<PAGE>
STATE BOND
Diversified Fund
A Member of the ARM Financial Group
[LOGO]
STATE BOND
Diversified Fund
Semi-Annual Report
June 30, 1995
<PAGE>
State Bond Diversified Fund
TO THE SHAREHOLDERS:
As of June 30, 1995, the State Bond Diversified Fund (the "Fund") had total net
assets of $41.5 million and a net asset value per share of $9.54, which compares
to $8.44 at the beginning of the period. During this semi-annual period, the
Fund paid a quarterly dividend of 5 cents per share in both March and June.
Investment decisions to sell selected securities from the Fund's portfolio
resulted in a net realized gain of approximately 38 cents per share for the
first half of the year.
The portfolio of investments, as shown in the "Schedule of Investments" of this
report, shows that the Fund has investments in 52 companies representing 23
different industries. Equities represented 89.4% and short-term securities
accounted for 10.6% of the Fund's portfolio. The emphasis of these equity
investments is in the telecommunication, energy, and chemical industries.
In February of this semi-annual reporting period, the Federal Reserve raised the
Fed Funds rate for the seventh time within a twelve-month period, to the 6%
level. Even as this restrictive monetary action was happening, the economy was
giving indications of slowing, as home sales, retail sales, and other economic
data suggested weakness. Long-term interest rates, as measured by the benchmark
30 year Treasury Bond yield, which had already begun to decline, were down over
1% from year-end levels. Declining interest rates proved beneficial to both
stocks and bonds as both markets rallied strongly. The Fund, on a total return
basis which includes the reinvestment of dividends and net realized gain
distributions, showed a strong return of 14.3% for this six-month period.
We appreciate your investment in the Fund and look forward to continuing to help
you meet your investment goals. Should you desire additional information, we
would welcome your inquiries.
Sincerely,
/s/ Keith O. Martens
--------------------
Keith O. Martens
Vice President
1
<PAGE>
INVESTMENT RECORD
The chart below illustrates the annual changes in the value of an assumed
investment of $10,000 for the period from June 25, 1964, to June 30, 1995. This
period was one of fluctuating common stock prices. The results shown should not
be considered as a representation of the distributions from net investment
income or net realized gain which may be realized from an investment made in the
Fund today.
[INVESTMENT RECORD CHART APPEARS HERE]
<TABLE>
<CAPTION>
Total value assuming
reinvestment of
distributions from
Total value assuming net realized gain--
reinvestment of all $56,983 (an additional Value of
dividends and $24,838 received in original shares
distributions--$179,205 cash dividends) --$18,171
----------------------- ---------------------- ---------------
<S> <C> <C> <C>
Initial
asset
value at
June 25,
1964 $ 9,525.00 $ 9,525.00 $ 9,525.00
$ 9,695.05 $ 9,600.00 $ 9,600.00
1965 $ 10,535.24 $10,174.54 $ 9,942.86
$ 9,599.57 $ 9,003.28 $ 8,685.71
$ 12,212.12 $11,142.62 $10,342.86
$ 14,752.43 $13,123.83 $11,600.00
$ 13,017.90 $11,227.45 $ 9,923.81
1970 $ 14,189.30 $11,766.19 $10,400.00
$ 15,506.63 $12,505.58 $10,933.33
$ 17,119.04 $13,460.45 $11,561.91
$ 14,721.33 $11,234.67 $ 9,238.10
$ 11,506.16 $ 8,395.22 $ 6,361.91
