STALWART FUNDS
ANNUAL REPORT
NOVEMBER 30, 1995
U.S. GOVERNMENT SECURITIES FUND
INCOME FUND
CORE EQUITY FUND
AGGRESSIVE EQUITY FUND
INTERNATIONAL EQUITY FUND
Investment advice is provided by Briar Capital Management L.L.C., a third-party
money manager.
Shares of Stalwart Funds:
-are not insured by the FDIC nor are they guaranteed by the U.S. government or
any of its agencies;
-are not deposits or obligations of or guaranteed by any bank, bank affiliate,
or bank holding company;
-are subject to investment risks, including possible loss of principal.
Shares of Stalwart Funds are offered by S.F. Investments, Inc., member NASD and
an affiliate of Briar Capital Management L.L.C.
LETTER TO SHAREHOLDERS
January 1996
Dear Shareholder,
The first fiscal year for the Stalwart Funds has been completed against a year-
long backdrop of spectacular investment performance by most sectors of the U.S.
equity and fixed income markets. Many investment commentators have referred to
the climate as one of an "investment mania."
As investors, we have generally benefited from the year-long upward trends in
both the equity and fixed income markets. As we look out into 1996 and beyond
toward the next century we remain positive on the global investment outlook for
both equity and fixed income securities.
Lots of things have gone right for the investment markets in the U.S. during
1995. We enjoyed low inflation, higher productivity, lower interest rates and a
focus on downsizing and budget balancing both in business and government. The
explosion of information technology has driven intense attention to both new
public offerings and existing companies even remotely related to the
"information super-highway." Some observers have called the existing climate
"frothy." Perhaps this is why a number of new micro-brewer offerings have also
been very well received.
While market risk may have increased because of positive performance, we remain
confident that our portfolio managers are well positioned to deal with any
shifts in the investment outlook. We continue to be guardedly optimistic about
the outlook for equities and fixed income securities over the intermediate term.
We believe that a consistent approach of balanced exposure between equity and
fixed income securities, both domestic and international, remains the soundest
strategy for long-term wealth accumulation and capital preservation.
In summary, the Stalwart Funds completed a successful first year.
VALUE OF A $10,000 INVESTMENT AS OF 11/30/95
Stalwart U.S. Government Securities Fund $11,513
Lehman Bros. Intermediate Government Bond Index $11,178
CUMULATIVE TOTAL RETURN
for the period ended 11/30/95 (Since Commencement<F1>)
Stalwart U.S. Government Securities Fund 15.13%
<F1>January 27, 1995
This chart assumes an initial gross investment of $10,000 made on 1/27/95
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future results. Investment return and principal
value will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost.
The Lehman Bros. Intermediate Government Bond Index is made up of the Treasury
Bond Index (all public obligations of the U.S. Treasury, excluding flower bonds
and foreign-targeted issues) and the Agency Bond Index (all publicly issued
debt of U.S. small government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. government). It includes only those
bonds with maturities of up to ten years.
VALUE OF A $10,000 INVESTMENT AS OF 11/30/95
Stalwart Income Fund $11,681
Lehman Bros. Gov't./Corp. Bond Index $11,565
CUMULATIVE TOTAL RETURN
for the period ended 11/30/95 (Since Commencement <F2>)
Stalwart Income Fund 16.81%
<F2>January 27, 1995
This chart assumes an initial gross investment of $10,000 made on 1/27/95
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future results. Investment return and principal
value will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost.
The Lehman Bros. Gov't./Corp. Bond Index includes all public obligations of the
U.S. Treasury, excluding flower bonds and foreign-targeted issues; all publicly
issued debt of U.S. government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. government; and all publicly issued, fixed
rate, nonconvertible investment-grade dollar-denominated, SEC-registered
corporate debt. Included in the latter is debt issued or guaranteed by foreign
sovereign governments, municipalities, or governmental agencies, or
international agencies.
VALUE OF A $10,000 INVESTMENT AS OF 11/30/95
Stalwart Core Equity Fund $12,597
S&P 500 Stock Index $13,216
CUMULATIVE TOTAL RETURN
for the period ended 11/30/95 (Since Commencement <F3>)
Stalwart Core Equity Fund 25.97%
<F3>January 27, 1995
This chart assumes an initial gross investment of $10,000 made on 1/27/95
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future results. Investment return and principal
value will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
VALUE OF A $10,000 INVESTMENT AS OF 11/30/95
Stalwart Aggressive Equity Fund $12,310
S&P 500 Stock Index $13,216
CUMULATIVE TOTAL RETURN
for the period ended 11/30/95 (Since Commencement <F4>)
Stalwart Aggressive Equity Fund 23.10%
<F4>January 27, 1995
This chart assumes an initial gross investment of $10,000 made on 1/27/95
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future results. Investment return and principal
value will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
VALUE OF A $10,000 INVESTMENT AS OF 11/30/95
Stalwart International Equity Fund $11,009
Morgan Stanley Capital International World EX-USA Index $11,110
CUMULATIVE TOTAL RETURN
for the period ended 11/30/95 (Since Commencement <F5>)
Stalwart International Equity Fund 10.09%
<F5>January 27, 1995
This chart assumes an initial gross investment of $10,000 made on 1/27/95
(commencement). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future results. Investment return and principal
value will fluctuate, so that shares, when redeemed, may be worth more or less
than the original cost.
The Morgan Stanley Capital International World ex-USA Index is composed of a
sample of companies representative of the market structure of 21 countries. The
objective of the World ex-USA Index and all other Morgan Stanley Capital Inter-
national Indices is to represent the evolution of an unmanaged portfolio
consisting of domestically listed stocks within the markets included in the
index.
The Stalwart U.S. Government Securities Fund performed strongly for the entire
period, in line with the general U.S. government bond market. Again the Fund
manager's general theme, namely that we are continuing in a secular
disinflationary trend, allowed the portfolio to continue to benefit from falling
interest rates. This Fund's average maturity of 11.32 years reflects the
portfolio manager's continuing disinflationary theme.
