<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
LAKE FOREST CORE EQUITY FUND
AUGUST 31, 1996
(Unaudited)
<C> <S> <C>
Shares Market Value
------ ------------
COMMON STOCKS 82.78%
AEROSPACE/DEFENSE 2.68%
200 Boeing Company...................... $ 18,100
200 Lockheed Martin Corporation......... 16,825
----------
34,925
----------
AUTOS AND TRUCKS 10.62%
200 Chrysler Corporation............... 11,650
2,300 Ford Motor Company................. 77,050
1,000 General Motors..................... 49,750
----------
138,450
----------
BEVERAGES 2.64%
1,200 Pepsico,Inc........................ 34,500
---------
CHEMICALS 8.65%
500 DuPont (B.I.) De Ne Mours......... 41,062
200 Eastman Chemical Company........... 11,175
1,400 Union Carbide Corp Hldg Co......... 60,550
---------
112,787
---------
COMPUTER SOFTWARE/SVCS 1.88%
200 Microsoft Corporation*............. 24,500
---------
COMPUTERS 6.96%
1,200 Compaq Computer Corporation*....... 67,950
200 International Business Machines Corp. 22,875
---------
90,825
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (continued)
LAKE FOREST CORE EQUITY FUND
AUGUST 31, 1996
(Unaudited)
<C> <S> <C>
Shares Market Value
- ------ ------------
ELECTRONICS - SEMICONDUCTORS 0.72%
200 Texas Instruments Inc..................... $ 9,350
-------
FINANCIAL - BANKS, COMMERCIAL 9.16%
400 Bank of New York Inc...................... 11,150
600 Mellon Bank Corp.......................... 33,225
2,400 PNC Bank Corporation...................... 75,000
--------
119,375
--------
FOOD - PROCESSING 7.13%
1,200 General Mills Inc......................... 66,000
300 Phillip Morris Companies Inc.............. 26,925
--------
92,925
--------
HOUSEHOLD PRODUCTS/WARES 2.05%
300 Proctor & Gamble.......................... 26,663
--------
MONEY CENTER BANKS 2.98%
500 Bankers Trust Co.......................... 38,875
--------
OIL/GAS - DOMESTIC 4.58%
1,200 Tenneco Inc............................... 59,700
--------
OIL/GAS - INTERNATIONAL 6.65%
1,000 Amoco Corp................................ 69,000
200 Texaco Inc................................ 17,750
--------
86,750
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (continued)
LAKE FOREST CORE EQUITY FUND
AUGUST 31, 1996
(Unaudited)
<C> <S> <C>
Shares Market Value
- ------ ------------
PHARMACEUTICALS 5.37%
1,550 Abbott Laboratories.................. $ 69,944
-------
RETAIL-DEPARTMENT STORES 1.74%
400 Federated Department Stores*......... 13,850
200 Sears, Roebuck & Co.................. 8,800
-------
22,650
-------
UTILITIES- ELECTRIC 8.16%
600 General Electric Company............. 49,875
2,600 Houston Industries Inc............... 56,550
-------
106,425
-------
UTILITIES- TELECOMMUNICATIONS 0.81%
200 AT & T............................... 10,500
-------
10,500
-------
TOTAL COMMON STOCKS..................
