OCTOBER 31, 1996
ANNUAL REPORT
PORTICO FUNDS
MONEY MARKET
FUND
U.S. TREASURY
MONEY MARKET FUND
U.S. GOVERNMENT
MONEY MARKET FUND
TAX-EXEMPT
MONEY MARKET FUND
NOTICE TO INVESTORS
- - Shares of Portico Funds:
- ARE NOT INSURED BY THE FDIC, the US Government or any other governmental
agency;
- are not bank deposits or obligations of or guaranteed by Firstar Bank, its
parent company or its affiliates;
- are subject to investment risks, including possible loss of principal; and
- are offered by B.C. Ziegler and Company, member NASD, SIPC, and an
independent third-party distributor.
- - There can be no assurance that the money market funds will be able to
maintain a stable net asset value of $1.00 per share.
- - Firstar Bank affiliates serve as investment adviser, custodian, transfer
agent, administrator, and accounting services agent and receive compensation
for such services as disclosed in the current prospectus.
TABLE OF CONTENTS
Page(s)
SHAREOWNER LETTER...................................................1
PORTICO MONEY MARKET FUNDS YIELD COMPARISONS........................2
LOOKING AHEAD - THE FORECAST........................................2
STATEMENT OF ASSETS AND LIABILITIES.................................3
STATEMENT OF OPERATIONS.............................................4
STATEMENT OF CHANGES IN NET ASSETS..................................5
FINANCIAL HIGHLIGHTS...............................................6-7
SCHEDULE OF INVESTMENTS............................................8-13
NOTES TO FINANCIAL STATEMENTS.....................................14-15
REPORT OF INDEPENDENT ACCOUNTANTS...................................16
October, 1996
DEAR SHAREOWNER:
INVESTMENT REVIEW
Money market rates remained unusually steady over the past fiscal year. Short-
term interest rates moved approximately 50 basis points while the rest of the
bond market experienced much greater volatility with longer-term rates
fluctuating as much as 160 basis points. Concerns throughout the year for the
prospect of higher inflation kept short-term interest rates high on a real or
inflation-adjusted basis. However, restrained by global competition and
mitigated by technology-based productivity gains, inflation actually remained
subdued under 3%. "Real" yields on our money market funds remain attractive
when adjusted for the continued low levels of inflation.
Portico money market funds are managed with quality and safety of principal as
our primary goals. All securities purchased by the Funds must meet strict
guidelines set by the SEC for presenting minimal credit risk, as well as our own
high internal standards. Our credit research team closely monitors all
investments to ensure quality standards are met.
PORTICO MONEY MARKET FUNDS 7-DAY YIELDS<F1>
PERIOD ENDED OCTOBER 31, 1996
CURRENT EFFECTIVE
------- ---------
MONEY MARKET FUND 4.94% 5.06%
U.S. TREASURY
MONEY MARKET FUND 4.62% 4.73%
U.S. GOVERNMENT
MONEY MARKET FUND 4.80% 4.92%
TAX-EXEMPT
MONEY MARKET FUND 3.07% 3.12%
<F1> After fee waivers. Had fees not been waived, current and effective yields
would have been 4.72% and 4.84% for the Money Market Fund; 4.41% and 4.52% for
the U.S. Treasury Money Market Fund; 4.68% and 4.80% for the U.S. Government
Money Market Fund; and 2.89% and 2.94% for the Tax-Exempt Money Market Fund,
respectively. Reflects past performance; yields will vary. An investment in any
one of the Portico money market funds is neither insured nor guaranteed by the
U.S. Government nor is there any assurance the Funds will be able to maintain a
stable net asset value of $1.00 per share.
Current yield refers to income earned by a fund's investments over a 7-day
period. It is then annualized and stated as a percentage of the investment.
Effective yield is the same as current yield except that it assumes the income
earned by an investment in a fund will be reinvested.
