<PAGE> 1
[LOGO]
FAIRPORT FUNDS
Charting A Course You Can TrustSM
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
- Fairport Midwest Growth Fund
- Fairport Growth and Income Fund
- Fairport Government Securities Fund
April 30, 1996
Advised by
Roulston & Company, Inc.
<PAGE> 2
FAIRPORT FUNDS SEMI-ANNUAL REPORT TO SHAREHOLDERS
- --------------------------------------------------------------------------------
May 8, 1996
Dear Shareholder,
We are pleased to issue the financial report on the Fairport Funds for the six
months ended April 30, 1996.
The Fairport Midwest Growth Fund gained 14.12% during the period, while the
Fairport Growth and Income Fund gained 10.71%. These returns were earned in a
period when the market, as measured by the Standard & Poor's 500 Stock Index,
gained by 13.75%. The Fairport Government Securities Fund gained 0.19% during
the period while the Lehman Brothers Intermediate Treasury Bond Index increased
by 1.21%.
During the six months ended April 30, 1996, economic activity continued at the
slower pace set in the preceding year. While government shutdowns, strikes at
Boeing and General Motors, and a severe winter in the eastern half of the
country provided some minor peaks and valleys, the underlying trend of slow to
moderate growth has persisted.
Capital spending and export growth remain the driving engines of this expansion,
while consumer and public sector spending remain the restraining elements.
Despite some worrisome price increases among a few commodities, thanks to
strong productivity gains most underlying inflation numbers remain under
control.
Continued moderate economic growth approaching 3% with inflation under control
remains a favorable setting for both the bond and stock markets.
In the commentary that follows on each of the Funds you will note a common theme
that has long been a hallmark of our investment management. Research is the
cornerstone of our investment process. Our research efforts for the Fairport
Funds continue and give us confidence in the future of the economy and the
portfolios we manage on your behalf.
/s/ Scott D. Roulston /s/ Joseph A. Harrison
Scott D. Roulston Joseph A. Harrison
President Director of Investments
<PAGE> 3
FAIRPORT FUNDS INVESTMENT ADVISER'S REPORT
- --------------------------------------------------------------------------------
FAIRPORT MIDWEST GROWTH FUND
The graph below compares the increase in value of a $10,000 investment in
Fairport Midwest Growth Fund with the performance of the Standard & Poor's 500
Stock and Lipper Growth Fund indices.
[GRAPHIC]
FAIRPORT MIDWEST GROWTH FUND: GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
<S> <C>
1 Year ............. 24.44%
Since Inception .... 19.53%
<FN>
* For period ending 4/30/96
</TABLE>
<TABLE>
<CAPTION>
FAIRPORT MIDWEST GROWTH FUND
Fairport Midwest Lipper Growth Standard & Poor's
Growth Fund Fund Index 500 Stock Index
<S> <C> <C> <C>
7/1/93 $10,000 $10,000 $10,000
7/93 10,200 9,988 9,970
10/93 11,090 10,653 10,480
1/94 11,730 11,088 10,497
4/94 11,847 10,479 10,100
7/94 11,796 10,457 10,482
10/94 12,298 10,871 10,880
1/95 12,222 10,587 10,914
4/95 13,263 11,631 12,019
7/95 14,950 13,127 13,207
10/95 14,532 13,478 13,750
1/96 14,514 14,271 15,127
4/96 16,584 14,989 15,641
</TABLE>
Past performance is not indicative of future results.
Fairport Midwest Growth Fund was established to achieve capital appreciation
through the investment in equity securities of companies that are headquartered
in the eight-state area contiguous to the Great Lakes.
While the Fund's objective is growth, investments are not limited to growth
stocks. We seek opportunities in a broad spectrum of investments from
traditional growth companies to highly cyclical companies.
Investment decisions are driven by intense and continuous fundamental research.
This research focus attempts to uncover a combination of internal and external
change at a company that presents an unusual appreciation potential.
Internal changes that would be significant might include:
- - An internal change in management
- - A strategic decision to change the business focus of the company or a
sector of the company that could include an acquisition or divestiture
- - The development of an important new product or service
- - Adoption of new operating methods or systems that could positively impact
profitability and cash flow.
Significant external changes might include:
- - A new CEO or other important manager brought in from outside the company
- - A structural change such as a consolidation or bankruptcy in an important
customer industry
- - A significant change in the competitive environment caused by a new entrant
into the market, a new product introduced by a competitor or a dramatic
change in product pricing or costs
- - The development of a new technology that could impact the industry.
While the above lists are far from inclusive, they provide some examples of the
type of changes our research process attempts to identify and analyze.
Looking to the year ahead, divergent demand trends and margin pressures should
put even greater emphasis on a research-driven stock selection process. The
Midwest secular trends of increased productivity, global competitiveness and
strong demand, continuing manufacturing and service diversity and growing
technological presence should continue to present investment opportunities.