1975 $ 16,128.20 $11,298.01 $ 8,342.86
$ 20,981.27 $14,189.62 $10,190.48
$ 20,944.51 $13,628.98 $ 9,390.48
$ 21,567.39 $13,310.49 $ 8,800.00
$ 25,521.22 $15,074.80 $ 9,771.43
1980 $ 32,526.94 $18,331.45 $11,523.81
$ 30,840.56 $16,392.62 $ 9,980.95
$ 37,067.22 $18,511.96 $10,800.00
$ 44,222.20 $20,983.27 $12,019.05
$ 46,912.98 $21,231.32 $11,657.14
1985 $ 59,836.43 $25,995.35 $13,619.05
$ 71,791.85 $30,214.38 $14,133.33
$ 73,879.55 $30,064.50 $13,219.05
$ 85,118.89 $33,267.39 $14,076.19
$108,973.17 $40,836.31 $16,838.10
1990 $107,305.08 $38,607.59 $15,104.76
$140,896.50 $49,192.80 $18,438.10
$142,935.31 $48,665.90 $17,504.76
$156,657.89 $51,610.27 $17,600.00
$156,852.63 $50,412.73 $16,076.19
June 30,
1995 $179,204.90 $56,983.11 $18,171.43
</TABLE>
The chart above and the table on the next page assume the applicability of the
current maximum sales charge of 4.75% throughout the life of the Fund, although
the maximum sales charge was higher prior to March 1, 1990. Future performance
of the Fund will be affected by the establishment of a Rule 12b-1 plan,
effective May 1, 1990, under which Fund assets may be used to pay distribution
costs. Initial net asset value is the amount received by the Fund after
deducting from the cost of investment the 4.75% sales charge described in the
prospectus. There is no sales charge on distributions taken in shares. No
adjustment has been made for any income taxes payable by shareholders on
distributions received in shares.
THE AVERAGE ANNUAL TOTAL RETURN FOR THE ONE, FIVE, AND TEN YEAR PERIODS ENDED
JUNE 30, 1995, WAS 11.45%, 9.20%, AND 12.25%, RESPECTIVELY. The performance data
quoted represents only past performances. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
2
<PAGE>
INVESTMENT RECORD
(CONTINUED)
<TABLE>
<CAPTION>
RESULTS ASSUMING
REINVESTMENT OF NET
REALIZED GAIN DISTRIBUTIONS
PER SHARE DATA ONLY*
----------------------------------------- ------------------------------
YEAR NET NET REALIZED
ENDED ASSET GAIN DIVIDEND NET REALIZED CASH
DECEMBER 31 VALUE DISTRIBUTION INCOME GAIN DIVIDENDS
----------------------------------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
1964 $5.04 $ - $.050 $ - $ 95.24
1965 5.22 .120 .130 228.57 247.61
1966 4.56 .060 .140 116.95 272.87
1967 5.43 .210 .150 414.62 296.17
1968 6.09 .312 .150 640.24 307.80
1969 5.21 - .170 - 366.35
1970 5.64 - .200 - 431.00
1971 5.74 .063 .160 135.76 348.60
1972 6.07 .104 .150 226.58 332.63
1973 4.85 .264 .150 585.43 347.47
1974 3.34 .341 .170 802.20 414.70
1975 4.38 .091 .170 228.73 438.51
1976 5.35 .129 .180 332.75 477.41
1977 4.93 .212 .190 562.28 525.25
1978 4.62 .191 .250 528.02 720.26
1979 5.13 .094 .220 270.82 646.49
1980 6.05 .159 .260 467.23 787.80
1981 5.24 .187 .320 566.61 1,001.07
1982 5.67 .206 .320 644.44 1,044.76
1983 6.31 .106 .320 346.08 1,064.12
1984 6.12 .262 .280 871.25 971.37
1985 7.15 .289 .270 1,002.59 981.63
1986 7.42 .846 .250 3,163.90 949.12
1987 6.94 .440 .277 1,791.69 1,127.95
1988 7.39 .286 .305 1,250.95 1,337.56
1989 8.84 .229 .365 1,030.88 1,643.12
1990 7.93 .427 .342 1,972.52 1,579.86
1991 9.68 .415 .276 2,020.45 1,343.72
1992 9.19 .388 .237 1,971.78 1,204.40
1993 9.24 .508 .317 2,691.19 1,678.68
1994 8.44 .586 .225 3,270.88 1,256.75
1995** 9.54 - .100 - 597.30
------------------------------
$28,135.39 $24,837.57
==============================
</TABLE>
* Based upon an investment of $10,000 on June 25, 1964.
