THE CHAPMAN FUNDS, INC.
THE CHAPMAN FUNDS, INC.
SEMI-ANNUAL REPORT
APRIL 30, 1996
<TABLE>
<CAPTION>
THE CHAPMAN FUNDS, INC.
SCHEDULE OF PORTFOLIO INVESTMENTS - APRIL 30, 1996 (Unaudited)
(Showing Percentage of Total Value of Net Assets)
U.S. TREASURY MONEY FUND
<S> <C> <C>
Principal Value
Amount (Note B)
U.S. GOVERNMENT - 54.7%
$10,000,000 U.S. Treasury Bills 4.73%, Due 5/9/96 $9,989,489
10,000,000 U.S. Treasury Bills 4.79%, Due 5/16/96 9,980,041
2,000,000 U.S. Treasury Bills 5.42%, Due 5/30/96 1,991,268
21,960,798
REPURCHASE AGREEMENTS - 40.5%
7,260,000 Daiwa Securities, dated 4/30/96, 5.10%
agreement to repurchase at $7,261,029 on
5/1/96 (collateralized by $6,525,000 US
Treasury Bonds, 8.125%, due 8/15/19) 7,260,000
9,000,000 Nomura Securities, dated 4/30/96, 5.33%
agreement to repurchase at $9,001,332.50
on 5/1/96 (collateralized by $9,125,000
U.S. Treasury Bonds, due 8/31/97) 9,000,000
16,260,000
Total Investments (Cost $38,220,798)* - 95.2% 38,220,798
Other Assets and Liabilities - 4.8% 1,939,029
Net Assets - 100.0% $40,159,827
*Cost for federal income tax purposes.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
THE CHAPMAN FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES - APRIL 30, 1996 (Unaudited)
INSTITUTIONAL
U.S. CASH
TREASURY MANAGEMENT
MONEY FUND FUND
<S> <C> <C> <C>
ASSETS:
Investments in securities
(Amortized cost $38,220,798)
(Note B) $38,220,798 (Note A)
Cash 2,140,143
Accrued interest receivable 2,361
Prepaid expenses 30,409
Total assets 40,393,711
LIABILITIES:
Accrued expenses (Note D) 69,274
Distribution payable 164,610
Total liabilities 233,884
NET ASSETS $40,159,827
NET ASSETS:
At April 30, 1996 net assets
consisted of:
Capital stock $ 40,159
Capital paid-in 40,119,668
Net assets, for 40,159,827
outstanding common shares
(Note C) $40,159,827
NET ASSET VALUE PER SHARE
($40,159,827 divided by 40,159,827
outstanding shares) $1.00
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
THE CHAPMAN FUNDS, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED APRIL 30, 1996 (Unaudited)
INSTITUTIONAL
U.S. CASH
TREASURY MANAGEMENT
MONEY FUND FUND
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income (Note B) $1,190,585 (Note A)
EXPENSES:
Management and administrative fees
(Note D) (130,152)
Legal and auditing (8,971)
Transfer and dividend disbursing
agent's fees (9,229)
Custodian fees (11,815)
Rating expense (10,221)
Directors' fees and expenses
(Note E) (318)
Other (7,558)
Total expenses before reimbursement (178,264)
Reimbursement of expenses (Note D) 15,622
Net expenses (162,642)
Net increase in net assets
resulting from operations $1,027,943
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
THE CHAPMAN FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
APRIL 30, 1996 YEAR ENDED
(Unaudited) OCTOBER 31, 1995
INSTITUTIONAL INSTITUTIONAL
U.S. CASH U.S. CASH
TREASURY MANAGEMENT TREASURY MANAGEMENT
MONEY FUND FUND MONEY FUND FUND
<S> <C> <C> <C> <C>
INCREASE IN NET
ASSETS:
Operations:
Net increase in net
assets resulting
from operations
$1,027,943 (Note A) $1,490,630 (Note A)
Dividends:
Distributions paid
to shareholders
from net investment
income ($.0238 and
$.0497 per share,
respectively) (Note
B)
(1,027,943) (1,490,630)
From Capital Share
Activities:
(at $1 per share)
Proceeds from
sales of shares 91,538,986 156,891,847
Shares issued in
reinvestment of
dividends from
net investment
income 655,710 1,179,373
Cost of shares (86,406,303) (143,710,447)
redeemed
Increase (decrease)
in net assets
derived from
capital share 5,788,393 14,360,773
transactions
Total increase
(decrease) 5,788,393 14,360,773
NET ASSETS:
Beginning of period 34,371,434 20,010,661
End of period $40,159,827 $34,371,434
</TABLE>
See Notes to Financial Statements.
