IPS NEW FRONTIER FUND 1999 ANNUAL REPORT
Fellow Shareholders:
We are pleased to present our Annual Report for the 12 months ended
November 30, 1999. Total assets grew from $606,000 to $5,660,120 during the
year. If you would like more frequent updates on the Fund's performance and
other factors, all performance statistics and the complete Fund portfolio are
updated monthly on our Web site. New Frontier is beginning to attract the notice
of the financial press. Fund manager Robert Loest and New Frontier Fund were
recently been the subject of a major article in the January issue of Mutual
Funds magazine. New Frontier has also been ranked in the top 10 funds by Lipper
Analytical Services, in the multicap long term growth category, based on 12
month total returns. All investors should be aware of the small number of stocks
held by New Frontier Fund. We expect to keep this number around 20 stocks for
now, and we may invest large amounts of fund assets in just a few stocks. Our
strategy of buying mostly high tech or Internet companies means that the Fund
will be more volatile than most stock mutual funds. This volatility is even
greater due to the focused nature of the Fund's holdings. While we feel that
long term returns during periods of fundamental technological revolution such as
we are currently experiencing may be higher than during the mature, low growth
industrial economy that existed before 1995, we nevertheless view the dramatic
appreciation in the Fund's NAV in recent months as unsustainable, and caution
investors NOT to expect such returns from any fund on a long-term basis.
[GRAPHIC OMITTED but is represented below]
----------------------------------------------------------------------------
| |
| $10,000 INVESTMENT AT INCEPTION 8/3/98 |
| |
| 08/03/98 12/31/98 05/31/99 11/30/99 |
| |
| V.L. Arithmetic $10,000 $10,145 $11,065 $10,975 |
| S&P 500 $10,000 $11,029 $11,739 $12,588 |
| New Frontier $10,000 $11,836 $14,799 $24,531 |
| |
----------------------------------------------------------------------------
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 NEW FRONTIER VALUE LINE S&P 500
FUND ARITHMETIC INDEX COMPOSITE
<S> <C> <C> <C>
12 MONTHS ENDED 11/30/99 133.63% 12.61% 20.67%
INCEPTION 8/3/98 - 11/30/99 96.74% 7.23% 18.84%
</TABLE>
The total returns above include changes in the Fund's share price, plus
reinvestment of 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 total return with dividends reinvested.
- -------------------------------------------------------------------------------
Phone: 423.524.1676 Web site: HTTP://WWW.IPSFUNDS.COM 1225 Weisgarber Rd.
800.232.9142 E-mail: [email protected] Suite S-380
Fax: 423.544.0630 Knoxville, TN 37909
<PAGE>
TABLE 1: BREAKDOWN BY MARKET CAP
NOV. 30, 1999
SECTOR NUMBER PERCENT
-----------------------------------------------------------------------
1. Large Caps (>$10b) 6 28.6%
2. Mid Caps 13 61.9%
3. Small Caps (<$1b) 2 9.5%
---- ---------
Total 21 100.0%
MEDIAN MARKET CAPITALIZATION: $ 6.3B
WEIGHTED AVERAGE MARKET CAP: $ 20.5B
Management's Discussion & Analysis
----------------------------------
CLASSIFICATION BY MARKET CAPITALIZATION
TABLE 1 presents the Fund's makeup by market capitalization as of
11/30/99. Note that the Fund's asset distribution has undergone a shift away
from the 50% in large- and 50% in mid-cap companies (market capitalization is
price per share times number of shares outstanding, one good measure of a
company's size) in the Semi-Annual Report, and toward small- and mid-caps. We
feel that median market cap is a better measure of the type of fund you own than
is average market cap. The reason is that average market cap is strongly biased
by single, large outliers like AMERICA ON-LINE (AOL.N).
This shift in asset distribution over the last six months is primarily
due to a shift toward a higher proportion of the Fund in newer, less mature
software and and information services companies, such as MICROMUSE (MUSE.O) and
TUMBLEWEED (TMWD.O). The reason for this shift was to seek higher returns than
were possible in some of the older, more mature tech companies like EMC CORP.
(EMC.N) and BMC SOFTWARE (BMCS.O). We expect in the future that the Fund's
market cap profile will continue to be determined by where in the stock market
we find opportunity.