** For the six months ended June 30, 1995.
If all dividends and distributions had been taken in cash, the value of the
account on June 30, 1995, would have been $18,171. A total of $13,513 in net
investment income and $14,333 in net realized gains would have been paid to the
shareholder.
3
<PAGE>
State Bond Diversified Fund
Schedule of Investments
June 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------------------------
<S> <C> <C>
COMMON STOCKS (89.4%)
ADVERTISING (1.7%)
Omnicom Group Inc. 12,000 $ 727,500
APPLIANCES (1.3%)
Maytag Corporation 35,000 560,000
CHEMICALS AND ALLIED PRODUCTS (8.3%)
Dow Chemical Company 10,000 718,750
Eastman Chemical 10,000 595,000
Hercules, Inc. 20,000 975,000
Minnesota Mining and Manufacturing Company 20,000 1,142,500
-----------
3,431,250
CONGLOMERATES (7.4%)
ITT Corporation 10,000 1,175,000
Hanson PLC 30,000 525,000
Tenneco, Inc. 13,000 598,000
United Techonologies Corporation 10,000 781,250
-----------
3,079,250
CONSUMER PRODUCTS (1.8%)
Coca Cola Company 12,000 765,000
DEPOSITORY INSTITUTIONS (2.5%)
Chase Manhattan Bank 10,000 470,000
Fleet Financial Group Inc. 15,000 556,875
-----------
1,026,875
DRUGS (3.7%)
Bristol-Myers Squibb Company 12,000 816,000
Merck & Company 15,000 736,875
-----------
1,552,875
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
ELECTRONIC PRODUCTS (4.2%)
AMP, Inc. 24,000 $ 1,014,000
Emerson Electric 10,000 715,000
-----------
1,729,000
ENERGY (10.0%)
Enron Corporation 25,000 878,125
Exxon Corporation 5,000 353,125
MCN Corporation 40,000 790,000
Repsol SA 15,000 474,375
Sonat, Inc. 20,000 610,000
Texaco, Inc. 10,000 656,250
YPF Sociedad Anonima 20,000 377,500
-----------
4,139,375
FINANCIAL SERVICES (3.7%)
Dean Witter Discover Company 15,000 705,000
MBNA Corporation 25,000 843,750
-----------
1,548,750
FOOD AND KINDRED PRODUCTS (1.8%)
General Mills, Inc. 15,000 770,625
HOTELS AND OTHER LODGING PLACES (1.7%)
Hilton Hotels Corporation 10,000 702,500
HOUSEHOLD PRODUCTS (2.6%)
Colgate Palmolive Corporation 15,000 1,096,875
INSURANCE CARRIERS (1.9%)
CIGNA Corporation 10,000 776,250
</TABLE>
5
<PAGE>
State Bond Diversified Fund
Schedule of Investments (Unaudited)(continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
---------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
LUMBER AND WOOD PRODUCTS (1.5%)
Weyerhauser Company 13,000 $ 612,625
PAPER AND ALLIED PRODUCTS (2.2%)
Kimberly-Clark Corporation 15,000 898,125
PHOTOGRAPHY (2.6%)
Eastman Kodak Company 18,000 1,091,250
PRINTING AND PUBLISHING (3.8%)
Gannett Company 15,000 813,750
McGraw Hill Inc. 10,000 758,750
-----------
1,572,500
RETAIL (3.5%)
May Department Store Company 13,000 541,125
Sears Roebuck and Company 15,000 896,250
-----------
1,437,375
TELECOMMUNICATIONS (13.3%)
AT&T Corporation 20,000 1,060,000
Airtouch Communications 25,000 712,500
ALLTEL Corporation 30,000 761,250
British Telecommunication PLC 8,000 502,000
GTE Corporation 25,000 853,125
Pacific Telesis Group 25,000 668,750
SBC Communications, Inc. 20,000 952,500
-----------
5,510,125
TOBACCO PRODUCTS (4.1%)
Philip Morris Companies, Inc. 13,000 966,875
