[ FRONT COVER ]
[ WOODWARD FUNDS LOGO ART AND LOGOTYPE ]
-----------------
Semi-Annual Report
June 30, 1996
-----------------
Woodward Bond Fund
Woodward Intermediate Bond Fund
Woodward Short Bond Fund
Woodward Municipal Bond Fund
Woodward Michigan Municipal Bond Fund
Investment Adviser
[ NBD BANK LOGOTYPE ]
24 Hour yield information:
Purchase and Redemption orders:
(800) 688-3350
<PAGE>
Dear Shareholder:
As you know, the Woodward Funds have embarked on some exciting
changes over the last several months. Following the proxy solicitation, we are
pleased to report that the reorganization of the Woodward Funds has been
approved by shareholders. The reorganization is expected to be completed on or
around September 23,1996.
What does this mean to you?
First Chicago NBD Investment Management Company, the adviser to
the Prairie Funds, has joined forces with NBD Bank, the adviser to the
Woodward Mutual Fund Family, to create a powerful new fund group, soon to be
renamed the Pegasus Funds. As a shareholder, this means that the resources of
a stronger organization will be working for you.
o Strength in management -- With more than $12 billion in total assets, the
Pegasus Funds will be one of the largest bank-managed mutual fund
families in the country.
o Depth of experience -- Continuing a century-old tradition of asset
management for individuals and institutions, the Pegasus Funds' adviser
is comprised of more than 70 investment professionals who are dedicated
to the Funds' management.
o Breadth of investment choices -- Shareholders can select from a complete
array of 25 mutual funds to meet virtually any investment objective.
Pegasus Funds bring you "Strength in Investing"
In addition to offering you a wide range of investment
opportunities, we pride ourselves on delivering superior service and
convenience. We have added features such as systematic withdrawals and
cross-reinvestment of dividends -- allowing you to invest dividends from one
Pegasus Fund in another -- so that you can have more options for your
investment dollars.
Thank you for your patience throughout this transition. If you
have any questions, please speak with your Investment Professional or call
Shareholder Services toll-free at 1-800-688-3350.
Sincerely,
/s/ Marco Hanig
Marco Hanig
Managing Director
First Chicago NBD Investment Management Company
August 30, 1996
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
BOND FUND
-------------
<S> <C>
ASSETS:
Investment in securities:
At cost ........................................ $535,540,172
============
At value (Note 2) .............................. 540,348,346
Cash ................................................ 470,327
Interest receivable ................................. 5,770,290
Deferred organization costs, net (Note 2) ........... --
Prepaids and other assets ........................... 980
------------
TOTAL ASSETS .............................. 546,589,943
------------
LIABILITIES:
Payable for securities purchased .................... 6,463,976
Accrued investment advisory fee ..................... 281,815
Accrued distribution fees ........................... 4,977
Accrued custodial fee ............................... 6,925
Dividends payable ................................... --
Other payables and accrued expenses ................. 59,937
------------
TOTAL LIABILITIES ......................... 6,817,630
------------
NET ASSETS ................................ $539,772,313
============
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value $.10 per share) ............. $ 5,388,005
Additional paid-in capital .......................... 552,636,306
Accumulated undistributed net investment income ..... 1,060,633
Accumulated undistributed net realized gains (losses) (24,120,806)
Net unrealized appreciation (depreciation)
on investments .................................... 4,808,175
------------
TOTAL NET ASSETS .......................... $539,772,313
============
Shares of capital stock outstanding ................. 53,880,046
============
Net asset value and redemption price per share ...... $ 10.02
============
Maximum offering price per share .................... $ 10.52
============
<FN>
See accompanying notes to financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investment in securities:
At cost ............................................ $384,600,325 $164,016,417 $89,007,482 $54,733,368
============ ============ =========== ===========
At value (Note 2) .................................. $381,102,839 $163,688,796 $89,077,459 $54,423,188
Cash .................................................... 9,459,905 689.310 -- --
Interest receivable ..................................... 4,708,987 2,509,389 1,660,987 707,535
Deferred organization costs, net (Note 2) ............... -- 22,103 4,800 4,800
Prepaids and other assets ............................... 730 61,366 46,042 39,239
------------ ------------ ----------- -----------
TOTAL ASSETS .................................. 395,272,461 166,970,964 90,789,288 55,174,762
------------ ------------ ----------- -----------
LIABILITIES:
Payable for securities purchased ........................ 4,176,722 1,988,916 -- --
Accrued investment advisory fee ......................... 206,248 87,985 47,627 28,816
Accrued distribution fees ............................... 2,325 696 1,234 1,764
Accrued custodial fee ................................... 5,839 3,299 1,799 1,300
Dividends payable ....................................... -- -- 216,445 138,612
Other payables and accrued expenses ..................... 63,101 429 943 1,267
------------ ------------ ----------- -----------
TOTAL LIABILITIES ............................. 4,454,235 2,081,325 268,048 171,759
------------ ------------ ----------- -----------
NET ASSETS .................................... $390,818,226 $164,889,639 $90,521,240 $55,003,003
============ ============ =========== ===========
Net assets consist of:
Capital shares (unlimited number of shares
authorized, par value
$.10 per share) ....................................... $ 3,877,073 $ 1,633,064 $ 873,780 $ 536,709
Additional paid-in capital .............................. 399,129,726 163,040,690 90,068,258 54,767,240
Accumulated undistributed net investment income ......... 497,956 206,265 5,578 (1,578)
Accumulated undistributed net realized gains (losses) ... (9,189,045) 337,241 (496,353) 10,812
Net unrealized appreciation on investments .............. (3,497,484) (327,621) 69,977 (310,180)
------------ ------------ ----------- -----------
TOTAL NET ASSETS .............................. $390,818,226 $164,889,639 $90,521,240 $55,003,003
============ ============ =========== ===========
Shares of capital stock outstanding ..................... 38,770,728 16,330,640 8,737,797 5,367,093
============ ============ =========== ===========
Net asset value and redemption price per share .......... $ 10.08 $ 10.10 $ 10.36 $ 10.25
============ ============ =========== ===========
Maximum offering price per share ........................ $ 10.58 $ 10.41 $ 10.87 $ 10.76
============ ============ =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
BOND FUND
------------
<S> <C>
INTEREST INCOME (Note 2) ................................. $ 19,197,401
------------
EXPENSES (Notes 2, 3 and 6):
Investment advisory fee .............................. 1,680,455
Distribution fees .................................... 30,077
Professional fees .................................... 15,256
Custodial fee ........................................ 43,230
Transfer and dividend disbursing agent fees .......... 17,789
Amortization of deferred organziation costs .......... 6,439
Marketing expense .................................... 26,445
Security pricing services ............................ 7,167
Registration, filing fees and other expenses ........ 36,933
Less:
Expense reimbursement ............................ --
------------
NET EXPENSES ..................................... 1,863,791
------------
NET INVESTMENT INCOME .................................... 17,333,610
------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) .......................... 3,804,179
Net change in unrealized appreciation (depreciation)
on investments ..................................... (26,317,524)
------------
NET REALIZED AND UNREALIZED LOSSES ON
INVESTMENTS ............................... (22,497,042)
------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .... $ (5,179,735)
============
<FN>
See accompanying notes to financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
INTEREST INCOME (Note 2) ................................. $ 13,356,145 $ 5,022,420 $ 2,278,912 $ 1,450,133
------------ ----------- ----------- -----------
EXPENSES (Notes 2, 3 and 6):
Investment advisory fee .............................. 1,274,959 532,308 271,410 172,437
Distribution fees .................................... 14,580 4,221 7,666 10,997
Professional fees .................................... 12,518 15,256 15,256 15,256
Custodial fee ........................................ 37,018 20,664 11,701 8,440
Transfer and dividend disbursing agent fees .......... 8,895 2,368 5,310 7,548
Amortization of deferred organziation costs .......... 3,565 3,401 1,516 1,516
Marketing expense .................................... 19,334 14,084 15,242 15,666
Security pricing services ............................ 7,167 7,167 9,015 9,015
Registration, filing fees and other expenses ........ 30,402 35,406 6,447 8,890
Less:
Expense reimbursement ............................ -- -- (2,250) (32,420)
------------ ----------- ----------- -----------
NET EXPENSES .................................... 1,408,438 634,875 341,313 217,345
------------ ----------- ----------- -----------
NET INVESTMENT INCOME .................................... 11,947,707 4,387,545 1,937,599 1,232,788
------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) .......................... 1,584,614 297,039 (66,049) 43,574
Net change in unrealized appreciation
(depreciation) on investments....................... (12,789,445) (2,611,795) (2,431,870) (1,869,583)
------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED LOSSES ON
INVESTMENTS ............................... (11,204,831) (2,314,756) (2,497,919) (1,826,009)
------------ ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS .... $ 742,876 $ 2,072,789 $ (560,320) $ (593,221)
============ =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
BOND FUND
-----------------------------------
Six Months Ended
June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995
----------------- -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ........................ $ 17,333,610 $ 30,487,886
Net realized gains (losses) .................. 3,804,179 (1,566,826)
Net change in unrealized appreciation
(depreciation) on investments .............. (26,317,524) 72,514,668
------------- -------------
Net increase (decrease) in net assets
from operations .................... (5,179,735) 101,435,728
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income ................... (16,506,339) (31,071,705)
From realized gains .......................... -- --
------------- -------------
Total distributions ....................... (16,506,339) (31,071,705)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................... 78,556,127 81,776,844
Net asset value of shares issued in
reinvestment of distributions
to shareholders ............................ 13,302,100 24,963,507
------------- -------------
91,858,227 106,740,351
Less: payments for shares redeemed .......... (47,965,419) (86,707,190)
------------- -------------
Net increase (decrease) in net assets
from capital share transactions ......... 43,892,808 20,033,161
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS .......... 22,206,734 90,397,184
NET ASSETS:
Beginning of period .......................... 517,565,579 427,168,395
------------- -------------
End of period ................................ $ 539,772,313 $ 517,565,579
============= =============
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................... 7,707,350 8,355,987
Shares issued in reinvestment of
distributions to shareholders .............. 1,313,291 2,525,870
------------- -------------
9,020,641 10,881,857
Less: shares redeemed .......................... (4,664,438) (8,790,418)
------------- -------------
NET INCREASE (DECREASE) IN
SHARES OUTSTANDING ....................... 4,356,203 2,091,439
CAPITAL SHARES:
Beginning of period .......................... 49,523,843 47,432,404
------------- -------------
End of period ................................ 53,880,046 49,523,843
============= =============
<FN>
See accompanying notes to financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
INTERMEDIATE BOND FUND SHORT BOND FUND
---------------------------------- ----------------------------------
Six Months Ended Six Months Ended
June 30, 1996 Year Ended June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995
---------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income ...................... $ 11,947,707 $ 24,249,471 $ 4,387,545 $ 5,750,588
Net realized gains (losses) ................ 1,584,614 (4,126,208) 297,039 97,446
Net change in unrealized appreciation
(depreciation) on investments ............ (12,789,445) 52,637,906 (2,611,795) 3,290,608
------------- -------------- ------------ ------------
Net increase (decrease) in net asset
from operations ..................... 742,876 72,761,169 2,072,789 9,138,642
------------- -------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income ................. (11,741,638) (24,265,050) (4,246,758) (5,697,455)
From realized gains ........................ -- -- -- (25,517)
------------- -------------- ------------ ------------
Total distributions ..................... (11,741,638) (24,265,050) (4,246,758) (5,722,972)
------------- -------------- ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold .................. 46,700,134 47,268,989 22,207,990 114,313,557
Net asset value of shares issued in
reinvestment of distributions to
shareholders ........................... 9,111,108 19,077,115 1,797,267 3,924,968
------------- -------------- ------------ ------------
55,811,242 66,346,104 24,005,257 118,238,525
Less: payments for shares redeemed ........ (59,304,193) (102,551,4510) (20,278,504) (22,556,503)
------------- -------------- ------------ ------------
Net increase (decrease) in net assets from
capital share transactions ............. (3,492,951) (36,205,348) 3,726,753 95,682,022
------------- -------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ........ (14,491,713) 12,290,771 1,552,784 99,097,692
NET ASSETS:
Beginning of period ........................ 405,309,939 393,019,168 163,336,855 64,239,163
------------- -------------- ------------ ------------
End of period .............................. $ 390,818,226 $ 405,309,939 $164,889,639 $163,336,855
============= ============== ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold .................................. 4,562,448 4,818,378 2,182,552 11,284,693
Shares issued in reinvestment of distributions
