PRINCIPLED
EQUITY
MARKET
FUND
SEMI-ANNUAL REPORT
JUNE 30, 1997
(UNAUDITED)
<PAGE>
- ------------------------------------------------------------------
PRINCIPLED EQUITY MARKET FUND
- ------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
(Unaudited)
Assets:
Investments at quoted market value (cost $14,453,011;
see Schedule of Investments, Notes 1, 2, & 5)....... $16,821,254
Cash ................................................ 55,937
Dividends and interest receivable.................... 23,427
Other assets......................................... 41,399
-----------
Total assets..................................... 16,942,017
-----------
Liabilities:
Accrued expenses and other liabilities (Note 3 )..... 66,714
-----------
Total liabilities................................ 66,714
-----------
Net Assets:
Capital stock (unlimited shares authorized at $1.00 par
value, amount paid in on 1,431,921 shares outstanding)
(Note 1)............................................. $14,410,423
Accumulated undistributed net investment income...... 104,811
Accumulated realized loss from security transactions,
net.................................................. (8,174)
Net unrealized appreciation in value of investments
(Note 2)............................................. 2,368,243
-----------
Net assets (equivalent to $11.79 per share, based
on 1,431,921 capital shares outstanding)............. $16,875,303
===========
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PRINCIPLED EQUITY MARKET FUND
==================================================================
STATEMENT OF OPERATIONS
JUNE 30, 1997
(Unaudited)
Income:
Dividends........................................... $139,379
Interest............................................ 2,628
-----------
Total income..................................... 142,007
-----------
Expenses:
Management fees, net (Note 3)....................... 10,573
Audit and accounting fees........................... 5,581
Organizational expenses............................. 4,601
Administrative fees (Note 4)....................... 2,961
Legal fees.......................................... 4,555
Trustees' fees and expenses......................... 1,328
Transfer fees (Note 4).............................. 2,961
Custodian fees...................................... 8,050
Other expenses...................................... 2,240
-----------
Total expenses................................... 42,850
Fees paid indirectly (Note 4)............... (5,654)
-----------
Net expenses................................ 37,196
-----------
Net investment income................................ 104,811
-----------
Realized and unrealized gain on investments:
Realized loss on investments-net................... (8,174)
Increase in net unrealized appreciation in
investments....................................... 2,368,243
-----------
Net gain on investments.......................... 2,360,069
===========
Net increase in net assets resulting from operations. $2,464,880
===========
<PAGE>
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PRINCIPLED EQUITY MARKET FUND
==================================================================
STATEMENTS OF CHANGES IN NET ASSETS
Six Months
Ended Year Ended
June 30, 1997 December 31,
1996
----------------------------
From operations:
Net investment income................... $ 104,811 $ --
Realized loss on investments, net....... (8,174) --
Increase in net unrealized
appreciation in investments............ 2,368,243 --
----------- ------------
Net increase in net assets resulting
from operations..................... 2,464,880 --
------------ -----------
Distributions to shareholders:
From net investment income.............. -- --
From net realized gain on investments... -- --
------------ -----------
Total distributions to shareholders.. -- --
------------ -----------
From capital share transactions:
Number of Shares
1997 1996
--------- ---------
Proceeds from sale of
shares.............. 537,895 894,026 5,470,163 8,940,260
Shares issued to
shareholders in
distributions
reinvested........... -- -- -- --
Cost of shares
redeemed.............. -- -- -- --
Increase in net
assets resulting
from capital
share transactions....537,895 894,026 5,470,163 8,940,260
========= ========= ---------- -----------
Net increase in net assets............... 7,935,043 8,940,260
Net assets:
Beginning of period.................... 8,940,260 --
============ ===========
End of period (including undistributed
net investment income of $104,811 and
$0, respectively).................. $16,875,303 $8,940,260
============ ===========
