PRAGMA Investment Trust
-----------------------
PRAGMA Providence Fund
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Semi-Annual Report
September 30, 1997
(Unaudited)
Investment Adviser Administrator
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PRAGMA, Inc. Countrywide Fund Services, Inc.
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>
RRAGMA Providence Fund
Statement of Assets and Liabilities
September 30, 1997 (Unaudited)
ASSETS
Investments in securities:
At acquisition cost $ 3,650,497
=============
At value (Note 1) $ 4,302,494
Investments in repurchase agreements (Note 1) 273,000
Cash 459
Receivable for capital shares sold 50
Dividends receivable 2,382
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TOTAL ASSETS 4,578,385
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LIABILITIES
Payable to affiliates (Note 3) 5,558
Payable for securities purchased 12,062
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TOTAL LIABILITIES 17,620
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NET ASSETS $4,560,765
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Net assets consist of:
Paid-in capital (Note 1) $ 3,983,337
Accumulated net realized losses from security
transactions (66,303)
Accumulated net investment loss (8,266)
Net unrealized appreciation on investments 651,997
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Net assets $ 4,560,765
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Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 397,180
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Net asset value, offering price and redemption price
per share (Note 1) $ 11.48
=============
See accompanying notes to financial statements.
<PAGE>
PRAGMA Providence Fund
Statement of Operations
For the Six Months Ended September 30 , 1997 (Unaudited)
INVESTMENT INCOME
Dividend income $ 18,967
Interest income 4,062
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TOTAL INVESTMENT INCOME 23,029
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EXPENSES
Investment management fees (Note 3) 31,295
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NET INVESTMENT LOSS (8,266)
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REALIZED AND UNREALIZED GAINS
ON INVESTMENTS
Net realized gains from security
transactions 191,825
Net change in unrealized
appreciation/depreciation on
investments 772,093
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NET REALIZED AND UNREALIZED
GAINS ON INVESTMENTS 963,918
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NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 955,652
===========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PRAGMA Providence Fund
Statements of Changes in Net Assets
For the Periods Ended September 30, 1997 and March 31, 1997
<S> <C> <C>
Six Months
Ended Year
Sept. 30, 1997 Ended
(Unaudited) March 31, 1997
FROM OPERATIONS:
Net investment loss $ (8,266) $ (30,026)
Net realized gains (losses) from security transactions 191,825 (258,128)
Net change in unrealized appreciation/
depreciation on investments 772,093 (120,096)
--------------- ---------------
Net increase (decrease) in net assets from operations 955,652 (408,250)
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FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income -- --
Distributions from net realized gains -- --
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Decrease in net assets from distributions to shareholders -- --
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FROM CAPITAL SHARE TRANSACTIONS (a):
Proceeds from shares sold 220,830 3,699,846
Net asset value of shares issued in
reinvestment of distributions to shareholders -- --
Payments for shares redeemed (397,693) (9,620)
-------------- ---------------
Net increase (decrease) in net assets from capital share
transactions (176,863) 3,690,226
-------------- ---------------
TOTAL INCREASE IN NET ASSETS 778,789 3,281,976
NET ASSETS:
Beginning of period (Note 1) 3,781,976 500,000
-------------- ---------------
End of period $ 4,560,765 $ 3,781,976
============== ===============
(a)CAPITAL SHARE ACTIVITY:
Shares sold 19,962 366,602
Shares issued in reinvestment of distributions to
shareholders -- --
Shares redeemed (38,459) (925)
-------------- ---------------
Net increase (decrease) in shares outstanding (18,497) 365,677
Shares outstanding, beginning of period (Note 1) 415,677 50,000
-------------- ---------------
Shares outstanding, end of period 397,180 415,677
============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRAGMA Providence Fund
Financial Highlights
Per share data for a share outstanding throughout each period:
<S> <C> <C>
Six Months
Ended Year
Sept. 30, 1997 Ended
(Unaudited) March 31, 1997
Net asset value at beginning of period $ 9.10 $ 10.00
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Income from investment operations:
Net investment loss (0.02) (0.07)
Net realized and unrealized losses
on investments 2.40 (0.83)
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Total from investment operations 2.38 (0.90)
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Less distributions:
Dividends from net investment income -- --
Distributions from net realized gains -- --
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Total distributions -- --
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Net asset value at end of period $ 11.48 $ 9.10
=========== ============
Ratios and supplemental data:
Total return 26.15% (9.00)%
=========== ============
Net assets at end of period (000's) $ 4,561 $ 3,782
=========== ============
Ratio of expenses to average net assets 1.50%(A) 1.50%
Ratio of net investment loss to average
net assets (.40)%(A) (.85)%
Portfolio turnover rate 272%(A) 241%
Average commission rate per share $ 0.0355 $ 0.0486
<FN>
(A) Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
PRAGMA Providence Fund
Portfolio of Investments
September 30, 1997 (Unaudited)
Market
INVESTMENTS IN COMMON STOCK - 94.3% Shares Value
- ----------------------------------------------------------------
COMPUTERS & COMMUNICATION - 25.5%
AirTouch Communications, Inc.* 3,000 $ 106,313
Cisco Systems, Inc.* 1,800 131,512
Compaq Computer Corp.* 3,000 224,250
Intel Corp. 1,800 166,162
Lucent Technologies, Inc. 2,000 162,750
Microsoft Corp.* 900 119,081
Motorala, Inc. 1,800 129,375
Tellabs, Inc.* 2,400 123,600
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1,163,043
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MEDICAL - 25.4%