<TABLE>
PORTICO MONEY MARKET FUNDS YIELD COMPARISONS<F2>
<CAPTION>
AVERAGE DONOGHUE'S
MONTHLY MONEY
RATES PORTICO FUND
DONOGHUE'S DONOGHUE'S PORTICO DONOGHUE'S TAX-EXEMPT AVERAGETM/
DONOGHUE'S PORTICO MONEY PORTICO MONEY TAX- MONEY MONEY ALL TAX FREE
PORTICO MONEY FUND U.S. TREASURY FUND U.S. GOV'T. FUND EXEMPT FUND MARKET TAX TAX
MONEY AVERAGE TM/ MONEY AVERAGETM/ MONEY AVERAGETM/ MONEY AVERAGETM/ EQUIVALENT EQUIVALENT
MARKET ALL TAXABLE MARKET U.S. TREASURY MARKET GOV'T. MARKET ALL TAX-FREE YIELD YIELD<F3>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996
- ----
October 4.96% 4.82% 4.65% 4.61% 4.81% 4.65% 3.06% 2.96% 4.78% 4.63%
September 4.90% 4.83% 4.68% 4.63% 4.84% 4.66% 3.10% 3.00% 4.84% 4.69%
August 4.91% 4.82% 4.67% 4.60% 4.83% 4.65% 3.08% 2.98% 4.81% 4.66%
July 4.87% 4.81% 4.60% 4.56% 4.81% 4.64% 2.74% 2.67% 4.28% 4.17%
June 4.82% 4.77% 4.57% 4.53% 4.76% 4.60% 2.89% 2.88% 4.52% 4.50%
May 4.77% 4.74% 4.56% 4.50% 4.74% 4.57% 3.28% 3.16% 5.13% 4.94%
April 4.76% 4.75% 4.58% 4.52% 4.72% 4.58% 3.05% 2.97% 4.77% 4.64%
March 4.79% 4.76% 4.53% 4.50% 4.71% 4.60% 2.85% 2.79% 4.45% 4.36%
February 4.92% 4.83% 4.65% 4.61% 4.79% 4.64% 2.86% 2.85% 4.47% 4.45%
January 5.11% 5.05% 4.92% 4.75% 5.01% 4.85% 3.06% 2.97% 4.78% 4.64%
1995
- ----
December 5.20% 5.19% 4.90% 4.89% 5.10% 5.01% 3.57% 3.52% 5.58% 5.50%
November 5.22% 5.23% 4.93% 4.90% 4.90% 5.05% 3.35% 3.29% 5.23% 5.14%
We compare our Funds to the IBC/Donoghue's Money Fund Averages, which are composites of professionally managed money market
investmentfunds with similar objectives.
<FN>
<F2>After fee waivers. Had fees not been waived, performance would be reduced. Reflects past performance; yields will vary. An
investment in any one of the Portico money market funds is neither insured nor guaranteed by the U.S. Government nor is there any
assurance the Funds will be able to maintain a stable net asset value of $1.00 per share.
<F3>Assumes a 36% tax bracket.
</TABLE>
LOOKING AHEAD - THE FORECAST
Our forecast calls for continued moderate Gross Domestic Product (GDP) and
fairly low levels of inflation in the 2-4% range. We expect money market rates
to remain stable and possibly fall over the next several months and anticipate
at least maintaining an average maturity comparable to, or slightly longer than,
the industry benchmarks. The high credit quality of our money market funds
continues to be reinforced by strong corporate earnings.
We continue to pride ourselves on having met three important objectives for our
money market shareowners: preservation of principal, liquidity and competitive
investment income. We believe these principles, combined with a disciplined
approach to quality, continue to be appropriate for our money market investors.
We appreciate your continued confidence in the Portico money market funds and
look forward to working with you in the future.
Jane T. Keelan
Carl J. Smith
Margaret Radske
Portfolio Managers
Firstar Investment Research & Management Company
STATEMENT OF ASSETS AND LIABILITIES
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OCTOBER 31, 1996
U.S. U.S.
TREASURY GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND
----------- ----------- ----------- -----------
ASSETS:
Investments, at
amortized cost $224,990 $52,829 $198,785 $78,948
Interest receivable 78 851 450 640
Other 20 2 3 5
-------- -------- -------- --------
Total Assets 225,088 53,682 199,238 79,593
-------- -------- -------- --------
LIABILITIES:
Dividends payable 916 192 754 190
Payable to affiliates 99 33 109 48
Accrued expenses and
other liabilities 37 27 41 27
-------- -------- -------- --------
Total Liabilities 1,052 252 904 265
-------- -------- -------- --------
NET ASSETS $224,036 $53,430 $198,334 $79,328
======== ======== ======== ========
CAPITAL STOCK, $.0001
par value
Authorized 5,000,000 5,000,000 5,000,000 5,000,000
Issued and outstanding 224,036 53,430 198,334 79,328
NET ASSET VALUE,
REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $1.00 $1.00 $1.00 $1.00
======== ======== ======== ========
See notes to the financial statements.
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
YEAR ENDED OCTOBER 31, 1996
U.S. U.S.