to shareholders .......................... 895,970 1,922,824 177,284 388,668
------------- ------------- ------------ ------------
5,458,418 6,741,202 2,359,836 11,673,361
Less: shares redeemed ........................ (5,780,224) (10,335,186) (1,992,684) (2,236,808)
------------- ------------- ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING (321,806) (3,593,984) 367,152 9,436,553
CAPITAL SHARES:
Beginning of period ........................ 39,092,534 42,686,518 15,963,488 6,526,935
------------- ------------- ------------ ------------
End of period .............................. 38,770,728 39,092,534 16,330,640 15,963,488
============= ============= ============ ============
See accompanying notes to financial statements.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
MICHIGAN
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------------------- -------------------------------
Six Months Ended Six Months Ended
June 30, 1996 Year Ended June 30, 1996 Year Ended
(Unaudited) Dec. 31, 1995 (Unaudited) Dec. 31, 1995
---------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income .......................... $ 1,937,599 $ 3,150,282 $ 1,232,788 $ 2,357,562
Net realized gains (losses) .................... (66,049) (132,105) 43,574 95,495
Net change in unrealized appreciation
(depreciation) on investments ................ (2,431,870) 7,347,301 (1,869,583) 5,119,573
----------- ------------ ------------ ------------
Net increase (decrease) in net assets
from operations ........................ (560,320) 10,365,478 (593,221) 7,572,630
----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS (Note 2):
From net investment income ..................... (1,937,128) (3,149,113) (1,236,300) (2,358,540)
From realized gains ............................ -- -- -- --
----------- ------------ ------------ ------------
Total distributions ......................... (1,937,128) (3,149,113) (1,236,300) (2,358,540)
----------- ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ...................... 21,316,633 25,660,467 7,496,325 12,994,627
Net asset value of shares issued in reinvestment
of distributions to shareholders ............. 738,830 964,584 463,577 927,746
----------- ------------ ------------ ------------
22,055,463 26,625,051 7,959,902 13,922,373
Less: payments for shares redeemed ............ (6,000,339) (18,133,625) (4,580,538) (10,946,362)
----------- ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions .................. 16,055,124 8,491,426 3,379,364 2,976,011
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ............ 13,557,676 15,707,791 1,549,843 8,190,101
NET ASSETS:
Beginning of period ............................ 76,963,564 61,255,773 53,453,160 45,263,059
----------- ------------ ------------ ------------
End of period .................................. $90,521,240 $ 76,963,564 $ 55,003,003 $ 53,453,160
=========== ============ ============ ============
CAPITAL SHARE TRANSACTIONS:
Shares sold ...................................... 2,034,316 2,502,764 721,787 1,290,446
Shares issued in reinvestment of
distribution to shareholder .................. 70,764 93,325 44,733 90,653
----------- ------------ ------------ ------------
2,105,080 2,596,089 766,520 1,381,098
Less: shares redeemed ............................ (572,717) (1,774,851) (441,176) (1,085,688)
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN SHARES OUTSTANDING .... 1,532,363 821,238 325,344 295,410
CAPITAL SHARES:
Beginning of period ............................ 7,205,434 6,384,196 5,041,749 4,746,339
----------- ------------ ------------ ------------
End of period .................................. 8,737,797 7,205,434 5,367,093 5,041,749
=========== ============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
TEMPORARY CASH INVESTMENTS - 5.93%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, all held at Chemical Bank) ................. $20,534,030 $20,534,030
Daiwa, Securities America, Inc., Revolving Repurchase Agreement,
5.50%, 7/1/96 (secured by U.S. Treasury Bills due 12/19/96,
held at the bank of New York) ............................................ 11,500,000 11,500,000
-----------
(Cost $32,034,030) 32,034,030
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 77.50%
U.S. Treasury Securities - 35.22%
Principal Strip from U.S. Treasury Securities due:
5/15/17 .............................................................. 10,420,000 2,370,967
8/15/17 .............................................................. 31,915,000 7,126,300
Strip from U.S. Treasury Securities due:
5/15/98 .............................................................. 1,800,000 1,608,318
8/15/98 .............................................................. 1,500,000 1,317,990
11/15/98 ............................................................. 1,700,000 1,469,752
2/15/99 .............................................................. 10,805,000 9,185,763
8/15/99 .............................................................. 3,000,000 2,465,598
5/15/05 .............................................................. 3,950,000 2,173,053
2/15/11 .............................................................. 4,525,000 1,633,570
5/15/11 .............................................................. 9,338,000 3,308,453
2/15/12 .............................................................. 4,555,000 1,525,652
5/15/13 .............................................................. 10,594,000 3,230,217
2/15/14 .............................................................. 15,700,000 4,532,747
5/15/18 .............................................................. 15,620,000 3,310,815
11/15/18 ............................................................. 49,840,000 10,185,302
U.S. Treasury Bonds:
12.750%, 11/15/10 .................................................... 6,850,000 9,618,907
10.375%, 11/15/12 .................................................... 12,965,000 16,459,457
12.500%, 8/15/14 ..................................................... 1,300,000 1,914,654
8.750%, 5/15/17 ...................................................... 1,000,000 1,186,875
U.S. Treasury Notes:
6.125%, 7/31/96 ...................................................... 1,000,000 1,000,780
8.000%, 10/15/96 ..................................................... 4,400,000 4,431,636
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
7.250%, 11/15/96 ..................................................... 3,890,000 3,914,935
8.500%, 4/15/97 ...................................................... 1,270,000 1,296,784
8.500%, 5/15/97 ...................................................... 3,130,000 3,201,896
6.750%, 5/31/97 ...................................................... 1,000,000 1,008,440
5.875%, 7/31/97 ...................................................... 2,100,000 2,100,000
8.625%, 8/15/97 ...................................................... 18,900,000 19,452,258
8.750%, 10/15/97 ..................................................... 6,150,000 6,361,376
5.250%, 12/31/97 ..................................................... 8,410,000 8,323,259
7.875%, 1/15/98 ...................................................... 7,592,000 7,795,997
8.125%, 2/15/98 ...................................................... 3,000,000 3,093,750
7.875%, 4/15/98 ...................................................... 14,125,000 14,542,111
6.875%, 7/31/99 ...................................................... 7,410,000 7,515,370
7.750%, 11/30/99 ..................................................... 19,815,000 20,632,369
7.250%, 5/15/04 ...................................................... 1,000,000 1,035,625
-----------
(Cost $188,826,366) 190,330,976
-----------
Agency Obligations - 42.28%
Federal Home Loan Mortgage Corp. Participation Ctfs.:
#170269, 12.000%, 8/1/15 ............................................. 1,694,998 1,896,155
#200070, 7.500%, 4/1/02 .............................................. 264,359 264,845
#274081, 7.500%, 7/1/16 .............................................. 86,778 86,103
#289711, 7.500%, 4/1/17 .............................................. 155,346 154,009
#555238, 12.000%, 7/1/19 ............................................. 806,535 903,025
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D, 10.000%, 7/15/18 .................................. 902,902 927,632
Series 11 Class D, 9.500%, 7/15/19 ................................... 3,000,000 3,258,687
Series 22 Class C, 9.500%, 4/15/20 ................................... 1,104,876 1,205,906
Series 23 Class E, 9.400%, 8/15/19 ................................... 672,904 695,224
Series 23 Class F, 9.600%, 4/15/20 ................................... 1,375,000 1,503,190
Series 29 Class SD, IO, IF, 4/25/24 .................................. 21,046,201 539,204
Series 32 Class B, 9.500%, 8/15/19 ................................... 684,614 697,875
Series 38 Class C, 9.500%, 1/15/19 ................................... 415,500 425,971
Series 41 Class I, HB, 84.000%, 5/15/20 .............................. 123,007 356,721
Series 47 Class F, 10.000%, 6/15/20 .................................. 500,000 550,635
Series 51 Class D, 10.000%, 5/15/19 .................................. 117,372 117,126
Series 82 Class D, 8.900%, 10/15/20 .................................. 1,000,000 1,003,789
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C>
Series 99 Class Z, 9.500%, 1/15/21 ................................... 1,915,624 2,041,287
Series 129 Class E, 8.850%, 6/15/09 .................................. 3,189,484 3,221,663
Series 134 Class B, IO, 9.000%, 8/15/22 .............................. 1,033,152 324,151
Series 204 Class E, HB, IF, 5/15/23 .................................. 2,174,473 500,129
Series 1022 Class G, 8.000%, 2/15/19 ................................. 136,960 136,969
Series 1045 Class G, HB, 1066.2085%, 2/15/21 ......................... 438,612 135,312
Series 1051 Class D, 7.000%, 11/15/19 ................................ 1,091,458 1,096,063
Series 1065 Class J, 9.000%, 4/15/21 ................................. 2,000,000 2,118,058
Series 1072 Class A, HB, 1008.500%, 5/15/06 .......................... 3,051,994 738,277
Series 1079 Class S, IF, 5/15/21 ..................................... 1,169,612 1,218,222
Series 1084 Class F, AR, 5/15/21 ..................................... 2,000,000 2,038,578
Series 1084 Class S, IF, 5/15/21 ..................................... 1,400,000 1,610,000
Series 1089 Class C, IO, IF, 6/15/21 ................................. 7,927,260 1,011,592
Series 1098 Class M, HB, 10.080%, 6/15/06 ............................. 1,351,278 324,307
Series 1144 Class KB, 8.500%, 9/15/21 .................................. 2,000,000 2,071,298
Series 1172 Class L, HB, 1167.776%, 11/15/21 ........................... 1,977,643 624,935
Series 1196 Class B, HB, IF, 1/15/22 ................................... 8,036,510 773,112
Series 1295 Class JB, 4.500%, 3/15/07 .................................. 2,400,000 2,051,662
Series 1297 Class H, 7.500%, 1/15/20 ................................... 1,764,136 1,715,762
Series 1298 Class L, HB, 981.8667, 6/15/07 ............................. 900,000 355,500
Series 1329 Class S, IO, IF, 8/15/99 ................................... 4,455,276 233,902
Series 1360 Class PK, 10.000%, 12/15/20 ................................ 3,500,000 3,922,447
Series 1370 Class F, 6.750%, 3/15/19 ................................... 600,000 588,677
Series 1378 Class H, 10.000%, 1/15/21 .................................. 1,500,000 1,675,843
Series 1378 Class JZ, 7.500%, 11/15/21 ................................. 2,367,728 2,181,301
Series 1418 Class B, 6.500%, 11/15/19 .................................. 2,250,000 2,164,462
Series 1465 Class SA, IO, IF, 2/15/08 .................................. 25,247,923 1,199,276
Series 1483 Class E, 6.500%, 2/15/20 ................................... 3,150,000 3,020,091
Series 1489 Class L, 5.500%, 4/15/08 ................................... 1,945,626 1,846,417
Series 1506 Class F, AR, 5/15/08 ....................................... 1,508,437 1,493,352
Series 1506 Class S, IF, 5/15/08 ....................................... 538,727 430,982
Series 1506 Class SD, IO, IF, 5/15/08 .................................. 23,761,300 1,076,625
Series 1508 Class KB, IO, IF, 5/15/23 .................................. 8,086,045 510,391
Series 1531 Class K, 6.000%, 4/15/08 ................................... 1,127,152 1,053,953
Series 1554 Class KA, PO, 8/15/08 ...................................... 871,080 566,202
Series 1575, Class FB, AR, 8/15/08 ..................................... 2,685,107 2,664,968
Series 1575, Class SB, AR, 8/15/08 ..................................... 895,035 519,121
</TABLE>
11
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<S> <C> <C>
Series 1583 Class NS, IF, 9/15/23 ...................................... 1,270,128 781,129
Series 1585 Class NB, IF, 9/15/23 ...................................... 2,271,596 1,553,204
Series 1586 Class A, 6.000%, 9/15/08 ................................... 1,474,998 1,366,998
Series 1595 Class S, IO, IF, 10/15/11 .................................. 13,699,724 642,106
Series 1602, Class O, 6.000%, 10/15/23 ................................. 1,300,000 1,146,443
Series 1604 Class SE, IF, 11/15/08 .................................... 701,374 506,742
Series 1628 Class S, IF, 12/15/23 ...................................... 2,550,000 1,198,500
Series 1640 Class A, 5.500%, 10/15/07 .................................. 1,024,748 976,440
Series 1655 Class F, AR, 12/15/08 ...................................... 1,494,755 1,457,386
Series 1655 Class SA, IF, 12/15/08 ..................................... 344,875 230,418
Series 1681 Class K, 7.000%, 8/15/23 ................................... 1,089,788 1,030,829
Series 1686 Class SH, IF, 2/15/24 ...................................... 1,535,892 936,894
Series 1686 Class SL, IF, 2/15/24 ...................................... 1,201,836 874,336
Series 1689 Class SD, IF, 3/15/24 ...................................... 1,725,000 1,306,687
Series 1694 Class SE, IF, 5/15/23 ...................................... 1,401,417 1,171,935
Series 1706 Class LA, 7.000%, 3/15/24 .................................. 4,903,757 4,736,142
Series 1757-A, Class A, 9.500%, 5/15/23 ................................ 3,219,129 3,396,181
Series 1796-A, Class S, IF, 2/15/09 .................................... 1,000,000 660,000
Series 1798-B, Class C, 6.500%, 3/15/08 ................................ 2,250,000 2,103,253
Series 1807, Class G, 9.000%, 1/01/06 .................................. 2,542,113 2,650,153
Series 1825, Class C, 5.7999%, 12/15/23 ................................ 2,000,000 1,705,620
Series 1854, Class C, PO, 4/15/08 ...................................... 2,250,000 1,262,092
Federal Housing Administration Merrill Lynch Project
Pass Thru Ctfs., 7.430%, 8/1/20 ...................................... 1,351,708 1,355,763
Federal Housing Administration Project #073-35307, 7.430%, 1/1/22 ........ 1,794,408 1,796,203
Federal Housing Administration Greystone, 7.430%, 11/1/22 ................ 2,644,411 2,647,055