During the entire year the Stalwart Income Fund provided consistent current
income as well as price appreciation. The asset allocation of 47.2% corporate
bonds, 20.0% other fixed income securities and 24.1% in dividend paying common
stocks as of November 30, 1995, mirrors the portfolio manager's secular
disinflationary theme. It is also reflective of the Fund manager's fundamental
thesis of continuing lower inflation over the intermediate future.
The Stalwart Core Equity Fund had a very solid year from a performance
standpoint. Interestingly, this performance was achieved while the Fund had
little exposure to technology issues during the year. The consistent theme as
stated by the Fund manager is "we attempt to buy a piece of the business at a
substantial discount to its underlying value." By exercising discipline and
patience, the Fund shareholders benefit as the manager seeks to identify shares
trading at a large discount to value and, over time, price and value coverage.
While the Fund's performance lagged the S&P 500 Stock Index performance, we
believe the adviser's long-term value approach will offer more long-term upside
potential when compared to a market index in general.
The Stalwart Aggressive Equity Fund slightly underperformed both the S&P 500
Stock Index and the Nasdaq Composite Index for the year. This Fund's emphasis
continues to be on growth companies with price/earnings ratios equal to their
projected growth rate. A long-term time horizon and patience, we believe, will
yield superior performance for a Fund that invests in this disciplined manner.
The Stalwart International Equity Fund has performed in line with its
international equity index throughout the year. With a theme of diversification
through investment in high-quality companies in various industries, the adviser
follows a very risk-averse strategy.
Sincerely,
BRIAR CAPITAL MANAGEMENT
David S. Evans Thomas A. Hickey
Chairman President
RESULTS OF THE SPECIAL SHAREHOLDERS' MEETING
A Special Meeting of the Shareholders of the Stalwart Core Equity Fund was held
on December 20, 1995.
The matters voted on by shareholders of record as of October 31, 1995 and the
results of the shareholders' vote at the December 20, 1995 meeting were as
follows:
1) Approval of an interim sub-advisory agreement with Harris Associates L.P. for
the period from September 29, 1995 through December 20, 1995. 345,693 shares
voted affirmatively, 3,222 shares voted negatively and 4,974 shares abstained
from voting.
2) Approval of a new sub-advisory agreement with Harris Associates L.P.
effective December 20, 1995. 345,693 shares voted affirmatively, 3,222 shares
voted negatively and 4,974 shares abstained from voting.
3) Approval of a new sub-advisory agreement effective upon the date of the
consummation of a proposed merger or other reorganization involving the parent
of Harris Associates L.P. and Metropolitan Life Insurance Company. 345,693
shares voted affirmatively, 3,222 shares voted negatively and 4,974 shares
abstained from voting.
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- --- ----
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at value (cost $6,582,165,
$5,633,072, $6,819,917, $5,801,015
and $3,394,333, respectively) $7,116,354 $6,018,716 $8,215,524 $6,294,044 $3,669,162
Cash 190 -- 3,103 -- 1,814
Receivables for investments sold - 267,490 -- 175,975 --
Dividends and interest receivable 92,713 87,636 19,334 3,321 12,814
Due from Adviser 8,381 7,520 4,305 8,391 15,447
Organization costs, net of
accumulated amortization 31,497 31,496 31,496 31,497 31,496
------ ------ ------ ------ ------
TOTAL ASSETS 7,249,135 6,412,858 8,273,762 6,513,228 3,730,733
--------- --------- --------- --------- ---------
LIABILITIES:
Dividends payable 34,478 19,791 76,397 - 13,123
Payables for investments purchased - 263,675 - -- -
Other payables and accrued expenses 20,157 21,145 25,526 202,582 25,169
------ ------ ------ ------- ------
TOTAL LIABILITIES 54,635 304,611 101,923 202,582 38,292
------ ------- ------- ------- ------
NET ASSETS $7,194,500 $6,108,247 $8,171,839 $6,310,646 $3,692,441
---------- ---------- ---------- ---------- ----------
NET ASSETS CONSIST OF:
Capital stock $6,492,177 $5,420,989 $6,453,762 $4,882,457 $3,277,884
Accumulated net realized gains
on investments 163,085 291,896 319,764 931,817 97,843
Accumulated net realized gains from
foreign currency transactions - - - - 37,861
Unrealized net appreciation on
investments 534,189 385,644 1,395,607 493,029 298,535
Unrealized depreciation on translation of
assets and liabilities in
foreign currencies - - - - (23,776)
Undistributed net investment income 5,049 9,718 2,706 3,343 4,094
----- ----- ----- ----- -----
TOTAL NET ASSETS $7,194,500 $6,108,247 $8,171,839 $6,310,646 $3,692,441
========== ========== ========== ========== ==========
CAPITAL STOCK, NO PAR VALUE
Authorized Unlimited Unlimited Unlimited Unlimited Unlimited
Issued and outstanding 656,465 545,802 654,753 512,662 336,451
OFFERING PRICE, REDEMPTION PRICE AND
NET ASSET VALUE PER SHARE $10.96 $11.19 $12.48 $12.31 $10.97
========== ========== ========== ========== ==========
See notes to the financial statements.