<PAGE> 4
FAIRPORT FUNDS
- --------------------------------------------------------------------------------
FAIRPORT GROWTH AND INCOME FUND
The graph below compares the increase in value of a $10,000 investment in
Fairport Growth and Income Fund with the performance of the Standard & Poor's
500 Stock and Lipper Growth & Income Fund indices.
[GRAPHIC]
FAIRPORT GROWTH AND INCOME FUND: GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
<S> <C>
1 Year ............. 20.46%
Since Inception .... 13.02%
<FN>
* For period ending 4/30/96
</TABLE>
<TABLE>
<CAPTION>
FAIRPORT GROWTH AND INCOME FUND
Fairport Growth Lipper Growth and Standard & Poor's
and Income Fund Income Fund Index 500 Stock Index
<S> <C> <C> <C>
7/1/93 $10,000 $10,000 $10,000
7/93 10,030 10,054 9,970
10/93 10,398 10,606 10,480
1/94 10,895 11,051 10,862
4/94 10,682 10,478 10,241
7/94 10,899 10,677 10,482
10/94 10,889 10,941 10,880
1/95 10,940 10,778 10,914
4/95 11,652 11,759 12,019
7/95 12,541 12,799 13,207
10/95 12,780 13,125 13,750
1/96 14,075 14,314 15,127
4/96 14,149 14,980 15,641
</TABLE>
Past performance is not indicative of future results.
Fairport Growth and Income Fund was established to achieve capital appreciation
and current income primarily through investment in common stocks or securities
convertible into common stocks.
The investment policy is to invest in a diversified portfolio of dividend-paying
common stocks which have been researched by our own staff and offer reasonable
valuation based on price to earnings, book value and cash flows.
Our investment strategy is to seek out companies that meet the demanding
fundamental analysis of our research staff. Visits with management, suppliers,
customers, distributors and unions are among the sources utilized by our
analysts to form judgments about the outlook for each company. The results of
this analysis are joined with rigorous valuation for each investment in the
portfolio.
Two financial companies that typify our investment approach are First Empire
State Corporation and Norwest Corporation. Both companies are reasonably valued
by the marketplace reflecting their reliance on interest rates for a substantial
portion of their earnings. Yet each company has established itself as an
innovative, low-cost provider of financial services able to sustain strong
earnings in any foreseeable interest rate environment.
Currently the Fund is diversified among 38 investments representing most sectors
of our economy. Based on our broad-based research effort, we continue to be
impressed with the favorable outlook for well-managed companies that have taken
the requisite action to improve profitability. Conversations with a broad cross
section of managements point to continued strong earnings domestically. A strong
relative competitive position for U.S. manufacturers enhances the earnings
outlook for many companies. We will continue to seek out those companies that
present a favorable earnings outlook at prices that offer a good value.
2
<PAGE> 5
INVESTMENT ADVISER'S REPORT
- --------------------------------------------------------------------------------
FAIRPORT GOVERNMENT SECURITIES FUND
The graph below compares the increase in value of a $10,000 investment in
Fairport Government Securities Fund with the performance of the Lehman Brothers
Intermediate Treasury Bond Index.
[GRAPHIC]
FAIRPORT GOVERNMENT SECURITIES FUND: GROWTH OF A HYPOTHETICAL $10,000 INVESTMENT
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN*
<S> <C>
1 Year .............. 8.05%
Since Inception ..... 3.38%
<FN>
* For period ending 4/30/96
</TABLE>
<TABLE>
<CAPTION>
Fairport Government Lehman Brothers Intermediate
Securities Fund Treasury Bond Index
<S> <C> <C>
7/1/93 $10,000 $10,000
7/93 10,000 10,019
10/93 10,304 10,236
1/94 10,346 10,328
4/94 9,649 9,972
7/94 9,748 10,118
10/94 9,558 10,067
1/95 9,733 10,215
4/95 10,192 10,588
7/95 10,628 10,963
10/95 10,968 11,249
1/96 11,350 11,599
4/96 10,989 11,386
</TABLE>
Past performance is not indicative of future results.
In order to meet its objective of current income with preservation of capital,
Fairport Government Securities Fund seeks to minimize credit risk by investment
in securities issued directly by the U.S. Government. Because changes in
interest rates affect the value of the Fund's holdings, investment in issues
maturing in less than ten years are the primary focus of the portfolio.
During the past six months some concerns over energy prices and a few
agricultural commodities, along with the normal ebb and flow of concerns over
the pace of economic growth, produced a brief increase in interest rates. It has
been nearly 30 years since we have enjoyed four consecutive years with inflation
at 3.0% or less. Our outlook calls for continued moderate growth and low
inflation which should provide a favorable environment for the bond market.
