Washington, D.C. 20549
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
The Semi-Annual Report to Shareholders for the period ended June 30, 2006 pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) C17 CFR 270.30e-1 is filed herewith.
MEMORIAL FUNDS
GOVERNMENT BOND FUND
GROWTH EQUITY FUND
VALUE EQUITY FUND
SEMI-ANNUAL REPORT
JUNE 30, 2006
| | Page |
| | |
| Letter from the President | 1 |
| Fund Profiles: | |
Government Bond Fund | 2 |
Growth Equity Fund | 4 |
Value Equity Fund | 6 |
Financial Statements of the Memorial Funds | |
| Schedule of Investments: | |
Government Bond Fund | 8 |
Growth Equity Fund | 10 |
Value Equity Fund | 12 |
| Statements of Assets and Liabilities | 13 |
| Statements of Operations | 14 |
| Statements of Changes in Net Assets | 15 |
| Financial Highlights | 17 |
| Notes to Financial Statements | 20 |
| Trustees and Officers | 27 |
LETTER FROM THE PRESIDENT
Dear Shareholder:
If you are new to the Memorial Funds family, thank you for joining us and welcome! If you are a longtime investor in the fund family, I extend my appreciation to you for allowing us to serve your investment needs. I encourage each of you to take the time to read the semi-annual report for Memorial Funds as of June 30, 2006 presented herein. This report contains fund profiles, financial statements with financial highlights and footnotes, information about the trustees and officers and our privacy notice.
For the six months ended June 30, 2006, the Government Bond Fund achieved a 0.43% total return. The Growth Equity Fund reported a total return of (1.77%) while the Value Equity Fund’s total return was 3.48%. The total return represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends.
There are several factors that have impacted the bond and stock markets in the first half of 2006. These factors include the high cost of oil, the increase in short term interest rates by the Federal Reserve and the continuing war on terrorism. The global economy is facing additional new challenges of uncertainty with regards to nuclear arms development by both North Korea and Iran. Also, continued efforts by those opposed to the U.S. presence in the Middle East continue to impose a shadow over the markets. As another hurricane season approaches, there is a question as to whether catastrophic losses will approach those that were suffered in the wake of the tragedies of hurricanes Katrina and Rita in 2005. Despite these factors, the U.S. economy continues to lead the world with additional growth, low inflation and improvements in employment. However, the U.S. economy is showing signs of slowing down. The bond and equity markets are anticipating that the recent economic data will give the Federal Reserve reason to pause in raising short-term interest rates which would be a positive stimulus for the bond and equity markets.
For the second half of 2006, the U.S. economy is expected to continue its slower growth with the Consumer Staples, Financial and Health Care sectors helping maintain our equity market levels. The Energy sector should continue to be volatile while the Consumer Discretionary, Industrial and Material sectors is anticipated to be lackluster. The bond markets may continue to be challenged by world events and the Federal Reserve. The concerns over a threat of cutback in the oil supply by Iran and the shut-down of aging pipelines for repair might affect both markets. Through all the volatility of the economy and world events, Memorial Funds is committed to each Fund’s investment style by maintaining a disciplined approach regardless of market fluctuations and global occurrences.
On a final note, on June 28, 2006, the shareholders approved the reorganization of the Memorial Funds, which closed on July 14, 2006. Please refer to Note 10 in the footnotes to the financial statements which discusses this subsequent event. I hope you enjoy the new name Monteagle Funds.
Our continued pledge is to provide you with a fund family that you can be proud to own and that helps you achieve your investment goals. If you have any questions about our Funds or their investment styles, please give me a call. Thank you for choosing Memorial Funds.
