APRIL 30, 1997
SEMI-ANNUAL
REPORT
(LOGO)
INSTITUTIONAL
MONEY MARKET FUND
NOTICE TO INVESTORS
- - Shares of Portico Funds:
- ARE NOT INSURED BY THE FDIC, the US Government or any other governmental
agency;
- are not bank deposits or obligations of or guaranteed by Firstar Bank, its
parent company or its affiliates;
- are subject to investment risks, including possible loss of principal; and
- are offered by B.C. Ziegler and Company, member NASD, SIPC, and an
independent third-party distributor.
- - 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.
- - There can be no assurance that the money market fund will be able to maintain
a stable net asset value of $1.00 per share.
TABLE OF CONTENTS
Page(s)
SHAREOWNER LETTER....................................................1
PORTICO INSTITUTIONAL MONEY MARKET FUND YIELD COMPARISONS............2
LOOKING AHEAD - THE FORECAST.........................................2
STATEMENT OF ASSETS AND LIABILITIES..................................3
STATEMENT OF OPERATIONS..............................................4
STATEMENT OF CHANGES IN NET ASSETS...................................4
FINANCIAL HIGHLIGHTS.................................................5
SCHEDULE OF INVESTMENTS.............................................6-7
NOTES TO FINANCIAL STATEMENTS........................................8
June 1997
DEAR SHAREOWNER:
INVESTMENT REVIEW
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. To keep inflation subdued, the Federal Reserve Board raised
the Federal Funds Rate 25 basis points in March to 5.50%. Short-term money
market rates, which had been very stable, rose accordingly. Portico
Institutional Money Market Fund's yield increased approximately 17 basis points.
When adjusted for the continued low levels of inflation, "real" yield on our
Institutional Money Market Fund remains very attractive.
Portico Institutional Money Market Fund is managed with quality and safety of
principal as our primary goals. All securities purchased by the Funds must meet
strict guidelines set by the SEC for presenting minimal credit risk as well as
our own high internal standards. Our credit research team closely monitors all
investments to ensure quality standards are met.
7-DAY YIELD*
PERIOD ENDED APRIL 30, 1997
INSTITUTIONAL MONEY MARKET FUND
CURRENT EFFECTIVE
5.22% 5.35%
* After fee waivers. Had fees not been waived, the current and effective yields
would have been 4.92% and 5.05%, respectively. Reflects past performance;
yields will vary. An investment in Portico Institutional Money Market Fund is
neither insured nor guaranteed by the U.S. Government nor is there any
assurance the Fund will be able to maintain a stable net asset value of $1.00
per share.
Current yield refers to income earned by a fund's investments over a 7-day
period. It is then annualized and stated as a percentage of the investment.
Effective yield is the same as current yield except that it assumes the income
earned by an investment in a fund will be reinvested.
YIELD COMPARISONS*
AVERAGE
MONTHLY PORTICO INSTITUTIONAL IBC'S INSTITUTIONAL
RATES MONEY MARKET FUND AVERAGE TM/ALLTAXABLE
- ---------------------------------------------------------------------------
1997
April 5.17% 5.14%
March 5.08% 5.04%
February 5.09% 5.01%
January 5.12% 5.03%
1996
December 5.13% 5.04%
November 5.14% 5.04%
October 5.16% 5.00%
September 5.17% 5.01%
August 5.16% 5.00%
July 5.13% 5.00%
June 5.07% 4.97%
May 5.03% 4.94%
We compare the Portico Institutional Money Market Fund to the IBC's
Institutional AverageTM/All Taxable, which is a composite of professionally
managed money market investment funds with similar objectives.
* After fee waivers. Had fees not been waived, performance would have been
reduced. Reflects past performance; yields will vary. An investment in Portico
Institutional Money Market Fund is neither insured nor guaranteed by the U.S.
government nor is there any assurance the Fund will be able to maintain a
stable net asset value of $1.00 per share.
LOOKING AHEAD - THE FORECAST
We believe inflation will remain subdued in the 3% area. We expect money market
rates to remain high on a real, or inflation-adjusted, basis over the next six
months and anticipate at least maintaining an average maturity in the Portico
money market funds comparable to their respective industry benchmarks. The high
credit quality of our money market funds continues to be reinforced by strong
corporate earnings.
As always, we pride ourselves on meeting three important objectives for our
money market shareholders: PRESERVATION OF PRINCIPAL, LIQUIDITY and COMPETITIVE
INVESTMENT INCOME. We believe these principles, combined with a disciplined
approach to quality, continue to be appropriate for our money market investors.