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PRINCIPLED EQUITY MARKET FUND
==================================================================
SELECTED PER SHARE DATA AND RATIOS
(for a share outstanding throughout each period)
Six Months Year
Ended Ended
June 30, December 31,
1997 1996
--------------------------
Investment income .......................$ 0.10 $ 0.00
Expenses, net............................ 0.03 0.00
------------ ------------
Net investment income ................... 0.07 0.00
Net realized and unrealized
gain on investments...................... 1.72 0.00
Distributions to shareholders:
From net investment income............ -- --
From net realized gain ..on investments -- --
----------- -------------
Net increase in net asset value.......... 1.79 --
Net asset value:
Beginning of period..................... 10.00 10.00
=========== ============
End of period...........................$ 11.79 $ 10.00
=========== ============
Ratio of expenses
to average net assets.................... 0.60% 0.00%
Ratio of net investment
income to average net assets............. 1.46% 0.00%
Portfolio turnover....................... 0.04 0.00
Number of shares out-standing at end of
period................................... 1,431,921 894,026
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PRINCIPLED EQUITY MARKET FUND
==================================================================
SCHEDULE OF INVESTMENTS
JUNE 30, 1997
(Unaudited)
COMMON STOCKS -- 99.68%
Aerospace/Defense Industry -- 0.35%
1,000 Precision Castparts Corporation................ $ 59,625
----------
Air Transport Industry -- 0.41%
400 Amr Corporation................................ 37,000
200 Federal Express Corporation.................... 11,575
800 Southwest Airlines Company..................... 20,700
----------
69,275
----------
Auto & Truck Industry -- 0.28%
1,000 Paccar Incorporated............................ 46,438
----------
Auto Parts (OEM) Industry -- 0.37%
600 Dana Corporation............................... 22,800
600 Oea Incorporated............................... 23,700
600 Superior Industries International.............. 15,900
----------
62,400
----------
Auto Parts (Replacement) Industry -- 0.25%
200 Echlin Incorporated............................ 7,200
1,050 Genuine Parts Company.......................... 35,569
----------
42,769
----------
Bank Industry -- 5.02%
1,000 Bank Of New York Company Incorporated.......... 43,625
2,400 Bankamerica Corporation........................ 154,950
500 Bankboston Corporation......................... 36,031
1,300 Citicorp....................................... 156,731
800 First Union Corporation........................ 74,000
900 JP Morgan and Company Incorporated............. 93,938
300 Keycorp........................................ 16,762
2,060 Nationsbank Corporation........................ 132,999
1,100 Pnc Bank Corporation........................... 45,925
200 Wachovia Corporation........................... 11,662
300 Wells Fargo and Company........................ 80,850
----------
847,473
----------
Bank (Midwest) Industry -- 1.30%
100 First Bank System Incorporated................. 8,537
1,400 First Chicago Nbd Corporation.................. 84,700
1,100 National City Corporation...................... 58,025
1,200 Norwest Corporation............................ 67,500
----------
218,762
----------
<PAGE>
Beverage (Soft Drink) Industry -- 5.80%
7,900 Coca Cola Company.............................. 541,150
2,400 Coca Cola Enterprises Incorporated............. 55,200
10,200 Pepsico Incorporated........................... 383,137
----------
979,487
----------
Building Materials Industry -- 0.04%
100 Armstrong World Industries Incorporated........ 7,337
----------
Chemical (Basic) Industry -- 2.28%
8,100 Arco Chemical Company.......................... 385,256
----------
Chemical (Diversified) Industry -- 0.67%
1,300 Millipore Corporation.......................... 57,200
2,400 Pall Corporation............................... 55,800
----------
113,000
----------
Chemical (Specialty) Industry -- 1.06%
900 Ecolab Incorporated............................ 42,975
600 International Flavors and Fragrances........... 30,300
1,200 Praxair Incorporated........................... 67,200
800 Sherwin Williams Company....................... 24,700
400 Sigma Aldrich Corporation...................... 14,025
----------
179,200
----------
Coal/Alternate Energy Industry -- 0.08%
200 Aes Corporation................................ 14,150
----------
Computer & Peripherals Industry -- 4.94%
200 Apple Computer Incorporated.................... 2,850
600 Cabletron Systems Incorporated................. 16,987
