<PAGE> 1
MAGNA FUNDS
LETTER TO SHAREHOLDERS
We are pleased to send you the Semi-Annual Report for the period ended February
28, 1998 for the Magna Funds, consisting of the Magna Growth & Income Fund and
Magna Intermediate Government Bond Fund. During the period, aggregate net
assets, which exceed $148,000,000, and shares outstanding, which exceed
8,500,000, continued to grow as we attracted new shareholders. The funds saw
additional investment by existing shareholders and enjoyed stock market
advances.
On August 6, 1997 the Dow Jones Industrial Average reached a then record high
close of 8259. It suffered its greatest single-day point loss in history -- over
550 points -- on October 27, 1997 to close at 7161, only to achieve new record
high levels closing over 8500 for the first time on February 27, 1998. This kind
of market volatility reinforces our belief that the prudent investor should take
a long term view of the financial markets.
We look forward to reporting to you again in six months.
Sincerely,
Walter B. Grimm
Walter B. Grimm
President
<PAGE> 2
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
PORTFOLIO MANAGER REPORT
COMMENTS FROM DISCUSSIONS WITH L. CLARK ZEDRIC, PORTFOLIO MANAGER.
HOW HAS THE FUND PERFORMED
OVER THE PAST SIX MONTHS
AND ONE
YEAR PERIODS? The Fund provided a total return of 4.8%(1),
exclusive of sales loads, for the six-month period
ended February 28, 1998. In the past twelve months
the Fund returned 8.6%(1). This compares to a
return of 5.0% in the past six months and a twelve
month return of 9.0% for Lipper Intermediate
Government Bond Index.
BASED ON YOUR OUTLOOK FOR
1998,
HOW HAVE YOU POSITIONED THE
FUND FOR THE FUTURE? We expect interest rates to remain in a narrow
trading range with a downward bias over the rest of
our fiscal year. As rates move up towards the upper
end of their range our strategy has been to make
purchases at these better levels(2). The quality of
bonds in the portfolio remains high. Over 70% of
bonds held are rated AAA by Moody's. No bonds below
an A rating by Moody's are held in the portfolio.
This reconfirms our commitment to quality.
- ---------------
(1) With a maximum sales charge of 4.00%, the total return for the six month
period would have been 0.52%, and 4.3% for the one year return.
(2) The composition of the Fund's holdings is subject to change.
2
<PAGE> 3
MAGNA GROWTH & INCOME FUND
PORTFOLIO MANAGER REPORT
COMMENTS FROM DISCUSSIONS WITH GARY J. GUTHRIE, PORTFOLIO MANAGER.
HOW HAS THE FUND PERFORMED
OVER THE PAST SIX MONTHS
AND ONE
YEAR PERIODS? The Fund had a total return of 14.6%(1) and 31.4%,
exclusive of sales load, for the six months and
one-year period ended February 28, 1998,
respectively. This compares with the S&P 500 Index
returns of 17.6% and 35.0%, respectively. The
average growth and income fund tracked by Lipper
Analytical returned 13.0% and 28.3% for the same
six-month and one year periods.
WHAT IS THE COMPOSITION OF
THE
PORTFOLIO AT THIS TIME? The Fund is currently invested in 68 companies(2)
which represent 30 industries. We are broadly
diversified with the single largest equity holding
at 4.3% of the portfolio while the ten largest
positions represent approximately 25% of the
portfolio as of February 28, 1998.
WHAT COMMENTS DO YOU HAVE
ON
THE MARKET AND FUND
PERFORMANCE? The market rebounded from the October 1997
correction and began building momentum going into
the new year. January saw increased momentum in
financial and drug stocks. Strong returns were also
posted by Lucent and Dell.
WHAT'S YOUR OUTLOOK FOR THE
NEXT
SIX MONTHS? The impact of the Asian financial collapse seems to
have been discounted by the recent strong market
performance. Strong demographic trends combined
with advances in technology continue to boost
productivity. We believe the further opening of
global markets may spur long-term growth. We
believe new money should be dollar cost averaged
over the remaining year(3).
- ---------------
(1) With a maximum sales charge of 4.00%, the total return for the six-month
period would have been 10.0%, and 26.2% for the one year return.
(2) The composition of the Fund's holdings is subject to change.
(3) Dollar cost averaging does not insure a profit and does not protect against
loss in declining markets. An investor should consider his or her financial
ability to continue making additional investments through periods of low
share price levels.
3
<PAGE> 4
MAGNA GROWTH & INCOME FUND
COMPARATIVE TOTAL RETURN
FOR THE PERIODS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
CUMULATIVE
SINCE
SIX MONTHS ONE YEAR INCEPTION*
---------- -------- ----------
<S> <C> <C> <C>
Magna Growth & Income Fund:
Without sales charge......................... 14.6% 31.4% 117.2%
With 4% sales charge......................... 10.0 26.2 108.5
Lipper Growth & Income Fund Index:................ 13.0 28.3 105.4
S&P 500 Index..................................... 17.6 35.0 138.4
Consumer Price Index (CPI)........................ 0.7 1.4 8.7
</TABLE>
- ---------------
* The Fund commenced operations on September 1, 1994.
Past performance is not predictive of future results. Investment returns and
principal value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may be worth more or less than their
original cost.
The Fund's total return figures reflect fund expenses and portfolio transactions
costs, and assume the reinvestment of income, dividends and capital gains
distributions. The Lipper Growth & Income Fund Index is composed of thirty
funds. The S&P 500 is a broad-based, widely recognized unmanaged index of 500
common stocks. The total return figures for the indices do not reflect any
commissions or expenses that would be incurred if an investor individually
purchased or sold the securities represented in these indices. It is generally
not possible to invest in an index. The CPI is a measure of changes in consumer
prices, as determined by a monthly survey of U.S. Bureau of Labor Statistics.
