<PAGE> 1
MAGNA FUNDS
LETTER TO SHAREHOLDERS
We are pleased to bring you this Magna Funds Semi-Annual Report for the six
months ending February 28, 1999. The Magna Funds are comprised of the Magna
Growth & Income Fund and the Magna Intermediate Government Bond Fund. Growth in
net assets was strong during the period and the funds now exceed $200 million
under management.
The financial markets continued to be volatile over the past six months, with
the Dow Jones Industrial Average ranging from a low of 7616 on September 10,
1998, to a high of 9643 on January 8, 1999, an increase of over 2000 points!
This volatility makes for spectacular growth opportunities but also enforces the
notion of a disciplined and long-term approach to achieving your financial
goals.
On the following pages, you will find a discussion of each fund's performance,
portfolio composition and short-term forecast. We encourage you to read the
report, and thank you for your investment in the Magna Funds.
Sincerely,
/s/ Walter B. Grimm
Walter B. Grimm
President
<PAGE> 2
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-MONTH AND
ONE YEAR PERIODS? The fund has a total return of 25.56%(1) and
19.27%(1), exclusive of sales load for the six
months and one year ended February 28, 1999,
respectively. This compares with the S&P 500 Index
returns of 30.27% and 19.76%. The average growth
and income fund tracked by Lipper Analytical
returned 19.90% and 5.30% for the same six months
and one year periods.
WHAT IS THE COMPOSITION OF
THE PORTFOLIO AT THIS TIME? The fund is currently invested in 77 companies,
which represent 31 industries. We are broadly
diversified with the single largest equity holding
at 3.7% of the portfolio while the ten largest
positions represent 25.8%(2) of the portfolio as of
February 28, 1999.
WHAT COMMENTS DO YOU HAVE
ON THE MARKET AND FUND
PERFORMANCE? The market rebounded sharply following the
correction with help from Federal Reserve rate
cuts. Internet mania swept the markets as
speculation increased volatility in related issues.
The markets focus on large cap companies bolstered
fund performance. Dell, Microsoft, Cisco and Intel
led the fund and the market on a roller coaster
ride.
WHAT IS YOUR OUTLOOK FOR
THE NEXT SIX MONTHS? The Fed's Greenspan has questioned the previous
rate cuts while the economy has continued to show
strength with little or no inflationary pressures.
The Dow rose sharply after month-end as interest
rates eased. Earnings in early 1999 continue to
surprise on the upside versus the cautionary
projections last fall. Growth will likely moderate
and continue, barring any exogenous shocks.
- ---------------
(1) With a maximum sales charge of 4.00%, the total return for the six-month
period would have been 20.52%, and 14.53% for the one year return.
(2) The composition of the Fund's holdings is subject to change.
2
<PAGE> 3
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
PORTFOLIO MANAGER REPORT
COMMENTS FROM A CONVERSATION WITH L. CLARK ZEDRIC, PORTFOLIO MANAGER.
HOW HAS THE FUND PERFORMED
OVER THE PAST SIX-MONTH AND
ONE YEAR PERIODS? The fund provided a total return of 0.48%(1)
exclusive of sales loads, for the six-month period
and a total return of 4.90%(1) exclusive of sales
loads, for the one year period ended February 28,
1999. In comparison, the Lipper Intermediate
Government Bond Fund Index returned 0.89% and 5.49%
for the same six-month and one year periods.
DURING THIS TIME, HOW WERE
YOU ABLE TO MAINTAIN A
HIGH-QUALITY PORTFOLIO AND
A RELATIVELY GENEROUS
COUPON RATE? Interest rates had fallen dramatically to roughly
4.75% on the 30-year U.S. Treasury Notes, then
increased to 5.65% . Currently the rate is
vacillating between 5.40% and 5.60% on the long
30-year U.S. Treasury Note. 62.7% of the portfolio
was invested in Federal Agency Bonds and U.S.
Treasury Notes as of February 28, 1999 -- with the
remainder in high quality corporate paper and cash.
The Fund's average credit quality was AAA; the Fund
owns nothing below an A rating. As of February 28,
1999 the average portfolio coupon rate(2) was
6.88%.*
HOW HAVE YOU POSITIONED THE
FUND FOR THE COMING YEAR? An essential part of our strategy is to maintain "a
ladder" within our port-folio, holding bonds with
different maturities. This allows us to take
advantage of anticipated changes in the bond market
and ensures that we will have a portion of our
bonds maturing every year. "Laddering" maturities
means that as we buy new bonds, we might shorten
our ladder to five or six year maturities, or
extend to 8 or 12 year maturities. Lately, we have
been investing in 12 or 15 year maturities, to
increase our ladder. This move reflects our belief
that interest rates, at least for the remainder of
the year, will remain stable or decline.
- ---------------
(1) With a maximum sales charge of 4.00%, the total return for the six-month
period would have been (3.53)%, and 0.74% for the one year return.
(2) The interest rate stated on the face of a bond represents the percentage of
interest to be paid by the issuer on the face value of the bond.
* The composition of the Fund's holdings is subject to change.
