PRAGMA INVESTMENT TRUST
PRAGMA PROVIDENCE FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 1996
(UNAUDITED)
INVESTMENT ADVISER ADMINISTRATOR
PRAGMA, Inc. MGF Service Corp.
7150 Greenville Ave. 312 Walnut Street
Suite 101 - LB 340 P.O. Box 5354
Dallas, Texas 75231 Cincinnati, Ohio 45202-5354
1.214.373.3585 1.800.738.2065
<PAGE>
PRAGMA Providence Fund
Statement of Assets and Liabilities
September 30, 1996 (Unaudited)
ASSETS
Investments in securities:
At acquisition cost $3,363,075
==========
At value (Note 1) $3,447,812
Investment in repurchase agreements 587,000
Cash 340
Dividends receivable 1,333
----------
TOTAL ASSETS 4,036,485
----------
LIABILITIES
Payable to affiliates (Note 3) 4,825
----------
TOTAL LIABILITIES 4,825
----------
NET ASSETS $4,031,660
==========
Net assets consist of:
Capital shares $4,116,169
Accumulated net realized losses from security transactions (158,984)
Accumulated net investment loss (10,262)
Net unrealized appreciation on investments 84,737
----------
Net assets $4,031,660
==========
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 408,326
==========
Net asset value, redemption price and offering price
per share (Note 1) $ 9.87
==========
See accompanying notes to financial statements.
<PAGE>
PRAGMA Providence Fund
Statement of Operations
For the Six Months Ended September 30, 1996 (Unaudited)
INVESTMENT INCOME
Interest income $ 8,230
Dividend income 3,387
----------
TOTAL INVESTMENT INCOME 11,617
----------
EXPENSES
Investment advisory fees 21,879
----------
NET INVESTMENT LOSS (10,262)
----------
REALIZED AND UNREALIZED LOSSES
ON INVESTMENTS
Net realized losses from security transactions (158,984)
Net change in unrealized appreciation/depreciation on investments 84,737
----------
NET REALIZED AND UNREALIZED
LOSSES ON INVESTMENTS (74,247)
----------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $ (84,509)
==========
See accompanying notes to financial statements.
<PAGE>
PRAGMA Providence Fund
Statement of Changes in Net Assets
For the Six Months Ended September 30, 1996 (Unaudited)
FROM OPERATIONS:
Net investment loss $ (10,262)
Net realized losses from security transactions (158,984)
Net change in unrealized appreciation/
depreciation on investments 84,737
-----------
Net decrease in net assets from operations (84,509)
-----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income --
Distributions from net realized gains --
-----------
Decrease in net assets from distributions to shareholders --
-----------
FROM CAPITAL SHARE TRANSACTIONS (A):
Proceeds from shares sold 3,616,169
Net asset value of shares issued in
reinvestment of distributions to shareholders --
Payments for shares redeemed --
-----------
Net increase in net assets from capital share transactions 3,616,169
-----------
TOTAL INCREASE IN NET ASSETS 3,531,660
NET ASSETS:
Beginning of period 500,000
-----------
End of period $ 4,031,660
===========
(A)CAPITAL SHARE ACTIVITY:
Shares sold 358,326
Shares issued in reinvestment of distributions to shareholders --
Shares redeemed --
-----------
Net increase in shares outstanding 358,326
Shares outstanding, beginning of period 50,000
-----------
Shares outstanding, end of period 408,326
===========
See accompanying notes to financial statements.
<PAGE>
PRAGMA Providence Fund
Financial Highlights
For the Period Ended September 30, 1996 (A) (Unaudited)
Net asset value at beginning of period $ 10.00
--------
Income from investment operations:
Net investment loss (0.03)
Net realized and unrealized losses on investments (0.10)
--------
Total from investment operations (0.13)
--------
Less distributions:
Dividends from net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value at end of period $ 9.87
========
Total return (2.59)%(B)
========
Net assets at end of period (000's) $ 4,032
========
Ratio of expenses to average net assets 1.50%(B)
Ratio of net investment loss to average net assets (.70)%(B)
Portfolio turnover rate 244%(B)
Average commission rate per share $0.0545
(A)Represents the period from the initial public offering of shares
(April 1, 1996) through September 30, 1996.
(B)Annualized.
See accompanying notes to financial statements.