TREASURY GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY MONEY
MARKET FUND MARKET FUND MARKET FUND MARKET FUND
----------- ----------- ----------- -----------
INVESTMENT INCOME:
Interest income $10,727 $3,322 $10,456 $2,920
-------- -------- -------- --------
EXPENSES:
Investment advisory fees 969 313 962 396
Administration fees 221 72 220 90
Service organization fees 40 - - -
Custody fees 38 18 45 21
Shareowner servicing and
accounting costs 188 47 62 54
Professional fees 21 20 24 23
Reports to shareowners 61 11 14 10
Federal and state
registration fees 31 13 28 14
Directors' fees and expenses 5 6 5 5
Other 3 3 4 3
-------- -------- -------- --------
Total expenses before
waiver 1,577 503 1,364 616
Less: Waiver of expenses (414) (127) (210) (141)
-------- -------- -------- --------
Net Expenses 1,163 376 1,154 475
-------- -------- -------- --------
NET INVESTMENT INCOME $ 9,564 $2,946 $ 9,302 $2,445
======== ======== ======== ========
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
(AMOUNTS IN THOUSANDS)
U.S. TREASURY
MONEY MARKET FUND MONEY MARKET FUND
----------------- -----------------
Year ended Oct. 31, Year ended Oct. 31,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
OPERATIONS:
Net investment income $ 9,564 $ 8,443 $ 2,946 $ 2,992
-------- -------- -------- --------
Increase in net assets
resulting from
operations 9,564 8,443 2,946 2,992
-------- -------- -------- --------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 537,145 601,835 187,850 205,921
Shares issued to
owners in
reinvestment
of dividends 8,880 7,100 315 283
Shares redeemed (494,250) (601,692) (199,390) (197,569)
-------- -------- -------- --------
Net increase (decrease) 51,775 7,243 (11,225) 8,635
-------- -------- -------- --------
DIVIDENDS PAID FROM:
Net investment income (9,564) (8,443) (2,946) (2,992)
-------- -------- -------- --------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS 51,775 7,243 (11,225) 8,635
NET ASSETS:
Beginning of year 172,261 165,018 64,655 56,020
-------- -------- -------- --------
End of year $224,036 $172,261 $ 53,430 $ 64,655
======== ======== ======== ========
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
(AMOUNTS IN THOUSANDS)
U.S. GOVERNMENT TAX-EXEMPT
MONEY MARKET FUND MONEY MARKET FUND
----------------- -----------------
YEAR ENDED OCT. 31, YEAR ENDED OCT. 31,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
OPERATIONS:
Net investment income $ 9,302 $ 9,076 $ 2,445 $ 2,359
-------- -------- -------- --------
Increase in net assets
resulting from
operations 9,302 9,076 2,445 2,359
-------- -------- -------- --------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 945,438 875,356 156,757 182,982
Shares issued to
owners in
reinvestment
of dividends 2,681 2,649 990 884
Shares redeemed (912,853) (898,528) (162,503) (170,218)
-------- -------- -------- --------
Net increase (decrease) 35,266 (20,523) (4,756) 13,648
-------- -------- -------- --------
DIVIDENDS PAID FROM:
Net investment income (9,302) (9,076) (2,445) (2,359)
-------- -------- -------- --------
TOTAL INCREASE
(DECREASE) IN
NET ASSETS 35,266 (20,523) (4,756) 13,648
NET ASSETS:
Beginning of year 163,068 183,591 84,084 70,436
-------- -------- -------- --------
End of year $198,334 $163,068 $ 79,328 $ 84,084
======== ======== ======== ========
See notes to the financial statements.
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
------------------
Year ended October 31,
--------------------------------------------------
1996 1995 1994 1993 1992<F4>
---- ---- ---- ---- -------
Per Share Data:
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment
income<F5> 0.05 0.05 0.03 0.03 0.04
----- ----- ----- ----- -----
Total from investment
operations 0.05 0.05 0.03 0.03 0.04
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.03) (0.03) (0.04)
----- ----- ----- ----- -----
Total distributions (0.05) (0.05) (0.03) (0.03) (0.04)
----- ----- ----- ----- -----
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return 5.06% 5.51% 3.42% 2.71% 3.73%
Supplemental data and ratios:
Net assets, in
thousands,
end of period $224,036 $172,261 $165,018 $132,568 $146,012
Ratio of net
expenses to
average net assets 0.60% 0.60% 0.60% 0.60% 0.58%
Ratio of net
investment
income to average
net assets 4.94% 5.36% 3.44% 2.67% 3.84%
FINANCIAL HIGHLIGHTS (CONTINUED)
U.S. TREASURY
MONEY MARKET FUND
-----------------
Year ended October 31,
--------------------------------------------------
1996 1995 1994 1993 1992<F4>
---- ---- ---- ---- -------
Per Share Data:
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment
income<F5> 0.05 0.05 0.03 0.03 0.04
----- ----- ----- ----- -----
Total from investment
operations 0.05 0.05 0.03 0.03 0.04
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.03) (0.03) (0.04)
----- ----- ----- ----- -----
Total distributions (0.05) (0.05) (0.03) (0.03) (0.04)
----- ----- ----- ----- -----
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return 4.80% 5.16% 3.20% 2.59% 3.48%
Supplemental data and ratios:
Net assets, in
