<PAGE>
SEMI ANNUAL REPORT
APRIL 30, 1999
[LOGO]
U.S. TREASURY MONEY FUND
THE CHAPMAN FUNDS, INC.
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THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Schedule Of Investments - April 30, 1999 (Unaudited)
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(Showing Percentage of Total Value of Net Assets)
<TABLE>
<CAPTION>
Principal Value
Amount (Note B)
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<S> <C>
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U.S. GOVERNMENT - 51.1%
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$ 28,000,000 U.S. Treasury Bills 4.150%, Due 05/13/99 $ 27,967,722
2,000,000 U.S. Treasury Bills 3.900%, Due 05/27/99 1,994,800
42,000 U.S. Treasury Bills 4.585%, Due 08/12/99 41,545
10,000,000 U.S. Treasury Bills 4.400%, Due 11/12/99 9,764,112
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$ 39,768,179
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REPURCHASE AGREEMENTS - 49.3%
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18,798,000 Societe Generale, dated 04/30/99, 4.830% agreement
to repurchase at $18,805,566 on 05/03/99
(collateralized by U.S. Treasury Notes, 5.500%, due
05/31/2003, $19,082,250 market value)
18,798,000
19,500,000 Morgan Stanley, dated 04/30/99, 4.82% agreement to
repurchase at $19,507,833 on 05/03/99
(collateralized by U.S. Treasury Notes, 9.375%, due
02/15/2006, $19,865,225 market value) 19,500,000
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38,298,000
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Total Investment (Cost $78,066,179)* - 100.4% 78,066,179
Other Assets and Liabilities - (0.4%) (341,657)
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NET ASSETS - 100.0% $ 77,724,522
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</TABLE>
*Cost for federal income tax purposes
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See Notes to Financial Statements 1
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THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Statement of Assets and Liabilities - April 30, 1999 (Unaudited)
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<TABLE>
<S> <C>
ASSETS:
Investments in securities at value
(Including repurchase agreements of $38,298,000)
(Amortized cost $78,066,179) $ 78,066,179
Cash 717
Interest receivable 15,398
Prepaid expenses 10,827
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Total assets $ 78,093,121
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LIABILITIES:
Accrued expenses (Note D) $ 85,787
Distribution payable 282,812
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Total liabilities $ 368,599
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NET ASSETS $ 77,724,522
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(Equivalent to $1.00 per share on 77,724,522
shares of common stock outstanding)
NET ASSETS CONSIST OF:
Capital stock $ 77,724
Paid-in-capital applicable to 77,724,522 shares
outstanding (Note C) 77,646,798
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Net assets $ 77,724,522
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NET ASSET VALUE PER SHARE $ 1.00
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</TABLE>
2 See Notes to Financial Statements
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THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Statement of Operations - For the six months ended April 30, 1999 (Unaudited)
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income (Note B) $ 1,790,999
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EXPENSES:
Management and administrative fees (Note D) $ 228,288
Legal and auditing fees 24,860
Custodian fees 17,306
Other 14,813
Rating fees 11,122
Director's fees (Note E) 9,868
Transfer and dividend disbursing agent's fees
(Note D) 9,557
Total expenses before reimbursement 315,814
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Reimbursement of expenses (Note D) (68,501)
Net expenses 247,313
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INCREASE IN NET ASSETS FROM OPERATIONS $ 1,543,686
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</TABLE>
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See Notes to Financial Statements 3
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THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Statement of Changes in Net Assets
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<TABLE>
<CAPTION>
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Six months ended Year ended
April 30, 1999 October 31, 1998
(Unaudited)
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<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,543,686 $ 2,312,977
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DISTRIBUTIONS TO SHAREHOLDERS (NOTE B):
Net investment income $ (1,543,686) $ (2,312,977)
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CAPITAL SHARE TRANSACTIONS (AT $1 PER SHARE):
Shares sold $ 43,968,193 $ 136,367,309
Shares reinvested 1,176,470 1,390,423
Shares redeemed (43,899,130) (121,488,853)
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Increase in net assets from capital share transactions $ 1,245,533 $ 16,268,879
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Total increase in net assets during period: 1,245,533 16,268,879
NET ASSETS:
Beginning of period 76,478,989 60,210,110
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End of period $ 77,724,522 $ 76,478,989
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</TABLE>
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4 See Notes to Financial Statements
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THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Financial Highlights