3
<PAGE> 4
MAGNA GROWTH & INCOME FUND
COMPARATIVE TOTAL RETURN
FOR THE PERIODS ENDED FEBRUARY 28, 1999
<TABLE>
<CAPTION>
ANNUALIZED
SIX MONTHS ONE YEAR SINCE INCEPTION*
---------- -------- ----------------
<S> <C> <C> <C>
Magna Growth & Income Fund:
Without sales charge........................... 25.6% 19.3% 23.6%
With 4% sales charge........................... 20.5 14.5 22.5
Lipper Growth & Income Fund Index................... 19.9 5.3 18.7
S&P 500 Index....................................... 30.3 19.8 26.3
Consumer Price Index (CPI).......................... 0.6 1.6 2.2
</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, 1999 %
- ---------------------- ---------
<S> <C>
Dell Computer Corp.......................................... 3.7
Microsoft Corp.............................................. 3.5
Pfizer, Inc................................................. 2.7
General Electric Co......................................... 2.7
Sun Microsystems, Inc....................................... 2.6
Cisco Systems, Inc.......................................... 2.5
Warner-Lambert Co........................................... 2.1
Time Warner, Inc............................................ 2.1
Computer Sciences Corp...................................... 2.0
Lucent Technologies, Inc.................................... 1.9
</TABLE>
Portfolio composition is subject to change.
4
<PAGE> 5
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
COMPARATIVE TOTAL RETURN
FOR THE PERIODS ENDED FEBRUARY 28, 1999
<TABLE>
<CAPTION>
ANNUALIZED
SIX MONTHS ONE YEAR SINCE INCEPTION*
---------- -------- ----------------
<S> <C> <C> <C>
Magna Intermediate Government Bond Fund:
Without sales charge........................... 0.5% 4.9% 6.5%
With 4% sales charge........................... (3.5) 0.7 5.6
Lipper Intermediate Government Bond Index:.......... 0.9 5.5 7.1
</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. 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 any 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, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- ------------
<S> <C> <C>
COMMON STOCKS -- (86.4%):
AEROSPACE/DEFENSE -- (1.2%):
Lockheed Martin Corporation............................ 40,000 $ 1,507,500
------------
AIR TRAVEL -- (0.9%):
Delta Air Lines, Incorporated.......................... 20,000 1,216,250
------------
ALUMINUM -- (0.6%):
Aluminum Company of America, Incorporated.............. 20,000 810,000
------------
AUTOMOBILES & TRUCKS -- (2.7%):
Daimlerchrysler AG..................................... 18,705 1,757,101
Ford Motor Company..................................... 30,000 1,779,375
------------
3,536,476
------------
BREWERY -- (1.5%):
Anheuser-Busch Companies, Incorporated................. 25,000 1,917,188
------------
CHEMICALS -- (2.8%):
DuPont (EI) de Nemours & Company....................... 40,000 2,052,500
Monsanto Company....................................... 35,000 1,594,688
------------
3,647,188
------------
CLOTHING -- (1.3%):
TJX Companies, Incorporated............................ 60,000 1,713,750
------------
COMPUTER SOFTWARE -- (5.5%):
Computer Sciences Corporation.......................... 40,000 2,665,000
Microsoft Corporation*................................. 30,400 4,563,800
------------
7,228,800
------------
COMPUTERS & BUSINESS EQUIPMENT -- (11.9%):
Cisco Systems, Incorporated*........................... 33,750 3,301,172
Compaq Computer Corporation............................ 46,000 1,621,500
Dell Computer Corporation*............................. 60,000 4,807,499
Gateway 2000, Incorporated............................. 15,000 1,090,313
Hewlett-Packard Company................................ 20,000 1,328,750
Sun Microsystems, Incorporated*........................ 35,000 3,405,937
------------
15,555,171
------------
DIVERSIFIED OPERATIONS -- (2.7%):
General Electric Company............................... 35,000 3,510,938
------------
</TABLE>
continued
6
<PAGE> 7
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- ------------
<S> <C> <C>
COMMON STOCKS -- (CONTINUED):
DRUGS & HEALTHCARE -- (14.3%):
Amgen, Incorporated.................................... 20,000 $ 2,497,500
Bristol-Myers Squibb Company........................... 20,000 2,518,750
Cardinal Health, Incorporated.......................... 15,000 1,082,813
Johnson & Johnson...................................... 20,000 1,707,500
Lilly (Eli) & Company.................................. 19,000 1,799,063
Merck & Company, Incorporated.......................... 20,200 1,651,350
Pfizer, Incorporated................................... 27,000 3,562,312
Tenet Healthcare Corporation*.......................... 50,000 984,375
Warner-Lambert Company................................. 40,000 2,762,499
------------
18,566,162
------------
ELECTRONIC COMPONENTS -- (1.4%):
Intel Corporation...................................... 15,000 1,799,063
------------
ENTERTAINMENT -- (0.8%):
Walt Disney Company.................................... 30,000 1,055,625
------------
FINANCE & BANKING -- (6.3%):
Bank One Corporation................................... 13,200 709,500
BankAmerica Corporation................................ 10,000 653,125
Chase Manhattan Corporation............................ 30,000 2,388,749
First Union Corporation................................ 25,000 1,332,812
Mellon Bank Corporation................................ 18,300 1,237,538
Southtrust Corporation................................. 20,000 801,250
SunTrust Banks, Incorporated........................... 5,000 339,688
Wells Fargo Company.................................... 20,000 735,000
