APRIL 30, 1997
SEMI-
ANNUAL
REPORT
INSTITUTIONAL CLASS
(LOGO)
SHORT-TERM
BOND MARKET FUND
INTERMEDIATE
BOND MARKET FUND
TAX-EXEMPT
INTERMEDIATE BOND FUND
BOND IMMDEX/TM
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.
- - 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...................................................1-2
THE ECONOMY ROLLS ON, THE FED RESPONDS..............................3-5
LOOKING AHEAD - THE FORECAST.........................................5
SHORT-TERM BOND MARKET FUND REVIEW..................................6-7
INTERMEDIATE BOND MARKET FUND REVIEW................................8-9
TAX-EXEMPT INTERMEDIATE BOND FUND REVIEW...........................10-11
BOND IMMDEX/TM FUND REVIEW.........................................12-13
STATEMENT OF ASSETS AND LIABILITIES..................................14
STATEMENT OF OPERATIONS..............................................15
STATEMENT OF CHANGES IN NET ASSETS...................................16
FINANCIAL HIGHLIGHTS...............................................17-20
SCHEDULE OF INVESTMENTS............................................21-29
NOTES TO FINANCIAL STATEMENTS......................................30-33
June 1997
DEAR SHAREOWNER:
INVESTMENT REVIEW
Over the past six months, the pace of economic activity has accelerated,
interest rates have risen modestly and the stock market, as measured by the Dow
Jones Industrial Average, jumped 1,000 points to a record high. We list the
surprisingly robust conditions affecting the financial markets in the
accompanying chart titled Economic Scorecard. Looking forward, a recently
published National Association of Purchasing Managers report (NAPM), a
historically accurate gauge of future business conditions, suggests valid
reasons for continued optimism:
1) Prices paid for materials have DECLINED by -0.2%.
2) The outlook for labor and benefit expenses for calendar year 1997 is a
modest +2%.
3) The REVENUE OUTLOOK FOR 1997 IMPROVED to +7% - versus + 4.9% for 1996.
4) CAPACITY GROWTH of +4.9% is expected in 1997.
Perhaps the most noteworthy events for the financial markets since our last
report are the narrowing of interest rate spreads for low quality credits and
the significant outperformance of big company stocks (S&P 500; +14.7%) relative
to small and midcap stocks (S&P MidCap 400; +6.9%). OUR PREDICTABLE PROFITS AT
REASONABLE PRICES GROWTH EQUITY STRATEGY WORKS WELL IN THIS SLOW GROWTH,
DISINFLATIONARY ECONOMIC ENVIRONMENT. Importantly, valuation levels between
large cap and midcap stocks are now at parity, providing a level playing field
going forward.
- -------------------------------------------------------------------------------
ECONOMIC SCORECARD
LATEST REPORT TWELVE MONTHS OUTLOOK
GDP Growth +5.8% (1Q97) +2.4% (1996) Upside Surprise
Job Creation +143,000 (April) +2.2% Improving Participation
Rate
Inflation +0.1% (April) +2.5% Downward Bias
Budget Deficit $53 billion $107 billion Falling
(7-mth annual rate) (yr-end 9/96)
30-yr Bond Yield 6.96% (May) 6.35% -7.19% Range Bound
S&P 500 Earnings +15% (1Q97) +13% Continued Above
Expectations
TOTAL RETURNS:
S&P 500 +14.7% (6-mth) +25.1% Flattening
S&P MidCap 400 + 6.9 % (6-mth) +10.1% Upward Bias
- -------------------------------------------------------------------------------
MARKET OUTLOOK
Our economic and market outlook is predicated on the following trends:
1. With fiscal year-to-date Federal tax receipts gaining +9% against a +4%
gain in Federal spending, we continue to forecast a CYCLICALLY BALANCED
FEDERAL BUDGET and expect this year's deficit to drop approximately $47
billion to $60 billion.
2. We anticipate the adoption of the Labor Department's experimental consumer
price index (CPI) which will DECREASE THE REPORTED CPI BY -.3% ANNUALLY.
3. Rapid job creation, along with an improving job "mix", results in
aggregate wage growth of +7% year-over-year, STIMULATING CONSUMER SPENDING.
4. The percentage of the U.S. working-age population employed (the labor force
participation rate) has RISEN from 59% in 1962, to a record 67% today
(source: Deutsche Morgan Grenfell).
5. The aging of the U.S. work force, combined with the labor force
participation rate upswing, is generating SIGNIFICANT PERSONAL SAVINGS
GROWTH - up 44% over the past three years to $275 billion.
6. PRODUCTIVITY IMPROVEMENTS CONTINUE TO OFFSET WAGE GAINS. For 16 consecutive
quarters, S&P 500 profit growth has exceeded total revenue growth. A
productivity-driven economic expansion is not inflationary.
7. The S&P 500's current 18X 1997 price/earnings IS IN THE MIDDLE OF THE
HISTORICAL 15X TO 20X RANGE for valuations when inflation is +2-3%.
8. Falling oil prices should lead to MODERATE MONTHLY INFLATION REPORTS of
+0.1% - 0.2%, or about +2.5% annually.
9. The .8% drop in inflation and .4% rise in interest rates brings "real"
yields up by +1.2% and IMPROVES THE OUTLOOK FOR FIXED-INCOME RETURNS.
10. The ability of S&P 500 companies to sustain double-digit earnings gain in a
5% nominal GDP growth environment explains the resilience of the bull
market and STRENGTHENS THE OUTLOOK FOR OUR PERSISTENT GROWTH COMPANY
STRATEGY.
IN SUMMARY
WE MAINTAIN OUR FAVORABLE OUTLOOK FOR FINANCIAL ASSETS AND FORECAST IMPROVED
RELATIVE RESULTS FOR SMALLER TO MIDCAP STOCKS FOR THE REMAINDER OF 1997. We
expect "over-the-speed-limit" growth in consumer spending will be partially
offset by continued moderate government and healthcare spending trends. This, we
believe, will result in full year Gross Domestic Product (GDP) growth of +3-4%.
For inflation, increased foreign competition, improved productivity, and lower
raw material prices will lead to a 2-3% increase in the CPI.
As always, we appreciate your confidence in the Portico Fund Family and
encourage you to read the portfolio reviews that follow.
(Pictures)
J. SCOTT HARKNESS, CFA MARY ELLEN STANEK, CFA
Chairman/Chief President
Investment Officer
Firstar Investment Research & Management Company
THE ECONOMY ROLLS ON, THE FED RESPONDS
The economy has continued on its path of steady growth into 1997. During the
first quarter of 1997, the economy expanded at an annual rate of 5.6%. While
near full employment has put upward pressure on wages, increased productivity
and fierce price competition have prevented higher wages from translating into
higher inflation. INFLATION IS THE NUMBER ONE ENEMY OF THE BOND MARKET. When
inflation rises, investors demand higher interest rates to compensate for the
portion of their return they expect to lose to inflation. As interest rates
rise, bond prices fall.
With its goal of keeping inflation subdued, the Federal Reserve Board responded
to the strength demonstrated by the economy by raising short-term rates (fed
funds) from 5.25% to 5.50% in March. Interest rates rose in anticipation of the
Fed's move and, as of April 30, 1997, are approximately 50 basis points (0.50%)
higher than they were on October 31, 1996 (see chart below).
YIELDS HAVE RISEN
1 3 5 7 10 30
MATURITY (YEARS)
10/31/96 5.404 5.732 5.860 6.070 6.341 6.641
04/30/97 5.887 6.274 6.398 6.565 6.709 6.954
Source: Bloomberg
A FLATTER YIELD CURVE, INFLATION STEADY
As is often the case when interest rates rise, the yield curve flattened. Over
the past six months, the difference between the yield on the 2-year Treasury
note and the 30-year Treasury bond has shrunk from 91 basis points (0.91%) on
October 31, 1996 to 68 basis points (0.68%) as of April 30, 1997. WE BELIEVE THE
FLATTENING OF THE YIELD CURVE REFLECTS THE BOND MARKET'S CONFIDENCE IN THE FED'S
DETERMINATION TO CONTAIN INFLATION. Despite gyrations in interest rates over the
last several years, inflation has been held steady around 3% per year.
REAL YIELDS HIGH, BOND MARKET ATTRACTIVE
Because we are not seeing economic pressures strong enough to significantly
raise inflation, we believe the rise in interest rates so far this year presents
exceptional value in the bond market. As seen in the chart below, REAL YIELDS
(NOMINAL YIELDS LESS INFLATION) ARE HIGH BY HISTORICAL STANDARDS.
REAL YIELDS
HISTORICAL VS. CURRENT
(3, 5 &10 yr. U.S. Treasury notes)
3 YR. 5 YR. 10 YR.
Historical Average (1960-Present) 2.35% 2.51% 2.71%
Apr-97 3.12% 3.27% 3.42%
Source: Bloomberg
With real yields well above their historical averages, WE ARE OPTIMISTIC ABOUT
THE PROSPECTS FOR THE BOND MARKET IN THE NEAR FUTURE. The continued volatility
of the market presents us with ongoing opportunities to add value through
adherence to our structured fixed-income style of management.
A MENU OF BOND FUND CHOICES
In the taxable funds, we offer a menu of bond fund choices, each targeted to a
particular maturity segment of the bond market. Portico Short-Term Bond Market
Fund is designed for investors with less tolerance for principal volatility.
Intermediate maturities are represented by Portico Intermediate Bond Market Fund
and for investors seeking tax-exempt income we offer Portico Tax-Exempt
Intermediate Bond Fund. Portico Bond IMMDEX/TM Fund utilizes investments in the
full maturity range (from cash investments to 30-year bonds or longer) to
achieve total returns, which we expect will be higher than returns of either the
Short-Term Bond Market and Intermediate Bond Market Funds over complete market
cycles, but come with additional principal volatility.
- -------------------------------------------------------------------------------
PORTICO FAMILY OF FIXED-INCOME FUNDS
SHORT-TERM INTERMEDIATE-TERM BOND FUNDS LONG-TERM
BOND FUND BOND FUND
PORTICO PORTICO PORTICO PORTICO
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND BOND INTERMEDIATE IMMDEX/TM FUND
MARKET FUND MARKET FUND BOND FUND
LEHMAN BROTHERS LEHMAN BROTHERS LEHMAN BROTHERS LEHMAN BROTHERS
BENCHMARK 1-3 YEAR INTERMEDIATE 5-YEAR GENERAL GOV'T./CORP.
GOV'T./CORP. GOV'T./CORP. OBLIGATION BOND
BOND INDEX BOND INDEX BOND INDEX INDEX
AVERAGE QUALITY
OF HOLDINGS* AA AA AAA AA
AVERAGE MATURITY 2.9 YEARS 5.0 YEARS 4.9 YEARS 10.0 YEARS
DURATION 1.7 YEARS 3.3 YEARS 4.0 YEARS 5.0 YEARS
PRINCIPAL
VOLATILITY LOW MODERATE MODERATE HIGH
- -------------------------------------------------------------------------------
Lehman Brothers is neither a sponsor of nor affiliated with Portico Funds. An
investment cannot be made in an index.
Average quality, maturity and duration reflect the portfolio as of April 30,
1997, and will change from time to time in connection with the management of the
portfolios pursuant to the policies described in the current prospectus.
* Dollar weighted average quality of portfolio securities held by the Funds.
LOOKING AHEAD - THE FORECAST
Looking ahead at the next six months, we see continued volatility for the fixed-
income markets, moderate economic growth, and inflation averaging in the range
of 3%. However, interest rates at current levels are sufficiently high enough to
produce attractive real, or inflation-adjusted yields. As always, we continue to
advocate "staying the course", knowing that the Funds have achieved
competitive relative returns and our structured approach allows you to
reasonably compare the volatility of our fund offerings.
We appreciate your continued confidence in the Portico Funds and look forward to
providing you with the benefits of our structured fixed-income investment
strategies.
MARY ELLEN STANEK, CFA
TERESA R. WESTMAN, CFA
DANIEL A. TRANCHITA, CFA
WARREN D. PIERSON, CFA
Portfolio Managers
Firstar Investment Research & Management Company
SHORT-TERM BOND MARKET FUND
Portico Short-Term Bond Market Fund seeks to provide an annual rate of total
return comparable to that of the Lehman Brothers 1-3 Year Government/Corporate
Bond Index, before Fund expenses. In order to achieve its objective, the Fund
may invest in securities with short to intermediate remaining maturities.
This Fund's maturity mix gives it an overall AVERAGE PORTFOLIO MATURITY OF 2.9
YEARS, and a DURATION OF 1.7 YEARS. Because Portico Short-Term Bond Market
Fund's duration of 1.7 years is the shortest of all the Portico taxable bond
funds, it will display the least downward price movement when interest rates
increase, but will also exhibit the least upward price appreciation when
interest rates decrease.
In fact, the shorter average maturity and duration of this Fund benefited its
performance, relative to longer funds, for the six months ended April 30, 1997.
The increase in interest rates (2-year U.S. Treasury rates increased by almost
0.5% to 6.3%) resulted in a six-month total return for the Fund of +2.31% which
compares favorably to the benchmark total return of +2.26% for the same period.
For the twelve months ended April 30, 1997, 2-year interest rates ended slightly
higher from their beginning levels. This resulted in a total return for the Fund
of +5.94% versus its benchmark's return of +6.16%.
