STATE BOND
CASH MANAGEMENT
FUND
SEMI-ANNUAL
REPORT
JANUARY 31, 1995
February 17, 1995
TO THE SHAREHOLDERS:
We are pleased to present the semi-annual report for State Bond Cash Management
Fund. We wish to welcome the new shareholders that joined us during this
six-month period of operations, and thank all of our shareholders for their
investment in the Fund. As of January 31, 1995, the SEC 7-day yield was 4.55%.
This is an increase of 38% from 3.30% as of July 31, 1994.
Since our last report of July 31, 1994, short-term interest rates have continued
to rise because of Federal Reserve actions. This period produced a stronger
economy which the Federal Reserve interpreted as an indication of future
inflation. In an effort to control inflation, the Federal Reserve raised
short-term interest rates twice since July 31, 1994 by a total of 1.25%. These
rate increases carried over into the money markets, resulting in higher
short-term rates.
The Fund's investment strategy continues to be current income, preservation of
principal, and liquidity. These objectives are achieved through diversification
and high credit quality.
As of January 31, 1995, approximately 59% of the portfolio was invested in U.S.
Treasury Bills. These are the highest quality short-term investments available.
The remainder of the portfolio was invested in high quality commercial paper.
The portfolio holdings were diversified across nine different companies, all of
which are rated in the top category by two of the following nationally
recognized ratings services: Standard & Poors Corp., Moodys Investor Service,
Inc., Fitch Investor Service and Duff and Phelps Credit Rating Company.
We appreciate your investment in the Fund and look forward to helping you meet
your investment goals. Should you desire additional information, we would
welcome your inquiries.
Sincerely,
/s/ Charles A. Geer
President
STATEMENT OF NET ASSETS
JANUARY 31, 1995
UNAUDITED
<TABLE>
<CAPTION>
PRINCIPAL DUE INTEREST MARKET
AMOUNT DATE RATE VALUE
--------- --------- --------- ---------
TREASURY BILLS
<S> <C> <C> <C> <C>
$ 245,000 U.S. Treasury Bill 2-02-95 4.630% $ 244,968
175,000 U.S. Treasury Bill 2-09-95 4.470 174,826
170,000 U.S. Treasury Bill 3-23-95 5.300 168,749
155,000 U.S. Treasury Bill 2-23-95 5.050 154,522
135,000 U.S. Treasury Bill 3-02-95 5.250 134,429
120,000 U.S. Treasury Bill 3-02-95 5.270 119,491
110,000 U.S. Treasury Bill 3-16-95 5.200 109,317
100,000 U.S. Treasury Bill 2-16-95 4.500 99,812
100,000 U.S. Treasury Bill 2-23-95 4.950 99,697
95,000 U.S. Treasury Bill 3-16-95 5.350 94,393
80,000 U.S. Treasury Bill 2-16-95 4.500 79,850
----------
TOTAL TREASURY BILLS - 59.3% 1,480,054
(Cost $1,475,043) ----------
COMMERCIAL PAPER
$ 85,000 American Express Credit Corp. 3-03-95 6.000 84,575
125,000 American General Finance Corp. 2-13-95 5.550 124,769
115,000 Associates Corp. of North America 2-06-95 5.500 114,912
120,000 Beneficial Corp. 2-14-95 5.900 119,744
125,000 Chevron Oil Finance Co. 2-07-95 5.450 124,887
105,000 Ford Motor Credit Co. 2-08-95 5.620 104,885
125,000 General Electric Capital Corp. 2-01-95 5.380 125,000
105,000 Household Finance Corp 2-10-95 5.570 104,854
120,000 John Deere Capital Corp. 2-03-95 5.500 119,963
----------
TOTAL COMMERCIAL PAPER - 41.0% 1,023,589
(Cost $1,022,031) ----------
TOTAL INVESTMENTS 100.3% 2,503,643
(Cost $2,497,074) ----------
OTHER ASSETS LESS LIABILITIES (0.3%) (6,001)
----------
TOTAL NET ASSETS applicable to 2,497,642 Class A
shares of $.00001 par value capital stock
outstanding (authorized -
20,000,000,000 total shares) - 100.0% $2,497,642
==========
NET ASSET VALUE PER SHARE $1.00
=====
</TABLE>
See accompanying notes to financial statements.