Your continued confidence in Portico Institutional Money Market Fund is
important to us, and we look forward to working with you in the future.
Jane T. Keelan
Carl J. Smith
Margaret Radske
Portfolio Managers
Firstar Investment Research & Management Company
INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
APRIL 30, 1997
(UNAUDITED)
ASSETS:
Investments, at amortized cost $807,940
Interest receivable 294
Other 13
----------
Total Assets 808,247
----------
LIABILITIES:
Dividends payable 3,398
Payable to affiliates 331
Accrued expenses and other liabilities 79
----------
Total Liabilities 3,808
----------
NET ASSETS $804,439
==========
CAPITAL STOCK, $.0001 par value
Authorized 5,000,000
Issued and outstanding 804,439
NET ASSET VALUE,
REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $1.00
=====
See notes to the financial statements.
INSTITUTIONAL MONEY MARKET FUND
STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS)
SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
INVESTMENT INCOME:
Interest income $23,462
----------
EXPENSES:
Investment advisory fees 2,145
Administration fees 499
Custody fees 72
Federal and state registration fees 12
Shareowner servicing and accounting costs 38
Professional fees 13
Reports to shareowners 7
Directors' fees and expenses 2
Other 6
----------
Total expenses before waiver 2,794
Less: Waiver of expenses (1,293)
----------
Net Expenses 1,501
----------
NET INVESTMENT INCOME $21,961
==========
See notes to the financial statements.
STATEMENT OF CHANGES IN NET ASSETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
Six months Year
ended ended
Apr. 30, 1997 Oct. 31,1996
------------- ------------
(Unaudited)
OPERATIONS:
Net investment income $ 21,961 $ 40,269
----------- -----------
Increase in net assets resulting
from operations 21,961 40,269
----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 1,308,473 2,484,810
Shares issued to owners in
reinvestment of dividends 3,015 6,595
Shares redeemed (1,257,100) (2,457,920)
----------- -----------
Net increase 54,388 33,485
----------- -----------
DIVIDENDS PAID FROM:
Net investment income (21,961) (40,269)
----------- -----------
TOTAL INCREASE
IN NET ASSETS 54,388 33,485
NET ASSETS:
Beginning of period 750,051 716,566
----------- -----------
End of period $ 804,439 $ 750,051
=========== ===========
See notes to the financial statements.
INSTITUTIONAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
Six months
ended Year ended October 31,
April 30, ---------------------------------------------
1997 1996 1995 1994 1993 1992<F1>
---- ---- ---- ---- ---- --------
(Unaudited)
Per Share Data:
Net asset value,
beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from
investment operations:
Net investment
income 0.03 0.05 0.06 0.04 0.03 0.04
------- ------- ------- ------- ------- -------
Total from investment
operations 0.03 0.05 0.06 0.04 0.03 0.04
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income (0.03) (0.05) (0.06) (0.04) (0.03) (0.04)
------- ------- ------- ------- ------- -------
Total distributions (0.03) (0.05) (0.06) (0.04) (0.03) (0.04)
------- ------- ------- ------- ------- -------
Net asset value, end
of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= ======= =======
Total Return<F2> 2.57% 5.32% 5.77% 3.65% 2.92% 3.88%
Supplemental data
and ratios:
Net assets, in
thousands, end
of period $804,439 $750,051 $716,566 $754,636 $588,301 $696,132
Ratio of net
expenses to
average
net assets<F3> 0.35% 0.35% 0.35% 0.37% 0.38% 0.41%
Ratio of net
investment income
to average net
assets<F3> 5.12% 5.19% 5.63% 3.64% 2.87% 3.75%
<F1> Effective February 3, 1992, FIRMCO assumed the investment advisory
responsibilities of Firstar Trust Company.
<F2> Not annualized for the period ended April 30, 1997.
<F3> Annualized for the period ended April 30, 1997.
See notes to the financial statements.
INSTITUTIONAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- -------------- -------------
COMMERCIAL PAPER 93.0%
AGRICULTURAL PRODUCTS 3.7%
John Deere Capital:
$15,000 5.31%, 5/19/97 $ 14,960
15,000 5.61%, 7/22/97 14,808
----------
29,768
----------
ASSET-BACKED 10.5%
Ciesco L.P.:
10,000 5.58%, 6/12/97 9,935
15,000 5.60%, 7/01/97 14,858
Corporate Asset Funding Co., Inc.:
15,000 5.32%, 6/03/97 14,927
15,000 5.55%, 6/26/97 14,870
New Center Asset Trust:
15,000 5.31%, 5/06/97 14,989
15,000 5.34%, 5/12/97 14,975
----------
84,554
----------
AUTO & TRUCKS 4.9%
Ford Credit Europe PLC:
15,000 5.32%, 5/14/97 14,971
14,500 5.61%, 7/08/97 14,347
10,000 5.65%, 7/29/97 9,860
----------
39,178
----------
BANKING - DOMESTIC 1.6%
Barclays US Funding Corporation,
12,500 5.25%, 5/09/97 12,485
----------
BANKING - FOREIGN 5.6%
Deutsche Bank Financial, Inc.:
15,000 5.24%, 5/23/97 14,952
15,000 5.60%, 7/07/97 14,844
Dresdner US Finance,
15,000 5.28%, 6/16/97 14,899
----------
44,695
----------
BASIC INDUSTRY 3.7%
RTZ America, Inc:
15,000 5.30%, 5/20/97 14,958
15,000 5.54%, 6/24/97 14,875
----------
29,833
----------
BEVERAGES 1.9%
Bass Finance (C.I.) Ltd.,
15,643 5.35%, 5/06/97 15,631
----------
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- -------------- -------------
CONSUMER CYCLICAL 1.8%
General Electric Company,
$15,000 5.56%, 6/20/97 $ 14,884
----------
CONSUMER STAPLES 3.0%
Hitachi America, Ltd.:
15,000 5.61%, 7/02/97 14,855
9,600 5.60%, 7/11/97 9,494
----------
24,349
----------
FINANCE 20.9%
A. I. Credit Corporation,
15,000 5.61%, 7/21/97 14,811
American Express Credit Corp.,
14,000 5.27%, 5/22/97 13,957
American General Finance:
15,000 5.33%, 6/04/97 14,924
15,000 5.33%, 6/05/97 14,922
15,000 5.34%, 6/09/97 14,913
Beneficial Corporation,
15,000 5.59%, 6/17/97 14,891
CIT Group Holdings, Inc.,
15,000 5.25%, 5/29/97 14,939
General Electric Capital Corporation:
5,000 5.25%, 5/27/97 4,981
15,000 5.65%, 7/30/97 14,788
Household Finance Corporation,
15,000 5.56%, 6/18/97 14,889
Swedish Export Credit Corporation,
15,000 5.33%, 5/13/97 14,973
Transamerica Finance Corporation,
15,000 5.25%, 5/21/97 14,956
----------
167,944
----------
FINANCE - SERVICES 10.5%
Goldman Sachs Group, L.P.:
15,000 5.57%, 5/01/97 14,940
15,000 5.38%, 5/28/97 15,000
Merrill Lynch & Co., Inc.:
15,000 5.36%, 6/11/97 14,908
15,000 5.64%, 7/17/97 14,818
10,000 5.63%, 7/28/97 9,862
Morgan Stanley Group, Inc.,
15,000 5.19%, 5/15/97 14,969
----------
84,497
----------
FOOD 1.8%
CPC International, Inc.,
15,000 5.62%, 7/23/97 14,806
----------
INSTITUTIONAL MONEY MARKET FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1997
(UNAUDITED)
Principal Amortized
Amount Cost
(in thousands) (in thousands)
- -------------- -------------
INSURANCE 7.5%
American Family Financial Services, Inc.:
$ 9,500 5.63%, 7/10/97 $ 9,396
6,500 5.60%, 7/11/97 6,428
ITT Hartford Group, Inc.,
15,046 5.28%, 6/02/97 14,976
Prudential Funding Corporation:
15,000 5.61%, 7/14/97 14,827
15,000 5.60%, 7/15/97 14,825
----------
60,452
----------
MISCELLANEOUS 1.3%
International Lease Finance Corporation,
10,650 5.30%, 6/13/97 10,583
----------
PRINTING AND PUBLISHING 3.7%
McGraw-Hill,
15,000 5.58%, 5/06/97 14,872
Reed Elsevier, Inc.,
15,000 5.60%, 7/09/97 14,839
----------
29,711
----------
RETAIL 1.9%
J.C. Penney Funding Corporation,
15,000 5.35%, 6/10/97 14,911
----------
SOVEREIGN 8.7%
Kingdom of Sweden:
15,000 5.32%, 5/07/97 14,987
15,000 5.32%, 5/08/97 14,984
Quebec (Province of) Canada,
15,000 5.60%, 6/30/97 14,860
Wool International:
10,000 5.32%, 5/02/97 9,999
15,000 5.32%, 5/05/97 14,991
----------
69,821
----------
Total Commercial Paper 748,102
----------
VARIABLE RATE DEMAND NOTES 4.8%
39,000 WPL Holdings Demand Note 39,000
----------
Total Variable Rate Demand Notes 39,000
----------
Number Amortized
of Shares Cost
(in thousands) (in thousands)
- -------------- -------------
INVESTMENT COMPANIES 2.6%
10 Financial Square Prime Obligation Fund $ 10
20,828 Short-Term Investments Co.