2,400 Cisco Systems Incorporated..................... 161,100
1,000 Compaq Computer Corporation.................... 99,500
600 Dell Computer Corporation...................... 70,462
1,700 EMC Corporation................................ 66,300
5,400 Hewlett Packard Company........................ 302,400
1,100 Seagate Technology Incorporated................ 38,775
900 Silicon Graphics Incorporated.................. 13,500
1,300 Sun Microsystems Incorporated.................. 48,384
<PAGE>
700 Tandem Computers Incorporated.................. 14,175
----------
834,433
----------
Computer Software & Services Industry -- 4.87%
500 Automatic Data Processing Incorporated......... 23,500
2,400 Computer Associates International.............. 133,650
400 Electronic Data Systems Corporation............ 16,475
1,700 First Data Corporation......................... 74,694
3,900 Microsoft Corporation.......................... 492,862
1,600 Oracle Corporation............................. 80,600
----------
821,781
----------
Diversified Company Industry -- 0.83%
100 Crane Company.................................. 4,169
200 National Service Industries Incorporated....... 9,737
200 Raychem Corporation............................ 14,912
800 Thermo Electron Corporation.................... 27,500
1,200 Tyco International Limited..................... 83,550
----------
139,868
----------
Drug Industry -- 3.19%
7,700 Amgen Incorporated............................. 447,562
300 Biogen Incorporated............................ 10,162
800 Chiron Corporation............................. 16,700
900 Genzyme Corporation General Division........... 24,975
200 Interneuron Pharmaceuticals Incorporated....... 4,025
200 Quintiles Transnational Corporation............ 13,925
400 RP Scherer Corporation......................... 20,650
----------
537,999
----------
Drugstore Industry -- 0.50%
400 Rite Aid Corporation........................... 19,950
1,200 Walgreen Company............................... 64,350
----------
84,300
----------
Electric Utility (Central) Industry -- 0.92%
800 Cinergy Corporation............................ 27,850
3,100 Dte Energy Holding Company..................... 85,637
1,900 Unicom Corporation............................. 42,275
----------
155,762
----------
Electric Utility (East) Industry -- 1.29%
1,800 Carolina Power and Light Company............... 64,575
835 Duke Energy Corporation........................ 40,028
800 Northeast Utilities............................ 7,600
<PAGE>
800 P P and L Resources Holding Company............ 15,900
4,300 Peco Energy Company............................ 90,300
----------
218,403
----------
Electric Utility (West) Industry -- 4.29%
10,200 Edison International Incorporated.............. 253,725
2,000 Nevada Power Company........................... 42,500
19,400 Pacificorp..................................... 426,800
----------
723,025
----------
Electrical Equipment Industry -- 0.78%
1,000 Cooper Industries Incorporated................. 49,750
1,200 Corning Incorporated........................... 66,750
200 W W Grainger Incorporated...................... 15,637
----------
132,137
----------
Electronics Industry -- 0.27%
1,100 Amp Incorporated............................... 45,925
----------
Entertainment Industry -- 1.18%
1,700 Laidlaw Transportation, Limited. .............. 23,481
1,000 Safety Kleen Corporation....................... 16,875
3,300 Time Warner Incorporated Holding Company....... 159,225
----------
199,581
----------
Environmental Industry -- 0.38%
1,600 Republic Industries Incorporated............... 40,800
600 USA Waste Services Incorporated................ 23,063
----------
63,863
----------
Financial Services Industry -- 4.27%
2,500 American Express Company....................... 186,250
1,900 Cuc International Incorporated................. 49,044
400 Deluxe Corporation............................. 13,650
700 Green Tree Financial Corporation............... 24,937
400 Household International Incorporated........... 46,975
2,100 Loews Corporation.............................. 210,262
1,500 Mbna Corporation............................... 54,937
2,920 Morgan Stanley Dean Witter Discover............ 125,742
100 Transamerica Corporation....................... 9,356
----------
721,153
----------
Food Processing Industry -- 3.76%
2,100 General Mills Incorporated..................... 136,369
200 Hershey Foods Corporation...................... 11,162
<PAGE>
3,600 Hj Heinz Company............................... 166,050
800 Kellogg Company................................ 68,500
400 Pioneer Hi Bred International Incorporated..... 31,375