3
<PAGE> 6
FAIRPORT FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FAIRPORT MIDWEST GROWTH FUND April 30, 1996
=====================================================================
(Unaudited) Shares Value
- ---------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 98.46%
CAPITAL GOODS-20.84%
Acme-Cleveland Corp. ........................ 97,000 $ 2,922,125
AMP, Inc. ................................... 36,700 1,642,325
Kennametal, Inc. ............................ 20,000 757,500
Myers Industries, Inc. ...................... 120,000 2,175,000
Nordson Corp. ............................... 24,700 1,494,350
Park-Ohio Industries, Inc.* ................. 100,509 1,871,980
Trinova Corp. ............................... 43,000 1,515,750
----------
12,379,030
- ---------------------------------------------------------------------
CONSUMER DURABLES-17.66%
Cooper Tire & Rubber Co. .................... 55,000 1,347,500
Federal-Mogul Corp. ......................... 67,000 1,273,000
Juno Lighting, Inc. ......................... 100,000 1,481,250
Masco Corp. ................................. 42,000 1,144,500
Premark International, Inc. ................. 40,000 2,055,000
Royal Appliance Manufacturing Co.* .......... 300,000 1,837,500
Varity Corp.* ............................... 31,600 1,346,950
----------
10,485,700
- ---------------------------------------------------------------------
CONSUMER NON-DURABLES-17.20%
Barry (R.G.) Corp.* ......................... 106,666 1,853,322
Consolidated Stores Corp.* .................. 54,700 1,969,200
Fay's Drug, Inc. ............................ 175,400 1,512,825
Rite Aid Corp. .............................. 55,000 1,629,375
Universal Foods Corp. ....................... 40,500 1,387,125
Worthington Foods, Inc. ..................... 120,000 1,860,000
----------
10,211,847
- ---------------------------------------------------------------------
ENERGY-3.31%
Belden & Blake Corp.* ....................... 97,100 1,966,275
- ---------------------------------------------------------------------
FINANCE-12.44%
First Empire State Corp. .................... 7,000 1,666,000
National Auto Credit, Inc.* ................. 176,000 2,508,000
Norwest Corp. ............................... 39,800 1,437,775
Star Banc Corp. ............................. 27,000 1,778,625
----------
7,390,400
- ---------------------------------------------------------------------
</TABLE>
4
<PAGE> 7
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
MATERIALS/SERVICES-24.13%
Bearings, Inc. .................................................................... 78,750 $ 2,520,000
Duriron Co., Inc. ................................................................. 55,800 1,464,750
Figgie International, Inc. Class A* ............................................... 180,000 2,385,000
Libbey, Inc. ...................................................................... 48,100 1,118,325
Owens Corning Fiberglass Corp.* ................................................... 29,700 1,195,425
Pioneer Standard Electronics, Inc. ................................................ 160,000 2,600,000
USG Corp.* ........................................................................ 62,000 1,619,750
Worthington Industries, Inc. ...................................................... 70,083 1,427,941
----------
14,331,191
- -----------------------------------------------------------------------------------------------------------------
TECHNOLOGY-2.88%
Telxon Corp. ...................................................................... 74,400 1,711,200
- -----------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS-(COST $45,897,152) ............................................ 58,475,643
- -----------------------------------------------------------------------------------------------------------------
Principal
Amount
- -----------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.57%
United Missouri Bank, U.S. Treasury Note, $920,000 par, 7.50% coupon,
due 10/31/99, dated 04/30/96, to be sold on 05/01/96 at $934,130 (Cost $934,000) $ 934,000 934,000
- -----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.03% (COST $46,831,152)** .................................... 59,409,643
----------
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS-(0.03%) ............................ (15,989)
----------
NET ASSETS-100.00% ................................................................ $ 59,393,654
==========
=================================================================================================================
<FN>
* Non-income producing security.
**Also represents cost for Federal income tax purposes.
See accompanying notes to financial statements.
</TABLE>
5
<PAGE> 8
FAIRPORT FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FAIRPORT GROWTH AND INCOME FUND April 30, 1996
================================================================================
(Unaudited) Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 91.76%
CAPITAL GOODS-15.04%
Boeing Co. ........................................... 7,000 $ 574,875
Emerson Electric Co. ................................. 10,000 836,250
General Electric Co. ................................. 11,000 852,500
Harnischfeger Industries, Inc. ....................... 22,000 891,000
Johnson Controls, Inc. ............................... 12,000 858,000
Kennametal, Inc. ..................................... 1,300 49,238
---------
4,061,863
- --------------------------------------------------------------------------------
CONSUMER DURABLES-16.45%
Cooper Tire & Rubber Co. ............................. 25,000 612,500
Leggett & Platt, Inc. ................................ 28,000 721,000
Masco Corp. .......................................... 24,000 654,000
Premark International, Inc. .......................... 14,000 719,250
Sherwin-Williams Co. ................................. 17,000 794,750
TRW, Inc. ............................................ 10,000 938,750
---------
4,440,250
- --------------------------------------------------------------------------------
CONSUMER NON-DURABLES-19.61%
Banta Corp. .......................................... 27,000 661,500
Baxter International, Inc. ........................... 10,000 442,500
Beckman Instruments, Inc. ............................ 20,000 740,000
Dean Foods Co. ....................................... 20,000 467,500
Dial Corp. ........................................... 26,000 731,250
McGraw-Hill Companies, Inc. .......................... 7,400 326,525
Rite Aid Corp. ....................................... 26,000 770,250
Sara Lee Corp. ....................................... 24,000 744,000
Universal Foods Corp. ................................ 12,000 411,000
---------
5,294,525
- --------------------------------------------------------------------------------
ENERGY-7.49%
Exxon Corp. .......................................... 8,000 680,000
Questar Corp. ........................................ 22,000 770,000
Royal Dutch Petroleum Co. ............................ 4,000 573,000
---------
2,023,000
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (CONT.)