------------
8,197,662
------------
FINANCIAL SERVICES -- (2.1%):
Citigroup, Incorporated................................ 5,000 293,750
Fannie Mae............................................. 20,000 1,400,000
Hartford Financial Services Group...................... 20,000 1,081,250
------------
2,775,000
------------
</TABLE>
continued
7
<PAGE> 8
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- ------------
<S> <C> <C>
COMMON STOCKS -- (CONTINUED):
FOOD & BEVERAGES -- (2.6%):
Coca-Cola Company...................................... 16,000 $ 1,023,000
PepsiCo, Incorporated.................................. 10,600 398,825
Sara Lee Corporation................................... 70,000 1,903,125
------------
3,324,950
------------
HOUSEHOLD PRODUCTS -- (3.2%):
Dial Corporation....................................... 75,000 2,189,063
Procter & Gamble Company............................... 22,000 1,969,000
------------
4,158,063
------------
INSURANCE -- (2.3%):
Allstate Corporation................................... 45,000 1,687,500
Conseco, Incorporated.................................. 45,000 1,347,188
------------
3,034,688
------------
INTERNATIONAL OIL -- (4.2%):
Exxon Corporation...................................... 30,000 1,996,875
Mobil Corporation...................................... 30,200 2,512,263
Texaco, Incorporated................................... 22,000 1,024,375
------------
5,533,513
------------
MEDICAL INSTRUMENTS -- (1.6%):
Medtronic, Incorporated................................ 30,000 2,118,750
------------
MULTIMEDIA -- (2.1%):
Time Warner, Incorporated.............................. 41,600 2,683,200
------------
OIL & GAS -- (1.1%):
Atlantic Richfield Company............................. 20,000 1,092,500
Ultramar Diamond Shamrock Corporation.................. 15,000 296,250
------------
1,388,750
------------
PAPER -- (0.7%):
Kimberly-Clark Corporation............................. 20,000 945,000
------------
RAILROADS -- (0.6%):
Burlington Northern Santa Fe Corporation............... 23,800 788,375
------------
</TABLE>
continued
8
<PAGE> 9
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- ------------
<S> <C> <C>
COMMON STOCKS -- (CONTINUED):
RESTAURANTS -- (1.0%):
McDonald's Corporation................................. 14,700 $ 1,249,500
------------
TELECOMMUNICATIONS -- (8.7%):
GTE Corporation........................................ 29,500 1,913,813
Lucent Technologies, Incorporated...................... 25,000 2,539,062
MCI Worldcom, Incorporated............................. 25,000 2,062,499
SBC Communications, Incorporated....................... 29,200 1,543,950
Sprint Corporation (PCS)............................... 5,000 160,000
Sprint Corporation*.................................... 10,000 858,125
Tellabs, Incorporated.................................. 10,000 800,625
U S West, Incorporated................................. 26,500 1,412,781
------------
11,290,855
------------
TOBACCO -- (0.9%):
Philip Morris Companies, Incorporated.................. 30,000 1,173,750
------------
UTILITIES -- (1.4%):
GPU, Incorporated...................................... 25,000 996,875
New Century Energies, Incorporated..................... 20,000 811,250
------------
1,808,125
------------
TOTAL COMMON STOCKS -- (Cost $64,295,304)................... 112,534,292
------------
PREFERRED STOCKS -- (6.3%):
BANKING -- (0.6%):
Harris Preferred Capital, Series A..................... 30,000 763,125
------------
FINANCIAL SERVICES -- (2.4%):
AT & T Capital Corporation............................. 40,000 1,027,500
MediaOne Financial Trust............................... 40,000 1,035,000
Merrill Lynch Capital Trust............................ 40,000 1,015,000
------------
3,077,500
------------
INSURANCE -- (1.2%):
Aetna Services, Incorporated........................... 10,000 708,125
Allstate Corporation................................... 35,000 888,125
------------
1,596,250
------------
</TABLE>
continued
9
<PAGE> 10
MAGNA GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- ------------
<S> <C> <C>
PREFERRED STOCKS -- (CONTINUED):
OIL & GAS -- (0.4%):
UDS Capital, Series I.................................. 20,000 $ 503,750
------------
TELECOMMUNICATIONS -- (0.7%):
Motorola Capital Trust................................. 40,000 962,480
------------
UTILITIES -- (1.0%):
Duke Energy Capital Trust.............................. 30,000 763,125
KCPL Financing, Series I............................... 20,000 525,000
------------
1,288,125
------------
TOTAL PREFERRED STOCKS -- (Cost $8,083,100)................. 8,191,230
------------
SHORT TERM INVESTMENTS -- (6.8%):
REPURCHASE AGREEMENT -- (2.2%):
Fifth Third Bank
4.28%, dated 2/26/99 and maturing 3/1/99
(Collateralized by $2,921,000 Freddie Mac, 6.00%,
9/1/13, Market Value -- $2,921,000)................. 2,863,288 2,863,288
------------
UNITED STATES TREASURY NOTES -- (4.6%):
6.25%, 5/31/1999....................................... 2,000,000 2,006,880
6.00%, 8/15/1999....................................... 2,000,000 2,010,320
5.50%, 3/31/2000....................................... 2,000,000 2,009,060
------------
6,026,260
------------
TOTAL SHORT TERM INVESTMENTS -- (Cost $8,894,853)........... 8,889,548
------------
TOTAL INVESTMENTS -- (Cost $81,273,257) -- 99.5%............ 129,615,070
CASH, RECEIVABLES AND OTHER ASSETS,
LESS LIABILITIES -- 0.5%.................................. 688,236
------------
NET ASSETS -- 100.0%........................................ $130,303,306
============
</TABLE>
- ---------------
Percentages indicated are based on net assets of $130,303,306.