<TABLE>
<CAPTION>
LARGEST STOCK HOLDINGS PORTFOLIO
FEBRUARY 28, 1998 %
---------------------- ---------
<S> <C>
Dell Computer Corp.......................................... 4.3
Microsoft Corp.............................................. 3.1
Intel Corp.................................................. 2.7
Procter & Gamble............................................ 2.3
General Electric Co......................................... 2.2
Pfizer, Inc................................................. 2.1
Sun Microsystems, Inc....................................... 2.0
Lilly (Eli) & Company....................................... 1.9
Bristol Myers Squibb Co..................................... 1.8
Compaq Computers............................................ 1.8
</TABLE>
4
<PAGE> 5
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
COMPARATIVE TOTAL RETURN
FOR THE PERIODS ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
CUMULATIVE
SINCE
SIX MONTHS ONE YEAR INCEPTION*
---------- -------- ----------
<S> <C> <C> <C>
Magna Intermediate Government Bond Fund:
Without sales charge......................... 4.8% 8.6% 26.7%
With 4% sales charge......................... 0.5 4.3 21.7
Lipper Intermediate Government Bond Index:........ 5.0 9.0 28.4
</TABLE>
- ---------------
* The Fund commenced operations on September 1, 1994.
Past performance is not predictive of future results. Investment returns and
principal value of shares of the Fund will fluctuate with market conditions so
that shares of the Fund, when redeemed, may be worth more or less than their
original cost.
The Fund's total return figures reflect fund expenses and portfolio transactions
costs, and assume the reinvestment of income and capital gains distributions.
The Lipper Intermediate Government Bond Index is composed of thirty funds. The
total return figures for the index do not reflect any commissions or expenses
that would be incurred if an investor individually purchased or sold the
securities represented in this index. It is generally not possible to invest in
an index.
5
<PAGE> 6
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- --------- -----------
<S> <C> <C>
COMMON STOCKS -- (87.7%):
AEROSPACE/DEFENSE -- (2.4%):
Boeing Company......................................... 15,000 $ 813,750
Lockheed Martin Corporation............................ 10,000 1,166,875
-----------
1,980,625
-----------
AIR FREIGHT -- (0.8%):
FDX Corporation*....................................... 10,000 636,875
-----------
AIR TRAVEL -- (1.4%):
Delta Air Lines Incorporated........................... 10,000 1,130,625
-----------
ALUMINUM -- (0.9%):
Aluminum Company of America............................ 10,000 733,750
-----------
AUTOMOBILES & TRUCKS -- (1.7%):
Ford Motor Company..................................... 25,000 1,414,063
-----------
BREWERY -- (1.2%):
Anheuser-Busch Companies, Incorporated................. 20,000 937,500
-----------
CHEMICALS -- (3.3%):
DuPont (EI) de Nemours & Company....................... 21,000 1,287,562
Monsanto Company....................................... 25,000 1,271,875
Solutia Incorporated................................... 5,000 136,563
-----------
2,696,000
-----------
CLOTHING -- (1.2%):
TJX Companies Incorporated............................. 25,000 965,625
-----------
COMPUTER SOFTWARE -- (3.2%):
Microsoft Corporation*................................. 30,400 2,576,400
-----------
COMPUTERS & BUSINESS EQUIPMENT -- (11.6%):
Cisco Systems Incorporated*............................ 22,500 1,482,188
Compaq Computer Corporation............................ 46,000 1,474,875
Dell Computer Corporation*............................. 25,000 3,496,874
Hewlett-Packard Company................................ 20,000 1,340,000
Sun Microsystems Incorporated*......................... 35,000 1,666,875
-----------
9,460,812
-----------
</TABLE>
continued
6
<PAGE> 7
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- --------- -----------
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
COSMETICS & TOILETRIES -- (1.6%):
Dial Corporation....................................... 55,000 $ 1,302,813
-----------
DIVERSIFIED OPERATIONS -- (2.9%):
Conagra Incorporated................................... 20,000 600,000
General Electric Company............................... 23,000 1,788,250
-----------
2,388,250
-----------
DRUGS & HEALTHCARE -- (11.9%):
Bristol-Myers Squibb Company........................... 15,000 1,502,813
Johnson & Johnson...................................... 11,000 830,500
Lilly (Eli) & Company.................................. 24,000 1,579,499
Merck & Company Incorporated........................... 10,100 1,288,381
Pfizer Incorporated.................................... 20,000 1,769,999
Tenet Healthcare Corporation*.......................... 35,000 1,305,938
Warner-Lambert Company................................. 10,000 1,462,500
-----------
9,739,630
-----------
ELECTRONIC COMPONENTS -- (3.6%):
Intel Corporation...................................... 25,000 2,242,188
Xilinx Incorporated*................................... 15,000 658,125
-----------
2,900,313
-----------
ENTERTAINMENT -- (1.4%):
Walt Disney Company.................................... 10,000 1,119,375
-----------
FINANCE & BANKING -- (7.6%):
Banc One Corporation................................... 13,200 745,800
BankAmerica Corporation................................ 10,000 775,000
Chase Manhattan Corporation............................ 10,000 1,240,624
First Union Corporation................................ 20,000 1,053,750
Mellon Bank Corporation................................ 18,300 1,140,319
Norwest Corporation.................................... 20,000 818,750
Suntrust Banks Incorporated............................ 5,000 368,750
-----------
6,142,993
-----------
</TABLE>
continued
7
<PAGE> 8
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- --------- -----------
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (1.6%):