THE CHAPMAN FUNDS, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements. It should be read in conjunction with the financial statements
and notes thereto.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1996 YEAR ENDED YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995 OCTOBER 31, 1994
INSTITUTI INSTITUTI INSTITUT
U.S. ONAL U.S. ONAL CASH U.S. IONAL
TREASUR CASH TREASURY MANAGEMEN TREASURY CASH
Y MANAGEMEN MONEY T MONEY MANAGEME
MONEY T FUND FUND FUND NT
FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share
Operating
Performance
Net asset
value,
beginning of $1.00 -- $1.00 -- $1.00 --
year..........
..
Income from
Investment
Operations:
Net
investment 0.0238 -- 0.0497 -- 0.0294 --
income........
Distributions:
From net
investment
0.0238 -- 0.0497 -- 0.0294 --
income........
Net asset
value, 1.00 -- 1.00 -- 1.00 --
end of
year.....
Total Return 4.81% -- 5.09% -- 3.04% --
Ratios/Supple-
mental Data:
Net Assets,
end
of year 40,160 -- 34,371 -- 20,011 --
(000
omitted)...
Ratios to
Average
Net Assets: 0.75%* -- 0.75%* -- 0.75%* --
Expenses...... 4.75% -- 5.02% -- 2.94% --
..
Net
Investment
Income........
..
</TABLE>
* Chapman Capital Management, Inc. (the "Advisor") agreed to bear all
expenses (excluding income, excise and other taxes and extraordinary
expenses) of the Fund in excess of .75% of average daily net assets on an
annual basis. The expense ratio of the U.S. Treasury Money Fund, had there
been no reimbursement of expenses by the Advisor, would have been .82%
(annualized), .97%, 1.12%, 1.15%, 1.02%, and 1.13% for the six months ended
April 30, 1996 and the years ended October 31, 1995, 1994, 1993, 1992 and
1991, respectively. The expense ratio of the Institutional Cash Management
Fund, had there been no reimbursement of expenses by the Advisor, would have
been 1.14% for the year ended October 31, 1991.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1993 OCTOBER 31, 1992 OCTOBER 31, 1991
INSTITUTI INSTITUT INSTITUTI
U.S. ONAL U.S. IONAL U.S. ONAL
TREASUR CASH TREASURY CASH TREASURY CASH
Y MANAGEMEN MONEY MANAGEME MONEY MANAGEMEN
MONEY T FUND NT FUND T
FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
Per Share
Operating
Performance
Net asset
value,
beginning of $1.00 -- $1.00 -- $1.00 $1.00
year..........
.
Income from
Investment
Operations:
Net investment
income........ 0.0241 -- 0.0315 -- 0.0619 0.0697
Distributions:
From net
investment
income........ 0.0241 -- 0.0315 -- 0.0619 0.0697
Net asset
value, 1.00 -- 1.00 -- 1.00 1.00
end of
year.....
Total Return 2.44% -- 3.20% -- 6.37% 7.20%
Ratios/Supple-
mental Data:
Net Assets,
end
of year 23,515 -- 33,002 -- 12,229 --
(000
omitted)...
Ratios to
Average
Net Assets: 0.75%* -- 0.75%* -- 0.75%* 0.75%*
Expenses...... 2.41% -- 3.15% -- 6.19% 6.97%
..
Net
Investment
Income........
..
</TABLE>
* Chapman Capital Management, Inc. (the "Advisor") agreed to bear all
expenses (excluding income, excise and other taxes and extraordinary
expenses) of the Fund in excess of .75% of average daily net assets on an
annual basis. The expense ratio of the U.S. Treasury Money Fund, had there
been no reimbursement of expenses by the Advisor, would have been .82%
(annualized), .97%, 1.12%, 1.15%, 1.02%, and 1.13% for the six months ended
April 30, 1996 and the years ended October 31, 1995, 1994, 1993, 1992 and
1991, respectively. The expense ratio of the Institutional Cash Management
Fund, had there been no reimbursement of expenses by the Advisor, would have
been 1.14% for the year ended October 31, 1991.
THE CHAPMAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1996
NOTE A - GENERAL
The Chapman Funds, Inc. (the "Fund") was incorporated on November 22, 1988,
and operates as a series fund. There are currently two series, the U.S.