thousands,
end of period $53,430 $64,655 $56,020 $40,744 $37,342
Ratio of net
expenses to
average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment
income to average
net assets 4.70% 5.04% 3.14% 2.55% 3.42%
FINANCIAL HIGHLIGHTS (CONTINUED)
U.S. GOVERNMENT
MONEY MARKET FUND
-----------------
Year ended October 31,
--------------------------------------------------
1996 1995 1994 1993 1992<F4>
---- ---- ---- ---- -------
Per Share Data:
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment
income<F5> 0.05 0.05 0.03 0.03 0.04
----- ----- ----- ----- -----
Total from investment
operations 0.05 0.05 0.03 0.03 0.04
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.05) (0.05) (0.03) (0.03) (0.04)
----- ----- ----- ----- -----
Total distributions (0.05) (0.05) (0.03) (0.03) (0.04)
----- ----- ----- ----- -----
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return 4.96% 5.37% 3.35% 2.63% 3.60%
Supplemental data and ratios:
Net assets, in
thousands,
end of period $198,334 $163,068 $183,591 $203,165 $221,521
Ratio of net
expenses to
average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
Ratio of net investment
income to average
net assets 4.84% 5.24% 3.29% 2.59% 3.56%
FINANCIAL HIGHLIGHTS (CONTINUED)
TAX-EXEMPT
MONEY MARKET FUND
------------------
Year ended October 31,
-------------------------------------------------
1996 1995 1994 1993 1992<F4>
---- ---- ---- ---- -------
Per Share Data:
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment
income<F5> 0.03 0.03 0.02 0.02 0.03
----- ----- ----- ----- -----
Total from investment
operations 0.03 0.03 0.02 0.02 0.03
----- ----- ----- ----- -----
Less distributions:
Dividends from net
investment income (0.03) (0.03) (0.02) (0.02) (0.03)
----- ----- ----- ----- -----
Total distributions (0.03) (0.03) (0.02) (0.02) (0.03)
----- ----- ----- ----- -----
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return 3.13% 3.42% 2.25% 2.17% 2.91%
Supplemental data and ratios:
Net assets, in
thousands,
end of period $79,328 $84,084 $70,436 $73,621 $74,343
Ratio of net
expenses to
average net assets 0.60% 0.60% 0.60% 0.60% 0.60%
income to average
net assets 3.09% 3.36% 2.23% 2.12% 2.83%
<F4>Effective February 3, 1992, FIRMCO assumed the investment advisory
responsibilities of Firstar Trust Company.
<F5>For the Tax-Exempt Money Market Fund, substantially all investment income
is exempt from Federal income tax.
See notes to the financial statements.
MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
COMMERCIAL PAPER - 93.9%
ASSET BACKED SECURITY - 8.0%
Ciesco L.P.,
$4,500 5.35%, 12/03/96 $ 4,479
Corporate Asset Funding Co., Inc.,
5,000 5.45%, 12/12/96 4,969
New Center Asset Trust,
4,000 5.51%, 11/07/96 3,996
4,500 5.40%, 1/16/97 4,449
--------
17,893
--------
AUTOS & TRUCKS - 4.2%
Ford Credit Europe PLC,
4,500 5.56%, 1/21/97 4,444
Ford Motor Credit Company,
5,000 5.26%, 12/18/96 4,965
--------
9,409
--------
BANKING - FOREIGN - 2.0%
Dresdner US Financial,
4,500 5.32%, 12/13/96 4,472
--------
BASIC INDUSTRY - 5.8%
Monsanto Company,
4,000 5.48%, 12/11/96 3,976
U.S. Borax & Chemical Corporation,
4,500 5.29%, 11/20/96 4,487
4,500 5.30%, 11/26/96 4,484
--------
12,947
--------
BEVERAGES - 2.0%
Bass Finance (C.I.) Ltd.,
4,500 5.48%, 12/10/96 4,473
--------
CONGLOMERATES - 8.6%
Mitsubishi International Corporation,
4,500 5.34%, 11/05/96 4,497
5,000 5.45%, 1/10/97 4,947
Philip Morris Companies, Inc.,
5,000 5.32%, 1/13/97 4,946
5,000 5.31%, 1/24/97 4,938
--------
19,328
--------
CONSUMER STAPLES - 2.2%
Hitachi America, Ltd.,
5,000 5.34%, 11/15/96 4,990
--------
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- ------------
DRUGS - 4.5%
Sandoz Corporation,
$5,000 5.40%, 11/01/96 $ 5,000
5,000 5.40%, 11/06/96 4,996
--------
9,996
--------
ELECTRONICS - 1.8%
Panasonic Finance Inc.,
4,000 5.45% 11/04/96 3,998
--------
FINANCE - MISCELLANEOUS - 20.8%
American Express Co.,
5,000 5.26%, 12/23/96 4,962
5,000 5.32%, 1/23/97 4,939
CIT Group Holdings, Inc.,
4,500 5.34%, 12/26/96 4,463
General Electric Capital Corporation,
5,000 5.40%, 11/12/96 4,992
5,000 5.31%, 1/28/97 4,935
Household Finance Corporation,
4,500 5.32%, 1/08/97 4,455
5,000 5.32%, 2/03/97 4,930
Swedish Export Credit Corporation,
4,000 5.30%, 12/02/96 3,982
Transamerica Finance Corporation,
4,000 5.30% 11/18/96 3,990
5,000 5.39%, 1/31/97 4,932
--------
46,580
--------
FINANCE - SERVICES - 8.4%
Merrill Lynch and Co., Inc.,
5,000 5.34%, 1/07/97 4,950
5,000 5.37%, 1/27/97 4,935
Morgan Stanley Group, Inc.,
4,500 5.30%, 11/14/96 4,492
4,500 5.30%, 11/19/96 4,488
--------
18,865
--------
INSURANCE - 12.7%
American Family Financial Services, Inc.,
4,000 5.38%, 12/16/96 3,973
American General Corporation,
4,500 5.32%, 1/14/97 4,451
ITT Hartford Group, Inc.,
5,000 5.33%, 1/17/97 4,943
John Hancock Capital Corp.,
5,770 5.32%, 1/15/97 5,706
Prudential Funding Corporation,
4,500 5.32%, 11/27/96 4,483
5,000 5.32%, 1/09/97 4,949
--------
28,505
--------
MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
RETAIL - 2.2%
J.C. Penney Company, Inc.
