53% -0.69% |
| 6/98 3.81% -1.23% |
| 12/98 23.35% 19.80% |
- -----------------------------------------------------------
Figure 2. Volatility of returns relative to VALUE LINE ARITHMETIC COMPOSITE.
CHANGES IN PORTFOLIO SECTORS
The sector changes we have made to your Fund over the last six
months are shown in Table 2, with large changes in bold type. We have
sold all petroleum, industrial equipment, chemical and real estate
investment trusts, and trucking & transportation companies. We feel
the
Page 2<PAGE>
<TABLE>
<CAPTION>
Table 2
Industry Sector Position (%) Position (%) Position (%)
11/30/98 5/31/98 11/30/97
<S> <C> <C>
Cash 15.0% 14.7% 12.7%
Financial & Brokerage 3.7% 4.3% 5.0%
Chemical, Specialty 0.0% 1.0% 2.2%
Computer & Internet Equipm. 5.8% 9.2% 8.8%
Electronic Commerce 4.6% 5.0% 2.2%
Electric Utilities 15.1% 13.6% 7.3%
Natural Gas Utilities 10.2% 4.8% 2.9%
Internet Service Providers 11.5% 4.8% 0.0%
Medical Services 4.4% 4.6% 4.8%
Pharmaceutical 0.5% 3.8% 3.9%
Petroleum 0.0% 1.5% 1.1%
Real Estate Investment Trusts 0.0% 3.3% 6.7%
Semi-Conductors 2.3% 5.5% 9.9%
Services, Misc. 5.4% 4.6% 4.2%
Software 9.2% 8.0% 8.4%
Telecommunications 12.2% 10.1% 13.1%
Trucking & Transportation 0.0% 0.8% 1.7%
Other (Broadcasting, Industrials) 0.0% 0.0% 5.1%
</TABLE>
Note: Large changes are bolded.
shift to global deflation, and a prolonged economic slow-down in most
of the world will hurt commodity-priced items like oil and chemicals,
slow growth in transportation and equipment, and dramatically decrease
the appreciation of commercial real estate. We hope to be able to buy
back some of the best of these companies in the future, after their
prices have been sufficiently discounted for deflation and slower
global economic growth. We have added two new sectors, breaking
out Natural Gas Utilities from the Electric Utilities sector, and
breaking out Internet Service Providers (ISPs) from the
Telecommunications sector. We feel these changes make it easier to
understand how your Fund assets are allocated, and better reflect two
underlying changes in our economy. The first is the massive,
deregulation-driven transition to natural gas, and away from oil and
coal, as a source of electric power generation. The second is the
growing presence of the Internet and the ISP sector. There are now
over 5,000 ISPs in the U.S., and Internet service is rapidly becoming
a major sub-sector within the larger telecommunications universe.
In addition to the shifts noted above, we are also in the process
of shifting the Fund's mix of semi-conductor companies from desktop
PC-type chips made by companies like Intel, to special function,
single-chip analog/digital systems like those made by Analog Devices
(ADI.N) and National Semiconductor (NSM.N). The rationale behind this
change in emphasis in the semiconductor sector is what we believe will
be a massive shift in 1999 and 2000 toward wireless Internet access
using a combination digital PCS phone and Palm Pilot or similar
device, like those currently being made by Qualcom (QCOM.O) for sale
early in 1999.
People increasingly require computers to be portable, wireless,
and Internet-ready telecommunications devices. We expect the big move
near term, not to be the merging of the television and desktop PC as
has been widely predicted, but the merging of the digital wireless
phone and personal information managers (PIMs) such as the 3 Com Palm
Pilot. This means in turn a large increase in Internet users, an<PAGE>
increased use of ISPs, a shift in telecommunications service providers
to pure Internet-based phone services like those provided by Sprint
PCS (PCS.N), Qwest Communications, and Global Crossing, and a steep
and rapid decline in cost of bandwidth. All these trends will work
together to eliminate the current high cost of bandwidth as the last
barrier to inexpensive, full-time, broadband communications for the
masses. The companies that drive down the cost of bandwidth, and those
that benefit from the rapid expansion in use as a result, we believe
will garner a disproportionate amount of the value added in our
economy and in the stock market. This is the vision of the near future
that determines how we allocate your Fund assets in most of the high
tech sectors.
