ANNUAL
REPORT
SEPTEMBER 30, 1995
Short Term Government
INCOME FUND
Institutional Government
INCOME FUND
Intermediate Term
Government
INCOME FUND
Adjustable Rate
U.S. Government
SECURITIES FUND
Global
BOND FUND
MIDWEST TRUST
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-3874
Nationwide (Toll Free) 800-543-8721
Cincinnati 629-2000
Rate Line 579-0999
Shareholder Services
Nationwide (Toll Free) 800-543-0407
Cincinnati 629-2050
BOARD OF TRUSTEES
Gary W. Heldman
James C. Krumme
H. Jerome Lerner
Robert H. Leshner
Oscar P. Robertson
G. William Rohde
Bruce J. Simpson
OFFICERS
Robert H. Leshner, President
John F. Splain, Secretary
Mark J. Seger, Treasurer
INVESTMENT ADVISER/UNDERWRITER
MIDWEST GROUP FINANCIAL SERVICES, INC.
312 Walnut St., 21st Floor
Cincinnati, Ohio 45202-3874
TRANSFER AGENT
MGF SERVICE CORP.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
This report is authorized for distribution only when it is accompanied
or preceded by a current prospectus of Midwest Trust.
11/95
LETTER FROM THE PRESIDENT
===============================================================================
Dear Fellow Shareholders:
We are pleased to enclose for your review the unaudited semiannual report for
the six months ended March 31, 1995, for the Short Term Government Income Fund,
the Intermediate Term Government Income Fund and the Adjustable Rate U.S.
Government Securities Fund.
Bond prices plummeted as yields on all types of bonds rose substantially in
1994. Short-term rates increased more than long-term rates, which resulted in a
flattening of the yield curve. However, because long-term bonds are more
interest rate sensitive, they declined in value more than their short-term
counterparts.
After a strong performance in 1993, long-term U.S. Government bonds declined by
7.74% in 1994. This return ranks as the second largest annual loss on record.
The total return on intermediate-term government bonds in 1994 was -5.14%. This
return ranks as the largest annual loss in sixty-eight years.
While current economic data continues to be mixed, reports indicate moderate
economic strength sufficient enough to keep the Federal Reserve from raising
interest rates any time in the near future. The slower economy resulted in
declining interest rates and allowed the U.S. Government markets to post
moderate gains during the first quarter of 1995. Intermediate-term maturities
posted the biggest advance. As we move forward, the pace of the economy and the
international exchange value of the dollar will be the primary factors that
drive the U.S. Government markets.
While investors may be worried about the economy, interest rates, the stock
market and taxes, they are also showing a basic interest in fundamental
investing. Midwest Group's conservative approach, seeking to maximize returns
while minimizing risk, has served investors well. Our concentration of high
quality U.S. Treasury and/or U.S. Government agency issues held by the Funds,
plus the flexibility of each Fund's cash position, should appeal to the
risk-adverse investor.
The Intermediate Term Government Income Fund remains an excellent conservative
alternative for investors whose objective is high current income, consistent
with protection of capital . The Fund's yield for March 1994 was 6.18% and 5.80%
for Class A and Class C shares, respectively. Its annualized total return for
Class A shares (excluding the impact of the 2% maximum front-end sales load) for
the six months ended March 31, 1995 was 9.83%.
The Adjustable Rate U.S. Government Securities Fund seeks high current income,
consistent with low volatility of principal. The Fund's yield for March 1994 was
5.53% and its annualized total return (excluding the impact of the 2% maximum
front-end sales load) for the six months ended March 31, 1995 was 3.69%.
If you are undecided about your investment goals or about current market
conditions, consider money market funds to provide you with current income along
with investment stability, liquidity and convenience. As of May 15, 1995, the
Short Term Government Income Fund's 7-day current and effective yields were
5.02% and 5.15%, respectively.
During the first quarter of 1995, Midwest Group introduced the Midwest Global
Bond Fund. It seeks high total return through both income and capital
appreciation. With more than 60% of the world's debt securities issued outside
the United States, the global bond markets offer a wide range of investment
opportunities.
For more than ten years, Rogge Global Partners of London, England, the Global
Bond Fund's investment manager, has provided global investment management to
large global portfolios of $50 million or more. Midwest's Global Bond Fund
allows investors to participate in the global bond markets with this experienced
investment manager at a much lower account size than would otherwise be
available.
It is an excellent opportunity to diversify globally.
While we cannot change the nature of the markets, we can make informed
investment decisions based on a long-term perspective and strategy. In the short
term, we will follow an extremely conservative fixed-income policy.
Sincerely,
/s/ Robert H. Leshner
Robert H. Leshner
President
MANAGEMENT DISCUSSION AND ANALYSIS
INTERMEDIATE TERM GOVERNMENT INCOME FUND
===============================================================================
The Intermediate Term Government Income Fund seeks high current income
consistent with protection of capital. To the extent consistent with the Fund's
primary objective, capital appreciation is a secondary objective. The Fund
invests in U.S. Government obligations maturing within twenty years or less with
a dollar-weighted average portfolio maturity under normal market conditions of
between three and ten years. For the fiscal year ended September 30, 1995, the
Fund's total returns (excluding the impact of applicable sales loads) were
12.52% and 11.96% for Class A shares and Class C shares, respectively.
Economic conditions during the past fiscal year enabled the bond market to stage
an impressive rally. Moderate economic growth and subdued inflationary pressures
allowed the Federal Reserve Board to discontinue its strategy of tightening
monetary policy and to actually reverse its course by lowering the Federal Funds
rate in July. The domestic economy, which had shown signs of growth late in
1994, slowed dramatically early in 1995. Industrial production, capacity
utilization, employment levels, inventories and stagnant inflation all suggested
that the economy was responding to a full year of restrictive monetary policy by
the Federal Reserve. Accordingly, the bond market showed steady improvement
throughout the year. For the twelve months ended September 30, 1995, the Lehman
Brothers Intermediate Government Bond Index returned 10.60%.
The Fund was able to capitalize on the positive tone in the bond market.
Utilizing a proactive sector management strategy, the Fund initiated several
trades designed to capitalize on the changing yield spreads between the callable
and non-callable agency sectors of the market. These trades were made in
conjunction with adjustments to the average maturity of the Fund's investment
portfolio based on anticipated interest rate movements. Our interest rate
outlook and timely sector rotation were the keys which helped the Fund
outperform the Lehman Brothers comparative index and much of the Fund's peer
group.
Our outlook for the bond market and the Fund remains positive. Stable inflation
and moderate economic growth should help contain interest rates. The Federal
Reserve Board's willingness to ease monetary policy in response to subdued
growth and low inflation will be key to the magnitude of any market move. The
current budget battle being waged in Washington should also influence the bond
market. It is generally believed that meaningful deficit reduction will suppress
economic activity which will allow the Federal Reserve to ease monetary policy.
We will continue to actively manage the Fund's sector exposures and make
adjustments to the Fund's duration based upon our interest rate outlook.
MANAGEMENT DISCUSSION AND ANALYSIS
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
===============================================================================
The Adjustable Rate U.S. Government Securities Fund seeks high current income,
consistent with lower volatility of principal, by investing primarily in
mortgage-backed securities created from pools of adjustable rate mortgages which
are issued or guaranteed by the United States Government, its agencies or
instrumentalities. For the fiscal year ended September 30, 1995, the Fund's
total return for Class A shares (excluding the impact of applicable sales loads)
was 5.33% as compared to 9.44% for the Lehman Brothers Adjustable Rate Mortgage
(ARM) Index. The initial public offering of Class C shares commenced on May 2,
1995.
Activity within the ARM market was subdued throughout most of the fiscal year
despite the impressive rally experienced in the overall bond market. Spreads
between interest rates on short and long-term Treasury issues narrowed
considerably giving investors an incentive to refinance into fixed rate
mortgages. This, in turn, increased prepayment speeds on ARM securities causing
yield spreads to widen versus U.S. Treasury securities. As a result, fully
indexed ARM securities with rate adjustments tied to short-term U.S.
Treasury securities traded in a very tight range.
With more of the bond market rally concentrated in longer maturity issues and
with short-term rates relatively stagnant, the Fund's fiscal year performance
was generally representative of the interest rate environment. This type of
market favored the more volatile ARM issues having longer average maturities and
greater sensitivity to changes in interest rates more so than the largely
conservative, fully indexed ARM securities held by the Fund. The Fund's strategy
of maintaining a high quality portfolio with low volatility was adhered to
throughout the year. The yield on the Fund rose by approximately 100 basis
points during this period as coupons on ARM securities held in the portfolio
adjusted to current interest rate levels. However, the share price of the Fund
remained essentially unchanged as widening spreads offset any price appreciation
on such securities.
Our outlook for the next several months remains optimistic. With inflation
contained and economic activity mixed, there appears to be some room for the
Federal Reserve Board to further reduce short-term interest rates. We will
continue to pursue a conservative strategy for the Fund, attempting to maximize
current yield while minimizing principal fluctuation.
MANAGEMENT DISCUSSION AND ANALYSIS
GLOBAL BOND FUND
===============================================================================
The Global Bond Fund seeks high total return, through both income and capital
appreciation, by investing primarily in high-grade domestic and foreign
fixed-income securities. Investments in the Fund are geographically concentrated
in the countries included in the Salomon Brothers World Government Bond Index:
Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, the
Netherlands, Spain, Sweden, the United Kingdom and the United States. For the
period from inception of the Fund (February 1, 1995) through September 30, 1995,
the Fund's total returns (excluding the impact of applicable sales loads) were
9.87% and 9.45% for Class A shares and Class C shares, respectively. The Salomon
Brothers World Government Bond Index returned 13.24% during this same period.
Management of the Fund uses an active country/currency allocation in liquid
markets, based on a process of relative value analysis across countries. Focus
is placed on financially healthy countries which have the potential to produce
the highest bond and currency returns on a relative basis. Careful analysis is
made of each country's savings rate, monetary growth, credibility of monetary
authorities, fiscal policy and political climate. Based upon twelve month
expectations of investor confidence and market outlook, optimal country
weightings are assigned. Various hedging strategies are also used by the Fund to
reduce short-term volatility resulting from currency exchange rate fluctuations.