$5,000 5.31%, 1/22/97 $ 4,940
--------
SOVEREIGN - 6.5%
Kingdom of Sweden,
4,500 5.50%, 11/25/96 4,484
2,000 5.31%, 12/06/96 1,990
3,500 5.30%, 12/13/96 3,478
Quebec Province of Canada,
4,500 5.30%, 11/22/96 4,486
--------
14,438
--------
TECHNOLOGY - 2.0%
Xerox Corporation,
4,500 5.32%, 12/05/96 4,477
--------
UTILITIES - 2.2%
Ontario Hydro,
5,000 5.43%, 12/09/96 4,971
--------
Total Commercial Paper 210,282
--------
VARIABLE RATE DEMAND NOTES - 3.1%
7,000 WPL Holdings Demand Note 7,000
--------
Total Variable Rate Demand Notes 7,000
--------
Number Amortized
of Shares Cost
(in thousands) (in thousands)
------------- -------------
INVESTMENT COMPANIES - 3.4%
1,130 Financial Square Prime Obligation Fund $ 1,130
6,578 Short-Term Investments Co.
Liquid Assets Portfolio 6,578
--------
Total Investment Companies 7,708
--------
Total Investments 100.4% 224,990
--------
Liabilities, less Other Assets (0.4)% (954)
--------
NET ASSETS 100.0% $224,036
========
See notes to the financial statements.
U.S. TREASURY MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
U.S. TREASURIES - 91.0%
U.S. TREASURY NOTES - 72.1%
$4,000 4.38%, 11/15/96 $ 3,999
8,000 7.25%, 11/15/96 8,005
5,500 7.50%, 12/31/96 5,520
8,000 8.00%, 1/15/97 8,039
1,000 6.25%, 1/31/97 1,002
4,500 7.50%, 1/31/97 4,523
3,000 4.75%, 2/15/97 2,994
1,500 6.88%, 2/28/97 1,507
2,900 8.50%, 4/15/97 2,940
--------
38,529
--------
U.S. TREASURY BILLS - 18.9%
8,500 4.21%, 11/07/96 8,493
1,600 4.86%, 12/12/96 1,591
--------
10,084
--------
Total U.S. Treasuries 48,613
--------
Number
of Shares
(in thousands)
INVESTMENT COMPANIES - 7.9%
1,696 Institutional Liquid Assets
Treasury Instruments Portfolio 1,696
2,520 Short-Term Investments Co.
Treasury Tax Advantage Portfolio 2,520
--------
Total Investment Companies 4,216
--------
Total Investments 98.9% 52,829
--------
Other Assets, less Liabilities 1.1% 601
--------
NET ASSETS 100.0% $53,430
========
See notes to the financial statements.
U.S. GOVERNMENT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
U.S. GOVERNMENT AGENCIES - 86.6%
FEDERAL FARM CREDIT BANK - 19.0%
Federal Farm Credit Bank Discount Notes:
$5,000 5.25%, 11/05/96 $ 4,997
5,000 5.25%, 11/06/96 4,996
5,000 5.27%, 11/25/96 4,982
4,000 5.17%, 12/05/96 3,980
5,700 5.29%, 12/06/96 5,671
5,000 5.15%, 12/27/96 4,960
3,170 5.21%. 1/06/97 3,140
5,000 5.21%, 1/09/97 4,950
--------
37,676
--------
FEDERAL HOME LOAN BANK - 2.2%
Federal Home Loan Bank Discount Note,
4,500 5.40%, 11/15/96 4,491
--------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 20.2%
Federal Home Loan Mortgage Corporation Discount Notes:
5,000 5.23%, 11/12/96 4,992
3,000 5.19%, 11/19/96 2,992
4,000 5.18%, 12/09/96 3,978
4,000 5.19%, 12/11/96 3,977
3,500 5.33%, 12/12/96 3,479
4,500 5.18%, 12/16/96 4,471
4,000 5.20%, 12/16/96 3,974
3,000 5.22%, 1/08/97 2,971
5,000 5.23%, 1/10/97 4,949
4,439 5.23%, 2/03/97 4,378
--------
40,161
--------
FEDERAL NATIONAL MORTGAGE ASSN. - 21.8%
Federal National Mortgage Assn. Discount Notes:
5,000 5.23%, 11/14/96 4,991
5,000 5.19%, 11/18/96 4,988
4,000 5.22%, 11/21/96 3,988
5,000 5.38%, 11/27/96 4,981
5,000 5.34%, 12/03/96 4,976
5,000 5.34%, 12/13/96 4,969
5,000 5.21%, 1/16/97 4,945
4,500 5.22%, 1/22/97 4,446
5,000 5.24%, 1/29/97 4,935
--------
43,219
--------
OTHER - 2.5%
Tennessee Valley Authority Discount Note,
5,000 5.20%, 11/04/96 4,998
--------
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
STUDENT LOAN MARKETING ASSN.- 19.8%
Student Loan Marketing Assn. Discount Notes:
$ 5,000 5.27%, 12/18/96 $ 4,966
4,000 5.18%, 12/31/96 3,965
Student Loan Marketing Assn. Floating Rate Notes:
13,500 5.39%, 12/20/96 <F6> 13,498
3,810 5.53%, 10/30/97 <F6> 3,812
5,000 5.53%, 11/20/97 <F6> 5,002
8,000 5.43%, 4/21/98 <F6> 7,998
--------
39,241
--------
GOVERNMENT BOND - 1.1%
Government Trust Certificates, Class 2-D,
2,138 9.25%, 11/15/96 2,139
--------
Total U.S. Government Agencies 171,925
--------
U.S. TREASURIES - 5.6%
U.S. TREASURY NOTES:
6,000 6.75%, 2/28/97 6,026