</TABLE>
SCHEDULE OF INVESTMENTS
U.S. GOVERNMENT SECURITIES FUND
NOVEMBER 30, 1995
PAR
VALUE VALUE
----- -----
U.S. GOVERNMENT AGENCIES 54.01%
FEDERAL HOME LOAN MORTGAGE
CORPORATION 21.68%
$ 92,276 Federal Home Loan Mortgage
Corporation 1606 KA PAC-2,
6.25%, 11/15/08 $ 92,940
156,459 Federal Home Loan Mortgage
Corporation FHR 1618 K,
6.00%, 11/15/08 155,633
189,888 Federal Home Loan Mortgage
Corporation - GNMA FHG
12-IPAC-2, 6.00%, 11/25/08 186,181
300,000 Federal Home Loan Mortgage
Corporation, 8.05%, 4/5/10 323,835
250,000 Federal Home Loan Mortgage
Corporation, Real Estate
Mortgage Investment Conduit,
6.95%, 9/15/20 250,000
300,000 Federal Home Loan Mortgage
Corporation, 7.75%, 12/15/22 309,000
262,373 Federal Home Loan Mortgage
Corporation, Real Estate
Mortgage Investment Conduit
1608 QA, 6.10%, 7/15/23 242,210
---------
1,559,799
---------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION 32.33%
250,000 Federal National Mortgage
Association, 7.68%, 11/22/99 267,105
250,000 Federal National Mortgage
Association, 8.625%, 11/10/04 270,625
500,000 Federal National Mortgage
Association GLB Bond, 8.50%,
2/1/05 544,215
250,000 Federal National Mortgage
Association, 7.80%, 3/29/05 264,937
100,000 Federal National Mortgage
Association FNR 1992-186 N,
6.00%, 10/25/07 95,720
$176,241 Federal National Mortgage
Association 1993-101 CL B,
6.50%, 12/25/07 178,082
183,634 Federal National Mortgage
Association FNR 1993-18 B,
6.50%, 2/25/08 177,341
255,751 Federal National Mortgage
Association FNR 1993-43 K,
6.50%, 4/25/08 258,977
250,000 Federal National Mortgage
Association, 8.17%, 9/1/09 268,995
---------
2,325,997
---------
Total U.S. Government Agencies
(cost $3,659,782) 3,885,796
---------
U.S. TREASURIES 42.47%
500,000 U.S. Treasury Note,
7.125%, 2/29/00 529,430
400,000 U.S. Treasury Bond,
7.50%, 5/15/02 440,208
500,000 U.S. Treasury Bond,
6.25%, 2/15/03 516,595
500,000 U.S. Treasury Bond,
7.25%, 8/15/04 549,355
750,000 U.S. Treasury Bond,
10.75%, 8/15/05 1,019,970
---------
Total U.S. Treasuries
(cost $2,747,383) 3,055,558
---------
REPURCHASE AGREEMENTS 2.43%
$175,000 United Missouri Bank
Repurchase Agreement, 5.40%,
dated 11/30/95, repurchase price
$175,026, maturing 12/1/95
(collateralized by U.S. Treasury
Note, 7.625%, 4/30/96) 175,000
---------
Total Repurchase Agreements
(cost $175,000) 175,000
---------
Total Investments 98.91%
(cost $6,582,165) 7,116,354
Cash and Other Assets,
less Liabilities 1.09% 78,146
---------
NET ASSETS 100.00% $7,194,500
=========
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
INCOME FUND
NOVEMBER 30, 1995
PAR
VALUE VALUE
----- -----
FIXED INCOME BONDS 67.25%
ASSET-BACKED SECURITIES 4.63%
$300,000 Sears Mortgage Security Subordinated
Debentures, Series 1993-7M,
7.00%, 6/25/08 $282,750
--------
CONVERTIBLE BONDS 4.80%
150,000 Browning-Ferris Industries, Inc.
Convertible Subordinated
Debenture, 6.25%, 8/15/12 149,812
150,000 McKesson Corp. Convertible
Bond, 4.50%, 3/1/04 143,250
--------
293,062
--------
CORPORATE BONDS 47.21%
150,000 Aetna Life & Casualty Co.
Debenture, 6.75%, 9/15/13 143,062
250,000 BankAmerica Corp. Subordinated
Note, 7.625%, 6/15/04 268,125
250,000 Chase Manhattan Corp.
Subordinated Note,
6.75%, 8/15/08 252,500
250,000 Cigna Corp. Note,
8.25%, 1/1/07 282,813
250,000 Commonwealth Edison Co. Note,
7.625%, 6/1/03 256,250
250,000 Ford Motor Credit Co. Note,
6.375%, 4/15/00 252,813
250,000 Gulf States Utilities Co. Note,
8.21%, 1/1/02 262,500
260,000 K-Mart Corp. Sinking Fund,
8.80%, 7/1/10 219,050
150,000 Lehman Brothers Holding, Inc.
Medium Term Note,
8.25%, 4/11/02 162,187
250,000 Morgan Stanley Group, Inc.
Note, 6.375%, 12/15/03 248,438
250,000 Paine Webber Group Notes,
6.50%, 11/1/05 242,500
$250,000 Texas Instruments, Inc. Note,
8.75%, 4/1/07 294,063
---------
2,884,301
---------
Taxable Municipals 2.37%
125,000 University of Southern California
Note, 9.80%, 10/1/06 144,531
---------
U.S. Government Agencies 3.91%
225,000 Federal Home Loan Bank Note,
8.00%, 9/20/04 238,657
---------
U.S. Treasuries 4.33%
250,000 U.S. Treasury Note,
7.125%, 2/29/00 264,715
---------
Total Fixed Income Bonds
(cost $3,892,667) 4,108,016
---------
NUMBER
OF SHARES
---------
PREFERRED STOCKS 6.92%
5,000 American General Capital Corp.,
8.45%, Series A, Cumulative
Monthly Income Preferred
Security 129,375
5,000 Citicorp, 8.50%, Series 21,
Non-cumulative 135,000
2,000 Corning Delaware, 6.00% 98,000
2,300 Midland Bank PLC, 10.25%,
Series B, Non-cumulative 60,375
--------
Total Preferred Stocks
(cost $409,465) 422,750
--------
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS 24.11%
CHEMICALS 2.90%
2,500 Dow Chemical Co. $177,187
--------
ELECTRICAL PRODUCTS 5.35%
2,500 General Electric Co. 168,125
10,000 Juno Lighting, Inc. 158,750
--------
326,875
--------
ENVIRONMENTAL SERVICES 1.48%
3,000 Browning-Ferris Industries, Inc. 90,375
--------
FINANCIAL SERVICES 2.32%
3,000 Bank of New York Co., Inc. 141,375
--------
OIL AND GAS 2.56%
1,500 Mobil Corp. 156,563
--------
REAL ESTATE 2.30%
7,500 AMLI Residential
Properties Trust 140,625
--------
STEEL 3.99%
13,000 Reliance Steel &
Aluminum Co. 243,750
---------
TELECOMMUNICATIONS 3.21%
1,500 AT&T Corp. 99,000
1,800 SBC Communications, Inc. 97,200
--------
196,200
--------
Total Common Stocks
(cost $1,315,940) 1,472,950
---------
PAR
VALUE VALUE
----- -----
REPURCHASE AGREEMENTS 0.25%
$15,000 United Missouri Bank Repurchase
Agreement, 5.40%, dated 11/30/95,
repurchase price $15,002,
maturing 12/1/95 (collateralized by
U.S. Treasury Note, 7.625%,
4/30/96) $ 15,000
---------
Total Repurchase Agreements
(cost $15,000) 15,000
---------
Total Investments 98.53%
(cost $5,633,072) 6,018,716
Cash and Other Assets,
less Liabilities 1.47% 89,531
---------
NET ASSETS 100.00% $6,108,247
=========
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
CORE EQUITY FUND
NOVEMBER 30, 1995
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS 97.53%
AEROSPACE 7.30%
4,001 Lockheed Martin Corp. $293,573
3,400 McDonnell Douglas Corp. 303,025
-------
596,598
-------
BANKING 7.22%
4,400 BankAmerica Corp. 279,950
5,800 Mellon Bank Corp. 310,300
-------
590,250
-------
BEVERAGES 5.83%
4,200 Anheuser-Busch Cos., Inc. 278,250
5,200 Brown-Forman Corp. - Class B 198,250
-------
476,500
-------
BROADCAST, RADIO, TV 7.47%
2,900 Tele-Communications, Inc.