700 Quaker Oats Company............................ 31,063
700 Unilever NV.................................... 149,887
600 Wm Wrigley Jr Company.......................... 40,200
----------
634,606
----------
Food Wholesalers Industry -- 0.20%
900 Sysco Corporation.............................. 32,850
----------
Foreign Telecommunication Industry -- 0.65%
1,200 Northern Telecom Limited....................... 109,200
----------
Gold/Silver Mining Industry -- 0.60%
3,100 Barrick Gold Corporation....................... 67,812
700 Newmont Mining Corporation..................... 27,300
400 Placer Dome Incorporated....................... 6,550
----------
101,662
----------
Grocery Industry -- 0.57%
1,300 Albertsons Incorporated........................ 47,450
200 American Stores Company........................ 9,875
200 Safeway Incorporated........................... 9,250
800 Winn Dixie Stores Incorporated................. 29,800
----------
96,375
----------
Home Appliance Industry -- 0.13%
400 Whirlpool Corporation.......................... 21,825
----------
Hotel/Gaming Industry -- 0.22%
600 Marriott International Incorporated............ 36,825
----------
Household Products Industry -- 1.81%
200 Clorox Company................................. 26,437
2,400 Colgate Palmolive Company...................... 156,600
800 Newell Company................................. 31,800
600 Ralston Ralston Purina Group................... 49,237
1,400 Rubbermaid Incorporated........................ 41,650
----------
305,724
----------
Insurance (Diversified) Industry -- 1.28%
1,100 American General Corporation................... 52,525
<PAGE>
600 Lincoln National Corporation................... 38,625
800 Marsh and Mclennan Companies Incorporated...... 57,100
1,400 Mgic Investment Corporation.................... 67,113
----------
215,363
----------
Insurance (Life) Industry -- 0.36%
900 Conseco Incorporated........................... 33,300
400 Jefferson Pilot Corporation.................... 27,950
----------
61,250
----------
Insurance (Property/Casualty) Industry -- 3.13%
2,100 Allstate Corporation........................... 153,038
900 Chubb Corporation.............................. 60,188
1,000 General Re Corporation......................... 182,000
700 Safeco Corporation............................. 32,681
1,100 St Paul Companies Incorporated................. 83,875
700 Usf and G Corporation.......................... 16,713
----------
528,495
----------
Machinery Industry -- 0.85%
1,100 Aeroquip Vickers Incorporated.................. 53,488
700 Donaldson Company Incorporated................. 26,644
200 Snap On Incorporated........................... 7,875
1,400 Stanley Works.................................. 56,000
----------
144,007
----------
Machinery (Construction &Mining) Industry --
1.26%
200 Case Corporation............................... 13,775
1,100 Caterpillar Incorporated....................... 118,113
800 Deere and Company.............................. 43,900
600 Ingersoll Rand Company......................... 37,050
----------
212,838
----------
Medical Services Industry -- 0.16%
200 Idexx Laboratories Incorporated................ 2,488
800 Tenet Healthcare Corporation................... 23,600
----------
26,088
----------
Medical Supplies Industry -- 2.33%
1,200 Allergan Incorporated.......................... 38,175
1,600 Becton Dickinson and Company................... 81,000
2,000 Boston Scientific Corporation.................. 122,875
100 Centocor Incorporated.......................... 3,106
1,800 Medtronic Incorporated......................... 148,500
----------
393,656
----------
<PAGE>
Metals & Mining (Div.) Industry -- 1.35%
7,600 Inco Limited................................... 227,525
Natural Gas (Distribution) Industry -- 0.36%
1,200 Pacific Enterprises............................ 40,350
800 Washington Gas Light Company................... 20,100
----------
60,450
----------
Natural Gas (Diversified) Industry -- 1.95%
700 Burlington Resources Incorporated.............. 30,888
200 Columbia Gas System Incorporated............... 13,150
600 Consolidated Natural Gas Company............... 32,288
4,800 Enron Corporation.............................. 195,900
700 Noram Energy Corporation....................... 10,675
400 Sonat Incorporated............................. 20,500
600 Williams Companies Incorporated................ 26,250
----------
329,651
----------
Newspaper Industry -- 0.59%
700 Gannett Incorporated........................... 69,125
200 Times Mirror Company........................... 11,050
400 Tribune Company................................ 19,225