The three largest countries represented in the Solomon Brothers World Government
Bond Index are the United States, Japan and Germany, respectively, which account
for approximately two-thirds of the index weighting. While these three countries
represent roughly the same total percentage of the Fund's overall allocation,
Germany is overweighted by comparison whereas the United States and Japan have
selectively been underweighted by the Fund. In addition, allocations for Italy
and the Netherlands have both been increased in recent months. Global securities
held by the Fund continue to be invested predominately in highly liquid
government debt.
Our outlook for the global bond markets and the Fund is promising. Global
economies on the whole are experiencing reasonable growth with little upward
pressure on inflation, and budget deficits in most of the industrialized world
are generally declining. As always, the Fund's portfolio will be reviewed on a
continual basis focusing on country allocation, currency management duration
control and security selection. We will continue to actively manage the Fund,
seeking value-added returns while striving to protect capital.
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1995
====================================================================================================================
MONEY MARKET FUNDS
====================================================================================================================
SHORT TERM INSTITUTIONAL
GOVERNMENT GOVERNMENT
INCOME FUND INCOME FUND
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.................................................... $ 46,426,489 $ 29,640,982
=============== ===============
At amortized cost...................................................... $ 46,727,328 $ 29,825,915
=============== ===============
At value (Note 1) ..................................................... $ 46,727,328 $ 29,825,915
Investments in repurchase agreements (Note 1)............................. 39,277,000 6,198,000
Cash ..................................................................... 800,693 702
Interest receivable....................................................... 397,548 18,009
Other assets.............................................................. 12,502 --
--------------- ---------------
TOTAL ASSETS........................................................... 87,215,071 36,042,626
--------------- ---------------
LIABILITIES
Dividends payable......................................................... 9,088 20,196
Payable to affiliates (Note 3)............................................ 53,113 7,163
Other accrued expenses and liabilities.................................... 11,734 6,637
--------------- ---------------
TOTAL LIABILITIES ..................................................... 73,935 33,996
--------------- ---------------
NET ASSETS .............................................................. $ 87,141,136 $ 36,008,630
=============== ===============
Net assets consist of:
Capital shares............................................................ $ 87,138,909 $ 36,037,070
Accumulated net realized gains (losses) from security transactions ....... 2,227 (28,440)
--------------- ---------------
Net assets ............................................................... $ 87,141,136 $ 36,008,630
=============== ===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) (Note 4) .................................... 87,138,909 36,037,070
=============== ===============
Net asset value, offering price and redemption price per share (Note 1) .. $ 1.00 $ 1.00
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1995
==================================================================================================================
GOVERNMENT BOND FUNDS
==================================================================================================================
ADJUSTABLE
INTERMEDIATE RATE U.S.
TERM GOVERNMENT
GOVERNMENT SECURITIES
INCOME FUND FUND
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments in securities:
At acquisition cost.................................................... $ 53,666,581 $ 19,417,632
=============== ===============
At amortized cost ..................................................... $ 53,620,994 $ 19,417,632
=============== ===============
At value (Note 1) ..................................................... $ 55,639,412 $ 19,566,997
Investments in repurchase agreements (Note 1)............................. 981,000 1,024,000
Cash ..................................................................... 42 837
Interest receivable ...................................................... 1,030,130 168,812
Receivable for capital shares sold........................................ 42,229 4,143
Receivable for principal paydowns......................................... -- 145,849
Other assets.............................................................. -- 6,833
--------------- ---------------
TOTAL ASSETS .......................................................... 57,692,813 20,917,471
--------------- ---------------
LIABILITIES
Payable for capital shares redeemed ...................................... 49,240 57,458
Dividends payable ........................................................ 31,690 5,944
Payable to affiliates (Note 3) ........................................... 33,623 9,550
Other accrued expenses and liabilities.................................... 11,224 5,800
--------------- ---------------
TOTAL LIABILITIES ..................................................... 125,777 78,752
--------------- ---------------
NET ASSETS .............................................................. $ 57,567,036 $ 20,838,719
=============== ===============
Net assets consist of:
Capital shares ........................................................... $ 58,743,616 $ 22,010,668
Accumulated net realized losses from security transactions................ (3,194,998) (1,321,314)
Net unrealized appreciation on investments ............................... 2,018,418 149,365
--------------- ---------------
Net assets ............................................................... $ 57,567,036 $ 20,838,719
=============== ===============
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares ................................ $ 56,968,568 $ 20,752,304
=============== ===============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) (Note 4) ................... 5,308,934 2,121,595
=============== ===============
Net asset value and redemption price per share (Note 1)................... $ 10.73 $ 9.78
=============== ===============
Maximum offering price per share (Note 1) ................................ $ 10.95 $ 9.98
=============== ===============
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares ................................ $ 598,468 86,415
=============== ===============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) (Note 4).................... 55,773 8,834
=============== ===============
Net asset value, offering price and redemption price per share (Note 1)... $ 10.73 $ 9.78
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1995
===================================================================================================================
GLOBAL BOND
FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities and time deposits:
At acquisition cost...................................................................... $ 16,396,061
===============
At amortized cost ....................................................................... $ 16,396,061
===============
At value (Note 1) ....................................................................... $ 16,559,934
Cash denominated in foreign currencies (At cost $98,322).................................... 99,546
Cash ....................................................................................... 769,469
Interest receivable ........................................................................ 452,150
Receivable for capital shares sold.......................................................... 34,274
---------------
TOTAL ASSETS ............................................................................ 17,915,373
---------------
LIABILITIES
Payable for capital shares redeemed......................................................... 203
Net unrealized depreciation on forward foreign currency exchange contracts (Note 6)......... 71,979
Payable to affiliates (Note 3) ............................................................. 15,945
Other accrued expenses and liabilities...................................................... 12,202
---------------
TOTAL LIABILITIES ....................................................................... 100,329
---------------
NET ASSETS ................................................................................ $ 17,815,044
===============
Net assets consist of:
Capital shares ............................................................................. $ 17,658,845
Undistributed net investment income......................................................... 8,355
Accumulated net realized gains from security transactions................................... 157,918
Accumulated net realized losses from foreign currency transactions ......................... (106,555)
Net unrealized appreciation on investments and foreign currencies........................... 96,481
---------------
Net assets ................................................................................. $ 17,815,044
===============
PRICING OF CLASS A SHARES
Net assets attributable to Class A shares .................................................. $ 13,296,621
===============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) (Note 4) ............................................... 1,249,309
===============
Net asset value and redemption price per share (Note 1)..................................... $ 10.64
===============
Maximum offering price per share (Note 1) .................................................. $ 11.08
===============
PRICING OF CLASS C SHARES
Net assets attributable to Class C shares .................................................. $ 4,518,423
===============
Shares of beneficial interest outstanding (unlimited number of
shares authorized, no par value) (Note 4) ............................................... 426,839
===============
Net asset value, offering price and redemption price per share (Note 1)..................... $ 10.59
===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1995
=====================================================================================================================
MONEY MARKET FUNDS
=====================================================================================================================
SHORT TERM INSTITUTIONAL
GOVERNMENT GOVERNMENT
INCOME FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income ....................................................... $ 4,729,343 $ 2,459,040
--------------- ---------------
EXPENSES
Investment advisory fees (Note 3) ..................................... 407,097 86,367
Shareholder services and transfer agent fees (Note 3) ................. 167,248 12,000
Distribution expenses (Note 3)......................................... 109,110 1,655
Accounting services fees (Note 3)...................................... 38,300 37,800
Postage and supplies................................................... 44,888 4,955
Custodian fees ........................................................ 16,410 10,801
Professional fees ..................................................... 13,008 8,808
Registration fees...................................................... 17,036 3,979
Insurance expense...................................................... 10,269 6,630
Reports to shareholders ............................................... 8,073 224
Trustees' fees and expenses ........................................... 2,965 2,965
Other expenses ........................................................ 6,203 5,048
--------------- ---------------
TOTAL EXPENSES....................................................... 840,607 181,232
Fees waived by the Adviser (Note 3) ................................... -- (8,500)
--------------- ---------------
NET EXPENSES......................................................... 840,607 172,732
--------------- ---------------
NET INVESTMENT INCOME .................................................... 3,888,736 2,286,308
--------------- ---------------
NET REALIZED GAINS FROM SECURITY TRANSACTIONS ........................... 2,227 4,844
--------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............................. $ 3,890,963 $ 2,291,152
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
For the Year Ended September 30, 1995
=================================================================================================================
GOVERNMENT BOND FUNDS
=================================================================================================================
ADJUSTABLE
INTERMEDIATE RATE U.S.
