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THE CHAPMAN FUNDS, INC.
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THE CHAPMAN FUNDS, INC.
SEMI-ANNUAL REPORT
APRIL 30, 1997
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SCHEDULE OF INVESTMENTS - APRIL 30, 1997 (Unaudited)
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(Showing Percentage of Total Value of Net Assets)
U.S. TREASURY MONEY FUND
Principal Value
Amount (Note B)
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U.S. GOVERNMENT - 51.3%
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$6,000,000 U.S. Treasury Bills 5.01%, Due 5/8/97 $ 5,994,517
4,000,000 U.S. Treasury Bills 4.70%, Due 5/8/97 3,996,103
8,000,000 U.S. Treasury Bills 4.84%, Due 5/15/97 7,984,942
2,000,000 U.S. Treasury Bills 5.06%, Due 5/29/97 1,992,121
1,000,000 U.S. Treasury Bills 5.50%, Due 6/26/97 991,444
1,000,000 U.S. Treasury Bills 5.30%, Due 1/8/98 962,901
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21,922,028
REPURCHASE AGREEMENTS - 49.2%
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10,532,000 Merrill Lynch, dated 4/30/97, 5.20% agreement to
repurchase at $10,533,521 on 5/1/97
(collateralized by $10,075,000 US Treasury
Notes, 7.50%, due 11/15/01) 10,532,000
10,532,000 Nomura Securities, dated 4/30/97, 5.20% agreement
to repurchase at $10,533,521 on 5/1/97
(collateralized by $10,720,000 U.S. Treasury
Notes, 6.00% due 8/15/99) 10,532,000
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21,064,000
Total Investments (Cost $42,986,028)* - 100.5% 42,986,028
Other Assets and Liabilities - (0.5%) (228,573)
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Net Assets - 100.0% $ 42,757,455
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* Cost for federal income tax purposes.
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See Notes to Financial Statements.
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STATEMENT OF ASSETS AND LIABILITIES - April 30, 1997 (Unaudited)
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U.S. TREASURY MONEY FUND
ASSETS:
Investments in securities (Including repurchase
agreements of $21,064,000) at value (Amortized
cost $42,986,028) (Note B) $ 42,986,028
Cash 548
Interest receivable 3,043
Prepaid expenses 16,840
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Total assets 43,006,459
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LIABILITIES:
Accrued expenses (Note D) 50,783
Distribution payable 198,221
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Total liabilities 249,004
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NET ASSETS $ 42,757,455
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NET ASSETS CONSISTS OF:
Capital stock $ 42,757
Capital paid-in 42,714,698
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Net assets, for 42,757,455 outstanding common shares
(Note C) $ 42,757,455
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NET ASSET VALUE PER SHARE ($42,757,455
divided by 42,757,455 outstanding shares) $ 1.00
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See Notes to Financial Statements.
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STATEMENT OF OPERATIONS - April 30, 1997 (Unaudited)
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U.S. TREASURY MONEY FUND
INVESTMENT INCOME:
Interest income (Note B) $ 1,115,639
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EXPENSES:
Management and administrative fees
(Note D) 126,132
Custodian fees 13,068
Rating expense 10,138
Transfer and dividend disbursing
agent's fees (Note D) 9,452
Legal and auditing 9,049
Insurance expense 17,576
Directors' fees and expenses (Note E) 5,528
Other 5,749
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Total expenses before reimbursement 196,692
Reimbursement of expenses (Note D) (51,264)
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Net expenses 145,428
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Net increase in net assets resulting
from operations $ 970,211
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See Notes to Financial Statements.
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STATEMENTS OF CHANGES IN NET ASSETS
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U.S. TREASURY MONEY FUND
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31,
(Unaudited) 1996
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INCREASE IN NET ASSETS:
Operations:
Net increase in net assets
resulting from operations $ 970,211 $ 1,849,863
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Dividends:
Dividends paid to shareholders
from net investment income
($.0229 and $.0464 per share,
respectively) (Note B) (970,211) (1,849,863)
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Capital Share Transactions
(at $1 per share):
Proceeds from sales of shares 65,324,829 162,896,210
Shares issued in reinvestment
of dividends from net investment
income 528,680 1,070,762
Shares redeemed (78,224,589) (143,209,871)
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Increase/(Decrease) in net assets derived
from capital share transactions (12,371,080) 20,757,101
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Total increase/(decrease) (12,371,080) 20,757,101
NET ASSETS:
Beginning of year 55,128,535 34,371,434
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End of year $ 42,757,455 $ 55,128,535
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See Notes to Financial Statements.
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FINANCIAL HIGHLIGHTS - U.S. TREASURY MONEY FUND
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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 FOR THE YEARS ENDED OCTOBER 31,
APRIL 30, 1997 ----------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period. . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
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INCOME FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . . 0.0229 0.0464 0.0497 0.0294 0.0241 0.0315
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DISTRIBUTIONS:
From net investment income. . . . . . . . . 0.0229 0.0464 0.0497 0.0294 0.0241 0.0315
------------ ---------- ---------- ---------- ---------- ----------
Net asset value, end of period. . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------ ---------- ---------- ---------- ---------- ----------
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(1)
TOTAL RETURN . . . . . . . . . . . . . . . . 4.62% 4.74% 5.09% 3.04% 2.44% 3.20%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of year (000 omitted) . . . $42,757 $55,129 $34,371 $20,011 $23,515 $33,002
RATIOS TO AVERAGE NET ASSETS:
(2) (1)
Expenses . . . . . . . . . . . . . . . . . . 0.70% 0.75% 0.75% 0.75% 0.75% 0.75%
(1)
Net investment income. . . . . . . . . . . . 4.62% 4.63% 5.02% 2.94% 2.41% 3.15%
</TABLE>
(1) Annualized.
(2) 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 .65% of average daily net assets on an annual basis effective
January 1, 1997. Prior to this period, the expense ratio was limited to .75% of
average daily net assets on an annual basis.
The expense ratio, had there been no reimbursement of the expenses by the
Advisor, would have been .94% (annualized), .87%, .97%, 1.12%, 1.15%, and 1.02%
for the six months ended April 30, 1997 and the years ended October 31, 1996,
1995, 1994, 1993, and 1992, respectively.
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NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (Unaudited)
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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 pursuant to 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.
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
Each series of the Fund is treated as a separate entity for Federal income tax
purposes and each intends to continue to qualify as a Regulated Investment
Company under Subchapter M of the Internal Revenue Code and distribute all of
its net investment income to its shareholders. Therefore no provision for
income taxes has been made.
Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Interest income is
recorded on the accrual basis.
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NOTES TO FINANCIAL STATEMENTS (Continued)
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Use of Estimates in the Preparation of Financial Statements
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 at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
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, 1997, these
expenses were $126,132.
CCM also serves as Transfer and Dividend Disbursing Agent for the Fund pursuant
to a Shareholder Services Agreement. For its services, CCM is compensated $18
per account with a monthly minimum of $1,500 per fund excluding out-of-pocket
expenses. For the six months ended April 30, 1997 expenses for these services
amounted to $9,452.
CCM agreed to bear all expenses (excluding income, excise and other taxes and
extraordinary expenses) of the Fund in excess of .65% of average daily net
assets on an annual basis effective January 1, 1997. Prior to this period, the
expense ratio was limited to .75% of average daily net assets on an annual
basis. Total expenses reimbursed for the six months ended April 30, 1997 were
$51,264.
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. For the
six months ended April 30, 1997, these "affiliated persons" did not receive any
compensation from the fund.
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. Total expenses paid to directors for the six months ended April
30, 1997 were $5,528.