Liberty Media Unit - Class A <F6> 81,200
15,000 Tele-Communications, Inc. -
Class A <F6> 277,500
14,000 U.S. West Media Group <F6> 252,000
-------
610,700
-------
BUILDING MATERIALS 3.59%
7,400 Sherwin-Williams Co. 293,225
-------
CHEMICALS 3.48%
4,000 Great Lakes Chemical Corp. 284,500
-------
FINANCIAL SERVICES 6.91%
2,600 Federal National Mortgage Assn. 284,700
6,100 First USA, Inc. 279,837
-------
564,537
-------
FOOD 9.83%
8,700 Heinz (H.J.) Co. 277,313
8,900 Nabisco Holdings Corp. - Class A 251,425
7,900 Quaker Oats Co. 274,525
-------
803,263
-------
HARDWARE 3.57%
7,800 Black & Decker Corp. 291,525
-------
HOUSEHOLD PRODUCTS 3.62%
3,900 Clorox Co. 295,425
-------
INSURANCE 7.32%
3,900 MBIA, Inc. 300,300
4,200 SAFECO Corp. 298,200
-------
598,500
-------
MANUFACTURING 3.50%
13,000 Whitman Corp. 286,000
-------
MINING 3.29%
9,700 De Beers Consolidated Mines
Ltd. ADR 269,175
-------
OIL AND GAS 6.83%
6,700 Murphy Oil Corp. 263,813
15,100 YPF Sociedad Anonima ADR 294,450
-------
558,263
-------
PHARMACEUTICALS 3.57%
3,200 American Home Products Corp. 292,000
-------
PRINTING AND PUBLISHING 7.59%
5,200 Gannett Co., Inc. 317,200
4,700 Knight-Ridder, Inc. 303,150
-------
620,350
-------
RETAIL 3.39%
9,500 Federated Department
Stores, Inc. <F6> 276,688
-------
TOBACCO PRODUCTS 3.22%
6,300 American Brands, Inc. $ 263,025
---------
Total Common Stocks
(cost $6,574,917) 7,970,524
---------
PAR
VALUE
- -----
REPURCHASE AGREEMENTS 3.00%
$245,000 United Missouri Bank
Repurchase Agreement, 5.40%,
dated 11/30/95, repurchase price
$245,036, maturing 12/1/95,
(collateralized by U.S. Treasury
Note, 7.75%, 3/31/96) 245,000
---------
Total Repurchase Agreements
(cost $245,000) 245,000
---------
Total Investments 100.53%
(cost $6,819,917) 8,215,524
Liabilities, less Cash
and Other Assets (0.53)% (43,685)
---------
NET ASSETS 100.00% $8,171,839
=========
<F6> Non-income producing security.
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
AGGRESSIVE EQUITY FUND
NOVEMBER 30, 1995
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS 96.53%
BUSINESS PRODUCTS 5.00%
11,450 American Business Information,
Inc. <F7> $208,962
3,800 Wabash National Corp. 106,400
-------
315,362
-------
BUSINESS SERVICES 4.19%
14,000 Franklin Quest Co. <F7> 264,250
-------
COMPUTER SOFTWARE 13.13%
10,200 FTP Software, Inc. <F7> 309,825
3,000 Parametric Technology
Corp. <F7> 212,250
5,600 Softkey International, Inc. <F7> 189,000
3,400 Synopsys, Inc. <F7> 117,300
-------
828,375
-------
COMMUNICATION PRODUCTS 8.95%
3,800 Hummingbird Communication
Ltd. <F7> 190,950
8,300 Madge, N.V. <F7> 374,019
-------
564,969
-------
ELECTRONICS 8.36%
4,300 Altron, Inc. <F7> 126,850
18,500 Cincinnati Microwave, Inc. <F7> 129,500
5,000 Kent Electronics Corp. <F7> 271,250
-------
527,600
-------
FINANCIAL SERVICES 4.79%
4,400 Green Tree Financial Corp. 124,300
8,750 Mercury Finance Co. 124,687
2,200 Washington Federal, Inc. 53,075
-------
302,062
-------
HEALTH CARE SERVICES 6.29%
6,000 Express Scripts, Inc. -
Class A <F7> 247,500
2,000 HBO & Co. 149,500
--------
397,000
--------
PERSONAL SERVICES 3.21%
10,700 Barefoot, Inc. 123,050
3,000 Loewen Group, Inc. 79,500
--------
202,550
-------
PHARMACEUTICALS 1.83%
2,144 Cardinal Health, Inc. 115,776
-------
REAL ESTATE 10.91%
12,500 National Health Investors, Inc.