CHANGES IN INVESTMENT POSITIONS: SALES
We have sold our Harbinger (HRBC.O), Chirex (CHRX.O), PeopleSoft
(PSFT.O), Cybercash (CYCH.O), and Frontier (FTR.N) due to a
deterioration in leadership positions. We trimmed some of our
positions in Yahoo! (YHOO.O), EMC Corp. (EMC.N), Cisco Systems
(CSCO.O) and MindSpring (MSPG.O) because we temporarily lost our
minds. We sold several other companies like MCN Energy (MCN.N), Analog
Devices (ADI.N), Teco Energy (TE.N), Incyte Pharmaceuticals (INCY.O),
Learonal (LRI.N - since bought out), Sterling Commerce (SE.N) and
Verio (VRIO.O) to realize losses to offset capital gains. We've since
repurchased ADI, SE and VRIO. The net result is that we have been able
to avoid paying capital gains distributions for a second year in a row
while still generating excellent returns to our shareholders. One of
our goals is not to distribute capital gains. While this may not
always be possible, we will try hard not to do so without jeopardizing
portfolio performance.
CHANGES IN INVESTMENT POSITIONS: PURCHASES
The Fund has increased its total assets by over $12m., or 108% in
the last 12 months. This large inflow of cash has allowed us the
flexibility of adding new positions in more attractive sectors such
as the Internet, without having to sell other companies we would
prefer to hold onto. Major additions to your Fund's portfolio include
the following companies:
Page 3 <PAGE>
<TABLE>
<CAPTION>
Major New Stock Additions Last 6 Months Buy Price Range Price on 30 Dec.
--------------------------------------- --------------- ----------------
<S> <C> <C>
AES Corp. (AES.N) $44 $ 47
Amazon.com (AMZN.O) $73 - $119 $ 321
American Electric Power (AEP.N) $45 $ 47
Broadcom (BRCM.O) $72 $ 121
California Water (CWT.N) $24 - $25 $ 31
CalEnergy (CHOW.N) $24 - $30 $ 34
Calpine (CPN.N) $18 - $21 $ 25
i2 (ITWO.O) $26 $ 30
Keane Associates (KEA.N) $33 - $43 $ 40
Uniphase (UNPH.O) $43 - $44 $ 69
Western Resources (WR.N) $39 $ 33
Major Additions to Existing Positions
-------------------------------------
America On-Line (AOL.N) $43 - $55 $ 150
BMC Software (BMCS.O) $40 - $55 $ 44
EarthLink Network (ELNK.O) $27 - $33 $ 57
Enron Corp. (ENE.N) $42 - $51 $ 57
Microsoft (MSFT.O) $66 - $106 $ 139
MindSpring (MSPG.O) $20 - $37 $ 61
Qwest Communications (QWST.O) $30 - $42 $ 50
TrustCo Bank of NY (TRST.N) $21 - $28 $ 30
</TABLE>
Note in the above lists the prevalence of utility (AES, AEP, CWT,
CHOW, CPN, ENE, WR), Internet-related (AMZN, AOL, BRCM, ELNK, MSPG,
QWST, UNPH), and software companies (BMCS, ITWO, KEA, MSFT). These
three groups cover nearly all major additions to the fund in the last
half year. Electricity, natural gas and water utilities comprise 25.3%
of the portfolio. Internet-related sectors comprise another 24.9%, for
a total of 50.2% of the Fund. You can already see the barbell strategy
with just these two groups, Internet on one end, utilities on the
other. Software comprises 9.2%, and telecommunications another 12.2%,
for a total of 71.6% of the portfolio spread among these four broadly
defined sectors. We believe there is an enormous opportunity in
deregulation of the power generation industry, and although it may be
a more gradual change than the development of the Internet, it will be
huge.