TERM GOVERNMENT
GOVERNMENT SECURITIES
INCOME FUND FUND
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest income ....................................................... $ 4,286,348 $ 1,418,607
--------------- ---------------
EXPENSES
Investment advisory fees (Note 3)...................................... 294,316 112,333
Accounting services fees (Note 3)...................................... 60,000 47,750
Distribution expenses, Class A (Note 3)................................ 84,109 14,176
Transfer agent fees, Class A (Note 3).................................. 59,523 16,584
Transfer agent fees, Class C (Note 3).................................. 12,000 5,000
Postage and supplies................................................... 34,630 11,741
Registration fees, Common.............................................. 9,351 12,010
Registration fees, Class A............................................. 2,195 360
Registration fees, Class C............................................. 3,393 95
Custodian fees......................................................... 8,529 14,125
Professional fees...................................................... 12,510 8,710
Insurance expense...................................................... 8,839 6,240
Trustees' fees and expenses............................................ 2,965 2,965
Reports to shareholders................................................ 3,774 1,559
Other expenses......................................................... 10,437 23,189
--------------- ---------------
TOTAL EXPENSES....................................................... 606,571 276,837
Fees waived or expenses reimbursed by the Adviser (Note 3)............. (11,362) (108,196)
--------------- ---------------
NET EXPENSES......................................................... 595,209 168,641
--------------- ---------------
NET INVESTMENT INCOME .................................................... 3,691,139 1,249,966
--------------- ---------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions ........................ (932,473) (997,493)
Net change in unrealized appreciation/depreciation on investments ..... 4,287,039 743,284
--------------- ---------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS ............... 3,354,566 (254,209)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............................. $ 7,045,705 $ 995,757
=============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Period Ended September 30, 1995(A)
=====================================================================================================================
GLOBAL BOND
FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
Interest income (net of foreign withholding taxes of $13,318) ........................... $ 338,752
---------------
EXPENSES
Accounting services fees (Note 3)........................................................ 44,250
Investment advisory fees (Note 3)........................................................ 41,518
Custodian fees........................................................................... 13,968
Professional fees........................................................................ 12,611
Transfer agent fees, Class A (Note 3).................................................... 8,000
Transfer agent fees, Class C (Note 3).................................................... 8,000
Distribution expenses, Class A (Note 3).................................................. 7,199
Registration fees, Common................................................................ 7,066
Registration fees, Class A............................................................... 3,019
Registration fees, Class C............................................................... 3,529
Trustees' fees and expenses.............................................................. 2,130
Postage and supplies..................................................................... 1,530
Reports to shareholders.................................................................. 706
Other expenses........................................................................... 1,503
---------------
TOTAL EXPENSES......................................................................... 155,029
Fees waived and expenses reimbursed by the Adviser (Note 3).............................. (70,718)
---------------
NET EXPENSES........................................................................... 84,311
---------------
NET INVESTMENT INCOME ...................................................................... 254,441
---------------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY (Note 5) Net realized gains (losses) from:
Security transactions ................................................................. 157,918
Foreign currency transactions.......................................................... (106,555)
Net change in unrealized appreciation/depreciation on:
Investments ........................................................................... 119,054
Translation of assets and liabilities in foreign currencies............................ (22,573)
---------------
NET REALIZED AND UNREALIZED GAINS FROM INVESTMENTS AND FOREIGN CURRENCY .................... 147,844
---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................................................ $ 402,285
===============
<FN>
(A)Represents the period from the start of business (February 1, 1995) through
September 30, 1995.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended September 30, 1995 and 1994
=======================================================================================================================
MONEY MARKET FUNDS
=======================================================================================================================
SHORT TERM INSTITUTIONAL
GOVERNMENT GOVERNMENT
INCOME FUND INCOME FUND
- -----------------------------------------------------------------------------------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income........................ $ 3,888,736 $ 2,306,072 $ 2,286,308 $ 1,532,617
Net realized gains (losses) from
security transactions ..................... 2,227 5,891 4,844 (134,563)
------------ ------------- ------------- ------------
Net increase in net assets from operations...... 3,890,963 2,311,963 2,291,152 1,398,054
------------ ------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income .................. (3,888,736) (2,306,072) (2,286,308) (1,532,617)
From net realized gains from
security transactions ..................... (4,105) -- -- --
------------ ------------- ------------- ------------
Decrease in net assets from
distributions to shareholders ............... (3,892,841) (2,306,072) (2,286,308) (1,532,617)
------------ ------------- ------------- ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 4):
Proceeds from shares sold ................... 306,531,676 417,855,148 152,663,812 168,143,765
Net asset value of shares issued in
reinvestment of distributions
to shareholders ........................... 3,627,273 2,046,254 1,869,015 1,129,608
Payments for shares redeemed................. (312,723,860) (427,161,727) (160,298,008) (162,084,359)
------------ ------------- ------------- ------------
Net increase (decrease) in net assets from
capital share transactions................... (2,564,911) (7,260,325) (5,765,181) 7,189,014
------------ ------------- ------------- ------------
CAPITAL CONTRIBUTION BY AFFILIATE (Note 3) ..... -- -- -- 105,000
------------ ------------- ------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ...... (2,566,789) (7,254,434) (5,760,337) 7,159,451
NET ASSETS:
Beginning of year............................ 89,707,925 96,962,359 41,768,967 34,609,516
------------ ------------- ------------- ------------
End of year.................................. $ 87,141,136 $ 89,707,925 $ 36,008,630 $ 41,768,967
============ ============= ============= ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET
ASSETS For the Years Ended September 30, 1995 and 1994
===================================================================================================================
GOVERNMENT BOND FUNDS
===================================================================================================================
INTERMEDIATE TERM ADJUSTABLE RATE
GOVERNMENT U.S. GOVERNMENT
INCOME FUND SECURITIES FUND
- -------------------------------------------------------------------------------------------------------------------
Year Year Year Year
Ended Ended Ended Ended
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ....................... $ 3,691,139 $ 4,062,227 $ 1,249,966 $ 1,873,947
Net realized losses from security transactions (932,473) (1,877,102) (997,493) (304,327)
Net change in unrealized
appreciation/depreciation on investments... 4,287,039 (7,766,054) 743,284 (612,863)
------------ ------------- ------------- ------------
Net increase (decrease) in net assets
from operations .............................. 7,045,705 (5,580,929) 995,757 956,757
------------ ------------- ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ......... (3,660,758) (4,050,330) (1,250,247) (1,872,126)
From net investment income, Class C ......... (30,381) (11,897) (1,540) --
From net realized gains from
security transactions, Class A ........... -- (1,012,050) -- (22,389)
------------ ------------- ------------- ------------
Decrease in net assets from distributions
to shareholders ............................. (3,691,139) (5,074,277) (1,251,787) (1,894,515)
------------ ------------- ------------- ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 4):
CLASS A
Proceeds from shares sold ................... 13,539,608 19,529,582 17,065,780 96,127,400
Net asset value of shares issued in
reinvestment of distributions to shareholders 3,085,214 4,360,921 1,122,368 1,544,607
Payments for shares redeemed ................ (27,372,364) (38,538,270) (34,751,708) (83,562,236)
------------ ------------- ------------- ------------
Net increase (decrease) in net assets
from Class A share transactions ............. (10,747,542) (14,647,767) (16,563,560) 14,109,771
------------ ------------- ------------- ------------
CLASS C
Proceeds from shares sold ................... 438,070 792,585 85,878 --
Net asset value of shares issued in
reinvestment of distributions to shareholders 29,534 12,021 1,510 --
Payments for shares redeemed................. (410,675) (264,642) (1,007) --
------------ ------------- ------------- ------------
Net increase in net assets from Class C
share transactions 56,929 539,964 86,381 --
------------ ------------- ------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....... (7,336,047) (24,763,009) (16,733,209) 13,172,013
NET ASSETS:
Beginning of year............................ 64,903,083 89,666,092 37,571,928 24,399,915
------------ ------------- ------------- ------------
End of year.................................. $ 57,567,036 $ 64,903,083 $ 20,838,719 $ 37,571,928
============ ============= ============= ============
UNDISTRIBUTED NET INVESTMENT INCOME ............ -- -- -- $ 1,821
============ ============= ============= ============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the Period Ended September 30, 1995(A)
=====================================================================================================================
GLOBAL BOND
FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
FROM OPERATIONS:
Net investment income ................................................................... $ 254,441
Net realized gains from security transactions ........................................... 157,918
Net realized losses from foreign currency transactions................................... (106,555)
Net change in unrealized appreciation/depreciation on investments........................ 119,054
Net change in unrealized appreciation/depreciation on translation of assets
and liabilities in foreign currencies.................................................. (22,573)
---------------
Net increase in net assets from operations ................................................. 402,285
---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income, Class A ..................................................... (232,249)
From net investment income, Class C ..................................................... (13,837)
---------------
Decrease in net assets from distributions to shareholders .................................. (246,086)
---------------
FROM CAPITAL SHARE TRANSACTIONS (Note 4):
CLASS A
Proceeds from shares sold ............................................................... 13,448,590
Net asset value of shares issued in reinvestment of distributions to shareholders ....... 226,752
Payments for shares redeemed ............................................................ (560,630)
---------------
Net increase in net assets from Class A share transactions ................................. 13,114,712
---------------
CLASS C
Proceeds from shares sold ............................................................... 4,554,154
Net asset value of shares issued in reinvestment of distributions to shareholders........ 13,614
Payments for shares redeemed............................................................. (23,635)
---------------
Net increase in net assets from Class C share transactions ................................. 4,544,133
---------------
TOTAL INCREASE IN NET ASSETS .............................................................. 17,815,044
NET ASSETS:
Beginning of period...................................................................... --
---------------
End of period (including undistributed net investment income of $8,355).................. $ 17,815,044
===============
<FN>
(A)Represents the period from the start of business (February 1, 1995) through
September 30, 1995.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHORT TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
=====================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
=====================================================================================================================
Year Ended September 30,
- ---------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ---------- ---------- -----------
Net investment income .................... 0.046 0.027 0.022 0.035 0.059
----------- ----------- ---------- ---------- -----------
Dividends from net investment income...... (0.046) (0.027) (0.022) (0.035) (0.059)
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== ========== ========== ===========
Total return ............................. 4.69% 2.72% 2.24% 3.55% 6.06%
=========== =========== ========== ========== ===========
Net assets at end of year (000's) ........ $ 87,141 $ 89,708 $ 96,962 $ 91,519 $ 101,535
----------- ----------- ---------- ---------- -----------
Ratio of expenses to average net assets .. 0.99% 0.99% 0.99% 0.99% 0.99%
Ratio of net investment income
to average net assets ................. 4.59% 2.69% 2.22% 3.51% 5.90%
- --------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
====================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
====================================================================================================================
Year Ended September 30,
- --------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ---------- ---------- -----------
Net investment income..................... 0.053 0.034 0.029 0.040 0.065
----------- ----------- ---------- ---------- -----------
Dividends from net investment income...... (0.053) (0.034) (0.029) (0.040) (0.065)
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== ========== ========== ===========
Total return.............................. 5.42% 3.43% 2.96% 4.08% 6.61%
=========== =========== ========== ========== ===========
Net assets at end of year (000's) ........ $ 36,009 $ 41,769 $ 34,610 $ 43,432 $ 62,313
=========== =========== ========== ========== ===========
Ratio of expenses to average net assets(A) 0.40% 0.40% 0.40% 0.37% 0.35%
Ratio of net investment income
to average net assets ................. 5.30% 3.41% 2.92% 4.04% 6.50%
- ---------------------------------------------------------------------------------------------------------------------
<FN>
(A)Absent fee waivers by the Adviser, the ratios of expenses to average net
assets would have been 0.42%, 0.42%, 0.48%, 0.43% and 0.36% for the years
ended September 30, 1995, 1994, 1993, 1992 and 1991, respectively (Note 3).
