<PAGE> 1
CRANBROOK FUNDS
CONSISTING OF THE
CRANBROOK MONEY MARKET FUND
AND
CRANBROOK TREASURY FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT TO SHAREHOLDERS
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR AND PORTFOLIO
MANAGER:
Cranbrook Capital Management, Inc.
CRANBROOK CAPITAL MANAGEMENT LOGO
- --------------------------------------------------------------------------------
ADMINISTRATOR, UNDERWRITER AND
DISTRIBUTOR:
FIRST OF MICHIGAN INVESTMENTS LOGO
- --------------------------------------------------------------------------------
Principal Office of the Trust:
100 Renaissance Center/25th Floor
Detroit, Michigan 48243
- --------------------------------------------------------------------------------
This report is not to be distributed
unless
preceded or accompanied by a
prospectus.
- --------------------------------------------------------------------------------
Phone Number of the Trust (313)
259-4321
24 Hour Yield Information (800)
482-2417
Outside of Michigan (800) 521-1098
Purchase and Redemption Orders:
Outside of Michigan (800) 521-1264
Within Michigan (800) 482-2560
Dear Shareholder,
We are pleased to present this
annual report of the Cranbrook
Funds as of October 31, 1996.
As of October 31, 1996, the
Cranbrook Money Market Fund had
net assets of approximately $435
million and the Cranbrook
Treasury Fund had net assets of
over $63 million.
For the year ended October 31,
1996, the Money Market Fund had a
net yield of 5.00% and the
Treasury Fund had a net yield of
4.75%.
We thank you for your continued
confidence in the Cranbrook Funds
and we hope you are pleased with
the investment results.
CONRAD W. KOSKI SIGNATURE
CONRAD W. KOSKI
President
December 20, 1996
<PAGE> 2
CRANBROOK FUNDS
CRANBROOK MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost............ $433,859,665
Interest receivable....................... 1,641,977
Prepaid expenses and other assets......... 151,672
------------
Total assets $435,653,314
------------
LIABILITIES:
Accrued administrator fee................. $ 92,841
Accrued investment advisor fee............ 83,557
Accrued transfer and dividend disbursing
fees.................................... 32,147
Accounts payable and accrued expenses..... 96,817
Dividends payable......................... 394,502
------------
Total liabilities..................... $ 699,864
------------
Total net assets...................... $434,953,450
============
NET ASSETS:
Shares of beneficial interest, an
unlimited number of shares authorized,
434,953,450 shares outstanding, par
value $.10 per share.................... $ 43,495,345
Additional paid-in capital................ 391,458,105
------------
Total net assets...................... $434,953,450
============
NET ASSET VALUE:
Offering and redemption price per share on
434,953,450 shares of beneficial
interest outstanding.................... $1.00
============
</TABLE>
CRANBROOK FUNDS
CRANBROOK MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
TOTAL INVESTMENT INCOME..................... $24,022,190
-----------
EXPENSES:
Administrator fee........................... $ 1,079,045
Investment advisor fee...................... 971,127
Transfer and dividend disbursing fees....... 460,552
Custodial fees.............................. 169,450
Professional fees........................... 63,301
Insurance................................... 60,333
Postage and printing........................ 53,625
Registration and filing fees................ 41,146
Trustee fees and expenses................... 35,369
Other....................................... 31,015
-----------
Total expenses.............................. $ 2,964,963
-----------
NET INVESTMENT INCOME....................... $21,057,227
===========
RATIO OF TOTAL EXPENSES TO TOTAL INVESTMENT
INCOME.................................... 12.34%
===========
</TABLE>
CRANBROOK FUNDS
CRANBROOK MONEY MARKET FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR EIGHT MONTHS
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income................................ $ 21,057,227 $ 13,509,443
Dividends declared................................... (21,057,227) (13,509,443)
-------------- --------------
Change in net assets from operations............... $ -- $ --
-------------- --------------
FROM SHARE TRANSACTIONS (at $1.00 per share):
Proceeds from sale of shares......................... $ 1,357,274,646 $1,133,540,267
Asset value of shares issued in reinvestment of
dividends.......................................... 20,736,509 13,312,245
-------------- --------------
$ 1,378,011,155 $1,146,852,512
Payments for shares redeemed......................... (1,355,876,180) (734,034,037)
-------------- --------------
Change in net assets from share transactions....... $ 22,134,975 $ 412,818,475
-------------- --------------
NET CHANGE IN NET ASSETS............................... $ 22,134,975 $ 412,818,475
NET ASSETS:
Beginning of period.................................. 412,818,475 --
-------------- --------------
End of period........................................ $ 434,953,450 $ 412,818,475
============== ==============
</TABLE>
See accompanying notes to financial statements.