VOLATILITY OF RETURNS
[GRAPHIC OMITTED but is represented below]
----------------------------------------------------------
| |
| Quarter Returns: IPS New FrontierFund |
| vs. Value Line Arithmetic Composite |
| |
| IPS Value Line |
| Quarter ending New Frontier Arithmetic |
| Fund Composite |
| |
| 09/98 -1.92% -16.23% |
| 12/98 20.67% 19.80% |
| 03/99 19.11% -3.46% |
| 06/99 9.59% 17.24% |
| 09/99 11.08% -8.38% |
----------------------------------------------------------
FIGURE 2. Relative volatility of the NEW FRONTIER FUND, on a quarterly basis,
vs. the broad stock market as represented by the VALUE LINE ARITHMETIC
COMPOSITE.
In order to gain a better perspective on your Fund's return and risk
characteristics, review FIGURE 2. Note that New Frontier's downside volatility
has been significantly less than that of the overall market, as represented by
the VALUE LINE ARITHMETIC COMPOSITE (VLAC). This has been true throughout the
Fund's history. However, the Fund is still very volatile on a day-to-day basis,
due to both they type and the small number of companies that it holds. Note also
that New Frontier has again regained its dominance over the VLAC, primarily due
to the shift mentioned above to smaller, faster growing companies.
In August we modified our stock selection strategy. Our concern during
the steep market decline of Summer, 1999 was that the Fund's YTD return was
below that of the Millennium Fund, and it was more volatile. In other words, our
return per unit of risk was below that of the less risky Millennium Fund, which
we felt was unacceptable. New Frontier will be much more volatile than most
funds, but this should also be accompanied by higher returns, or we aren't doing
our job.
Our conclusion was that we were doing too much trading to capture
short-term profits. Our decision was to do less trading, and to focus the Fund's
portfolio even more than it had been. We decided on a core position in three or
four of what we feel are the most clearly dominant winners for the long term,
with higher amounts of the Fund's assets in each one. We also decided to stay
more fully invested, and not to use large cash positions to reduce the Fund's
volatility, but to concentrate more on buying high growth companies, and to
accept the accompanying higher volatility, as long as the returns justified
it.
While this makes the Fund even more volatile than it has been in the
past, it has dramatically improved the Fund's return per unit of risk. We feel
this strategic shift in the Fund's management was what was responsible for our
exceptional return during 1999, most of which came in our last FY quarter (9/99
- - 11/99). This shift can be seen in both FIGURE 1 and FIGURE 2.
<PAGE>
COPYRIGHT 1999, IPS ADVISORY, INC. PAGE 2
CHANGES IN PORTFOLIO SECTORS
TABLE 2 on the shows a snapshot of the Fund's investment sector makeup
and changes over the last six months. Note first of all the large cash positions
at the end of both periods, which is typical. Also, you can see that for most
portfolio sectors, there have been major changes. In many cases we have gone
from 0% to a large position, as in the case of INFORMATION SERVICES, or from a
large position to nothing, as with NATURAL GAS UTILITIES.
TABLE 2
INDUSTRY SECTOR POSITION (%) POSITION (%)
5/31/99 11/30/99
- -------------------------------------------------------------------------------
Cash 32.9% 10.6%
Cable Service Providers 1.7% 0.0%
Computer & Internet Equip 9.7% 3.6%
Electronic Commerce 11.8% 6.3%
Information Services 14.5% 20.1%
Internet Service Providers 11.8% 3.9%
Semi-Conductor Technology 0.0% 1.5%
Software, General 12.9% 21.0%
Software, E-commerce 2.5% 19.4%
Telecommunications 2.3% 13.5%
------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
This is the result of successful stock picks. OUR OBJECTIVE WHEN WE BUY
A COMPANY IS NORMALLY A 50% PLUS SHORT-TERM GAIN. We are buying companies whose
stock price has plunged on what we believe are clearly short-term factors,
either particular to that company, or to the industry sector. If we are correct,
the stock recovers within a few months at most, and we sell it.
Thus, over a six month period we should experience large changes in the
Fund's investment sector make-up if we are accurate in our assessment of the
companies we purchase for you. So far, this has proven to be the case. This also
results in high turnover ratios and large capital gains, so be prepared to get
socked with a big capital gains distribution at the end of 1999. We think the
returns justify it, but all investors should understand our management strategy,
because it is better suited for qualified plans where capital gains are
tax-deferred, than for taxable accounts.
ANALYSIS OF PERFORMANCE
We have broken down our performance gains by investment sector below,
and listed the major contributors to each sector's performance.