In our Semi-Annual Report to you for May 31, we made the
following prediction: "Periods of major investment opportunity seem
always to coincide with the elimination of the limits imposed on
civilization by a critical limiting resource. In our view, that
critical resource today is the cost of bandwidth (the size of the pipe
through which all digital data - voice, video, e-mail, etc. - must
pass). We expect that the companies that prosper the most will be
those companies that drive down the cost of bandwidth (QWST, FON, LU,
LVLT, WCOM), and those who prosper directly as a result of cheaper
bandwidth (AOL, YHOO, SE, MSFT, ELNK, MSPG, HRBC)."
Of the companies we picked to prosper above, we sold LVLT for a
small profit, and HRBC for a loss. All the others, with the exception
of SE, have made huge gains in just six months. We warn you, though,
that their prices can be volatile. Any company that goes up over $100
in a few weeks can also go down just as much, and faster. We expect
it, and you should also. As of Dec. 31, AMZN, AOL and YHOO together
make up 13% of the Fund's assets, compared with less than 3% of assets
on 31 May, 1998, due to their explosive price appreciation over the
last few months. When they go down temporarily, our large cash and
utilities positions won't help us much. We won't look good when that<PAGE>
happens, but these companies are the future. We can't afford not to
own them.
We repeat what we said last time: The next major development for
our society will be a plunge in the cost of bandwidth by orders of
magnitude. Such investment opportunities from fundamental
technological changes (the steam engine, auto, electric motors,
telephone, computers) occur so rarely in human history, we should
count ourselves extraordinarily fortunate that we are living through
such a time. We will do our best to make sure you don't miss these
opportunities. Thank you again for your confidence in IPS Millennium
Fund.
Robert Loest, Ph.D., CFA Gregory A. D'Amico
Senior Portfolio Manager President
=======================================================================
THIS ANNUAL REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS UNLESS IT IS PROCEEDED OR ACCOMPANIED BY A FUND PROFILE, OR
BY A PROSPECTUS FOR IPS MILLENNIUM FUND.
========================================================================
Page 4
<PAGE>
<PAGE>
FINANCIAL STATEMENTS
(Audited)
IPS MILLENNIUM FUND
STATEMENT OF ASSETS AND LIABILITIES
For the 12 months ended Nov. 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in securities, at value -
identified cost $18,363,910.65 $24,401,333
Cash .06
Accrued income
Sales of fund shares 700
Security sales 0
Dividends 21,200
Interest 13,318
Other assets 4,409
-----------
Total assets 24,440,961
LIABILITIES:
Accrued expenses 26,012
-----------
Total liabilities 26,012
----------
NET ASSETS ON NOVEMBER 30, 1998
Equivalent to $27.53 per share based on
886,847.608 shares of capital stock
outstanding $24,414,949
==========
STATEMENT OF OPERATIONS
For the 12 months ended Nov. 30, 1998
INVESTMENT INCOME:
Income
Dividend income $191,560
Interest 75,822
----------
Total income 267,381
Expenses:
Management fees 237,948
Expense reimbursement ( 3,222)
Organizational cost 3,222
------------
Total expense 237,948
----------
Net investment income 29,433
==========
<PAGE>
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 137,354
Change in unrealized appreciation
of investments for the year 3,223,186
============
Net gain (loss) on investments 3,360,540
==========
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $3,389,973
==========
/TABLE
<PAGE>
FINANCIAL STATEMENTS
(Audited)
IPS MILLENNIUM FUND
Statement of Changes in Net Assets
For the 12 months ended Nov. 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Year ended Year ended
INCREASE (DECREASE) IN NET 1998 1997
ASSETS FROM OPERATIONS: ---- ----
Investment income-net $ 29,433 ( $18,357)
Net realized gain on 137,354 (227,520)
CHANGE IN UNREALIZED 3,223,186 1,740,804
APPRECIATION ---------- ---------
Net increase in net assets 3,389,973 1,494,927
Distributions to
Investment income-net 0 0
Realized gains 0 (24,680)
---------- ---------
Net decrease in net assets 0 (24,680)
Capital Share Transactions:
Issued-regular 10,621,570 4,773,237
Issued-in lieu of cash 0 24,531
Redeemed - regular ( 1,280,809) ( 197,315)
----------- ----------
INCREASE IN NET ASSETS DUE TO 9,340,761 4,600,453
CAPITAL SHARE TRANSACTIONS
Increase in net assets 12,730,734 6,070,700
NET ASSETS
Beginning of year 11,684,215 5,613,515
End of period $24,414,949 $11,684,215
=========== ===========
</TABLE>
Page 5<PAGE>
<PAGE>
IPS MILLENNIUM FUND
Notes to Financial Statements
Twelve Months Ended November 30, 1998
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
The company is registered under the Investment Company Act of 1940 as
a diversified, open-end management investment company. The company
began selling shares and making investments on January 3, 1995. The
Fund provides investment management and advisory services for its
shareholders, which include individuals, qualified plans and trust
accounts located in the United States.