----------
99,400
----------
Office Equipment & Supplies Industry -- 1.09%
700 Ikon Office Solutions Incorporated............. 17,456
2,400 Pitney Bowes Incorporated...................... 166,800
----------
184,256
----------
Oilfield Services/Equipment Industry -- 1.83%
1,300 Baker Hughes Incorporated...................... 50,294
200 Cooper Cameron Corporation..................... 9,350
800 Diamond Offshore Drilling Incorporated......... 62,300
1,300 Dresser Industries Incorporated................ 48,425
200 Ensco International Incorporated............... 10,550
400 Global Marine Incorporated..................... 9,325
200 Helmerich and Payne Incorporated............... 11,525
200 Noble Drilling Corporation..................... 4,500
400 Reading and Bates Corporation.................. 10,650
700 Rowan Companies Incorporated................... 19,731
200 Smith International Incorporated............... 12,150
400 Transocean Offshore Incorporated............... 29,050
500 Varco International Incorporated............... 16,125
200 Western Atlas Incorporated..................... 14,650
----------
308,625
----------
<PAGE>
Packaging & Container Industry -- 0.25%
600 Bemis Company Incorporated..................... 25,950
500 Sonoco Products Company........................ 15,219
----------
41,169
----------
Paper & Forest Products Industry -- 0.68%
200 Chesapeake Corporation......................... 6,750
1,800 Rayonier Incorporated.......................... 75,713
1,700 Wausau Paper Mills Company..................... 32,088
----------
114,551
----------
Petroleum (Integrated) Industry -- 1.96%
3,100 Fina Incorporated.............................. 197,625
600 Murphy Oil Corporation......................... 29,250
800 Pennzoil Company............................... 61,200
800 Quaker State Corporation....................... 12,350
400 Sun Company Incorporated....................... 12,400
600 Tosco Corporation.............................. 17,963
----------
330,788
----------
Petroleum (Producing) Industry -- 0.35%
100 Louisiana Land and Exploration Company......... 5,713
200 Pogo Producing Company......................... 7,738
1,800 Union Pacific Resources Group Incorporated..... 44,550
----------
58,001
----------
Publishing Industry -- 0.29%
900 Harcourt General Incorporated.................. 42,863
100 Mcgraw Hill Company Incorporated............... 5,881
----------
48,744
----------
Railroad Industry -- 3.65%
5,400 Burlington Northern Santa Fe Corporation....... 485,325
1,300 Norfolk Southern Corporation................... 130,975
----------
616,300
----------
Restaurant Industry -- 0.66%
2,300 McDonalds Corporation.......................... 111,119
----------
Retail (Special Lines) Industry -- 0.39%
1,400 Gap Incorporated............................... 54,425
<PAGE>
400 Tjx Companies Incorporated..................... 10,550
----------
64,975
----------
Retail Building Supply Industry -- 0.98%
2,400 Home Depot Incorporated........................ 165,600
----------
Retail Store Industry -- 3.08%
800 Dayton Hudson Corporation...................... 42,550
200 Dillards Incorporated Class A.................. 6,925
500 Federated Department Stores Incorporated....... 17,375
1,200 JC Penney Company Incorporated................. 62,625
1,000 K Mart Corporation............................. 12,188
300 May Department Stores Company.................. 14,363
2,000 Sears Roebuck and Company...................... 107,500
7,500 Wal Mart Stores Incorporated................... 253,594
100 Woolworth Corporation.......................... 2,400
----------
519,520
----------
Securities Brokerage Industry -- 0.71%
2,000 Merrill Lynch and Company Incorporated......... 119,250
----------
Semiconductor Industry -- 1.96%
300 Advanced Micro Devices Incorporated............ 10,763
2,200 Intel Corporation.............................. 311,575
200 Micron Technology Incorporated................. 8,000
----------
330,338
----------
Semiconductor Capital Equipment Industry --
0.17%
400 Applied Materials Incorporated................. 28,325
----------
Shoe Industry -- 0.49%
1,400 Nike Incorporated.............................. 81,725
----------
Steel (General) Industry -- 0.18%
400 Nucor Corporation.............................. 22,600
400 Worthington Industries Incorporated............ 7,325
----------
29,925
----------
Telecommunication Equipment Industry -- 3.06%
300 Andrew Corporation............................. 8,438
700 General Instrument Corporation................. 17,631
6,100 Lucent Technologies Incorporated............... 439,581
700 Tellabs Incorporated........................... 39,113