<TABLE>
<CAPTION>
INVESTMENT SECTOR 6-MONTH RETURN PRIMARY CONTRIBUTORS
- ----------------- -------------- --------------------
<S> <C> <C>
COMPUTER NETWORKING ( 9.5)% COMS (-26.8%)
ELECTRIC UTILITIES 12.0%
ELECTRONIC COMMERCE 70.3% AMZN (+153.2%)
FINANCIAL & BANKING 33.1% NCBC (+34.7%)
INFORMATION SERVICES 57.5% BCST (+53.4%)
INTERNET SERVICE PROVIDERS 103.8% CNCX (+85.3%), VRIO (+206.9%)
MEDICAL SERVICES 32.8% HBOC (+32.8%)
NATURAL GAS UTILITY 41.5% CPN (+45.7%)
SEMICONDUCTORS 146.7% ADI (+50.2%), BRCM (+56.7%), NSM (+56.4%)
SOFTWARE 8.0% ITWO (+19.2%)
TELECOMMUNICATIONS 156.6% GBLX (+71.8%), JDSU (+63.6%), PCS (+79.5%)
</TABLE>
The largest contributors by far to the Fund's capital gains were the
TELECOMMUNICATION, SEMICONDUCTOR and INTERNET SERVICE PROVIDER sectors.
Together, they accounted for 70.7% of the six-month period's total capital gains
of $317,354. If you add in the INFORMATION SERVICES sector - mostly Internet
companies BROADCOM (BRCM.O), LYCOS (LCOS.O), NETWORK SOLUTIONS (NSOL.O) and
YAHOO! (YHOO.O) - the total reaches nearly 90% of capital gains.
<PAGE>
COPYRIGHT 1999, IPS ADVISORY, INC. PAGE 3
There is an obvious theme here. VIRTUALLY ALL OF YOUR CAPITAL GAINS
CAME FROM THE INTERNET IN ONE WAY OR ANOTHER. Most or all of the growth in our
economy comes from increasing connectivity. The Internet is increasingly the way
we communicate. We expect, for the foreseeable future, to concentrate our bets
on these areas. What this means for you is that your portfolio will be more
volatile than most funds on a day to day basis, because we are buying volatile
stocks, and we are taking large positions. You should not expect that your
portfolio will track the overall market on a daily basis, because performance
tends to be determined by individual companies in the Fund with very large
moves, not by the overall stock market. We sincerely appreciate your confidence
in IPS NEW FRONTIER FUND. Please visit your Web site, and let us know if you
have any questions or suggestions for us.
ROBERT A. 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 PROFILE OR A PROSPECTUS FOR
IPS NEW FRONTIER FUND.
<PAGE>
FINANCIAL STATEMENTS
IPS NEW FRONTIER FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999
ASSETS:
Investments in securities, at value - $6,303,549
identified cost 4,426,937
Cash 26,100
Accounts Receivable
Fund shares sold 66,298
Interest 2,841
----------
Total assets 6,398,788
LIABILITIES:
Accounts Payable
Investments securities purchased 696,399
Accrued expenses 5,519
----------
Total liabilities 701,918
Net Assets 5,696,870
Net assets consist of:
Paid in capital 3,648,764
Accumulated realized capital gains 171,494
Accumulated unrealized capital gain 1,876,612
----------
Net Assets 5,696,870
Net asset value (5,696,870/193,818 shares) $ 29.39
==========
STATEMENT OF OPERATIONS
Year Ending November 30, 1999
-------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend income $ 2,174
Interest 23,316
-----------
Total income 25,490
Expenses:
Management fees 28,048
-----------
Total expense 28,048
Net investment income (2,558)
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 192,875
Change in unrealized appreciation
of investments for the year 1,835,687
-----------
Net gain (loss) on investments 2,028,562
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 2,026,004
The accompanying notes are an integral part of the financial statements.