While the Fund's duration is the single most significant determinant of its
return, the Fund's quality, sector allocation, and maturity structure (yield
curve positioning) are also important. IN TERMS OF QUALITY, OVER HALF (65%) OF
THE FUND IS INVESTED IN OBLIGATIONS RATED AAA OR HIGHER. These obligations are
primarily composed of U.S. Treasury and agency obligations and asset-backed
securities.
The Fund is over-weighted in several sectors. For many years we have utilized
securities backed by credit card receivables and auto loan receivables as a
substitute for other non-U.S. Treasury securities. The asset-backed securities
that we own tend to be very highly rated (Aaa/AAA), and very liquid. We believe
they have contributed favorably to the Fund's performance. Other sectors that
have helped the Fund are finance, banking, and brokerage issues, international
securities (all are denominated in U.S. dollars), and selected mortgage-backed
securities. GIVEN THE HEALTHY U.S. ECONOMIC OUTLOOK, WE ANTICIPATE THAT OUR NON-
TREASURY HOLDINGS WILL CONTINUE TO ADD VALUE TO THE PORTFOLIO.
In terms of the Fund's maturity structure, its emphasis on bonds with 2-3 years
remaining to maturity has helped as the yield curve flattened slightly in
response to anticipated Federal Reserve tightening. This performance advantage
was somewhat offset by the underperformance of very short maturity bonds.
Overall, we feel we have a portfolio maturity structure that will generate a
modest benefit for the remainder of the year.
Since Portico Short-Term Bond Market Fund's inception on 12/29/89, we have
adhered to the same, disciplined management approach. The past 7+ years have
brought us more volatility in the fixed-income markets than many would have
expected. THE HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSISTENT
PERFORMANCE IN ALL MARKET CLIMATES. Portico Short-Term Bond Market Fund's
returns have been comparable to the benchmark in periods of rising interest
rates and falling interest rates. Our goal is to continue to deliver this same
consistent performance in the future.
We look forward to continuing to serve you as Portico Fund shareowners.
(Pictures)
MARY ELLEN STANEK, CFA DANIEL A. TRANCHITA, CFA
PORTFOLIO MANAGER PROFILE
- -------------------------------------------------------------------------------
MARY ELLEN STANEK, CFA, President of Firstar Investment Research &Management
Company (FIRMCO) and DANIEL A. TRANCHITA, CFA, Vice President and Portfolio
Manager, co-manage the Fund - Mary Ellen since its inception on December 29,
1989 and Dan since January 1, 1993. Mary Ellen has 18 years of investment
management experience and was named a Director of FIRMCO in 1992. Prior to
joining FIRMCO, she headed the Fixed Income and Quantitative Investment
Management Department at Firstar Trust Company. Mary Ellen received her BAfrom
Marquette University in 1978 and her MBA from the University of Wisconsin-
Milwaukee in 1984. Dan has been with Firstar since 1989 and has eight years of
investment management experience. He received his BA in 1987 and his MBA in 1989
from Marquette University. Mary Ellen and Dan are both Chartered Financial
Analysts.
<TABLE>
<CAPTION>
12/29/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 4/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PORTICO SHORT-TERM
BOND MARKET FUND $10,000 $10,464 $11,865 $12,966 $13,833 $14,035 $15,290 $16,177 $16,551
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED APRIL 30, 1997
Fiscal Since Inception
Year-To-Date 1 Year 3 Years 5 Years 12/29/89
PORTICO SHORT-TERM
BOND MARKET FUND 2.3 5.9 6.3 6.1 7.1
LEHMAN BROTHERS 1-3
YEAR GOV'T./CORP.
BOND INDEX* 2.3 6.2 6.3 5.7 7.0
* The Lehman Brothers 1-3 Year Gov't./Corp. Bond Index is an unmanaged market
value weighted index measuring both principal price changes of, and income
provided by, the underlying universe of securities that comprise the
index. Securities included in the index must meet the following criteria:
fixed as opposed to variable rate; not less than one year to maturity; not
more than three years remaining to maturity; and minimum outstanding par
value of $100 million. An investment cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. In addition, the purchase
price adjustment on the Fund no longer applies to either the Series A or Series
Institutional shares. The performance for the Series Institutional shares has
been restated to reflect the elimination of the purchase price adjustment.
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
SECTOR DISTRIBUTION
4/30/97
U.S. TREASURY 20%
U.S. GOVERNMENT AGENCY 0%
MORTGAGE-BACKED 23%
FINANCE, BANKING, BROKERAGE 16%
INDUSTRIAL 9%
UTILITY 3%
INTERNATIONAL/YANKEE 2%
ASSET-BACKED 23%
CASH 1%
TAXABLE MUNICIPAL 3%
TOTAL 100%
PORTFOLIO COMPOSITION 4/30/97
AVERAGE MATURITY 2.9 YEARS
AVERAGE DURATION 1.7 YEARS
QUALITY DISTRIBUTION 4/30/97
U.S. TREASURY 20%
U.S. GOVERNMENT AGENCY 13%
Aaa 32%
Aa 5%
A 25%
Baa 5%
TOTAL 100%
SEC 30-DAY YIELD
6.39%
TOTAL FUND NET ASSETS 4/30/97
$219,010,579
INTERMEDIATE BOND MARKET FUND
Portico Intermediate Bond Market Fund seeks to provide an annual rate of total
return comparable to that of the Lehman Brothers Intermediate
Government/Corporate Bond Index, before Fund expenses. In order to achieve its
objective, the Fund may invest in securities with long remaining maturities, (10
years or longer), in addition to shorter bonds and notes.
The Fund's maturity mix gives it an overall AVERAGE PORTFOLIO MATURITY OF FIVE
YEARS, and a DURATION IN EXCESS OF THREE YEARS. Because Intermediate Bond Market
Fund's duration of 3.3 years is between the durations of the other Portico
taxable bond funds, when interest rates increase it will display more downward
price movement than the Short-Term Bond Market Fund and less than the Bond
IMMDEX/TM Fund. But, when interest rates decrease, this Fund will exhibit more
upward price appreciation than Short-Term Bond Market Fund and less than the
Bond IMMDEX/TM Fund.
In fact, the Fund's intermediate average maturity and duration somewhat
sheltered its performance, relative to longer funds, for the six months ended
April 30, 1997. An increase in interest rates (5-year U.S. Treasury rates
increased by almost 0.5% to 6.6%) resulted in a six-month total return for the
Fund of +1.72% which is comparable to the Fund's benchmark, the Lehman Brothers
Intermediate Government/Corporate Bond Index which had a total return of +1.74%
for the same period. For the twelve months ended April 30, 1997, 5-year interest
rates ended only slightly higher than their beginning levels. This resulted in a
total return for the Fund of +6.25% versus its benchmark's return of +6.41%.
While the Fund's duration is the single most significant determinant of its
return, the Fund's quality, sector allocation, and maturity structure (yield
curve positioning) are also important. IN TERMS OF QUALITY, OVER HALF (62%) OF
THE FUND IS INVESTED IN OBLIGATIONS RATED AAA OR HIGHER. These obligations are
primarily composed of U.S. Treasury and agency obligations and asset-backed
securities.
The Fund is over-weighted in several sectors. For many years we have utilized
securities backed by credit card receivables and auto loan receivables as a
substitute for other non-U.S. Treasury securities. The asset-backed securities
that we own tend to be very highly rated (Aaa/AAA), and very liquid. We believe
they have contributed favorably to the Fund's performance. Other sectors that
have helped the Fund are finance, banking, and brokerage issues, international
securities (all are denominated in U.S. dollars), and selected mortgage-backed
securities. GIVEN THE HEALTHY U.S. ECONOMIC OUTLOOK, WE ANTICIPATE OUR NON-
TREASURY HOLDINGS WILL CONTINUE TO ADD VALUE TO THE PORTFOLIO.
In terms of the Fund's maturity structure, our underweighting of bonds with less
than two years remaining to maturity has definitely helped as the yield curve
flattened in response to anticipated Federal Reserve tightening. This
performance advantage was somewhat offset by the underperformance of our three -
four year maturity bonds. Overall, we feel we have a portfolio maturity
structure that will generate a modest benefit for the remainder of the year.
Since Portico Intermediate Bond Market Fund's inception on 1/5/93, we have
adhered to the same, disciplined management approach. The past 4+ years have
brought us more volatility in the fixed income markets than many would have
expected. THE HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSISTENT
PERFORMANCE IN ALL MARKET CLIMATES. Portico Intermediate Bond Market Fund's
returns have been comparable to the benchmark in periods of rising interest
rates and falling interest rates. Our goal is to continue to deliver this same
consistent performance in the future.
We look forward to continuing to serve you as Portico Fund shareowners.
(Pictures)
MARY ELLEN STANEK, CFA TERESA R. WESTMAN, CFA
PORTFOLIO MANAGER PROFILE
- -------------------------------------------------------------------------------
MARY ELLEN STANEK, CFA, President of Firstar Investment Research &Management
Company (FIRMCO) and TERESA R. WESTMAN, CFA, Senior Vice President and Senior
Portfolio Manager have co-managed the Fund since its inception on January 5,
1993. Mary Ellen has 18 years of investment management experience and was named
a Director of FIRMCO in 1992. Prior to joining FIRMCO, she headed the Fixed
Income and Quantitative Investment Management Department at Firstar Trust
Company. Mary Ellen received her BAfrom Marquette University in 1978 and her MBA
from the University of Wisconsin-Milwaukee in 1984. Teresa has been with Firstar
since 1987 and has ten years of investment management experience. Teresa
received her BAfrom Augustana College in 1985 and her MBA from the University of
Chicago in 1991. Mary Ellen and Teresa are both Chartered Financial Analysts.
1/5/93 10/93 10/94 10/95 10/96 4/97
PORTICO INTERMEDIATE
BOND MARKET FUND $10,000 $10,858 $10,670 $11,978 $12,669 $12,886
This chart assumes an initial investment of $10,000 made on 1/5/93 (inception).
Per formance reflects fee waivers in effect. In the absence of fee waivers,
total return would be reduced. Returns shown include the reinvestment of all
dividends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED APRIL 30, 1997
Fiscal Since Inception
Year-To-Date 1 Year 3 Years 1/5/93
PORTICO INTERMEDIATE
BOND MARKET FUND 1.7 6.3 6.8 6.1
LEHMAN BROTHERS
INTERMEDIATE GOV'T./
CORP. BOND INDEX* 1.7 6.4 6.9 6.1
* The Lehman Brothers Intermediate Gov't./Corp. Bond Index is an unmanaged
market value weighted index measuring both principal price changes of, and
income provided by, the underlying universe of securities that comprise
the index. Securities included in the index must meet the following criteria:
fixed as opposed to variable rate; remaining maturity of one to ten years;
minimum outstanding par value of $100 million; and rated investment grade or
higher by Moody's, Standard & Poor's, or Fitch, in that order. An investment
cannot be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. In addition, the purchase
price adjustment on the Fund no longer applies to either the Series A or Series
Institutional shares. The performance for the Series Institutional shares has
been restated to reflect the elimination of the purchase price adjustment.
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
SECTOR DISTRIBUTION
4/30/97
U.S. TREASURY 24%
U.S. GOVERNMENT AGENCY 0%
MORTGAGE-BACKED 11%
FINANCE, BANKING, BROKERAGE 25%
INDUSTRIAL 6%
INTERNATIONAL 5%
UTILITY 1%
ASSET-BACKED 25%
TAXABLE MUNICIPAL 1%
CASH 2%
TOTAL 100%
PORTFOLIO COMPOSITION 4/30/97
AVERAGE MATURITY 5.0 YEARS
AVERAGE DURATION 3.3 YEARS
QUALITY DISTRIBUTION 4/30/97
U.S. TREASURY 25%
U.S. GOVERNMENT AGENCY 10%
Aaa 27%
A 32%
Baa 6%
TOTAL 100%
SEC 30-DAY YIELD
6.50%
TOTAL FUND NET ASSETS 4/30/97
$212,543,362
TAX-EXEMPT INTERMEDIATE BOND FUND
Portico Tax-Exempt Intermediate Bond Fund seeks to provide current income exempt
from federal income taxes and emphasizes total return with relatively low
volatility of principal. Currently, the Fund does not purchase any issues which
are subject to the alternative minimum tax.
In order to achieve its objectives, the Fund first targets bonds of short- and
intermediate-term maturity. These bonds have a lower price sensitivity to
changes in interest rates than longer maturity bonds and, therefore, tend to be
more stable in value. The limited volatility of these short and intermediate
maturities has sheltered the Fund from rising rates so far this year. As of
April 30, 1997, THE FUND HAS AN AVERAGE MATURITY OF 4.9 YEARS; considerably
shorter than the typical municipal bond fund which, according to Lipper
Analytical Services, has an average maturity of 19 years.
Second, the Fund focuses on high quality holdings. As of April 30, 1997, 70% OF
THE FUND'S HOLDINGS ARE SECURED WITH U.S. TREASURY ISSUES (prerefunded municipal
bonds) and the Fund has an average quality rating of AAA. Holding issues of
superior quality has protected the Fund from widening credit spreads seen so far
in 1997.
Third, the Fund's maturity structure enhanced its performance. Concentrations of
holdings in 3-5 year maturities and 9-12 year maturities enabled the Fund to
capitalize on a flattening yield curve.
We appreciate your continued confidence in Portico Tax-Exempt Intermediate Bond
Fund.