5,000 6.88%, 3/31/97 5,023
--------
Total U.S. Treasuries 11,049
--------
Number
of Shares
(in thousands)
-------------
INVESTMENT COMPANIES - 8.0%
6,484 Financial Square Government Obligation Fund 6,484
9,327 Short-Term Investments Co. Treasury Portfolio 9,327
--------
Total Investment Companies 15,811
--------
Total Investments 100.2% 198,785
--------
Liabilities, less Other Assets (0.2)% (451)
--------
NET ASSETS 100.0% $198,334
========
<F6> Stated maturity with weekly interest rate reset
See notes to the financial statements.
TAX-EXEMPT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
GENERAL OBLIGATION - 2.3%
Connecticut State Series C,
$ 900 4.50%, 3/15/97 $ 903
Honolulu, Hawaii, City and County,
500 7.15%, 7/01/97 510
Northwestern Mutual Life,
400 4.50%, 2/15/09<F7><F8> 400
--------
Total General Obligation 1,813
--------
NOTES AND BONDS - 8.1%
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL REVENUE- 3.8%
Illinois Development Finance Authority,
2,000 Enterprise Office, 3.85%, 12/01/17<F7><F8> 2,000
Sauget Illinois Regional Wastewater
1,000 Treatment, 4.20%, 5/01/97 1,001
--------
3,001
--------
UNIVERSITY REVENUE- 4.3%
Cook County, Illinois, Community College District,
3,390 7.70%, 1/01/97 3,412
--------
Total Notes and Bonds 6,413
--------
PREREFUNDED AND ESCROWED
TO MATURITY - 15.0%
District Of Columbia - Series A,
1,000 7.75%, 6/01/01, Prerefunded 6/01/97 1,036
Du Page Water Commission, Illinois,
1,000 6.875%, 5/01/14, Prerefunded 5/01/97 1,035
Indian Trace Community Development District, Florida,
700 8.75%, 5/01/07, Prerefunded 5/01/97 730
Interstate South Metropolitan District, Colorado,
1,000 9.50%, 12/01/06, Prerefunded 12/01/96 1,015
Kenosha, Wisconsin, Unified School District,
500 5.40%, Escrowed to Maturity 4/01/97 503
Kentucky State Turnpike Authority:
1,120 13.125%, 7/01/09, Prerefunded 7/01/97 1,185
990 6.20%, 7/01/11, Prerefunded 7/02/97 1,004
Laporte County, Indiana, Hospital Authority,
1,500 8.75%, 3/01/12, Prerefunded 3/01/97 1,555
Maine Municipal Bond Bank,
665 6.30%, 11/01/99, Prerefunded 11/01/96 672
Pottsville Pennsylvania Hospital Authority, Good
3,050 Samaritan, 8.25%, 8/01/12, Prerefunded 8/01/97 3,201
--------
Total Prerefunded and Escrowed to Maturity 11,936
--------
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
REVENUE BONDS - 68.4%
(DAILY/WEEKLY/MONTHLY PUT BONDS)
ELECTRIC REVENUE - 6.4%
County of Mason, Kentucky, Series 1984B,
$2,050 3.60%, 10/15/14<F7> $ 2,050
Putnam County, Florida Development Authority -
2,985 Seminole Electric, 3.60%, 3/15/14<F7> 2,985
--------
5,035
--------
HOSPITAL REVENUE - 19.8%
Illinois Development Finance Authority, Ulhich
2,700 Children's Home, 3.55%, 4/01/07<F7> 2,700
Indiana Health Facilities Finance Authority,
3,100 3.55%, 12/01/02<F7> 3,100
Jefferson Parish, Louisiana, Hospital,
2,600 3.55%, 12/01/15<F7> 2,600
Louisiana PFA Hospital Equipment,
1,300 3.90%, 12/01/05<F7> 1,300
West Virginia State Hospital Finance Authority -
500 St. Joseph's Hospital Project, 3.60%, 10/01/10<F7> 500
Wisconsin State Health & Educational Facilities -
2,000 Blood Center, 3.65%, 6/01/19<F7> 2,000
Wisconsin State Health & Educational Facilities -
3,500 Marshfield Clinic, 3.60%, 6/01/10<F7> 3,500
--------
15,700
--------
HOUSING REVENUE - 16.4%
Broward County, Florida, Housing Finance Authority -
2,000 Quiet Creek Apartments, 3.65%, 12/01/29<F7> 2,000
Dade County, Florida, Housing Finance Authority,
1,600 3.80%, 8/01/05<F7> 1,600
Dade County, Florida, Housing Finance Authority,
1,800 Nob Hill Project Series 1, 3.80%, 12/01/29<F7> 1,800
Illinois Development Finance Authority -
1,625 St. Paul's House, 3.60%, 2/01/25<F7> 1,625
Industrial Development Authority of St. Louis,
2,990 3.80%, 2/01/07<F7> 2,990
Orland Hills, Illinois, Multi-Family,
2,470 3.60%, 12/01/04<F7> 2,470
Washington State Housing Finance - Community
555 Multifamily Mortgage, 3.60%, 10/01/20<F7> 555
--------
13,040
--------
INDUSTRIAL DEVELOPMENT/POLLUTION
CONTROL REVENUE - 10.7%