1
<PAGE> 3
CRANBROOK FUNDS
CRANBROOK MONEY MARKET FUND
SCHEDULE OF INVESTMENTS -- OCTOBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT AGENCIES -- 3.68% COST
- ---------- ------------
<C> <S> <C>
2,800,000 Federal National Mortgage Assoc.,
5.46%, due 11/15/96................... $ 2,799,834
5,000,000 Federal Home Loan Mortgage Corp.,
7.88%, due 12/20/96................... 5,014,538
4,696,935 Small Business Administration,
Variable Rate Note,
5.75%, due 1/25/97.................... 4,707,112
3,446,847 Small Business Administration,
Variable Rate Note,
5.75%, due 1/25/97.................... 3,454,866
------------
$ 15,976,350
------------
CERTIFICATES OF DEPOSIT -- 8.07%
10,000,000 Standard Federal Bank,
5.35%, due 11/14/96................... $ 10,000,000
10,000,000 American Express Centurian Bank,
5.27%, due 11/22/96................... 10,000,000
5,000,000 Standard Federal Bank,
5.75%, due 12/5/96.................... 5,000,000
5,000,000 Canadian Imperial Bank of Commerce,
5.42%, due 1/17/97.................... 5,000,211
5,000,000 First Chicago Corp.,
5.70%, due 5/22/97.................... 4,995,031
------------
$ 34,995,242
------------
COMMERCIAL PAPER -- 64.04%
5,000,000 Island Finance Norwest,
5.32%, due 11/1/96.................... $ 5,000,000
5,000,000 Nynex Corp.,
5.37%, due 11/4/96.................... 4,997,762
5,210,000 Brown Forman Corp.,
5.40%, due 11/5/96.................... 5,206,874
5,000,000 Echlin Inc.,
5.50%, due 11/5/96.................... 4,996,944
5,000,000 Harley Davidson Dealer Funding Corp.,
5.24%, due 11/5/96.................... 4,997,089
5,000,000 Winn Dixie Stores Inc.,
5.29%, due 11/5/96.................... 4,997,061
5,000,000 National Bank of Canada,
5.36%, due 11/6/96.................... 4,996,278
5,000,000 American Trading & Production Corp.,
5.44%, due 11/7/96.................... 4,995,467
8,536,000 Brown Forman Corp.,
5.25%, due 11/7/96.................... 8,528,531
5,000,000 Cofco Credit Suisse,
5.33%, due 11/7/96.................... 4,995,558
5,000,000 Nestles Capital Corp.,
5.19%, due 11/8/96.................... 4,994,954
4,000,000 Pitney Bowes Credit Corp.,
5.19%, due 11/8/96.................... 3,994,638
5,000,000 Sinochem American Credit Suisse,
5.30%, due 11/8/96.................... 4,994,847
6,979,000 Clipper Receivables Corp.,
5.28%, due 11/12/96................... 6,967,741
5,009,000 Franklin Resources Inc.,
5.45%, due 11/12/96................... 5,000,659
10,000,000 Xerox Credit Corp.,
5.38%, due 11/12/96................... 9,983,561
5,000,000 Xerox Credit Corp.,
5.27%, due 11/13/96................... 4,991,217
6,000,000 First Chicago NBD Corp.,
5.28%, due 11/14/96................... 5,988,560
5,000,000 Hertz Corp.,
5.24%, due 11/14/96................... 4,990,539
7,000,000 Briarcliff Capital Corp.,
5.27%, due 11/15/96................... 6,985,654
4,800,000 Harley Davidson Dealer Funding Corp.,
5.28%, due 11/18/96................... 4,788,032
5,000,000 J.C. Penney Funding Corp.,
5.22%, due 11/18/96................... 4,987,675
5,000,000 Allomon Funding Corp.,
5.28%, due 11/19/96................... 4,986,800
6,400,000 Ford Motor Credit Corp.,
5.40%, due 11/19/96................... 6,382,720
5,000,000 Island Finance Norwest,
5.24%, due 11/19/96................... 4,986,900
8,000,000 Nynex Corp.,
5.36%, due 11/19/96................... 7,978,560
5,000,000 Briarcliff Capital Corp.,
5.26%, due 11/20/96................... 4,986,119
6,000,000 Explorer Pipeline Inc.,
5.27%, due 11/20/96................... 5,983,312
5,000,000 IBM Credit Corp.,