Sincerely,
/s/ Carl C. Peterson
Carl C. Peterson
President
Memorial Funds
MEMORIAL FUNDS
GOVERNMENT BOND FUND—FUND PROFILE
JUNE 30, 2006 (Unaudited)
Top Ten Portfolio Holdings
(% of Net Assets)
| FNMA, Pool 386008, 4.52%, 04/01/2013 | | | 5.17 | % |
| GNMA, Series 2003-81, 6.00%, 03/20/2029 | | | 4.91 | % |
| FNMA, 4.60%, 07/26/2006 | | | 4.89 | % |
| FHLMC, 4.75%, 12/08/2010 | | | 4.76 | % |
| FNMA, Pool 545759, 6.50%, 07/01/2032 | | | 3.14 | % |
| FNMA, 7.25%, 01/15/2010 | | | 2.59 | % |
| FHLB, 6.795%, 06/30/2009 | | | 2.55 | % |
| FFCB, 5.19%, 01/18/2008 | | | 2.45 | % |
| FHLB, 4.625%, 08/09/2010 | | | 2.42 | % |
| FNMA, 4.50%, 08/04/2008 | | | 2.41 | % |
| | | | 35.29 | % |
Portfolio Industries
(% of Net Assets)
| Government Agency Bonds | | | 71.92 | % |
| Mortgage Backed Securities | | | 23.41 | % |
| Cash-Money Market Funds | | | 4.00 | % |
| Other Assets in Excess of Liabilities | | | 0.67 | % |
| | | | | |
| | | | 100.00 | % |
Bond Payment Class Type with
Cash and Other Assets
(% of Net Assets)
| Non-Callable Bonds | | | 34.29 | % |
| Callable Bonds | | | 31.75 | % |
| Mortgage Backed Bonds/Pooled | | | 12.94 | % |
| Planned Amortization Class Bonds | | | 8.40 | % |
| Floating Rate Bonds | | | 4.88 | % |
| Cash-Money Market Fund | | | 4.00 | % |
| Sequential Pay CMO | | | 2.07 | % |
| Callable Bonds—Step Up Coupon | | | 1.00 | % |
| Other Assets in Excess of Liabilities | | | 0.67 | % |
| | | | 100.00 | % |
Memorial Funds
GOVERNMENT BOND FUND—EXPENSE EXAMPLE
JUNE 30, 2006 (Unaudited)
As a shareholder of the Government Bond Fund, you incur two types of costs: direct costs, such as wire fees and low balance fees; and indirect costs, including management fees, and other Fund operating expenses. This example is intended to help you understand your indirect costs, also referred to as “ongoing costs,” (in dollars) of investing in the Fund, and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period of January 1, 2006, through June 30, 2006.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested at the beginning of the period, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any direct costs, such as wire fees or low balance fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these direct costs were included, your costs would be higher.
| | | | | | | Expenses Paid | |
| | | | | | | During Period* | |
| | | Beginning | | Ending | | January 1, 2006 | |
| | | Account Value | | Account Value | | Through | |
| | | January 1, 2006 | | June 30, 2006 | | June 30, 2006 | |
| Actual | | $ | 1,000.00 | | $ | 1,004.30 | | $ | 4.97 | |
| Hypothetical | | | | | | | | | | |
| (5% return before expenses) | | | 1,000.00 | | | 1,019.84 | | | 5.01 | |
| * | Expenses are equal to the Fund’s annualized expense ratio of 1.00%, which is net of any expenses paid indirectly, multiplied by the average account value over the period, multiplied by 181 days/365 days (to reflect the one-half year period). The Fund’s ending account value on the first line in the table is based on its actual total return of 0.43% for the six-month period of January 1, 2006, to June 30, 2006. |
Memorial Funds
GROWTH EQUITY FUND—FUND PROFILE
JUNE 30, 2006 (Unaudited)
Top Ten Portfolio Holdings
(% of Net Assets)
| PepsiCo, Inc. | | | 4.10 | % |
| Microsoft Corp. | | | 3.73 | % |
| General Electric Co. | | | 3.34 | % |
| Yahoo! Inc. | | | 2.89 | % |
| American Express Co. | | | 2.68 | % |
| Bank of America Corp. | | | 2.63 | % |
| The Walt Disney Co. | | | 2.53 | % |
| Danaher Corp. | | | 2.48 | % |
| SLM Corp. | | | 2.47 | % |
| Wal-Mart Stores, Inc | | | 2.45 | % |
| | | | 29.30 | % |
Top Ten Portfolio Industries
(% of Net Assets)
| Miscellaneous Manufacturing | | | 8.81 | % |
| Retail | | | 8.71 | % |
| Telecommunications | | | 5.32 | % |
| Oil & Gas | | | 4.77 | % |
| Financial Services | | | 4.60 | % |
| Biotechnology | | | 4.44 | % |
| Food & Beverages | | | 4.10 | % |
| Computers | | | 4.00 | % |
| Healthcare - Products | | | 3.99 | % |
| Internet Software & Services | | | 3.96 | % |
| | | | 52.70 | % |
Economic Sectors with Cash and Other Liabilities