FINANCE-13.29%
American International Group, Inc. ................................................ 6,750 $ 616,781
First Empire State Corp. .......................................................... 3,000 714,000
KeyCorp ........................................................................... 15,000 579,375
National City Corp. ............................................................... 22,000 811,250
Norwest Corp. ..................................................................... 24,000 867,000
-----------
3,588,406
- ---------------------------------------------------------------------------------------------------------------
MATERIALS/SERVICES-11.07%
Great Lakes Chemical Corp. ........................................................ 10,000 682,500
Hanna (M.A.) Co. .................................................................. 13,500 465,750
Ogden Corp. ....................................................................... 20,000 405,000
Teleflex, Inc. .................................................................... 16,000 742,000
Worthington Industries, Inc. ...................................................... 34,000 692,750
-----------
2,988,000
- ---------------------------------------------------------------------------------------------------------------
TECHNOLOGY-3.20%
Harris Corp. ...................................................................... 14,000 864,500
- ---------------------------------------------------------------------------------------------------------------
UTILITIES-5.61%
AT&T Corp. ........................................................................ 12,000 735,000
GTE Corp. ......................................................................... 18,000 780,750
-----------
1,515,750
- ---------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS-(COST $19,663,400) ............................................ 24,776,294
- ---------------------------------------------------------------------------------------------------------------
Principal
Amount
- ---------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 8.21%
United Missouri Bank, U.S. Treasury Note, $2,182,000 par, 7.50% coupon, due
10/31/99, dated 04/30/96, to be sold on 05/01/96 at $2,216,308 (Cost $2,216,000) $ 2,216,000 2,216,000
- ---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.97% (COST $21,879,400)** ..................................... 26,992,294
-----------
CASH AND OTHER ASSETS NET OF LIABILITIES-0.03% .................................... 8,146
-----------
NET ASSETS-100.00% ................................................................ $27,000,440
===========
===============================================================================================================
<FN>
**Also represents cost for Federal income tax purposes.
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 10
FAIRPORT FUNDS SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FAIRPORT GOVERNMENT SECURITIES FUND April 30, 1996
=============================================================================================================
Principal
(Unaudited) Amount Value
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY NOTES -- 97.08%
U.S. TREASURY NOTES
5.500%, 09/30/97 .................................................................. $ 550,000 $ 547,167
5.125%, 06/30/98 .................................................................. 750,000 735,757
6.875%, 08/31/99 .................................................................. 1,800,000 1,829,916
5.500%, 04/15/00 .................................................................. 1,650,000 1,602,100
5.625%, 02/28/01 .................................................................. 500,000 483,560
6.250%, 02/15/03 .................................................................. 1,450,000 1,425,379
5.750%, 08/15/03 .................................................................. 650,000 617,598
5.875%, 02/15/04 .................................................................. 1,200,000 1,143,264
- -------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY NOTES-(COST $8,574,350) ....................................... 8,384,741
- -------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.20%
United Missouri Bank, U.S. Treasury Note, $187,000 par, 7.50% coupon,
due 10/31/99, dated 04/30/96, to be sold on 05/01/96 at $190,026 (Cost $190,000) 190,000 190,000
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-99.28% (COST $8,764,350)** ...................................... 8,574,741
----------
CASH AND OTHER ASSETS NET OF LIABILITIES-0.72% .................................... 62,560
----------
NET ASSETS-100.00% ................................................................ $8,637,301
==========
=============================================================================================================
<FN>
**Also represents cost for Federal income tax purposes.
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 11
FAIRPORT FUNDS STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 30, 1996
=======================================================================================================================
FAIRPORT MIDWEST FAIRPORT GROWTH FAIRPORT GOVERNMENT
(Unaudited) GROWTH FUND AND INCOME FUND SECURITIES FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments in securities at value (cost $46,831,152,
$21,879,400 and $8,764,350, respectively) ............ $ 59,409,643 $26,992,294 $ 8,574,741
Cash .................................................... 942,646 2,191,105 190,398
Receivable for capital stock sold ....................... 79,269 20,500 0
Dividends and interest receivable ....................... 23,202 26,029 86,499
Deferred organization costs (Note A) .................... 12,434 12,434 12,434
Other assets ............................................ 9,525 4,491 1,143
------------ ----------- -----------
Total assets ..................................... 60,476,719 29,246,853 8,865,215
------------ ----------- -----------
LIABILITIES
Payable for capital stock redeemed ...................... 602 0 0
Accrued expenses ........................................ 51,713 30,413 0
Distributions payable ................................... 0 0 37,914
Payable for securities purchased ........................ 1,030,750 2,216,000 190,000
------------ ----------- -----------
Total liabilities ................................. 1,083,065 2,246,413 227,914
------------ ----------- -----------
NET ASSETS
Applicable to 3,902,777, 2,009,214
and 901,848 shares outstanding, respectively ......... $ 59,393,654 $27,000,440 $ 8,637,301
============ =========== ===========
NET ASSETS CONSIST OF
Capital paid-in ......................................... $ 46,045,273 $21,349,033 $ 8,841,078