<PAGE>
600 US West Media Group............................ 12,150
----------
516,913
----------
Telecommunication Services Industry -- 7.79%
2,500 Airtouch Communications ....................... 68,750
900 Alltel Corporation............................. 30,094
2,700 Ameritech Corporation.......................... 183,431
5,100 Bellsouth Corporation.......................... 236,513
2,300 MCI Communications Corporation................. 88,119
1,900 Nynex Corporation.............................. 109,369
3,489 SBC Communications Incorporated................ 215,882
3,800 Sprint Corporation............................. 198,550
1,700 Tele Communications Incorporated .............. 25,287
2,500 US West Communications Group................... 94,062
2,000 Worldcom Incorporated.......................... 64,000
----------
1,314,057
----------
Thrift Industry -- 1.58%
2,400 Federal Home Loan Mortgage Association......... 84,000
4,000 Federal National Mortgage Association.......... 174,500
200 HF Ahmanson and Company........................ 8,637
----------
267,137
----------
Tire & Rubber Industry -- 0.05%
400 Cooper Tire and Rubber Company................. 8,800
----------
Toiletries/Cosmetics Industry -- 1.30%
700 Avon Products Incorporated..................... 49,394
1,800 Gillette Company............................... 170,550
----------
219,944
----------
Total common stocks (cost $14,453,011)......... 16,821,254
----------
Total investments (cost $14,453,011)........... 16,821,254
----------
CASH & OTHER ASSETS, LESS LIABILITIES -- 0.32% 54,049
----------
Total Net Assets............................... $16,875,303
==========
<PAGE>
PRINCIPLED EQUITY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
1. Significant accounting policies:
Principled Equity Market Fund, a Massachusetts business trust (the "Trust"),
is registered under the Investment Company Act of 1940, as amended, as a
diversified, closed-end investment management company. The following is a
summary of significant accounting policies followed by the Trust which are in
conformity with those generally accepted in the investment company industry.
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. A. Investment securities--
Security transactions are recorded
on the date the investments are purchased or sold. Each day, at noon,
securities traded on national security exchanges are valued at the last sale
price on the primary exchange on which they are listed, or if there has been
no sale by noon, at the current bid price. Other securities for which market
quotations are readily available are valued at the last known sales price,
or, if unavailable, the known current bid price which most nearly represents
current market value. Temporary cash investments are stated at cost, which
approximates market value. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis. Gains and losses
from sales of investments are calculated using the "identified cost" method
for both financial reporting and federal income tax purposes.
B. Income Taxes-- The Trust has elected to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute each year all of its taxable income to its shareholders. No
provision for federal income taxes is necessary since the Trust intends to
qualify for and elect the special tax treatment afforded a "regulated
investment company" under subchapter M of the Internal Revenue Code.
C. Capital Stock-- The Trust records the sales and redemptions
of its capital stock on trade date.
D. Deferred Organizational Expenses - Costs to be incurred in connection with
organization and registration will be deferred and amortized over a period
of 60 months from the date upon which the Trust commences operations.
2. Investment advisory and sub-advisory agreements: The investment advisory
contract with F.L. Putnam Investment Management Company (the "investment
adviser") provides that the Trust will pay the adviser a fee for investment
advice based on a rate of 1/4% of 1% per annum of the average monthly net
assets. The adviser has elected to waive .10% of the annual fee in the
Trust's first year of operations. David W.C. Putnam, a Trustee of the Trust,
is President and a Director of the Adviser. Pursuant to the Investment
Advisory Contract, the investment adviser is responsible for the management
of the Trust's portfolio. The adviser is obligated to supervise the
performance of administrative and professional services provided by others to
the Trust and will provide all facilities, equipment and personnel and if
requested office space necessary to perform its duties under the
Investment Advisory Contract.