Federal National Mortgage Assn. Mortgage Backed Securities,
Stripped Trust:
23, Class 2, IO, 10.000%, 9/1/17 ..................................... 1,223,229 405,195
50, Class 2, IO, 10.500%, 3/25/19 .................................... 164,626 49,799
Federal National Mortgage Assn. Pass Thru Securities:
Pool #44699, 7.000%, 4/1/17 .......................................... 313,578 306,360
Pool #50966, 7.000%, 1/1/24 .......................................... 1,962,510 1,899,296
Pool #70226, Adjustable Rate, 1/1/19 ................................. 565,352 556,165
Pool #116612, Adjustable Rate, 3/1/19 ................................ 2,351,257 2,422,470
Pool #160330, 6.345%, 3/1/99 ......................................... 2,373,167 2,350,930
</TABLE>
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<S> <C> <C>
Pool #303306, 12.500%, 1/1/16 ........................................ 1,924,476 2,215,012
Federal National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 ...................................... 726,189 767,740
1988 Class 17-B, 9.400%, 10/25/17 .................................... 568,500 586,947
1989 Class 27-D, 10.000%, 1/25/16 .................................... 597,208 615,309
1989 Class 34-E, 9.850%, 8/25/14 ..................................... 1,000,000 1,050,395
1989 Class 69-G, 7.600%, 10/25/19 .................................... 2,250,000 2,186,008
1989 Class 70-G, 8.000%, 10/25/19 .................................... 2,000,000 2,033,078
1989 Class 73-C, PO, 10/25/19 ........................................ 1,299,464 972,973
1989 Class 78-H, 9.400%, 11/25/19 .................................... 1,250,000 1,356,586
1990 Class 1-D, 8.800%, 1/25/20 ...................................... 3,200,000 3,333,661
1990 Class 60-K, 5.500%, 6/25/20 ..................................... 750,000 681,464
1990 Class 63-H, 9.500%, 6/25/20 ..................................... 900,000 977,345
1990 Class 93-G, 5.500%, 8/25/20 ..................................... 1,500,000 1,361,173
1990 Class 94-H, HB, 505.000%, 8/25/20 ............................... 3,376,441 550,360
1990 Class 95-J, HB, 1118.040%, 8/25/20 .............................. 1,841,849 711,875
1990 Class 102-J, 6.500%, 8/25/20 .................................... 4,000,000 3,829,276
1990 Class 120-H, 9.000%, 10/25/20 ................................... 2,500,000 2,670,522
1990 Class 134-SC, IF, 11/25/20 ...................................... 1,063,660 1,151,412
1990 Class 140-K, HB, 652.1454%, 12/25/20 ............................ 1,829,206 515,836
1991 Class 4-N, HB, 758.750%, 1/25/06 ................................ 948,273 183,017
1991 Class 7-K, HB, 908.500%, 2/25/21 ................................ 700,030 175,007
1991 Class 33-J, HB, 1008.250%, 4/25/06 .............................. 881,356 210,556
1991 Class 55-G, HB, 1148.550%, 2/25/05 .............................. 149,738 4,193
1991 Class 144-PZ, 8.500%, 6/25/21 ................................... 2,227,174 2,302,695
1992 Class 13-S, HB, IF, 1/25/99 ..................................... 3,154,661 233,445
1992 Class 135-LC, 7.500%, 9/25/07 ................................... 1,000,000 1,016,359
1992 Class 137-BA, 3.500%, 1/25/17 .................................. 2,003,750 1,875,506
1992 Class 186-M, 6.000%, 9/25/07 ................................... 1,281,026 1,176,736
1992 Class 199-S, IO, IF, 11/25/99 .................................. 11,934,175 507,202
1992 Class 204-B, 6.000%, 10/25/20 .................................. 4,300,000 3,891,926
1992 Class 215-PM, 7.875%, 11/25/21 ................................. 1,600,000 1,653,582
1993 Class 8-SB, IO, IF, 8/25/06 .................................... 13,789,057 637,744
1993 Class 12-S, IO, IF, 2/25/23 .................................... 6,750,262 405,016
1993 Class 12-SB, IF, 2/25/23 ....................................... 5,337,417 507,055
1993 Class 13-G, 6.000%, 6/25/20 .................................... 2,000,000 1,866,678
</TABLE>
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1993 Class 15-K, 7.000%, 2/25/08 .................................... 760,583 725,793
1993 Class 19-G, 5.000%, 5/25/19 .................................... 3,265,000 2,974,216
1993 Class 32-K, 6.000%, 3/25/23 .................................... 1,613,359 1,374,983
1993 Class 38-S, IO, IF, 11/25/22 ................................... 27,598,140 827,944
1993 Class 44-S, IO, IF, 4/25/23 .................................... 11,488,923 800,548
1993 Class 58-J, 5.500%, 4/25/23 .................................... 1,803,121 1,612,098
1993 Class 94-K, 6.750%, 5/25/23 .................................... 1,234,154 1,154,586
1993 Class 113-S, IO, IF, 7/25/23 ................................... 8,229,764 488,601
1993 Class 139-SG, IF, 8/25/23 ...................................... 3,450,311 1,802,787
1993 Class 152-D, PO, 8/25/23 ....................................... 1,000,000 736,250
1993 Class 155-LA, 6.500%, 5/25/23 .................................. 4,166,134 4,033,188
1993 Class 155-SB, IO, IF, 9/25/23 .................................. 10,250,574 651,834
1993 Class 156-SD, IF, 10/25/19 ..................................... 1,250,000 706,250
1993 Class 167-S, IF, 9/25/23 ....................................... 1,776,420 1,056,970
1993 Class X-188A, WA, IO, NTL, 10/01/93 ............................ 6,745,833 881,208
1993 Class 190-SE, IF, 10/25/08 ..................................... 1,719,713 1,190,351
1993 Class 207-SC, IF, 11/25/23 ..................................... 3,435,541 1,990,449
1993 Class 209-KB, 5.659%, 8/25/08 .................................. 4,380,356 3,968,993
1993 Class 214-L, 6.000%, 12/25/08 .................................. 787,497 741,979
1993 Class 220-SD, IF, 11/25/13 ..................................... 2,087,684 1,216,076
1993 Class 223-FB, AR, 12/25/23 ..................................... 5,732,752 5,532,106
1993 Class 223-SB, IF, 12/25/23 ..................................... 2,901,860 2,009,538
1993 Class X-225C, FP, IF, 12/25/22 ................................. 900,000 872,819
1993 Class X-225C, VO, IF, 12/25/22 ................................. 1,600,000 1,256,000
1994 Class 19-C, 5.000%, 1/25/24 .................................... 2,519,478 2,197,890
1994 Class 26-G, PO, 2/25/24 ........................................ 2,278,569 1,184,856
1994 Class 30-LA, 6.500%, 2/25/09 ................................... 1,903,228 1,829,209
1994 Class 36-SG, IO, IF, 8/25/23 ................................... 7,651,123 542,694
1994 Class 36-SE, IF, 11/25/23 ...................................... 2,061,342 1,350,179
1994 Class 39-F, AR, 3/25/24 ........................................ 1,129,623 1,104,907
1994 Class 39-S, IF, 3/25/24 ........................................ 434,470 340,377
1994 Class 53-CA, PO, 11/25/23 ...................................... 2,500,000 1,718,750
1994 Class 82-SA, IO, IF, 5/25/23 ................................... 38,352,830 1,150,585
1995 Class 13-B, 6.500%, 3/25/09 .................................... 3,383,505 3,192,435
1995 Class XG1C C, 8.800%, 1/25/25 .................................. 1,000,000 1,004,535
1992-G Class 15-Z, 7.000%, 1/25/22 ................................. 1,691,466 1,474,145
1992-G Class 27-G, HB, IF, 5/25/22 ................................. 674,016 967,415
</TABLE>
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<TABLE>
<S> <C> <C>
1992-G Class 42-Z, 7.000%, 7/25/22 ................................. 1,708,703 1,540,200
1992-G Class 59-C, 6.000%, 12/25/21 ................................ 1,800,000 1,657,510
1992-G Class 61-Z, 7.000%, 10/25/22 ................................ 1,020,588 838,729
1993 Class 19-K, 6.500%, 6/25/19 .................................... 2,208,259 2,068,584
1993 Class 27-SE, IF, 8/25/23 ....................................... 1,343,715 527,408
1994 Class 13-ZB, 7.000%, 11/17/24 .................................. 2,457,068 2,118,678
1996-20, Class L, PO, 9/25/08 ....................................... 3,165,000 1,688,306
Government National Mortgage Assn. Pass Thru Securities
Guaranteed Remic Trust:
1994 Class 4-SA, IF, 10/16/22 ....................................... 7,700,000 446,215
Government National Mortgage Assn. Pass Thru Pool:
#023594, 8.500%, 7/15/08 ............................................ 440,906 460,015
#190923, 9.000%, 12/15/16 ........................................... 414,605 439,747
#297628, 8.000%, 9/15/22 ............................................ 3,208,105 3,255,775
#313110, 7.500%, 11/15/22 ........................................... 1,948,103 1,935,828
#345288, 7.500%, 3/15/23 ............................................ 792,346 786,704
International Bank For Reconstruction & Development,
2/15/15 ............................................................. 2,000,000 501,254
-----------
(Cost $226,214,613) 228,465,894
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS ...................................... 418,796,870
(Cost $415,024,675) -----------
CORPORATE BONDS AND NOTES - 13.59%
Finance - 12.42%
American Express Co., 11.625%, 12/12/00 ................................. 1,400,000 1,517,250
Associates Corp. of North America:
9.125%, 4/1/00 ...................................................... 2,350,000 2,532,466
8.150%, 8/1/09 ...................................................... 3,085,000 3,236,227
Case Equipment, 5.500%, 2/15/03 ......................................... 4,940,000 4,895,288
Chase Manhattan Grantor Trust, Series 95-B, 5.900%, 11/15/01 ............ 1,343,247 1,341,929
Collaterized Mortgage Securities Corp. CMO:
Trust 10-Z, 8.950%, 12/1/16 ......................................... 2,736,794 2,749,353
Trust 12-D, 9.500%, 2/1/17 .......................................... 808,986 837,534
Trust 16-Q, 14.750%, 3/20/18 ........................................ 429,967 451,465
First USA Credit Card Master Trust, VR, 10/15/01 ........................ 4,100,000 4,106,105
Ford Credit Grantor Trust, Series 94-A, 6.350%, 5/15/99 ................. 1,443,232 1,450,432
</TABLE>
15
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<S> <C> <C>
General Motors Acceptance Corp. Medium Term Note,
7.550%, 1/14/97 ..................................................... 2,500,000 2,519,525
Government National Mortgage Assn. Backed Trust I CMO,
Class A, Zero Coupon, PO, 5/20/17 .................................. 309,439 229,226
Green Tree, 5.700%, 2/15/26 ............................................. 1,683,490 1,679,936
Kidder Peabody Mortgage Assets Trust CMO, Series 24
Class E, 8.940%, 4/1/19 ............................................. 1,125,000 1,160,594
Merrill Lynch Trust Series 43 Class E CMO, 6.500%, 8/27/15 .............. 4,000,000 3,797,836
Merrill Lynch Home Equity Loan, 1992-1, Class A, Variable Rate, 7/15/22 2,517,739 2,523,200
MLMBS 144-s, 7.430%, 7/25/24 ............................................ 4,750,332 4,560,319
Morgan Stanley Mortgage Trust CMO:
Series 35-2, HB, IF, 4/20/21 ........................................ 460,886 672,755
Series 37-2, HB, IF, 7/20/21 ........................................ 521,055 703,424
Series 39-3, PO, 12/20/21 ........................................... 865,939 630,776
Navistar, Class A-2, 6.550%, 11/20/01 ................................... 3,600,443 3,656,822
ONYX Acceptance, 5.400%, 2/15/01 ........................................ 1,265,468 1,251,597
PaineWebber CMO Trust:
Series H-4, 8.750%, 4/1/18 .......................................... 890,805 925,448
Series P-4, 8.500%, 8/1/19 .......................................... 2,586,613 2,661,416
Rural Housing Trust 1987-1 Sr. Mortgage Pass Thru Ctf.,
Class 3-B, 7.330%, 4/1/26 ........................................... 1,101,796 1,116,416
Shearson Lehman, Inc. CMO, Mortgage Backed Sequential
Pay Bond, Series U, Sequence U-1, 8.750%, 8/27/17 ................... 188,879 189,702
Standard Credit Card Master Trust Asset Backed Ctf.,
Series 1995-5, Class A, Adjustable Rate, 5/8/00 ..................... 4,000,000 4,060,396
Superior Wholesale, 1996-A, Adjustable Rate, 3/15/01 .................... 2,700,000 2,700,000
Toyota Auto Receivables Grantor Trust, Series 95-A
Class A, 5.850%, 3/15/01 ............................................ 959,375 959,595
World Omni Automobile LSE SEC Trust, Series 95-5
Class A, 6.050%, 11/25/01 ........................................... 8,000,000 8,013,032
----------
(Cost $64,750,239) 67,130,064
----------
Industrial - 0.90%
Boeing Co., 7.950%, 8/15/24 ............................................ 1,730,000 1,832,675
General Motors Corp., 8.800%, 3/1/21 ................................... 2,695,000 3,020,260
----------
(Cost $4,522,779) 4,852,935
----------
</TABLE>
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Public Utility - 0.27%
Nippon Telegraph & Telephone Corp., 9.500%, 7/27/98 .................. 1,355,000 1,431,219
(Cost $1,430,628) -----------
TOTAL CORPORATE BONDS AND NOTES ............................................ 73,414,218
(Cost $70,703,646) -----------
FOREIGN - 2.98%
African Development Bank Note, 9.300%, 7/1/00 ........................ 1,572,000 1,703,010
Kingdom of Belgium Put Euro Dollar, 9.200%, 6/28/10 .................. 2,000,000 2,312,500
Metropolis of Tokyo, 8.700%, 10/05/99 ................................ 2,250,000 2,403,625
National Australia Bank Ltd, 9.700%, 10/15/98 ........................ 800,000 853,040
Province of Ontario, 15.750%, 3/15/12 ................................ 1,415,000 1,581,206
Province of Ontario Eurobond, 7.375%, 1/27/03 ........................ 4,400,000 4,519,500
Province of Quebec, 9.125%, 8/22/01 .................................. 2,515,000 2,730,347
------------
(Cost $17,761,517) 16,103,228
------------
TOTAL INVESTMENTS .......................................................... $540,348,346
============
(Cost $535,540,172)
</TABLE>
<PAGE>
THE WOODWARD FUNDS
BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996
(Unaudited)
Notes to Portfolio of Investments
(a) The Fund invests in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture.
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified
index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks
as those associated with IO securities. Unlike IO's the owner also has a
right to receive a very small portion of principal. The high interest
rate results from taking interest payments from other classes in the
REMIC Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represent the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market
interest rates. As prepayments on the underlying mortgages of these
securities increase, the yield on these securities increases.
(b) Based upon estimated future cash flows, income is currently not being
recognized on certain IO, HB, and CMO securities with an aggregate
market value of $3,730,108. The book cost of certain IO and HB securities
includes a write down in the amount of $6,056,100 taken during 1993
to properly state the net realizable value of the securities. The write
down results in a lower cost of investments than the tax cost disclosed
in Note 4 in Notes to Financial Statements.