(Picture)
WARREN D. PIERSON, CFA
PORTFOLIO MANAGER PROFILE
- -------------------------------------------------------------------------------
WARREN D. PIERSON, CFA, Vice President and Portfolio Manager of Firstar
Investment Research &Management Company (FIRMCO) has managed the Fund since June
22, 1993. Since joining Firstar in 1985, his responsibilities have included
trading government and government agency issues, as well as money market
instruments. His current portfolio management responsibilities focus on the tax-
exempt bond market. Warren received his BA from Lawrence University in 1984, and
has 12 years of investment management experience. He is a Chartered Financial
Analyst, as well as a member of the Association for Investment Management and
Research and the Milwaukee Investment Analysts Society.
2/8/93 10/93 10/94 10/95 10/96 4/97
PORTICO TAX-EXEMPT
INTERMEDIATE
BOND FUND $10,000 $10,536 $10,459 $11,440 $11,900 $12,065
This chart assumes an initial investment of $10,000 made on 2/8/93 (inception).
Performance reflects fee waivers in effect. In the absence of fee waivers,
total return would be reduced. Returns shown include the reinvestment of all
dividends and other distributions. Past performance is not predictive of future
performance. Investment return and principal value will fluctuate, so that your
shares, when redeemed, may be worth more or less than their original cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED APRIL 30, 1997
Fiscal Since Inception
Year-To-Date 1 Year 3 Years 2/8/93
PORTICO TAX-EXEMPT
INTERMEDIATE
BOND FUND 1.4 4.3 5.0 4.5
LEHMAN BROTHERS 5 YEAR
GENERAL OBLIGATION
BOND INDEX* 1.6 4.8 5.7 5.2
* The Lehman Brothers 5 Year General Obligation Bond Index, an unmanaged index,
is a total return performance benchmark for the investment-grade tax-exempt
bond market. To be included in this index, a municipal bond must be a state or
local General Obligation bond; have a minimum credit rating of at least Baa;
have been issued as part of an offering of at least $50 million; have a
maturity amount outstanding of at least $3 million; have been issued within
the last five years; and have a maturity of 4 to 6 years. An investment cannot
be made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. Performance reflects fee
waivers in effect. In the absence of fee waivers, total return would be reduced.
SECTOR DISTRIBUTION
4/30/97
GENERAL OBLIGATIONS 2%
ESCROWED/PREREFUNDED 70%
INSURED 17%
REVENUE 11%
CASH 0%
TOTAL 100%
QUALITY DISTRIBUTION 4/30/97
Aaa 93%
Aa 5%
A 2%
TOTAL 100%
PORTFOLIO COMPOSITION 4/30/97
AVERAGE MATURITY 4.9 YEARS
AVERAGE DURATION 4.0 YEARS
SEC 30-DAY YIELD
4.47%
TOTAL FUND NET ASSETS 4/30/97
$52,124,009
BOND IMMDEX/TM FUND
Portico Bond IMMDEX/TM Fund seeks to provide an annual rate of total return
comparable to that of the Lehman Brothers Government/Corporate Bond Index,
before Fund expenses. In order to achieve its objective, the Fund may invest in
securities with very long remaining maturities, (30 years or longer), in
addition to shorter bonds and notes.
The Fund's maturity mix gives it an overall AVERAGE PORTFOLIO MATURITY OF 10
YEARS and a DURATION OF FIVE YEARS. Because Bond IMMDEX/TM Fund's duration of
five years is the longest of all the Portico taxable bond funds, it will display
the greatest downward price movement when interest rates increase, but will
exhibit the greatest upward price appreciation when interest rates decrease.
In fact, the longer average maturity and duration of this Fund hampered its
performance, relative to shorter funds, for the six months ended April 30, 1997.
An increase in interest rates (10-year U.S. Treasury rates increased by almost
0.4% to 6.7%) resulted in a six-month total return for the Fund of +1.45% which
compares favorably to the Fund's benchmark, the Lehman Brothers Government
Corporate Bond Index which had a total return of +1.30% for the same period. For
the twelve months ended April 30, 1997, 10-year interest rates ended very near
to their beginning levels. This resulted in a total return for the Fund of
+6.80% versus its benchmark's return of +6.72%.
While the Fund's duration is the single most significant determinant of its
return, the Fund's quality, sector allocation, and maturity structure (yield
curve positioning) are also important. IN TERMS OF QUALITY, OVER HALF (53%) OF
THE FUND IS INVESTED IN OBLIGATIONS RATED AAA OR HIGHER. These obligations are
primarily composed of U.S. Treasury and agency obligations and asset-backed
securities.
The Fund is over-weighted in several sectors. For many years we have utilized
securities backed by credit card receivables and auto loan receivables as a
substitute for other non-U.S. Treasury securities. The asset-backed securities
that we own tend to be very highly rated (Aaa/AAA), and very liquid. We believe
they have contributed favorably to the Fund's performance. Other sectors that
have helped the Fund are finance, banking and brokerage issues, international
securities (all are denominated in U.S. dollars), and selected mortgage-backed
securities. GIVEN THE HEALTHY U.S. ECONOMIC OUTLOOK, WE ANTICIPATE OUR NON-
TREASURY HOLDINGS WILL CONTINUE TO ADD VALUE TO THE PORTFOLIO.
In terms of the Fund's maturity structure, its emphasis on bonds with 15-20
years remaining to maturity has definitely helped as the yield curve flattened
slightly in response to anticipated Federal Reserve tightening. This performance
advantage was somewhat offset by the underperformance of very short maturity
bonds. Overall, we feel we have a portfolio maturity structure that will
generate a modest benefit for the remainder of the year.
Since Portico Bond IMMDEX/TM Fund's inception on 12/29/89, we have adhered to
the same, disciplined management approach. The past 7+ years have brought us
more volatility in the fixed-income markets than many would have expected. THE
HALLMARK OF OUR APPROACH HAS BEEN THE FUND'S CONSISTENT PERFORMANCE IN ALL
MARKET CLIMATES. Portico Bond IMMDEX/TM Fund's returns have been comparable to
the benchmark in periods of rising interest rates and falling interest rates.
Our goal is to continue to deliver this same consistent performance in the
future.
We look forward to continuing to serve you as Portico Fund shareowners.
(Pictures)
MARY ELLEN STANEK, CFA TERESA R. WESTMAN, CFA
PORTFOLIO MANAGER PROFILE
- -------------------------------------------------------------------------------
MARY ELLEN STANEK, CFA, President of Firstar Investment Research & Management
Company (FIRMCO) and TERESA R. WESTMAN, CFA, Senior Vice President and Senior
Portfolio Manager have co-managed the Fund - Mary Ellen since its inception on
December 29, 1989 and Teresa since January 1, 1992. Mary Ellen has 18 years of
investment management experience and was named a Director of FIRMCO in 1992.
Prior to joining FIRMCO, she headed the Fixed Income and Quantitative Investment
Management Department at Firstar Trust Company. Mary Ellen received her BAfrom
Marquette University in 1978 and her MBA from the University of Wisconsin-
Milwaukee in 1984. Teresa has been with Firstar since 1987 and has ten years of
investment management experience. Teresa received her BA from Augustana College
in 1985 and her MBA from the University of Chicago in 1991. Mary Ellen and
Teresa are both Chartered Financial Analysts.
<TABLE>
<CAPTION>
12/29/89 10/90 10/91 10/92 10/93 10/94 10/95 10/96 4/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PORTICO BOND IMMDEX/TM FUND $10,000 $10,421 $12,105 $13,376 $15,154 $14,565 $16,934 $17,840 $18,098
</TABLE>
This chart assumes an initial investment of $10,000 made on 12/29/89
(inception). Performance reflects fee waivers in effect. In the absence of fee
waivers, total return would be reduced. Returns shown include the reinvestment
of all dividends and other distributions. Past performance is not predictive of
future performance. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than their original
cost.
AVERAGE ANNUAL RATE OF RETURN (%)
FOR PERIODS ENDED APRIL 30, 1997
Fiscal Since Inception
Year-To-Date 1 Year 3 Years 5 Years 12/29/89
PORTICO BOND
IMMDEX/TM FUND 1.5 6.8 7.7 7.6 8.4
LEHMAN BROTHERS
GOV'T./CORP.
BOND INDEX* 1.3 6.7 7.4 7.5 8.3
* The Lehman Brothers Gov't./Corp. Bond Index is an unmanaged market value
weighted index measuring both principal price changes of, and income provided
by, the underlying universe of securities that comprise the index.
Securities included in the index must meet the following criteria: fixed as
opposed to variable rate; not less than one year to maturity; minimum
outstanding par value of $100 million; and rated investment grade or higher by
Moody's, Standard & Poor's, or Fitch, in that order. An investment cannot be
made directly in an index.
Effective at the close of business on January 9, 1995, Portico Funds began to
offer Series A (retail) shares and Series Institutional shares. Series A shares,
unlike the Series Institutional shares, have a 2% maximum sales load and are
subject to an annual 0.25% service organization fee. In addition, the purchase
price adjustment on the Fund no longer applies to either the Series A or Series
Institutional shares. The performance for the Series Institutional shares has
been restated to reflect the elimination of the purchase price adjustment.
Performance reflects fee waivers in effect. In the absence of fee waivers, total
return would be reduced.
SECTOR DISTRIBUTION
4/30/97
U.S. TREASURY 26%
U.S. GOVERNMENT AGENCY 0%
MORTGAGE-BACKED 7%
FINANCE, BANKING, BROKERAGE 29%
INDUSTRIAL 10%
UTILITY 2%
INTERNATIONAL 7%
ASSET-BACKED 15%
TAXABLE MUNICIPAL 0%
CASH 4%
TOTAL 100%
PORTFOLIO COMPOSITION 4/30/97
AVERAGE MATURITY 10.0 YEARS
AVERAGE DURATION 5.0 YEARS
QUALITY DISTRIBUTION 4/30/97
U.S. TREASURY 26%
U.S. GOVERNMENT AGENCY 6%
Aaa 20%
Aa 2%
A 35%
Baa 11%
TOTAL 100%
SEC 30-DAY YIELD
6.83%
TOTAL FUND NET ASSETS 4/30/97
$416,010,756
STATEMENT OF ASSETS AND LIABILITIES
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
APRIL 30, 1997
(UNAUDITED) SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
---------- ---------- ---------- ---------
ASSETS
Investments, at value (cost
$218,174, $210,491,
$51,063 and $406,095,
respectively) $216,353 $209,961 $ 51,184 $409,508
Interest receivable 2,964 3,177 983 6,710
Capital shares sold 100 20 7 127
Cash - - - 3
Other assets 28 29 15 28
---------- ---------- ---------- ----------
Total Assets 219,445 213,187 52,189 416,376
---------- ---------- ---------- ----------
LIABILITIES:
Payable for securities
purchased - 495 - 98
Capital shares redeemed 264 1 - 49
Payable to affiliates 128 115 44 182
Accrued expenses and
other liabilities 42 33 21 36
---------- ---------- ---------- ----------
Total Liabilities 434 644 65 365
---------- ---------- ---------- ----------
NET ASSETS $219,011 $212,543 $ 52,124 $416,011
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Capital stock 222,412 214,313 52,112 413,274
Undistributed net
investment income 104 103 16 215
Undistributed accumulated
net realized (losses) (1,684) (1,343) (125) (891)
Unrealized net appreciation
(depreciation) on
investments (1,821) (530) 121 3,413
---------- ---------- ---------- ----------
Total Net Assets $219,011 $212,543 $ 52,124 $416,011
========== ========== ========== ==========
SERIESA:
Net assets $ 60,433 $ 19,113 $ 12,137 $ 49,777
Shares authorized ($.0001
par value) 500,000 500,000 500,000 500,000
Shares issued and
outstanding 5,938 1,899 1,198 1,839
Net asset value and
redemption price
per share (1) $10.18 $10.06 $10.13 $27.07
========== ========== ========== ==========
Maximum offering price
per share (1) $10.39 $10.27 $10.34 $27.62
========== ========== ========== ==========
SERIESINSTITUTIONAL:
Net assets $158,578 $193,430 $ 39,987 $366,234
Shares authorized ($.0001
par value) 500,000 500,000 500,000 500,000
Shares issued and
outstanding 15,582 19,224 3,946 13,524
Net asset value,
redemption price and
offering price
per share <F1> $10.18 $10.06 $10.13 $27.08
========== ========== ========== ==========
<F1> Amounts may not recalculate due to rounding.
See notes to the financial statements.
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED) SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
---------- ---------- ---------- ----------
INVESTMENT INCOME:
Interest income $7,070 $6,636 $1,211 $14,121
-------- -------- -------- --------
EXPENSES:
Investment advisory fees 653 506 124 624
Administration fees 127 118 29 243
Shareowner servicing
and accounting costs 81 60 40 74
Service organization
fees - Series A 75 23 14 58
Custody fees 19 18 7 39
Federal and state
registration fees 16 15 6 18
Professional fees 10 14 12 14
Reports to shareowners 20 7 6 12
Amortization of
organization costs - 1 1 -
Directors' fees and expenses 3 2 3 2
Other 4 2 1 3
-------- -------- -------- --------
Total expenses before waiver 1,008 766 243 1,087
Less: Waiver of expenses (388) (237) (105) (146)
-------- -------- -------- --------
Net expenses 620 529 138 941
-------- -------- -------- --------
NET INVESTMENT INCOME 6,450 6,107 1,073 13,180
-------- -------- -------- --------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss)
on investment transactions (149) (281) (25) 259
Change in unrealized
appreciation (depreciation)
on investments (1,530) (2,347) (389) (7,232)
-------- -------- -------- --------
Net loss on investments (1,679) (2,628) (414) (6,973)
-------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $4,771 $3,479 $ 659 $ 6,207
======== ======== ======== ========
See notes to the financial statements.