Undistributed net investment income (loss) .............. (8,041) 51,960 0
Accumulated net realized gain (loss) on investments ..... 777,931 486,553 (14,168)
Net unrealized appreciation (depreciation) on investments 12,578,491 5,112,894 (189,609)
------------ ----------- -----------
$ 59,393,654 $27,000,440 $ 8,637,301
============ =========== ===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE ........................... $ 15.22 $ 13.44 $ 9.58
=======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 12
FAIRPORT FUNDS STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended April 30, 1996
================================================================================================================
FAIRPORT MIDWEST FAIRPORT GROWTH FAIRPORT GOVERNMENT
(Unaudited) GROWTH FUND AND INCOME FUND SECURITIES FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends ........................................ $ 338,663 $ 282,975 $ 0
Interest ......................................... 91,900 27,511 246,905
----------- ----------- -----------
Total investment income .................... 430,563 310,486 246,905
----------- ----------- -----------
EXPENSES
Investment advisory fees (Note B) ................ 201,940 96,273 10,766
Transfer agent fees .............................. 23,068 16,266 11,820
Administration fees .............................. 29,951 14,243 4,780
Distribution expenses (Note B) ................... 67,375 32,120 10,766
Pricing fees ..................................... 15,830 11,347 10,417
Printing fees .................................... 831 27 288
Custodian fees ................................... 11,827 8,089 5,089
Insurance fees ................................... 9,133 4,712 4,028
Amortization of organization costs (Note A) ...... 1,549 1,549 1,549
Registration expenses ............................ 38,932 25,999 19,325
Trustees fees .................................... 7,387 1,740 1,150
Miscellaneous expenses ........................... 1,065 107 895
----------- ----------- -----------
Total expenses ............................. 408,888 212,472 80,873
Expenses reimbursed (Note B) ..................... (36,978) (19,753) (42,117)
----------- ----------- -----------
Net expenses ............................... 371,910 192,719 38,756
----------- ----------- -----------
NET INVESTMENT INCOME ............................ 58,653 117,767 208,149
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments .......... 1,032,216 485,032 (2,921)
Net change in unrealized
appreciation (depreciation) on investments .... 6,243,409 1,910,549 (192,982)
----------- ----------- -----------
Net realized and unrealized
gain (loss) on investments .................... 7,275,625 2,395,581 (195,903)
----------- ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS ........... $ 7,334,278 $ 2,513,348 $ 12,246
================================================================================================================
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 13
Fairport Funds STATEMENTS OF CHANGES IN NET ASSETS
- ----------------------------------------------------
<TABLE>
<CAPTION>
==================================================================================================================================
Fairport Midwest Fairport Growth Fairport Government
Growth Fund and Income Fund Securities Fund
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
4/30/96 10/31/95 4/30/96 10/31/95 4/30/96 10/31/95
(Unaudited) (Unaudited) (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income ..................... $ 58,653 $ 116,744 $ 117,767 $ 257,163 $ 208,149 $ 412,546
Net realized gain (loss) on investments ... 1,032,216 1,329,274 485,032 280,894 (2,921) (1,571)
Net change in unrealized appreciation
(depreciation) on investments .......... 6,243,409 5,112,366 1,910,549 2,751,712 (192,982) 698,738
------------ ------------ ------------ ------------ ----------- -----------
Increase in net assets .................... 7,334,278 6,558,384 2,513,348 3,289,769 12,246 1,109,713
------------ ------------ ------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................ (64,662) (130,340) (131,485) (207,044) (245,523) (411,089)
From net realized gains ................... (774,802) (2,076,604) (178,762) (167,462) 0 0
------------ ------------ ------------ ------------ ----------- -----------
Total distributions ....................... (839,464) (2,206,944) (310,247) (374,506) (245,523) (411,089)
------------ ------------ ------------ ------------ ----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ................. 7,225,614 17,023,299 3,179,469 5,619,642 1,324,554 1,562,174
Reinvestment of distributions ............. 831,366 2,182,580 263,359 309,030 137,757 265,604
Amount paid for repurchase of shares ...... (4,565,834) (3,838,535) (1,727,495) (3,939,188) (1,238,549) (1,493,055)
------------ ------------ ------------ ------------ ----------- -----------
Net increase from capital transactions .... 3,491,146 15,367,344 1,715,333 1,989,484 223,762 334,723
------------ ------------ ------------ ------------ ----------- -----------
Total increase (decrease) in net assets ... 9,985,960 19,718,784 3,918,434 4,904,747 (9,515) 1,033,347
NET ASSETS
Beginning of period ....................... 49,407,694 29,688,910 23,082,006 18,177,259 8,646,816 7,613,469
------------ ------------ ------------ ------------ ----------- -----------
End of period ............................. $ 59,393,654 $ 49,407,694 $ 27,000,440 $ 23,082,006 $ 8,637,301 $ 8,646,816
============ ============ ============ ============ =========== ===========
Accumulated undistributed (overdistributed)
net investment income included in
net assets at end of period ............ $ (8,041) $ (2,032) $ 51,960 $ 65,679 $ 0 $ 37,375
------------ ------------ ------------ ------------ ----------- -----------
CAPITAL SHARE TRANSACTIONS
Shares sold ............................... 517,915 1,339,632 241,292 502,408 134,018 166,952
Shares issued on reinvestment
of dividends ........................... 60,419 187,547 20,119 28,130 13,949 28,472
Shares repurchased ........................ (323,030) (299,578) (130,171) (355,019) (125,134) (159,651)
------------ ------------ ------------ ------------ ----------- -----------
Net increase from capital transactions .... 255,304 1,227,601 131,240 175,519 22,833 35,773
============ ============ ============ ============ =========== ===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 14
Fairport Funds
- --------------------------------------------------------------------------------
The tables below set forth financial data for a share of beneficial interest
outstanding throughout the periods presented.