Baxter International, Inc. 2,000 104,500
Boston Scientific Corp.* 2,200 121,413
Guidant Corp. 4,000 224,000
Eli Lilly and Co. 1,200 144,525
Medtronic, Inc. 3,000 141,000
Pfizer, Inc. 2,500 150,156
Pharmacia & Upjohn, Inc. 3,300 120,450
Schering-Plough Corp. 3,000 154,500
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1,160,544
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FINANCIAL - 22.4%
Banc One Corp. 2,700 150,694
Fleet Financial Group, Inc. 1,800 118,013
Jefferson-Pilot Corp. 1,500 118,500
Lincoln National Corp. 1,800 125,325
Schwab (Charles) Corp. 3,000 107,250
Southtrust Corp. 3,000 147,750
SunAmerica, Inc. 3,000 117,562
Wells Fargo & Co. 500 137,500
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1,022,594
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OILFIELD PRODUCTION & EQUIPMENT - 10.3%
Baker Hughes, Inc. 2,700 118,125
Dresser Industries, Inc. 2,700 116,100
Mobil Corp. 1,400 103,600
Unocal Corp. 3,000 129,750
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467,575
---------
<PAGE>
MISCELLANEOUS - 5.5%
PACCAR, Inc. 2,200 123,200
Textron, Inc. 2,000 130,000
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253,200
---------
AEROSPACE/DEFENSE - 5.2%
Lockheed Martin Corp. 1,100 117,288
Raytheon Co. 2,000 118,250
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235,538
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TOTAL COMMON STOCK $4,302,494
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(Cost $3,650,497)
Face Market
REPURCHASE AGREEMENTS(a) - 6.0% Amount Value
- ------------------------------------------------------------------------
Star Bank, N.A., 5.45%, dated 9/30/97,
due 10/1/97, repurchase proceeds $273,041 $ 273,000 $ 273,000
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TOTAL REPURCHASE AGREEMENTS $ 273,000 $ 273,000
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TOTAL INVESTMENTS AND REPURCHASE
AGREEMENTS AT VALUE - 100.3% $ 4,575,494
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.3)% (14,729)
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NET ASSETS - 100.0% $ 4,560,765
===========
* 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, 1997
(Unaudited)
1. Significant Accounting Policies
The PRAGMA Providence Fund (the Fund) is a diversified series of PRAGMA
Investment Trust (the Trust), an open-end management investment company
registered under the Investment Company Act of 1940. 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 is an aggressive growth equity mutual fund which seeks 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:
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 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.
<PAGE>
PRAGMA Providence Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
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, 1997, net unrealized appreciation on investments was
$651,997 for federal income tax purposes, of which $674,091 related to
appreciated securities and $22,094 related to depreciated securities based on a
federal income tax cost basis of $3,650,497.
As of March 31, 1997, the Fund had a capital loss carryforward for federal
income tax purposes of $171,721, which expires on March 31, 2005. In addition,
the Fund elected to treat $84,546 of net realized losses from security
transactions, which occurred after October 31, 1996, as having been incurred in
the Fund's tax year ending March 31, 1998.
2. Investment Transactions
During the six months ended September 30, 1997, purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$5,401,656 and $5,696,281, respectively.
<PAGE>
PRAGMA Providence Fund
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
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 Countrywide Fund Services, Inc. (CFS), the administrative services
agent, shareholder servicing and transfer agent, and accounting services agent
for the Trust. Approximately 52% of the Fund was directly or indirectly owned by
officers and Trustees of the Trust as of September 30, 1997.
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 of the Trust's
independent Trustees. There were no fees paid or expenses reimbursed to the
Trustees for the current year.
ADMINISTRATION, ACCOUNTING AND TRANSFER AGENCY AGREEMENTS Under the terms of the
Administration, Accounting and Transfer Agency Agreements between the Trust, the
Adviser and CFS, CFS supplies non-investment related statistical and research
data, internal regulatory compliance services and executive and administrative
services for the Fund. CFS 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, CFS 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. CFS 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 CFS a monthly base fee, an asset-based fee and a fee based on the
number of shareholder accounts. In addition, the Adviser reimburses CFS for its
out-of-pocket expenses including, but not limited to, postage, supplies and the
costs of pricing the Fund's portfolio securities.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001005706
<NAME> PRAGMA INVESTMENT TRUST - PRAGMA PROVIDENCE FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 3,923,497
<INVESTMENTS-AT-VALUE> 4,575,494
<RECEIVABLES> 2,432
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 459
<TOTAL-ASSETS> 4,578,385
<PAYABLE-FOR-SECURITIES> 12,062
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,558
<TOTAL-LIABILITIES> 17,620
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,983,337
<SHARES-COMMON-STOCK> 397,180
<SHARES-COMMON-PRIOR> 415,677
<ACCUMULATED-NII-CURRENT> (8,266)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (66,303)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 651,997
<NET-ASSETS> 4,560,765
<DIVIDEND-INCOME> 18,967
<INTEREST-INCOME> 4,062
<OTHER-INCOME> 0
<EXPENSES-NET> 31,295
<NET-INVESTMENT-INCOME> (8,266)
<REALIZED-GAINS-CURRENT> 191,825
<APPREC-INCREASE-CURRENT> 772,093
<NET-CHANGE-FROM-OPS> 955,652
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 19,962
<NUMBER-OF-SHARES-REDEEMED> 38,459
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 778,789
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (258,128)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,295
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 31,295
<AVERAGE-NET-ASSETS> 4,165,491
<PER-SHARE-NAV-BEGIN> 9.10
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 2.40
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.48
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