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
(AMOUNTS IN THOUSANDS)
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE BOND IMMDEX/TM
FUND FUND FUND FUND
-------------------- -------------------- -------------------- --------------------
Six months Year Six months Year Six months Year Six months Year
ended ended ended ended ended ended ended ended
Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31, Apr. 30, Oct. 31,
1997 1996 1997 1996 1997 1996 1997 1996
-------- -------- -------- -------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 6,450 $ 10,830 $ 6,107 $ 9,912 $ 1,073 $ 1,668 $ 13,180 $ 22,285
Net realized gain (loss)
on investments (149) 92 (281) 773 (25) 43 259 (167)
Change in unrealized
appreciation (depreciation)
on investments (1,530) (1,102) (2,347) (1,245) (389) (88) (7,232) (2,584)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase in net assets
resulting from operations 4,771 9,820 3,479 9,440 659 1,623 6,207 19,534
--------- --------- --------- --------- --------- --------- --------- ---------
CAPITAL SHARE TRANSACTIONS:
Shares sold 38,473 103,118 38,150 84,747 10,452 24,183 59,175 142,933
Shares issued to owners in
reinvestment of dividends 5,586 9,114 3,832 6,299 431 738 11,290 19,366
Shares redeemed (29,689) (47,577) (17,684) (40,206) (5,687) (12,833) (60,726) (58,472)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase in net assets
resulting from
capital share transactions 14,370 64,655 24,298 50,840 5,196 12,088 9,739 103,827
--------- --------- --------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO SERIES A
SHAREOWNERS:
From net investment income (1,725) (3,056) (525) (816) (234) (371) (1,435) (1,987)
--------- --------- --------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO SERIES
INSTITUTIONAL SHAREOWNERS:
From net investment income (4,714) (7,799) (5,569) (9,121) (839) (1,304) (11,727) (20,296)
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INCREASE IN NET ASSETS 12,702 63,620 21,683 50,343 4,782 12,036 2,784 101,078
NET ASSETS:
Beginning of period 206,309 142,689 190,860 140,517 47,342 35,306 413,227 312,149
--------- --------- --------- --------- --------- --------- --------- ---------
End of period (including
undistributed net investment
income of $104, $92,
$103, $89, $16, $15, $215
and $197, respectively) $219,011 $206,309 $212,543 $190,860 $52,124 $47,342 $416,011 $413,227
========= ========= ========= ========= ========= ========= ========= =========
See notes to the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
SHORT-TERM BOND MARKET FUND
-----------------------------
Six months ended Year ended Year ended
April 30, 1997 October 31, 1996 October 31, 1995<F3> Year ended October 31,
----------------------- --------------------- ----------------------- ----------------------
Series A Series Inst'l. Series A Series Inst'l. Series A Series Inst'l. 1994 1993 1992<F2>
-------- -------------- --------- ------------- --------- ------------- ---- ---- --------
Per Share Data: (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.25 $10.25 $10.28 $10.28 $10.03 $10.03 $10.56 $10.60 $10.33
Income from investment
operations:
Net investment income<F4> 0.29 0.30 0.58<F9> 0.61<F9> 0.61 0.63 0.56 0.58 0.64
Net realized and unrealized
gains (losses) on
securities (0.07) (0.07) (0.03) (0.03) 0.24 0.24 (0.41) 0.10 0.29
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.22 0.23 0.55 0.58 0.85 0.87 0.15 0.68 0.93
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.29) (0.30) (0.58) (0.61) (0.60) (0.62) (0.56) (0.58) (0.64)
Distributions from
capital gains - - - - - - (0.12) (0.14) (0.02)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.29) (0.30) (0.58) (0.61) (0.60) (0.62) (0.68) (0.72) (0.66)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of period $10.18 $10.18 $10.25 $10.25 $10.28 $10.28 $10.03 $10.56 $10.60
======== ======== ======== ======== ======== ======== ======== ======== ========
Total return<F5><F6> 2.19% 2.31% 5.54% 5.80% 8.74% 8.95% 1.46% 6.70% 9.28%
Supplemental data and ratios:
Net assets, in thousands,
end of period $60,433 $158,578 $58,843 $147,466 $47,730 $94,959 $122,368 $142,518 $129,409
Ratio of net expenses
to average net assets<F7> 0.75% 0.50% 0.75% 0.50% 0.69% 0.50% 0.50% 0.52% 0.60%
Ratio of net investment
income to average net
assets<F7> 5.74% 5.99% 5.67% 5.92% 6.04% 6.23% 5.43% 5.53% 6.00%
Portfolio turnover
rate<F8> 25.91% 25.91% 59.62% 59.62% 100.58% 100.58% 76.13% 87.62% 82.20%
<FN>
<F1> Commencement of operations.
<F2> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective on
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional Series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Fund's net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994 through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995 through October 31, 1995.
<F4> For the Tax-Exempt Intermediate Bond Fund, substantially all investment income is exempt from Federal income tax.
<F5> Not annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds,
and for the periods ended April 30, 1997, for all Funds.
<F6> The total return calculation does not reflect the 2% front end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds, and
for the periods ended April 30, 1997, for all Funds.
<F8> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
See notes to the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND MARKET FUND
------------------------------
Six months ended Year ended Year ended Year ended Jan. 5, 1993<F1>
April 30, 1997 October 31, 1996 October 31, 1995<F3> Oct. 31, through
Series A Series Inst'l. Series A Series Inst'l. Series A Series Inst'l. 1994 Oct. 31, 1993
-------- -------------- --------- ------------- -------- ------------- ---- --------------
Per Share Data: (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $10.19 $10.19 $10.21 $10.21 $9.67 $9.67 $10.45 $10.00
Income from investment
operations:
Net investment income<F4> 0.29 0.30 0.56(9) 0.59(9) 0.60 0.62 0.51 0.40
Net realized and
unrealized gains (losses)
on securities (0.13) (0.13) (0.02) (0.02) 0.53 0.53 (0.69) 0.45
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.16 0.17 0.54 0.57 1.13 1.15 (0.18) 0.85
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.29) (0.30) (0.56) (0.59) (0.59) (0.61) (0.51) (0.40)
Distributions from
capital gains - - - - - - (0.09) -
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.29) (0.30) (0.56) (0.59) (0.59) (0.61) (0.60) (0.40)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of period $10.06 $10.06 $10.19 $10.19 $10.21 $10.21 $9.67 $10.45
======== ======== ======== ======== ======== ======== ======== ========
Total return<F5><F6> 1.59% 1.72% 5.51% 5.77% 12.04% 12.25% (1.73)% 8.58%
Supplemental data and ratios:
Net assets, in thousands,
end of period $19,113 $193,430 $17,392 $173,468 $11,576 $128,941 $88,306 $56,794
Ratio of net expenses
to average net assets<F7> 0.75% 0.50% 0.75% 0.50% 0.69% 0.50% 0.50% 0.50%
Ratio of net investment
income to average net
assets<F7> 5.80% 6.05% 5.59% 5.84% 6.07% 6.26% 5.19% 4.65%
Portfolio turnover rate<F8> 26.10% 26.10% 59.29% 59.29% 66.69% 66.69% 56.25% 82.37%
<FN>
<F1> Commencement of operations.
<F2> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective on
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional Series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Fund's net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994 through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995 through October 31, 1995.
<F4> For the Tax-Exempt Intermediate Bond Fund, substantially all investment income is exempt from Federal income tax.
<F5> Not annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds,
and for the periods ended April 30, 1997, for all Funds.
<F6> The total return calculation does not reflect the 2% front end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds, and
for the periods ended April 30, 1997, for all Funds.
<F8> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
See notes to the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
TAX-EXEMPT INTERMEDIATE BOND FUND
----------------------------------
Six months ended Year ended Year ended Year ended Feb. 8, 1993<F1>
April 30, 1997 October 31, 1996 October 31, 1995<F3> Oct. 31, through
Series A Series Inst'l. Series A Series Inst'l. Series A Series Inst'l. 1994 Oct. 31, 1993
Per Share Data: -------- ------------- -------- ------------- -------- ------------- ---- -------------
Net asset value, (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $10.21 $10.21 $10.23 $10.24 $9.78 $9.78 $10.26 $10.00
Income from investment
operations:
Net investment income<F4> 0.21 0.22 0.40(9) 0.43<F9> 0.42 0.44 0.41 0.27
Net realized and unrealized
gains (losses) on
securities (0.08) (0.08) (0.01) (0.03) 0.45 0.46 (0.48) 0.26
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.13 0.14 0.39 0.40 0.87 0.90 (0.07) 0.53
-------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.21) (0.22) (0.41) (0.43) (0.42) (0.44) (0.41) (0.27)
Distributions from
capital gains - - - - - - - -
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.21) (0.22) (0.41) (0.43) (0.42) (0.44) (0.41) (0.27)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of period $10.13 $10.13 $10.21 $10.21 $10.23 $10.24 $9.78 $10.26
======== ======== ======== ======== ======== ======== ======== ========
Total return<F5><F6> 1.27% 1.39% 3.87% 4.02% 9.07% 9.38% (0.73)% 5.36%
Supplemental data and ratios:
Net assets, in thousands,
end of period $12,137 $39,987 $10,690 $36,652 $7,711 $27,595 $26,167 $23,866
Ratio of net expenses
to average net assets<F7> 0.75% 0.50% 0.75% 0.50% 0.71% 0.51% 0.60% 0.59%
Ratio of net investment
income to average net
assets<F7> 4.14% 4.39% 3.99% 4.24% 4.25% 4.45% 4.04% 3.75%
Portfolio turnover rate<F8> 6.68% 6.68% 30.46% 30.46% 44.13% 44.13% 58.54% 3.23%
<FN>
<F1> Commencement of operations.
<F2> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective on
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional Series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Fund's net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994 through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995 through October 31, 1995.
<F4> For the Tax-Exempt Intermediate Bond Fund, substantially all investment income is exempt from Federal income tax.
<F5> Not annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds,
and for the periods ended April 30, 1997, for all Funds.
<F6> The total return calculation does not reflect the 2% front end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds, and
for the periods ended April 30, 1997, for all Funds.
<F8> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
See notes to the financial statements.
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
BOND IMMDEX/TM FUND
--------------------
Six months ended Year ended Year ended
April, 30, 1997 October 31, 1996 October 31, 1995<F3> Year ended October 31,
---------------------- ---------------------- ---------------------- ---------------------
Per Share Data: Series A Series Inst'l. Series A Series Inst'l. Series A Series Inst'l. 1994 1993 1992<F2>
-------- ------------- -------- ------------- -------- ------------- ---- ---- --------
Net asset value, (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $27.54 $27.55 $27.82 $27.82 $25.67 $25.67 $28.91 $27.31 $26.50
Income from investment
operations:
Net investment income<F4> 0.83 0.86 1.61(9) 1.70<F9> 1.68 1.74 1.65 1.68 1.75
Net realized and unrealized
gains (losses) on
securities (0.47) (0.47) (0.26) (0.27) 2.30 2.29 (2.74) 1.83 0.96
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.37 0.39 1.35 1.43 3.98 4.03 (1.09) 3.51 2.71
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income (0.83) (0.86) (1.63) (1.70) (1.79) (1.84) (1.65) (1.70) (1.76)
Distributions from
capital gains - - - - (0.04) (0.04) (0.50) (0.21) (0.14)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total distributions (0.83) (0.86) (1.63) (1.70) (1.83) (1.88) (2.15) (1.91) (1.90)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end
of period $27.07 $27.08 $27.54 $27.55 $27.82 $27.82 $25.67 $28.91 $27.31
======== ======== ======== ======== ======== ======== ======== ======== ========
Total return<F5><F6> 1.33% 1.45% 5.06% 5.35% 16.05% 16.26% (3.89)% 13.30% 10.49%
Supplemental data and ratios:
Net assets, in thousands,
end of period $49,777 $366,234 $42,671 $370,556 $21,875 $290,274 $256,778 $260,468 $181,421
Ratio of net expenses
to average net assets<F7> 0.67% 0.42% 0.68% 0.43% 0.64% 0.44% 0.48% 0.50% 0.50%
Ratio of net investment income
to average net assets<F7> 6.12% 6.36% 5.98% 6.23% 6.31% 6.51% 6.14% 6.10% 6.92%
Portfolio turnover rate<F8> 25.41% 25.41% 33.38% 33.38% 41.67% 41.67% 49.70% 81.18% 37.72%
<FN>
<F1> Commencement of operations.
<F2> Effective February 3, 1992, FIRMCO assumed the investment advisory responsibilities of Firstar Trust Company.
<F3> On January 9, 1995, all previously existing series of shares of each Fund were reclassified as Series A shares. Effective on
January 9, 1995, Institutional shareowners exchanged their Series A shares for the Funds' Institutional Series shares. For the
year ended October 31, 1995, the Financial Highlights ratios of net expenses to average net assets, ratios of net investment
income to average net assets, total return and the per share income from investment operations and distributions are presented
on a basis whereby the Fund's net investment income, net expenses, net realized and unrealized gains (losses) and distributions
for the period November 1, 1994 through January 9, 1995, were allocated to each class of shares based upon the relative net
assets of each class of shares as of the close of business on January 9, 1995, and the results thereof combined with the
results of operations and distributions for each applicable class for the period January 10, 1995 through October 31, 1995.