REIT 385,937
14,500 Oasis Residential, Inc. REIT 302,688
-------
688,625
-------
RETAIL 6.56%
4,700 Doubletree Corp. <F7> 99,875
9,500 Heilig-Meyers Co. 192,375
2,600 St. John Knits, Inc. 121,875
-------
414,125
-------
SEMICONDUCTORS 6.75%
2,500 Atmel Corp. <F7> 75,000
6,500 Lattice Semiconductor Corp. <F7> 209,625
4,600 Integrated Process Equipment
Corp. <F7> 141,450
-------
426,075
-------
TELECOMMUNICATIONS 12.79%
11,100 Century Telephone Enterprises 346,875
4,600 United States Cellular Corp. <F7> 161,000
9,200 WorldCom, Inc. <F7> 299,000
---------
806,875
---------
TRANSPORTATION 3.77%
4,800 Expeditors International of
Washington, Inc. 122,400
6,000 M.S. Carriers, Inc. <F7> 115,500
---------
237,900
---------
Total Common Stocks
(cost $5,609,015) 6,091,544
---------
PAR
VALUE
-----
CONVERTIBLE BONDS 3.21%
$100,000 National Healthcare LP
Convertible Debentures,
6.00%, 7/1/00 202,500
---------
Total Convertible Bonds
(cost $192,000) 202,500
---------
Total Investments 99.74%
(cost $5,801,015) 6,294,044
Cash and Other Assets,
less Liabilities 0.26% 16,602
---------
NET ASSETS 100.00% $6,310,646
=========
<F7> Non-income producing security
See notes to the financial statements.
SCHEDULE OF INVESTMENTS
INTERNATIONAL EQUITY FUND
NOVEMBER 30, 1995
NUMBER
OF SHARES VALUE
--------- -----
COMMON STOCKS 94.69%
BERMUDA 1.44%
2,000 PartnerRe Holdings ADR $ 53,000
---------
CANADA 1.89%
2,000 Imperial Oil ADR 69,750
---------
FRANCE 8.05%
3,000 Coflexip ADR 46,125
247 Gaz et Eaux 88,294
2,100 Institute de Developpement
des Industries Agricoles 61,952
1,350 Primagaz 100,854
---------
297,225
---------
GERMANY 7.05%
1,700 Deutsche Bank 79,812
140 Hochtief 62,870
132 Linde 77,454
22 MunichRe 40,203
---------
260,339
---------
HONG KONG 5.87%
27,000 Hutchison Whampoa 152,538
31,000 Johnson Electric 64,123
---------
216,661
---------
INDONESIA 0.85%
12,000 Wicaksana Overseas
International 31,531
---------
JAPAN 17.26%
6,000 Canon 105,782
3,000 Canon Sales 74,461
2,000 Honda Motor 36,245
2,000 Ito-Yokado 110,706
1,000 Kyocera 79,287
15,000 Mitsubishi Heavy Industries 119,817
6,000 Nippon Denso 111,100
---------
637,398
---------
LUXEMBOURG 1.61%
3,600 Quilmes Industrial 59,400
---------
MALAYSIA 5.98%
9,000 Nestle Malaysia 63,173
25,000 Nylex Malaysia 74,924
32,000 Sime Darby 82,653
---------
220,750
---------
NETHERLANDS 8.93%
1,200 IHC Caland 36,204
1,600 Randstad 67,165
1,100 Royal Dutch Petroleum ADR 141,213
1,010 Wolters Kluwer 85,296
---------
329,878
---------
NORWAY 3.68%
2,000 Norsk Hydro ADR 81,250
4,200 Unitor ADR 54,726
---------
135,976
---------
SINGAPORE 5.65%
8,000 Development Bank of
Singapore 93,584
14,000 Keppel 115,136
---------
208,720
---------
SOUTH AFRICA 2.48%
24,000 Liblife Strategic Investments 91,628
---------
SPAIN 2.57%
1,000 Banco Intercontinental 95,021
---------
SWEDEN 2.79%
2,800 Astra 102,803
---------
SWITZERLAND 11.76%
620 Brown Boveri Registered 139,985
2,000 Nestle ADR 106,760
225 Sika Finanz Registered 52,718
400 Societe Generale de Surveillance
Registered 134,617
---------
434,080
---------
UNITED KINGDOM 6.83%
22,000 Blenheim Exhibitions 77,057
5,000 Hanson ADR 76,250
20,000 Rentokil 98,807
---------
252,114
---------
Total Common Stocks
(cost $3,237,820) 3,496,274
---------
WARRANTS 0.03%
FRANCE 0.03%
150 Primagaz Warrants <F8> 1,169
---------
Total Warrants
(cost $754) 1,169
---------
PAR
VALUE
- -----
CONVERTIBLE BONDS 3.43%
THAILAND 3.43%
$125,000 Bangkok Bank Convertible
Bond, 3.25%, 3/3/04 126,719
-------
Total Convertible Bonds
(cost $110,759) 126,719
-------
PAR
VALUE VALUE
----- -----
REPURCHASE AGREEMENTS 1.22%
$45,000 United Missouri Bank Repurchase
Agreement, 5.40%, dated 11/30/95,
repurchase price $45,007
maturing 12/1/95 (collateralized by
U.S. Treasury Note, 7.625%,
4/30/96) $ 45,000
---------
Total Repurchase Agreements
(cost $45,000) 45,000
---------
Total Investments 99.37%
(cost $3,394,333) 3,669,162
Cash and Other Assets,
less Liabilities 0.63% 23,279
---------
NET ASSETS 100.00% $3,692,441
=========
<F8> Non-income producing security.
At November 30, 1995, the International Equity Fund's investments, excluding
repurchase agreements, were diversified as follows:
Basic Industries 16.15%
Capital Goods & Technology 16.10
Consumer - Cyclical 25.59
Consumer - Non-Cyclical 16.82
Financial Services 13.47
Holding Companies 2.53
Natural Resources 9.34
------
100.00%
=======
See notes to the financial statements.