<TABLE>
<CAPTION>
Fairport Midwest Growth Fund
- -----------------------------------------------------------------------------------------------------------
Six Months Year Year Period
Ended Ended Ended Ended
04/30/96 10/31/95 10/31/94 10/31/93(1)
(Unaudited)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ................. $ 13.55 $ 12.27 $ 11.07 $ 10.00
--------- --------- --------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ................................ 0.01 0.04 0.02 0.01
Net realized and unrealized gain (loss) on investments 1.88 2.04 1.19 1.07
--------- --------- --------- --------
Total from investment operations ............... 1.89 2.08 1.21 1.08
--------- --------- --------- --------
LESS DISTRIBUTIONS
From net investment income ........................... (0.02) (0.04) (0.01) (0.01)
From realized capital gains .......................... (0.20) (0.76) 0.00 0.00
--------- --------- --------- --------
Total Distributions ............................ (0.22) (0.80) (0.01) (0.01)
--------- --------- --------- --------
NET ASSET VALUE, END OF PERIOD ....................... $ 15.22 $ 13.55 $ 12.27 $ 11.07
========= ========= ========= ========
TOTAL RETURN ......................................... 28.41%* 18.17% 10.89% 10.90%**
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) ...................... $ 59,394 $ 49,408 $ 29,688 $ 9,870
Ratio of expenses to average net assets
before reimbursement of expenses by Advisor ....... 1.52%* 1.57% 1.54% 2.89%*
after reimbursement of expenses by Advisor ........ 1.38%* 1.41% 1.45% 1.50%*
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor ....... 0.08%* 0.14% 0.08% (1.11%)*
after reimbursement of expenses by Advisor ........ 0.22%* 0.29% 0.17% 0.28%*
Portfolio turnover ................................... 18.94% 46.51% 77.57% 0.00%
Average commission rate paid ......................... $ 0.0600 N/A N/A N/A
===========================================================================================================
<FN>
* Annualized
**Not annualized
(1) The Fairport Midwest Growth Fund, Fairport Growth and Income Fund and
Fairport Government Securities Fund commenced operations on July 1, 1993.
See accompanying notes to financial statements.
</TABLE>
12
<PAGE> 15
________________________________________________ FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Fairport Growth and Income Fund Fairport Government Securities Fund
- -------------------------------------------------------------------------------------------------------------------------
Six Months Year Year Period Six Months Year Year Period
Ended Ended Ended Ended Ended Ended Ended Ended
04/30/96 10/31/95 10/31/94 10/31/93(1) 04/30/96 10/31/95 10/31/94 10/31/93(1)
(Unaudited) (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 12.29 $ 10.68 $ 10.36 $ 10.00 $ 9.84 $ 9.03 $ 10.20 $ 10.00
- --------- --------- --------- --------- --------- --------- --------- ---------
0.06 0.15 0.14 0.04 0.24 0.49 0.43 0.15
1.25 1.68 0.35 0.36 (0.22) 0.81 (1.17) 0.16
- --------- --------- --------- --------- --------- --------- --------- ---------
1.31 1.83 0.49 0.40 0.02 1.30 (0.74) 0.31
- --------- --------- --------- --------- --------- --------- --------- ---------
(0.07) (0.12) (0.14) (0.04) (0.28) (0.49) (0.42) (0.11)
(0.09) (0.10) (0.03) 0.00 0.00 0.00 (0.01) 0.00
- --------- --------- --------- --------- --------- --------- --------- ---------
(0.16) (0.22) (0.17) (0.04) (0.28) (0.49) (0.43) (0.11)
- --------- --------- --------- --------- --------- --------- --------- ---------
$ 13.44 $ 12.29 $ 10.68 $ 10.36 $ 9.58 $ 9.84 $ 9.03 $ 10.20
========= ========= ========= ========= ========= ========= ========= =========
21.54%* 17.36% 4.72% 3.98%** 0.38%* 14.76% (7.24%) 3.04%**
$ 27,000 $ 23,082 $ 18,177 $ 8,716 $ 8,637 $ 8,647 $ 7,614 $ 5,829
1.66%* 1.79% 1.72% 2.79%* 1.88%* 2.16% 1.80% 2.78%*
1.50%* 1.50% 1.50% 1.50%* 0.90%* 0.90% 0.90% 0.90%*
0.76%* 0.98% 1.20% 0.10%* 3.86%* 3.89% 3.88% 2.29%*
0.92%* 1.26% 1.42% 1.39%* 4.84%* 5.16% 4.78% 4.17%*
15.11% 13.36% 35.16% 4.18% 4.76% 1.28% 24.14% 24.53%
$ 0.0572 N/A N/A N/A N/A N/A N/A N/A
=========================================================================================================================
</TABLE>
13
<PAGE> 16
Fairport Funds
- --------------------------------------------------------------------------------
(Unaudited) April 30, 1996
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES:
The Fairport Funds (the "Trust"), formerly called the Roulston Family of Funds,
is an open-end management investment company and is organized under Ohio law as
a business trust under a Declaration of Trust dated September 16, 1994. On March
1, 1996, the Trust changed its name from The Roulston Family of Funds to
Fairport Funds. The Trust currently consists of three Funds (the "Funds"):
Fairport Midwest Growth Fund (the "Midwest Growth Fund"), Fairport Growth and
Income Fund (the "Growth and Income Fund") and Fairport Government Securities
Fund (the "Government Fund"). The Trust is registered under the Investment
Company Act of 1940, as amended (the "Act"). On April 29, 1995, pursuant to an
Agreement and Plan of Reorganization and Liquidation, the Midwest Growth Fund,
the Growth and Income Fund and the Government Fund of the Trust acquired in a
tax free reorganization, all of the assets of each of the Roulston Midwest
Growth Fund, the Roulston Growth and Income Fund and the Roulston Government
Securities Fund (collectively, the "Acquired Funds") of the Advisors' Inner
Circle Fund, a Massachusetts business trust, respectively, in exchange for the
assumption of such Acquired Fund's liabilities and a number of full and
fractional shares of the corresponding Fund of the Trust having an aggregate net
asset value equal to such Acquired Fund's net assets (the "Reorganization"). The
Reorganization was approved by the shareholders of the Acquired Funds on March
24, 1995. For accounting purposes, the Reorganization was accounted for in a
manner similar to a pooling of interest and the financial highlights have been
presented since the Funds' inception, July 1, 1993. The following is a summary
of significant accounting policies consistently followed by the Trust.