5.23%, due 11/20/96................... 4,986,199
8,407,000 Allomon Funding Corp.,
5.28%, due 11/22/96................... 8,381,106
5,000,000 General Motors Acceptance Corp.,
5.60%, due 12/2/96.................... 4,975,889
5,000,000 Allomon Funding Corp.,
5.28%, due 12/3/96.................... 4,976,533
4,500,000 American Trading & Production Corp.,
5.32%, due 12/3/96.................... 4,478,720
4,000,000 Franklin Resources Inc.,
5.33%, due 12/3/96.................... 3,981,049
5,000,000 Island Finance Norwest
5.46%, due 12/9/96.................... 4,971,183
5,000,000 American Trading & Production Corp.,
5.27%, due 12/10/96................... 4,971,454
9,500,000 Franklin Resources Inc.,
5.27%, due 12/10/96................... 9,445,828
7,000,000 Nynex Corp.,
5.40%, due 12/11/96................... 6,958,000
17,000,000 Bank of America,
5.43%, due 12/12/96................... 16,894,710
5,000,000 Ford Motor Credit Corp.,
5.26%, due 12/13/96................... 4,969,317
5,000,000 International Nederlander Funding
Corp.,
5.35%, due 12/19/96................... 4,964,333
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 4
CRANBROOK FUNDS
CRANBROOK MONEY MARKET FUND
SCHEDULE OF INVESTMENTS -- OCTOBER 31, 1996
(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL COMMERCIAL PAPER -- 64.04% AMORTIZED
AMOUNT (CONTINUED) COST
- ---------- ------------
<C> <S> <C>
5,000,000 National Bank of Canada,
5.26%, due 12/20/96................... $ 4,964,203
5,000,000 National Bank of Canada,
5.47%, due 12/31/96................... 4,954,417
5,000,000 General Motors Acceptance Corp.,
5.47%, due 1/21/97.................... 4,938,462
5,000,000 Banco Bradesco S A Grand Barclays,
5.36%, due 2/12/97.................... 4,923,322
5,000,000 General Motors Acceptance Corp.,
8.38%, due 5/1/97..................... 5,059,652
5,500,000 Pitney Bowes Capital Corp.,
5.28%, due 5/2/97..................... 5,353,187
5,000,000 Pepsi Co Inc.,
6.88%, due 5/15/97.................... 5,025,124
------------
$277,856,740
------------
REPURCHASE AGREEMENTS -- 5.94%
25,767,000 Greenwich Capital Corporation Tri
Party,
5.60%, due 11/1/96 (Secured by various
mortgage securities ranging in
maturity from 10/25/22 to 4/25/24 at
various interest ranging from 7.00% to
7.88%, all held at Chase Bank, NY).... $ 25,767,000
------------
$ 25,767,000
------------
BANKERS ACCEPTANCES -- 1.15%
5,000,000 American Express Co.,
5.27%, due 11/14/96................... $ 4,990,485
------------
$ 4,990,485
------------
TAXABLE MUNICIPALS -- 6.15%
10,000,000 Anaheim CA,
5.61%, due 11/1/96.................... $ 10,000,000
5,000,000 Massachusetts State, Series D,
5.40%, due 11/25/96................... 5,000,000
11,700,000 Trover Clinic PSC, KY,
Floating Rate Note,
5.44%, due 11/25/96................... 11,700,000
------------
$ 26,700,000
------------
MEDIUM TERM NOTES -- 10.97%
5,000,000 Dean Witter Discover,
Floating Rate Note,
5.77%, due 11/15/96................... $ 5,000,363
2,000,000 General Electric Capital Corp.,
8.75%, due 11/26/96................... 2,004,906
5,000,000 American Express Centurion Bank,
Floating Rate Note,
5.44%, due 2/12/97.................... 4,999,994
4,400,000 Ford Motor Credit Corp.,
Medium Term Note,
9.30%, due 2/18/97.................... 4,443,963
5,000,000 IBM Credit Corp.,
Medium Term Note,
5.00%, due 2/24/97.................... 4,998,163
7,912,000 Household Finance Corp.,
7.50%, due 3/15/97.................... 7,975,528
3,000,000 Philip Morris,
Medium Term Note,
7.50%, due 3/15/97.................... 3,017,056
5,070,000 General Motors Acceptance Corp.