<F4> For the Tax-Exempt Intermediate Bond Fund, substantially all investment income is exempt from Federal income tax.
<F5> Not annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds,
and for the periods ended April 30, 1997, for all Funds.
<F6> The total return calculation does not reflect the 2% front end sales charge for Series A.
<F7> Annualized for the period ended October 31, 1993, for the Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds, and
for the periods ended April 30, 1997, for all Funds.
<F8> Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
<F9> Net investment income per share is calculated using ending balances prior to consideration of adjustments for permanent book
and tax differences.
See notes to the financial statements.
</TABLE>
SHORT-TERM BOND MARKET FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- -------------
LONG-TERM INVESTMENTS 98.4%
ASSET-BACKED SECURITIES 23.0%
AUTO LOAN RECEIVABLES 0.7%
General Motors Acceptance Corp. Grantor,
$1,289 Series 1991-A1, Class A, 8.17%, 1/02/00 $ 1,315
USAA Auto Loan Grantor Trust, Series 1994-1,
200 Class A, 5.00%, 11/15/99 199
-----------
1,514
-----------
CREDIT CARD RECEIVABLES 16.0%
Banc One Credit Card Master Trust:
6,500 Series 1994-C, Class A, 7.80%, 12/15/00 6,648
1,250 Series 1995-A, Class A, 6.15%, 7/15/02 1,235
Chase Manhattan Grantor Trust,
1,203 Series 1995-B, Class A, 5.90%, 9/15/99 1,202
Discover Card Master Trust I:
3,450 Series 1993-2, Class A, 5.40%, 5/15/99 3,406
2,000 Series 1993-B, Class A, 6.75%, 2/15/00 2,001
First Chicago Master Trust II, Series 1994-L,
3,500 Class A, 7.15%, 4/15/01 3,541
First Deposit Master Trust, Series 1995-2,
4,000 Class A, 6.05%, 6/15/98 3,998
Household Affinity Credit Card Master Trust I,
500 Series 1993-2, Class A, 5.60%, 11/15/00 486
NationsBank Credit Card Master Trust,
3,668 Series 1995-1, Class A, 6.45%, 8/15/00 3,652
Sears Credit Account Master Trust,
5,050 Series 1994-1, Class A, 7.00%, 8/15/00 5,107
Signet Master Trust, Series 1993-1, Class A,
3,900 5.20%, 10/15/98 3,845
-----------
35,121
-----------
HOME EQUITY LOAN RECEIVABLES 6.3%
EQCC Home Equity Loan Trust,
810 Series 1994-3, Class A2, 7.44%, 8/15/05 800
GE Home Equity Loan Asset-Backed Certificates:
426 Series 1991-1, Class A, 7.20%, 8/30/11 429
2,500 Series 1991-1, Class B, 8.70%, 9/15/11 2,491
Household Finance Corp.:
1,679 Series 1992-2, Class A3, 5.25%, 10/20/07 1,676
825 Series 1992-2, Class A, 6.65%, 11/20/12 822
Security Pacific Home Equity Loan:
1,515 Series 1991-1, 8.85%, 5/15/98 1,552
2,982 Series 1991-2, 8.15%, 6/15/20 3,021
U.S. Home Equity Loan Certificates:
812 Series 1991-2, Class A, 8.50%, 4/15/21 816
2,200 Series 1991-2, Class B, 9.125%, 4/15/21 2,235
-----------
13,842
-----------
CORPORATE BONDS 28.1%
Atlantic Richfield Notes,
4,169 10.25%, 7/02/00 4,251
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
CORPORATE BONDS 28.1% (CONT.)
Bear Stearns Company Senior Notes,
$1,000 6.75%, 8/15/00 $ 995
Big Rivers Electric Corporation
Coop Utility Trust Certificates,
1,500 9.50%, 2/15/17 1,604
BP America, Inc. Guaranteed Debentures,
2,000 10.00%, 7/01/18 2,166
Chase Manhattan Corp. Subordinated Notes:
1,350 10.375%, 3/15/99 1,437
700 10.00%, 6/15/99 746
Chrysler Corp. Debentures,
2,250 10.95%, 8/01/17 2,392
Continental Bank Subordinated Notes,
1,840 11.25%, 7/01/01 1,923
Deseret Generation & Transmission Coop Debentures,
1,000 10.11%, 12/15/17 1,071
Ford Capital Debentures,
2,010 9.00%, 8/15/98 2,071
Ford Motor Credit Co., Notes:
630 8.875%, 6/15/99 657
750 8.375%, 1/15/00 780
General Motors Acceptance Corp. Notes,
3,600 7.75%, 1/15/99 3,669
GTE Corp. Debentures,
4,525 10.75%, 9/15/17 4,810
Heller Financial, Inc. Notes,
2,790 8.00%, 12/15/98 2,848
Joy Technologies, Inc. Senior Notes,
4,600 10.25%, 9/01/03 5,020
Lehman Brothers Holdings, Inc. Debentures:
3,000 8.875%, 11/01/98 3,096
1,000 9.875%, 10/15/00 1,079
Lehman Brothers Holdings, Inc. Notes:
2,225 7.625%, 7/15/99 2,265
1,100 6.65%, 11/08/99 1,086
Lehman Brothers, Inc. Senior Subordinated Notes:
750 7.625%, 8/01/98 760
2,302 10.00%, 5/15/99 2,440
Paine Webber Group, Inc. Medium Term Notes:
1,000 5.83%, 2/02/99 986
1,000 6.31%, 7/22/99 989
Salomon, Inc. Medium Term Notes,
1,500 10.125%, 6/01/99 1,599
Salomon, Inc. Senior Notes:
800 7.75%, 5/15/00 817
Smith Barney Holdings, Inc. Notes,
3,150 5.625%, 11/15/98 3,108
Torchmark Corp. Debentures,
3,600 9.625%, 5/01/98 3,706
USF&G Corporation Senior Notes,
3,075 7.00%, 5/15/98 3,089
-----------
61,460
-----------
SHORT-TERM BOND MARKET FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
MORTGAGE-BACKED SECURITIES 9.1%
Citicorp Mortgage Securities, Inc.,
Real Estate Mortgage Investment Conduit (REMIC),
$ 519 Series 1991-7, Class M, 8.75%, 5/25/21 $ 526
Collateralized Mortgage Securities Corp.,
1,184 Series 1991-6, Class PH, 7.00%, 5/20/20 1,182
Green Tree Financial Corp. Pass-Thru Certificates:
1,000 Series 1993-3, Class A4, 5.45%, 10/15/18 987
3,865 Series 1993-4, Class A2, 5.85%, 1/15/19 3,860
Marine Midland, Real Estate Mortgage Investment
Conduit (REMIC), Series 1992-3, Class A12,
1,690 8.00%, 10/25/23 1,660
Merrill Lynch Mortgage Investors, Inc.,
1,807 Series 1992-B, Class A, 7.85%, 4/15/12 1,830
Morgan Stanley Mortgage Trust,
1,979 Series 40, Class 6, 7.00%, 2/20/20 1,980
Prudential-Bache CMO Trust,
1,002 Series 8, Class E, 7.965%, 3/01/18 1,006
Prudential Home Mortgage Securities,
949 Series 1993-24, Class A1, 5.50%, 6/25/00 935
Prudential Securities Financial Asset FDG Corp.,
1,150 Series 1993-4, Class A3, 6.83%, 9/25/09 1,141
Resolution Trust Corp.:
250 Series 1992-MH2, Class B, 7.95%, 2/15/04 251
532 Series 1992-MH2, Class A1, 7.00%, 2/15/19 533
Security Pacific Acceptance Corp.:
665 Series 1992-2, Class A2, 7.10%, 5/15/12 667
3,250 Series 1992-2, Class A3, 7.50%, 6/15/12 3,295
-----------
19,853
-----------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 1.2%
Hydro-Quebec Debentures,
1,250 13.375%, 2/15/13 1,373
Quebec Province CDA Debentures,
1,000 13.25%, 9/15/14 1,173
-----------
2,546
-----------
TAXABLE MUNICIPAL 3.2%
California State Water Department,
2,000 Series E, 9.875%, 12/01/24 2,270
Florida Housing Finance Agency:
450 Antigua Club-A-2, 8.625%, 8/01/01 468
425 Brittany Apartments-C-2, 8.625%, 8/01/02 444
550 Maitland Club-B-2, 8.625%, 8/01/01 573
St. Louis, Missouri Airport Revenue Bond,
3,250 Series 1993A, 5.50%, 7/01/98 3,224
-----------
6,979
-----------
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
U.S. GOVERNMENT AGENCY
AND AGENCY MORTGAGE-BACKED ISSUES 13.5%
Federal Home Loan Mortgage Corporation (FHLMC)
Participation Certificates:
$ 58 7.00%, 12/01/01 $ 58
164 7.75%, 7/01/09 167
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
1,959 Series 1153, Class F, 7.75%, 10/15/98 1,982
988 Series 1243, Class K, 7.50%, 8/15/01 1,001
865 Series 153 Class F, 7.75%, 8/15/15 872
1,825 Series 1149, Class K, 7.50%, 7/15/20 1,838
2,300 Series 1101, Class L, 6.95%, 9/15/20 2,290
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
1,250 Series, 1992-140, Class HB, 6.50%, 10/25/99 1,248
4,640 Series 1992-54, Class VB, 7.50%, 12/25/99 4,680
2,198 Series X-19A, Class A, 6.50%, 10/25/00 2,187
2,000 Series 1993-G06, Class K, 7.00%, 11/25/01 1,996
126 Series G92-40, Class D, 7.00%, 3/25/03 125
1,739 Series 1991-63, Class G, 6.95%, 5/25/06 1,736
1,000 Series 1993-86, Class E, 6.00%, 1/25/07 986
1,453 Series 1992-93, Class G, 7.50%, 6/25/07 1,464
284 Series 1989-75, Principal Only, Class C, 0.00%, 9/25/18 278
250 Series 1992-138, Class C, 6.00%, 12/25/18 248
1,000 Series 1991-154, Class PH, 7.50%, 9/25/20 1,010
4,500 Series 1991-82, Class PL, 7.00%, 12/15/20 4,483
U.S. Department of Veterans Affairs Mortgage Trust
1,000 (REMIC) Series 1992-1, Class J, 7.75%, 2/15/01 1,000
-----------
29,649
-----------
U.S. TREASURY OBLIGATIONS 20.3%
U.S. Treasury Notes:
10,550 7.50%, 10/31/99 10,814
19,750 8.50%, 2/15/00 20,775
5,000 6.875%, 3/31/00 5,056
8,000 5.50%, 4/15/00 7,803
-----------
44,448
-----------
Total Long-Term Investments (Cost $217,233) 215,412
-----------
Number
of Shares
(in thousands)
-------------
SHORT-TERM INVESTMENTS 0.4%
INVESTMENT COMPANIES 0.4%
1 Financial Square Prime Obligation Fund 1
940 Short-Term Investments Co. Liquid Assets Portfolio 940
-----------
Total Short-Term Investments (Cost $941) 941
-----------
Total Investments 98.8% (Cost $218,174) 216,353
-----------
Other Assets, less Liabilities 1.2% 2,658
-----------
TOTAL NET ASSETS 100.0% $219,011
==========
See notes to the financial statements.