<TABLE>
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JANUARY 27, 1995<F9> THROUGH NOVEMBER 30, 1995
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 458,179 $262,771 $ 17,682 $ 33,794 $ 19,781
Dividend income (less withholding taxes of
$0, $442, $948, $47 and $13,758, respectively) - 84,496 159,266 47,601 74,529
-------- -------- -------- --------- ---------
Total investment income 458,179 347,267 176,948 81,395 94,310
-------- -------- -------- --------- ---------
EXPENSES:
Fund accounting and administration fees 51,743 41,536 51,823 43,257 26,819
Transfer agent fees and expenses 22,318 22,465 21,970 21,948 21,924
Investment advisory fees 16,247 13,041 16,268 13,581 8,421
Professional fees 14,012 14,012 14,012 14,013 16,712
Sub-advisory fees 12,998 10,433 27,331 21,730 20,210
12b-1 fees 9,748 7,824 9,761 8,149 5,053
Amortization of organization costs 6,391 6,391 6,391 6,391 6,391
Trustees' fees 4,540 4,540 4,540 4,540 4,540
Custody fees 3,592 4,323 5,012 5,517 17,405
Printing and mailing expenses 4,122 4,122 4,122 4,122 4,122
Federal and state registration fees 2,821 2,404 2,809 2,355 1,719
Pricing expense 2,203 2,389 944 1,261 3,859
Insurance expense 698 577 611 540 327
--------- --------- --------- --------- ---------
Total expenses before reimbursement 151,433 134,057 165,594 147,404 137,502
Reimbursement of expenses (79,296) (65,724) (66,087) (60,485) (73,163)
--------- --------- --------- --------- ---------
Net expenses 72,137 68,333 99,507 86,919 64,339
--------- --------- --------- --------- ---------
Net investment income (loss) 386,042 278,934 77,441 (5,524) 29,971
--------- --------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS
AND FOREIGN CURRENCIES:
Net realized gain on:
Investments 165,322 290,455 319,764 939,022 97,843
Foreign currency transactions - - - - 23,445
-------- -------- -------- -------- --------
Total net realized gain 165,322 290,455 319,764 939,022 121,288
Net increase in unrealized appreciation
(depreciation) on:
Investments 534,189 385,644 1,395,607 493,029 298,535
Translation of assets and liabilities in foreign
currencies - - - - (23,776)
-------- -------- -------- -------- ---------
Total net unrealized gain 534,189 385,644 1,395,607 493,029 274,759
Net realized and unrealized gain from investments
and foreign currencies 699,511 676,099 1,715,371 1,432,051 396,047
-------- -------- --------- --------- ---------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,085,553 $955,033 $1,792,812 $1,426,527 $426,018
========= ======== ========== ========== ========
<FN>
<F9>Commencement of operations.
See notes to the financial statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JANUARY 27, 1995<F10> THROUGH NOVEMBER 30, 1995
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 386,042 $ 278,934 $ 77,441 $ (5,524) $ 29,971
Net realized gain on investments 165,322 290,455 319,764 939,022 97,843
Net realized gain on foreign currency
transactions - - - - 23,445
Net increase in unrealized appreciation
on investments 534,189 385,644 1,395,607 493,029 298,535
Net increase in unrealized depreciation
on translation of assets and liabilities
in foreign currencies - - - - (23,776)
--------- --------- --------- --------- ----------
Net increase in net assets
resulting from operations 1,085,553 955,033 1,792,812 1,426,527 426,018
--------- --------- --------- --------- ----------
DISTRIBUTIONS PAID FROM:
Net investment income (384,892) (269,437) (76,397) - (13,123)
---------- ---------- --------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 9,530,364 7,052,894 8,951,962 7,262,913 4,665,365
Proceeds from reinvestment of dividends 339,630 242,950 - - -
Value of shares redeemed (3,396,155) (1,893,193) (2,516,538) (2,398,794) (1,405,819)
----------- ----------- ----------- ----------- -----------
Net increase from capital share transactions 6,473,839 5,402,651 6,435,424 4,864,119 3,259,546
----------- ----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS 7,174,500 6,088,247 8,151,839 6,290,646 3,672,441
NET ASSETS:
Beginning of period 20,000 20,000 20,000 20,000 20,000
---------- ---------- ---------- ---------- ----------
End of period $7,194,500 $6,108,247 $8,171,839 $6,310,646 $3,692,441
========== ========== ========== ========== ==========
<FN>
<F10> Commencement of operations.
See notes to the financial statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR THE PERIOD FROM JANUARY 27, 1995<F11> THROUGH NOVEMBER 30, 1995
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.00 $10.00 $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.52 0.48 0.12 (0.01) 0.09
Net realized and unrealized gains on
investments and foreign currencies 0.96 1.17 2.48 2.32 0.92
----- ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.48 1.65 2.60 2.31 1.01
LESS DISTRIBUTIONS:
Dividends from net investment income (0.52) (0.46) (0.12) - (0.04)
------ ------ ------ ---- ------
TOTAL DISTRIBUTIONS (0.52) (0.46) (0.12) - (0.04)
------ ------ ------ ---- ------
NET ASSET VALUE, END OF PERIOD $10.96 $11.19 $12.48 $12.31 $10.97
====== ====== ====== ====== ======
TOTAL RETURN <F12> 15.13% 16.81% 25.97% 23.10% 10.09%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in 000s) $7,195 $6,108 $8,172 $6,311 $3,692
Ratio of net expenses to average
net assets <F13><F14> 1.11% 1.31% 1.53% 1.60% 1.91%
Ratio of net investment income (loss)
to average net assets <F13><F14> 5.94% 5.35% 1.19% (0.10)% 0.89%
Portfolio turnover rate <F12> 55.29% 63.76% 34.71% 140.94% 38.09%
<FN>
<F11>Commencement of operations.
<F12>Not annualized for the period from January 27, 1995 through November 30, 1995.
<F13>Annualized for the period from January 27, 1995 through November 30, 1995.
<F14>Without fees waived, the ratio of net expenses to average net assets would have been 2.33% for the U.S. Government Securities
Fund; 2.57% for the Income Fund; 2.54% for the Core Equity Fund; 2.71% for the Aggressive Equity Fund; and 4.08% for the
International Equity Fund.
Without fees waived, the ratio of net investment income (loss) to average net assets would have been 4.72% for the U.S. Government
Securities Fund; 4.09% for the Income Fund; 0.18% for the Core Equity Fund; (1.21)% for the Aggressive Equity Fund; and (1.28)% for
the International Equity Fund.
See notes to the financial statements.