Medium Term Note,
7.13%, 3/31/97........................ 5,100,095
5,000,000 IBM Credit Corp.,
5.70%, due 5/22/97.................... 5,001,557
5,000,000 American General Finance,
Medium Term Note,
6.96%, due 7/15/97.................... 5,032,223
------------
$ 47,573,848
------------
Total Investments...................... $433,859,665
============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 5
CRANBROOK FUNDS
CRANBROOK TREASURY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at amortized cost............. $62,852,664
Cash....................................... 7,346
Interest receivable........................ 337,756
Prepaid expenses and other assets.......... 25,773
-----------
Total assets........................... $63,223,539
-----------
LIABILITIES:
Accrued administrator fee.................. $ 13,283
Accrued investment advisor fee............. 11,955
Accrued transfer and dividend disbursing
fees..................................... 1,872
Accounts payable and accrued expenses...... 21,075
Dividends payable.......................... 53,668
-----------
Total liabilities...................... $ 101,853
-----------
Total net assets....................... $63,121,686
===========
NET ASSETS:
Shares of beneficial interest, an unlimited
number of shares authorized, 63,121,686
shares outstanding, par value $.10 per
share.................................... $ 6,312,169
Additional paid-in capital................. 56,809,517
-----------
Total net assets....................... $63,121,686
===========
NET ASSET VALUE:
Offering and redemption price per share on
63,121,686 shares of beneficial interest
outstanding.............................. $1.00
===========
</TABLE>
CRANBROOK FUNDS
CRANBROOK TREASURY FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<S> <C>
TOTAL INVESTMENT INCOME..................... $3,289,521
----------
EXPENSES:
Administrator fee........................... $ 153,260
Investment advisor fee...................... 137,932
Custodial fees.............................. 69,381
Transfer and dividend disbursing fees....... 27,458
Registration and filing fees................ 13,188
Professional fees........................... 11,171
Insurance................................... 10,647
Postage and printing........................ 9,463
Trustee fees and expenses................... 6,242
Other....................................... 10,175
----------
Total expenses............................ $ 448,917
----------
NET INVESTMENT INCOME....................... $2,840,604
==========
RATIO OF TOTAL EXPENSES TO TOTAL
INVESTMENT INCOME......................... 13.65%
==========
</TABLE>
CRANBROOK FUNDS
CRANBROOK TREASURY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR EIGHT MONTHS
ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income.................................. $ 2,840,604 $ 2,046,867
Dividends declared..................................... (2,840,604) (2,046,867)
------------- -------------
Change in net assets from operations................. $ -- $ --
------------- -------------
FROM SHARE TRANSACTIONS (at $1.00 per share):
Proceeds from sale of shares........................... $ 161,265,622 $ 178,869,473
Asset value of shares issued in reinvestment of
dividends............................................ 2,826,138 2,041,690
------------- -------------
$ 164,091,760 $ 180,911,163
Payments for shares redeemed........................... (158,933,406) (122,947,831)
------------- -------------
Change in net assets from share transactions......... $ 5,158,354 $ 57,963,332
------------- -------------
NET CHANGE IN NET ASSETS................................. $ 5,158,354 $ 57,963,332
NET ASSETS:
Beginning of period.................................... 57,963,332 --
------------- -------------
End of period.......................................... $ 63,121,686 $ 57,963,332
============= =============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 6
CRANBROOK FUNDS
CRANBROOK TREASURY FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT U.S. GOVERNMENT OBLIGATIONS -- 70.88% COST