Moffat County, Colorado, Pollution Control,
1,800 3.55%, 7/01/10<F7> 1,800
Oakbrook Terrace, Illinois Industrial Development,
4,100 3.65%, 12/01/25<F7> 4,100
Oklahoma County, Oklahoma Finance Authority -
2,600 Perrine Office Project, 4.10%, 12/01/14<F7> 2,600
--------
8,500
--------
TAX-EXEMPT MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
Principal Amortized
Amount Cost
(in thousands) (in thousands)
------------- -------------
MISCELLANEOUS - 5.7%
Glendale, California, Reliance Development
$1,000 Public Parking, 3.40%, 12/01/14<F7> $ 1,000
Illinois Development Finance Authority,
1,500 Presbyterian Home Lake-A, 3.60%, 9/01/31<F7> 1,500
Illinois Educational Facilities Authority,
2,000 Chicago Zoological, 3.65%, 12/15/25<F7> 2,000
--------
4,500
--------
POOLED GOVERNMENT AUTHORITY REVENUE - 2.5%
Illinois Educational Facilities Authority,
2,000 Cultural Pool, 3.50%, 12/01/25<F7> 2,000
--------
UNIVERSITY REVENUE - 6.9%
Illinois Development Finance Authority - Aurora -
2,500 Central Catholic High School, 3.60%, 4/01/24<F7> 2,500
Illinois Development Finance Authority -
3,000 St. Ignatius College Prep, 3.60%, 6/01/24<F7> 3,000
--------
5,500
--------
Total Revenue Bonds 54,275
--------
Number Amortized
of Shares Cost
(in thousands) (in thousands)
------------- -------------
INVESTMENT COMPANIES - 5.7%
3,651 Financial Square Tax-Exempt Money Market Fund $ 3,651
860 Tax Free Cash Reserves 860
--------
Total Investment Companies 4,511
--------
Total Investments 99.5% 78,948
--------
Other Assets, less Liabilities 0.5% 380
--------
NET ASSETS 100.0% $79,328
========
<F7> Variable rate security
<F8> Stated maturity with option to put
See notes to the financial statements.
MONEY MARKET FUND
U.S. TREASURY MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
TAX-EXEMPT MONEY MARKET FUND
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION
Portico Funds, Inc. (the "Company") was incorporated on February 15, 1988, as
a Wisconsin Corporation and is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended. The Money Market,
U.S. Treasury Money Market (formerly the U.S. Federal Money Market Fund), U.S.
Government Money Market and Tax-Exempt Money Market Funds (the "Funds") are
separate, diversified investment portfolios of the Company. The Money Market,
U.S. Treasury Money Market, U.S. Government Money Market and Tax-Exempt Money
Market Funds commenced operations on March 16, 1988, April 29, 1991, August 1,
1988 and June 27, 1988, respectively.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - The securities are valued on the basis of amortized
cost for financial reporting purposes and federal income tax purposes, which
approximates market value. Variable rate demand notes are valued at cost which
approximates market value.
b) Federal Income Taxes - No provision for federal income taxes has been made
since the Funds have complied with the provisions of the Internal Revenue Code
available to regulated investment companies and intend to continue to so comply
in future years.
c) Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
d) Expenses - The Funds are charged for those expenses that are directly
attributable to each portfolio such as advisory, administration, service
organization fees and certain shareowner service fees. Expenses that are not
directly attributable to a portfolio are typically allocated among the Company's
portfolios in proportion to their respective net assets, number of shareowner
accounts or net sales, where applicable.
e) Distributions to Shareowners - Dividends from net investment income are
declared daily and paid monthly. Distributions of net realized capital gains, if
any, will be declared at least annually.
f) Other - The Funds recognize interest income on the accrual basis. For
securities with put provisions, discounts and premiums are amortized to the
earlier of the put date or maturity. For the remainder of securities, discounts
and premiums are amortized over the life of the respective securities.