<PAGE>
PRAGMA Providence Fund
Portfolio of Investments
September 30, 1996 (Unaudited)
Market
INVESTMENTS IN COMMON STOCK-85.5% Shares Value
MEDICAL SCIENCE-31.8%
MEDICAL-BIOGENETICS-11.7%
Amgen, Inc.* 700 $ 44,187
Biogen, Inc.* 700 53,200
Biomatrix, Inc.* 2,700 45,225
Chiron Corp.* 3,200 60,800
Corvas International, Inc.* 8,000 37,000
Ergo Science Corp.* 3,000 45,000
Genome Therapeutics Corp.* 4,300 38,162
Genzyme Corp.-General Division* 2,800 71,400
Gilead Sciences, Inc.* 1,400 39,550
Isis Pharmaceuticals, Inc.* 2,200 35,475
------------
$ 469,999
------------
MEDICAL-PRODUCTS/DRUG DELIVERY-12.9%
Allergan, Inc. 1,000 $ 38,125
Baxter International, Inc. 1,600 74,800
Boston Scientific Corp.* 1,000 57,500
Dentsply International, Inc. 1,000 44,500
Escalon Medical Corp.* 15,000 24,375
Guidant Corp. 800 44,200
Invacare Corp. 2,700 75,600
Nellcor Puritan Bennett, Inc.* 1,600 35,200
OrthoLogic Corp.* 4,000 42,500
Pharmacia & Upjohn, Inc. 1,000 41,250
Sybron International Corp.* 1,500 43,500
------------
$ 521,550
------------
MEDICAL-SYSTEMS/SERVICES-7.2%
ADAC Laboratories 1,900 $ 38,237
Cryolife, Inc.* 2,600 33,150
Housecall Medical Resources, Inc.* 3,000 15,750
IDEXX Laboratories, Inc.* 1,200 54,300
Meridian Diagnostics, Inc. 3,300 44,137
NeoPath, Inc.* 1,900 36,575
Star Multi Care Services, Inc.* 4,600 31,338
Techne Corp.* 1,500 35,063
------------
$ 288,550
------------
TOTAL MEDICAL SCIENCE $ 1,280,099
------------
TECHNOLOGY-26.6%
TECHNOLOGY-COMMUNICATIONS-9.1%
AirTouch Communications, Inc.* 1,400 $ 38,675
General Motors Corp.-Class H 700 40,425
Lucent Technologies, Inc. 1,800 82,575
MCI Communications Corp. 1,500 38,437
Netscape Communications Corp.* 800 37,100
QUALCOMM, Inc.* 1,000 42,500
Tellabs, Inc.* 700 49,438
U.S. Robotics Corp.* 600 38,775
------------
$ 367,925
------------
TECHNOLOGY-COMPUTER SOFTWARE/HARDWARE-10.5%
Broderbund Software, Inc.* 2,000 $ 58,000
Business Objects S.A. - ADR* 2,000 38,500
Cisco Systems, Inc.* 700 43,444
Intel Corp. 600 57,262
International Business Machines Corp. 600 74,700
Oracle Corp.* 1,000 42,563
Sun Microsystems, Inc.* 800 49,700
Texas Instruments, Inc. 1,100 60,638
------------
$ 424,807
------------
TECHNOLOGY-SYSTEMS/SERVICES-7.0%
American Management Systems, Inc.* 1,700 $ 47,600
Computer Learning Centers, Inc.* 1,600 44,800
Fair Isaac & Co., Inc. 1,800 69,750
Health Management Systems, Inc.* 1,300 38,025
National Data Corp. 1,100 47,988
Shared Medical Systems Corp. 600 34,200
-----------
$ 282,363
-----------
TOTAL TECHNOLOGY $ 1,075,095
-----------
OTHER-27.1%
COMMERCIAL TECHNOLOGY/SERVICES-18.9%
A.S.V., Inc.* 3,000 $ 51,000
Caraustar Industries, Inc. 1,300 38,594
Chart Industries, Inc. 2,600 45,825
Daimler-Benz AG - ADR 800 44,200
IMCO Recycling, Inc. 2,600 42,250
Ionics, Inc.* 900 42,412
Millipore Corp. 1,000 39,500
Molten Metal Technology, Inc.* 1,200 38,400
Newpark Resources, Inc.* 1,000 36,375
Oceaneering International, Inc.* 4,400 74,800
Raychem Corp. 600 45,000
Republic Industries, Inc.* 1,600 46,400
Safety Kleen Corp. 2,300 37,950
Thermo Electron Corp.* 1,800 72,900
Unocal Corp. 1,000 36,000
U.S. Filter Corp.* 2,100 71,662
----------
$ 763,268
----------
SYSTEMS/SERVICES-8.2%
Alaska Air Group, Inc.* 2,000 $ 42,750
ClinTrials Research, Inc.* 1,100 44,825
Norrell Corp. 1,600 50,400
Omnicare, Inc. 3,200 97,600
Staples, Inc.* 2,000 44,375
UICI* 1,900 49,400
----------
$ 329,350
----------
----------
TOTAL OTHER $ 1,092,618
----------
TOTAL COMMON STOCK $ 3,447,812
(Cost $3,363,075) ----------
Face Market
REPURCHASE AGREEMENTS(a)-14.6% Amount Value
Star Bank, N.A., 5.300%, dated 9/30/96,
due 10/1/96, repurchase proceeds $587,086 $ 587,000 $ 587,000
---------- ----------
TOTAL REPURCHASE AGREEMENTS $ 587,000 $ 587,000
========== ==========
TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE-100.1% $ 4,034,812
OTHER ASSETS AND LIABILITIES, NET-(0.1)% (3,152)
----------
NET ASSETS-100.0% $ 4,031,660
==========
* Non-income producing securities.