INTERMEDIATE BOND MARKET FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
LONG-TERM INVESTMENTS 96.2%
ASSET-BACKED SECURITIES 24.7%
AUTO LOAN RECEIVABLES 2.6%
Ford Credit Grantor Trust, Series 1994-A,
$ 311 Class A, 6.35%, 5/15/99 $ 312
General Motors Acceptance Corp. Grantor,
836 Series 1995-A, Class A, 7.15%, 3/15/00 842
Keycorp Auto Grantor Trust, Series 1995-A,
1,315 Class A, 5.80%, 7/15/00 1,314
Premier Auto Trust:
1,884 Series 1993-5, Class A2, 4.22%, 3/02/99 1,861
876 Series 1994-1, Class A3, 4.75%, 2/02/00 870
252 Series 1994-2, Class A4, 6.00%, 5/02/00 250
-----------
5,449
-----------
CREDIT CARD RECEIVABLES 19.5%
AT&T Universal Card Master Trust, Series 1995-2,
3,000 Class A, 5.95%, 10/17/00 2,938
Advanta Credit Catd Master Trust,
1,000 Series 1995-F, Class A1, 6.05%, 8/01/03 982
American Express Master Trust, Series 1994-2,
2,000 Class A, 7.60%, 8/15/02 2,059
Banc One Credit Card Master Trust:
3,700 Series 1995-B, Class A, 6.30%, 9/15/00 3,665
1,000 Series 1995-A, Class A, 6.15%, 7/15/02 988
Citibank Credit Card Master Trust, Principal Only,
11,550 Series 1996-1, 0.00%, 2/07/01 8,996
Discover Card Master Trust I,
500 Series 1993-3, Class A, 6.20%, 5/16/06 480
First Chicago Master Trust II, Series 1994-L,
3,675 Class A, 7.15%, 2/15/00 3,718
HFC Private Label Credit Card Master Trust II,
2,000 Series 1994-2, Class A, 7.80%, 9/20/03 2,044
Household Affinity Credit Card Master Trust I,
2,900 Series 1993-2, Class A, 5.60%, 11/15/00 2,821
MBNA Master Credit Card Trust:
745 Series 1995-F, Class A, 6.60%, 8/15/00 745
1,200 Series 1995-D, Class A, 6.05%, 11/15/02 1,182
NationsBank Credit Card Master Trust,
2,500 Series 1995-1, Class A, 6.45%, 8/15/00 2,489
Sears Credit Account Master Trust:
5,900 Series 1994-1, Class A, 7.00%, 8/15/00 5,966
2,400 Series 1995-3, Class A, 7.00%, 10/15/04 2,428
-----------
41,501
-----------
HOME EQUITY LOAN RECEIVABLES 2.6%
EQCC Home Equity Loan Trust,
1,200 Series 1994-4, 8.68%, 10/15/08 1,260
Security Pacific Acceptance Corp.,
736 Series 1991-2, Class B, 8.55%, 9/15/11 750
Security Pacific Home Equity Loan:
1,000 Series 1991-1, 8.85%, 5/15/98 1,024
2,533 Series 1991-2, 8.15%, 6/15/20 2,565
-----------
5,599
-----------
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- --------------
CORPORATE BONDS 31.2%
American General Finance Corp. Notes,
$1,000 8.00%, 2/15/00 $1,031
BankAmerica Corporation Subordinated Notes,
1,500 10.00%, 2/01/03 1,695
Bankers Trust - NY, Subordinated Debentures,
1,000 9.50%, 6/14/00 1,073
Bear Stearns Company Senior Notes:
1,312 6.75%, 8/15/00 1,306
2,000 9.375%, 6/01/01 2,164
Caterpillar, Inc. Sinking Fund Debentures,
1,150 9.75%, 6/01/19 1,225
Chase Manhattan Corp. Debentures,
1,015 10.00%, 6/15/99 1,081
Chase Manhattan Corp. Medium Term Notes,
1,000 8.65%, 2/13/99 1,035
Chemical Banking Corp. Subordinated Capital Notes,
1,175 9.75%, 6/15/99 1,245
Chrysler Financial Corp. Debentures:
750 13.25%, 10/15/99 859
700 12.75%, 11/01/99 796
Commonwealth Edison Debentures,
850 9.75%, 2/15/20 921
Consolidated Edison Co. Debentures,
100 7.60%, 1/15/00 102
Continental Cablevision, Inc. Debentures:
1,050 8.875%, 9/15/05 1,141
1,900 9.50%, 8/01/13 2,128
Deseret Generation & Transmission Coop Debentures,
750 9.375%, 1/02/11 789
Jack Eckerd Corporation Senior Subordinated Notes,
2,000 9.25%, 2/15/04 2,115
Federal Paper Board, Inc. Debentures,
350 10.00%, 4/15/11 424
Fleet Mortgage Group Notes,
2,405 6.50%, 6/15/00 2,381
Ford Motor Company Debentures,
850 9.50%, 9/15/11 999
Ford Motor Credit Co. Debentures,
1,046 9.50%, 4/15/00 1,118
General Motors Acceptance Corp. Debentures,
1,602 8.625%, 6/15/99 1,664
General Motors Acceptance Corp. Notes:
1,050 8.00%, 10/01/99 1,075
1,945 9.375%, 4/01/00 2,076
General Motors Corp. Debentures,
1,200 9.625%, 12/01/00 1,304
Georgia Pacific Corp. Debentures,
750 9.50%, 12/01/11 868
Goldman Sachs Group Notes,
5,000 6.25%, 2/01/03 (Acquired 2/01/96; Cost $4,988)* 4,766
INTERMEDIATE BOND MARKET FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
CORPORATE BONDS 31.2% (CONT.)
Heller Financial, Inc. Notes,
$1,300 9.375%, 3/15/98 $ 1,332
Household Finance Corp. Senior Subordinated Notes,
2,468 9.55%, 4/01/00 2,643
Household Finance Corp. Subordinated Notes,
945 9.625%, 7/15/00 1,019
International Lease Finance Corp. Medium Term Notes,
500 8.25%, 10/19/98 512
Lehman Brothers Holdings, Inc. Medium Term Notes,
1,750 8.875%, 2/15/00 1,834
Lehman Brothers Holdings, Inc. Notes:
2,000 6.90%, 7/15/99 2,003
1,000 6.65%, 11/08/99 987
Lehman Brothers, Inc. Senior Subordinated Notes,
1,715 10.00%, 5/15/99 1,818
NCNB Corp. Subordinated Notes,
1,900 10.20%, 7/15/15 2,350
News America Holdings Debentures,
750 10.125%, 10/15/12 834
Paine Webber Group, Inc. Medium Term Notes,
1,000 7.70%, 2/11/00 1,019
J.C. Penney Company, Inc. Debentures,
1,950 9.75%, 6/15/21 2,134
SCE Capital Corp. Notes,
1,000 7.375%, 12/15/03 990
Salomon, Inc. Medium Term Notes,
1,300 10.125%, 6/01/99 1,386
Salomon, Inc. Senior Notes:
1,450 7.75%, 5/15/00 1,481
150 6.75%, 2/15/03 146
The Charles Schwab Corp. Medium Term Notes,
650 6.06%, 10/02/00 632
Security Pacific Corp. Subordinated Notes,
2,274 9.75%, 5/15/99 2,404
Smith Barney Holdings, Inc. Notes:
2,450 5.50%, 1/15/99 2,408
1,000 6.625%, 6/01/00 993
-----------
66,306
-----------
MORTGAGE-BACKED SECURITIES 0.7%
MDC Asset Investors Trust,
Real Estate Mortgage Investment Conduit (REMIC),
1,155 Series VIII, Class 8, 7.75%, 9/25/17 1,171
Merrill Lynch Mortgage Investors, Inc. Notes,
124 8.375%, 2/09/00 129
-----------
1,300
-----------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 4.9%
Ford Capital BV Debentures,
4153 10.125%, 11/15/00 4,566
Hydro-Quebec Corporation Debentures,
2,250 11.75%, 2/01/12 3,060
Midland Bank PLC Subordinated Notes,
2,975 6.95%, 3/15/11 2,796
-----------
10,422
-----------
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
TAXABLE MUNICIPAL 0.8%
St. Louis, Missouri Airport Revenue Notes,
$ 1,800 Series 1993A, 5.30%, 7/01/98 $ 1,782
-----------
U.S. GOVERNMENT AGENCY
AND AGENCY MORTGAGE-BACKED ISSUES 10.2%
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
473 Series 1339, Class B, 8.00%, 6/15/99 480
1,000 Series 1289, Class PR, 7.50%, 2/15/03 1,017
1,153 Series 1456, Class LA, 7.50%, 5/15/03 1,176
1,000 Series 8, Class VB, 7.00%, 1/25/04 1,004
1,200 Series 1101, Class L, 6.95%, 9/15/20 1,195
1,000 Series 1167, Class E, 7.50%, 11/15/21 1,006
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
3,000 Series 1601-73, 6.642%, 10/01/98 2,994
800 Series 1993-23, Class PU, 7.50%, 1/25/00 808
500 Series 1992-73, Class L, 7.50%, 1/25/01 508
1,516 Series 1992-18, Class HB, 7.20%, 3/25/02 1,528
3,500 Series 1993-37, Class B, 7.00%, 7/25/02 3,516
1,000 Series 1992-103, Class L, 7.50%, 11/25/02 1,013
2,000 Series 1991-77, Class PH, 7.00%, 11/25/20 1,988
U.S. Department of Veterans Affairs Mortgage
Trust (REMIC):
3,000 Series 1993-1, Class G, 7.00%, 2/15/00 3,001
500 Series 1992-2, Class J, 7.00%, 3/15/01 496
-----------
21,730
-----------
U.S. TREASURY OBLIGATIONS 23.7%
U.S. Treasury Bonds:
19,000 10.75%, 2/15/03 22,705
7,950 11.875%, 11/15/03 10,109
4,900 10.75%, 8/15/05 6,126
U.S. Treasury Inflation-Indexed Notes,
3,072 3.375%, 1/15/07 3,020
U.S. Treasury Notes:
3,550 6.875%, 3/31/00 3,590
4,875 6.625%, 7/31/01 4,886
-----------
50,436
-----------
Total Long-Term Investments (Cost $205,055) 204,525
===========
Number
of Shares
(in thousands)
--------------
SHORT-TERM INVESTMENTS 2.6%
INVESTMENT COMPANIES 2.6%
10 Financial Square Prime Obligation Fund 10
5,426 Short-Term Investments Co. Liquid Assets Portfolio 5,426
-----------
Total Short-Term Investments (Cost $5,436) 5,436
-----------
Total Investments 98.8% (Cost $210,491) 209,961
-----------
Other Assets, less Liabilities 1.2% 2,582
-----------
TOTAL NET ASSETS 100.0% $212,543
===========
* Unregistered Security
See notes to the financial statements.
TAX-EXEMPT INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
GENERAL OBLIGATION 2.3%
Washington State:
$ 100 6.75%, 10/01/01 $ 105
1,000 6.30%, 9/01/02 1,063
-----------
Total General Obligation (Cost $1,181) 1,168
-----------
REVENUE BONDS 10.6%
HOUSING 4.0%
Saint Charles, Illinois, Industrial Development -
Covington Ct Project, Mandatory Put,
960 9/01/98, 5.50%, 12/01/09 975
South Dakota Housing Development Authority -
1,105 Homeownership Mortgage, 4.85%, 5/01/01 1,098
-----------
2,073
-----------
OTHER 7.9%
Georgia Municipal Electric Authority Power Revenue,
1,000 8.125%, 1/01/17, Crossover Refunded 1/01/98 1,040
Georgia State Municipal Electric Authority,
200 4.50%, 1/01/00 199
Metropolitan Pier & Exposition Authority, Illinois
1,945 Dedicated State Tax Revenue, 0.00%, 12/15/98 1,811
Phoenix, AZ Street & Highway Users,
1,000 6.50%, 7/01/09 1,087
-----------
4,137
-----------
UNIVERSITY 0.7%
New England Education Student Loan
360 Marketing Corporation, 5.80%, 3/01/02 373
-----------
Total Revenue Bonds (Cost $6,581) 5,543
-----------
PREREFUNDED AND ESCROWED
TO MATURITY 66.1%
Alaska State Housing Finance Corporation,
1,465 6.375%, 12/01/12, Prerefunded 12/01/02 1,566
Arizona State Municipal Funding Program,
1,500 8.75%, 8/01/07, Escrowed to Maturity 1,899
Bucks County, Pennsylvania Industrial Development
Authority - Grand View Hospital Project,
1,000 7.00%, 7/01/21, Prerefunded 7/01/01 1,099
Chicago, Illinois Motor Fuel Tax Revenue,
1,000 7.05%, 1/01/07, Prerefunded 1/01/01 1,091
Clark County, Nevada School District,
345 7.00%, 6/01/09, Prerefunded 6/01/01 376
Cleveland, Ohio Packaging Facilities Revenue,
1,125 8.10%, 9/15/22, Prerefunded 9/15/02 1,302
Convention Center Authority - Rhode Island Revenue,
1,000 6.65%, 5/15/12, Prerefunded 5/15/01 1,084
Danville, Indiana Community Elementary School
Building Corp., First Mortgage,
1,000 6.90%, 1/15/10, Prerefunded 1/15/02 1,099
Principal Market
Amount Value
(in thousands) (in thousands)
------------- -------------
PREREFUNDED AND ESCROWED
TO MATURITY 66.1% (CONT.)
Delaware County, Pa, - Elwyn Inc. Project,
$1,000 8.35%, 6/01/15 Prerefunded 6/01/00 $ 1,123
Des Plaines, Il Hospital Facilities - Holy
Family Hospital
500 Project, 10.75%, 1/01/14, Prerefunded 7/01/02 632
Elizabeth-Forward Pennsylvania School District,
1,000 7.25%, 1/15/10, Prerefunded 1/15/00 1,065
Farmington, New Mexico Power Revenue Bonds,
905 9.875%, 1/01/13, Prerefunded 7/01/05 1,179
Fruita, Colorado, Escrowed to Maturity:
500 9.25%, 10/01/01 562
500 9.25%, 4/01/03 599
Hodgkins, Illinois,
1,400 9.50%, 12/01/09, Prerefunded 12/01/01 1,680
Illinois Educational Facilities Authority -
Chicago College of Osteopathic Medicine, Escrowed
To Maturity,
455 8.75%, 7/01/99 476
Illinois Educational Facilities Authority -
Loyola University,
3,355 7.125%, 7/01/21, Prerefunded 7/01/01 3,701
Louisville, Kentucky Water & Sewer Revenue,
1,000 Escrowed to Maturity, 6.00%, 11/15/07 1,053
Maricopa County, Arizona School District No. 1, Phoenix
1,000 Elementary, 6.60%, 7/01/03, Prerefunded 7/01/01 1,075
Metropolitan Nashville Airport,
500 7.75%, 7/01/07, Prerefunded 7/01/01 563
Michigan State Hospital Financial Authority, Sisters of
Mercy Health Corp.,
870 7.50%, 2/15/18, Prerefunded 2/15/01 965
Nevada State Colorado River Community,
1,130 6.50%, 7/01/19, Prerefunded 7/01/04 1,239
New Jersey State Turnpike Authority Revenue Refunding,
150 Escrowed to Maturity, 6.75%, 1/01/09 162
Oklahoma State Industrial Authority Revenue,
St. Anthony Hospital, Escrowed to Maturity,
1,105 6.125%, 6/01/03 1,154
Philadelphia, Pennsylvania, Regional Port Authority,
Lease Revenue Bonds,
1,000 7.15%, 8/01/20, Prerefunded 8/01/00 1,075
Rhode Island State Public Building Authority,
1,000 6.00%, 2/01/11, Prerefunded 2/01/01 1,041
Snohomish County, Washington - Public Hospital,
Stevens Memorial Hospital,
1,000 6.85%, 12/01/11, Prerefunded 12/01/01 1,083
Tucson, Arizona Street & Highway User Revenue Bonds,
1,000 Escrowed to Maturity, 9.25%, 7/01/02 1,199
University of Illinois, Escrowed to Maturity,
1,005 6.10%, 10/01/03 1,074
Virginia State Residential Authority -
Solid Waste Disposal System,
1,000 7.30%, 4/01/15, Prerefunded 4/01/00 1,090
TAX-EXEMPT INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
-------------- --------------
PREREFUNDED AND ESCROWED
TO MATURITY 66.1% (CONT.)