<PAGE>
FINANCIAL STATEMENTS
IPS NEW FRONTIER FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------
December 1,1999 to August 3,1998 to
November 30, 1999 November 30,1998
INCREASE (DECREASE) IN NET 1999 1998
- -------------------------- ---- ----
ASSETS FROM OPERATIONS:
Investment income-net ($ 2,558) $ 1,131
Net realized gain on investments 192,875 (18,829)
CHANGE IN UNREALIZED 1,835,687 40,925
----------- ---------
APPRECIATION
Net increase in net assets 2,026,004 23,227
resulting from operations
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Investment income-net (1,125) 0
Realized gains 0 0
----------- ---------
Net decrease in net assets due to (1,125) 0
distributions to shareholders
CAPITAL SHARE TRANSACTIONS:
Issued-regular 3,538,001 585,867
Issued-in lieu of cash 1,125 0
distributions
Redeemed - regular (473,229) (3,000)
----------- ---------
INCREASE IN NET ASSETS DUE TO 3,065,897 582,867
CAPITAL SHARE TRANSACTIONS
INCREASE IN NET ASSETS 5,090,776 606,094
NET ASSETS 606,094 0
Beginning of year
End of period $ 5,696,870 $ 606,094
=========== =========
he accompanying notes are an integral part of the financial statements.
<PAGE>
IPS NEW FRONTIER FUND
FINANCIAL HIGHLIGHTS, SELECTED PER SHARE DATA AND RATIOS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD
NOVEMBER 30, 1999 AUGUST 3, 1998 TO NOVEMBER 30, 1998
----------------- ------------------------------------
PER SHARE DATA: PER SHARE DATA:
SELECTED PER SHARE DATA:
<S> <C> <C>
Net assets value beginning of period $ 12.60 $ 12.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment income (0.03) 0.03
Net realized and unrealized gain
(loss) on investments 16.84 0.57
------------ ----------
TOTAL INCOME (LOSS) FROM INVESTMENT OPERATIONS 16.81 0.60
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) 0.00
------------ ----------
NET ASSET VALUE:
End of period $ 29.39 $ 12.60
============ ==========
Total return 133.37% 5.00% <F1>
RATIOS:
Net assets, end of period (thousands) $ 5,697 $ 606
Ratio of expenses to average net assets 1.40% 1.40% <F1>
Ratio of net income to average net assets (.13%) 0.27%
Portfolio turnover rate 217.50% 15.48%
<FN>
<F1> ANNUALIZED.
</FN>
</TABLE>
================================================================================
NOTES TO FINANCIAL STATEMENTS
YEAR ENDING NOVEMBER 30, 1999
NOTE 1 - ORGANIZATION
The company is registered under the Investment Company Act of 1940 as a
non-diversified, open-end management investment company. The company began
selling shares and making investments on August 3, 1998. The fund's investment
objective is growth of capital.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
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.
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. The specific
identification method is used for determining gains and losses for financial
statement and income purposes.
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.
<PAGE>
NOTE 3 - CAPITAL SHARE TRANSACTIONS
As of November 30, 1999, there were an unlimited number of shares of no par
value capital stock authorized and capital paid was $3,648,764.
Transactions in capital stock for the period 12/01/98 through 11/30/99 were as
follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares sold 181,602 48,349 $3,538,001 $585,867
Share issued in reinvestment
of Dividends 87 0 1,125 0
------- ------ ---------- --------
Total 181,689 48,349 3,539,126 585,867
Shares redeemed 35,981 239 473,230 3,000
------- ------ ---------- --------
Net increase 145,708 48,110 $3,065,896 $582,867
</TABLE>
NOTE 4 - INVESTMENT TRANSACTIONS
The Fund made purchases of investment securities (excluding short-term
securities) of $5,974,865 and 3,549,593, respectively, during the period
December 1, 1998 through November 30, 1999; there were no investment
transactions involving U.S. Government obligations. At November 30, 1999, the
unrealized appreciation for all securities was$1,930,786 and the unrealized
depreciation for all securities was $54,174. For a net unrealized appreciation
of $1,876,612. The aggregate cost of securities for federal income tax purposes
at November 30, 1999 was $4,426,937.
NOTE 5 - 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 $250,000,001. Total fees
paid to IPS Advisory Inc. during the year ended November 30, 1999 was $28,048.
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.
NOTE 6 - CHANGE OF INDEPENDENT ACCOUNTANTS
Effective October 21, 1999 the Trust selected the accounting firm of McCurdy &
Associates CPA's Inc. To serve as the funds' independent certified public
accountants for the fiscal year ended November 30, 1999 to fill a vacancy
resulting from Cherry, Bekaert & Holland, L.L.P.'s resignation. Cherry, Bekaert
& Holland, L.L.P. had served as the funds' independent certified public
accountants for the funds' fiscal years ended November 30, 1998. Cherry, Bekaert
& Holland's report on the financial statements of the fund for the fiscal year
ended November 30, 1998 did not contain an adverse opinion or disclaimer of
opinion or was not qualified or modified as to uncertainty, audit scope or
accounting principles. There were no disagreements with Cherry, Bekaert &
Holland, L.L.P. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure during the fiscal year
ended November 30, 1998 through the date of their resignation.