RJR Nabisco 5,000 138,750
UST, Inc. 20,000 595,000
-----------
1,700,625
TRANSPORTATION (2.0%)
Conrail, Inc. 15,000 834,375
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
---------------------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES (3.8%)
NIPSCO Industries Inc. 10,000 $ 340,000
Northeast Utilities 18,000 405,000
Peco Energy Company 20,000 552,500
Unicom Corporation 10,000 266,250
-----------
1,563,750
-----------
TOTAL COMMON STOCKS (Cost $28,563,088) 37,126,875
SHORT-TERM SECURITIES (10.6%)
Ford Motor Credit Company, 5.95%, 07/07/95 $1,050,000 1,048,438
Ford Motor Credit Company, 5.97%, 07/07/95 550,000 548,997
GE Capital Corporation, 5.95%, 07/03/95 1,450,000 1,447,124
John Deere Capital Corporation, 5.95%, 7/10/95 800,000 798,678
Sears Roebuck Acceptance Corporation, 5.93%,
07/05/95 550,000 548,913
-----------
TOTAL SHORT-TERM SECURITIES
(Cost $4,392,150) 4,392,150
-----------
TOTAL INVESTMENTS (100%)
(Cost $32,955,238*) $41,519,025
===========
</TABLE>
* Also represents cost for federal income tax purposes.
See accompanying notes.
7
<PAGE>
State Bond Diversified Fund
Statement of Assets and Liabilities
June 30, 1995 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Investment in securities, at value
(cost $32,955,238)
(Note 1)--See accompanying schedule $41,519,025
Cash 11,699
Dividends, interest and other
receivables 136,023
-----------
TOTAL ASSETS 41,666,747
LIABILITIES
Payable for capital shares repurchased 91,473
Payable to affiliates 36,070
Other payables and accrued expenses 8,628
-----------
TOTAL LIABILITIES 136,171
-----------
NET ASSETS $41,530,576
===========
Net Assets consist of:
Paid-in capital $31,274,524
Undistributed net investment income 34,230
Undistributed net realized gain on
investments 1,658,035
Net unrealized appreciation on
investment securities 8,563,787
-----------
NET ASSETS, for 4,355,103 shares
outstanding $41,530,576
===========
NET ASSET VALUE and redemption price
per share $ 9.54
===========
Maximum offering price per share
(includes maximum sales charge of
4.75%--reduced on purchases of $50,000
or more) $ 10.02
===========
</TABLE>
See accompanying notes.
8
<PAGE>
State Bond Diversified Fund
Statement of Operations
Six Months Ended June 30, 1995 (Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 588,025
Interest 119,934
----------
Total investment income 707,959
EXPENSES (Note 2)
Investment advisory and management fees 129,412
12b-1 plan fees 50,400
Transfer agent fees 18,200
Registration fees 10,552
Professional fees 7,150
Shareholders' reports 8,400
Custodian fees 5,850
Directors' fees and expenses 2,600
Other expenses 4,448
----------
Total expenses 237,012
----------
Net investment income 470,947
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 1)
Net realized gain on investments 1,658,035
Change in unrealized appreciation on
investment securities 3,177,495
----------
Net realized and unrealized gain on
investments 4,835,530
----------
Net increase in net assets resulting
from operations $5,306,477
==========
</TABLE>
See accompanying notes.