Fannie Mae............................................. 20,000 $ 1,276,250
-----------
FOOD & BEVERAGES -- (3.2%):
Coca-Cola Company...................................... 16,000 1,099,000
PepsiCo Incorporated................................... 10,600 387,563
Sara Lee Corporation................................... 20,000 1,130,000
-----------
2,616,563
-----------
HOUSEHOLD PRODUCTS -- (2.3%):
Procter & Gamble Company............................... 22,000 1,868,625
-----------
INSURANCE -- (4.7%):
Allstate Corporation................................... 15,000 1,398,750
Conseco Incorporated................................... 30,000 1,408,125
Hartford Financial Services Group...................... 10,000 982,500
-----------
3,789,375
-----------
INTERNATIONAL OIL -- (4.0%):
Exxon Corporation...................................... 15,000 958,125
Mobil Corporation...................................... 15,200 1,101,050
Texaco Incorporated.................................... 22,000 1,227,875
-----------
3,287,050
-----------
MACHINERY & EQUIPMENT -- (0.7%):
Deere & Company........................................ 10,000 561,250
-----------
MEDICAL INSTRUMENTS -- (1.6%):
Medtronic Incorporated................................. 24,000 1,275,000
-----------
OIL & GAS -- (1.4%):
Atlantic Richfield Company............................. 10,000 777,500
Ultramar Diamond Sharmrock Corporation................. 10,000 356,875
-----------
1,134,375
-----------
PAPER -- (1.4%):
Kimberly-Clark Corporation............................. 20,000 1,113,750
-----------
RAILROADS -- (0.6%):
Burlington Northern Santa Fe........................... 4,600 458,275
-----------
</TABLE>
continued
8
<PAGE> 9
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- --------- -----------
<S> <C> <C>
COMMON STOCKS -- (CONTINUED)
RESTAURANTS -- (1.0%):
McDonald's Corporation................................. 14,700 $ 804,825
-----------
TELECOMMUNICATIONS -- (4.8%):
GTE Corporation........................................ 19,500 1,055,438
Lucent Technologies Incorporated....................... 10,000 1,083,749
SBC Communications Incorporated........................ 7,100 536,938
Sprint Corporation..................................... 10,000 660,000
Worldcom Incorporated*................................. 15,000 572,813
-----------
3,908,938
-----------
TOBACCO -- (1.6%):
Philip Morris Companies, Incorporated.................. 30,000 1,303,125
-----------
UTILITIES -- (2.1%):
GPU Incorporated....................................... 20,000 803,750
New Century Energies Incorporated...................... 20,000 932,500
-----------
1,736,250
-----------
TOTAL COMMON STOCKS -- (Cost $39,464,910)................... 71,259,300
-----------
PREFERRED STOCKS -- (5.3%):
CLOTHING -- (0.9%):
Harris Preferred Capital, Series A*.................... 30,000 755,640
-----------
DIVERSIFIED OPERATIONS -- (0.6%):
UDS Capital, Series I*................................. 20,000 525,000
-----------
ELECTRICAL & ELECTRONIC -- (0.6%):
KCPL Financing, Series I*.............................. 20,000 522,500
-----------
INSURANCE -- (2.2%):
Aetna Services Incorporated*........................... 10,000 833,750
Allstate Corporation*.................................. 35,000 885,920
-----------
1,719,670
-----------
UTILITIES -- (1.0%):
Duke Energy Capital Trust*............................. 30,000 761,250
-----------
TOTAL PREFERRED STOCKS -- (Cost $4,083,101)................. 4,284,060
-----------
</TABLE>
continued
9
<PAGE> 10
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- --------- -----------
<S> <C> <C>
SHORT TERM INVESTMENTS -- (6.9%):
U.S. GOVERNMENT SECURITIES -- (4.9%):
United States Treasury Notes
5.13%, 3/31/1998..................................... 500,000 $ 499,881
5.13%, 4/30/1998..................................... 500,000 499,610
6.00%, 5/31/1998..................................... 500,000 500,545
5.13%, 6/30/1998..................................... 500,000 499,455
5.25%, 7/31/1998..................................... 500,000 499,610
6.00%, 9/30/1998..................................... 500,000 501,330
5.13%, 12/31/1998.................................... 500,000 498,360
5.50%, 2/28/1999..................................... 500,000 499,845
-----------
3,998,636
-----------
REPURCHASE AGREEMENT -- (2.0%):
Fifth Third Bank
5.06%, dated 3/2/1998 (Collateralized by $1,599,000
Federal Home Loan Mortgage Corporation, 7.50%,
2/1/2012, Market Value -- $1,646,970)............... 1,614,469 1,614,469
-----------
TOTAL SHORT TERM INVESTMENTS -- (Cost $5,611,503)........... 5,613,105
-----------
TOTAL INVESTMENTS -- (Cost $49,159,513) -- 99.9%............ 81,156,465
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES --
0.1%...................................................... 70,677
-----------
NET ASSETS -- 100.0%........................................ $81,227,142
===========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $81,227,142.
* Represents non-income producing securities.
See notes to financial statements.
10
<PAGE> 11
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
GOVERNMENT AND AGENCY BONDS -- (64.0%):
FEDERAL AGENCIES -- (59.6%):
Federal Farm Credit Bank
6.20%, 11/30/2009.................................... $1,000,000 $ 1,010,940
6.27%, 1/26/2016..................................... 1,000,000 997,030
-----------
2,007,970
-----------
Federal Home Loan Bank
8.45%, 7/26/1999..................................... 150,000 155,672
7.59%, 2/10/2000..................................... 1,000,000 1,034,370
8.06%, 3/10/2005..................................... 500,000 520,780
7.15%, 9/13/2005..................................... 540,000 539,746
7.33%, 5/30/2007..................................... 1,000,000 1,027,190
7.01%, 12/4/2012..................................... 1,000,000 1,005,310
6.13%, 1/9/2013...................................... 1,000,000 1,005,470
-----------
5,288,538
-----------
Federal Home Loan Mortgage Corp.