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS - CLASS A
======================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
======================================================================================================================
Year Ended September 30,
- ----------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year...... $ 10.14 $ 11.59 $ 11.10 $ 10.45 $ 9.85
----------- ----------- ---------- ---------- -----------
Income from investment operations:
Net investment income.................. 0.64 0.56 0.60 0.68 0.75
Net realized and unrealized gains (losses)
on investments....................... 0.59 (1.32) 0.49 0.65 0.60
----------- ----------- ---------- ---------- -----------
Total from investment operations.......... 1.23 (0.76) 1.09 1.33 1.35
----------- ----------- ---------- ---------- -----------
Less distributions:
Dividends from net investment income... (0.64) (0.56) (0.60) (0.68) (0.75)
Distributions from net realized gains.. -- (0.13) -- -- --
----------- ----------- ---------- ---------- -----------
Total distributions....................... (0.64) (0.69) (0.60) (0.68) (0.75)
----------- ----------- ---------- ---------- -----------
Net asset value at end of year............ $ 10.73 $ 10.14 $ 11.59 $ 11.10 $ 10.45
=========== =========== ========== ========== ===========
Total return(A) .......................... 12.52% (6.76%) 10.15% 13.27% 14.19%
=========== =========== ========== ========== ===========
Net assets at end of year (000's)......... $ 56,969 $ 64,395 $ 89,666 $ 59,290 $ 40,896
=========== =========== ========== ========== ===========
Ratio of expenses to average net assets... 0.99% 0.99% 0.99% 1.00% 1.00%
Ratio of net investment income
to average net assets.................. 6.17% 5.17% 5.31% 6.40% 7.39%
Portfolio turnover rate................... 58% 236% 255% 76% 74%
- ---------------------------------------------------------------------------------------------------------------------
<FN>
(A)The total returns shown do not include the effect of applicable sales loads.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS - CLASS C
===================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
===================================================================================================================
Year Period
Ended Ended
Sept. 30, Sept. 30,
1995 1994(A)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period.................................... $ 10.14 $ 11.27
--------------- ---------------
Income from investment operations:
Net investment income.................................................. 0.59 0.34
Net realized and unrealized gains (losses) on investments.............. 0.59 (1.13)
--------------- ---------------
Total from investment operations.......................................... 1.18 (0.79)
--------------- ---------------
Less distributions:
Dividends from net investment income................................... (0.59) (0.34)
--------------- ---------------
Total distributions....................................................... (0.59) (0.34)
--------------- ---------------
Net asset value at end of period.......................................... $ 10.73 $ 10.14
=============== ===============
Total return(B) .......................................................... 11.96% (10.38%)(D)
=============== ===============
Net assets at end of period (000's)....................................... $ 598 $ 508
=============== ===============
Ratio of expenses to average net assets(C ) .............................. 1.48% 1.46%(D)
Ratio of net investment income to average net assets...................... 5.60% 4.89%(D)
Portfolio turnover rate................................................... 58% 236%(D)
- ----------------------------------------------------------------------------------------------------------------------
<FN>
(A)Represents the period from initial public offering of Class C shares
(February 1, 1994) through September 30, 1994.
(B)The total returns shown do not include the effect of applicable sales loads.
(C)Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 3.57% and 2.41% (D) for the
periods ended September 30, 1995 and 1994, respectively (Note 3).
(D)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS - CLASS A
=====================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Period
=====================================================================================================================
Year Year Period
Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30,
1995 1994 1993(A)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period ................... $ 9.82 $ 10.01 $ 10.00
--------------- --------------- ---------------
Income from investment operations:
Net investment income ................................. 0.55 0.39 0.28
Net realized and unrealized gains (losses) on investments (0.04) (0.18) 0.01
--------------- --------------- ---------------
Total from investment operations ......................... 0.51 0.21 0.29
--------------- --------------- ---------------
Less distributions:
Dividends from net investment income................... (0.55) (0.39) (0.28)
Distributions from net realized gains.................. -- (0.01) --
--------------- --------------- ---------------
Total distributions ...................................... (0.55) (0.40) (0.28)
--------------- --------------- ---------------
Net asset value at end of period ......................... $ 9.78 $ 9.82 $ 10.01
=============== =============== ===============
Total return(B) .......................................... 5.33% 2.09% 4.56%(D)
=============== =============== ===============
Net assets at end of period (000's) ...................... $ 20,752 $ 37,572 $ 24,400
=============== =============== ===============
Ratio of expenses to average net assets(C) ............... 0.75% 0.68% 0.22%(D)
Ratio of net investment income to average net assets ..... 5.57% 3.91% 4.17%(D)
Portfolio turnover rate .................................. 115% 81% 170%(D)
- -----------------------------------------------------------------------------------------------------------------------
<FN>
(A)Represents the period from the initial public offering of Class A shares
(February 10, 1993) through September 30, 1993.
(B)The total returns shown do not include the effect of applicable sales loads.
(C)Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.21%, 0.78% and 1.18%(D)
for the periods ended September 30, 1995, 1994 and 1993, respectively (Note
3).
(D)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS - CLASS C
======================================================================================================================
Per Share Data for a Share Outstanding Throughout The Period
======================================================================================================================
Period
Ended
Sept. 30,
1995(A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Net asset value at beginning of period ..................................................... $ 9.76
---------------
Income from investment operations:
Net investment income ................................................................... 0.22
Net realized and unrealized gains on investments ........................................ 0.02
---------------
Total from investment operations ........................................................... 0.24
---------------
Less distributions:
Dividends from net investment income..................................................... (0.22)
---------------
Total distributions ........................................................................ (0.22)
---------------
Net asset value at end of period ........................................................... $ 9.78
===============
Total return(B) ............................................................................ 5.87%(D)
===============
Net assets at end of period (000's) ........................................................ $ 86
===============
Ratio of expenses to average net assets(C) ................................................. 1.24%(D)
Ratio of net investment income to average net assets ....................................... 5.38%(D)
Portfolio turnover rate .................................................................... 115%(D)
- -----------------------------------------------------------------------------------------------------------------------
<FN>
(A)Represents the period from the initial public offering of Class C shares (May
1, 1995) through September 30, 1995.
(B)The total return shown does not include the effect of applicable sales loads.
(C)Absent fee waivers and expense reimbursements by the Adviser, the ratio of
expenses to average net assets would have been 18.84%(D) (Note 3).
(D)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBAL BOND FUND
FINANCIAL HIGHLIGHTS
For the Period Ended September 30, 1995(A)
===================================================================================================================
Per Share Data for a Share Outstanding Throughout The Period
===================================================================================================================
Class A Class C
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value at beginning of period.................................... $ 10.00 $ 10.00
--------------- ---------------
Income from investment operations:
Net investment income.................................................. 0.35 0.38
Net realized and unrealized gains on investments and foreign currency.. 0.64 0.57
--------------- ---------------
Total from investment operations.......................................... 0.99 0.95
--------------- ---------------
Less distributions:
Dividends from net investment income................................... (0.35) (0.36)
--------------- ---------------
Total distributions....................................................... (0.35) (0.36)
--------------- ---------------
Net asset value at end of period.......................................... $ 10.64 $ 10.59
=============== ===============
Total return(B) .......................................................... 14.89%(D) 14.25%(D)
=============== ===============
Net assets at end of period (000's)....................................... $ 13,297 $ 4,518
=============== ===============
Ratio of expenses to average net assets(C) ............................... 1.33%(D) 1.98%(D)
Ratio of net investment income to average net assets...................... 4.30%(D) 3.70%(D)
Portfolio turnover rate................................................... 130%(D) 130%(D)
- --------------------------------------------------------------------------------------------------------------------
<FN>
(A)Represents the period from initial public offering of shares (February 1,
1995) through September 30, 1995.
(B)The total returns shown do not include the effect of applicable sales loads.
(C)Absent fee waivers and expense reimbursements by the Adviser, the ratios of
expenses to average net assets would have been 2.47% (D) and 3.45%(D) for
Class A and Class C shares, respectively (Note 3).
(D)Annualized.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
===============================================================================
1. Significant Accounting Policies
The Short Term Government Income Fund, the Institutional Government Income Fund,
the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund and the Global Bond Fund (collectively, the Funds)
are each a series of Midwest Trust (the Trust). The Trust (formerly Midwest
Income Trust) is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Global Bond Fund, a
non-diversified series of the Trust, commenced operations on February 1, 1995.
The Trust was organized as a Massachusetts business trust on December 7, 1980.
The Declaration of Trust, as amended, permits the Trustees to issue an unlimited
number of shares of each Fund.
The Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund, and the Global Bond Fund each offer two classes of
shares: Class A shares (sold subject to a maximum front-end sales load of 2% for
the Intermediate Term Government Income Fund and the Adjustable Rate U.S.
Government Securities Fund and 4% for the Global Bond Fund and a distribution
fee of up to .35% of average daily net assets of each Fund) and Class C shares
(sold subject to a maximum contingent deferred sales load of 1% if redeemed
within a one-year period from purchase and a distribution fee of up to 1% of
average daily net assets.) Each Class A and Class C share of a Fund represents
an identical interest in the investment portfolio of such Fund and has the same
rights, except that (i) Class C shares bear the expenses of higher distribution
fees, which is expected to cause Class C shares to have a higher expense ratio
and to pay lower dividends than Class A shares; (ii) certain other class
specific expenses will be borne solely by the class to which such expenses are
attributable; and (iii) each class has exclusive voting rights with respect to
matters relating to its own distribution arrangements.
The following is a summary of the Funds' significant accounting policies:
Securities valuation -- Short Term Government Income Fund securities and
Institutional Government Income Fund securities are valued on the amortized cost
basis, which approximates market value. This involves initially valuing a
security at its original cost and thereafter assuming a constant amortization to
maturity of any discount or premium. This method of valuation is expected to
enable these Funds to maintain a constant net asset value per share.
Intermediate Term Government Income Fund securities, Adjustable Rate U.S.
Government Securities Fund securities and Global Bond Fund securities are valued
at their most recent bid prices as obtained from one or more of the major market
makers for such securities. The U.S. dollar value of foreign securities and
forward foreign currency contracts in the Global Bond Fund is determined using
spot and forward currency exchange rates, respectively, supplied by a quotation
service.