9
<PAGE>
State Bond Diversified Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED
1995 DECEMBER 31,
(UNAUDITED) 1994
--------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 470,947 $ 943,089
Net realized gain on investments 1,658,035 2,472,164
Net unrealized appreciation
(depreciation) 3,177,495 (3,315,204)
--------------------------------
Net increase in net assets resulting
from operations 5,306,477 100,049
Distributions to shareholders from:
Net investment income (442,266) (940,453)
Net realized gain -- (2,472,772)
--------------------------------
Total distributions to shareholders (442,266) (3,413,225)
Capital share transactions:
Proceeds from sales of shares 1,394,018 4,060,096
Proceeds from reinvested dividends 388,154 3,090,198
Cost of shares redeemed (3,296,673) (3,866,269)
--------------------------------
Net increase (decrease) in net assets
resulting from share transactions (1,514,501) 3,284,025
--------------------------------
Total increase (decrease) in net assets 3,349,710 (29,151)
NET ASSETS
Beginning of period 38,180,866 38,210,017
--------------------------------
End of period (including undistributed
net investment income of $34,230 and
$5,549, respectively) $41,530,576 $38,180,866
================================
OTHER INFORMATION
Shares:
Sold 154,475 446,525
Issued through reinvestment of dividends 41,712 361,162
Redeemed (362,520) (422,208)
--------------------------------
Net increase (decrease) (166,333) 385,479
================================
</TABLE>
See accompanying notes.
10
<PAGE>
State Bond Diversified Fund
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------- ------------------------------------------------
1995 1994 1993 1992 1991 1990
---------- ------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 8.44 $ 9.24 $ 9.19 $ 9.68 $ 7.93 $ 8.84
Income from investment operations:
Net investment income .11 .23 .32 .24 .27 .34
Net realized and unrealized gain
(loss) on investments 1.09 (.21) .56 (.10) 2.18 (.48)
------- -------------------------------------------------
Total from investment operations 1.20 .02 .88 .14 2.45 (.14)
Less distributions:
From net investment income (.10) (.23) (.32) (.24) (.28) (.34)
From net realized gain -- (.59) (.51) (.39) (.42) (.43)
------- -------------------------------------------------
Total distributions (.10) (.82) (.83) (.63) (.70) (.77)
------- --------------------------------------------------
Net asset value, end of period $ 9.54 $ 8.44 $ 9.24 $ 9.19 $ 9.68 $ 7.93
======= ================================================
TOTAL RETURN(A) 14.25% 0.13% 9.60% 1.45% 31.31% (1.53%)
Ratios and Supplemental Data(B)
Net assets, end of period (in thousands) $41,531 $38,181 $38,210 $36,202 $31,316 $22,589
Ratio of expenses to average net assets 1.18% 1.17% 1.20% 1.19% 1.22% 1.12%
Ratio of net investment income to
average net assets 2.34% 2.46% 3.31% 2.55% 3.10% 4.06%
Portfolio turnover rate 17% 22% 24% 14% 15% 11%
</TABLE>
(A) Total returns do not consider the effects of the one time sales charge and
for periods of less than one year are not annualized.
(B) Data expressed as a percentage are annualized as appropriate.
11
<PAGE>
State Bond Diversified Fund
Notes to Financial Statements
June 30, 1995 (Unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
The State Bond Diversified Fund (the "Fund") is the only investment portfolio of
State Bond Investment Funds, Inc. The Fund is registered under the Investment
Company Act of 1940, as amended, as a diversified open-end management investment
company. The Fund seeks to produce reasonable current income and long-term
capital value growth without exposing capital to undue risk.
On June 14, 1995, ARM Financial Group, Inc. ("ARM") completed the acquisition of
substantially all of the assets and business operations of SBM Company ("SBM").
As part of the acquisition, ARM Capital Advisors, Inc. ("ARM Capital Advisors"),
a subsidiary of ARM, assumed the responsibilities of SBM as manager of the Fund.
The Investment Advisory and Management Agreement between the Fund and ARM
Capital Advisors contains the same material terms and conditions (including the
fees payable to ARM Capital Advisors) as are contained in the Fund's prior
Investment Advisory and Management Agreement with SBM.
As part of the acquisition, ARM acquired all of the issued and outstanding
common stock of SBM Financial Services, Inc. ("SBM Financial Services"), the
Fund's distributor. Effective June 14, 1995, SBM Financial Services also became
the transfer agent for the Fund. Prior to the acquisition SBM functioned as the
transfer agent for the Fund.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for investment companies.