Security valuation - Investments in securities traded on a national
- ------------------
securities exchange (or reported on the NASDAQ national market) are
stated at the last reported sales price on the day of valuation; other
securities traded in the over-the-counter market and listed securities
for which no sale was reported on that date are stated at the last
quoted bid price. Short-term notes are stated at amortized cost,
which is equivalent to value.
Federal income taxes - The Fund's policy is to comply with the
- --------------------
requirements of the Internal Revenue Code that are applicable to
regulated investment companies and to distribute all its taxable
income to its shareholders. Therefore, no federal income tax
provision is required.
As of November 30, 1998, net unrealized appreciation on investments
for book and federal income tax purposes aggregated $6,037,423. The
cost of portfolio securities for book and federal income tax purposes
was $18,363,911.
Distributions to shareholders - Dividends to shareholders are recorded
- -----------------------------
on the ex-dividend date.
Other - The Fund follows industry practice and records security
- -----
transactions on the trade date for performance calculations and the
trade date plus one for fund accounting. Dividend income is
recognized on the ex-dividend date, and interest income is recognized
on an accrual basis. Discounts and premiums on securities purchased
are amortized over the life of the respective securities.
Use of estimates in the preparation of financial statements - The
- -----------------------------------------------------------
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2 - DISTRIBUTIONS TO SHAREHOLDERS
As of November 30, 1998 there have been no distributions.
NOTE 3 - ORGANIZATIONAL EXPENSES
The Fund has incurred amortized organizational expenses in the amount
of $16,281. Organizational expenses are being amortized monthly over<PAGE>
a period of 60 months, beginning on January 3, 1995. The balance
outstanding on November 30, 1998 was $4,409.
Note 4 - Capital share transactions
As of November 30, 1998, there were an unlimited number of shares of
no par value capital stock authorized and capital paid in aggregated
$18,410,443.
Transactions in capital stock for the period 11/30/97 through 11/30/98
were as follows:
<TABLE>
<CAPTION>
Shares Amount
------ ------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Shares sold 431,562.896 234,740.915 $10,621,569 $4,773,237
Share issued in reinvestment
of Dividends 0 1,312.499 0 24,531
------------ ------------ ----------- -----------
Total 431,562.896 236,053.414 10,621,569 $4,797,768
Shares redeemed 65,382.429 9,838.368 1,280,809 197,315
------------ ------------ ----------- -----------
Net increase 366,180.467 226,215.046 $9,340,760 $4,600,453
</TABLE>
NOTE 5 - INVESTMENT TRANSACTIONS
The Fund made purchases and sales of investment securities (excluding
short-term securities) of $20,495,698 and $13,358,309, respectively,
during the period December 1, 1997 through November 30, 1998; there
were no investment transactions involving U.S. Government obligations.
As of November 30, 1998 the unrealized appreciation of securities was
$6,037,423; there are no accumulated undistributed net realized gains
on investment transactions.