</TABLE>
NOTES TO THE FINANCIAL STATEMENTS
1. ORGANIZATION
Briar Funds Trust (the "Trust") was organized October 7, 1994 as a Delaware
business trust and is registered under the Investment Company Act of 1940 (the
"1940 Act"). The Stalwart Funds (the "Funds"), the separate portfolios of the
Trust, are currently authorized to issue an unlimited number of shares of
beneficial interest (no par value per share). The Funds commenced operations on
January 27, 1995. Each of the Funds initially issued and sold 2,000 shares to
Briar Capital Management L.L.C. (the "Adviser") on January 12, 1995, for
consideration in the amount of $100,000.
Costs of $189,437 incurred by the Funds in connection with their organization,
registration and the initial public offering of shares have been deferred and
are being amortized on a straight-line basis over a period of five years from
the date upon which the Funds commenced their investment activities. These costs
were advanced by the Adviser and reimbursed by the Funds. The proceeds of any
redemption of the initial shares by any holder thereof will be reduced by a pro
rata portion of any then unamortized deferred organizational costs in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of such redemption.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements.
A) INVESTMENT VALUATION - Securities which are traded on a recognized stock
exchange are valued at the last sale price on the securities exchange on which
such securities are primarily traded or at the last sale price on a national
securities exchange. Exchange-traded securities for which there were no
transactions are valued at the current bid prices. Portfolio securities traded
on a foreign exchange are valued at the respective closing prices on that
exchange.Securities traded on only over-the-counter markets are valued on the
basis of closing over-the-counter bidprices. Fixed income/debt securities are
priced at fair value using the bid price. However, in circumstances where the
Adviser or sub-adviser deems it appropriate to do so, the Funds' fixed income
securities are valued utilizing prices obtained for the day of valuation from a
bond pricing service. Debt securities with a maturity date less than 60 days are
valued at amortized cost basis which approximates value. Securities for which
quotations are not readily available, and other assets, are valued at fair
value, as determined in good faith by the Board of Trustees.
B) FOREIGN CURRENCY TRANSACTIONS - The books and records of the Funds are
maintained in U.S. dollars as follows:
(I) market value of investment securities and other assets and liabilities are
recorded at the exchange rate on the valuation date; and
(II) purchases and sales of investment securities, income and expenses are
recorded at the exchange rate prevailing on the respective date of such
transactions.
The Funds isolate that portion of the results of operations resulting from
changes in foreign exchange rates on investments from the fluctuation arising
from changes in market prices of investments held. For the International Equity
Fund, the amount of net unrealized depreciation on the translation of assets and
liabilities in foreign currencies related to investments as of November 30, 1995
was $23,706.
C) FEDERAL INCOME TAXES - No provision for federal income taxes has been made
since the Funds have complied to date with the provisions of the Internal
Revenue Code available to regulated investment companies and intend to continue
to so comply in future years.
D) DISTRIBUTIONS TO SHAREHOLDERS - Generally, dividends from net investment
income will be declared and paid monthly for the U.S. Government Securities and
Income Funds, and annually for the Core Equity, Aggressive Equity and
International Equity Funds. Distributions of net realized capital gains, if any,
will be declared and paid annually. For the year ended November 30, 1995, 14.3%,
35.4% and 5.1% of dividends paid or to be paid from taxable income for the
Income Fund, Core Equity Fund and Aggressive Equity Fund, respectively, qualify
for the dividends received deduction available to corporate shareholders.
The Funds may periodically make reclassifications among certain of their capital
accounts as a result of the timing and characterization of certain income and
capital gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions and organizational costs. Accordingly, at November 30, 1995,
reclassifications were recorded to increase (decrease) undistributed net
investment income by $3,899, $221, $1,662, $8,867 and $(12,754); increase
(decrease) accumulated net realized gains on investments by $(2,237), $1,441,
$0, $(7,205) and $0; increase accumulated net realized gains from foreign
currency transactions $0, $0, $0, $0 and $14,416; and decrease capital stock by
$1,662 for each of the U.S. Government Securities, Income, Core Equity,
Aggressive Equity and International Equity Funds, respectively.
E) OTHER - For financial reporting, investment transactions are recorded on the
trade date. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds. Dividend income is recognized on the ex-dividend date, except
for certain dividends from foreign securities which are recorded as soon as
information is available to the Funds. Interest income is recognized on an
accrual basis and includes amortization of premiums and discounts.
3. INVESTMENT ADVISORY AGREEMENT AND OTHER AGREEMENTS
The Trust has an agreement with the Adviser, with whom certain officers and
trustees of the Trust are affiliated, to furnish investment advisory services to
the Funds. Under the terms of the agreement, the Funds will pay the Adviser a
monthly fee on average daily net assets at the following annual rates: 0.45%
for the U.S. Government Securities and Income Funds; 0.75% for the Core Equity
Fund; 0.65% for the Aggressive Equity Fund; and 0.85% for the International
Equity Fund. The basic fee for the Core Equity Fund is subject to a performance
adjustment (up to a maximum +/- 0.10%) based on the Core Equity Fund's
investment performance as compared to the S&P 500 over a specified period of
time. For the period from January 27, 1995 through November 30, 1995, the
sub-adviser reduced its fee by $5,109 for a performance adjustment. Of the
above annual fees, the Adviser retains 0.25% and has directed the Funds to
pay each respective sub-adviser the remainder.
The Adviser voluntarily agreed to waive its fees and/or reimburse the Funds to
the extent that total expenses (excluding interest, taxes, brokerage commissions
and other costs incurred in connection with the purchase or sale of portfolio
securities, and extraordinary items) exceed 1.11% of average net assets of the
U.S. Government Securities Fund; 1.31% of average net assets of the Income Fund;
1.53% of average net assets of the Core Equity Fund; 1.60% of average net assets
of the Aggressive Equity Fund; and 1.91% of average net assets of the
International Equity Fund. Accordingly, for the period from January 27, 1995
through November 30, 1995, the Adviser waived advisory fees of $16,247 and
reimbursed an additional $32,968 to the U.S. Government Securities Fund; waived
advisory fees of $13,041 and reimbursed an additional $28,312 to the Income
Fund; waived advisory fees of $16,268 and reimbursed an additional $32,102 to
the Core Equity Fund; waived advisory fees of $13,581 and reimbursed an
additional $32,190 to the Aggressive Equity Fund; and waived advisory fees of
$8,421 and reimbursed an additional $55,872 to the International Equity Fund.