8.00%, 2/1/1999...................................... 76,173 76,521
7.90%, 9/19/2001..................................... 280,000 298,637
6.60%, 3/25/2003..................................... 700,000 698,362
5.78%, 10/22/2003.................................... 380,000 372,339
8.03%, 4/6/2005...................................... 1,475,000 1,478,230
7.49%, 5/25/2005..................................... 1,000,000 1,003,590
7.25%, 6/8/2005...................................... 500,000 501,250
6.55%, 11/28/2005.................................... 500,000 498,125
6.91%, 11/30/2005.................................... 500,000 500,705
8.00%, 9/11/2006..................................... 1,000,000 1,011,410
7.50%, 1/1/2007...................................... 20,838 21,423
6.50%, 5/1/2008...................................... 99,562 100,210
6.77%, 3/21/2011..................................... 1,000,000 1,017,810
6.71%, 12/5/2011..................................... 2,000,000 2,064,060
7.27%, 2/6/2012...................................... 1,000,000 1,075,780
7.49%, 4/16/2012..................................... 1,000,000 1,096,870
7.09%, 11/22/2016.................................... 500,000 524,765
7.00%, 1/15/2023, SERIES 1497 P...................... 1,000,000 1,011,250
</TABLE>
continued
11
<PAGE> 12
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
GOVERNMENT AND AGENCY BONDS -- (CONTINUED)
FEDERAL AGENCIES -- (CONTINUED)
7.00%, 12/15/2023, SERIES 1695 EA.................... $ 546,000 $ 551,285
6.50%, 2/15/2024, SERIES 1680........................ 179,134 177,846
-----------
14,080,468
-----------
Federal National Mortgage Assoc.
5.55%, 10/5/1998..................................... 650,000 649,188
5.38%, 10/23/1998.................................... 840,000 838,421
7.00%, 7/1/1999...................................... 582,075 586,534
8.55%, 8/30/1999..................................... 360,000 370,573
6.40%, 3/25/2003..................................... 1,140,000 1,134,482
7.85%, 9/10/2004..................................... 500,000 514,060
8.33%, 2/8/2005...................................... 1,000,000 1,045,470
7.65%, 3/10/2005..................................... 500,000 548,515
7.13%, 7/6/2005...................................... 1,000,000 1,002,030
8.00%, 6/21/2006..................................... 1,000,000 1,026,090
7.50%, 10/5/2006..................................... 1,000,000 1,007,500
8.00%, 4/9/2007...................................... 1,000,000 1,002,340
6.83%, 10/10/2007.................................... 500,000 503,595
8.10%, 5/11/2010..................................... 1,000,000 1,004,060
7.00%, 12/5/2011..................................... 1,000,000 997,500
7.00%, 8/14/2012..................................... 1,500,000 1,522,965
7.00%, 8/27/2012..................................... 1,500,000 1,547,340
7.00%, 10/29/2012.................................... 500,000 509,685
7.00%, 12/12/2016.................................... 1,000,000 1,037,190
6.75%, 8/25/2021, SERIES 1993-38 K................... 920,000 928,335
7.05%, 4/25/2022, SERIES 1993-23 PM.................. 925,000 948,125
-----------
18,723,998
-----------
U.S. GOVERNMENT SECURITIES -- (4.4%):
United States Treasury Notes
9.25%, 8/15/1998..................................... 135,000 137,236
7.13%, 10/15/1998.................................... 750,000 757,268
5.88%, 3/31/1999..................................... 380,000 381,364
</TABLE>
continued
12
<PAGE> 13
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
GOVERNMENT AND AGENCY BONDS -- (CONTINUED)
7.00%, 4/15/1999..................................... $1,000,000 $ 1,015,780
6.00%, 10/15/1999.................................... 690,000 694,423
-----------
2,986,071
-----------
TOTAL GOVERNMENT AND AGENCY BONDS -- (Cost $42,127,239)..... 43,087,045
-----------
CORPORATE BONDS -- (27.9%):
FINANCE & BANKING -- (10.7%):
Associates Corporation NA
7.13%, 5/15/2000..................................... 1,000,000 1,025,620
Bear Stearns Companies, Incorporated
7.00%, 3/1/2007...................................... 1,000,000 1,029,690
Ford Capital BV
9.34% 5/15/2001...................................... 380,000 414,500
Merrill Lynch & Company Incorporated
8.00%, 6/1/2007...................................... 500,000 552,605
8.30%, 11/1/2002..................................... 460,000 498,272
8.00%, 2/1/2002...................................... 325,000 345,602
-----------
1,396,479
-----------
Morgan Stanley Group Incorporated
8.10%, 6/24/2002..................................... 460,000 492,688
Nationsbank Corporation
7.04%, 8/15/2012..................................... 500,000 498,750
Norwest Financial Incorporated
7.20%, 5/1/2007...................................... 1,000,000 1,056,970
St. Paul Companies Incorporated
7.29%, 8/28/2007..................................... 500,000 539,850
Toyota Motor Credit Corporation
7.13%, 9/26/2006..................................... 500,000 509,260
United Postal Savings Association
9.00%, 7/26/1999..................................... 250,000 260,148
-----------
7,223,955
-----------
</TABLE>
continued
13
<PAGE> 14
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
CORPORATE BONDS -- (CONTINUED)
INDUSTRIALS -- (8.6%):
DuPont Corporation
8.13%, 3/15/2004..................................... $ 265,000 $ 292,329
Ford Motor Company
9.00%, 9/15/2001..................................... 280,000 305,208
9.50%, 9/15/2011..................................... 230,000 291,426
-----------
596,634
-----------
Kimberly-Clark Corporation
8.63%, 5/1/2001...................................... 280,000 300,866
Lilly Eli & Company
8.13%, 12/1/2001..................................... 500,000 534,880
Loews Corporation
6.75%, 12/15/2006.................................... 500,000 507,275
Monsanto Company
8.75%, 5/15/2001..................................... 200,000 215,732
Philip Morris Companies Incorporated
8.75%, 6/1/2001...................................... 250,000 266,230
7.25%, 1/15/2003..................................... 700,000 722,484
7.50%, 1/15/2002..................................... 360,000 373,208
-----------
1,361,922
-----------
R R Donnelley & Sons Company
7.00%, 1/1/2003...................................... 700,000 722,463
Rockwell International Corporation
8.38%, 2/15/2001..................................... 280,000 297,528
Texaco Capital Incorporated
9.00%, 12/15/1999.................................... 340,000 356,874
Wal-Mart Stores Incorporated
8.63%, 4/1/2001...................................... 430,000 460,805
Weyerhaeuser Company
8.94%, 4/9/2001...................................... 100,000 108,327
-----------
5,755,635
-----------
</TABLE>
continued
14
<PAGE> 15
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
CORPORATE BONDS -- (CONTINUED)
TRANSPORTATION -- (0.4%):
Norfolk & Southern Railway Company