Treasury Money Fund (the "Money Fund") and the Institutional Cash
Management Fund (the "Cash Management Fund"). The Fund is registered as a
diversified open-end management investment company under the Investment
Company Act of 1940 (the "1940 Act"). During fiscal year 1991, the Cash
Management Fund liquidated its portfolio and distributed the proceeds to
its shareholders. Since 1991, there has been no activity, including
subscriptions for purchase of shares, in the Cash Management Fund, however,
the Cash Management Fund is still authorized to sell shares to investors
meeting the qualifications of the Fund prospectus.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund uses the amortized cost method, which approximates market value,
to value portfolio securities which is permitted under Rule 2a-7 of the
1940 Act provided the Fund complies with certain conditions. The amortized
cost valuation method involves valuing a security at its cost on the date
of purchase and thereafter assuming a constant amortization from date of
purchase to date of maturity of any discount or premium.
Repurchase Agreements
The Fund's custodian takes possession, through the Federal Book Entry
System, of the collateral pledged for investments in repurchase agreements.
The underlying collateral is valued daily to ensure that the value,
including accrued interest, is at least equal to the repurchase price. In
the event of default, the Fund has the right to liquidate the collateral
and apply the proceeds in satisfaction of the obligation.
THE CHAPMAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Interest income is
recorded on the accrual basis.
Distributions to Shareholders
Dividends to shareholders of the Fund are declared daily from net
investment income, which consist of accrued interest and earned discount
(including both original issue and market discount), less amortization of
premium and the accrued expenses applicable to the dividend period.
Federal Income Taxes
As a regulated investment company, the Fund plans to distribute sufficient
investment income and security profits in order that, under the Internal
Revenue Code, it will not incur Federal income taxes.
NOTE C - CAPITAL STOCK
The authorized capital stock of the Fund consists of ten billion shares,
par value of $.001 per share divided into two portfolios. Each portfolio
currently consists of five billion authorized shares.
NOTE D - MANAGEMENT ADVISORY AND ADMINISTRATIVE FEES
Chapman Capital Management, Inc. ("CCM") acts as the investment advisor and
administrator for the Fund. The investment advisory and administrative
fees are based on the average daily net assets of the Fund computed at
annual rates of .5% and .1%, respectively. For the six months ended April
30, 1996, these expenses were $130,152 for the Money Fund. The Cash
Management Fund did not incur any expenses for the period ended April 30,
1996.
Effective January 1, 1995, CCM serves as Transfer and Dividend Disbursing
Agent for the Fund pursuant to a Shareholder Services Agreement. The
THE CHAPMAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Fund pays CCM $1,500 per month for each active portfolio. Prior to January
1, 1995, these services were provided by Fund/Plan Services, Inc.
("Fund/Plan"). For the six months ended April 30, 1996 expenses for these
services amounted to $9,000.
CCM agreed to assume all expenses (excluding income, excise and other taxes
and extraordinary expenses) of the Fund in excess of .75% of average daily
net assets on an annualized basis until December 31, 1996. Total expenses
reimbursed for the six months ended April 30, 1996 were $15,622 for the
Money Fund.
NOTE E - DISTRIBUTION FEES AND RELATED PARTIES
Certain officers and directors of the Fund are "affiliated persons", as
defined in the Investment Company Act of 1940, of the Advisor and Sub-
Advisor.
Those directors who are not "affiliated persons" (independent directors)
receive $1,000 plus certain expenses from the Fund for each Board of
Directors meeting they attend.
THE CHAPMAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - ATTACHMENT
APRIL 30, 1996
NOTE I - COMPENSATION OF DIRECTORS
For the six months ended April 30, 1996, the fund has paid a total of
$7,181 to directors for their attendance at the board meetings of November
17, 1995 and March 22, 1996.
NOTE II - ELECTION OF OFFICERS
The Fund held an annual shareholder meeting on April 22, 1996. With
26,685,074 votes cast for, 0 votes cast against, 17,209,264 votes withheld,
0 votes abstained and 0 broker non-votes the shareholders ratified the
appointment of Ernst & Young as independent auditors.
The shareholders also elected the following directors. Each director
received 26,685,074 votes for, 0 votes against, 17,209,264 votes withheld,
0 votes abstained and 0 broker non-votes.
David E. Rivers Ronald A. White
Benjamin Hooks Joseph Quash
Nathan A. Chapman, Jr. Wilfred Marshall
James B. Lewis Levi Watkins, Jr.
Lottie H. Shackelford
The list above constitutes the entire board of directors for the Fund.