INVESTMENTS IN SECURITIES
Securities listed on national securities exchanges are valued at closing market
quotations at the end of each day. Unlisted securities are valued at the mean
between bid and asked prices as quoted in the over-the-counter market. Short-
term securities are valued at cost plus accrued interest, which approximates
market value. Security transactions are accounted for on the date the order to
buy or sell is executed, and dividends declared but not received are accrued on
the ex-dividend date. Realized gains or losses from security transactions are
determined on the basis of specific identification.
12
<PAGE>
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At June 30, 1995, gross unrealized appreciation of investments aggregated
$9,223,611 and gross unrealized depreciation of investments aggregated $659,824
for tax purposes.
INCOME TAX STATUS
The Fund complied with the requirements of the Internal Revenue Code applicable
to regulated investment companies and distributed its taxable net investment
income and net realized gains. Therefore, no provision for federal or state
income tax is required.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income, if any, are paid
quarterly. The Fund distributes substantially all of its taxable net realized
gain on investment securities annually. Dividends and distributions are recorded
on the ex-dividend date.
2. INVESTMENT ADVISORY AGREEMENT AND PAYMENTS TO RELATED PARTIES
ARM Capital Advisors is the Fund's investment adviser. The investment advisory
fee is computed at the annual rate of .65% on the average daily net assets of
the Fund. In addition, the Fund pays .25% of the average daily net assets to SBM
Financial Services under a Rule 12b-1 plan of share distribution. ARM Capital
Advisors has voluntarily agreed to reimburse the Fund for expenses (including
the advisory fee but excluding taxes) in excess of 1.5% of the first $30,000,000
of the average daily net assets of the Fund and 1.0% of the average daily net
assets in excess of $30,000,000. No such reimbursements were required during the
six months ended June 30, 1995.
Fees paid to SBM Financial Services for underwriting services in connection with
sales of the Fund's capital shares aggregated $45,565 for the six months ended
June 30, 1995. Such fees are not an expense of the Fund and are excluded from
the proceeds received by the Fund for sales of its capital shares as shown in
the accompanying statements of changes in net assets.
Certain officers and directors of the Fund are also officers of ARM, ARM Capital
Advisors, and SBM Financial Services.
13
<PAGE>
State Bond Diversified Fund
Notes to Financial Statements
June 30, 1995
3. PURCHASES AND SALES OF SECURITIES
Aggregate purchases and proceeds from sales of securities, excluding short-term
investments during the six months ended June 30, 1995, amounted to $2,977,080
and $4,851,070, respectively.
4. CAPITAL SHARES
At June 30, 1995, the Fund had authority to issue ten billion shares of common
stock, each with a par value of $.00001.
14
<PAGE>
BOARD OF DIRECTORS
William B. Faulkner
President, William Faulkner & Associates, Inc.
Director, State Bond mutual funds
Patrick M. Finley
President, Universal Cooperatives, Inc.
Director, State Bond mutual funds
Arthur J. Gartland
Co-founder and President, Benedetto, Gartland & Greene, Inc.
Director, State Bond mutual funds
John Katz
Executive Vice President, Equitable Investment Corporation,
retired 1991
Director, State Bond mutual funds
John R. Lindholm
Executive Vice President, ARM Financial Group, Inc.
President, State Bond and Mortgage Life Insurance Company
Chairman, State Bond mutual funds
Chris L. Mahai
Senior Vice President, Strategic Integration, Star Tribune
Director, State Bond mutual funds
Theodore S. Rosky
Executive Vice President and Chief Financial Officer,
Providian Corporation, retired 1992
Director, State Bond mutual funds
---------------------------------------
INVESTMENT ADVISER
ARM Capital Advisors, Inc.
GENERAL DISTRIBUTOR
SBM Financial Services, Inc.
8400 Normandale Lake Blvd., Suite 1150
Minneapolis, Minnesota 55437-3807
612/835/0097
CUSTODIAN
First Bank National Association
St. Paul, Minnesota
---------------------------------------
This report is intended for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
accompanied or preceded by the offering prospectus of the Fund, which contains
details of sales commissions and other information.