Repurchase agreements -- Repurchase agreements, which are collateralized by U.S.
Government obligations, are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' custodian, at the Federal
Reserve Bank of Cleveland. At the time each 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. In addition, each Fund actively monitors and
seeks additional collateral, as needed. In the event of a bankruptcy or other
default of the seller of a repurchase agreement, a Fund could experience both
delays in liquidating the underlying security and losses. These losses would
equal the face amount of the repurchase agreement and accrued interest, net of
any proceeds received in liquidation of the underlying securities. To minimize
the possibility of loss, each Fund enters into repurchase agreements only with
institutions deemed to be creditworthy by the adviser, including banks having
assets in excess of $10 billion and primary U.S. Government securities dealers.
Share valuation -- The net asset value per share of the Short Term Government
Income Fund and the Institutional Government Income Fund is calculated daily by
dividing the total value of a Fund's assets, less liabilities, by the number of
shares outstanding. The offering price and redemption price per share is equal
to the net asset value per share.
The net asset value per share of the Intermediate Term Government Income Fund,
the Adjustable Rate U.S. Government Securities Fund and the Global Bond Fund is
also calculated daily. Net asset value per share is calculated for each class of
a Fund by dividing the total value of a Fund's assets attributable to that
class, less liabilities attributable to that class, by the number of shares of
that class outstanding. The maximum offering price of Class A shares of the
Intermediate Term Government Income Fund and the Adjustable Rate U.S. Government
Securities Fund is equal to net asset value per share plus a sales load equal to
2.04% of the net asset value (or 2% of the offering price). The maximum offering
price of Class A shares of the Global Bond Fund is equal to net asset value per
share plus a sales load equal to 4.17% of the net asset value (or 4% of the
offering price). The offering price of Class C shares of each Fund is equal to
the net asset value per share.
<PAGE>
The redemption price per share of Class A shares and Class C shares of the
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund and the Global Bond Fund is equal to the net asset value per
share. However, Class C shares of each Fund are subject to a contingent deferred
sales load of 1% of the original purchase price if redeemed within a one-year
period from the date of purchase.
Investment income and distributions to shareholders -- Interest income is
accrued as earned. Discounts and premiums on securities purchased are amortized
in accordance with income tax regulations which approximate generally accepted
accounting principles. For the Short Term Government Income Fund, the
Institutional Government Income Fund, the Intermediate Term Government Income
Fund and the Adjustable Rate U.S. Government Securities Fund, dividends arising
from net investment income are declared daily and paid on the last business day
of each month. For the Global Bond Fund, dividends arising from net investment
income are declared and paid quarterly. With respect to each Fund, net realized
short-term capital gains, if any, may be distributed during the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income distributions and capital gain distributions are determined in
accordance with income tax regulations.
Allocations between classes -- Investment income earned by the Intermediate Term
Government Income Fund, the Adjustable Rate U.S. Government Securities Fund and
the Global Bond Fund is allocated daily to each class of shares based on the
percentage of the net asset value of settled shares of such class to the total
of the net asset value of settled shares of both classes of shares. Realized
capital gains and losses and unrealized appreciation and depreciation are
allocated daily to each class of shares based upon its proportionate share of
total net assets of the Fund. Class specific expenses are charged directly to
the class incurring the expense. Common expenses which are not attributable to a
specific class are allocated daily to each class based upon its proportionate
share of total net assets of the Fund.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a 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 each 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.
The following information is based upon federal income tax cost of portfolio
investments (excluding repurchase agreements) as of September 30, 1995:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
Adjustable
Intermediate Rate U.S.
Term Government Global
Government Securities Bond
Income Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized appreciation............................. $ 2,200,137 $ 152,735 $ 255,065
Gross unrealized depreciation............................. (1,152,452) (3,370) (113,657)
--------------- --------------- ---------------
Net unrealized appreciation. ....................... $ 1,047,685 $ 149,365 $ 141,408
=============== =============== ===============
Federal income tax cost................................... $ 54,591,727 $ 19,417,632 $ 16,418,526
=============== =============== ===============
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
As of September 30, 1995, the Institutional Government Income Fund had capital
loss carryforwards for federal income tax purposes of $28,440, none of which
will expire prior to September 30, 2001. As of September 30, 1995, the
Intermediate Term Government Income Fund and the Adjustable Rate U.S. Government
Securities Fund had capital loss carryforwards for federal income tax purposes
of $2,224,265 and $1,321,314, respectively, none of which will expire prior to
September 30, 2003. The difference between financial reporting and tax cost and
capital loss amounts for the Intermediate Term Government Income Fund and the
Global Bond Fund is due to certain timing differences in recognizing capital
losses under generally accepted accounting principles and tax rules. These
capital loss carryforwards may be utilized in future years to offset net
realized capital gains prior to distributing such gains to shareholders.
2. Investment Transactions
During the period ended September 30, 1995, purchases and proceeds from sales
and maturities of investment securities, other than short-term investments,
amounted to $32,613,834 and $36,966,943, respectively, for the Intermediate Term
Government Income Fund, $24,893,721 and $42,626,042, respectively, for the
Adjustable Rate U.S. Government Securities Fund and $22,511,709 and 6,622,851,
respectively, for the Global Bond Fund.
3. Transactions with Affiliates
The President of the Trust is the controlling shareholder of Leshner Financial,
Inc., whose subsidiaries include Midwest Group Financial Services, Inc. (the
Adviser), the Trust's investment manager and principal underwriter, and MGF
Service Corp. (MGF), the shareholder servicing and transfer agent and accounting
and pricing agent for the Trust.
MANAGEMENT AND SUBADVISORY AGREEMENTS
Each Fund's investments are managed by the Adviser under the terms of a
Management Agreement. Under the Management Agreement, the Short Term Government
Income Fund, the Intermediate Term Government Income Fund and the Adjustable
Rate U.S. Government Securities Fund each pay the Adviser a fee, which is
computed and accrued daily and paid monthly, at an annual rate of .5% of its
respective average daily net assets up to $50,000,000; .45% of such net assets
from $50,000,000 to $150,000,000; .4% of such net assets from $150,000,000 to
$250,000,000; and .375% of such net assets in excess of $250,000,000. The
Institutional Government Income Fund pays the Adviser a fee, which is computed
and accrued daily and paid monthly, at an annual rate of .2% of its average
daily net assets. The Global Bond Fund pays the Adviser a fee, which is computed
and accrued daily and paid monthly, at an annual rate of .7% of its average
daily net assets up to $100,000,000 and .6% of such net assets in excess of
$100,000,000.
The Adviser retains Hanover Capital Advisors, Inc. (Hanover) to regularly review
the Adjustable Rate U.S. Government Securities Fund's portfolio holdings,
recommend securities to be purchased for the Fund and confer with the Adviser
regarding the credit and maturity guidelines for investments in the Fund's
portfolio. The Adviser pays Hanover a fee equal to an annual rate of .25% of the
Fund's average daily net assets up to $50,000,000; .225% of such net assets from
$50,000,000 to $150,000,000; .2% of such net assets from $150,000,000 to
$250,000,000; and .1875% of such net assets in excess of $250,000,000. The fee
paid to Hanover is subject to reduction in the event the Adviser waives or
reimburses any portion of its advisory fee in order to reduce the operating
expenses of the Adjustable Rate U.S. Government Securities Fund.
The Adviser provides general investment supervisory services to the Global Bond
Fund. The Fund's investments are managed by Rogge Global Partners, plc, (Rogge)
under the terms of an Investment Advisory Agreement. Under the Investment
Advisory Agreement, the Adviser pays Rogge a fee, which is computed and accrued
daily and paid monthly, at an annual rate of .35% of the Fund's average daily
net assets up to $100,000,000 and .3% of such net assets in excess of
$100,000,000.
States in which shares of the Trust are offered may impose an expense limitation
based upon net assets. The Adviser has agreed to reimburse each Fund yearly for
expenses which exceed the most restrictive applicable expense limitation of any
state. In order to reduce the operating expenses of the Institutional Government
Income Fund, the Adviser voluntarily waived $8,500 of its advisory fees during
the year ended September 30, 1995. In order to reduce the operating expenses of
the Intermediate Term Government Income Fund, the Adviser voluntarily reimbursed
the Fund for $11,362 of Class C expenses during the year ended September 30,
1995. In order to reduce the operating expenses of the Adjustable Rate U.S.
Government Securities Fund, the Adviser voluntarily waived $103,298 of its
advisory fees and reimbursed the Fund for $4,898 of Class C expenses during the
year ended September 30, 1995. In order to reduce the operating expenses of the
Global Bond Fund, the Adviser voluntarily waived its entire advisory fee of
$41,518 and reimbursed the Fund for $22,707 of common operating expenses and
$6,493 of Class C expenses during the period ended September 30, 1995.
<PAGE>
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and MGF, MGF maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. Under the terms of the Agreement, MGF receives for its
services a fee, payable monthly, at an annual rate of $25.00 per shareholder
account from each of the Short Term Government Income Fund and the Institutional
Government Income Fund and $21.00 per shareholder account from each of the
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund and the Global Bond Fund, subject to a $1,000 minimum monthly
fee for each Fund, or for each class of shares of a Fund, as applicable. In
addition, each Fund pays out-of-pocket expenses including, but not limited to,
postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and MGF,
MGF calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, MGF receives a monthly fee
from each Fund. The monthly fee, based on current asset levels, is $3,000 per
month for each of the Short Term Government Income Fund and the Institutional
Government Income Fund, $4,250 per month for each of the Intermediate Term
Government Income Fund and the Adjustable Rate U.S. Government Securities Fund,
and $4,750 per month for the Global Bond Fund. In addition, each Fund pays
certain out-of-pocket expenses incurred by MGF in obtaining valuations of such
Fund's portfolio securities.
UNDERWRITING AGREEMENT
The Adviser is the Funds' principal underwriter and, as such, acts as exclusive
agent for distribution of the Funds' shares. Under the terms of the Underwriting
Agreement between the Trust and the Adviser, the Adviser earned $5,350, $2,338
and $2,776 from underwriting and broker commissions on sales of shares of the
Intermediate Term Government Income Fund, the Adjustable Rate U.S. Government
Securities Fund and the Global Bond Fund, respectively, for the year ended
September 30, 1995.