NOTE 6 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Fund pays advisory fees for investment management and advisory
services under a management agreement with IPS Advisory, Inc.(the
Advisor). Under the agreement, the Advisor will pay all of the Fund's
operating expenses, excluding brokerage fees and commissions, taxes,
interest and extraordinary expenses. The Fund is obligated to pay the
Advisor a fee computed and accrued daily and paid monthly at an annual
rate of 1.40% of its average daily net assets to and including
$100,000,000, 1.15% of such assets from $100,000,001 to and including
$250,000,000, and 0.90% of such assets in excess of $250,000,000.
Page 6<PAGE>
Notes to Financial Statements (continued)
Twelve Months Ended November 30, 1998
Certain officers and trustees of the Fund are also officers and
directors of the investment advisor.
Securities Service Network, Inc. (SSNI), the Fund's underwriter, has
received no income from sales commissions earned on sales of the Fund
shares, since it is a no-load fund. Mr. D'Amico and Mr. Loest are
registered representatives of SSNI.
All securities trades for the Fund have been made through SSNI.
Mr. D'Amico and Mr. Loest, as registered representatives of SSNI and
received benefits from securities trading commissions paid by the Fund
to SSNI.
NOTE 7 - PORTFOLIO MANAGER INVESTMENT DISCLOSURE
IPS Millennium Fund prohibit its portfolio manager from trading in
individual stocks. All of the invested assets of portfolio manager
Robert Loest, as well as his immediate family, are invested in IPS
Millennium Fund.
<TABLE>
<CAPTION>
IPS MILLENNIUM FUND
Financial Highlights, Selected Per Share Data and Ratios
For the period ended For the year ended For the year ended For the year ended
Nov. 30, 1998 Nov. 30, 1997 Nov. 30, 1996 Nov. 30, 1995
=================================================================================================================================
Per share data: Per share data: Per share data: Per share data:
<S> <C> <C> <C> <C>
Net asset value:
Beginning of period $22.310 $18.860 $14.996 $12.000
INCOME FROM INVESTMENT OPERATIONS
Net Investment income 0.044 (0.046) 0.021 0.121
Net realized and unrealized gain
(loss) on investments 5.176 3.576 3.959 2.982
------- ------- ------- -------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 5.220 3.530 3.980 3.103
LESS DISTRIBUTIONS:
Dividends from net investment income 0.000 0.000 (0.035) (0.107)
Dividends from net realized gains on
investments (0.000) (0.080) (0.081) 0.000
------- ------- ------- -------
Total distributions $(0.000) $(0.080) $(0.116) $(0.107)
NET ASSET VALUE:
End of period $27.53 $22.310 $18.860 $2.996
======= ======= ======= =======
Total return (annualized) 23.398% 18.746% 26.754% 28.831%
<PAGE>
RATIOS:
Net assets, end of
period (thousands) $24,414.949 $11,684.215 $5,613.515 $1,625,600
Ratio of expenses to average
net assets 1.40% 1.40% 1.40% 1.40%
Ratio of net income to average
net assets .17% 0.23% 0.76% 1.00%
Portfolio turnover rate 87.99% 33.17% 55.17% 26.70%
Average commissions per share $0.05087 $0.04050 $0.05705 $0.10056
</TABLE>
See notes to financial statements.