- ----------- ------------
<S> <C> <C>
6,000,000 U.S. Treasury Strip,
5.37%, due 11/15/96................................................... $ 5,988,076
1,000,000 U.S. Treasury Note,
7.25%, due 11/30/96................................................... 1,001,464
4,000,000 U.S. Treasury Bill,
4.87%, due 12/5/96.................................................... 3,980,700
3,000,000 U.S. Treasury Bill,
5.25%, due 12/12/96................................................... 2,982,529
1,000,000 U.S. Treasury Bill,
4.93%, due 12/19/96................................................... 993,027
2,000,000 U.S. Treasury Note,
7.50%, due 12/31/96................................................... 2,006,581
1,000,000 U.S. Treasury Note,
6.25%, due 1/31/97.................................................... 1,002,111
3,000,000 U.S. Treasury Note,
7.50%, due 1/31/97.................................................... 3,014,680
2,000,000 U.S. Treasury Bill,
5.10%, due 2/27/97.................................................... 1,966,862
4,000,000 U.S. Treasury Note,
6.75%, due 2/28/97.................................................... 4,018,327
2,000,000 U.S. Treasury Note,
6.88%, due 2/28/97.................................................... 2,009,160
5,000,000 U.S. Treasury Note,
6.63%, due 3/31/97.................................................... 5,028,089
2,000,000 U.S. Treasury Bill,
5.07%, due 4/10/97.................................................... 1,955,067
2,000,000 U.S. Treasury Bill,
5.09%, due 4/17/97.................................................... 1,952,776
1,000,000 U.S. Treasury Strip,
5.85%, due 5/15/97.................................................... 969,956
2,000,000 U.S. Treasury Note,
6.75%, due 5/31/97.................................................... 2,014,774
1,000,000 U.S. Treasury Bill,
5.28%, due 6/26/97.................................................... 964,285
2,693,365 Small Business Administration,
Variable Rate Note,
5.75%, due 1/25/97.................................................... 2,699,200
------------
$ 44,547,664
------------
REPURCHASE AGREEMENTS -- 29.12%
6,200,000 Lehman Brothers Tri Party,
5.58%, due 11/1/96 (secured by GNMA 9%, due 11/15/18, held at
Chase Bank, NY)....................................................... $ 6,200,000
6,000,000 Daiwa Securities Tri Party,
5.50%, due 11/1/96 (secured by U.S. Treasury Note 7.5%, due 10/31/99,
held at Bank of New York)............................................. 6,000,000
6,105,000 Greenwich Capital Corporation Tri Party,
5.60%, due 11/1/96 (secured by various GNMA securities with maturities
ranging from 8/15/22 to 9/15/25 at various interest rates ranging from
7.00% to 8.00%, all held at Chase Bank, NY)........................... 6,105,000
------------
$ 18,305,000
------------
Total Investments...................................................... $ 62,852,664
============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 7
CRANBROOK FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
(1) ORGANIZATION
Cranbrook Money Market Fund and Cranbrook Treasury Fund are separate series
of Cranbrook Funds (the "Fund"), which is an unincorporated business trust
organized under Massachusetts law on November 30, 1994 and which commenced
operations on March 1, 1995. Each Portfolio of the Fund is an open-end,
diversified management investment company and the Fund is registered with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act").
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by the Fund.
Investments
Each Fund utilizes the amortized cost method to determine the carrying
value of investment securities. Under this method, investment securities are
valued for both financial reporting and Federal tax purposes at cost and any
discount or premium is amortized from the date of acquisition to maturity. The
use of this method results in a carrying value which approximates market value,
which is determined based upon quoted market prices or dealer quotes.
Investment security purchases and sales are accounted for on a trade date
basis.