PLANS OF DISTRIBUTION
The Trust has a Plan of Distribution (Class A Plan) under which shares of each
Fund having one class of shares and Class A shares of each Fund having two
classes of shares may directly incur or reimburse the Adviser for expenses
related to the distribution and promotion of shares. The annual limitation for
payment of such expenses under the Class A Plan is .10% of the Institutional
Government Income Fund's average daily net assets and .35% of each of the other
Funds' average daily net assets attributable to Class A shares.
The Trust also has a Plan of Distribution (Class C Plan) under which Class C
shares of each Fund having two classes of shares may directly incur or reimburse
the Adviser for expenses related to the distribution and promotion of shares.
The annual limitation for payment of such expenses under the Class C Plan is 1%
of average daily net assets attributable to Class C shares.
CAPITAL CONTRIBUTION
During the year ended September 30, 1994, an affiliate purchased a security from
the Institutional Government Income Fund at an amount $105,000 in excess of the
security's fair market value. The Fund recorded a realized loss on the sale and
an offsetting capital contribution from the affiliate.
<PAGE>
4. Capital Share Transactions
Proceeds from shares sold and payments for shares redeemed as shown in the
Statements of Changes in Net Assets are the result of the following capital
share transactions for the periods ended September 30, 1995 and September 30,
1994:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
INTERMEDIATE TERM ADJUSTABLE RATE GLOBAL
GOVERNMENT U.S. GOVERNMENT BOND
INCOME FUND SECURITIES FUND FUND
- ------------------------------------------------------------------------------------------------------------------
Year Year Year Year Period
Ended Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1995 1994 1995 1994 1995(A)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS A
Shares sold............................... 1,296,111 1,766,194 1,751,161 9,629,743 1,280,982
Shares issued in reinvestment of
distributions to shareholders.......... 297,350 402,072 115,143 155,277 20,956
Shares redeemed........................... (2,637,294) (3,549,832) (3,571,519) (8,395,265) (52,629)
----------- ----------- ---------- ---------- -----------
Net increase (decrease) in
shares outstanding .................... (1,043,833) (1,381,566) (1,705,215) 1,389,755 1,249,309
Shares outstanding, beginning of period... 6,352,767 7,734,333 3,826,810 2,437,055 --
----------- ----------- ---------- ---------- -----------
Shares outstanding, end of period......... 5,308,934 6,352,767 2,121,595 3,826,810 1,249,309
=========== =========== ========== ========== ===========
CLASS C
Shares sold............................... 42,546 73,938 8,783 -- 427,772
Shares issued in reinvestment of
distributions to shareholders.......... 2,836 1,160 154 -- 1,259
Shares redeemed........................... (39,738) (24,969) (103) -- (2,192)
----------- ----------- ---------- ---------- -----------
Net increase in shares outstanding........ 5,644 50,129 8,834 -- 426,839
Shares outstanding, beginning of period... 50,129 -- -- -- --
----------- ----------- ---------- ---------- -----------
Shares outstanding, end of period......... 55,773 50,129 8,834 -- 426,839
=========== =========== ========== ========== ===========
- ---------------------------------------------------------------------------------------------------------------------
<FN>
(A)Represents the period from the initial public offering of shares (February 1,
1995) through September 30, 1995.
</FN>
</TABLE>
Share transactions for the Short Term Government Income Fund and the
Institutional Government Income Fund are identical to the dollar value of those
transactions as shown in the Statements of Changes in Net Assets.
5. Foreign Currency Translation
Amounts denominated in or expected to settle in foreign currencies are
translated into United States dollars based on exchange rates on the following
basis:
A. The market values of investment securities, other assets and liabilities
are translated at the closing rate of exchange each day.
B. Purchases and sales of investment securities, income and expenses are
translated at the rate of exchange prevailing on the respective dates of
such transactions.
C. The Fund isolates that portion of the results of operations resulting
from changes in foreign exchange rates on investments from those
resulting from changes in market prices of securities held. Reported net
realized foreign exchange gains or losses arise from 1) sales of foreign
securities, 2) sales of foreign currencies, 3) currency gains or losses
realized between the trade and settlement dates on securities
transactions, and 4) the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the Fund's books,
and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities, including investment securities,
resulting from changes in exchange rates.
<PAGE>
6. Forward Foreign Currency Exchange Contracts
The Global Bond Fund enters into foreign currency exchange contracts as a way of
managing foreign exchange rate risk. The Fund may enter into these contracts for
the purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific transactions or portfolio
positions. The objective of the Fund's foreign currency hedging transactions is
to reduce the risk that the U.S. dollar value of the Fund's securities
denominated in foreign currency will decline in value due to changes in foreign
currency exchange rates. All foreign currency exchange contracts are
"marked-to-market" daily at the applicable translation rates resulting in
unrealized gains or losses. Realized and unrealized gains or losses are included
in the Fund's Statement of Assets and Liabilities and Statement of Operations.
Risks may arise upon entering into these contracts from the potential inabilitiy
of counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
At September 30, 1995, the Global Bond Fund had forward foreign currency
exchange contracts outstanding as follows:
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
Net
Unrealized
Settlement To Receive Initial Market Appreciation
Date (To Deliver) Value Value (Depreciation)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONTRACTS TO SELL
10/27/95 (3,922,800) DEM $ (2,693,767) $ (2,754,456) $ (60,689)
============ ------------- ------------- --------------
10/27/95 (300,000) FRF $ (61,149) $ (60,908) $ 241
============ ------------- ------------- --------------
10/27/95 (1,161,755) NLG $ (700,000) $ (728,962) $ (28,962)
============ ------------- ------------- --------------
TOTAL SELL CONTRACTS $ (3,454,916) $ (3,544,326) $ (89,410)
------------- ------------- --------------
CONTRACTS TO BUY
10/27/95 87,131 DEM $ 61,149 $ 61,180 $ 31
============ ------------- ------------- --------------
10/27/95 152,643,400 JPY $ 1,523,767 $ 1,541,167 $ 17,400
============ ------------- ------------- --------------
TOTAL BUY CONTRACTS $ 1,584,916 $ 1,602,347 $ 17,431
------------- ------------- --------------
NET CONTRACTS $ (1,870,000) $ (1,941,979) $ (71,979)
============= ============= ==============
- -------------------------------------------------------------------------------------------------------------------
<FN>
FRF-Franch Franc
DEM-German Mark
JPY-Japanese Yen
NLG-Netherlands Guilder
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHORT TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1995
====================================================================================================================
Par Yield To Market
Value U.S. TREASURY OBLIGATIONS-- 53.6% Maturity(1) Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 4,000,000 U.S. Treasury Bills, 10/05/95................................... 6.128% $ 3,997,393
3,000,000 U.S. Treasury Bills, 10/19/95................................... 5.602% 2,991,870
5,000,000 U.S. Treasury Bills, 11/02/95................................... 5.592% 4,975,822
5,000,000 U.S. Treasury Notes, 9.50%, 11/15/95............................ 5.549% 5,023,203
5,000,000 U.S. Treasury Notes, 8.50%, 11/15/95............................ 5.561% 5,017,040
5,000,000 U.S. Treasury Bills, 11/16/95.................................. 5.585% 4,965,372
5,000,000 U.S. Treasury Bills, 11/24/95.................................. 5.617% 4,959,463
5,000,000 U.S. Treasury Bills, 2/22/96................................... 5.672% 4,891,200
5,000,000 U.S. Treasury Notes, 7.50%, 2/29/96............................. 5.557% 5,038,972
5,000,000 U.S. Treasury Bills, 3/28/96................................... 5.574% 4,866,993
- -------------- -------------
$ 47,000,000 TOTAL U.S. TREASURY OBLIGATIONS
============== (Amortized Cost $46,727,328).................................. $ 46,727,328
-------------
</TABLE>
<TABLE>
=======================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(2)-- 45.1% Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 2,277,000 Nesbitt Burns Securities, Inc., 5.60%, dated 9/29/95, due 10/02/95,
repurchase proceeds $2,278,063............................................... $ 2,277,000
6,100,000 Daiwa Securities America, Inc., 6.25%, dated 9/29/95, due 10/02/95,
repurchase proceeds $6,103,177............................................... 6,100,000
13,100,000 Fuji Securities, Inc., 6.35%, dated 9/29/95, due 10/02/95,
repurchase proceeds $13,106,932.............................................. 13,100,000
8,900,000 Prudential Bache Securities, Inc., 5.65%, dated 9/21/95, due 10/05/95,
repurchase proceeds $8,919,555............................................... 8,900,000
8,900,000 Prudential Bache Securities, Inc., 5.73%, dated 9/28/95, due 10/12/95,
repurchase proceeds $8,919,832............................................... 8,900,000
- -------------- -------------
$ 39,277,000 TOTAL REPURCHASE AGREEMENTS ................................................... $ 39,277,000
============== -------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE--98.7% ................... $ 86,004,328
OTHER ASSETS AND LIABILITIES, NET--1.3% ....................................... 1,136,808
-------------
NET ASSETS--100.0% ............................................................ $ 87,141,136
-------------
<FN>
(1)Yield to maturity at date of purchase.