(cost $998,019) 1,079,144
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (continued)
LAKE FOREST CORE EQUITY FUND
AUGUST 31, 1996
(Unaudited)
<C> <S> <C>
Shares Market Value
- ------ ------------
SHORT TERM DEBT 16.97%
221,000 Fed Home Loan Mtg Disc 5.16%, 9/3/96...... $ 221,000
311 Star Treasury Fund........................ 311
----------
TOTAL SHORT TERM DEBT
(cost $221,311)........................... 221,311
----------
TOTAL INVESTMENTS
(cost $1,219,330)............ 99.75% $1,300,455
==========
<FN>
* Non-income producing
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
LAKE FOREST MONEY MARKET FUND
AUGUST 31, 1996
(Unaudited)
<C> <S> <C>
Shares Market Value
------ ------------
SHORT TERM DEBT 100.47%
1,795,000 U.S. GOVERNMENT OBLIGATIONS 100.43%
Federal Home Loan Mortgage Disc. Note,
5.16%, due 09/03/96 (cost $1,795,000) $1,795,000
----------
646 Star Treasury Fund .04%
(cost $646) 646
----------
Total Investments 100.47%
(cost $1,795,646) $1,795,646
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
LAKE FOREST FUNDS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
(Unaudited)
<S> <C> <C>
CORE MONEY
ASSETS EQUITY MARKET
------ ------
Investments in securities, at value (cost
$998,019 and $1,795,000 respectively).... $1,079,144 $1,795,000
Short term investment..................... 221,311 646
Receivable for dividends and interest..... 4,161 4
Receivable for Fund shares sold........... 300 0
--------- ---------
Total assets 1,304,916 1,795,650
--------- ---------
LIABILITIES
Accrued advisory fee...................... 1,245 199
Dividends payable......................... 0 8,230
-------- -------
Total Liabilities 1,245 8,429
-------- --------
NET ASSETS
Net assets (equivalent to $17.44 and
$1.00 per share based on 74,756 and
1,787,221 shares, respectively, of
capital stock outstanding)............. $ 1,303,671 $1,787,221
=========== ==========
Composition of Net Assets:
Paid in capital......................... $ 1,211,775 $1,787,221
Accumulated net investment income...... 10,996 0
Accumulated net realized gain on
investments............................ (225) 0
Net unrealized appreciation on
investments............................ 81,125 0
---------- ----------
NET ASSETS, AUGUST 31, 1996 $ 1,303,671 $1,787,221
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
LAKE FOREST FUNDS
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1996
(Unaudited)
<S> <C> <C>
CORE EQUITY MONEY MARKET
----------- ------------
INVESTMENT INCOME
Interest $ 6,017 $ 48,106
Dividends 16,135 0
------- -------
Total Investment Income 22,152 48,106
------- -------
EXPENSES (Note 3)
Advisory Fee 6,489 1,142
Interest Expense 20 0
------- -------
Total Expenses 6,509 1,142
------- -------
Net investment income 15,643 46,964
------- -------
Net realized gain on
security transactions 944 0
Net change in unrealized
appreciation on investments 18,044 0
------- -------
Net gain on investments 18,988 46,964
------- -------
Net increase in net assets
resulting from operations $34,631 $46,964
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
LAKE FOREST CORE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
For the six For the year
months ended ended
August 31, 1996 February 29, 1996
--------------- -----------------
(Unaudited) (Audited)
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income................. $ 15,643 $ 22,553
Net realized gain on securities
transactions......................... 944 45,595
Net change in unrealized appreciation
of investments....................... 18,044 63,081
------- --------
Net increase in net assets resulting
from operations...................... 34,631 131,229
------- ---------
DISTRIBUTION TO SHAREHOLDERS:
From net investment income........... (10,333) (16,868)
From net realized gain on investments. (33,502) (13,262)
FUND SHARE TRANSACTIONS:
Net increase in net assets from fund
share transactions (Note 4)........... 297,124 864,652
------- -------
NET ASSETS:
Beginning of period................... 1,015,751 50,000
---------- --------
End of period (including
undistributed investment income of
$10,996 and $5,685, respectively).... $1,303,671 $1,015,751
========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
LAKE FOREST MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<S> <C> <C>
For the six For the year
months ended ended
August 31, 1996 February 29,1996
--------------- ----------------
(Unaudited) (Audited)
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income.................. $ 46,964 $ 63,254
Net realized gain on securities
transactions.......................... 0 0
Net change in unrealized appreciation
of investments........................ 0 0
--------- ----------
Net increase in net assets resulting
from operations....................... 46,964 63,254
--------- ----------
DISTRIBUTION TO SHAREHOLDERS:
From net investment income............ (46,964) (63,254)
From net realized gain on investments. 0 0
FUND SHARE TRANSACTIONS:
Net increase in net assets from fund
share transactions (Note 4)............ 312 1,736,909
---------- ---------
NET ASSETS:
Beginning of period.................... 1,786,909 50,000
---------- ----------
End of period.......................... $1,787,221 $1,786,909
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
LAKE FOREST FUNDS
NOTES TO FINANCIAL STATEMENTS- AUGUST 31, 1996
(Unaudited)
Note 1. Organization
The Lake Forest Funds (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust was established under the laws of Ohio by an
Agreement and Declaration of Trust dated November 23, 1994 (the "Trust
Agreement"). The Trust Agreement permits the Trustees to issue an unlimited
number of shares of beneficial interest of separate series without par value.