The Trust represents that it had not consulted with McCurdy and Associates CPS's
Inc. at any time prior to their engagement with respect to the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Fund's financial
statements.
NOTE 7 - RECLASSIFICATION OF CAPITAL ACCOUNTS
The Fund has adopted Statement of position 93-2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies. As a result of this statement, the Fund
changed the classification of distributions to shareholders to better disclose
the difference between financial statement amounts and distributions to
shareholders to better disclose the difference between financial statement
amounts and distributions determined in accordance with income tax regulations.
Accordingly, undistributed net investment loss and accumulated realized capital
gain have been adjusted as of November 30, 1999 in the following amounts. Theses
restatements did not affect net investment income, net realized gain (loss) or
net assets for the year ended November 30, 1999.
<TABLE>
<CAPTION>
UNDISTRIBUTED NET INVESTMENT LOSS ACCUMULATED REALIZED CAPITAL GAIN (LOSS)
--------------------------------- ----------------------------------------
<S> <C> <C>
2,552 (2,552)
</TABLE>
<PAGE>
IPS NEW FRONTIER FUND
SCHEDULE OF INVESTMENTS
NOVEMBER 30, 1999
<TABLE>
<CAPTION>
EQUITY SECURITIES: SHARES VALUE
<S> <C> <C> <C>
COMPUTER NETWORKING - 3.6
Radio Frequency Microdevices <F1> 3,000 $ 203,810
ELECTRONIC COMMERCE - 10.5
Amazon.com <F1> 2,000 170,125
Doubleclick <F1> 1,500 240,094
Verisign <F1> 1,000 185,813
INFORMATION & SERVICES - 20.1
CMGI <F1> 1,500 220,688
Mapquest <F1> 1,000 24,875
Network Solutions <F1> 1,700 254,894
Yahoo! Inc. <F1> 3,000 638,250
INTERNET SERVICE PROVIDERS - 3.8
America Online <F1> 2,000 145,375
Verio <F1> 2,000 71,875
SEMICONDUCTORS - 1.5
National Semiconductor <F1> 2,000 85,000
SOFTWARE - 36.2
Broadvision <F1> 3,000 279,188
Micromuse Inc. <F1> 1,000 114,375
Phone.com <F1> 1,400 203,000
Realnetworks <F1> 5,000 697,500
Silknet <F1> 1,000 88,250
Software.com <F1> 3,000 291,188
Tumbleweed Communication <F1> 2,000 78,000
Vitria Technology <F1> 3,000 299,438
TELECOMMUNICATIONS - 13.6
Clarent Corp. <F1> 1,000 81,250
JDS Uniphase <F1> 3,000 686,250
TOTAL COMMON STOCK - (COST $3,182,626) - 89.3 5,059,238
-----------
MONEY MARKET FUNDS - 22.0 Principal Amount
Riverfront U.S. Govt Securities Fund $ 1,244,331 1,244,311
-----------
TOTAL INVESTMENTS - (COST $4,426,937) - 111.3% 6,303,549
EXCESS OF OTHER LIABILITIES OVER OTHER ASSETS - (11.3) (643,429)
-----------
NET ASSETS - 100 $ 5,660,120
===========
<FN>
<F1> Non-income producing
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Shareholders and
Board of Trustees
IPS New Frontier Fund
We have audited the accompanying statement of assets and liabilities of IPS New
Frontier Fund, including the schedule of portfolio investments, as of November
30, 1999, and the related statement of operations for the year then ended, and
the statement of changes in net assets and financial highlights for the year
then ended and the period from August 3, 1998 (commencement of operations) to
June 30, 1998 in the period then ended. 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. Our procedures included confirmation of investments and cash held by
the custodian as of November 30, 1999 by correspondence with the custodian and
broker. 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
New Frontier Fund as of November 30, 1999, the results of its operations for the
year then ended, and the changes in its net assets and the financial highlights
for the year then ended and for the period from August 3, 1998 (commencement of
operations) to June 30, 1998 in the period then ended, in conformity with
generally accepted accounting principles.
McCurdy & Associates CPA's, Inc.
Westlake, Ohio
December 8, 1999