7.75%, 8/15/2005..................................... $ 225,000 $ 246,697
-----------
UTILITIES -- (8.2%):
A T & T Corporation
7.13%, 1/15/2002..................................... 960,000 995,683
Carolina Telephone & Telegraph Company
7.25%, 12/15/2004.................................... 1,000,000 1,066,970
General Electric Company
7.73%, 2/13/2002..................................... 400,000 427,720
National Rural Utilities
7.30%, 9/15/2006..................................... 1,000,000 1,067,250
7.20%, 10/1/2015..................................... 450,000 475,182
-----------
1,542,432
-----------
Northern Telecom, Limited
8.75%, 6/12/2001..................................... 430,000 462,353
Pacific Bell
7.25%, 7/1/2002...................................... 1,000,000 1,044,480
-----------
5,539,638
-----------
TOTAL CORPORATE BONDS -- (Cost $17,935,683)................. 18,765,925
-----------
SHORT TERM INVESTMENTS -- (6.3%):
REPURCHASE AGREEMENT -- (6.3%):
Fifth Third Bank
5.06%, dated 3/2/1998 (Collateralized by $4,222,000
Federal Home Loan Mortgage Corporation, 7.50%,
2/1/2012, Market Value -- $4,348,660)............... 4,262,579 4,262,579
-----------
TOTAL SHORT TERM INVESTMENTS -- (Cost $4,262,579)........... 4,262,579
-----------
TOTAL INVESTMENTS -- (Cost $64,325,500) -- 98.2%............ 66,115,549
CASH, RECEIVABLES AND OTHER ASSETS, LESS LIABILITIES --
1.8%...................................................... 1,197,959
-----------
NET ASSETS -- 100.0%........................................ $67,313,508
===========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $67,313,508.
See notes to financial statements.
15
<PAGE> 16
MAGNA FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
GROWTH & INTERMEDIATE
INCOME GOVERNMENT
FUND BOND FUND
----------- ------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $47,545,045 and
$60,062,922, respectively)................................ $79,541,996 $61,852,970
Repurchase agreements, at cost.............................. 1,614,469 4,262,579
----------- -----------
TOTAL INVESTMENTS......................................... 81,156,465 66,115,549
----------- -----------
Interest and dividend receivable............................ 197,228 1,085,384
Receivable for investment securities sold................... 500,000 460,713
Deferred organization costs................................. 15,861 31,037
Prepaid expenses and other assets........................... 4,474 29
----------- -----------
TOTAL ASSETS.............................................. 81,874,028 67,692,712
----------- -----------
LIABILITIES:
Payable for investment securities purchased................. 580,312 --
Distributions payable....................................... -- 309,014
Accrued expenses:
Advisory fees............................................. 30,361 20,690
Administration fees....................................... 1,935 1,750
Legal fees................................................ 13,370 16,350
Audit fees................................................ 2,554 4,437
Other..................................................... 18,354 26,963
----------- -----------
TOTAL LIABILITIES......................................... 646,886 379,204
----------- -----------
NET ASSETS.................................................. $81,227,142 $67,313,508
=========== ===========
COMPOSITION OF NET ASSETS
Paid-in capital............................................. $48,937,086 $65,689,809
Accumulated undistributed (distributions in excess of) net
investment income......................................... 144,971 (80)
Accumulated net realized gains (losses) on investment
transactions.............................................. 148,134 (166,269)
Net unrealized appreciation (depreciation) from
investments............................................... 31,996,951 1,790,048
----------- -----------
NET ASSETS.................................................. $81,227,142 $67,313,508
=========== ===========
Shares of beneficial interest outstanding, no par value..... 3,274,030 5,250,738
=========== ===========
Net asset value and redemption price per share.............. $ 24.81 $ 12.82
=========== ===========
Maximum Sales Charge........................................ 4.00% 4.00%
=========== ===========
Maximum Offering Price (100%/(100%-Maximum Sales Charge) of
net asset value adjusted to nearest cent) per share....... $ 25.84 $ 13.35
=========== ===========
</TABLE>
See notes to financial statements.
16
<PAGE> 17
MAGNA FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
GROWTH & INTERMEDIATE
INCOME GOVERNMENT
FUND BOND FUND
----------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................................. $ 191,447 $ 2,299,165
Dividend income............................................. 545,260 --
----------- -----------
TOTAL INCOME.............................................. 736,707 2,299,165
----------- -----------
EXPENSES:
Advisory fees............................................... 276,666 165,291
Administration fees......................................... 73,462 65,833
12b-1 fees.................................................. 92,222 82,645
Fund Accounting fees........................................ 17,884 20,368
Legal fees.................................................. 24,821 18,519
Audit fees.................................................. 6,092 3,760
Custodian fees.............................................. 8,212 10,226
Amortization of organization costs.......................... 5,241 10,167
Transfer agent fees......................................... 17,538 16,408
Printing costs.............................................. 3,754 3,161
Insurance costs............................................. 4,141 5,003
Registration and filing fees................................ 3,988 4,018
Trustees' fees and expenses................................. 10,379 10,380
Other....................................................... 191 118
----------- -----------
TOTAL EXPENSES............................................ 544,591 415,897
Less: Expenses voluntarily reduced/waived................. (184,444) (115,703)
----------- -----------
Net Expenses.............................................. 360,147 300,194
----------- -----------
NET INVESTMENT INCOME....................................... 376,560 1,998,971
----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENT
TRANSACTIONS:
Realized gains(losses) on investment transactions........... 862,373 91,973
Net change in unrealized appreciation(depreciation) on
investments............................................... 9,007,657 999,510
----------- -----------
Net realized and unrealized gains on investment
transactions.............................................. 9,870,030 1,091,483
----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. $10,246,590 $ 3,090,454
=========== ===========
</TABLE>
See notes to financial statements.