(2)Repurchase agreements are fully collateralized by U.S. Government obligations.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INSTITUTIONAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1995
=================================================================================================================
Par Yield To Market
Value U.S. GOVERNMENT AGENCY ISSUES-- 82.8% Maturity(1) Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 2,000,000 Federal Home Loan Bank Discount Notes, 10/5/95.................... 6.225% $ 1,998,676
2,000,000 Federal Agricultural Mortgage Corporation Discount Notes, 10/6/95. 5.707% 1,998,439
3,000,000 Federal National Mortgage Assoc. Discount Notes, 10/11/95......... 5.759% 2,995,292
3,000,000 Federal Home Loan Mortgage Corportion Discount Notes, 10/16/95.... 5.733% 2,992,962
2,000,000 Tennessee Valley Authority Discount Notes , 11/2/95............... 5.799% 1,989,956
2,000,000 Federal National Mortgage Assoc. Discount Notes, 11/3/95.......... 5.712% 1,989,733
3,000,000 Federal National Mortgage Assoc. Discount Notes, 11/6/95.......... 5.744% 2,983,260
3,000,000 Federal National Mortgage Assoc. Discount Notes, 11/8/95.......... 5.751% 2,982,298
3,000,000 Federal National Mortgage Assoc. Discount Notes, 11/22/95......... 5.736% 2,975,907
2,000,000 Federal Home Loan Bank Discount Notes, 2/2/96..................... 5.658% 1,962,387
2,000,000 Federal National Mortgage Assoc. Discount Notes, 2/20/96.......... 5.663% 1,957,005
3,000,000 Federal Home Loan Bank Notes, 5.90%, 8/29/96...................... 5.900% 3,000,000
- -------------- ------------
$ 30,000,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
============== (Amortized Cost $29,825,915).................................. $ 29,825,915
------------
</TABLE>
<TABLE>
====================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(2)-- 17.2% Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 5,000,000 Fuji Securities, Inc., 6.35%, dated 9/29/95, due 10/2/95,
repurchase proceeds $5,002,646............................................... $ 5,000,000
1,198,000 Nesbitt Burns Securities, Inc., 5.60%, dated 9/29/95, due 10/2/95,
repurchase proceeds $1,198,559............................................... 1,198,000
- -------------- -------------
$ 6,198,000 TOTAL REPURCHASE AGREEMENTS ................................................... $ 6,198,000
============== -------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 100.0% ................. $ 36,023,915
OTHER ASSETS AND LIABILITIES, NET-- 0.0% ...................................... (15,285)
-------------
NET ASSETS-- 100.0% ........................................................... $ 36,008,630
=============
<FN>
(1)Yield to maturity at date of purchase.
(2)Repurchase agreements are fully collateralized by U.S. Government obligations.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE TERM GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
September 30, 1995
================================================================================================================
Par Market
Value INVESTMENTS -- 96.7% Value
- ----------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 23.9%
<S> <C> <C> <C>
$ 1,000,000 U.S. Treasury Notes, 7.875%, 11/15/99.......................................... $ 1,067,500
1,000,000 U.S. Treasury Notes, 8.50%, 11/15/00........................................... 1,106,250
1,000,000 U.S. Treasury Notes, 7.75%, 2/15/01............................................ 1,076,875
1,000,000 U.S. Treasury Notes, 8.00%, 5/15/01............................................ 1,090,625
3,000,000 U.S. Treasury Notes, 7.875%, 8/15/01........................................... 3,267,186
2,000,000 U.S. Treasury Notes, 7.50%, 11/15/01........................................... 2,143,123
3,000,000 U.S. Treasury Notes, 5.75%, 8/15/03............................................ 2,918,436
1,000,000 U.S. Treasury Bonds, 8.25%, 5/15/05............................................ 1,082,500
- -------------- -------------
$ 13,000,000 TOTAL U.S. TREASURY OBLIGATIONS
- -------------- (Amortized Cost $13,175,371)................................................ $13,752,495
-------------
U.S. GOVERNMENT AGENCY ISSUES -- 72.8%
$ 3,000,000 Federal Home Loan Bank Notes, 8.45%, 7/26/99................................... $ 3,231,134
3,000,000 Federal Home Loan Bank Notes, 8.375%, 10/25/99................................. 3,239,967
2,000,000 Federal Home Loan Bank Notes, 7.87%, 4/19/00................................... 2,021,244
4,000,000 Federal Home Loan Bank Notes, 7.25%, 8/9/00.................................... 4,009,496
2,000,000 Federal Home Loan Mortgage Corp. Notes, 7.265%, 6/22/01........................ 2,048,822
1,000,000 Student Loan Marketing Assoc. Medium Term Notes, 7.50%, 7/2/01................. 1,058,550
3,000,000 Federal Home Loan Bank Notes, 7.31%, 7/6/01.................................... 3,135,263
3,000,000 Federal Home Loan Bank Medium Term Notes, 8.43%, 8/1/01........................ 3,310,830
1,410,000 Federal National Mortgage Assoc. Strips, 3/9/02................................ 1,288,308
2,000,000 Federal National Mortgage Assoc. Notes, 7.55%, 4/22/02......................... 2,120,372
1,000,000 Federal National Mortgage Assoc. Notes, 7.00%, 8/12/02......................... 1,004,192
1,000,000 Federal Home Loan Mortgage Corp. Notes, 7.23%, 12/17/02........................ 1,022,326
1,000,000 Federal National Mortgage Assoc. Medium Term Notes, 6.72%, 2/25/03............. 980,000
1,000,000 Federal Home Loan Mortgage Corp. Notes, 6.60%, 3/25/03......................... 990,705
1,000,000 Federal National Mortgage Assoc. Notes, 6.90%, 3/10/04......................... 1,000,000
2,000,000 Federal Home Loan Mortgage Corp. Notes, 7.05%, 3/24/04......................... 2,022,794
2,000,000 Federal Home Loan Mortgage Corp. Notes, 8.53%, 11/18/04........................ 2,146,176
1,000,000 Federal National Mortgage Assoc. Notes, 8.00%, 4/13/05......................... 1,042,240
1,000,000 Federal Home Loan Mortgage Corp. Notes, 7.65%, 5/10/05......................... 1,036,613
2,000,000 Federal Farm Credit Bank Medium Term Notes, 6.74%, 2/25/08..................... 1,960,400
3,000,000 Federal Home Loan Mortgage Corp. Notes, 8.57%, 10/26/09........................ 3,217,485
- -------------- -------------
$ 40,410,000 TOTAL U.S. GOVERNMENT AGENCY ISSUES
- -------------- (Amortized Cost $40,445,623) ................................................ $41,886,917
-------------
$ 53,410,000 TOTAL INVESTMENTS AT VALUE
============== (Amortized Cost $53,620,994)................................................. $55,639,412
-------------
</TABLE>
<TABLE>
===================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1)-- 1.7% Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 981,000 Nesbitt Burns Securities, Inc., 5.60%, dated 9/29/95, due 10/2/95,
repurchase proceeds $981,458................................................. $ 981,000
- -------------- -------------
$ 981,000 TOTAL REPURCHASE AGREEMENTS ................................................... $ 981,000
============== -------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 98.4% .................. $ 56,620,412
OTHER ASSETS AND LIABILITIES, NET-- 1.6% ...................................... 946,624
-------------
NET ASSETS-- 100.0% .......................................................... $ 57,567,036
=============
<FN>
(1)Repurchase agreements are fully collateralized by U.S. Government obligations.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
September 30, 1995
===================================================================================================================
Par Market
Value ADJUSTABLE RATE U.S. GOVERNMENT AGENCY ISSUES(1)-- 93.9% Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,703,115 Federal National Mortgage Assoc. #70907, 7.65%, 3/1/18......................... $ 1,754,769
1,647,572 Federal Home Loan Mortgage Corp. #605793, 7.29%, 5/1/18........................ 1,671,248
3,112,584 Federal National Mortgage Assoc. #70010, 7.39%, 6/1/18......................... 3,176,822
3,700,274 Federal National Mortgage Assoc. #70614, 7.49%, 10/1/18........................ 3,779,297
2,620,148 Federal Home Loan Mortgage Corp. #846013, 7.83%, 6/2/22........................ 2,704,550
98,256 Government National Mortgage Assoc. #8182, 7.37%,4/20/23....................... 100,467
3,603,466 Federal Home Loan Mortgage Corp. #846071, 7.36%, 2/1/25........................ 3,711,451
2,603,344 Federal National Mortgage Assoc. #70243, 7.30%, 3/1/28......................... 2,668,393
- -------------- -------------
$ 19,088,759 TOTAL ADJUSTABLE RATE U.S. GOVERNMENT AGENCY ISSUES
============== (Amortized Cost $19,417,632)................................................. $ 19,566,997
-------------
</TABLE>
<TABLE>
==================================================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(2)-- 4.9% Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 1,024,000 Nesbitt Burns Securities, Inc., 5.60%, dated 9/29/95, due 10/2/95,
repurchase proceeds $1,024,478............................................... $ 1,024,000
- -------------- -------------
$ 1,024,000 TOTAL REPURCHASE AGREEMENTS ................................................... $ 1,024,000
============== -------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 98.8% ................. $ 20,590,997
OTHER ASSETS AND LIABILITIES, NET-- 1.2% ...................................... 247,722
-------------
NET ASSETS-- 100.0% ........................................................... $ 20,838,719
=============
<FN>
(1)Rates shown are as of September 30, 1995.