The Fund invests in securities subject to repurchase agreements. Such
transactions are entered into only with institutions included on the Federal
Reserve System's list of institutions with whom the Federal Reserve open market
desk conducts business. The investment advisor, Cranbrook Capital Management
Inc. (CCM), acting under the supervision of the Trustees, has established the
following additional policies and procedures relating to the Fund's investments
in securities subject to repurchase agreements: 1) the value of the underlying
collateral is required to equal or exceed 102% of the funds advanced under the
repurchase agreement including accrued interest; 2) collateral is marked to
market daily by CCM to assure its value remains at least equal to 102% of the
repurchase agreement amount; and 3) funds are not disbursed by the Fund or its
agent unless collateral is presented or acknowledged by a Federal Reserve book
entry.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions about amounts in the financial statements and accompanying notes.
Actual results could differ.
Investment Income
Interest income is recorded daily on the accrual basis adjusted for
amortization of premium and accretion of discount.
Federal Income Taxes
It is the Fund's policy to comply with the requirements of Subchapter M of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its income to its shareholders. Therefore, no Federal income
tax provision is required in the accompanying financial statements.
Shareholder Dividends
On each business day the New York Stock Exchange is open, each Fund's net
investment income is declared at the close of the Exchange as a daily dividend
to shareholders of record prior to such close.
6
<PAGE> 8
CRANBROOK FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
(CONTINUED)
Each Fund calculates its dividends based on its daily net investment
income. For this purpose, the net investment income of a Fund consists of (1)
accrued interest income plus or minus amortized purchase discount or premium,
(2) plus or minus all realized gains and losses on disposition of Fund assets
and (3) minus accrued expenses allocated to that Fund. Expenses of the Fund are
accrued daily.
Expenses
Expenses (including management fees -- see Note 3) are charged to income
daily as a percentage of the respective Fund's net assets. The following is a
summary of expense rates in effect during the period:
<TABLE>
<CAPTION>
MONEY MARKET FUND TREASURY FUND
EFFECTIVE DATE ANNUAL RATE ANNUAL RATE
- ---------------- ------------------ -----------------
<S> <C> <C>
November 1, 1995 .705% .705%
December 6, 1995 .685% .735%
October 7, 1996 .705% .765%
</TABLE>
The Fund monitors the rate at which expenses are charged to ensure that a
proper amount of expense is charged to income each year. This percentage is
subject to revision if there is a change in the estimate of the future net
assets of the Funds or a change in expectations as to the level of actual
expenses.
(3) TRANSACTIONS WITH AFFILIATES
First of Michigan Corporation (FoM) is the Administrator of the Fund and
underwriter and distributor of its shares. Pursuant to the Administration and
Distribution Agreement dated December 15, 1994, the Fund pays FoM a fee for
services performed and facilities furnished by FoM. Fees are computed daily and
payable monthly at an annual rate of .25% of the Fund's first $500 million of
average net assets; .225% of the next $500 million of average net assets; and
.20% of average net assets in excess of $1 billion.
CCM is the investment advisor and portfolio manager pursuant to the
Advisory Agreement dated December 15, 1994. For such services the Fund pays CCM
a fee, computed daily and payable monthly, at an annual rate of .225% of the
Fund's first $500 million of average net assets; and .20% of average net assets
in excess of $500 million.
Certain states in which shares of the Fund are offered may impose an
expense limitation based upon net assets. CCM and FoM have agreed that they will
each reimburse the Fund in equal amounts such portions of the above fees as may
be required to satisfy any expense limitations imposed. No such reimbursement
was required for the year ended October 31, 1996.
Pursuant to the foregoing arrangements, for the year ended October 31,
1996, FoM earned $1,079,045 and $153,260 and CCM earned $971,127 and $137,932 in
fees for the Money Market Fund and the Treasury Fund, respectively, under the
Administration and Distribution Agreement and Advisory Agreement.
FoM was also compensated for its services as the Fund's Transfer and
Dividend Distribution Agent. FoM is also reimbursed for certain out of pocket
expenses incurred on behalf of the Fund. For the year ended October 31, 1996,
the Money Market Fund and the Treasury Fund incurred expenses of $460,552 and
$27,458, respectively, for the above service fees and out of pocket expenses of
FoM.
7
<PAGE> 9
CRANBROOK FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
(CONTINUED)
Certain officers and Trustees of the Fund are also officers of FoM.