Wausau, Wisconsin School District,
$1,000 6.50%, 4/01/10, Prerefunded 4/01/02 $ 1,069
Williston, North Dakota, Escrowed To Maturity,
80 6.00%, 6/01/98 82
-----------
Total Prerefunded and Escrowed to Maturity
(Cost $34,314) 34,457
-----------
INSURED BONDS 17.1%
EDUCATION 0.5%
Merrillville, Indiana Multi-School Building
Corporation,
200 6.375%, 7/01/03 214
-----------
ELECTRIC 2.0%
Springfield, Illinois Electric Revenue,
1,000 6.00%, 3/01/04 1,061
-----------
GENERAL OBLIGATION 12.6%
Amarillo, Texas Independent School District,
1,035 7.00%, 2/01/06 1,152
Chicago, Illinois,
675 11.60%, 1/01/01 827
Chicago, Illinois Park District,
1,600 6.00%, 1/01/07 1,684
Palatine, Illinois,
1,405 9.90%, 1/01/16 Crossover Refunded 1/01/00 1,613
Rocklin, California Unified School District,
1,235 6.70%, 9/01/04 1,328
-----------
6,604
-----------
PUBLIC FACILITIES & IMPROVEMENTS 2.0%
Illinois State Certificates of Participation,
1,000 6.00%, 7/01/06 1,055
-----------
Total Insured Municipal Bonds (Cost $8,945) 8,934
-----------
Number Market
of Shares Value
(in thousands) (in thousands)
- --------------- --------------
INVESTMENT COMPANIES 0.1%
2 Financial Square Tax-Exempt Money Market $ 2
40 Tax Free Investment Trust 40
-----------
Total Investment Companies (Cost $42) 42
-----------
Total Investments 98.2% (Cost $51,063) 51,184
-----------
Other Assets, less Liabilities 1.8% 940
-----------
TOTAL NET ASSETS 100.0% $52,124
===========
See notes to the financial statements.
BOND IMMDEX/TM FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
LONG-TERM INVESTMENTS 94.7%
ASSET-BACKED SECURITIES 15.4%
AUTO LOAN RECEIVABLES 1.1%
General Motors Acceptance Corp. Grantor Trust,
$ 1,269 Series 1995-A, Class A, 7.15%, 3/15/00 $ 1,279
Premier Auto Trust:
667 Series 1993-3, Class A3, 4.90%, 12/15/98 666
1,087 Series 1993-4, Class A2, 4.65%, 2/02/99 1,083
638 Series 1993-5, Class A2, 4.22%, 3/02/99 631
1,064 Series 1993-6, Class B, 4.875%, 11/02/99 1,063
-----------
4,722
-----------
CREDIT CARD RECEIVABLES 14.3%
Advanta Credit Card Master Trust, Series 1995-F,
4,200 Class A1, 6.05%, 8/01/03 4,126
AT&T Universal Master Card Trust, Series 1995-2,
4,600 Class A, 5.95%, 10/17/00 4,505
Banc One Credit Card Master Trust, Series 1995-B,
8,000 Class A, 6.30%, 9/15/00 7,926
Citibank Credit Card Master Trust, Principal Only,
2,465 Series 1996-1, 0.00%, 2/07/01 1,920
First Chicago Master Trust II, Series 1994-L,
1,000 Class A, 7.15%, 2/15/00 1,012
Ford Credit Grantor Trust
1,044 Series 1995-A, Class A, 5.90%, 5/15/00 1,044
HFC Private Label Credit Card Master Trust II:
2,600 Series 1994-2, Class A, 7.80%, 9/20/03 2,657
732 Series 1993-2, Class A3, 4.65%, 12/20/08 729
Household Affinity Credit Card Master Trust I,
3,750 Series 1993-2, Class A, 5.60%, 11/15/00 3,648
MBNA Master Credit Card Trust,
2,780 Series 1995-F, Class A, 6.60%, 8/15/00 2,780
NationsBank Credit Card Master Trust,
10,359 Series 1995-1, Class A, 6.45%, 8/15/00 10,313
Sears Credit Account Master Trust:
11,750 Series 1994-1, Class A, 7.00%, 8/15/00 11,882
1,700 Series 1995-2, Class A, 8.10%, 1/15/01 1,761
5,300 Series 1995-3, Class A, 7.00%, 10/15/04 5,362
-----------
59,665
-----------
CORPORATE BONDS 39.3%
Alabama Power Company Debentures,
1,000 9.00%, 12/01/24 1,059
American Airline Equipment Pass-Thru Certificates,
1,500 10.21%, 1/01/10 1,718
BankAmerica Corporation Subordinated Notes,
3,539 10.00%, 2/01/03 3,998
BarclaysAmericanCorp. Debentures,
815 9.75%, 5/15/21 914
Barnett Banks Inc. Subordinated Notes,
1,029 8.50%, 3/01/99 1,062
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- -------------
CORPORATE BONDS 39.3% (CONT.)
Bear Stearns Company Notes,
$ 63 6.50%, 6/15/00 $ 62
Bear Stearns Company Senior Notes,
500 6.75%, 8/15/00 498
Burlington Northern Railroad Company
Equipment Trust Certificates,
500 11.85%, 1/15/99 542
Chase Manhattan Corp. Medium Term Notes,
525 8.65%, 2/13/99 543
Chase Manhattan Corp. Notes,
7,702 10.00%, 6/15/99 8,203
Chemical Banking Corp. Subordinated Capital Notes,
4,664 9.75%, 6/15/99 4,943
Chrysler Financial Corp. Debentures:
7,648 13.25%, 10/15/99 8,757
1,927 12.75%, 11/01/99 2,190
Citicorp Subordinated Capital Notes,
3,836 9.75%, 8/01/99 4,075
Commonwealth Edison Co. Debentures,
6,050 9.75%, 2/15/20 6,556
Continental Bank Subordinated Notes,
683 12.50%, 4/01/01 808
Continental Cablevision, Inc. Debentures:
2,050 8.875%, 9/15/05 2,228
3,950 9.50%, 8/01/13 4,424
Deseret Generation & Transmission Coop Debentures,
2,274 9.375%, 1/02/11 2,392
Federal Express Corporation Debentures,
2,163 9.625%, 10/15/19 2,294
First Chicago Corp. Subordinated Notes:
3,844 9.00%, 6/15/99 4,018
620 9.875%, 8/15/00 674
First National Bank Chicago Debentures,
1,100 8.08%, 1/05/18 1,154
First National Bank Omaha Subordinated Notes,
3,000 7.32%, 12/01/10 2,887
First USA Bank Notes,
650 5.75%, 1/15/99 642
Ford Motor Company Notes,
2,650 9.50%, 9/15/11 3,113
Ford Motor Company Pass-Thru Certificates,
1,750 6.11%, 1/01/01 1,711
Ford Motor Credit Co. Debentures,
1,464 8.875%, 6/15/99 1,528
Ford Motor Credit Co. Notes,
911 8.375%, 1/15/00 947
GTE North, Inc. Debentures,
1,100 9.60%, 1/01/21 1,215
Geico Corporation Debentures,
2,000 9.15%, 9/15/21 2,174
BOND IMMDEX/TM FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- ---------------
CORPORATE BONDS 39.3% (CONT.)
General Motors Acceptance Corp. Medium Term Notes,
$ 1,000 7.50%, 7/22/99 $1,017
General Motors Acceptance Corp. Notes:
1,375 8.00%, 10/01/99 1,408
869 9.625%, 5/15/00 935
General Motors Corp. Debentures,
1,314 9.625%, 12/01/00 1,428
Georgia Pacific Corp. Debentures:
1,011 9.50%, 12/01/11 1,170
1,500 9.50%, 2/15/18 1,538
2,175 9.875%, 11/01/21 2,427
975 9.50%, 5/15/22 1,045
Goldman Sachs Group Notes,
10,000 6.25%, 2/01/03 (Acquired 2/01/96; Cost 9,974)* 9,531
Heller Financial, Inc. Notes,
9,045 9.375%, 3/15/98 9,270
Household Finance Corp. Subordinated Notes,
4,327 9.625%, 7/15/00 4,665
Lehman Brothers Holdings, Inc. Debentures,
1,980 9.875%, 10/15/00 2,136
Lehman Brothers Holdings, Inc. Medium Term Notes,
1,805 8.875%, 2/15/00 1,892
Lehman Brothers Holdings, Inc. Notes,
1,700 6.90%, 7/15/99 1,703
Lehman Brothers, Inc. Senior Subordinated Notes,
7,232 10.00%, 5/15/99 7,667
The May Department Stores Company Debentures,
1,650 9.875%, 6/15/21 1,859
Mobile Energy Services LLC Debentures,
722 8.665%, 1/01/17 731
National Westminster Bancorp. Inc., Debentures,
1,000 9.375%, 11/15/03 1,115
NCNB Corp. Subordinated Notes,
5,155 10.20%, 7/15/15 6,375
News America Holdings Debentures,
2,200 10.125%, 10/15/12 2,447
Paine Webber Group Medium Term Notes,
2,450 6.73%, 1/20/04 2,366
Parker Hannifin Debentures,
400 9.75%, 2/15/21 439
J.C. Penney Company, Inc. Debentures,
3,650 9.75%, 6/15/21 3,993
SCE Capital Corp. Notes,
1,100 7.375%, 12/15/03 1,089
Salomon, Inc. Notes,
2,150 7.00%, 6/15/03 2,108
Salomon, Inc. Senior Notes:
2,850 7.75%, 5/15/00 2,910
2,100 6.75%, 2/15/03 2,039
Principal Market
Amount Value
(in thousands) (in thousands)
- --------------- --------------
CORPORATE BONDS 39.3% (CONT.)
The Charles Schwab Corp. Medium Term Notes:
$2,000 5.84%, 9/30/99 $ 1,958
2,250 5.90%, 10/01/99 2,206
Security Pacific Corp. Subordinated Notes:
631 9.75%, 5/15/99 667
395 11.50%, 11/15/00 450
Tenneco, Inc. Debentures,
3,150 7.25%, 12/15/25 3,005
Union Camp Corp. Debentures,
850 10.00%, 5/01/19 923
Westvaco Corp. Debentures,
1,200 10.125%, 6/01/19 1,312
-----------
163,153
-----------
MORTGAGE-BACKED SECURITIES 0.5%
Prudential Home Mortgage Securities,
2,319 Series 1993-24, Class A2, 5.50%, 7/25/00 2,208
-----------
INTERNATIONAL/YANKEE (U.S. $ DENOMINATED) 7.4%
British Telecommunications Finance Debentures,
2,761 9.625%, 2/15/19 3,007
Ford Capital BV Notes:
2,546 10.125%, 11/15/00 2,800
2,305 9.375%, 5/15/01 2,495
1,000 9.50%, 6/01/10 1,167
Hydro-Quebec Debentures:
3,500 11.75%, 2/01/12 4,760
750 9.75%, 1/15/18 827
Midland Bank PLC Subordinated Notes,
5,000 6.95%, 3/15/11 4,700
National Bank of Hungary Debentures,
1,700 8.875%, 11/01/13 1,796
Newfoundland (Providence of) Canada,
1,800 10.00%, 12/01/20 2,215
Norsk Hydro A/S Debentures,
2,900 9.00%, 4/15/12 3,259
Quebec Province Debentures,
2,000 11.00%, 6/15/15 2,280
Sweden (Kingdom of) Debentures,
1,100 11.125%, 6/01/15 1,501
-----------
30,807
-----------
TAXABLE MUNICIPAL 0.1%
Texas State Taxable Water Development,
450 Series E, 7.625%, 8/01/11 446
-----------
BOND IMMDEX/TM FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Market
Amount Value
(in thousands) (in thousands)
- -------------- --------------
U.S. GOVERNMENT AGENCY AND
AGENCY MORTGAGE-BACKED ISSUES 6.0%
Federal Home Loan Bank (FHLB),
$ 1,500 Structured Notes, 5.03%, 7/28/00 $ 1,495
Federal Home Loan Mortgage Corporation (FHLMC),
141 Participation Certificates, 7.50%, 4/01/07 142
Federal Home Loan Mortgage Corporation (FHLMC)
Real Estate Mortgage Investment Conduit (REMIC):
20 Series 1259, Interest Only, Class IC,
1007.05%, 10/15/05 232
816 Series 6, Class C, 9.05%, 6/15/19 854
507 Series 1169, Class D, 7.00%, 5/15/21 507
2,150 Series 188, Class H, 7.00%, 9/15/21 2,104
575 Series 1201, Class E, 7.40%, 12/15/21 579
Federal National Mortgage Association (FNMA),
Participation Certificates:
522 7.50%, 8/01/07 529
156 7.75%, 6/01/08 156
Federal National Mortgage Association (FNMA)
Real Estate Mortgage Investment Conduit (REMIC):
7 Series 1992-29, Interest Only, Class K,
977.92%, 11/25/00 109
650 Series 1993-87, Class KD, 6.00%, 6/25/03 628
20 Series 1992-145N, 1010.06%, 1/25/06 682
539 Series 1989-39, Principal Only, Class C, 6/25/17 523
950 Series X-225C, Class TE, 5.45%, 10/25/18 921
1,736 Series 1988-24, Class G, 7.00%, 10/25/18 1,699
1,500 Series 1989-44, Class H, 9.00%, 7/25/19 1,576
400 Series 1989-90, Class E, 8.70%, 12/25/19 417
1,870 Series 1990-30, Class E, 6.50%, 3/25/20 1,803
234 Series 1990-72, Class A, 9.00%, 7/25/20 240
538 Series 1990-72, Class B, 9.00%, 7/25/20 578
6,356 Series 1990-105, Class J, 6.50%, 9/25/20 6,144
1,209 Series 1990-106, Class J, 8.50%, 9/25/20 1,251
1,772 Series 1992-120, Class C, 6.50%, 7/25/22 1,718
-----------
24,887
-----------
U.S. TREASURY OBLIGATIONS 26.0%
82,505 U.S. Treasury Bonds, 9.25%, 2/15/16 101,275
U.S. Treasury Inflation-Indexed Notes,
6,849 3.375%, 1/15/07 6,734
-----------
108,009
-----------
Total Long-Term Investments (Cost $390,483) 393,897
-----------
Number Market
of Shares Value
(in thousands) (in thousands)
- -------------- --------------
SHORT-TERM INVESTMENTS 3.7%
Investment Companies 1.3%
10 Financial Square Prime Obligation Fund $ 10
5,602 Short-Term Investments Co. Liquid Assets Portfolio 5,602
-----------
5,612
-----------
Principal
Amount
(in thousands)
--------------
VARIABLE RATE DEMAND NOTES,
DUE UPON DEMAND 2.4%
$10,000 Warner-Lambert Co. 10,000
-----------
Total Short-Term Investments (Cost $15,612) 15,612
-----------
Total Investments 98.4% (Cost $406,095) 409,509
-----------
Other Assets, less Liabilities 1.6% 6,502
-----------
TOTAL NET ASSETS 100.0% $416,011
===========
* Unregistered Security
See notes to the financial statements.