18
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
TEMPORARY CASH INVESTMENTS - 1.17%
Salomon Brothers, Revolving Repurchase Agreement, 5.53%, 7/1/96,
(secured by various U.S. Treasury Strips with maturities ranging
from 2/15/99 through 8/15/00, call held at Chemical Bank) ...... $ 4,475,055 $ 4,475,055
(Cost $ 4,475,055)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 83.29%
U.S. Treasury Securities - 46.97%
Strips from U.S. Treasury Securities due:
5/15/98 .................................................... 6,600,000 5,897,166
11/15/98 ................................................... 7,600,000 6,570,656
2/15/99 .................................................... 9,660,000 8,212,352
5/15/05 .................................................... 5,660,000 3,113,792
8/15/08 .................................................... 5,350,000 2,327,304
2/15/09 .................................................... 4,300,000 1,803,033
11/15/10 ................................................... 5,000,000 1,840,750
U.S. Treasury Bonds:
12.750%, 11/15/10 .......................................... 4,581,000 6,432,732
10.375%, 11/15/12 .......................................... 7,765,000 9,857,900
12.500%, 8/15/14............................................ 1,000,000 1,472,811
U.S. Treasury Notes:
7.375%, 5/15/96
6.125%, 7/31/96 ............................................ 1,000,000 1,000,780
7.250%, 11/15/96 ........................................... 2,000,000 2,012,820
8.500%, 4/15/97 ............................................ 3,640,000 3,716,768
6.875%, 4/30/97 ............................................ 10,000,000 10,092,200
8.500%, 5/15/97 ............................................ 11,470,000 11,733,466
6.750%, 5/31/97 ............................................ 2,000,000 2,016,880
5.875%, 7/31/97 ............................................ 5,000,000 5,000,000
8.625%, 8/15/97 ............................................ 3,000,000 3,087,660
8.750%, 10/15/97 ........................................... 9,950,000 10,291,982
5.250%, 12/31/97 ........................................... 19,140,000 18,942,590
7.875%, 1/15/98 ............................................ 13,710,000 14,078,388
8.125%, 2/15/98 ............................................ 8,300,000 8,559,375
7.875%, 4/15/98 ............................................ 10,425,000 10,732,850
5.125%, 4/30/98 ............................................ 3,320,000 3,263,958
</TABLE>
19
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<TABLE>
<S> <C> <C>
6.875%, 7/31/99 ............................................ 8,000,000 8,113,760
7.750%, 11/30/99 ........................................... 17,080,000 17,784,550
7.250%, 5/15/04 ............................................ 1,000,000 1,035,625
---------- -----------
(Cost $180,614,081) 178,992,148
-----------
Agency Obligations - 36.32%
Federal Home Loan Mortgage Corp. Participation Ctf.:
#170269,12.000%, 8/01/15 ......................................... 1,340,590 1,499,687
#252600, 7.500%, 9/1/08 .......................................... 341,481 345,426
#252601, 8.000%, 6/1/01 .......................................... 336,081 340,507
#555238, 12.000%, 7/1/19 ......................................... 612,147 685,381
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 10 Class D, 10.000%, 7/15/18 .............................. 1,436,435 1,475,778
Series 11 Class D, 9.500%, 7/15/19 ............................... 1,300,000 1,412,098
Series 14 Class A, 9.000%, 12/15/19 .............................. 10,647 10,626
Series 18 Class A, 9.000%, 11/15/19 .............................. 80,381 80,234
Series 23 Class E, 9.400%, 8/15/19 ............................... 448,603 463,482
Series 30 Class C, 9.500%, 5/15/18 ............................... 506,917 517,145
Series 32 Class B, 9.500%, 8/15/19 ............................... 1,860,365 1,896,398
Series 38 Class C, 9.500%, 1/15/19 ............................... 277,000 283,980
Series 39 Class E, 10.000%, 10/15/19 ............................. 599,452 615,007
Series 41 Class I, 84.000%, 5/15/20 .............................. 92,255 267,541
Series 47 Class F, 10.000%, 6/15/20 .............................. 500,000 550,635
Series 51 Class D, 10.000%, 5/15/19 .............................. 76,785 76,625
Series 63 Class F, 9.350%, 10/15/19 .............................. 154,482 155,876
Series 82 Class D, 8.900%, 10/15/20 .............................. 700,000 702,652
Series 99 Class Z, 9.500%, 1/15/21 ............................... 1,915,624 2,041,287
Series 129 Class E, 8.850%, 6/15/09 .............................. 2,460,459 2,485,283
Series 204 Class E, HB, IF, 5/15/23 .............................. 7,008 161,183
Series 1022 Class G, 8.000%, 2/15/19 ............................. 128,742 128,751
Series 1072 Class A, HB, 1008.500%, 5/15/06 ...................... 20,276 490,485
Series 1079 Class S, IF, 5/15/21 ................................. 877,209 913,666
Series 1084 Class F, AR, 5/15/21 ................................. 500,000 509,645
Series 1084 Class S, IF, 5/15/21 ................................. 350,000 402,500
Series 1098 Class M, HB, 10.080%, 6/15/06 ........................ 3,003 72,063
Series 1144 Class KB, 8.500%, 9/15/21 ............................ 2,000,000 2,071,298
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C>
Series 1172 Class L, HB, 1167.776%, 11/15/21 ..................... 17,080 539,716
Series 1196 Class B, HB, IF, 1/15/22 ............................. 52,581 505,825
Series 1295 Class JB, 4.500%, 3/15/07 ............................ 1,500,000 1,282,289
Series 1298 Class L, HB, 981.86%, 6/15/07 ........................ 6,000 237,000
Series 1329 Class S, IO, IF, 8/15/99 ............................. 3,818,305 200,461
Series 1360 Class PK, 10.000%, 12/15/20 .......................... 2,500,000 2,801,748
Series 1378 Class H, 10.000%, 1/15/21 ............................ 1,500,000 1,675,844
Series 1418 Class B, 6.500%, 11/15/19 ............................ 1,250,000 1,202,479
Series 1465 Class SA, IO, IF, 02/15/08 ........................... 23,271,999 1,105,420
Series 1489 Class L, 5.500%, 4/15/08 ............................. 1,626,544 1,543,605
Series 1506 Class F, IF, 5/15/08 ................................. 1,005,624 995,568
Series 1506 Class SD, IO, IF, 5/15/08 ............................ 13,090,716 593,140
Series 1506 Class S, IF, 5/15/08 ................................. 359,152 287,321
Series 1508 Class KB, IF, 5/15/23 ................................ 4,204,743 265,403
Series 1531 Class K, 6.000%, 4/15/08 ............................. 1,040,448 972,880
Series 1583 Class NS, IF, 9/15/23 ................................ 982,727 604,377
Series 1585 Class NB, IF, 9/15/23 ................................ 2,513,255 1,718,438
Series 1586 Class A, 6.000%, 9/15/08 ............................. 1,374,430 1,273,793
Series 1595 Class S, IO, IF, 10/15/13 ............................ 19,310,781 905,096
Series 1628 Class S, IF, 12/15/23 ................................ 2,500,000 1,175,000
Series 1640 Class A, 5.500%, 10/15/07 ............................ 1,852,429 1,765,104
Series 1655 Class F, AR, 12/15/08 ................................ 970,128 945,875
Series 1655 Class SA, IF, 12/15/08 ............................... 223,945 149,622
Series 1689 Class SD, IF, 10/15/23 ............................... 1,500,000 1,136,250
Series 1694 Class SE, IF, 5/15/23 ................................ 1,073,704 897,885
Series 1706 Class LA, 7.000%, 3/15/24 ............................ 3,189,436 3,080,418
Series 1757-A Class A, 9.500%, 5/15/23 ........................... 2,414,347 2,547,136
Series 1796-A, Class S, IF, 2/15/09 .............................. 1,391,843 918,616
Series 1807, Class G, 9.000%, 1/1/06 ............................. 1,314,886 1,370,769
GNMA Series 29 Class SD, IO, IF, 4/25/24 ......................... 12,218,404 313,036
Federal Housing Administration Project #07335307
7.430%, 1/1/22 ................................................... 996,894 997,890
Federal Housing Administration Greystone 1996-2
7.430 %, 11/01/22 ................................................ 1,996,470 1,998,467
</TABLE>
21
<PAGE>
<TABLE>
<S> <C> <C>
Federal National Mortgage Assn. Mortgage Backed Securities
Stripped Trust:
46, Class 1, 7.000%, 12/25/03 .................................... 251,832 250,258
50, Class 2, IO, 10.500%, 3/25/19 ................................ 260,657 78,849
Federal National Mortgage Assn. Pass Thru Securities:
Guaranteed Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 .................................. 710,738 751,405
1988 Class 17-B, 9.400%, 10/25/17 ................................ 98,801 102,007
1989 Class 26-D, 10.000%, 5/25/04 ................................ 896,882 943,555
1989 Class 27-D, 10.000%, 1/25/16 ................................ 1,089,905 1,122,939
1989 Class 34-D, 9.850%, 7/25/13 ................................. 345,126 347,755
1989 Class 70-G, 8.000%, 10/25/19 ................................ 2,000,000 2,033,078
1989 Class 73-C, PO, 10/25/19 .................................... 275,805 206,509
1989 Class 78-H, 9.400%, 11/25/19 ................................ 1,750,000 1,899,221
1990 Class 1-D, 8.800%, 1/25/20 .................................. 950,000 989,681
1990 Class 60-K, 5.500%, 6/25/20 ................................. 1,250,000 1,135,774
1990 Class 63-H, 9.500%, 6/25/20 ................................. 755,000 819,884
1990 Class 93-G, 5.500%, 8/25/20 ................................. 1,250,000 1,134,311
1990 Class 94-H, HB, 505.000%, 8/25/20 ........................... 19,999 325,983
1990 Class 95-J, HB, 1118.040%, 8/25/20 .......................... 9,209 355,938
1990 Class 102-J, 6.500%, 8/25/20 ................................ 4,600,000 4,403,667
1990 Class 120-H, 9.000%, 10/25/20 ............................... 900,000 961,388
1990 Class 134-SC, IF, 11/25/20 .................................. 632,246 684,406
1990 Class 140-K, HB, 652.145%, 12/25/20 ......................... 17,072 481,444
1991 Class 4-N, HB, 758.750%, 1/25/06 ............................ 3,347 64,589
1991 Class 7-K, HB, 908.500%, 2/25/21 ............................ 1,750 43,752
1991 Class 20-M, HB, 908.750%, 3/25/06 ........................... 1,746 39,282
1991 Class 33-J, HB, 1008.250%, 4/25/06 .......................... 4,113 98,260
1991 Class 55-G, HB, 1148.550%, 2/25/05 .......................... 1,872 5,241
1991 Class 161-H, 7.500%, 2/25/21 ................................ 618,695 625,574
1992 Class 13-S, HB, IF, 1/25/99 ................................. 9,341 69,123
1992 Class 137-BA, 3.500%, 1/25/17 ............................... 1,717,500 1,607,576
1992 Class 199-S, IO, IF, 11/25/99 ............................... 8,315,671 353,416
1992 Class 204-B, 6.000%, 10/25/20 ............................... 2,000,000 1,810,198
1993 Class 8-SB, IO, IF, 8/25/06 ................................. 13,258,708 613,215
1993 Class 12-S, IO, IF, 2/25/23 ................................. 4,269,933 256,196
1993 Class 12-SB, HB, IF, 2/25/23 ................................ 47,095 447,401
</TABLE>
22
<PAGE>
<TABLE>
<S> <C> <C>
1993 Class 19-G, 5.000%, 5/25/19 .................................. 3,530,000 3,215,615
1993 Class 38-S, IO, IF, 11/25/22 ................................. 25,915,015 777,450
1993 Class 58-J, 5.500%, 4/25/23 .................................. 1,352,341 1,209,074
1993 Class 94-K, 6.750%, 5/25/23 .................................. 822,769 769,724
1993 Class 110-SC, IO, IF, 7/25/23 ................................ 3,347,674 125,538
1993 Class 113-S, IO, IF, 7/25/23 ................................. 7,369,461 437,525
1993 Class 139-SG, IF, 8/25/23 .................................... 2,597,473 1,357,180
1993 Class 152-D, PO, 8/25/23 ..................................... 700,000 515,375
1993 Class 155-LA, 6.500%, 5/25/23 ................................ 1,735,889 1,680,495
1993 Class 155-SB, IO, IF, 9/25/23 ................................ 7,380,413 469,320
1993 Class 156-SD, IF, 10/25/19 ................................... 1,000,000 565,000
1993 Class 167-S, IF, 9/25/23 ..................................... 2,138,284 1,272,279
1993 Class 190-SE, IF, 10/25/08 ................................... 1,495,403 1,035,088
1993 Class 207-SC, IF, 11/25/23 ................................... 2,366,706 1,371,198
1993 Class 209-KB, 5.659%, 8/25/08 ................................ 3,599,652 3,261,605
1993 Class 214-L, 6.000%, 12/25/08 ................................ 1,574,994 1,483,958
1993 Class 215-PM, 7.875%, 11/25/21 ............................... 1,200,000 1,240,187
1993 Class 220-SD, IF, 11/25/13 ................................... 1,242,669 723,855
1993 Class 223-FB, AR, 12/25/23 ................................... 721,333 696,087
1993 Class 223-SB, IF, 12/25/23 ................................... 651,339 451,052
1993 Class X225-C, FP, IF, 10/25/22 ............................... 1,100,000 1,066,779
1993 Class X225-C, VO, IF, 12/25/22 ............................... 2,000,000 1,570,000
1994 Class 19-C, 5.000%, 1/25/24 .................................. 2,082,214 1,816,438
1994 Class 26-G, PO, 2/25/24 ...................................... 2,199,391 1,143,684
1994 Class 30-LA, 6.500%, 2/25/09 ................................. 2,068,725 1,988,271
1994 Class 36-SE, IF, 11/25/23 .................................... 1,198,454 784,988
1994 Class 36-SG, IO, IF, 8/25/23 ................................. 3,480,275 246,856
1994 Class 39-F, AR, 3/25/24 ...................................... 1,016,661 994,416
1994 Class 39-S, IF, 3/25/24 ...................................... 391,023 306,339
1994 Class 53-CA, PO, 11/25/23 .................................... 3,352,442 2,304,804
1994 Class 82-SA, IO, IF, 5/25/23 ................................. 18,904,968 567,149
1995 Class 13-B, 6.500%, 3/25/09 .................................. 2,443,643 2,305,648
1995 Class X-GIC C, 8.800%, 1/25/25 ............................... 1,000,000 1,004,535
1996 Class 20-L, PO, 9/25/08 ...................................... 1,655,000 882,827
1992-G Class 27-SQ, HB, IF, 5/25/22 ............................... 3,397 487,616
1992-G Class 42-Z, 7.000%, 7/25/22 ................................ 657,193 592,385
1993-G Class 8-PG, 6.500%, 7/25/18 ................................ 1,000,000 969,819
</TABLE>
23
<PAGE>
<TABLE>
<S> <C> <C>
1993-G Class 13-G, 6.000%, 6/25/20 ................................ 1,000,000 933,339
1993-G Class 19-K, 6.500%, 6/25/19 ................................ 1,613,728 1,511,658
1993-G Class 27-SE, IF, 8/25/23 ................................... 1,535,674 602,752
1994-G Class 13-ZB, 7.000%, 11/17/24 .............................. 2,457,068 2,118,678
Federal National Mortgage Assn. Pass Thru Pool:
#111366, Adjustable Rate, 8/01/19 ................................. 496,193 513,188
#116612, Adjustable Rate, 3/01/19 ................................. 1,508,354 1,554,037
#160330, 6.345%, 3/1/99 ........................................... 2,373,167 2,350,930
#303306, 12.500%, 1/1/16 .......................................... 1,270,154 1,461,908
Government National Mortgage Assn. Pass Thru Pool:
#297628, 8.000%, 9/15/22 .......................................... 2,138,737 2,170,516
#313110, 7.500%, 11/15/22 ......................................... 1,803,799 1,792,434
-----------
(Cost $140,212,374) 138,423,184
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS .................................... 317,415,332
(Cost $320,826,455) -----------
CORPORATE BONDS AND NOTES - 13.78%
Finance - 13.78%
American Express Co., 11.625%, 12/12/00 ............................... 1,250,000 1,354,688
American Express Credit Corp., 8.500%, 6/15/99 ........................ 300,000 313,530
Associates Corp. of North America:
9.125%, 4/1/00 .................................................... 1,675,000 1,805,055
8.150%, 8/1/09 .................................................... 3,625,000 3,802,698
Case Equipment Loan Trust Asset Backed Ctf. Series
1994 Series A, Class A2, 4.650%, 8/15/99 .......................... 845,846 838,825
1994 Series C, Class A2, 8.100%, 6/15/01 .......................... 2,000,000 2,053,978
1996 Series A, Class A2, 5.500%, 2/15/03 .......................... 5,030,000 4,984,473
Chase Manhattan Grantor Trust Automobile Loan Pass Thru Ctfs
Series 1995-B, Class A, 5.900%, 11/15/01 .......................... 1,151,354 1,150,225
Collaterized Mortgage Obligation Trust CMO:
Series 10, Class Z, 8.950%, 12/1/16 ............................... 4,413,080 4,433,332
Series 12, Class D, 9.500%, 2/1/17 ................................ 404,493 418,767
Series 16, Class Q, 14.750%, 3/20/18 .............................. 242,501 254,626
Series 88-2 Class B, 8.800%, 4/20/19 .............................. 518,561 538,128
First USA Credit Card Master Trust Asset Backed Pass Thru Ctf
Series 1995-1, Class A, IF, 10/15/01 .............................. 2,000,000 2,002,978
</TABLE>
24
<PAGE>
<TABLE>
<S> <C> <C>
General Motors Acceptance Corp. Medium Term Note,
7.550%, 1/14/97 ............................................... 4,735,000 4,771,980
Goldman Sachs Trust 7-C CMO, Series 7, Class C-2, .
9.100%, 4/27/17 .
Green Tree Financial Corp. Loan Trust Asset Backed Ctf .
Series 1996-A, Class A, 5.700%, 2/15/26 ...................... 1,282,659 1,279,951
Merrill Lynch Home Equity Loan Asset Backed Pass Thru Ctf .
Series 1992-1, Class A, IF, 7/15/22 ........................... 2,014,191 2,018,560
Merrill Lynch MBS Inc. Project Pass Thru Ctf .
Series 144-S, IF, 7/25/24 ..................................... 548,115 526,191
Merrill Lynch Trust 43-E CMO, Series 43, Class E,
6.500%, 8/27/15 ............................................... 1,500,000 1,424,189
Morgan Stanley Mortgage Trust, CMO: .