17
<PAGE> 18
MAGNA FUNDS
GROWTH & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income................................... $ 376,560 $ 719,510
Net realized gains (losses) from investment
transactions.......................................... 862,373 664,115
Net change in unrealized appreciation (depreciation) on
investments........................................... 9,007,657 15,434,191
----------- -----------
Change in net assets resulting from operations.......... 10,246,590 16,817,816
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (420,072) (645,485)
Net realized gains...................................... (1,369,723) (917,850)
----------- -----------
Change in net assets from shareholder distributions..... (1,789,795) (1,563,335)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Proceeds from sale of shares............................ 4,969,274 21,143,569
Shares issued in reinvestment of distributions.......... 1,532,946 1,132,911
Payments for shares redeemed............................ (4,008,360) (7,249,406)
----------- -----------
Change in net assets from fund share transactions....... 2,493,860 15,027,074
----------- -----------
NET INCREASE IN NET ASSETS.............................. 10,950,655 30,281,555
NET ASSETS:
Beginning of period..................................... 70,276,487 39,994,932
----------- -----------
End of period........................................... $81,227,142 $70,276,487
=========== ===========
</TABLE>
See notes to financial statements.
18
<PAGE> 19
MAGNA FUNDS
INTERMEDIATE GOVERNMENT BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income................................... $ 1,998,971 $ 3,747,065
Net realized gains (losses) from investment
transactions.......................................... 91,973 67,662
Net change in unrealized appreciation (depreciation) on
investments........................................... 999,510 815,681
----------- -----------
Change in net assets resulting from operations.......... 3,090,454 4,630,408
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (1,999,046) (3,748,531)
In excess of net investment income...................... -- (57,243)
----------- -----------
Change in net assets from shareholder distributions..... (1,999,046) (3,805,774)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Proceeds from sale of shares............................ 7,656,098 12,518,368
Shares issued in reinvestment of distributions.......... 366,532 637,814
Payments for shares redeemed............................ (6,259,454) (6,285,840)
----------- -----------
Change in net assets from fund share transactions....... 1,763,176 6,870,342
----------- -----------
NET INCREASE IN NET ASSETS.............................. 2,854,584 7,694,976
NET ASSETS:
Beginning of period..................................... 64,458,924 56,763,948
----------- -----------
End of period........................................... $67,313,508 $64,458,924
=========== ===========
</TABLE>
See notes to financial statements.
19
<PAGE> 20
MAGNA FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND FUND DESCRIPTION
Magna Funds (the "Trust") is an open-end, diversified management investment
company registered under the Investment Company Act of 1940 (the "Act"), as
amended. The Trust was organized as a Massachusetts business trust on April 28,
1994, and is authorized to issue an unlimited number of shares of beneficial
interest in multiple series. Two series commenced investment operations on
September 1, 1994: the Magna Growth & Income Fund and the Magna Intermediate
Government Bond Fund (the "Funds").
The investment objective of the Magna Growth & Income Fund is to seek long-term
growth of capital, current income and growth of income. The investment objective
of the Magna Intermediate Government Bond Fund is to achieve current income
consistent with preservation of capital.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust.
Investment Valuation: Equity securities listed on an established securities
exchange or on the NASDAQ National Market System are valued at the closing sale
price on the exchange where primarily traded or, if there is no reported sale
during the day, and in the case of over-the-counter securities not so listed, at
the last bid price. Long-term debt securities are valued by a pricing service,
which determines valuations of normal institutional-size trading units of
long-term debt securities. Short-term debt securities having a maturity of 60
days or less from the valuation date are valued at amortized cost which
approximates market value.
Investment Transactions: All securities transactions are recorded on a trade
date basis. Dividend income is recorded on the ex-dividend date and interest
income is recorded on the accrual basis. Realized gains and losses on sales of
securities are determined on the basis of identified cost.
Repurchase Agreements: A repurchase agreement customarily obligates the seller
at the time it sells securities to the Funds to repurchase the securities at a
mutually agreed upon time and price which, in the case of the Funds'
transactions, is usually within seven days. The total amount received by the
Funds on repurchase agreements is calculated to exceed the price paid by the
Funds, reflecting an agreed upon market rate of interest for the period of time
to the settlement date, and will not necessarily be related to the interest rate
on the underlying securities. The underlying securities are ordinarily United
States government securities. Repurchase agreements will be fully collaterized
at all times. However, to the extent that the proceeds from any sale upon
default in the obligation to repurchase is less than the repurchase price, the
Funds would suffer a loss. Also, the Funds might incur costs and encounter
delays in liquidating collateral.
Deferred Organizational Expenses: The Funds bear all costs in connection with
their organization, including the fees and expenses of registering and
qualifying shares for distribution under Federal and State securities
regulations. All such costs are amortized using the straight-line method over a
period of five years from the dates each Fund commenced operations: September 1,
1994, for the Magna Growth and Income Fund and the Magna Intermediate Government
Bond Fund.
continued
20
<PAGE> 21
MAGNA FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
Dividends and Distributions to Shareholders: The Magna Intermediate Government
Bond Fund declares dividends from net investment income daily and makes payments
monthly. The Magna Growth & Income Fund declares and pays dividends from net
investment income quarterly. Each Fund also distributes all of its net capital
gains, if any, on an annual basis, normally in December. Distributions are
recorded on the ex-dividend date. Income distributions and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. The differences are
primarily due to differing treatments for mortgage-backed securities, expiring
capital loss carryforwards, and deferrals of certain losses. Permanent book and
tax basis differences have been reclassified among the components of net assets.