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THE FINANCIAL HIGHLIGHTS TABLE IS INTENDED TO HELP YOU UNDERSTAND THE FUND'S
FINANCIAL PERFORMANCE FOR THE PAST FIVE YEARS. CERTAIN INFORMATION REFLECTS
FINANCIAL RESULTS FOR A SINGLE FUND SHARE. THE TOTAL RETURNS IN THE TABLE
REPRESENT THE RATE THAT AN INVESTOR WOULD HAVE EARNED ON AN INVESTMENT IN THE
FUND (ASSUMING REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS). THIS
INFORMATION HAS BEEN AUDITED FOR THE YEARS ENDED OCTOBER 31. IT SHOULD BE READ
IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES THERETO.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED OCTOBER 31,
----------------------------------------------------------------------------
Six months
ended
April 30,
1999
(Unaudited) 1998 1997 1996 1995 1994
-------------- ----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------------- ----------- ----------- ------------ ------------ ------------
INVESTMENT OPERATIONS:
Net investment income 0.0202 0.0477 0.0470 0.0464 0.0497 0.0294
Net realized and unrealized
gains (losses) on investments
-0- -0- -0- -0- -0- -0-
-------------- ----------- ----------- ------------ ------------ ------------
Total from investment
operations 0.0202 0.0477 0.0470 0.0464 0.0497 0.0294
-------------- ----------- ----------- ------------ ------------ ------------
DISTRIBUTIONS:
From net investment income (0.0202) (0.0477) (0.0470) (0.0464) (0.0497) (0.0294)
From net realized gains
-0- -0- -0- -0- -0- -0-
-------------- ----------- ----------- ------------ ------------ ------------
Total distributions (0.0202) (0.0477) (0.0470) (0.0464) (0.0497) (0.0294)
-------------- ----------- ----------- ------------ ------------ ------------
NET ASSET VALUE END OF PERIOD $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------------- ----------- ----------- ------------ ------------ ------------
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TOTAL RETURN: 2.04(1) 4.88% 4.80% 4.74% 5.09% 3.04%
RATIOS TO AVERAGE NET ASSETS:
Expenses 2 0.65%(3) 0.65% 0.67% 0.75% 0.75% 0.75%
Expenses
(prior to limitation) 0.83%(3) 0.94% 0.93% 0.87% 0.97% 1.12%
Net investment income 4.08%(3) 4.75% 4.72% 4.63% 5.02% 2.94%
SUPPLEMENTAL DATA:
Net Assets
end of period (000 omitted) $ 77,724 $ 76,479 $ 60,210 $ 55,129 $ 34,371 $ 20,011
-------------- ----------- ----------- ------------ ------------ ------------
</TABLE>
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(1) This ratio has not been annualized.
(2) Chapman Capital Management Inc., (CCM) ,the Fund's investment adviser, has
agreed to bear annual expenses (excluding income, excises and other taxes and
extraordinary expenses) in excess of .65% of average daily net assets. However,
CCM obligation is limited to the total of its advisory and administration fees,
and there is no guarantee that CCM will continue to provide the funds with this
fee waiver beyond December 31, 1999. Prior to January 1, 1997, the Fund's
expenses were limited to .75% of average daily net assets on an annual basis.
(3) Annualized
See Notes to Financial Statements
5
<PAGE>
THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Notes to Financial Statements - APRIL 30, 1999 (Unaudited)
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NOTE A - GENERAL
The U.S. Treasury Money Fund (the "Fund") is a series of The Chapman Funds, Inc.
(the "Company"), a diversified open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act"). The Fund seeks to earn as high
a level of current income as is consistent with preservation of capital and
maintenance of liquidity. The Fund invests solely in short-term direct
obligations of the U.S. Government and repurchase agreements collateralized
fully by direct obligations of the U.S. Government.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION - 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 Company 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 stockholders.
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.
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 Chapman Funds, Inc. is authorized to issue 10 billion full and fractional
shares of common stock, par value $.001 per share, of which 1 billion shares are
designated as U.S. Treasury Money Fund shares.
NOTE D - MANAGEMENT ADVISORY AND ADMINISTRATIVE FEES
Chapman Capital Management, Inc. ("CCM") acts as the investment adviser 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, 1999, these
expenses were $228,288.
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, 1999, expenses for these services
amounted to $9,557.
6 See Notes to Financial Statements
<PAGE>
THE CHAPMAN FUNDS, INC.
U.S. TREASURY MONEY FUND
Notes to Financial Statements - APRIL 30, 1999 (Unaudited)
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CCM has 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. Total expenses reimbursed for the six months ended
April 30, 1998 were $68,501.
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, 1999, 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, 1999 were $9,868.
See Notes to Financial Statements 7
<PAGE>
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO SHAREHOLDERS AND TO OTHERS
WHO HAVE RECEIVED A COY OF THE U.S. TREASURY FUND PROSPECTUS
[LOGO]
INVESTMENT ADVISOR:
TRANSFER AND DIVIDEND PAYING AGENT
AND ACCOUNTING AGENT:
CHAPMAN CAPITAL MANAGEMENT, INC.
WORLD TRADE CENTER - BALTIMORE
401 EAST PRATT STREET, 28TH FLOOR
BALTIMORE, MARYLAND 21202
(410) 625-9656
CUSTODIAN:
UMB BANK, N.A.
928 GRAND AVENUE
KANSAS CITY, MISSOURI 64141-6226
DISTRIBUTOR:
THE CHAPMAN COMPANY
WORLD TRADE CENTER - BALTIMORE
401 EAST PRATT STREET, 28TH FLOOR
BALTIMORE, MARYLAND 21202
(410) 625-9656
FOR SHAREHOLDER INQUIRIES CALL 1-800-752-1013