Series 35-2, HB, IF, 4/20/21 ................................. 3,512 512,575
Series 37-2, HB, IF, 7/20/21 .................................. 3,533 476,901
Series 39-3, PO, 12/20/21 .................................... 673,508 490,603
Navistar Financial Corp. Owner Trust Asset Backed Pass Thru Ctf
Series 1995-A, Class A2, 6.550%, 11/20/01 ..................... 2,800,344 2,844,195
Onyx Acceptance Grantor Trust Auto Loan Pass Thru Ctf
Series 1996-1, Class A, 5.400%, 5/15/01 ....................... 1,265,468 1,251,598
Rural Housing Trust 1987-1, Senior Mortgage Pass Thru Ctf.,
Sub Class 3-B, 7.330%, 4/1/26 ................................. 492,974 499,515
Standard Credit Card Master Trust Asset Backed Ctf
Series 1995-5, Class A, IF, 5/8/00
Series 1995-10, Class A, 5.900%, 2/7/01 ....................... 2,520,000 2,489,556
Series 1995-2, Class A, 8.625%, 1/7/02 ........................ 1,300,000 1,319,629
Superior Wholesale Inventory Fing Trust Asset Backed Ctf
Series 1996-A, Class A, IF, 3/15/01 ........................... 2,000,000 2,000,000
Toyota Auto Receivable Grantor Trust Asset Backed Ctf
Series 1995-A, Class A, 5.850%, 3/15/01 ....................... 957,285 957,504
World Omni Automobile Lse Sec Trust Asset Backed Ctf
Series 1995-A, Class A, 6.050%, 11/25/01 ...................... 5,700,000 5,709,285
----------
TOTAL CORPORATE BONDS AND NOTES ............................................. 52,523,535
(Cost $51,065,191) ----------
FOREIGN - 1.76%
African Development Bank Note, 9.300%, 7/1/00 ......................... 983,000 1,064,923
</TABLE>
25
<PAGE>
<TABLE>
<S> <C> <C>
Metropolis of Tokyo, 8.700%, 10/5/99 .................................. 1,500,000 1,602,417
National Australia Bank Ltd., 9.700%, 10/15/98 ........................ 400,000 426,520
Province of Ontario, 7.375%, 1/27/03 .................................. 3,500,000 3,595,057
------------
(Cost $8,233,624) 6,688,917
------------
TOTAL INVESTMENTS ........................................................... $381,102,839
============
(Cost $384,600,325)
</TABLE>
26
<PAGE>
THE WOODWARD FUNDS
INTERMEDIATE BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Notes to Portfolio of Investments
(a) The Fund invests in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture.
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified
index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks
as those associated with IO securities. Unlike IO's the owner also has a
right to receive a very small portion of principal. The high interest
rate results from taking interest payments from other classes in the
REMIC Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represent the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market
interest rates. As prepayments on the underlying mortgages of these
securities increase, the yield on these securities increases.
(b) Based upon estimated future cash flows, income is currently not being
recognized on certain IO, HB, and CMO securities with an aggregate
market value of $1,900,046. The book cost of certain IO and HB securities
includes a write down in the amount of $2,639,653 taken during 1993
to properly state the net realizable value of the securities. The write
down results in a lower cost of investments than the tax cost disclosed
in Note 4 in Notes to Financial Statements.
27
<PAGE>
THE WOODWARD FUNDS
SHORT BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
TEMPORARY CASH INVESTMENT -- 1.26%
Salomon Brothers, Revolving Repurchase Agreement,
5.53%, 7/1/96, (secured by various U.S. Treasury
Strips with maturities ranging from 2/15/99
through 8/15/00, all held at Chemical Bank) ........................ $2,067,822 $2,067,822
----------
(Cost $ 2,067,822)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 82.44%
U.S. Treasury Securities -- 65.59%
Strips from U.S. Treasury Note Principal due:
8/15/98 ........................................................ 500,000 439,330
U.S. Treasury Notes:
8.500%, 7/15/97 ................................................ 250,000 256,522
5.750%, 9/30/97 ................................................ 30,269,000 30,212,246
8.750%, 10/15/97 ............................................... 490,000 506,841
5.750%, 10/31/97 ............................................... 250,000 249,375
7.375%, 11/15/97 ............................................... 3,500,000 3,562,342
5.375%, 11/30/97 ............................................... 4,100,000 4,066,687
5.250%, 12/31/97 ............................................... 3,830,000 3,790,497
7.875%, 1/15/98 ................................................ 11,265,000 11,567,691
5.625%, 1/31/98 ................................................ 1,450,000 1,441,169
7.875%, 4/15/98 ................................................ 9,200,000 9,471,676
5.125%, 4/30/98 ................................................ 1,000,000 983,120
9.000%, 5/15/98 ................................................ 4,500,000 4,727,115
5.375%, 5/31/98 ................................................ 1,100,000 1,085,392
5.125%, 6/30/98 ................................................ 4,500,000 4,416,345
5.250%, 7/31/98 ................................................ 3,000,000 2,947,980
5.125%, 11/30/98 ............................................... 5,000,000 4,878,900
8.875%, 2/15/99 ................................................ 1,000,000 1,062,186
5.875%, 3/31/99 ................................................ 1,000,000 990,000
7.000%, 4/15/99 ................................................ 1,000,000 1,017,970
6.500%, 4/30/99 ................................................ 3,000,000 3,015,930
6.750%, 5/31/99 ................................................ 2,200,000 2,225,432
6.375%, 7/15/99 ................................................ 1,700,000 1,702,924
6.875%, 7/31/99 ................................................ 1,315,000 1,333,699
6.875%, 8/31/99 ................................................ 1,000,000 1,014,220
7.125%, 9/30/99 ................................................ 1,000,000 1,021,870
7.500%, 10/31/99 ............................................... 2,500,000 2,581,650
</TABLE>
28
<PAGE>
<TABLE>
<S> <C> <C>
7.875%, 11/15/99 ............................................... 1,000,000 1,044,530
7.750%, 11/30/99 ............................................... 2,250,000 2,342,813
7.750%, 12/31/99 ............................................... 1,000,000 1,041,870
7.750%, 1/31/00 ................................................ 1,300,000 1,355,042
6.875%, 3/31/00 ................................................ 500,000 507,655
6.375%, 8/15/02 ................................................ 500,000 495,468
-----------
(Cost $107,699,171) 107,356,487
-----------
Agency Obligations -- 16.85%
Federal Home Loan Mortgage Corp. Gtd. Multi-Class
Mortgage Participation Ctfs.:
Series 2 Class Z, 9.300%, 3/15/19 .............................. 1,242,507 1,311,800
Series 10 Class D, 10.000%, 7/15/18 ............................ 205,205 210,825
Series 11 Class C, 9.500%, 4/15/19 ............................. 482,698 497,782
Series 26 Class F, 9.500%, 2/15/20 ............................. 1,652,966 1,761,251
Series 81 Class A, 8.125%, 11/15/20 ............................ 428,196 428,196
Series 85 Class C, 8.600%, 1/15/21 ............................. 950,840 988,011
Series 99 Class Z, 9.500%, 1/15/21 ............................. 957,812 1,020,644
Series 192 Class H, 9.000%, 7/15/21 ............................ 401,566 412,219
Series 1045 Class G, HB, 1066.2085%, 2/15/21 ................... 2,193 67,656
Series 1096 Class D, 7.000%, 6/15/20 ........................... 927,440 932,846
Series 1477 Class F, 6.650%, 5/15/18 ........................... 300,000 297,276
Series 1559 Class VF, 6.250%, 2/15/20 .......................... 500,000 485,474
Series 1578 Class -- C, 5.500%, 11/15/12 ....................... 916,477 912,517
Series 1623 Class PC, 5.000%, 11/15/07 ......................... 440,000 436,026
Series 1669 Class C, 5.100%, 8/15/12 ........................... 740,000 731,652
Series 1671 Class D, 5.750%, 11/15/16 .......................... 250,000 246,367
Series 1722 Class PB, 6.500%, 2/15/09 .......................... 438,915 438,775
Series 1727 Class E, 6.500%, 4/15/18 ........................... 1,000,000 990,369
Series 1807 Class G, 9.000%, 1/1/06 ............................ 876,591 913,846
Federal National Mortgage Assn. Medium Term Note
4.920%, 9/28/98 ................................................ 220,000 212,454
Federal National Mortgage Assn. Mortgage Backed
Securities
Stripped Trust 268, Class 2, IO, 9.000%, 12/25/21 .................. 247,226 81,122
Federal National Mortgage Assn. Pass Thru
Securities:
Pool #070226, AR, 1/1/19 ....................................... 339,212 333,699
Pool #111366, AR, 8/1/19 ....................................... 400,771 414,498
Pool #116612, AR, 3/1/19 ....................................... 842,903 868,433
</TABLE>
29
<PAGE>
<TABLE>
<S> <C> <C>
Federal National Mortgage Assn. Pass Thru
Securities
Gtd. Remic Trust:
1988 Class 7-Z, 9.250%, 4/25/18 ................................ 772,541 816,745
1988 Class 15-A, 9.000%, 6/25/18 ............................... 164,729 172,469
1988 Class 16-B, 9.500%, 6/25/18 ............................... 986,955 1,054,618
1988 Class 17-B, 9.400%, 10/25/17 .............................. 49,400 51,003
1988 Class 19-H, 9.500%, 7/25/17 ............................... 33,442 33,435
1989 Class 27-D, 10.000%, 1/25/16 .............................. 149,302 153,827
1989 Class 31-D, 9.150%, 8/25/18 ............................... 267,766 274,858
1989 Class 73-C, PO, 10/25/19 .................................. 212,157 158,853
1990 Class 77-C, 9.000%, 7/25/19 ............................... 311,992 323,570
1990 Class 94-C, 8.000%, 1/25/19 ............................... 120,745 122,024
1991 Class 16-G, 8.000%, 3/25/04 ............................... 1,038,591 1,046,037
1991 Class 41-O, 9.000%, 8/25/06 ............................... 375,000 389,565
1991 Class 56-K, 8.600%, 2/25/20 ............................... 950,000 973,502
1992 Class 13-S, HB, IF, 1/25/99 ............................... 3,970 29,378
1992 Class 137-BA, 3.500%, 1/25/17 ............................. 286,250 267,929
1993 Class 35-C, 5.500%, 10/25/01 .............................. 124,597 123,978
1993 Class 85-PD, 5.500%, 7/25/03 .............................. 300,000 296,484
1993 Class 103-PC, 5.300%, 11/25/11 ............................ 500,000 496,974
1993 Class 107-D, 6.500%, 12/25/06 ............................. 900,000 884,726
1993 Class 252-C, 5.400%, 1/25/12 .............................. 250,000 248,105
1994 Class 32-PB, 5.500%, 3/25/03 .............................. 3,000,000 2,973,567
1994-G Class 7-PB, 6.000%, 4/17/08 ............................. 1,000,000 998,559
1994-G Class 8-B, 6.650%, 8/17/07 .............................. 700,000 701,595
-----------
(Cost $27,603,500) 27,585,539
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS ........................... 134,942,026
-----------
(Cost $135,302,671)
CORPORATE BONDS AND NOTES -- 16.30%
Finance -- 13.07%
American Southwest Financial Corp. CMO, Series
67-D, 9.450%, 3/1/15 .......................................... 175,005 174,950
Associates Corp. of North America:
9.700%, 5/1/97 ................................................. 765,000 787,216
6.800%, 12/15/97 ............................................... 800,000 807,041
</TABLE>
30
<PAGE>
<TABLE>
<S> <C> <C>
8.500%, 1/10/00 ................................................ 500,000 528,053
7.550%, 8/23/01 ................................................ 250,000 257,155
Associates Corp. of North America Medium Term
Note
Tranche #SR 00455, 7.480%, 7/27/02 ............................. 300,000 307,318
Beneficial Finance Corp. Medium Term Note:
Tranche #00107, 9.250%, 10/15/96 ............................... 1,150,000 1,162,579
Tranche #00490, 7.200%, 2/21/97 ................................ 400,000 403,487
Tranche #00659, 7.340%, 11/26/99 ............................... 200,000 203,845
CFC-7 Grantor Trust Asset Backed Ctf., 8.650%,
10/15/96 ............................................................. 213,533 213,727
Chemical Bank Grantor Trust 1989-B Participation
Marine Contracts, Class 1, 8.900%, 12/15/96 .................... 175,252 176,726
Citicorp Mortgage Securities, Inc. Remic Pass
Thru Ctf.,
Series 89-16, Class A-1, AR, 4/1/19 ............................ 299,990 299,990
Collaterized Mortgage Obligations Trust CMO:
Trust 12, Class D, 9.500%, 2/1/17 .............................. 202,247 209,384
Ford Credit Grantor Trust Asset Backed Ctf .......................
Series 1994-B, Class A, 7.300%, 10/15/99 ....................... 403,264 408,712
Ford Motor Credit Co.:
7.250%, 5/15/99 ................................................ 640,000 650,577
9.500%, 4/15/00 ................................................ 730,000 792,739
Ford Motor Credit Co. Medium Term Note:
9.000%, 7/26/96 ................................................ 500,000 501,488
Tranche #TR 00493, 6.450%, 7/21/97 ............................. 300,000 301,026
Tranche #00281, 7.470%, 7/29/99 ................................ 1,000,000 1,021,931
Tranche #00442, 7.590%, 4/06/00 ................................ 300,000 307,438
General Electric Capital Corp., 8.75%, 11/26/96 .................. 500,000 505,868
General Electric Capital Corp. Medium Term Note
Tranche #TR 00624, 7.665%, 2/3/97 .............................. 500,000 505,492
General Motors Acceptance Corp. Medium Term Note
Tranche #00162, 7.750%, 2/20/97 ................................ 250,000 252,902
Lomas Mortgage Funding Corp. II, CMO, Series
88-1A, 9.000%, 9/20/15 ......................................... 30,896 30,986
MBNA Master Credit Card Trust Asset Backed Ctf ...................
Trust 91-1, Series 1991-1A, 7.750%, 10/15/98 ................... 1,458,333 1,467,053
Trust 92-1, Series 1992-1A, 7.250%, 6/15/99 .................... 750,000 758,872
Merrill Lynch Home Equity Loan Asset Backed Pass Thru Ctf ........