SHORT-TERM BOND MARKET FUND
INTERMEDIATE BOND MARKET FUND
TAX-EXEMPT INTERMEDIATE BOND FUND
BOND IMMDEX/TM FUND
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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. The Short-Term Bond
Market, Intermediate Bond Market, Tax-Exempt Intermediate Bond and Bond
IMMDEX/TM Funds (the "Funds") are separate, diversified investment portfolios
of the Company. The Short-Term Bond Market Fund and Bond IMMDEX/TM Fund
commenced operations on Dec ember 29, 1989; the Intermediate Bond Market Fund
commenced operations on January 5, 1993; and the Tax-Exempt Intermediate Bond
Fund commenced operations on February 8, 1993. The objective of the Short-Term
Bond Market Fund is to seek to provide an annual rate of total return, before
Fund expenses, comparable to the annual rate of total return of the Lehman
Brothers 1-3 year Government/Corporate Bond Index. The objective of the
Intermediate Bond Market Fund is to seek to provide an annual rate of total
return, before Fund expenses, comparable to the annual rate of total return of
the Lehman Brothers Intermediate Government/Corporate Bond Index. The objective
of the Tax-Exempt Intermediate Bond Fund is to seek to provide current income
that is substantially exempt from federal income tax and emphasize total return
with relatively low volatility of principal. The objective of the Bond IMMDEX/TM
Fund is to seek to provide an annual rate of total return, before Fund expenses,
comparable to the annual rate of total return of the Lehman Brothers
Government/Corporate Bond Index.
The costs, in thousands, incurred in connection with the organiza tion,
initial registration and public offering of shares aggregating $44, $14, $11 and
$46 for the Short-Term Bond Market, Intermediate Bond Market, Tax-Exempt
Intermediate Bond and Bond IMMDEX/TM Funds, respectively, have been paid by the
Funds. These costs are being amortized over the period of benefit, but not to
exceed sixty months from each Fund's commencement of operations.
The Company has issued two classes of Fund shares in each of the
Funds: Series A and Series Institutional. The Series A shares are subject to a
0.25% shareowner service fee and to an initial sales charge imposed at the time
of purchase, in accordance with the Funds' prospectus. The maximum sales charge
is 2% of the offering price or 2.04% of the net asset value. Each class of
shares for each Fund has identical rights and privileges except with respect to
shareowner organization fees paid by Series A shares, voting rights on matters
affecting a single class of shares and the exchange privileges of each class of
shares.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
a) Investment Valuation - Securities which are traded on a recognized exchange
are valued at the last sale price on the securities exchange on which such
securities are primarily traded or at the last sale price on the national
securities market. Exchange-traded securities for which there were no
transactions are valued at the current bid prices. Securities traded on only
over-the-counter markets are valued on the basis of closing over-the-counter bid
prices. Instruments with a remaining maturity of 60 days or less are valued on
an amortized cost basis which approx i mates market value. Securities for which
quotations are not readily available and other assets are valued at fair value
as deter mined by the investment adviser under the supervision of the Board of
Directors.
b) Federal Income Taxes - No provision for federal income taxes has been made
since the Funds have complied to date with the provisions of the Internal
Revenue Code available to regulated investment companies and intend to continue
to so comply in future years.
c) Income and Expenses - The Funds are charged for those expenses that are
directly attributable to each portfolio, such as advisory, admini stra tion 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. Net investment income other than class specific expenses, and
realized and unrealized gains and losses are allocated daily to each class of
shares based upon the relative net asset value of outstanding shares (or the
value of dividend-eligible shares, as appropriate) of each class of shares at
the beginning of the day (after adjusting for the current day's capital share
activity of the respective class).
d) Distributions to Shareowners - Dividends from net investment income of the
Short-Term Bond Market, Intermediate Bond Market, Tax-Exempt Inter mediate Bond
and Bond IMMDEX/TM Funds are declared and paid monthly. Distributions of net
realized capital gains, if any, will be declared at least annually.
e) 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.
f) Unregistered Security - The Intermediate Bond Market and
Bond IMMDEX/TM Funds own a certain investment security which is unregistered and
thus restricted to resale. This security is valued by the Funds after giving due
consideration to pertinent factors including recent private sales, market
conditions and the issuer's financial performance. Where future disposition of
this security requires registration under the Securities Act of 1933, the Funds
have the right to include their security in such registration, generally without
cost to the Funds. The Funds have no right to require registration of
unregistered securities.
g) Other - Investment and shareowner transactions are recorded no later than
the first business day after the trade date. The Funds determine the gain or
loss realized from investment transactions by comparing the original cost of the
security lot sold with the net sale proceeds. Interest income is recognized on
an accrual basis. Discounts and premiums on bonds are amortized over the life of
the respective bond. Generally accepted accounting principles require that
permanent financial reporting and tax differences be reclassified to capital
stock.
3. INVESTMENT TRANSACTIONS
The aggregate purchases and sales, in thousands, of securities, excluding
short-term investments, for the Funds for the period ended April 30, 1997, were
as follows:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
----------- ----------- ------------ ---------
Purchases:
U.S. Government $25,896 $41,819 - $18,020
Other 46,928 32,413 $9,720 86,264
Sales:
U.S. Government 13,613 27,336 - 31,244
Other 39,354 24,293 3,221 74,317
At April 30, 1997, gross unrealized appreciation and depreciation of investments
for federal income tax purposes, in thousands, were as follows:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BONDFUND FUND
----------- ----------- ------------ ---------
Appreciation $ 424 $ 1,450 $317 $7,534
(Depreciation) (2,245) (1,938) (198) (3,986)
------- ------- ------ -------
Net unrealized
appreciation
(depreciation)
on investments $(1,821) $ (488) $119 $3,548
======= ======= ====== =======
At April 30, 1997, the cost of investments, in thousands, for federal income
tax purposes was $218,174, $210,448, $51,065 and $405,960 for the Short-Term
Bond Market, Intermediate Bond Market, Tax-Exempt Intermediate Bond and Bond
IMMDEX/TM Funds, respectively. At October 31, 1996, the Short-Term Bond Market,
Intermediate Bond Market and Tax-Exempt Intermediate Bond Funds had accumulated
net realized capital loss carryovers, in thousands, of $1,248, $493 and $97,
respectively, expiring in 2002. The Short-Term Bond Market, Intermediate Bond
Market and Bond IMMDEX/TM Funds had accumulated net realized capital loss
carryovers, in thousands, of $189, $568 and $987, respectively, expiring in
2003. The Short-Term Bond Market and Bond IMMDEX/TM Funds had accumulated net
realized capital loss carryovers, in thousands, of $79 and $24, respectively,
expiring in 2004. To the extent each Fund realizes future net capital gains,
taxable distributions to its respective shareowners will be offset by any unused
capital loss carryover.
<TABLE>
<CAPTION>
4. CAPITAL SHARE TRANSACTIONS
Transactions, in thousands, of shares of the Funds were as follows:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
----------------- ------------------ ------------------ ------------------
Amount Shares Amount Shares Amount Shares Amount Shares
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED APRIL 30, 1997:
Series A shares:
Shares sold $ 14,938 1,459 $ 3,736 368 $ 3,482 340 $ 13,406 489
Shares issued to owners
in reinvestment
of dividends 1,569 154 352 35 220 22 1,212 44
Shares redeemed (14,468) (1,413) (2,140) (211) (2,156) (211) (6,671) (244)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase $ 2,039 200 $ 1,948 192 $ 1,546 151 $ 7,947 289
========== ========== ========== ========== ========== ========== ========== ==========
Series Institutional shares:
Shares sold $ 23,535 2,293 $ 34,414 3,379 $ 6,970 681 $ 45,769 1,673
Shares issued to owners
in reinvestment
of dividends 4,017 394 3,480 344 211 21 10,078 369
Shares redeemed (15,221) (1,487) (15,544) (1,530) (3,531) (345) (54,055) (1,970)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase $ 12,331 1,200 $ 22,350 2,193 $ 3,650 357 $ 1,792 72
========== ========== ========== ========== ========== ========== ========== ==========
YEAR ENDED OCTOBER 31, 1996:
Series A shares:
Shares sold $ 27,710 2,697 $ 8,046 792 $ 5,857 573 $ 28,027 1,022
Shares issued to
owners in
reinvestment
of dividends 2,698 264 504 50 320 31 1,636 60
Shares redeemed (19,105) (1,863) (2,722) (268) (3,177) (311) (8,685) (319)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase $ 11,303 1,098 $ 5,828 574 $ 3,000 293 $ 20,978 763
========== ========== ========== ========== ========== ========== ========== ==========
Series Institutional
shares:
Shares sold $ 75,408 7,301 $ 76,701 7,539 $18,326 1,800 $114,906 4,180
Shares issued to
owners in
reinvestment
of dividends 6,416 627 5,795 572 418 41 17,730 648
Shares redeemed (28,472) (2,781) (37,484) (3,704) (9,656) (948) (49,787) (1,809)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase $ 53,352 5,147 $ 45,012 4,407 $ 9,088 893 $ 82,849 3,019
========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
5. 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 rates presented below as
applied to each Fund's daily net assets. For the six months ended April 30,
1997, FIRMCO voluntarily waived the following fees, in thousands, by Fund:
SHORT-TERM INTERMEDIATE TAX-EXEMPT BOND
BOND MARKET BOND MARKET INTERMEDIATE IMMDEX/TM
FUND FUND BOND FUND FUND
----------- ----------- ----------- ---------
Annual rate 0.60% 0.50% 0.50% 0.30%
Fees waived $312 $166 $87 -
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, calculated 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 period ended
April 30, 1997, $76, $71, $18 and $146 of administration fees, in thousands,
were voluntarily waived for the Short Term Bond Market, Intermediate Bond
Market, Tax-Exempt Intermediate Bond and Bond IMMDEX/TM Funds, respectively.
The Company entered into Servicing Agreements with certain Service
Organizations, including FIRMCO affiliates, for the Series A class of shares.
The Service Organizations are entitled to receive fees from the Funds up to the
annual rate of 0.25% of the average daily net asset value of the Series A shares
for certain support and/or distribution services to customers of the Service
Organizations who are beneficial owners of Series A shares. These services may
include assisting customers in processing purchase, exchange and redemption
requests; processing dividend and distribution payments from the Funds; and
providing information periodically to customers showing their positions in
Series A shares. Service Organization fees, in thousands, incurred by the Short-
Term Bond Market, Intermediate Bond Market, Tax-Exempt Intermediate Bond and
Bond IMMDEX/TM Funds aggregated $75, $23, $14 and $58, respectively, for the
period ended April 30, 1997.
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.
This page intentionally left blank.
This page intentionally left blank.
This page intentionally left blank.
- -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 pre ceded 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, WI 53201-3011
NASDREF #FX 1997-0603-0035