* Represents non-income producing securities.
See notes to financial statements.
10
<PAGE> 11
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
CORPORATE BONDS -- (32.5%):
FINANCE & BANKING -- (13.4%):
Bear Stearns Companies, Incorporated
7.00%, 3/1/2007...................................... $1,000,000 $ 1,015,980
Ford Capital BV
9.38%, 5/15/2001..................................... 380,000 407,105
Merrill Lynch & Company, Incorporated
8.00%, 2/1/2002...................................... 325,000 342,898
8.30%, 11/1/2002..................................... 460,000 494,532
8.00%, 6/1/2007...................................... 500,000 550,050
-----------
1,387,480
-----------
Morgan Stanley Group, Incorporated
8.10%, 6/24/2002..................................... 460,000 487,853
National City Bank of Kentucky
6.30%, 2/15/2011, OID................................ 1,000,000 987,750
Nationsbank Corporation
6.38%, 2/15/2008..................................... 1,000,000 1,001,780
6.60%, 5/15/2010..................................... 1,000,000 1,011,870
7.04%, 8/15/2012..................................... 500,000 510,345
-----------
2,523,995
-----------
Norwest Financial, Incorporated
7.20%, 5/1/2007...................................... 1,000,000 1,063,449
St. Paul Companies, Incorporated
7.29%, 8/28/2007..................................... 500,000 535,495
Swiss Bank of New York
7.00%, 10/15/2015.................................... 1,000,000 1,010,585
Wachovia Corporation
6.38%, 2/1/2009...................................... 1,000,000 1,009,830
-----------
10,429,522
-----------
FINANCIAL SERVICES -- (1.3%):
General Motors Acceptance Corporation
6.13%, 11/15/2008.................................... 1,000,000 987,858
-----------
</TABLE>
continued
11
<PAGE> 12
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
<->CORPORATE BONDS -- (CONTINUED):
INDUSTRIALS -- (9.2%):
Dupont Corporation
8.13%, 3/15/2004..................................... $ 265,000 $ 291,391
Ford Motor Company
9.00%, 9/15/2001..................................... 280,000 300,591
9.50%, 9/15/2011..................................... 230,000 288,717
-----------
589,308
-----------
J.C. Penney Company
Series A, 6.88%, 10/15/2015.......................... 1,500,000 1,429,112
Kimberly-Clark Corporation
8.63%, 5/1/2001...................................... 280,000 296,794
Lilly Eli & Company
8.13%, 12/1/2001..................................... 500,000 531,905
Loews Corporation
6.75%, 12/15/2006.................................... 500,000 485,060
Monsanto Company
8.75%, 5/15/2001..................................... 200,000 210,936
Philip Morris Companies, Incorporated
8.75%, 6/1/2001...................................... 250,000 264,110
7.50%, 1/15/2002..................................... 360,000 372,924
7.25%, 1/15/2003..................................... 700,000 724,332
-----------
1,361,366
-----------
R.R. Donnelley & Sons Company
7.00%, 1/1/2003...................................... 700,000 722,694
Rockwell International Corporation
8.38%, 2/15/2001..................................... 280,000 294,308
Texaco Capital, Incorporated
9.00%, 12/15/1999.................................... 340,000 349,459
Wal-Mart Stores, Incorporated
8.63%, 4/1/2001...................................... 430,000 455,680
Weyerhaeuser Company
8.94%, 4/9/2001...................................... 100,000 105,950
-----------
7,123,963
-----------
</TABLE>
continued
12
<PAGE> 13
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
<->CORPORATE BONDS -- (CONTINUED):
TRANSPORTATION -- (0.3%):
Norfolk & Southern Railway Company
7.75%, 8/15/2005..................................... $ 225,000 $ 238,469
-----------
UTILITIES -- (8.3%):
Alabama Power
5.38%, 10/1/2008..................................... 1,000,000 951,324
AT&T Corporation
7.13%, 1/15/2002..................................... 960,000 994,301
Carolina Telephone & Telegraph Company
7.25%, 12/15/2004.................................... 1,000,000 1,038,700
General Electric Company
7.73%, 2/13/2002..................................... 400,000 420,400
National Rural Utilities
7.30%, 9/15/2006..................................... 1,000,000 1,072,390
7.20%, 10/1/2015..................................... 450,000 479,124
-----------
1,551,514
-----------
Northern Telecom, Limited
8.75%, 6/12/2001..................................... 430,000 453,048
Pacific Bell
7.25%, 7/1/2002...................................... 1,000,000 1,044,290
-----------
6,453,577
-----------
TOTAL CORPORATE BONDS -- (Cost $24,665,555)................. $25,233,389
-----------
GOVERNMENT AND AGENCY BONDS -- (62.7%):
FEDERAL AGENCIES -- (56.2%):
Fannie Mae
7.00%, 7/1/1999...................................... 292,575 292,858
8.55%, 8/30/1999..................................... 360,000 365,792
7.85%, 9/10/2004..................................... 500,000 506,560
8.33%, 2/8/2005...................................... 1,000,000 1,026,870
7.65%, 3/10/2005..................................... 500,000 546,560
8.00%, 6/21/2006..................................... 1,000,000 1,007,810