Series 1992-1, Class A, IF, 7/15/22 ............................ 839,246 841,067
</TABLE>
31
<PAGE>
<TABLE>
<S> <C> <C>
Morgan Stanley Mortgage Trust, CMO, Series 38-4,
PO, 11/20/21 ................................................... 62,482 44,987
Navistar Financial Corp. Owner Trust Asset Backed Pass Thru
Ctf Series 1995-A, Class A2, 6.550%, 11/20/01 .................. 2,080,256 2,112,831
Ryland Acceptance Corp. Four, CMO, Series 78,
Class 78-B, 9.550%, 3/1/16 ..................................... 518,998 534,547
Shearson Lehman, Inc. CMO, Mortgage Backed
Sequential Pay Bond, Series U, Sequence U-1,
8.750%, 8/27/17 ................................................ 18,084 18,163
Standard Credit Card Master Trust Asset Backed
Ctf Series 1995-2, Class A, 8.625%, 1/7/02 ..................... 2,000,000 2,030,198
Western Financial Grantor Trust Auto Receivable
P/T Ctf: 1993-4, Class A1, 4.600%, 4/1/99 ...................... 446,602 442,386
1993-3, Class A, 6.650%, 12/1/99 ............................... 318,743 321,220
World Omni Automobile Lse Sec Trust Asset Backed
Ctf Series 1995-A, Class A, 6.050%, 11/25/01 ................... 2,000,000 2,003,258
------------
(Cost $21,337,988) 21,385,212
------------
Industrial -- 3.23%
Ford Holdings Inc.:
9.250%, 3/1/00 ................................................. 2,053,000 2,209,732
9.250%, 7/15/97 ................................................ 1,716,000 1,768,021
Pepsico, Inc.:
7.875%, 8/15/96 ................................................ 510,000 511,369
7.000%, 11/15/96 ............................................... 252,000 253,137
Waste Management Inc., 7.875%, 8/15/96 ........................... 550,000 551,477
------------
(Cost $5,307,936) 5,293,736
------------
TOTAL CORPORATE BONDS AND NOTES ...................................... 26,678,948
(Cost $26,645,923) ------------
TOTAL INVESTMENTS .................................................... $163,688,796
(Cost $164,016,417) ============
</TABLE>
32
<PAGE>
THE WOODWARD FUNDS
SHORT BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
June 30, 1996
(Unaudited)
Notes to Portfolio of Investments
(a) The Funds invest in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Some of these securities are
collateralized mortgage obligations (CMOs). CMOs are debt securities
issued by U.S. government agencies or by financial institutions and other
mortgage lenders which are collateralized by a pool of mortgages held
under an indenture. Descriptions of certain collateralized mortgage
obligations are as follows:
Inverse Floaters (IF) represent securities that pay interest at a rate
that increases (decreases) with a decline (increase) in a specified index.
Interest Only (IO) represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. The face amount shown
represents the par value on the underlying pool. The yields on these
securities are generally higher than prevailing market yields on other
mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not
be fully recouped. These securities are subject to accelerated principal
paydowns as a result of prepayments or refinancing of the underlying pool
of mortgage instruments. As a result, interest income may be reduced
considerably.
High Coupon Bonds (HB) (a.k.a. "IOettes") represent the right to receive
interest payments on an underlying pool of mortgages with similar risks as
those associated with IO securities. Unlike IO's, the owner also has a
right to receive a very small portion of principal. The high interest rate
results from taking interest payments from other classes in the REMIC
Trust and allocating them to the small principal of the HB class.
Principal Only (PO) represent the right to receive the principal portion
only on an underlying pool of mortgage loans. The market value of these
securities is extremely volatile in response to changes in market interest
rates. As prepayments on the underlying mortgages of these securities
increase, the yield on these securities increases.
33
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
WOODWARD MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
MUNICIPAL BONDS - 99.83%
Alaska - 2.83%
Fairbanks North Star Borough S (MBIA Insured), 5.45%, 3/1/06 ........... $2,500,000 $2,517,725
----------
Arizona - .74%
Salt River Project Agricultural Improvement Power District
Revenue, Electric System Series D, 6.00%, 1/1/08 .................... 625,000 662,331
----------
California - 6.51%
Orange Co Recovery CTFS PRTN CA (MBIA Insured)
Series A, 5.80%, 7/1/16 .............................................. 2,815,000 2,765,963
Sacramento, California M.U.D. (MBIA Insured) 5.75%, 1/1/10 ............. 3,000,000 3,030,600
----------
5,796,563
----------
Florida - 5.29%
Florida State Pollution Control Series Y, 6.40%, 7/1/08 ................ 1,400,000 1,490,062
St Petersburg Excise Tax Revenue FL (FGIC Insured), 5.00%, 10/01/16 .... 3,585,000 3,221,840
----------
4,711,902
----------
Georgia - 5.39%
Gainesville Water & Sewer RV GA (FGIC Insured)
Water Utility Improvements, Series B, 6.00%, 11/15/12 .............. 3,950,000 4,143,708
Georgia State Housing And Finance Authority Revenue
Series B, 6.10%, 12/1/12 ............................................. 650,000 656,156
----------
4,799,864
----------
Illinois - 10.68%
Chicago Metropolitan Water Capital Improvement, 5.50%, 12/1/12 ......... 1,000,000 990,360
Chicago O'Hare International Airport RV ILL (MBIA Insured)
Refunding 2nd Lien Series C, 5.00%, 01/01/18 ........................ 3,000,000 2,627,070
DuPage Co. Forest Preservation District, 6.00%, 11/1/03 ................ 1,750,000 1,860,723
Evanston General Obligation Unlimited Tax, 6.10%, 12/1/09 .............. 1,000,000 1,041,930
Illinois Health Facilities Authority Revenue Northwestern Memorial
Hospital Series A, 5.60%, 8/15/06 .................................... 1,000,000 1,015,380
Illinois Housing Development, Series A, 5.95%, 7/1/21 .................. 2,000,000 1,974,380
----------
9,509,843
----------
</TABLE>
34
<PAGE>
<TABLE>
<S> <C> <C>
Indiana - 6.84%
Ball State University Revenue (FGIC Insured) Student Fee Series G,
6.125%, 7/1/09 ...................................................... 400,000 412,100
Fort Wayne Sewer Works Improvement Revenue Indiana (FGIC Insured),
5.75%, 8/1/10 ....................................................... 1,100,000 1,102,728
Indiana State Vocational Technology Revenue Series D, 5.90%, 7/1/06 .... 1,000,000 1,041,400
Indiana Transportation Finance Authority, Series A
6.25%, 11/1/16 ...................................................... 1,500,000 1,513,410
North Adams Community Schools Participation Ctfs., 5.75%, 7/15/12 ...... 1,000,000 994,790
St. Joseph Co. Hospital Authority Facilities Revenue (MBIA Insured),
Memorial Hospital South Bend Project, 6.25%, 8/15/12 ................ 1,000,000 1,031,500
----------
6,095,928
----------
Kansas - 3.09%
Johnson Co Unified School District #229 KS
Series A, General Obligation Unlimited Tax, 5.00%, 10/1/16 .......... 3,000,000 2,752,680
----------
Kentucky - 1.35%
Kentucky State Turnpike Authority Economic Development Revenue
(AMBAC Insured) Refunding, 5.50%, 7/1/06 ............................. 1,175,000 1,204,997
----------
Maryland - 1.14%
Maryland State Community Development Administration Dept ...............
Housing & Community Development, First Series, 5.80%, 4/1/07 ...... 1,000,000 1,019,300
----------
Massachusetts - 7.05%
Massachusetts Housing Finance Agency Revenue (AMBAC Insured)
Single Family, 6.00%, 12/1/15 ........................................ 4,000,000 3,977,120
Massachusetts State Finance Agency, Series F
6.00%, 1/1/15 ........................................................ 2,265,000 2,302,635
----------
6,279,755
----------
Michigan - 6.81%
Grand Rapids Water Supply System Revenue (FGIC Insured),
6.30%, 1/1/04 ......................................................... 250,000 266,703
</TABLE>
35
<PAGE>
<TABLE>
<S> <C> <C>
Michigan State Building Authority Revenue Series I,
6.40%,10/1/04 ....................................................... 600,000 644,730
Michigan State Housing Development Authority Revenue
Series C, 6.375%, 12/1/11 ........................................... 1,450,000 1,481,465
Rochester Community School District School Building & Site
Unlimited Tax, 6.50%, 5/1/06 ........................................ 250,000 270,350
Royal Oak Hospital Finance Authority Revenue, William
Beaumont Hospital:
Series C, 7.20%, 1/1/05 ........................................... 250,000 270,810
Series G, 5.60%, 11/15/11 ......................................... 850,000 831,105
Saranac Community School District, 6.00%, 5/1/13 ....................... 250,000 253,570
Wyandotte Electric Revenue, 6.25%, 10/1/17 ............................. 2,000,000 2,043,700
---------- ----------
6,062,432
----------
Missouri - 5.25%
Missouri Health & EDL Facilities Authority Revenue
Series C, 3.70%, 9/1/30 ............................................. 2,800,000 2,800,000
Kansas City School District Building Revenue Elementary School
Project Series D, 5.10%, 2/1/07 ..................................... 1,905,000 1,875,834
----------
4,675,834
----------
New Jersey - 0.47%
Gloucester Co. Improvement Authority Gtd. Revenue, Solid Waste
Landfill Project Series AA, 6.20%, 9/1/07 ........................... 400,000 418,500
----------
New York - 0.31%
Tri-Borough Bridge & Tunnel Authority Revenue General Purpose
Series X, 6.625%, 1/1/12 ............................................ 250,000 276,327
----------
North Carolina - 1.15%
North Carolina Municipal Power Agency Catawba Electric Revenue,
6.00%, 1/1/05 ....................................................... 1,000,000 1,026,780
----------
Ohio - 4.52%
Franklin Co. Hospital Revenue, Children's Hospital Series A,
6.50%, 5/1/07 ....................................................... 950,000 1,009,527
Ohio State Building Authority Revenue, State Facilities Adult
Correctional Building Fund Series A, 6.125%, 10/1/09 ................ 250,000 260,273
Ohio General Obligation State of Public & Sewer Imports
Unlimited Tax, 6.00%, 8/1/07 ....................................... 1,000,000 1,066,730
</TABLE>
35
<PAGE>
<TABLE>
<S> <C> <C>
Ohio Housing Financial Agency Mortgage Revenue
Residential GNMA Series A-1, 6.20%, 9/1/14 ............................. 1,670,000 1,693,246
----------
4,029,776
----------
South Carolina - 2.19%
Greenville Hospital System Facilities Revenue SC
Health Hospital Nursing Home Improvements
Series A, 5.60%, 5/1/10 ............................................. 2,000,000 1,952,840
----------
South Dakota - 8.06%
Heartland Consumers Power District Electric Revenue
Refunding Electric Light & Power Improvements, 6.00%, 1/1/17 ........ 2,500,000 2,568,600
South Dakota Housing Development Authority AA1/AAA
5.70%, 5/1/08 ....................................................... 2,300,000 2,294,710
South Dakota Housing Development Authority Revenue
Series C, 6.25%, 5/1/15 .............................................. 1,000,000 1,007,730
South Dakota State Building Authority Lease Revenue (AMBAC
Insured), 6.625%, 9/1/12 ............................................ 1,200,000 1,309,884
----------
7,180,924
----------
Tennessee - 0.77%
Metropolitan Government Nashville/Davis County Revenue,
7.00%, 1/1/14 ....................................................... 675,000 690,066
----------
Texas - 7.69%
Austin Utilities System Revenue (AMBAC Insured), 6.50%, 5/15/11 ........ 250,000 262,245
Harris Co. Flood Control District Refunding General Obligation,
6.25%,10/1/05 ....................................................... 250,000 262,855
Houston General Obligation Series C, 6.00%, 3/1/05 ..................... 400,000 417,312
San Antonio Water Revenue (MBIA Insured), 6.50%, 5/15/10 ............... 250,000 264,485
Tarrant Co. Water Control & Improvement District #1 Revenue
Series A, 6.10%, 3/1/05 ............................................. 400,000 415,744
Texas General Obligation , 7.70%, 8/1/06 ............................... 1,305,000 1,408,800
Texas General Obligation Refunding Series A Unlimited Tax
6.00%, 10/1/05 ...................................................... 1,000,000 1,066,430
</TABLE>
36
<PAGE>
<TABLE>
<S> <C> <C>
Texas Turnpike Austin Dallas Northway RV (FGIC Insured)
President George Bush Turnpike Highway Improvements, 5.25%, 1/1/23 .. 3,000,000 2,747,730
----------
6,845,601
----------
Virginia - 6.19%
Virginia State Housing Development Authority Revenue,
5.60%, 11/1/10 ...................................................... 1,500,000 1,466,655
Virginia State Housing Development Commonwealth
Series H, 6.20%, 1/1/08 ............................................. 1,000,000 1,022,450
Virginia State Public School Authority Revenue Series A,
6.25%, 1/1/11 ....................................................... 500,000 513,190
Virginia State Transportation Board Contract Revenue
#58 Corridor, 6.00%, 5/15/19 ...................................... 2,500,000 2,508,375
----------
5,510,670
----------
Washington - 2.15%
Kent General Obligation (AMBAC Insured) Unlimited Tax, 5.40%,
12/1/06 .............................................................. 1,300,000 1,312,532
King Co. General Obligation Series A, 7.00%, 12/1/07 ................... 550,000 598,840
----------
1,911,372
----------
Wisconsin - 3.36%
Wisconsin Housing And Economic Development Authority Revenue
Series A, 6.15%, 9/1/17 .............................................. 1,500,000 1,502,160
Wisconsin State Health & Educational Facilities Authority
Revenue, Lutheran Hospital Benevolent Development Fund
Series A, 5.60%, 2/15/09 ............................................ 450,000 447,552
Wisconsin State Transportation Revenue Series B, 5.75%, 7/1/12 ......... 1,000,000 1,046,950
----------
2,996,662
----------
TOTAL MUNICIPAL BONDS ....................................................... 88,928,672
(Cost - $88,858,696) ----------
TEMPORARY CASH INVESTMENT - 0.17%
Woodward Tax Exempt Money Market Fund .................................. 148,787 148,787
(Cost - $148,786) ----------
TOTAL INVESTMENTS ........................................................... $89,077,459
===========
(Cost - $89,007,482)
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
THE WOODWARD FUNDS
WOODWARD MICHIGAN MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996
(Unaudited)
Market
Description Face Amount Value
----------- ----------- -----
<S> <C> <C>
MUNICIPAL BONDS - 95.48%
Michigan - 93.50%
Allegan Public School District General Obligation (AMBAC
Insured), Unlimited Tax,5.75%,5/1/12 ................................. $ 200,000 $ 201,178
Dearborn Economic Division Oakwood Obligation Group
Series, 5.60%, 11/15/08 ........................................... 1,690,000 1,698,366
Detroit Sewer Disposal Revenue (FGIC Insured):
6.00%, 7/1/00 ..................................................... 1,225,000 1,283,923
Series A, Sewer Improvement, 5.30%, 7/1/06 ........................ 455,000 456,097
East China Township School District School Building & Site,
Unlimited Tax, 6.00%, 5/1/03 ...................................... 400,000 421,484
Eastern Michigan University General Obligation Revenue
(AMBAC Insured), 5.125%, 6/1/11 ...................................... 500,000 467,570
Eastern Michigan University General Sinking Fund, 6.375%,
6/1/14 ............................................................... 1,000,000 1,035,560
Ferndale School District, 5.50%, 5/1/11 .............................. 1,000,000 991,920
Grand Haven Electric Revenue, 5.25%, 7/1/13 .......................... 1,315,000 1,232,050
Grand Traverse Co. Hospital Finance Authority Revenue
(AMBAC Insured), Munson Healthcare Series A, 5.90%, 7/1/04 ........... 1,000,000 1,048,040
Hartland Consolidated School District General Obligation
(AMBAC Insured), Unlimited Tax, 6.00%, 5/1/11 ........................ 650,000 666,513
Holland Electric Revenue, 5.00%, 7/1/09: ............................. 625,000 591,231
Lansing Building Authority (AMBAC Insured), 6.00%, 6/1/05 ............ 1,000,000 1,065,320
Livingston Co. General Obligation Bldg. Authority Limited Tax,
5.80%, 7/1/08 ................................................... 1,330,000 1,357,917
Marysville Public School District, 5.60%, 5/1/09 ..................... 620,000 621,810