(a) Repurchase agreements are fully collateralized by U.S. Government
obligations.
See accompanying notes to financial statements.
<PAGE>
PRAGMA Providence Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1996 (Unaudited)
1. Significant Accounting Policies
The PRAGMA Providence Fund (the Fund) is a diversified series of PRAGMA
Investment Trust (the Trust), which is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end management investment
company. The Trust was organized as an Ohio business trust on January 10, 1996.
The Fund was capitalized on February 13, 1996, when John H. Alban, Jr., the
President of the Fund's investment adviser, PRAGMA, Inc. (the Adviser),
purchased the initial shares of the Fund at $10.00 per share. The public
offering of shares of the Fund commenced on April 1, 1996. The Fund had no
operations prior to the public offering of shares except for the initial
issuance of shares.
The Fund's investment objective is to seek long-term capital appreciation
through investment in common stocks. Dividend income is only an incidental
consideration to the Fund's investment objective.
The following is a summary of the Fund's significant accounting policies:
Organization costs -- Subsequent to February 20, 1996, the Fund was informed by
the Adviser that the Adviser would absorb the organization costs for which the
Fund had previously recorded an estimated accrual of $35,000. Accordingly, in
the period ended September 30, 1996, such organization costs and estimated
accrual were eliminated.
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time). Securities which are traded
over-the-counter are valued based on the last sales price, if available,
otherwise, at the last quoted bid price. Securities traded on a national stock
exchange are valued based on upon the closing price on the principal exchange
where the security is traded.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost, which, together with accrued
interest, approximates market. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will at all times be equal to or exceed the face
amount of the repurchase agreement.
Share valuation -- The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share of the Fund is equal to the net asset value per
share.
Investment income -- Dividend income is recorded on the ex-dividend date.
Interest income is accrued as earned.
Distributions to shareholders -- Distributions to shareholders arising from net
investment income and net realized capital gains, if any, are distributed at
least once each year. Dividends from net investment income and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Estimates -- 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 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.
Federal income tax -- It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) available to regulated
investment companies. As provided therein, in any fiscal year in which the Fund
so qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years
As of September 30, 1996, net unrealized appreciation of securities was $84,737
for federal income tax purposes, of which $258,063 related to appreciated
securities and $173,326 related to depreciated securities. The aggregate cost of
investments at September 30, 1996 was $3,363,075 for federal income tax
purposes.
2. Investment Transactions
During the period ended September 30, 1996, purchases and proceeds from sales of
portfolio securities, other than short-term investments, amounted to $6,567,398
and $3,045,339, respectively.
3. Transactions with Affiliates
The Chairman of the Board of the Trust is also the President of the Adviser.
Certain other trustees and officers of the Trust are also officers of the
Adviser or of MGF Service Corp. (MGF), the administrative services agent,
shareholder servicing and transfer agent, and accounting services agent for the
Trust.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Investment Advisory Agreement. The Fund pays the Adviser an investment
management fee, computed and accrued daily and paid monthly, at an annual rate
of 1.50% of average daily net assets of the Fund. The Adviser pays all operating
expenses of the Fund except brokerage commissions, taxes, interest, fees and
expenses of independent Trustees and any extraordinary expenses.
In addition, the Adviser is contractually obligated to reduce its investment
management fee in an amount equal to the fees and expenses, if any, of the
Trust's independent Trustees.
ADMINISTRATION, ACCOUNTING AND TRANSFER AGENCY AGREEMENTS
Under the terms of the Administration, Accounting, and Transfer Agency
Agreements between the Trust, the Adviser and MGF, MGF supplies non-investment
related statistical and research data, internal regulatory compliance services
and executive and administrative services for the Fund. MGF supervises the
preparation of tax returns for the Fund, reports to shareholders of the Fund,
reports to and filings with the Securities and Exchange Commission and state
securities commissions and materials for meetings of the Board of Trustees. In
addition, MGF maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. MGF also calculates the
daily net asset value per share and maintains the financial books and records of
the Fund. For the performance of these services, the Adviser, out of its
investment management fee, pays MGF a monthly base fee, an asset based fee, and
a fee based on the number of shareholder accounts. In addition, the Adviser
reimburses MGF for its out-of-pocket expenses including, but not limited to,
postage, supplies and the costs of pricing the Fund's portfolio securities.
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<NAME> PRAGMA INVESTMENT TRUST - PRAGMA PROVIDENCE FUND
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<INVESTMENTS-AT-COST> 3,950,075
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<RECEIVABLES> 1,333
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