6.83%, 10/10/2007.................................... 500,000 500,935
6.58%, 12/17/2007.................................... 1,000,000 1,008,440
6.14%, 9/2/2008...................................... 1,000,000 987,340
6.00%, 12/18/2008.................................... 1,000,000 971,090
</TABLE>
continued
13
<PAGE> 14
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
GOVERNMENT AND AGENCY BONDS -- (CONTINUED):
FEDERAL AGENCIES -- (CONTINUED):
6.03%, 2/2/2009...................................... $1,000,000 $ 965,780
7.00%, 12/5/2011..................................... 1,000,000 1,020,890
7.00%, 8/14/2012..................................... 1,500,000 1,511,715
7.00%, 8/27/2012..................................... 1,500,000 1,539,135
7.00%, 10/29/2012.................................... 500,000 504,140
6.26%, 11/26/2012.................................... 1,000,000 1,014,286
6.25%, 2/18/2014..................................... 2,000,000 1,938,441
7.00%, 12/12/2016.................................... 1,000,000 999,920
6.75%, 8/25/2021..................................... 920,000 925,170
7.05%, 4/25/2022..................................... 925,000 933,667
6.75%, 3/25/2023..................................... 625,769 623,810
-----------
19,191,209
-----------
Federal Farm Credit Bank
6.20%, 11/30/2009.................................... 1,000,000 1,016,250
6.01%, 6/16/2010..................................... 2,000,000 1,978,440
6.13%, 1/22/2013..................................... 1,000,000 988,910
6.27%, 1/26/2016..................................... 1,000,000 1,034,840
-----------
5,018,440
-----------
Federal Home Loan Bank
8.45%, 7/26/1999..................................... 150,000 152,133
7.59%, 2/10/2000..................................... 1,000,000 1,021,090
5.26%, 10/26/2004.................................... 500,000 482,345
8.06%, 3/10/2005..................................... 500,000 512,810
7.33%, 5/30/2007..................................... 1,000,000 1,019,690
6.03%, 4/8/2008...................................... 500,000 501,095
6.12%, 8/26/2008..................................... 500,000 493,435
5.66%, 12/18/2008.................................... 500,000 480,000
7.01%, 12/4/2012..................................... 1,000,000 993,120
6.13%, 1/9/2013...................................... 2,000,000 1,996,560
6.73%, 9/17/2013..................................... 1,000,000 975,470
5.83%, 9/30/2013..................................... 1,000,000 966,560
6.10%, 2/19/2014..................................... 1,000,000 951,410
-----------
10,545,718
-----------
</TABLE>
continued
14
<PAGE> 15
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
GOVERNMENT AND AGENCY BONDS -- (CONTINUED):
FEDERAL AGENCIES -- (CONTINUED):
Freddie Mac
7.90%, 9/19/2001..................................... $ 280,000 $ 295,837
7.50%, 1/1/2007...................................... 15,427 15,738
6.50%, 5/1/2008...................................... 71,841 72,438
6.14%, 2/15/2011..................................... 1,000,000 999,370
6.77%, 3/21/2011..................................... 1,000,000 1,068,440
6.71%, 12/5/2011..................................... 2,000,000 2,060,000
7.27%, 2/6/2012...................................... 1,000,000 1,070,470
7.49%, 4/16/2012..................................... 1,000,000 1,087,660
7.09%, 11/22/2016.................................... 500,000 519,220
7.00%, 1/15/2023..................................... 1,000,000 1,007,500
7.00%, 12/15/2023.................................... 546,000 548,386
6.50%, 2/15/2024..................................... 147,844 147,705
-----------
8,892,764
-----------
43,648,131
-----------
U.S. GOVERNMENT SECURITIES -- (6.5%):
Tennessee Valley Authority
6.00%, 3/15/2013..................................... 3,000,000 2,970,930
-----------
United States Treasury Notes
5.88%, 3/31/1999..................................... 380,000 380,361
7.00%, 4/15/1999..................................... 1,000,000 1,002,707
6.00%, 10/15/1999.................................... 690,000 694,637
-----------
2,077,705
-----------
5,048,635
-----------
TOTAL GOVERNMENT AND AGENCY BONDS -- (Cost $48,297,139)..... 48,696,766
-----------
SHORT TERM INVESTMENTS -- (5.2%):
REPURCHASE AGREEMENT -- (5.2%):
Fifth Third Bank
4.28%, dated 2/26/99 and maturing 3/1/99
(Collateralized by $4,108,000 Freddie Mac, 6.00%,
9/1/13, Market Value -- $4,108,000)................. 4,027,446 4,027,446
-----------
</TABLE>
continued
15
<PAGE> 16
MAGNA INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
FEBRUARY 28, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SECURITY DESCRIPTION AMOUNT VALUE
-------------------- ---------- -----------
<S> <C> <C>
TOTAL SHORT TERM INVESTMENTS -- (Cost $4,027,446)........... $ 4,027,446
-----------
TOTAL INVESTMENTS -- (Cost $76,990,140) -- 100.4%........... 77,957,601
CASH, RECEIVABLES AND OTHER ASSETS,
LESS LIABILITIES -- (0.4)%............................... (274,834)
-----------
NET ASSETS -- 100.0%........................................ $77,682,767
===========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $77,682,767.