Page 7
<PAGE>
<PAGE>
IPS Millennium Fund
Investment Portfolio November 30, 1998
<TABLE>
<CAPTION>
Shares or Market Percent of Sector
EQUITY SECURITIES: Principal Amount Value Net Assets Weighting
<S> <C> <C> <C> <C>
Computer & Internet Equipment 5.8%
- ------------------------------- =====
Cisco Systems 9,200 $ 693,450 2.8%
EMC Corp 10,000 $ 725,000 3.0%
Electronic Commerce 4.6%
- ------------------- =====
Amazon.com 3,000 $ 576,000 2.4%
Sterling Commerce 15,000 $ 543,750 2.2%
Electric & Gas Utilities 15.1%
- ------------------------ =====
AES Corp. 3,000 $ 136,688 0.6%
American Electric Power 5,000 $ 231,875 0.9%
California Water Services 6,000 $ 156,375 0.6%
Duke Power 16,000 $ 999,000 4.1%
FPL Group 11,000 $ 673,750 2.8%
Nipsco 34,000 $ 996,625 4.1%
Scana Corp 10,000 $ 325,625 1.3%
Western Resources 5,000 $ 174,688 0.7%
Financial 3.7%
- --------- =====
National Commerce Bancorp 14,999 $ 271,857 1.1%
NetBank 8,000 $ 251,000 1.0%
Trustco & Bank of NY 13,800 $ 386,400 1.6%
Information & Services 5.4%
- ---------------------- =====
Apollo Group 5,000 $ 161,250 0.7%
Equifax Inc. 10,000 $ 414,375 1.7%
Keane 6,000 $ 172,875 0.7%
Yahoo! 3,000 $ 576,000 2.4%
Internet Service Providers 11.5%
- -------------------------- =====
America Online 12,200 $1,068,263 4.4%
@Home 2,000 $ 116,500 0.5%
Concentric Networks 5,000 $ 141,875 0.6%
Earthlink Networks 16,000 $ 973,000 4.0%
MindSpring 8,000 $ 516,500 2.1%
Medical Services 4.4%
- ---------------- =====
HBO & Company 24,400 $ 608,475 2.5%
Quintiles Transnational 9,200 $ 458,850 1.9%
Natural Gas Utilities 10.2%
- --------------------- ======
CalEnergy 20,000 $ 627,500 2.6%
Calpine 25,000 $ 600,000 2.5%
Enron Corp. 24,000 $1,266,000 5.2%
<PAGE>
Pharmaceuticals & Biotechnology 0.5%
- -------------------------------- =====
Abbott Laboratories, Inc. 2,390 $ 114,720 0.5%
Semi-Conductor Technology 2.3%
- ------------------------- =====
Analog Devices 8,000 $ 163,500 0.7%
Broadcom 3,000 $ 267,938 1.1%
National Semiconductor 10,000 $ 141,875 0.6%
Software 9.2%
- -------- =====
BMC Software 10,000 $ 510,625 2.1%
Computer Associates, Inc. 11,000 $ 485,375 2.0%
i2 6,000 $ 148,500 0.6%
Microsoft Corp. 9,000 $ 1,098,000 4.5%
</TABLE>
Page 8<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Shares or Market Percent of Sector
EQUITY SECURITIES: Principal Amount Value Net Assets Weighting
<S> <C> <C> <C> <C>
Telecommunications (Service & Equipment) 12.2%
- ---------------------------------------- =====
Level Three Communications 8,000 $ 276,000 1.1%
Lucent Technologies 5,166 $ 444,599 1.8%
QWEST Communications 14,000 $ 560,000 2.3%
Sprint FON Group 8,000 $ 584,000 2.4%
Sprint PCS Group 4,000 $ 64,000 0.3%
Uniphase 8,000 $ 433,500 1.8%
MCI / WorldCom 10,250 $ 604,750 2.5%
Other Assets 0.1%
Receivables Minus Payables $ 13,616 0.1% ====
Money Market Funds 15.0%
- ------------------ =====
Federated U.S. Treasury Fund 0 $ 0 0.0%
Provident Insured Money Fund 0 $ 0 0.0%
Riverfront U.S. Govt Securities Fund 3,660,408 $3 ,660,408 15.0%
TOTAL ASSETS: 4,111,013 $24,414,952 100.0%
</TABLE>
Page 9<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Shareholders and the Board of Trustees
IPS Funds
IPS Millennium Fund
Knoxville, Tennessee
We have audited the accompanying statement of assets and liabilities
of IPS Millennium Fund, including the schedule for investments in
securities, as of November 30, 1998, and the related statement of
operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the
financial highlights for each of the three years in the period then
ended and the period from inception (January 3, 1995) through November
30, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights.
Our procedures included confirmation of securities owned as of
November 30, 1998, 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 audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of IPS Millennium Fund as of November 30, 1998, the
results of its operations for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the
financial highlights for each of the three years in the period then
ended and the initial period ended November 30, 1995, in conformity
with generally accepted accounting principles.
Knoxville, Tennessee
January 19,1999<PAGE>