(2)Repurchase agreements are fully collateralized by U.S. Government obligations.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBAL BOND FUND
PORTFOLIO OF INVESTMENTS
September 30, 1995
===================================================================================================================
Par Market
Value INVESTMENTS -- 90.5% Value
- -------------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 17.9%
<S> <C> <C> <C>
USD 2,795,000 U.S. Treasury Notes, 6.50%, 8/15/05...................................... $ 2,863,128
USD 315,000 U.S. Treasury Bonds, 6.875%, 8/15/25..................................... 331,045
-------------
TOTAL U.S. TREASURY OBLIGATIONS ........................................ $ 3,194,173
(Amortized Cost $3,178,020) -------------
GLOBAL BOND ISSUES -- 10.2%
USD 1,000,000 Asian Development Bank, 6.125%, 3/9/04................................... $ 972,500
JPY 72,000,000 International Bank For Reconstruction and Development, 4.75%, 12/20/04... 844,348
-------------
TOTAL GLOBAL BOND ISSUES ................................................ $ 1,816,848
(Amortized Cost $1,861,533) -------------
FOREIGN GOVERNMENT ISSUES -- 62.4%
DKK 1,682,000 Government of Denmark, 8.00%, 3/15/06.................................... $ 302,135
-------------
FRF 720,000 Government of France, 7.75%, 4/12/00..................................... 151,708
FRF 3,170,000 Government of France, 7.75%, 10/25/05.................................... 656,060
-------------
807,768
-------------
ITL 790,000 Government of Italy, 9.50%, 1/1/05...................................... 428,801
ITL 2,245,000,000 Government of Italy, 10.50%, 4/1/05..................................... 1,312,451
-------------
1,741,252
-------------
JPY 20,000,000 Republic of Austria, 4.50%, 9/28/05...................................... 229,346
-------------
DEM 575,000 Federal Republic of Germany, 6.50%, 3/15/00............................. 418,961
DEM 1,400,000 Federal Republic of Germany, 7.50%, 11/11/04............................ 1,036,313
DEM 550,000 Federal Republic of Germany, 7.375%, 1/3/05............................. 404,031
DEM 4,881,000 Federal Republic of Germany, 6.875%, 5/12/05............................ 3,481,656
-------------
5,340,961
-------------
GBP 858,000 U.K. Gilt, 8.50%, 12/7/05................................................ 1,392,329
-------------
NLG 620,000 Government of Netherlands, 6.25%, 7/15/98............................... 401,485
NLG 1,369,000 Government of Netherlands, 7.50%, 4/15/10............................... 895,529
-------------
1,297,014
-------------
TOTAL FOREIGN GOVERNMENT ISSUES ........................................ $ 11,110,805
(Amortized Cost $10,918,400) -------------
TOTAL INVESTMENTS AT VALUE ............................................. $ 16,121,826
(Amortized Cost $15,957,953) -------------
</TABLE>
<TABLE>
=====================================================================================================================
Face Market
Amount TIME DEPOSITS-- 2.5% Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
JPY 43,219,352 Japanese Yen Time Deposit, .375%, 10/4/95................................ $ 438,108
-------------
TOTAL TIME DEPOSITS
(Amortized Cost $438,108)............................................. $ 438,108
-------------
TOTAL INVESTMENTS AND TIME DEPOSITS AT VALUE -- 93.0% ................... $ 16,559,934
OTHER ASSETS AND LIABILITIES, NET-- 7.0% ................................ 1,255,110
-------------
NET ASSETS-- 100.0% ..................................................... $ 17,815,044
=============
<FN>
DKK-Danish Krone
FRF-French Franc
ITL-Italian Lira
JPY-Japanese Yen
DEM-German Mark
GBP-British Pound Sterling
NLG-Netherlands Guilder
USD-U.S. Dollar
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
Report of Independent Public Accountants
================================================================================
To the Shareholders and Board of Trustees of the Short Term Government Income
Fund, the Institutional Government Income Fund, the Intermediate Term Government
Income Fund, the Adjustable Rate U.S. Government Securities Fund and the Global
Bond Fund of Midwest Trust:
We have audited the accompanying statements of assets and liabilities
of the Short Term Government Income Fund, the Institutional Government Income
Fund, the Intermediate Term Government Income Fund, the Adjustable Rate U.S.
Government Securities Fund and the Global Bond Fund of Midwest Trust (a
Massachusetts business trust), including the portfolios of investments, as of
September 30, 1995, and the related statements of operations, the statements of
changes in net assets, and the financial highlights for the periods indicated
thereon. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Short Term Government Income Fund, the Institutional Government
Income Fund, the Intermediate Term Government Income Fund, the Adjustable Rate
U.S. Government Securities Fund and the Global Bond Fund of Midwest Trust as of
September 30, 1995, the results of their operations, the changes in their net
assets, and their financial highlights for the periods indicated thereon, in
conformity with generally accepted accounting principles.
Cincinnati, Ohio,
November 13, 1995
Appendix
A representation of the graphic material contained in the Midwest
Trust Annual Report is set forth below.
1. Comparison of Change in Value of $10,000 Investment in the
Intermediate Term Government Income Fund* and the Lehman
Brothers Intermediate Government Bond Index.
LB INTERMEDIATE GOVT BOND INDEX: INTERMED TERM GOVT INCOME FUND:
- ------------------------------- ------------------------------
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
09/30/85 10,000 09/30/85 9,800
12/31/85 5.71% 10,571 12/31/85 4.94% 10,284
03/31/86 5.78% 11,182 03/31/86 4.94% 10,793
06/30/86 1.76% 11,379 06/30/86 1.27% 10,929
09/30/86 2.48% 11,661 09/30/86 2.32% 11,183
12/31/86 2.49% 11,951 12/31/86 2.35% 11,446
03/31/87 1.18% 12,092 03/31/87 0.84% 11,541
06/30/87 -0.83% 11,992 06/30/87 -1.32% 11,389
09/30/87 -1.29% 11,837 09/30/87 -1.17% 11,256
12/31/87 4.60% 12,382 12/31/87 3.91% 11,696
03/31/88 3.13% 12,769 03/31/88 2.50% 11,989
06/30/88 0.97% 12,893 06/30/88 0.47% 12,046
09/30/88 1.56% 13,094 09/30/88 1.64% 12,244
12/31/88 0.60% 13,173 12/31/88 0.27% 12,276
03/31/89 1.04% 13,310 03/31/89 1.05% 12,405
06/30/89 6.64% 14,194 06/30/89 5.40% 13,075
09/30/89 1.13% 14,354 09/30/89 0.93% 13,197
12/31/89 3.41% 14,844 12/31/89 2.88% 13,578
03/31/90 -0.14% 14,823 03/31/90 -1.32% 13,398
06/30/90 3.14% 15,288 06/30/90 2.77% 13,770
09/30/90 1.94% 15,585 09/30/90 0.93% 13,898
12/31/90 4.34% 16,261 12/31/90 4.51% 14,525
03/31/91 2.20% 16,619 03/31/91 1.93% 14,805
06/30/91 1.69% 16,900 06/30/91 1.25% 14,990
09/30/91 4.75% 17,703 09/30/91 5.87% 15,870
12/31/91 4.82% 18,556 12/31/91 5.33% 16,717
03/31/92 -1.05% 18,361 03/31/92 -2.24% 16,342
06/30/92 3.88% 19,073 06/30/92 4.25% 17,037
09/30/92 4.38% 19,909 09/30/92 5.51% 17,977
12/31/92 -0.34% 19,841 12/31/92 -0.87% 17,820
03/31/93 3.74% 20,583 03/31/93 5.09% 18,727
06/30/93 1.96% 20,987 06/30/93 2.76% 19,243
09/30/93 2.11% 21,429 09/30/93 2.90% 19,802
12/31/93 0.15% 21,462 12/31/93 -0.71% 19,660
03/31/94 -1.85% 21,065 03/31/94 -4.07% 18,861
06/30/94 -0.56% 20,947 06/30/94 -1.88% 18,507
09/30/94 0.77% 21,108 09/30/94 -0.24% 18,463
12/31/94 -0.10% 21,087 12/31/94 -0.23% 18,421
03/31/95 4.16% 21,964 03/31/95 5.14% 19,367
06/30/95 4.67% 22,990 06/30/95 5.95% 20,520
09/30/95 1.55% 23,346 09/30/95 1.24% 20,774
*The chart above represents performance of Class A shares only,
which will vary from the performance of Class C shares based on
the difference in sales loads and fees paid by shareholders in
the different classes. Fund inception was February 6, 1981, and
the initial public offering of Class C shares commenced on
February 1, 1994.
Past performance is not predictive of future performance.
Intermediate Term Government Income Fund
Average Annual Total Returns
1 Year 5 Years 10 Years Since Inception
Class A 10.27% 7.93% 7.59% 9.04%
Class C 11.96% N/A N/A 2.45%
2. Comparison of Change in Value of $10,000 Investment in the
Adjustable Rate U.S. Government Securities Fund* and the
Lehman Brothers ARM Index.
LEHMAN BROTHERS ARM INDEX: ADJ RATE U.S. GOVT SECURITIES FUND:
- ------------------------- ----------------------------------
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
02/28/93 10,000 02/28/93 9,800
03/31/93 0.45% 10,045 03/31/93 0.63% 9,862
06/30/93 1.90% 10,236 06/30/93 1.19% 9,980
09/30/93 1.06% 10,345 09/30/93 1.04% 10,084
12/31/93 0.52% 10,398 12/31/93 0.95% 10,180
03/31/94 -0.44% 10,353 03/31/94 0.62% 10,242
06/30/94 -0.39% 10,312 06/30/94 0.32% 10,276
09/30/94 0.69% 10,383 09/30/94 0.19% 10,295
12/31/94 0.15% 10,399 12/31/94 -0.63% 10,230
03/31/95 4.20% 10,836 03/31/95 2.48% 10,484
06/30/95 3.12% 11,174 06/30/95 2.01% 10,695
09/30/95 1.69% 11,363 09/30/95 1.39% 10,844
*The chart above represents performance of Class A shares only,
which will vary from the performance of Class C shares based on
the difference in sales loads and fees paid by shareholders in
the different classes. Fund inception was February 10, 1993, and
the initial public offering of Class C shares commenced on May 2,
1995.
Past performance is not predictive of future performance.
Adjustable Rate U.S. Government Securities Fund
Average Annual Total Returns
1 Year Since Inception
Class A 3.23% 3.12%
Class C N/A 3.49%
3. Comparison of Change in Value of $10,000 Investment in the
Global Bond Fund* and the Salomon Brothers World Government
Bond Index.
SALOMON BROTHERS WORLD GLOBAL BOND FUND:
GOVERNMENT BOND INDEX: ----------------
- ----------------------
MONTHLY MONTHLY
DATE RETURN BALANCE DATE RETURN BALANCE
02/01/95 10,000 02/01/95 9,600
02/28/95 2.56% 10,256 02/28/95 2.00% 9,792
03/31/95 5.94% 10,865 03/31/95 6.47% 10,426
04/30/95 1.85% 11,066 04/30/95 1.30% 10,562
05/31/95 2.81% 11,377 05/31/95 1.93% 10,765
06/30/95 0.59% 11,444 06/30/95 -0.09% 10,756
07/31/95 0.24% 11,472 07/31/95 0.00% 10,756
08/31/95 -3.44% 11,077 08/31/95 -3.41% 10,389
09/30/95 2.23% 11,324 09/30/95 1.53% 10,547
*The chart above represents performance of Class A shares only,
which will vary from the performance of Class C shares based on
the difference in sales loads and fees paid by shareholders in
the different classes. The initial public offering of Class A
shares and Class C shares each commenced on February 1, 1995.
Past performance is not predictive of future performance.
Global Bond Fund - Average Annual Total Returns
Since Inception
Class A 8.26%
Class C 12.75%