Federal Income Taxes: Each Fund of the Trust is treated as a separate entity
for federal tax purposes. Each Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code. By so
qualifying, the Funds will not be subject to federal income tax to the extent
that they distribute all of their taxable income, including realized capital
gains, for the fiscal year. In addition, by distributing substantially all of
their net investment income and capital gains during the calender year, the
Funds will not be subject to a federal excise tax.
Expenses: Expenses that are directly related to one of the Funds are charged
directly to that Fund. Expenses relating to the Funds collectively are prorated
to the Funds on the basis of each Fund's relative net assets.
Estimates: The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. Actual
results could differ from those estimates.
3. RELATED PARTY TRANSACTIONS
Each Fund has entered into a separate Investment Advisory Agreement with Magna
Bank, N.A. ("Magna"). Under these agreements, each Fund pays a fee, calculated
daily and paid monthly, based on the respective average daily net assets of such
Fund. This fee is 0.75% for the Magna Growth & Income Fund, and 0.50% for the
Magna Intermediate Government Bond Fund. Magna has voluntarily agreed to reduce
its fees with respect to the Magna Growth & Income Fund to 0.50% and with
respect to the Magna Intermediate Government Bond Fund to 0.40% of average daily
net assets through August 31, 1998. This voluntary reduction has been in effect
since September 1, 1995. For the six months ended February 28, 1998, Magna
voluntarily waived investment advisory fees of $92,222 and $33,058 for the Magna
Growth & Income Fund and Magna Intermediate Government Bond Fund, respectively.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"), an
Ohio limited partnership, is a subsidiary of The BISYS Group, Inc. BISYS, with
whom certain officers of the Trust are affiliated, serves the Trust as
distributor, administrator, transfer agent and fund accountant. Such officers
are not paid any fees directly by the Funds for serving as officers of the
Trust.
The Trust has entered into an Administration Service Agreement with BISYS, who
provides management and administrative services to the Funds pursuant to this
agreement. The Trust pays BISYS a fee for its services to
continued
21
<PAGE> 22
MAGNA FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
each Fund under the Administration Service Agreement at the annual rate of 0.20%
of the Trust's average net assets. For the six months ended February 28, 1998,
BISYS earned $73,462 from the Magna Growth & Income Fund, and $65,833 from the
Magna Intermediate Government Bond Fund.
Each Fund has adopted a Service Plan (the "Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended. The purpose of each plan is to
compensate the Funds' Distributor for expenses borne in connection with the
provision of personal services provided to investors and/or maintenance of
shareholder accounts, at an annual rate not to exceed 0.25% of each Fund's
average daily net assets. For the six months ended February 28, 1998, BISYS (the
"Distributor") voluntarily waived the entire 0.25% for each Fund, amounting to
$92,222 and $82,645 of service fees for the Magna Growth & Income Fund and the
Magna Intermediate Government Bond Fund, respectively.
BISYS is entitled to receive commissions on sales of shares of the Funds for the
six months ended February 28, 1998. BISYS received $1,017 of commissions on
sales of shares of the Funds, of which $720 was allowed to affiliated
broker/dealers of the Funds.
BISYS also serves the Funds as Transfer Agent. For the six months ended February
28, 1998, BISYS received Transfer Agent fees of $17,538 and $16,408 from the
Magna Growth & Income Fund and the Magna Intermediate Government Bond Fund,
respectively.
As Fund Accountant for the six months ended February 28, 1998, BISYS received
Fund Accounting fees of $17,884 and $20,368 from the Magna Growth & Income Fund
and the Magna Intermediate Government Bond Fund, respectively.
Each of the Trust's Trustees who are not affiliated with Magna receives an
annual fee of $5,000 plus $500 for each meeting attended. For the six months
ended February 28, 1998 the Trust's Trustees earned, in the aggregate, fees of
$10,379 from the Magna Growth & Income Fund and $10,380 from the Magna
Intermediate Government Bond Fund, respectively.