Shares of two series have been authorized, which shares constitute the interests
in Lake Forest Core Equity Fund ("the Equity Fund") and Lake Forest Money Market
Fund (the "Money Market Fund").
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies followed by
the Funds in the preparation of its financial statements.
Security Valuation-Securities which are traded on any exchange or on the
NASDAQ over-the-counter market are valued at the last quoted sale price. Lacking
a last sale price, a security is valued at its last bid price except when, in
the Adviser's opinion, the last bid price does not accurately reflect the
current value of the security. All other securities for which over-the-counter
market quotations are readily available are valued at their last bid price. When
market quotations are not readily available, when the Adviser determines the
last bid price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Adviser, in conformity with guidelines adopted by and subject to
review of the Board of Trustees of the Trust.
Fixed income securities generally are valued by using market quotations,
but may be valued on the basis of prices furnished by a pricing service when the
Adviser believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued (except for the Money
Market Fund) by using the amortized cost method of valuation, which the Board
has determined will represent fair value.
Option Transactions-The Equity Fund may write covered put and call options
on individual securities, write covered put and call options on stock indices
and engage in related closing transactions. A put (call) option on a security is
an agreement to buy (sell) a particular portfolio security if the option is
exercised at a specified price, or before a set date. An option on a stock index
gives the holder the right to receive, upon exercising the option, a cash
settlement amount based on the difference between the exercise price and the
value of the underlying stock index. To cover the potential obligations involved
in these option transactions, the Fund will own the underlying equity security
(for a call option); will segregate with the Custodian high grade liquid debt
obligations equal to the option exercise price (for a put option): or (for an
option on a stock index) will either hold a portfolio of stocks substantially
replicating the movement of the index or, to the extent the Fund does not hold
such a portfolio, will segregate with the Custodian high grade liquid debt
obligations equal to the market value of the stock index option, marked to
market daily. Risks associated with writing options include the possible
inability to effect closing transactions at favorable prices and an appreciation
limit on the securities set aside for settlement, as well as (in the case of an
option on a stock index) exposure to an indeterminate liability. There is no
assurance of liquidity in the secondary market for
<PAGE>
Lake Forest Funds
Notes to Financial Statements (Continued)
August 31, 1996 (Unaudited)
purposes of closing out option positions. Also, the Equity Fund may purchase put
and call options on individual securities and on stock indices for the purpose
of hedging against the risk of unfavorable price movements adversely affecting
the value of the Fund's securities or securities the Fund intends to buy. The
Fund may also sell put and call options in closing transactions.
Premiums received from put or call options written are recorded as an
asset with an equal liability which is marked-to-market daily with any
difference between the option's current market value and premiums received
recorded as an unrealized gain or loss. If the option is not exercised, premiums
received are realized as a gain at the expiration date. If the position is
closed prior to expiration, a gain or loss is realized based on premiums
received less the cost of the closing transaction. When an option is exercised,
premiums received are added to the proceeds from the sale of the underlying
securities and a gain or loss is realized accordingly.
Put and call options purchased are accounted for in the same manner as
portfolio securities. The cost of securities acquired through the exercise of
call options is increased by premiums paid. The proceeds from securities sold
through the exercise of put options are decreased by the premiums paid.
Federal Income Taxes-Each Fund intends to qualify each year as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended. By so qualifying, a Fund will not be subject to federal income taxes to
the extent that it distributes substantially all of its net investment income
and any realized capital gains.
Dividends and Distributions-Each Fund intends to distribute substantially
all of its net invesment income as dividends to its shareholders. The Equity
Fund intends to declare and pay dividends on a quarterly basis, and the Money
Market Fund intends to declare dividends daily and pay them monthly. Each Fund
intends to distribute its net long term capital gains at least once a year and
its net short term capital gains at least once a year.
Other- Each Fund follows industry practice and records security
transactions on the trade date. The specific identification method is used for
determining gains or losses for financial statements and income tax purposes.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrued basis.
Note 3. Investment Advisory Agreement
The Trust has an investment advisory agreement with Boberski & Company.