(% of Net Assets)
| Industrials | | | 21.58 | % |
| Information Technology | | | 15.48 | % |
| Financials | | | 14.67 | % |
| Consumer Staples | | | 13.72 | % |
| Health Care | | | 10.30 | % |
| Consumer Discretionary | | | 8.12 | % |
| Energy | | | 5.79 | % |
| Materials | | | 5.36 | % |
| Telecommunication Services | | | 2.71 | % |
| Cash | | | 1.86 | % |
| Other Assets in Excess of Liabilities | | | 0.41 | % |
| Utilities | | | 0.00 | % |
| | | | 100.00 | % |
Memorial Funds
GROWTH EQUITY FUND—EXPENSE EXAMPLE
JUNE 30, 2006 (Unaudited)
As a shareholder of the Growth Equity Fund, you incur two types of costs: direct costs, such as wire fees and low balance fees; and indirect costs, including management fees, and other Fund operating expenses. This example is intended to help you understand your indirect costs, also referred to as “ongoing costs,” (in dollars) of investing in the Fund, and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period of January 1, 2006, through June 30, 2006.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested at the beginning of the period, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any direct costs, such as wire fees or low balance fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these direct costs were included, your costs would be higher.
| | | | | | | Expenses Paid | |
| | | | | | | During Period* | |
| | | Beginning | | Ending | | January 1, 2006 | |
| | | Account Value | | Account Value | | Through | |
| | | January 1, 2006 | | June 30, 2006 | | June 30, 2006 | |
| Actual | | $ | 1,000.00 | | $ | 982.30 | | $ | 6.14 | |
| Hypothetical | | | | | | | | | | |
| (5% return before expenses) | | | 1,000.00 | | | 1,018.60 | | | 6.26 | |
| * | Expenses are equal to the Fund’s annualized expense ratio of 1.25%, which is net of any expenses paid indirectly, multiplied by the average account value over the period, multiplied by 181 days/365 days (to reflect the one-half year period). The Fund’s ending account value on the first line in the table is based on its actual total return of (1.77)% for the six-month period of January 1, 2006, to June 30, 2006. |
Memorial Funds
MEMORIAL FUNDS
VALUE EQUITY FUND—FUND PROFILE
JUNE 30, 2006 (Unaudited)
Top Ten Portfolio Holdings
(% of Net Assets)
| Verizon Communications, Inc. | | | 3.22 | % |
| Alcoa, Inc. | | | 2.47 | % |
| Symbol Technologies, Inc. | | | 2.44 | % |
| Merck & Co., Inc. | | | 2.43 | % |
| Bristol Myers Squibb Co. | | | 2.30 | % |
| Leggett & Platt, Inc. | | | 2.22 | % |
| AT&T, Inc. | | | 2.21 | % |
| Bemis Co., Inc. | | | 2.20 | % |
| Wal-Mart Stores, Inc. | | | 2.17 | % |
| CSX Corp. | | | 2.13 | % |
| | | | 23.79 | % |
Top Ten Portfolio Industries
(% of Net Assets)
| Miscellaneous Manufacturing | | | 7.21 | % |
| Telecommunications | | | 6.68 | % |
| Chemicals | | | 5.52 | % |
| Banks | | | 5.33 | % |
| Beverages | | | 5.24 | % |
| Pharmaceuticals | | | 4.73 | % |
| Retail | | | 4.31 | % |
| Transportation | | | 3.90 | % |
| Financial Services | | | 3.85 | % |
| Oil & Gas | | | 3.74 | % |
| | | | 50.51 | % |
Economic Sectors with Cash and Other Assets
(% of Net Assets)
| Consumer Discretionary | | | 14.51 | % |
| Consumer Staples | | | 13.55 | % |
| Information Technology | | | 12.88 | % |
| Financials | | | 12.80 | % |
| Materials | | | 12.27 | % |
| Industrials | | | 12.15 | % |
| Health Care | | | 8.61 | % |
| Telecommunication Services | | | 6.68 | % |
| Cash | | | 6.48 | % |
| Energy | | | 3.74 | % |
| Utilities | | | 0.00 | % |
| Liabilities in Excess of Other Assets | | | (3.67 | )% |
| | | | 100.00 | % |
Memorial Funds
MEMORIAL FUNDS
VALUE EQUITY FUND—EXPENSE EXAMPLE
JUNE 30, 2006 (Unaudited)
As a shareholder of the Value Equity Fund, you incur two types of costs: direct costs, such as wire fees and low balance fees; and indirect costs, including management fees, and other Fund operating expenses. This example is intended to help you understand your indirect costs, also referred to as “ongoing costs,” (in dollars) of investing in the Fund, and to compare these costs with the ongoing costs of investing in other mutual funds.