Liquid Assets Portfolio 20,828
----------
Total Investment Companies 20,838
----------
Total Investments 100.4% 807,940
----------
Liabilities, less Other Assets (0.4)% (3,501)
----------
NET ASSETS 100.0% $804,439
==========
See notes to the financial statements.
INSTITUTIONAL MONEY MARKET 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, as amended. The
Institutional Money Market Fund (the "Fund") which commenced operations on
April 26, 1991, is a separate, diversified investment portfolio of the Company.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in preparation of its financial statements. These policies
are in conformity with generally accepted accounting principles.
a) Investment Valuation - The securities are valued on the basis of amortized
cost for financial reporting purposes and federal income tax purposes, which
approximates market value. Variable rate demand notes are valued at cost which
approximates market value.
b) Federal Income Taxes - No provision for federal income taxes has been made
since the Fund has complied with the provisions of the Internal Revenue Code
available to regulated investment companies and intends to continue to so comply
in future years.
c) Expenses - The Fund is charged for those expenses that are directly
attributable to it, such as advisory, administration, service organization fees
and certain shareowner service fees. Expenses that are not directly attributable
to a portfolio are typically allocated among the Company's portfolios in
proportion to their respective net assets, number of shareowner accounts or net
sales, where applicable.
d) 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.
e) Distributions to Shareowners - Dividends from net investment income are
declared daily and paid monthly. Distributions of net realized capital gains, if
any, will be declared at least annually.
f) Other - The Fund recognizes interest income on the accrual basis. Discounts
and premiums are amortized over the life of the respective security. Investment
and shareowner transactions are recorded no later than the first business day
after the trade date. Realized gains and losses from investment transactions are
reported on an identified cost basis which is the same basis the Fund uses for
federal income tax purposes. Transactions in capital shares at $1.00 per share
are shown in the Statement of Changes in Net Assets. Generally accepted
accounting principles require that permanent financial reporting and tax
differences be reclassified to capital stock.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Fund has 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 Fund, FIRMCO is entitled to receive a fee,
calculated daily and payable monthly, at the annual rate of 0.50% of the Fund's
first $2 billion of average daily net assets, and 0.40% of the Fund's average
daily net assets in excess of $2 billion. For the six months ended April 30,
1997, FIRMCO voluntarily waived $924 of its advisory fees, in thousands, for the
Fund.
Firstar Trust Company, an affiliate of FIRMCO, serves as custodian, transfer
agent and accounting services agent for the Fund.
The Company has entered into a Co-Administration Agreement with B.C. Ziegler
and Company and Firstar Trust Company (the "Co-Administrators") for certain
administrative services. Pursuant to the Co-Administration Agreement with the
Company, the Co-Administrators are entitled to receive a fee, computed daily and
payable monthly, at the annual rate of 0.125% of the Company's first $2 billion
of average aggregate daily net assets, plus 0.10% of the Company's average
aggregate daily net assets in excess of $2 billion. For the six months ended
April 30, 1997, $369 of administration fees, in thousands, were voluntarily
waived for the Fund.
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 Fund maintains
its proportionate share of the Company's liability for deferred fees.
- - PORTICO FUNDS ARE AVAILABLE THROUGH:
- the Portico Funds Center,
- Investment Specialists who are registered representatives of Elan
Investment Services, Inc., a registered broker/dealer, NASD and SIPC
member,
- and through selected shareholder organizations.
This report is authorized for distribution only when preceded or accompanied by
a current prospectus.
TO OPEN AN ACCOUNT OR
REQUEST INFORMATION
1-800-982-8909
1-414-287-3710
FOR ACCOUNT BALANCES AND
INVESTOR SERVICES
1-800-228-1024
1-414-287-3808
PORTICO FUNDS CENTER
615 EAST MICHIGAN STREET
P.O. BOX 3011
MILWAUKEE, WI53201-3011
NASDREF#FX1997-0603-0035