Michigan General Obligation Environmental Protection Program:
6.25%, 11/1/08 .................................................... 450,000 489,874
Michigan Municipal Bond Authority Revenue:
Local Government Loan Program Series A, 5.70%, 8/1/07 ............. 1,145,000 1,165,942
Michigan State Building Authority Revenue Series I:
(AMBAC Insured), 5.00%, 10/1/06 ................................... 950,000 929,062
Michigan State Comprehensive Transportation Revenue Series B,
5.75%, 5/15/11 .................................................... 2,140,000 2,122,966
Michigan State Hospital Finance Authority Revenue:
3.55%, 12/1/23 .................................................... 900,000 900,000
</TABLE>
38
<PAGE>
<TABLE>
<S> <C> <C>
Detroit Medical Center - B (AMBAC Insured), 5.00%,
8/15/06 ......................................................... 1,000,000 965,260
Henry Ford Hospital, 6.00%, 9/1/11 ................................ 1,250,000 1,272,487
Henry Ford Hospital, 5.75%, 9/1/17 ................................ 750,000 727,612
Mercy Mt. Clemens, 6.25%, 5/15/11 ................................. 500,000 509,175
Refunding Hospital Daughters Charity, 5.25%, 11/1/15 .............. 1,000,000 912,620
Michigan State Housing Development Authority Revenue:
Rental, Series A, 6.20%, 4/1/03 ................................... 1,000,000 1,037,820
Single Family Mortgage Series B, 6.30%, 4/1/03 .................... 1,000,000 1,001,210
Series A, 6.00%, 12/1/15 .......................................... 3,000,000 2,969,310
Series C, 6.375%, 12/1/11 ......................................... 750,000 766,275
Michigan State University Revenue Series A:
6.25%, 8/15/15 .................................................... 2,000,000 2,036,780
Newaygo Public Schools General Obligation Unlimited Tax,
6.00%, 5/1/12 ..................................................... 300,000 307,506
Norway Vulcan Area Schools, 5.75%, 5/1/13 ............................ 250,000 248,115
Novi Community Schools, 6.125%, 5/1/13 ............................... 750,000 769,215
Novi General Obligation Series A & B Recreational Facilities
& Public Improvements, 5.00%, 10/1/11 ............................. 725,000 668,805
Oak Park School District (AMBAC Insured):
6.00%, 6/1/09 ..................................................... 250,000 258,740
Oakland Community College Refunding & Improvement Limited
Tax: 5.15%, 5/1/09 ................................................ 910,000 856,574
General Obligation, 5.20%, 5/1/10 ................................. 700,000 652,773
Ottawa Co. General Obligation Water Supply System, 6.00%,
8/1/08 ............................................................ 1,950,000 2,027,123
Perry Public Schools General Obligation Unlimited Tax,
6.00%, 5/1/12 ..................................................... 250,000 253,915
Rockford Public Schools, 5.875%, 5/1/12 .............................. 500,000 506,055
Royal Oak Hospital Finance Authority Revenue,
William Beaumont Hospital - G,5.25%, 11/15/19 ..................... 2,000,000 1,833,740
William Beaumont Hospital - G, 5.60%, 11/15/11 .................... 2,000,000 1,955,540
Saranac Community School District, 6.00%, 5/1/13 ..................... 250,000 253,570
Traverse City Area Public School District, Series I, 5.70%,
5/1/12 ............................................................ 2,400,000 2,413,296
Troy City School District, School Improvements, 6.40%,
5/1/12 ............................................................ 400,000 419,352
</TABLE>
39
<PAGE>
<TABLE>
<S> <C> <C>
University of Michigan Revenue Hospital Series A:
5.75%, 12/1/12 ...................................................... 850,000 836,663
5.50%, 12/1/21 ...................................................... 450,000 415,863
University of Michigan Revenue Medical Service Plan, 6.20%, 12/1/03 .... 1,000,000 1,075,120
University of Michigan Revenue Student Fee Series A, 5.25%, 4/1/15 ..... 1,000,000 937,520
Wayne State University (AMBAC Insured):
5.50%, 11/15/07 ...................................................... 1,000,000 1,013,330
5.65%, 11/15/15 ...................................................... 800,000 783,352
Wayne Westland Community Schools (FGIC Insured), Unlimited Tax,
5.75%, 5/1/11 ........................................................ 350,000 349,968
Webberville Community School, 5.60%, 5/1/11 ............................ 500,000 492,535
Western University Revenue (FGIC Insured), 6.25%, 11/15/12 ............. 250,000 260,732
Wyoming Public School, 5.875%, 5/1/13 .................................. 350,000 352,608
----------
50,887,382
----------
Puerto Rico - 1.98%
Puerto Rico Commonwealth GO (MBIA Insured) Unlimited Tax
Public Improvements, 6.25%, 7/1/12 .................................. 1,000,000 1,078,040
----------
TOTAL MUNICIPAL BONDS .................................................... 51,965,422
(Cost - $52,275,602)
TEMPORARY CASH INVESTMENT - 4.52%
Woodward Michigan Tax-Exempt Money Market Fund ......................... 2,457,766
(Cost - $2,457,766) ----------
TOTAL INVESTMENTS ........................................................ $54,423,188
(Cost - $54,733,368) ===========
</TABLE>
40
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Commencement of Operations
The Woodward Funds (Woodward) was organized as a Massachusetts business trust
on April 21, 1987, and registered under the Investment Company Act of 1940, as
amended, as an open-end investment company. As of June 30, 1996, Woodward
consisted of seventeen separate series of which there were five Bond Funds, as
described below.
Woodward Bond Fund
Woodward Intermediate Bond Fund
Woodward Short Bond Fund
Woodward Municipal Bond Fund
Woodward Michigan Municipal Fund
The Bond and Intermediate Bond Funds commenced operations on June 1, 1991.
The Municipal Bond and Michigan Municipal Bond Funds commenced operations
February 1, 1993. The Short Bond Fund commenced operations on September 17,
1994.
(2) Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Bond Funds in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies. Following generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements, and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Investments
The Bond Funds value investment securities at market value which is determined
by a pricing service based upon quoted market prices or dealer quotes.
Securities for which market prices or dealer quotes are not readily available
are valued by the investment advisor, NBD Bank (NBD), in accordance with
procedures approved by the Board of Trustees.
Investment security purchases and sales are accounted for on the day after
trade date.
Woodward invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open
market desk will do business. NBD, acting under the supervision of the Board
of Trustees, has established the following additional policies and procedures
relating to Woodward's investments in securities subject to repurchase
agreements: 1) the value of the underlying collateral is
41
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
required to equal or exceed 102% of the funds advanced under the repurchase
agreement including accrued interest; 2) collateral is marked to market daily
by NBD to assure its value remains at least equal to 102% of the repurchase
agreement amount; and 3) funds are not disbursed by Woodward or its agent
unless collateral is presented or acknowledged by the collateral custodian.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount on debt instruments. Bond
premiums and discounts are amortized/accreted as required by the Internal
Revenue Code. Premiums and discounts on mortgage-backed securities are
amortized/accreted using the effective interest rate method. As prepayments on
the underlying mortgages increase or decrease the expected life, the yield is
adjusted to amortize/accrete the security to its new expected life.
Federal Income Taxes
It is Woodward's policy to comply with the requirements of Subchapter M of the
Internal Revenue Code, as amended, applicable to regulated investment
companies and to distribute net investment income and realized gains to its
shareholders. Therefore, no federal income tax provision is required in the
accompanying financial statements.
As of December 31, 1995, the Bond Funds had capital loss carryforwards and
related expiration dates as follows:
<TABLE>
<CAPTION>
Fund 2002 2003 Total
- ---- ---- ---- -----
<S> <C> <C> <C>
Bond ...................... $19,955,806 $1,041,792 $20,997,598
Intermediate .............. 3,916,956 2,190,497 6,107,453
Municipal Bond ............ 96,878 333,098 429,976
Michigan Municipal Bond ... 29,400 -- 29,400
</TABLE>
Shareholder Dividends
Dividends from net investment income are declared and paid monthly by the Bond
Funds. Net realized capital gains are distributed annually. Distributions from
net investment income and net realized gains are made during each year to
avoid the 4% excise tax imposed on regulated investment companies by the
Internal Revenue Code.
Deferred Organization Costs
Organization costs are being amortized on a straight-line basis over the five
year period beginning with the commencement of operations of each series.
42
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
When Issued/To Be Announced (TBA) Securities.
The Bond Funds may purchase securities on a "when issued" basis. These
securities have been registered by a municipality or government agency, but
have not yet been issued to the public. These transactions involve a
commitment by the Funds to purchase particular securities, with payment and
delivery taking place at a future date, for which all specific information,
such as the face amount and maturity date of such investment security, is not
known at the time of the trade. These transactions are subject to market
fluctuations and the risk that the value at delivery may be more or less than
the purchase price at which the transactions were entered. The current value
of these securities is determined in the same manner as that of other
portfolio securities. Although the Bond Funds generally purchase these
securities with the intention of acquisition, such securities may be sold
before the settlement date.
Expenses
Expenses are charged daily as a percentage of the Fund's assets. Woodward
monitors the rate at which expenses are charged to ensure that a proper amount
of expense is charged to income each year. This percentage is subject to
revision if there is a change in the estimate of the future net assets of
Woodward or a change in expectations as to the level of actual expenses.
(3) Transactions with Affiliates
First of Michigan Corporation (FoM) and Essex National Securities, Inc.
(Essex) act as sponsors and co-distributors of Woodward's shares. Pursuant to
their Distribution Agreement with Woodward, FoM is entitled to receive a fee
at the annual rate of .005% of the Bond Funds' average net assets and Essex is
entitled to receive a fee at the annual rate of .10% of the aggregate average
net assets of Woodward's investment portfolios attributable to investments by
clients of Essex.
NBD is the investment advisor pursuant to the Advisory Agreement. For its
advisory services to Woodward, NBD is entitled to a fee, computed daily and
payable monthly. Under the Advisory Agreement, NBD also provides Woodward with
certain administrative services, such as maintaining Woodward's general ledger
and assisting in the preparation of various regulatory reports. NBD receives
no additional compensation for such services.
43
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
NBD, FoM, and Essex have agreed that they may waive their fees in whole or in
part; and, if in part, may specify the particular fund to which such waiver
relates as may be required to satisfy any expense limitation imposed by state
securities laws or other applicable laws. At present, no restrictive expense
limitation is imposed on Woodward. Restrictive limitations could be imposed as
a result of changes in current state laws and regulations in those states
where Woodward has qualified its shares, or by a decision of the Trustees to
qualify the shares in other states having restrictive expense limitations. For
the period ended June 30, 1996, NBD reimbursed the Municipal Bond and
Michigan Municipal Bond Funds for certain expenses in the amount of $2,250 and
$32,420, respectively.
On March 10, 1994, Woodward adopted the Woodward Funds Deferred Compensation
Plan (the "Plan"), an unfunded, nonqualified deferred compensation plan. The
Plan allows an individual trustee to elect to defer receipt of all or a
percentage of fees which otherwise would be payable for services performed.
NBD is also compensated for its services as Woodward's Custodian, Transfer
Agent and Dividend Disbursing Agent, and is reimbursed for certain out of
pocket expenses incurred on behalf of Woodward.
See Note 5 for a summary of fee rates and expenses pursuant to these
agreements.
(4) Investment Securities Transactions
Information with respect to investment securities and security transactions,
based on the aggregate cost of investments for federal income tax purposes,
excluding short-term securities, is as follows:
<TABLE>
<CAPTION>
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Gross Unrealized Gains ........ $ 16,834,834 $ 6,946,212 $ 413,684 $ 910,576 $ 437,472
Gross Unrealized Losses ....... (18,066,456) (13,083,350) (741,305) (840,599) (747,652)
------------ ------------ ------------ ----------- -----------
$ (1,231,622) $ (6,137,138) $ (327,621) $ 69,977 $ (310,180)
============ ============ ============ =========== ===========
Federal Income Tax Cost ....... $541,579,968 $387,239,977 $164,016,417 $89,007,483 $54,733,368
Purchases ..................... $147,238,139 $103,517,584 $106,220,541 $32,497,031 $ 6,962,400
Sales & Maturities, at value .. $ 75,620,922 $ 80,110,091 $ 93,939,578 $22,025,859 $ 6,099,489
</TABLE>
44
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
(5) Expenses
Following is a summary of total expense rates charged, advisory fee
rates payable to NBD, and amounts paid to NBD, FoM, and Essex pursuant to the
agreements described in Note 3 for the period ended June 30, 1996. The rates
shown are stated as a percentage of each fund's average net assets.
<TABLE>
<CAPTION>
MICHIGAN
INTERMEDIATE SHORT MUNICIPAL MUNICIPAL
Effective Date BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
- -------------- ----------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Expense Rates:
January 1 ............ 0.73% 0.72% 0.77% 0.82% 0.82%
March 18 ............. 0.72% 0.72% 0.78% 0.82% 0.82%
May 21 ............... 0.71% 0.71% 0.78% 0.82% 0.82%
NBD Advisory Fee:
January 1 ............ 0.65% 0.65% 0.65% 0.65% 0.65%
Amounts Paid:
Advisory Fee to NBD .. $1,680,455 $1,274,959 $432,308 $271,410 $172,437
Distribution Fees to
FoM & Essex ....... $ 30,077 $ 14,580 $ 4,221 $ 7,666 $ 10,997
Other Fees & Out
of Pocket
Expenses to NBD ...... $ 64,444 $ 47,397 $ 23,081 $ 17,705 $ 17,182
Expense Reimbursement
by NBD ............... -- -- -- $ 2,250 $ 32,420
</TABLE>
(6) Portfolio Composition
Although the Municipal Bond Fund has a diversified investment portfolio,
the Fund has investments greater than 10% of its total investments in the
state of Illinois. The Michigan Municipal Bond Fund does not have a
diversified portfolio since all of its investments are within the state of
Michigan. Such concentrations within particular states may subject the Funds
more significantly to economic changes occuring within those states.
(7) Subsequent Event
On August 23, 1996, the Woodward Bond Fund merged with the Prairie Bond
Fund. The transaction was effected as a tax-free reorganization under the
Internal Revenue Code, so that none of the Fund's shareholders recognized
taxable gains or losses as a result of the reorganization.
On or about September 13, 1996, the Woodward Municipal Bond Fund will
merge with the Prairie Municipal Bond Fund.
45
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS
The Financial Highlights present a per share analysis of how the Bond
Funds' net assets values have changed during the periods presented. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Bond Funds
and other information for the periods presented below.