OID -- Original Issue Discount.
See notes to financial statements.
16
<PAGE> 17
MAGNA FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & INTERMEDIATE
INCOME GOVERNMENT
FUND BOND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $78,409,969 and
$72,962,694, respectively)................................ $126,751,782 $73,930,155
Repurchase agreements, at cost (cost $2,863,288 and
$4,027,446, respectively)................................. 2,863,288 4,027,446
------------ -----------
TOTAL INVESTMENTS......................................... 129,615,070 77,957,601
------------ -----------
Receivable for investment securities sold................... 500,000 354
Income and other receivable................................. 290,232 1,158,321
Deferred organization costs................................. 5,316 10,489
Prepaid expenses and other assets........................... 5,547 6,642
------------ -----------
TOTAL ASSETS.............................................. 130,416,165 79,133,407
------------ -----------
LIABILITIES:
Payable for investment securities purchased................. -- 1,039,289
Distributions payable....................................... -- 338,310
Accrued expenses:
Advisory fees............................................. 50,450 23,956
Administration fees....................................... 3,608 2,129
Professional fees......................................... 32,338 28,694
Transfer agent fees....................................... 2,297 2,016
Printing costs............................................ 15,247 11,007
Other..................................................... 8,919 5,239
------------ -----------
TOTAL LIABILITIES......................................... 112,859 1,450,640
------------ -----------
NET ASSETS.................................................. $130,303,306 $77,682,767
============ ===========
COMPOSITION OF NET ASSETS
Paid-in capital............................................. $ 81,095,184 $76,830,582
Accumulated undistributed (distributions in excess of) net
investment income......................................... 232,876 (1,162)
Accumulated net realized gains (losses) on investment
transactions.............................................. 633,433 (114,114)
Net unrealized appreciation (depreciation) from
investments............................................... 48,341,813 967,461
------------ -----------
NET ASSETS.................................................. $130,303,306 $77,682,767
============ ===========
Shares of beneficial interest outstanding, no par value..... 4,547,487 6,110,229
============ ===========
Net asset value and redemption price per share.............. $ 28.65 $ 12.71
============ ===========
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....... $ 29.84 $ 13.24
============ ===========
</TABLE>
See notes to financial statements.
17
<PAGE> 18
MAGNA FUNDS
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & INTERMEDIATE
INCOME GOVERNMENT
FUND BOND FUND
----------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income............................................. $ 293,247 $2,387,934
Dividend income............................................. 844,968 --
----------- ----------
TOTAL INCOME.............................................. 1,138,215 2,387,934
----------- ----------
EXPENSES:
Advisory fees (Note 3)...................................... 437,504 186,920
Administration fees (Note 3)................................ 116,568 74,769
12b-1 fees (Note 3)......................................... 145,835 93,460
Fund accounting fees (Note 3)............................... 20,259 25,391
Custodian fees.............................................. 4,499 2,939
Transfer agent fees (Note 3)................................ 22,110 13,278
Amortization of organization costs.......................... 5,209 10,244
Other....................................................... 59,426 41,442
----------- ----------
TOTAL EXPENSES............................................ 811,410 448,443
Less: Expenses voluntarily reduced/waived................. (291,670) (130,844)
----------- ----------
Net Expenses.............................................. 519,740 317,599
----------- ----------
NET INVESTMENT INCOME....................................... 618,475 2,070,335
----------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENT
TRANSACTIONS:
Realized gains (losses) on investment transactions........ 633,433 44,512
Net change in unrealized appreciation (depreciation) from
investments............................................ 22,970,970 (1,792,576)
----------- ----------
Net realized and unrealized gains (losses) on Investment
Transactions........................................... 23,604,403 (1,748,064)
----------- ----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. $24,222,878 $ 322,271
=========== ==========
</TABLE>
See notes to financial statements.