(1) SECURITY VALUATION: Equity securities which are listed or admitted to
trading on a national securities exchange will be valued at the last sales price
on the exchange on which the security is principally traded. Equity securities
for which there is no sale on that day and equity securities traded only in the
over-the-counter market will be valued at their closing bid prices obtained from
one or more dealers making markets for such securities or, if market quotations
are not readily available, at their fair values as determined in good faith by
the Board of Trustees.
Valuations of fixed and variable income securities ("debt securities") are
supplied by independent pricing services used by Fund/Plan Services Inc., as
administrator, which have been approved by the Trustees of the Trust. Valuations
are based upon a consideration of yields or prices of obligations of comparable
quality, coupon, maturity and type, indications as to value from recognized
dealers, and general market conditions. Debt securities for which market
quotations are readily available are valued based upon these quotations. The
Trustees may deviate from the valuation provided by the pricing service
whenever, in their judgment, such valuation is not indicative of the fair value
of the debt security. Short-term investments with a maturity of 60 days or less
are valued at amortized cost, which approximates market value.
(2) REPURCHASE AGREEMENTS: All Funds may enter into repurchase agreements with
financial institutions deemed to be credit worthy by Roulston & Company, Inc.
("Roulston"), the Funds' investment adviser, under guidelines approved by the
Trust's Board of Trustees, subject to the seller's agreement to repurchase and
the Funds' agreement to resell such securities at a mutually agreed-upon date
and price. Securities purchased subject to repurchase agreements are deposited
with the Funds' custodian and, pursuant to the terms of the repurchase
agreement, must have an aggregate market value greater than or equal to the
repurchase price plus accrued interest at all times. If the seller were to
default on its repurchase obligation or become insolvent, the Fund
14
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
would suffer a loss to the extent that the proceeds from a sale of the
underlying portfolio securities were less than the repurchase price under the
agreement, or to the extent that the disposition of such securities by the Fund
was delayed pending court action.
(3) FEDERAL INCOME TAXES: The Funds intend to be treated as "regulated
investment companies" under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their net taxable income. Accordingly, no
provisions for Federal income taxes have been made in the accompanying financial
statements.
(4) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is recorded
on the ex-dividend date. Interest income is accrued daily. Security transactions
are accounted for on the date securities are purchased or sold. Security gains
and losses are determined on the identified cost basis.
(5) DIVIDENDS AND DISTRIBUTIONS: Substantially all of the net investment income
(exclusive of capital gains) of the Midwest Growth Fund and the Growth and
Income Fund is distributed in the form of semi-annual dividends. Net investment
income (exclusive of capital gains) of the Government Fund is declared daily and
distributed in the form of monthly dividends. If any capital gain is realized by
a Fund, substantially all of it will be distributed annually.
(6) DEFERRED ORGANIZATION COSTS: Organizational costs are being amortized on a
straight-line basis over five years commencing April 29, 1995.
NOTE (B) RELATED PARTY TRANSACTIONS:
The Trust and Roulston have entered into an Investment Advisory Agreement (the
"Agreement") dated as of January 20, 1995. Under terms of the Agreement,
Roulston makes the investment decisions for the assets of the Funds and
continuously reviews, supervises, and administers the investment program of the
Funds. For its services as investment adviser, Roulston receives a fee, at an
annual rate of 0.75% of the average daily net assets of each of the Midwest
Growth Fund and the Growth and Income Fund up to $100 million of such assets,
and 0.50% of each such Fund's assets of $100 million or more. With respect to
the Government Fund, Roulston receives a fee at an annual rate of 0.25% of the
average daily net assets of the Government Fund up to $100 million of such
assets, and 0.125% of such assets of $100 million or more. Such fees will be
calculated daily and paid monthly.
Prior to the effective date of the Reorganization, Roulston served as the
investment adviser to each of the Acquired Funds. For such services, Roulston
received an advisory fee from the Acquired Funds at the following annual rates:
1.00% of the value of each of the Midwest Growth Fund's and the Growth and
Income Fund's average daily net assets up to $100 million, 0.75% of each such
Fund's assets over $100 million; and 0.50% of the value of the Government Fund's
average daily net assets up to $100 million, 0.375% of the average daily net
assets from $100 million to $200 million, and 0.25% of the average daily net
assets of such Fund over $200 million.
Pursuant to Rule 12b-1 under the Act, effective April 29, 1995, the Trust has
adopted a Distribution and Shareholder Service Plan and Agreement (the "Plan"),
under which each Fund is authorized to pay or reimburse Roulston Research Corp.