Under the terms of the management agreement, the Adviser manages the Fund's
investments subject to approval of the Board of Trustees and pays all of the
operating expenses of the Fund except brokerage, taxes, interest and
extraordinary expenses. The Funds are responsible for payment of expenses
incurred in connection with the organization and initial registration of their
shares. As compensation for its management services and agreement to pay the
Funds' expenses, the Funds are obligated to pay the Adviser a fee computed and
accrued daily and paid monthly at an annual rate of 1.00% of the average daily
net assets of the Equity Fund and .50% of the average daily net assets of the
Money Market Fund. The adviser has agreed to cap the fee for the Money Market
Fund at 0.125% at least through the fiscal year ended February 28, 1997. The
rate of the advisory fees paid by most investment companies to their investment
advisers is lower than the rate of the advisory fees paid by the Funds. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while each Fund's expenses except those specified
above are paid by the Adviser.
<PAGE>
Lake Forest Funds
Notes to Financial Statements Continued)
August 31, 1996 (Unaudited)
The Adviser may waive all or part of its fee, at any time, and at its sole
discretion, but such action shall not obligate the Adviser to waive any fees in
the future. For the year ended February 29, 1996, the Adviser has received a fee
of $2,770 from the Core Equity Fund and $921 from the Money Market Fund. For the
six months ended August 31, 1996, the Adviser has received a fee of $6,489 from
the Core Equity Fund and $1,142 from the Money Market Fund.
Note 4. Capital Share Transactions
As of August 31, 1996 there was an unlimited number of no par value
shares of capital stock authorized for each fund.
Transactions in capital stock were as follows:
<TABLE>
Core Equity Money Market
----------- ------------
For the six For the six
months ended months ended
August 31, 1996 August 31, 1996
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
------ ------- ------- ------
Shares sold 60,631 $1,071,377 737,470 $737,470
Shares issued in reinvestment
of dividends 2,500 43,562 45,480 45,480
Shares redeemed (46,950) (817,815) (782,638) (782,638)
------- -------- ------- --------
Net increase 16,181 $ 297,124 312 $ 312
======= ======== ======= ========
Total paid in capital $1,211,775 $1,787,221
========= =========
</TABLE>
<PAGE>
Lake Forest Funds
Notes to Financial Statements (cont.)
August 31, 1996
(Unaudited)
Note 5. Investments
For the six months ended August 31, 1996, purchases and sales of investment
securities, other than short-term investments, for the Core Equity Fund,
aggregated $52,700 and $0 respectively. The gross unrealized appreciation for
all securities totaled $89,847 and the gross unrealized depreciation for all
securities totaled $8,722 or a net unrealized appreciation of $81,125. The
aggregate cost of securities for federal income tax purposes at August 31, 1996
was $1,219,330.
Transactions for all options written during the six months ended August
31, 1996 were as follows:
<TABLE>
<S> <C> <C>
Number of
Contracts Premiums
---------- --------
Options written 175 $ 944
Options expired (175) (944)
----- -----
Options outstanding at August 31, 1996 0 $ 0
===== =====
</TABLE>
Note 6. Revolving Credit Agreement
In order to meet shareholder redemption requests pending liquidation of the
portfolio assets, the Lake Forest Core Equity Fund has established a revolving
credit agreement with Star Bank, N.A. payable by February 6, 1997, with maximum
borrowings outstanding at one time not to exceed $250,000. Any borrowings would
bear interest at the Bank's prime rate, payable quarterly, and would be secured
by the Fund's securities. At August 31, 1996, there were no outstanding
liabilities under this agreement.
<PAGE>
<TABLE>
<CAPTION>
LAKE FOREST MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<S> <C> <C>
For the six For the year
months ended ended
August 31, 1996 February 29, 1996
---------------- -----------------
(Unaudited) (Audited)
Net asset value -
beginning of period............... $ 1.00 $ 1.00
Income from investment operations
Net investment income............... .03 .06
Net realized gain on investments... .00 .00
------ -----
Total from investment operations.... .03 .06
Less distributions
Dividends from net investment income.. (.03) (.06)
Dividends from capital gains.......... .00 .00
------ -----
Net asset value - end of period....... $ 1.00 $ 1.00
====== ======
Total Return.......................... 5.21%* 5.50%
Ratios/supplemental data
Net assets, end of period (in 000's).. 1,787 1,787
Ratio of expenses to average
net assets........................... .125%* .08%
Ratio of net investment income to
average net assets................... 5.21%* 5.50%
Portfolio turnover rate............... .00% .00%
<FN>
*Annualized
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