18
<PAGE> 19
MAGNA FUNDS
GROWTH & INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX YEAR ENDED
MONTHS ENDED AUGUST 31,
FEBRUARY 28, 1999 1998
----------------- ------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).............................. $ 618,475 $ 760,796
Net realized gains (losses) on investment transactions.... 633,433 3,524,168
Net change in unrealized appreciation (depreciation) from
investments............................................. 22,970,970 2,381,549
------------ ------------
Change in net assets resulting from operations............ 24,222,878 6,666,513
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (522,656) (812,222)
Net realized gains........................................ (2,809,929) (1,369,723)
------------ ------------
Change in net assets from shareholder distributions....... (3,332,585) (2,181,945)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Proceeds from sale of shares.............................. 41,149,513 10,354,580
Shares issued in reinvestment of distributions............ 2,120,947 1,697,386
Payments for shares redeemed.............................. (7,988,438) (12,682,030)
------------ ------------
Change in net assets from fund share transactions......... 35,282,022 (630,064)
------------ ------------
NET INCREASE IN NET ASSETS................................ 56,172,315 3,854,504
------------ ------------
NET ASSETS:
Beginning of period....................................... 74,130,991 70,276,487
------------ ------------
End of period............................................. $130,303,306 $ 74,130,991
============ ============
SHARE TRANSACTIONS:
Issued.................................................... 1,601,864 422,534
Reinvested................................................ 76,291 72,896
Redeemed.................................................. (290,577) (503,629)
------------ ------------
Change in shares.......................................... 1,387,578 (8,199)
============ ============
</TABLE>
See notes to financial statements.
19
<PAGE> 20
MAGNA FUNDS
INTERMEDIATE GOVERNMENT BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1999 AUGUST 31, 1998
----------------- ---------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss)............................ $ 2,070,335 $ 4,001,009
Net realized gains (losses) on investment
transactions.......................................... 44,512 98,469
Net change in unrealized appreciation (depreciation)
from investments...................................... (1,792,576) 1,969,499
----------- -----------
Change in net assets resulting from operations.......... 322,271 6,068,977
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................... (2,070,345) (4,001,009)
In excess of net investment income...................... -- --
----------- -----------
Change in net assets from shareholder distributions..... (2,070,345) (4,001,009)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Proceeds from sale of shares............................ 10,487,192 15,220,676
Shares issued in reinvestment of distributions.......... 315,199 674,015
Payments for shares redeemed............................ (3,985,769) (9,807,364)
----------- -----------
Change in net assets from fund share transactions....... 6,816,622 6,087,327
----------- -----------
NET INCREASE IN NET ASSETS.............................. 5,068,548 8,155,295
----------- -----------
NET ASSETS:
Beginning of period..................................... 72,614,219 64,458,924
----------- -----------
End of period........................................... $77,682,767 $72,614,219
=========== ===========
SHARE TRANSACTIONS:
Issued.................................................. 805,318 1,188,041
Reinvested.............................................. 24,055 52,724
Redeemed................................................ (306,020) (765,780)
----------- -----------
Change in shares........................................ 523,353 474,985
=========== ===========
</TABLE>
See notes to financial statements.
20
<PAGE> 21
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 collateralized
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 & Income Fund and the Magna Intermediate Government
Bond Fund.
continued
21
<PAGE> 22
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 calendar 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 Union
Planters Bank, N.A. ("UPC"). 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. UPC 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 daily net assets through August 31, 1999. This voluntary reduction has been
in effect since September 1, 1995. For the six months ended February 28, 1999,
UPC voluntarily waived investment advisory fees of $145,835 and $37,384 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 each Fund under the
Administration Service Agreement at the annual rate of 0.20% of the Trust's
average net
continued
22
<PAGE> 23
MAGNA FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
assets. For the six months ended February 28, 1999, BISYS earned $116,568 from
the Magna Growth & Income Fund, and $74,769 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, 1999, BISYS (the
"Distributor") voluntarily waived the entire 0.25% for each Fund, amounting to
$145,835 and $93,460 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, 1999. BISYS received $998 of commissions on sales
of shares of the Funds, of which $823 was allowed to affiliated broker/dealers
of the Funds.
BISYS also serves the Funds as Transfer Agent. For the six months ended February
28, 1999, BISYS received Transfer Agent fees of $22,110 and $13,278 from the
Magna Growth & Income Fund and the Magna Intermediate Government Bond Fund,
respectively.
As Fund Accountant for the six months ended February 28, 1999, BISYS received
Fund Accounting fees of $20,259 and $25,391 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 UPC receives an annual
fee of $5,000 plus $500 for each meeting attended. Total fees paid to Trustees
for the six months ended February 28, 1999 were $23,500.