<PAGE>
PRINCIPLED EQUITY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
(Continued)
2. Investment advisory and sub-advisory agreements (continued): The Trust has
also agreed to an Investment Sub-Advisory Contract between the adviser and
PanAgora Asset Management, Inc. (the sub-adviser), whereby the adviser will
pay an annual rate of .15% of the Trusts average net assets to the
sub-adviser. At June 30, 1997, investment sub-advisory fees of $1,389 were
due which were included in "Accrued expenses and other liabilities" in the
accompanying Statement of Assets and Liabilities. Pursuant to the Investment
Sub-Advisory Contract, the sub-adviser is responsible for the investment and
reinvestment of securities selected by the adviser.
3. Administration and transfer agent services: The Trust has entered into an
agreement with Anchor Investment Management Corporation for administrative,
transfer agent and dividend disbursing agent services. Annual fees of $12,000
are payable under this agreement.
4. Related parties:
The President and Secretary of the trust is also a director and principal
stockholder of the Trust's investment adviser.
5. Certain Transactions:
For the six months ended June 30, 1997 the total expense increase, as shown
in the statement of operations, is $5,654 as a result of an expense offset
arrangement with its custodian, Investors Bank & Trust Company. The Trust
could have invested the assets used by the custodian in an income producing
asset if it had not agreed to a reduction in fees under the expense offset
arrangement. In addition, the expense ratios in the Selected Per Share Data
and ratios are based on the total expenses, which include amounts that would
have been paid in lieu of an expense offset arrangement
6. Purchases and sales:
Aggregate cost of purchases and the proceeds from sales and maturities on
investments for the year ended six months ended June 30, 1997 were:
Cost of securities acquired:
U.S. Government and investments backed by
such securities........................... $ 130,723
Other investments....................... 14,924,367
=============
$ 15,055,090
=============
Proceeds from sales and maturities:
U.S. Government and investments backed by
such securities........................... $ 130,723
Other investments....................... 471,420
=============
$ 602,143
=============
<PAGE>
PRINCIPLED EQUITY MARKET FUND
OFFICERS AND TRUSTEES
DAVID W.C. PUTNAM President,
Secretary
Chairman, Board of Directors, F.L. Putnam and Trustee
Investment Management Company
President and Director, F.L. Putnam
Securities Company Incorporated
HOWARD R. BUCKLEY Trustee
President, Chief Executive Officer, Mercy
Hospital, Portland Maine; President, Chief
Executive Officer and Director, Mercy Health
Systems of Maine
SISTER ANNE MARY DONOVAN Trustee
General Treasurer of the Sisters of Notre
Dame de Namur, Boston
SISTER JOAN GIBBINS Trustee
Treasurer, Mercy Health System of
Southeastern Pennsylvania
RONALD P. HOGAN Trustee
Chief Executive Officer, Saint Joseph's
Health System
WILLIAM H. IZLAR, JR. Trustee
Chairman and Director, Eastern Mercy
Health System
SISTER JUNE KETTERER Trustee
Provincial Superior, St. Joseph Province,
Sisters of Charity of Montreal
SISTER MARY LABOURE MORIN Trustee
President, Regional Community, Sisters of
Mercy of the Americas
C. KENT RUSSELL Treasurer
President, Chief Executive Officer and and Trustee
Director, Eastern Mercy Health System
JOEL M. ZIFF Trustee
Director, Eastern Mercy Health System
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PRINCIPLED EQUITY MARKET FUND
INVESTMENT ADVISER
F.L. Putnam Investment Management Company
10 Langley Road, Suite 400, Newton Centre, Massachusetts 02159
(617) 964-7600
SUB-ADVISOR
PanAgora Asset Management, Inc.
260 Franklin St., 22nd Floor, Boston, Massachusetts 02110
CUSTODIAN
Investors Bank & Trust Company
89 South Street, Boston, Massachusetts 02111
INDEPENDENT PUBLIC ACCOUNTANT
Livingston & Haynes, P.C.
40 Grove St., Wellesley, Massachusetts 02181
ADMINISTRATOR AND TRANSFER AGENT
Anchor Investment Management Corp.
2717 Furlong Road, Doylestown, Pennsylvania 18901
(215) 794-2980
LEGAL COUNSEL
Sullivan & Worchester
One Post Office Square, Boston, Massachusetts 02109