BALANCE SHEET
JANUARY 31, 1995
UNAUDITED
ASSETS:
Investments, at market value (Note A
and Statement of Net Assets) $2,503,643
Cash 10,376
Receivable from SBM Company 5,807
----------
Total assets 2,519,826
----------
LIABILITIES:
Dividends payable 8,369
Accrued expenses 13,815
----------
Total liabilities 22,184
----------
NET ASSETS APPLICABLE TO
OUTSTANDING CAPITAL STOCK $2,497,642
==========
REPRESENTED BY:
Capital stock - 20,000,000,000 total shares
of $.00001 par value authorized;
2,497,642 Class A shares outstanding $ 25
Additional paid-in capital 2,497,617
----------
Total net assets $2,497,642
==========
NET ASSET VALUE PER SHARE $1.00
=====
See accompanying notes to financial statements.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED
JANUARY 31, 1995
UNAUDITED
INVESTMENT INCOME:
Interest $53,990
EXPENSES:
Transfer agent fees $10,800
Custodian fees 7,200
Audit and legal fees 6,000
Shareholders reports 4,800
Investment advisory and
management fees (Note B) 4,519
Directors fees 2,400
12b-1 plan fees (Note B) 2,260
Other expenses 5,000
-------
Total expenses 42,979
-------
Reimbursement of expenses
(Note B) (33,940) 9,039
------- -------
NET INVESTMENT INCOME - INCREASE
IN NET ASSETS RESULTING FROM OPERATIONS $44,951
=======
See accompanying notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31, 1995 YEAR ENDED
UNAUDITED JULY 31, 1994
---------------- -------------
<S> <C> <C>
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income $ 44,951 $ 63,949
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (44,951) (63,949)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of 2,838,279
and 5,642,187 shares, respectively 2,838,279 5,642,187
Issuance of 39,022 and 45,253 shares,
respectively, in reinvestment of dividends 39,022 45,253
---------- ----------
2,877,301 5,687,440
---------- ----------
Payments for repurchase of 2,399,202
and 7,325,191 shares, respectively (2,399,202) (7,325,191)
---------- ----------
Increase (decrease) in net assets
from capital share increase (decrease)
of 478,099 and (1,637,751)
shares, respectively 478,099 (1,637,751)
---------- ----------
Total increase (decrease) in net assets 478,099 (1,637,751)
NET ASSETS:
Beginning of year 2,019,543 3,657,294
---------- ----------
End of year $2,497,642 $2,019,543
========== ==========
</TABLE>
See accompanying notes to financial statements.
FINANCIAL HIGHLIGHTS
PER SHARE INVESTMENT INCOME AND CAPITAL CHANGES
(FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JANUARY 31, 1995
YEAR ENDED JULY 31 UNAUDITED 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .02 .03 .02 .04 .06 .08 .08 .06 .05 .06 .08
Net realized and
unrealized gains
on investment
transactions -- -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total from investment
operations .02 .03 .02 .04 .06 .08 .08 .06 .05 .06 .08
LESS DISTRIBUTIONS:
Dividends from net
investment income (.02) (.03) (.02) (.04) (.06) (.08) (.08) (.06) (.05) (.06) (.08)
Distributions from
capital gains -- -- -- -- -- -- -- -- -- -- --
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total distributions (.02) (.03) (.02) (.04) (.06) (.08) (.08) (.06) (.05) (.06) (.08)
NET ASSET VALUE,
END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
UNAUDITED
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
State Bond Cash Management Fund (the Fund) is the only current investment
portfolio of the State Bond Money Funds, Inc. which is an open-end diversified
management investment company. The primary investment objective of the Fund is
to maximize current income to the extent consistent with stability of principal.
The Fund invests exclusively in money market investments maturing in twelve
months or less.
Security Valuation
The Fund uses the amortized cost method for valuing portfolio securities in
accordance with SEC Rule 2a-7. Under this method all investments purchased at a
discount or premium are valued by amortizing the difference between the original
purchase price and maturity value of the issue over the period to maturity. The
cost of the investments for Federal income tax purposes is $2,497,074.
Security Transactions, Related Investment Income and Dividends to Shareholders
Security transactions are accounted for on the trade date. Realized security
gains and losses are determined using the identified cost method. Interest
income is recorded on the accrual basis and dividends to shareholders are
declared daily and paid once a month.
Income Taxes
No provision is made for income taxes since it is the policy of the Fund to
distribute all taxable net income and qualify as a "regulated investment
company" under the Internal Revenue Code.
(B) PAYMENTS TO RELATED PARTIES
SBM Company is the Fund's investment advisor, transfer agent, registrar, and
disbursing agent. Under the terms of an agreement previously approved by the
Board of Directors, investment advisory and management fees are computed at the
annual rate of .6% on the average daily net assets of the Fund. SBM Company
subsequently pays .2% of the average daily net assets to SBM Financial Services,
Inc. (a wholly owned subsidiary of SBM Company) under a 12b-1 plan of share
distribution. The investment advisory and management fee rate is reduced when
the Fund attains average daily net assets in excess of $500 million.