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, 1999
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- ----------
<S> <C> <C>
Magna Growth & Income Fund.................................. $31,651,024 $2,756,233
Magna Intermediate Government Bond Fund..................... $14,012,078 $6,981,415
</TABLE>
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, 1999 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........... $81,273,257 $50,204,571 $(1,862,758) $48,341,813
Intermediate Government Bond
Fund......................... $76,990,140 $ 1,562,670 $ (595,209) $ 967,461
</TABLE>
23
<PAGE> 24
MAGNA FUNDS
MAGNA GROWTH & INCOME FUND
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding throughout the
period indicated:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX SEPTEMBER 1,
MONTHS 1994*
ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
FEBRUARY 28, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1999 1998 1997 1996 1995
------------ ---------- ---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF
PERIOD................................ $ 23.46 $ 22.18 $ 16.42 $ 14.05 $ 12.50
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.14 0.23 0.26 0.24 0.25
Net realized and unrealized gains from
investment transactions............... 5.83 1.72 6.12 2.39 1.52
-------- ------- ------- ------- -------
Total income from investment
operations............................ 5.97 1.95 6.38 2.63 1.77
-------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Net investment income................... (0.13) (0.25) (0.25) (0.23) (0.22)
Net realized gain from investment
transactions.......................... (0.65) (0.42) (0.37) (0.03) --
-------- ------- ------- ------- -------
Total dividends and distributions....... (0.78) (0.67) (0.62) (0.26) (0.22)
-------- ------- ------- ------- -------
NET ASSET VALUE -- END OF PERIOD........ $ 28.65 $ 23.46 $ 22.18 $ 16.42 $ 14.05
======== ======= ======= ======= =======
Total return (1)........................ 25.56% 8.84% 39.59% 18.77% 14.33%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period ($000's)...... $130,303 $74,131 $70,276 $39,995 $30,284
Ratio of net expenses to average net
assets................................ 0.89%(2) 0.99% 1.06% 1.27% 1.25%
Ratio of net investment income to
average net assets.................... 1.06%(2) 0.96% 1.36% 1.56% 1.98%
Ratio of expenses to average net assets
without fee waivers**................. 1.39%(2) 1.49% 1.56% 1.77% 1.88%
Portfolio turnover rate (3)............. 3% 26% 17% 31% 41%
</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 for periods of less than one year are not
annualized.
(2) Annualized.
(3) A portfolio turnover rate is the percentage computed by taking the lesser of
purchases or sales of portfolio securities (excluding securities with
maturity dates of one year or less at the time of acquisition) for the
period and dividing it by the monthly average of the market value of such
securities during the period.
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 the
period indicated:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX SEPTEMBER 1,
MONTHS 1994*
ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
FEBRUARY 28, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1999 1998 1997 1996 1995
------------ ---------- ---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF
PERIOD................................ $ 13.00 $ 12.61 $ 12.43 $ 12.75 $ 12.50
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.36 0.76 0.79 0.76 0.74
Net realized and unrealized gains from
investment transactions............... (0.29) 0.39 0.19 (0.32) 0.25
------- ------- ------- ------- -------
Total income from investment
operations............................ 0.07 1.15 0.98 0.44 0.99
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Net investment income................... (0.36) (0.76) (0.79) (0.76) (0.74)
In excess of net investment income...... -- -- (0.01) -- --
------- ------- ------- ------- -------
Total dividends and distributions....... (0.36) (0.76) (0.80) (0.76) (0.74)
------- ------- ------- ------- -------
NET ASSET VALUE -- END OF PERIOD........ $ 12.71 $ 13.00 $ 12.61 $ 12.43 $ 12.75
======= ======= ======= ======= =======
Total return (1)........................ 0.48% 9.33% 7.96% 3.48% 8.30%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period ($000's)...... $77,683 $72,614 $64,459 $56,764 $52,085
Ratio of net expenses to average net
assets................................ 0.85%(2) 0.90% 0.96% 1.05% 1.10%
Ratio of net investment income to
average net assets.................... 5.54%(2) 5.92% 6.15% 5.97% 6.00%
Ratio of expenses to average net assets
without fee waivers**................. 1.20%(2) 1.25% 1.31% 1.40% 1.43%
Portfolio turnover rate (3)............. 10% 32% 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 for periods of less than one year are not
annualized.
(2) Annualized.
(3) A portfolio turnover rate is the percentage computed by taking the lesser of
purchases or sales of portfolio securities (excluding securities with
maturity dates of one year or less at the time of acquisition) for the
period and dividing it by the monthly average of the market value of such
securities during the period.
See notes to financial statements.
25
<PAGE> 26
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 27
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INVESTMENT ADVISOR
Union Planters 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
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, OH 43215
4-99
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Letter to Shareholders.................... 1
Portfolio Manager Report.................. 2
Schedule of Portfolio Investments......... 6
Statements of Assets and Liabilities...... 17
Statements of Operations.................. 18
Statements of Changes in Net Assets....... 19
Notes to Financial Statements............. 21
Financial Highlights...................... 24
</TABLE>
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MAGNA FUNDS
A FAMILY OF FUNDS
SEMI-ANNUAL REPORT
FEBRUARY 28, 1999
(UNAUDITED)
3435 STELZER ROAD
COLUMBUS, OH 43219
(800) 219-4182
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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. INVESTMENTS IN MUTUAL FUNDS INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. MUTUAL FUNDS ARE NOT FDIC INSURED OR
BANK GUARANTEED.
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