4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short-term securities for each Fund for the six months ended February 28, 1998
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Magna Growth & Income Fund.................................. $13,899,732 $11,526,200
Magna Intermediate Government Bond Fund..................... $ 9,100,921 $10,121,928
</TABLE>
continued
22
<PAGE> 23
MAGNA FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
The identified cost for federal income tax purposes of investments owned by each
Fund and their respective gross unrealized appreciation and depreciation at
February 28, 1998 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS NET UNREALIZED
IDENTIFIED UNREALIZED UNREALIZED APPRECIATION
COST APPRECIATION (DEPRECIATION) (DEPRECIATION)
----------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Growth & Income Fund................. $49,159,513 $32,295,985 ($299,034) $31,996,951
Intermediate Government Bond Fund.... $64,325,500 $ 1,891,897 ($101,849) $ 1,790,048
</TABLE>
5. FUND SHARE TRANSACTIONS
Share activity for the Funds were as follows:
<TABLE>
<CAPTION>
MAGNA GROWTH & INCOME FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------ ---------------
(UNAUDITED)
<S> <C> <C>
Shares sold............................................ 215,641 1,017,201
Shares issued in reinvestment.......................... 66,451 60,944
Shares redeemed........................................ (176,170) (346,284)
-------- ---------
Net increase........................................... 105,922 731,861
======== =========
</TABLE>
<TABLE>
<CAPTION>
MAGNA INTERMEDIATE
GOVERNMENT BOND FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
------------------ ---------------
(UNAUDITED)
<S> <C> <C>
Shares sold............................................ 599,462 993,664
Shares issued in reinvestment.......................... 28,746 50,648
Shares redeemed........................................ (489,361) (499,001)
-------- --------
Net increase........................................... 138,847 545,311
======== ========
</TABLE>
continued
23
<PAGE> 24
MAGNA FUNDS
MAGNA GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period indicated:
================================================================================
<TABLE>
<CAPTION>
FOR THE SIX YEAR YEAR SEPTEMBER 1, 1994*
MONTHS ENDED ENDED ENDED THROUGH
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
----------------- --------------- --------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD..... $ 22.18 $ 16.42 $ 14.05 $ 12.50
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.11 0.26 0.24 0.25
Net realized and unrealized gains from
investment transactions.................. 3.07 6.12 2.39 1.52
------- ------- ------- -------
Total income from investment operations.... 3.18 6.38 2.63 1.77
------- ------- ------- -------
LESS DISTRIBUTIONS:
Net investment income...................... (0.13) (0.25) (0.23) (0.22)
Net realized gain from investment
transactions............................. (0.42) (0.37) (0.03) --
------- ------- ------- -------
Total dividends and distributions.......... (0.55) (0.62) (0.26) (0.22)
------- ------- ------- -------
NET ASSET VALUE -- END OF PERIOD........... $ 24.81 $ 22.18 $ 16.42 $ 14.05
======= ======= ======= =======
Total return (1)........................... 14.56% 39.59% 18.77% 14.33%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period ($000's)......... $81,227 $70,276 $39,995 $30,284
Ratio of expenses to average net assets.... 0.98%(3) 1.06% 1.27% 1.25%
Ratio of net investment income to average
net assets............................... 1.02%(3) 1.36% 1.56% 1.98%
Ratio of expenses to average net assets
without fee waivers**.................... 1.48%(3) 1.56% 1.77% 1.88%
Ratio of net investment income to average
net assets without fee waivers**......... 0.52%(3) 0.86% 1.06% 1.35%
Portfolio turnover rate.................... 16% 17% 31% 41%
Average commission rate (2)................ $0.0600 $0.0500 $0.0600 NA
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(1) Total return excludes sales charges. Had the advisor, distributor and
administrator not reduced or waived certain expenses total returns would
have been lower. Total return is not annualized.
(2) The average commission rate paid is applicable for Funds that invest
greater than 10% of average net assets in equity security transactions on
which commissions are charged. This disclosure is required for fiscal
periods beginning on or after September 1, 1995.
(3) Annualized.
See notes to financial statements.
24
<PAGE> 25
MAGNA FUNDS
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout each
period indicated:
================================================================================
<TABLE>
<CAPTION>
FOR THE SIX YEAR YEAR SEPTEMBER 1, 1994*
MONTHS ENDED ENDED ENDED THROUGH
FEBRUARY 28, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
----------------- --------------- --------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF
PERIOD............................ $ 12.61 $ 12.43 $ 12.75 $ 12.50
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............... 0.38 0.79 0.76 0.74
Net realized and unrealized gain
from investment transactions...... 0.21 0.19 (0.32) 0.25
------- ------- ------- -------
Total income from investment
operations........................ 0.59 0.98 0.44 0.99
------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment
income............................ (0.38) (0.79) (0.76) (0.74)
In excess of net investment
income............................ -- (0.01) -- --
------- ------- ------- -------
Total dividends and distributions... (0.38) (0.80) (0.76) (0.74)
------- ------- ------- -------
NET ASSET VALUE -- END OF PERIOD.... $ 12.82 $ 12.61 $ 12.43 $ 12.75
======= ======= ======= =======
Total return (1).................... 4.75% 7.96% 3.48% 8.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period
($000's).......................... $67,314 $64,459 $56,764 $52,085
Ratio of expenses to average net
assets............................ 0.91%(2) 0.96% 1.05% 1.10%
Ratio of net investment income to
average net assets................ 6.08%(2) 6.15% 5.97% 6.00%
Ratio of expenses to average net
assets without fee waivers**...... 1.26%(2) 1.31% 1.40% 1.43%
Ratio of net investment income to
average net assets without fee
waivers**......................... 5.73%(2) 5.80% 5.62% 5.60%
Portfolio turnover rate............. 14% 19% 20% 34%
</TABLE>
- --------------------------------------------------------------------------------
* Commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(1) Total return excludes sales charges. Had the advisor, distributor and
administrator not reduced or waived certain expenses total returns would
have been lower. Total return is not annualized.
(2) Annualized.
See notes to financial statements.
25
<PAGE> 26
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 27
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 28
======================================================
INVESTMENT ADVISOR
Magna Bank, N.A.
1401 South Brentwood Boulevard
St. Louis, Missouri 61344
ADMINISTRATOR & DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
TRANSFER AND
DIVIDEND PAYING AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN
Fifth Third Bank
Fifth Third Center
Cincinnati, OH 45263
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, Massachusetts 02110
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, OH 43215
4-98
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Letter to Shareholders.................... 1
Portfolio Manager Report.................. 2
Schedule of Portfolio Investments......... 6
Statements of Assets and Liabilities...... 16
Statements of Operations.................. 17
Statements of Changes in Net Assets....... 18
Notes to Financial Statements............. 20
Financial Highlights...................... 24
</TABLE>
======================================================
======================================================
MAGNA FUNDS
A FAMILY OF FUNDS
SEMI-ANNUAL REPORT
FEBRUARY 28, 1998
3435 STELZER ROAD
COLUMBUS, OH 43219
(800) 219-4182
======================================================
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE PROVIDED FOR THE
GENERAL INFORMATION OF THE SHAREHOLDERS OF THE MAGNA FUNDS. THIS MATERIAL MUST
BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS. FOR A FREE PROSPECTUS CONTAINING
MORE COMPLETE INFORMATION, CALL (800) 219-4182. READ THE PROSPECTUS CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
======================================================