(4) INVESTMENT SECURITIES TRANSACTIONS
Purchases and sales (including maturities) of investment securities,
including repurchase agreements, during the period aggregated $9,603,049,811 and
$9,592,375,340 respectively, for the Money Market Fund and $5,767,150,038 and
$5,762,955,197, respectively, for the Treasury Fund. There were no brokerage
commissions paid by either Fund for the year ended October 31, 1996.
------------------------
FINANCIAL HIGHLIGHTS
The financial highlights presents a per share analysis of net investment
income and distributions from net investment income for the Funds. Additional
quantitative measures expressed in ratio form analyze important relationships
between certain items presented in the financial statements. These financial
highlights have been derived from the financial statements of the Funds and
other information for the period presented.
<TABLE>
<CAPTION>
MONEY MARKET FUND
------------------------------------
EIGHT MONTHS
YEAR ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
Net investment income................................... $ 0.0489 $ 0.0357
Distributions from net investment income................ $ (0.0489) $ (0.0357)
Net Asset Value per share at beginning and end of
period................................................ $ 1.00 $ 1.00
Total Return............................................ 5.00% 5.37%(a)
Net assets, end of period............................... $434,953,450 $412,818,475
Ratios to average net assets:
Net investment income................................. 4.89% 5.36%(a)
Expenses.............................................. 0.69% 0.69%(a)
</TABLE>
<TABLE>
<CAPTION>
TREASURY FUND
------------------------------------
EIGHT MONTHS
YEAR ENDED ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
Net investment income................................... $ 0.0465 $ 0.0347
Distributions from net investment income................ $ (0.0465) $ (0.0347)
Net Asset Value per share at beginning and end of
period................................................ $ 1.00 $ 1.00
Total Return............................................ 4.75% 5.20%(a)
Net assets, end of period............................... $ 63,121,686 $ 57,963,332
Ratios to average net assets:
Net investment income................................. 4.65% 5.20%(a)
Expenses.............................................. 0.73% 0.70%(a)
</TABLE>
- -------------------------
(a) Annualized for periods less than one year.
8
<PAGE> 10
REPORT OF INDEPENDENT AUDITORS
TO THE TRUSTEES AND SHAREHOLDERS OF CRANBROOK FUNDS
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments of the Cranbrook Funds, comprised of the
Cranbrook Money Market Fund and the Cranbrook Treasury Fund, as of October 31,
1996, and the related statements of operations, the statements of changes in net
assets and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
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
October 31, 1996, 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
each of the Funds comprised of the Cranbrook Funds as of October 31, 1996 and
the results of their operations and the changes in their net assets and the
financial highlights for the periods referred to above in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP SIGNATURE
Detroit, Michigan,
November 25, 1996
9
<PAGE> 11
LOGO
MEMBER:
New York Stock Exchange, Inc.
EXECUTIVE OFFICES
DETROIT, MI 48243-1182
100 Renaissance Center/26th Floor
(313) 259-2600
NEW YORK, NY 10005-3794
100 Wall Street/21st Floor
(212) 344-1144
MICHIGAN OFFICES
<TABLE>
<S> <C> <C>
ADRIAN 49221-2703 GRAND BLANC 48439-5058 MT. CLEMENS 48043-8600
123 East Maumee Street 2240 East Hill Road/Suite A 7 North Main Street
(517) 263-8570 (810) 694-2980 Suite 108
(810) 469-4930
ANN ARBOR 48104-2200 GRAND RAPIDS 49503-2373 PORT HURON 48059-4101
301 East Liberty Street 300 Ottawa, N.W. 3899 24th Avenue
(313) 747-8040 Suite 200 (810) 987-1500
AUBURN HILLS 48326-2563 (616) 774-0141 SAGINAW 48604-2830
2701 University Drive GROSSE POINTE 48230-1559 4835 Towne Centre Road
Suite 425 16980 Kercheval Suite 102
(810) 475-1700 (313) 886-1200 (517) 792-2346
BATTLE CREEK 49017-3611 GROSSE POINTE WOODS 48236-1821 ST. JOSEPH 49085-1259
29 West Michigan Mall 20155 Mack Avenue 2900 South State Street