(the "Distributor"), a wholly owned subsidiary of Roulston, a periodic amount
calculated at an annual rate not to exceed .25% of the average daily net assets
value of such Fund. Such an amount may be used by the Distributor to pay
broker-dealers, banks and other institutions (a "Participating Organization")
for distribution and/or shareholder service assistance pursuant to an agreement
between the Distributor and the Participating Organization or for distribution
assistance and/or shareholder service provided
15
<PAGE> 18
Fairport Funds NOTES TO FINANCIAL STATEMENTS CONT.
- --------------------------------------------------------------------------------
(Unaudited) April 30, 1996
by the Distributor. Under the Plan, a Participating Organization may include the
Distributor's affiliates.
In addition, the Board of Trustees of the Trust has adopted certain procedures
in accordance with Section 17(e)(2) and Rule 17e-1 under the Act pursuant to
which the Distributor may execute certain portfolio transactions as broker on
behalf of the Funds. In connection with such brokerage transactions, Roulston as
the investment adviser may determine to use the Distributor if such use will
likely result in commissions, fees or other renumeration and prices for and
execution of securities transactions at least as favorable to such Fund as those
likely to be derived from other qualified brokers.
Roulston and the Distributor have each agreed with the Trust to waive its
investment advisory fee and to reimburse certain other expenses of the Funds
from the effective date of the Reorganization (April 29, 1995) and such waivers
and reimbursements shall continue at least through October 31, 1996, to the
extent necessary to cause total operating expenses as a percentage of net assets
of the Midwest Growth Fund, the Growth and Income Fund and the Government Fund
not to exceed 1.38%, 1.50% and .90%, respectively.
Information regarding these transactions is as follows for the six month period
ended April 30, 1996:
<TABLE>
<CAPTION>
Midwest Growth and
Growth Income Government
Fund Fund Fund
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Advisory Fees:
Fees before fee waiver ... $201,940 $96,273 $10,766
Fees waived .............. 36,978 19,753 10,766
Rule 12b-1 Fees:
Fees before fee waiver ... 67,375 32,120 10,766
Fees waived .............. 0 0 0
Other expenses
reimbursed ............. 0 0 31,351
Brokerage fees paid to the
distributor on portfolio
transactions ........... 37,716 4,600 0
- --------------------------------------------------------------------------------
</TABLE>
Certain of the officers and trustees of the Trust are also officers, directors
and/or employees of Roulston and the Distributor. The officers and such
interested trustees served without direct compensation from the Trust during the
year.
NOTE (C) INVESTMENT TRANSACTIONS:
Purchases and sales of investment securities (excluding short-term securities)
for the six month period ended April 30, 1996, were:
<TABLE>
<CAPTION>
Proceeds
Purchases from Sales
(000) (000)
- ----------------------------------------------------------
<S> <C> <C>
Midwest Growth Fund .......... $14,392 $9,619
Growth and Income Fund ....... 3,713 3,924
Government Fund .............. 491 398
- ---------------------------------------------------------
</TABLE>
NOTE (D) UNREALIZED APPRECIATION
AND DEPRECIATION:
At April 30, 1996, the gross unrealized appreciation and depreciation of
securities for book and Federal income tax purposes consisted of the following:
<TABLE>
<CAPTION>
Net
Gross Gross Appreciation/
Unrealized Unrealized Unrealized
Appreciation (Depreciation)(Depreciation)
(000) (000) (000)
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Midwest Growth Fund .......... $13,029 $(451) $ 12,578
Growth and Income Fund ....... 5,327 (214) 5,113
Government Fund .............. 34 (224) (190)
- ------------------------------------------------------------------------
</TABLE>
16
<PAGE> 19
FAIRPORT FUNDS
[Logo]
4000 Chester Avenue
Cleveland, Ohio 44103
1-800-332-6459
DIRECTORS:
Thomas V. Chema
David H. Gunning
Scott D. Roulston
Ivan Winfield
OFFICERS:
Scott D. Roulston, President
Kathryn G. Balazs, Secretary
Michele R. Fogarty, Treasurer
ADVISER:
Roulston & Company, Inc.
4000 Chester Avenue
Cleveland, Ohio 44103
DISTRIBUTOR:
Roulston Research Corp.
4000 Chester Avenue
Cleveland, Ohio 44103
ADMINISTRATOR & TRANSFER AGENT:
Fund/Plan Services, Inc.
#2 West Elm Street
Conshohocken, Pennsylvania 19428
LEGAL COUNSEL:
Baker & Hostetler
65 East State Street
Columbus, Ohio 43215
INDEPENDENT PUBLIC ACCOUNTANTS:
Ernst & Young, LLP
1300 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115-1405
For information call 1-800-332-6459
Fairport Funds take their name from the historic Fairport Harbor Lighthouse,
located on Lake Erie at the Grand River, just east of the Funds' headquarters in
Cleveland, Ohio. Originally built in 1825, the Fairport Harbor Lighthouse guided
ships safely in and out of the harbor for 100 years. In its early years the
lighthouse was considered the gateway to the Western Reserve and the vast
frontiers of the Northwest Territories and beyond. Later the lighthouse served
as a beacon and supply stop for pioneers and travelers on their way to western
Great Lakes ports and beyond. The original brick structure was rebuilt in 1871
of sandstone blocks, as it remains today.
This report is submitted for the general information of the shareholders of the
Funds. It is not authorized for distribution to prospective investors in a Fund
unless preceded or accompanied by an effective Prospectus which includes details
regarding the Fund's objectives, policies, expenses and other information.