<TABLE>
<CAPTION>
Bond Fund
---------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ........................ $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55 $ 10.00
Income from investment
operations:
Net investment income ....... 0.33 0.63 0.61 0.76 0.83 0.51
Net realized and unrealized
gains (losses) on
investments ............. (0.44) 1.45 (1.31) 0.38 (0.17) 0.57
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations .................. (0.11) 2.08 (0.70) 1.14 0.66 1.08
------------ ------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment ......... (0.32) (0.64) (0.59) (0.76) (0.83) (0.51)
income
From realized gains ......... -- -- (0.02) (0.31) (0.13) (0.02)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ............. (0.32) (0.64) (0.61) (1.07) (0.96) (0.53)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period ...................... $ 10.02 $ 10.45 $ 9.01 $ 10.32 $ 10.25 $ 10.55
============ ============ ============ ============ ============ ============
Total Return (b) ................ (2.09)%(a) 23.75% (6.99)% 11.39% 6.56% 18.45%(a)
Ratios/Supplemental Data
Net assets, end of period ....... $539,772,313 $517,565,579 $427,168,395 $501,196,278 $321,758,333 $237,673,316
Ratio of expenses to average
net assets ................. 0.71%(a) 0.74% 0.74% 0.73% 0.73% 0.75%(a)
Ratio of net investment income
to average net assets ....... 6.63%(a) 6.39% 6.36% 7.20% 8.08% 8.44%(a)
Portfolio turnover rate ......... 14.30% 41.91% 75.67% 111.52% 90.45% 8.19%
<FN>
See accompanying notes to financial statements.
</TABLE>
46
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Intermediate Bond Fund
-------------------------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Year ended Year ended Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993 Dec. 31, 1992 Dec. 31, 1991
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ...................... $ 10.37 $ 9.21 $ 10.41 $ 10.28 $ 10.55 $ 10.00
Income from investment
operations:
Net investment income ....... 0.30 0.59 0.56 0.59 0.71 0.40
Net realized and unrealized
gains (losses) on
investments ............. (0.29) 1.16 (1.20) 0.26 (0.10) 0.57
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations...................... 0.01 1.75 (0.64) 0.85 0.61 0.97
------------ ------------ ------------ ------------ ------------ ------------
Less distributions:
From net investment income... (0.30) (0.59) (0.55) (0.59) (0.71) (0.40)
From realized gains ......... -- -- (0.01) (0.13) (0.17) (0.02)
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ............. (0.30) (0.59) (0.56) (0.72) (0.88) (0.42)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of period... $ 10.08 $ 10.37 $ 9.21 $ 10.41 $ 10.28 $ 10.55
============ ============ ============ ============ ============ ============
Total Return (b) ................ 0.35%(a) 19.48% (6.31)% 8.41% 6.00% 16.62%(a)
Ratios/Supplemental Data
Net assets, end of period ....... $390,818,226 $405,309,939 $393,019,168 $429,789,857 $220,432,255 $130,367,032
Ratio of expenses to average
net assets ................. 0.71%(a) 0.73% 0.74% 0.74% 0.74% 0.75%(a)
Ratio of net investment income
to average net assets ....... 6.04%(a) 5.98% 5.73% 5.44% 6.91% 6.59%(a)
Portfolio turnover rate ......... 20.12% 36.47% 54.60% 92.80% 56.30% 7.38%
</TABLE>
47
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Short Bond Fund
---------------------------------------------------
Six Months
Ended
June 30, 1996 Year ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994
-------------- -------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 10.23 $ 9.84 $ 10.00
Income from investment operations:
Net investment income ........... 0.27 0.58 0.17
Net realized and unrealized
gains (losses) on investments (0.14) 0.39 (0.16)
------------ ------------ -----------
Total from investment operations .... 0.13 0.97 0.01
------------ ------------ -----------
Less distributions:
From net investment
income ...................... (0.26) (0.58) (0.17)
From realized gains ............. -- -- --
------------ ------------ -----------
Total distributions ................. (0.26) (0.58) (0.17)
------------ ------------ -----------
Net asset value, end of
period .......................... $ 10.10 $ 10.23 $ 9.84
============ ============ ===========
Total return (b) .................... 2.52%(a) 10.07% 0.21%(a)
Ratios/Supplemental Data
Net assets, end of period ........... $164,889,639 $163,336,855 $64,239,163
Ratio of expenses to average net
assets .......................... 0.77%(a) 0.75% 0.75%(a)
Ratio of net investment income to
average net assets .............. 5.35%(a) 5.74% 5.92%(a)
Ratio of expenses to average net
assets without fee waivers/
reimbursed expenses ............. -- 0.81% 0.93%(a)
Ratio of net investment income
to average net assets without fee
waivers/reimbursed expenses ..... -- 5.68% 5.74%(a)
Portfolio turnover rate ............. 57.24% 30.94% 10.20%
</TABLE>
48
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Municipal Bond Fund
---------------------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year Ended Year Ended Period Ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 10.68 $ 9.59 $ 10.69 $ 10.00
Income from investment operations:
Net investment income ........... 0.24 0.48 0.50 0.45
Net realized and unrealized
gains (losses) on investments (0.32) 1.08 (1.11) 0.69
----------- ----------- ----------- -----------
Total from investment operations .... (0.08) 1.56 (0.61) 1.14
----------- ----------- ----------- -----------
Less distributions:
From net investment
income ...................... (0.24) (0.47) (0.49) (0.44)
From realized gains ............. -- -- -- (0.01)
----------- ----------- ----------- -----------
Total distributions ................. (0.24) (0.47) (0.49) (0.45)
----------- ----------- ----------- -----------
Net asset value, end of
period .......................... $ 10.36 $ 10.68 $ 9.59 $ 10.69
=========== =========== =========== ===========
Total return (b) .................... (1.55)%(a) 16.54% (5.72)% 12.69 (a)
Ratios/Supplemental Data
Net assets, end of period ........... $90,521,240 $76,963,564 $61,255,773 $54,703,974
Ratio of expenses to average net
assets .......................... 0.82%(a) 0.79% 0.53% 0.19%(a)
Ratio of net investment income to
average net assets .............. 4.63%(a) 4.63% 4.94% 5.27%(a)
Ratio of expenses to average net
assets without fee waivers/
reimbursed expenses ............. 0.82%(a) 0.93% 0.88% 1.12%(a)
Ratio of net investment income
to average net assets without fee
waivers/reimbursed expenses ..... 4.63%(a) 4.49% 4.59% 4.34%(a)
Portfolio turnover rate ............. 26.99% 20.46% 19.11% 11.12%
</TABLE>
49
<PAGE>
THE WOODWARD FUNDS
BOND FUNDS
FINANCIAL HIGHLIGHTS (Continued)
<TABLE>
<CAPTION>
Michigan Municipal Bond Fund
---------------------------------------------------------------
Six Months
Ended
June 30, 1996 Year Ended Year Ended Period ended
(Unaudited) Dec. 31, 1995 Dec. 31, 1994 Dec. 31, 1993
--------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 10.60 $ 9.54 $ 10.60 $ 10.00
Income from investment operations:
Net investment income ........... 0.24 0.48 0.50 0.44
Net realized and unrealized
gains (losses) on investments (0.35) 1.06 (1.06) 0.59
----------- ----------- ----------- -----------
Total from investment operations .... (0.11) 1.54 (0.56) 1.03
----------- ----------- ----------- -----------
Less distributions:
From net investment
income ...................... (0.24) (0.48) (0.50) (0.43)
From realized gains ............. -- -- -- --
----------- ----------- ----------- -----------
Total distributions ................. (0.24) (0.48) (0.50) (0.43)
----------- ----------- ----------- -----------
Net asset value, end of
period .......................... $ 10.25 $ 10.60 $ 9.54 $ 10.60
=========== =========== =========== ===========
Total return (b) .................... (2.16)%(a) 6.49% (5.42)% 11.50%(a)
Ratios/Supplemental Data
Net assets, end of period ........... $55,003,003 $53,453,160 $45,263,059 $42,113,795
Ratio of expenses to average net
assets .......................... 0.82%(a) 0.79% 0.53% 0.19%(a)
Ratio of net investment income to
average net assets .............. 4.61%(a) 4.71% 5.01% 5.12%(a)
Ratio of expenses to average net
assets without fee waivers/
reimbursed expenses ............. 0.93%(a) 1.04% 1.05% 1.21%(a)
Ratio of net investment income
to average net assets without fee
waivers/reimbursed expenses ..... 4.50%(a) 4.46% 4.49% 4.10%(a)
Portfolio turnover rate ............. 11.77% 26.97% 25.93% 41.70%
<FN>
(a) Annualized for periods less than one year for comparability purposes.
Actual annual values may be less than or greater than those shown.
(b) Total returns as presented do not include any applicable sales load.
</TABLE>
50
<PAGE>
RESULTS OF SPECIAL SHAREHOLDER MEETING (Unaudited)
On July 10, 1996, July 31, 1996, and August 14, 1996 special meetings of
the shareholders of The Woodward Bond, Intermediate, Short Bond, Municipal ,
and MI. Municipal Funds were held to approve the following proposals.
The shareholders approved these proposals with respect to The Woodward
Bond, Intermediate, Short Bond, Municipal, and MI. Municipal Funds are as
follows:
1. To approve a new investment advisory agreement ("New Advisory
Agreement") between each Trust, NBD Bank ("NBD") and First Chicago
Investment Management Company ("FCIMCO")
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,307,211 318,154 328,809
Intermediate 22,944,773 1,432,426 257,485
Short Bond 10,433,399 10,526 90,755
Municipal 5,263,616 54,710 53,915
Mich Municipal 3,104,687 51,897 141,228
</TABLE>
2. To approve a change to the fundamental investment limitations of
each Fund of the Trust with regard to the following:
a) investment in commodities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 24,907,043 524,065 446,863
Intermediate 22,710,386 1,493,601 362,712
Short Bond Fund 10,294,683 104,488 113,532
Municipal 5,003,336 208,220 85,478
Mich Municipal 2,876,994 250,066 136,458
</TABLE>
b) expanded power to borrow
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 24,887,424 579,395 411,152
Intermediate 22,706,601 1,549,366 310,731
Short Bond 10,314,370 90,236 108,097
Municipal 4,957,872 227,516 111,645
Mich Municipal 2,961,040 147,333 155,146
</TABLE>
c) issuing senior securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,015,352 437,271 425,349
Intermediate 22,704,780 1,462,351 399,568
Short Bond 10,367,475 22,453 122,774
Municipal 5,033,294 164,206 99,534
Mich Municipal 3,044,629 77,656 141,234
</TABLE>
<PAGE>
3. To approve a change to the fundamental investment policies and
limitations of certain Funds of the Trusts, as follows:
a) to approve a change of the diversification policy of the
Municipal Bond Fund from a diversified to a non-diversified
policy
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Municipal 5,054,157 83,564 159,314
</TABLE>
c) to approve a change to the fundamental investment limitation
concerning concentration of investments in a particular industry
with respect to the Funds
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,012,877 436,057 429,038
Intermediate 22,840,260 1,441,641 284,798
Short Bond 10,366,391 54,576 91,735
Municipal 5,087,970 62,993 146,071
Mich Municipal 2,991,355 103,035 169,129
</TABLE>
4. To approve a change of the following fundamental policies and
limitations to non-fundamental policies and limitations:
a) limitation prohibiting investing, with respect to 50% of its
total assets, more than 5% of its assets in the securities of
any one issuer
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Mich Municipal 2,168,092 60,758 107,626
</TABLE>
b) limitation on investment in other investment companies
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,045,699 425,366 406,907
Intermediate 22,854,609 1,420,937 291,153
Short Bond 10,377,966 25,662 109,074
Municipal 5,084,746 94,580 117,708
Mich Municipal 3,001,967 125,664 135,887
</TABLE>
c) limitation on illiquid securities
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 24,980,768 430,468 466,736
Intermediate 22,802,881 1,453,967 309,851
Short Bond 10,343,453 60,175 109,074
Municipal 5,100,147 103,934 92,953
Mich Municipal 3,039,205 93,085 131,228
</TABLE>
d) limitation on purchasing securities on margin
<PAGE>
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,038,543 422,092 417,336
Intermediate 22,781,701 1,463,123 321,875
Short Bond 10,376,781 26,847 109,074
Municipal 5,062,732 111,188 123,113
Mich Municipal 3,056,357 76,237 130,924
</TABLE>
e) limitation on purchasing securities of companies for the
purpose of exercising control
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,026,946 426,973 424,053
Intermediate 22,811,628 1,450,797 304,275
Short Bond 10,378,176 25,452 109,074
Municipal 5,098,123 105,066 93,844
Mich Municipal 3,031,995 109,222 122,301
</TABLE>
f) limitation on writing or selling put options, call options,
straddles, spreads, or any combinations thereof
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,053,258 393,787 430,927
Short Bond 10,339,635 63,994 109,074
Municipal 5,018,571 172,826 105,638
Mich Municipal 3,072,261 68,957 122,301
</TABLE>
6. To ratify the appointment of two Trustees to the Board of Trustees of
each Trust.
Elected Trustees Current Trustees
Ms. Marilyn McCoy Mr. Will M. Caldwell Mr. Donald L. Tuttle
Mr. John P. Gould Dr. Nicholas J. DeGrazia Mr. Donald B. Sutherland
Mr. Julius L. Pallone
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,286,806 274,474 392,893
Intermediate 22,977,680 1,372,752 284,253
Short Bond 10,424,050 19,343 91,287
Municipal 5,289,174 7,953 75,115
Mich Municipal 3,116,022 43,973 137,817
</TABLE>
<PAGE>
7. To approve amendments to the Amended and Restated Declaration of
Trust of The Woodward Funds.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 39,811,506 469,411 499,440
Intermediate 26,239,768 1,436,755 306,806
Short Bond 14,526,132 75,598 159,476
Municipal 5,537,082 283,839 98,607
Mich Municipal 3,461,981 86,932 163,829
</TABLE>
8. To transact such other business as may properly come before the
Meetings or any adjournment thereof.
<TABLE>
<CAPTION>
Fund Affirmative Against Abstain
<S> <C> <C> <C>
Bond Fund 25,289,548 218,371 446,254
Intermediate 22,993,450 1,349,962 291,272
Short Bond 10,380,424 16,265 137,990
Municipal 5,267,301 37,135 67,805
Mich Municipal 3,139,579 22,433 135,800
</TABLE>
<PAGE>
[ BACK COVER ]
Investment Adviser:
NBD Bank
Detroit, Michigan 48226
Sponsors and Co-Distributors:
First of Michigan Corporation
Detroit, Michigan 48243
Essex National Securities, Inc.
Napa, California 94558
Custodian and Transfer Agent:
NBD Bank
Troy, Michigan 48007-7058
Legal Counsel:
Drinker Biddle & Reath
Philadelphia, Pennsylvania 19107-3496 [ WOODWARD FUNDS LOGO ]
- -------------------------------------------------------------------------------
The Woodward Funds ------------
P.O. Box 7058 BULK RATE
Troy, MI 48007-7058 U.S. POSTAGE
PAID
Detroit, MI
Permit No. 2
------------