(616) 962-4034 (313) 884-9600 (616) 983-2587
BAY CITY 48708-5731 HARBOR SPRINGS 49740-1532 SOUTHFIELD 48076-4241
723 Washington Avenue 115 East Third Street 26555 Evergreen Road
(517) 894-5757 (616) 526-2193 (810) 358-3290
BIRMINGHAM 48009-5301 HILLSDALE 49242-1602 SOUTHGATE 48195-1300
280 North Woodward 85 North Broad 13219 Eureka Road
(810) 647-1400 (517) 437-7727 (313) 285-2000
BLOOMFIELD HILLS 48304-2862 HOLLAND 49423-3546 STERLING HEIGHTS 48313-1149
1533 North Woodward 100 East Eighth Street 12900 Hall Road/Suite 100
Suite 150 Suite 280 (810) 726-5000
(810) 540-2787 (616) 392-7986 TRAVERSE CITY 49684-5552
COLDWATER 49036-1966 JACKSON 49201-1227 10850 Traverse Highway
150 N. Willowbrook Road 333 Louis Glick Hwy., West (616) 947-2200
Suite 300 (517) 782-0405
(517) 278-7189 TROY 48084-3437
KALAMAZOO 49007-3923 2075 W. Big Beaver Road
DEARBORN 48124-1979 259 East Michigan Avenue Suite 100
23400 Michigan Avenue (616) 382-2600 (810) 643-9100
(313) 277-0300 LAPEER 48446-3810 WEST BLOOMFIELD 48322-2394
EAST LANSING 48823-2433 25 West Nepessing 6230 Orchard Lake Road
1427 West Saginaw (810) 664-0050 Suite 230
(517) 332-8000 MIDLAND 48640-5189 (810) 855-2100
FRANKENMUTH 48734-1532 200 East Main Street
108 West School Street (517) 631-0620
(517) 652-3251
</TABLE>
Customers of First of Michigan Corporation are protected by an excess
SIPC policy underwritten by the Aetna Casualty and Surety Company.
LOGO This policy provides $9.5 million of protection for customers'
securities and is in excess of the $500,000 protection provided by
the Securities Investor Protection Corporation. This affords our
clients total coverage of $10 million for their securities, per account, of
which $100,000 in cash coverage is provided by the Securities Investor
Protection Corporation.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CRANBROOK MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 432,583,200
<INVESTMENTS-AT-VALUE> 433,859,665
<RECEIVABLES> 1,641,977
<ASSETS-OTHER> 151,672
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 435,653,314
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 699,864
<TOTAL-LIABILITIES> 699,864
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 391,458,105
<SHARES-COMMON-STOCK> 434,953,450
<SHARES-COMMON-PRIOR> 412,818,475
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 434,953,450
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 24,022,190
<OTHER-INCOME> 0
<EXPENSES-NET> 2,964,963
<NET-INVESTMENT-INCOME> 21,057,227
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 21,057,227
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,357,274,646
<NUMBER-OF-SHARES-REDEEMED> 1,355,876,180
<SHARES-REINVESTED> 20,736,509
<NET-CHANGE-IN-ASSETS> 22,134,975
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 971,127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,964,963
<AVERAGE-NET-ASSETS> 430,621,685
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.049
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.049
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> CRANBROOK TREASURY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 62,605,576
<INVESTMENTS-AT-VALUE> 62,852,664
<RECEIVABLES> 337,756
<ASSETS-OTHER> 33,119
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 63,223,539
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,853
<TOTAL-LIABILITIES> 101,853
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 56,809,517
<SHARES-COMMON-STOCK> 63,121,686
<SHARES-COMMON-PRIOR> 57,963,332
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 63,121,686
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,289,521
<OTHER-INCOME> 0
<EXPENSES-NET> 448,917
<NET-INVESTMENT-INCOME> 2,840,604
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,840,604
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 161,265,622
<NUMBER-OF-SHARES-REDEEMED> 158,933,406
<SHARES-REINVESTED> 2,826,138
<NET-CHANGE-IN-ASSETS> 5,158,354
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 137,932
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 448,917
<AVERAGE-NET-ASSETS> 61,121,359
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.047
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.047
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