Investment and shareowner transactions are recorded no later than the first
business day after the trade date. Realized gains and losses from investment
transactions are reported on an identified cost basis which is the same basis
the Funds use for federal income tax purposes. The U.S. Government Money Market
Fund has investments in floating rate government agency notes. The notes have
weekly interest rate reset provisions which are tied to the 90-day Treasury bill
rate. The Fund values the securities at amortized cost, which approximates
market. Transactions in capital shares at $1.00 per share are shown in the
Statement of Changes in Net Assets. Generally accepted accounting principles
require that permanent financial reporting and tax differences be reclassified
to capital stock.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have entered into an Investment Advisory Agreement with Firstar
Investment Research & Management Company ("FIRMCO"). FIRMCO is a subsidiary of
Firstar Corporation, a publicly held bank holding company. Pursuant to its
Advisory Agreement with the Funds, FIRMCO is entitled to receive a fee,
calculated daily and payable monthly, at the annual rate of 0.50% on the first
$2 billion of each Fund's average daily net assets, and 0.40% of each Fund's
average daily net assets in excess of $2 billion. For the year ended October 31,
1996, FIRMCO voluntarily waived $266, $85, $75 and $88 of its advisory fees, in
thousands, for the Money Market, U.S. Treasury Money Market, U.S. Government
Money Market and Tax-Exempt Money Market Funds, respectively.
Firstar Trust Company, an affiliate of FIRMCO, serves as custodian, transfer
agent and accounting services agent for the Funds.
The Company has entered into a Co-Administration Agreement with B.C. Ziegler
and Company and Firstar Trust Company (the "Co-Administrators") for certain
administrative services. Pursuant to the Co-Administration Agreement with the
Company, the Co-Administrators are entitled to receive a fee, computed daily and
payable monthly, at the annual rate of 0.125% of the Company's first $2 billion
of average aggregate daily net assets plus 0.10% of the Company's average
aggregate daily net assets in excess of $2 billion. For the year ended October
31, 1996, $148, $42, $135 and $53 of administration fees, in thousands, were
voluntarily waived for the Money Market, U.S. Treasury Money Market, U.S.
Government Money Market and Tax-Exempt Money Market Funds, respectively.
The Funds have adopted a Service and Distribution Plan (the "Plan") pursuant
to Rule 12b-1 of the Investment Company Act of 1940. The Money Market Fund
incurred $40, in thousands, for the year ended October 31, 1996. The U.S.
Government Money Market, U.S. Treasury Money Market and Tax-Exempt Money Market
Funds incurred no expenses pursuant to the Plan during the year ended October
31, 1996.
Each Director of the Company who is not affiliated with FIRMCO receives an
annual fee from the Company for service as a Director and is eligible to
participate in a deferred compensation plan with respect to these fees.
Participants in the plan may designate their deferred Director's fees as if
invested in any one of the Portico Funds (with the exception of the MicroCap
Fund)or in 90-day U.S. Treasury bills. The value of each Director's deferred
compensation account will increase or decrease as if it were invested in shares
of the selected Portico Funds or 90-day U.S. Treasury bills. The Funds maintain
their proportionate share of the Company's liability for deferred fees.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF THE PORTICO MONEY MARKET FUND, THE
PORTICO U.S. TREASURY MONEY MARKET FUND, THE PORTICO U.S. GOVERNMENT MONEY
MARKET FUND AND THE PORTICO TAX-EXEMPT MONEY MARKET FUND
In our opinion, the accompanying statement of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Portico Money Market Fund, the
Portico U.S. Treasury Money Market Fund, the Portico U.S. Government Money
Market Fund and the Portico Tax-Exempt Money Market Fund (four of the portfolios
of Portico Funds, Inc. (the "Funds")) at October 31, 1996, the results of each
of their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, all in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1996 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
/S/Price Waterhouse LLP
Milwaukee, Wisconsin
December 6, 1996
- - Portico Funds are available through:
- the Portico Funds Center,
- Investment Specialists who are registered representatives of Elan
Investment Services, Inc., a registered broker/dealer, NASD and SIPC
member,
- and through selected shareholder organizations.
This report is authorized for distribution only when preceded or accompanied by
a current prospectus.
TO OPEN AN ACCOUNT OR
REQUEST INFORMATION
1-800-982-8909
1-414-287-3710
FOR ACCOUNT BALANCES AND
INVESTOR SERVICES
1-800-228-1024
1-414-287-3808
PORTICO FUNDS CENTER
615 East Michigan Street
P.O. Box 3011
Milwaukee, WI53201-3011
NASD Ref #C96-1129-001