Sub-advisory services are provided to the U.S. Government Securities and Income
Funds by Pekin, Singer & Shapiro Asset Management, Inc. ("Pekin, Singer"), an
affiliate of the Adviser; to the Core Equity Fund by Harris Associates L.P.; to
the Aggressive Equity Fund by Wasatch Advisors, Inc.; and to the International
Equity Fund by Harding, Loevner Management, L.P. Pekin, Singer waived their
sub-advisory fees of $12,998 and $10,433 for the U.S. Government Securities and
Income Funds, respectively.
Sunstone Financial Group, Inc. (the "Administrator") acts as Administrator for
each of the Funds. As compensation for its administrative services and the
assumption of certain administrative expenses, the Administrator is entitled to
a fee, computed daily and payable monthly, at an annual rate of 0.20% on the
first $100 million of average net assets of the Funds, 0.125% on the next $150
million of average net assets of the Funds, and 0.075% on average net assets in
excess of $250 million, subject to a minimum fee at an annual rate of $255,000,
plus out-of-pocket expenses. For the period from January 27, 1995 to November
30, 1995, the Administrator waived fees of $7,335 for the U.S. Government
Securities Fund; $6,114 for the Income Fund; $7,956 for the Core Equity Fund;
$6,565 for the Aggressive Equity Fund; and $3,817 for the International Equity
Fund.
4. DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan permits the Trust to employ one or more
distributors of its shares. Payments under the Plan may be made only to
distributors so employed by the Trust. The Trust pays to each distributor a
monthly fee for distribution of each Fund's shares at the rate of 0.15% per
annum of the average net asset value of the Fund shares beneficially owned by
each distributor's clients. Currently, S.F. Investments, Inc. (the
"Distributor"), an affiliate of the Adviser, is the underwriter of the Funds.
It is the only entity which has entered into an agreement under the Plan. For
the period from January 27, 1995 to November 30, 1995, the Distributor waived
distribution fees of $9,748 for the U.S. Government Securities Fund; $7,824 for
the Income Fund; $9,761 for the Core Equity Fund; $8,149 for the Aggressive
Equity Fund; and $5,053 for the International Equity Fund.
<TABLE>
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term investments, for each Fund for the period from January 27,
1995 through November 30, 1995, were as follows:
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PURCHASES:
U.S. Government $4,401,816 $ 571,597 - - -
Other 5,729,383 8,363,242 $8,775,403 $12,706,903 $4,545,162
SALES:
U.S. Government 1,787,297 344,273 - - -
Other 2,094,449 3,272,939 2,520,508 7,844,778 1,332,703
For the period from January 27, 1995 through November 30, 1995, the Income Fund paid brokerage commissions of $9,450 on trades of
securities to an affiliate of the Adviser.
</TABLE>
<TABLE>
Costs of investments are substantially the same for financial reporting purposes and federal income tax purposes for each Fund,
except the Aggressive Equity and International Equity Funds whose cost of investments for federal income tax purposes was
$5,804,205 and $3,400,217, respectively. At November 30, 1995, gross unrealized appreciation and depreciation of investments for
each Fund were as follows:
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Appreciation $534,189 $473,274 $1,460,071 $868,644 $388,965
Depreciation - (87,630) (64,464) (378,805) (120,020)
-------- --------- --------- --------- ---------
Net appreciation on investments $534,189 $385,644 $1,395,607 $489,839 $268,945
======== ======== ========== ======== ========
</TABLE>
<TABLE>
6. CAPITAL SHARE TRANSACTIONS
Transactions of capital shares for the period from January 27, 1995 through November 30, 1995 for each Fund were as follows:
<CAPTION>
U.S. GOVERNMENT CORE AGGRESSIVE INTERNATIONAL
SECURITIES INCOME EQUITY EQUITY EQUITY
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Shares sold 941,876 695,775 871,149 719,847 463,166
Shares issued in reinvestment
of dividends 32,022 22,598 - - -
Shares redeemed (319,433) (174,571) (218,396) (209,185) (128,715)
--------- --------- --------- --------- ---------
Net increase in shares 654,465 543,802 652,753 510,662 334,451
======== ======== ========== ======== ========
7. Subsequent Events
The Board of Trustees unanimously voted on January 26, 1996, to terminate the Trust's contracts with
the Adviser, all of the Sub-Advisers, the Distributor and the Administrator. The Board of Trustees also terminated its
Custodian Agreement with United Missouri Bank. The Board of Trustees expressed its desire to terminate the
contracts effective 45 days after prompt notice is given and authorized its officers to request a waiver
of any applicable notice provisions requiring notice in excess of 45 days from each service provider.
The Board also adopted a resolution that the Funds cease accepting additional purchases of shares.
Accordingly, the Funds stopped accruing Rule 12b-1 fees and stopped amortizing organizational costs.
The Adviser anticipates that each of the Funds will begin liquidating as soon as possible in an orderly fashion
considering the best interests of shareholders of the Funds, all portfolio investments and anticipates
holding the proceeds in short-term debt obligations. The shareholders will not bear the additional
expenses associated with winding up the operations of the Trust.
</TABLE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of the Stalwart Funds:
We have audited the accompanying statements of assets and liabilities of the
Stalwart Funds (comprised of the U.S. Government Securities Fund, Income Fund,
Core Equity Fund, Aggressive Equity Fund and International Equity Fund),
including the schedules of investments, as of November 30, 1995, and the related
statements of operations, changes in net assets and financial highlights for the
period from January 27, 1995 (commencement of operations) through November 30,
1995. These financial statements and financial highlights are the responsibility
of the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Stalwart Funds as of November 30, 1995, and the results of their operations,
changes in their net assets and financial highlights for the period from January
27, 1995 through November 30, 1995, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Chicago, Illinois
December 22, 1995
except for Note 7, as to which the date is
January 26, 1996.
This report is for the information of shareholders of Stalwart Funds.
It is authorized for distribution only when it is preceded or accompanied by a
current Stalwart Funds prospectus.