The Investment Advisor has voluntarily undertaken to reimburse the Fund for
expenses in excess of .8% of the average daily net assets, despite the fact that
higher expenses may be permitted by state law. Total reimbursement for the
period ended January 31, 1995, was $33,940.
Transfer agent fees totalling $10,800 were paid to SBM Company for the period
ended January 31, 1995, in accordance with a schedule of charges previously
approved by the Fund's Board of Directors. Certain officers and directors of the
Fund are officers and directors of SBM Company.
(C) SUBSEQUENT EVENT
Pursuant to a Stock and Asset Purchase Agreement dated February 16, 1995,
between SBM Company, the Manager of the State Bond Group of Mutual Funds (the
"Manager") and ARM Financial Group, Inc., a Delaware corporation ("ARM"), the
Manager has agreed to sell substantially all of its business operations to ARM
(the "Proposed Transaction"). As part of the Proposed Transaction, a subsidiary
of ARM, ARM Capital Advisors, Inc. ("ARM Advisors"), will assume the
responsibilities of the Manager as investment adviser to the Fund under the
Investment Advisory and Management Agreement between the Manager and the Fund.
In addition, ARM will acquire all of the outstanding Stock of SBM Financial
Services, Inc., the Distributor of the Fund (the "Distributor"). The completion
of the Proposed Transaction is subject to a number of contingencies, including
the obtaining of regulatory and shareholder approvals.
SHAREHOLDER SERVICES
VOLUNTARY INVESTMENT PLAN
Additional investments of $100 or more can be made at any time. The funds may be
wired or mailed as per the instructions found in the prospectus. Distributions
to shareholders are automatically reinvested to further increase the number of
shares owned.
AUTOMATIC INVESTMENT PLAN
With the cooperation of your bank, the Fund's transfer agent will make a
withdrawal of $100 or more from your checking account each month for the amount
you specify to purchase shares for your mutual fund account.
AUTOMATIC CASH WITHDRAWAL PLAN
Permits monthly, quarterly, semi-annual or annual payments of designated amounts
to investors holding shares of the Fund valued at $5,000 or more.
FREE CHECKWRITING
You may use free personalized checks to withdraw money from your account
(minimum of $100).
QUICK REDEMPTION BY TELEPHONE
Those who have selected this service may telephone redemption instructions. If
your request is for $500 or more, your funds will be wire-transferred the
following business day to your bank account. If the request is for under $500, a
check will be mailed to you. In order to initiate a Quick Redemption by
telephone you must elect this option. The Fund is not liable for any loss
arising from telephone redemptions that the Fund reasonably believes to be
genuine. The Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine; if it does not, it may be liable for any
losses due to unauthorized or fraudulent instructions. The procedures used by
the Fund will include requesting several items of personal identification
information prior to acting upon telephone instructions and sending a written
confirmation of all such transactions.
MAIL REDEMPTIONS
You may redeem shares by simply requesting the dollar amount you desire in
writing. A check payable to you will be put in the mail the business day
following receipt of your request.
RETIREMENT PLANS
Prototype plans for individual retirement accounts (IRAs) and qualified pensions
and profit sharing plans for corporate and non-corporate employers, as well as a
kit for the establishment of a 403(b) custodial account (TSA), are available.
BOARD OF DIRECTORS
ROBERT H. BAKER, JR.
President, Optima Resources, Inc.
Director, associated mutual funds
RICHARD M. EVJEN
President, The Evjen Associates, Inc.
Director, SBM Company
Director, associated mutual funds
WILLIAM B. FAULKNER
President, William Faulkner & Associates, Inc.
Director, associated mutual funds
PATRICK M. FINLEY
President, Universal Cooperatives, Inc.
Director, associated mutual funds
ALDEN M. HANSON
Realtor, Edina Realty
Director, associated mutual funds
CHRIS L. MAHAI
Senior Vice President, Strategic Integration
Star Tribune
Director, associated mutual funds
KEITH O. MARTENS
Executive Vice President-Investments,
SBM Company
Director and Vice President, associated mutual funds
KENNON V. ROTHCHILD
Chairman and Chief Executive Officer,
RCN Associates, Inc.
Director, SBM Company
Director, associated mutual funds
OFFICERS
Charles A. Geer President
Walter W. Balek Vice President
Stewart D. Gregg Vice President and Secretary
Keith O. Martens Vice President
Ann M. Schmid Vice President-Investments
Edward L. Zeman Vice President, Treasurer, and
Chief Financial Officer
Ronald H. Geiger Assistant Vice President
Lori L. Nuebel Assistant Vice President and
Assistant Secretary
INVESTMENT ADVISOR
SBM Company
Minneapolis, Minnesota
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 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.