This example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period of January 1, 2006, through June 30, 2006.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested at the beginning of the period, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The second line of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any direct costs, such as wire fees or low balance fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these direct costs were included, your costs would be higher.
| | | | | | | Expenses Paid | |
| | | | | | | During Period* | |
| | | Beginning | | Ending | | January 1, 2006 | |
| | | Account Value | | Account Value | | Through | |
| | | January 1, 2006 | | June 30, 2006 | | June 30, 2006 | |
| Actual | | $ | 1,000.00 | | $ | 1,034.80 | | $ | 6.31 | |
| Hypothetical | | | | | | | | | | |
| (5% return before expenses) | | | 1,000.00 | | | 1,018.60 | | | 6.26 | |
| * | Expenses are equal to the Fund’s annualized expense ratio of 1.25%, which is net of any expenses paid indirectly, multiplied by the average account value over the period, multiplied by 181 days/365 days (to reflect the one-half year period). The Fund’s ending account value on the first line in the table is based on its actual total return of 3.48% for the six-month period of January 1, 2006, to June 30, 2006. |
Memorial Funds
GOVERNMENT BOND FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2006 (Unaudited)
Principal | | | |
Amount | | | Value |
| | | | |
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 95.32% |
| | | | |
| | FFCB - 17.69% | | |
| 300,000 | 3.21%, 08/16/2007 | $ | 292,557 |
| 300,000 | 3.25%, 06/15/2007 | | 293,734 |
| 250,000 | 3.65%, 03/16/2009 | | 238,913 |
| 300,000 | 4.30%, 11/18/2009 | | 289,303 |
| 300,000 | 4.50%, 10/24/2007 | | 296,200 |
| 500,000 | 4.70%, 05/25/2010 | | 485,165 |
| 300,000 | 4.95%, 11/12/2013 | | 290,705 |
| 400,000 | 5.00%, 12/12/2012 | | 385,578 |
| 500,000 | 5.19%, 01/18/2008 (a) | | 500,230 |
| 300,000 | 5.40%, 10/06/2015 | | 289,445 |
| 250,000 | 6.23%, 12/21/2018 | | 245,981 |
| | | | 3,607,811 |
| | FHLB - 23.47% | | |
| 300,000 | 2.875%, 04/19/2007 | | 293,832 |
| 110,000 | 3.00%, 10/19/2009 (a) | | 107,864 |
| 300,000 | 3.75%, 09/29/2006 | | 298,774 |
| 300,000 | 4.275%, 06/27/2008 | | 293,206 |
| 300,000 | 4.375%, 10/27/2006 | | 298,974 |
| 300,000 | 4.625%, 08/25/2008 | | 294,611 |
| 300,000 | 4.85%, 09/27/2010 | | 290,453 |
| 200,000 | 4.90%, 11/21/2007 | | 198,349 |
| 250,000 | 5.00%, 01/26/2009 | | 246,773 |
| 300,000 | 3.00%, 10/15/2008 | | 284,412 |
| 200,000 | 3.25%, 09/30/2009 | | 193,206 |
| 300,000 | 3.40%, 12/30/2008 | | 285,828 |
| 100,000 | 4.20%, 08/27/2009 (a) | | 97,496 |
| 500,000 | 4.625%, 08/09/2010 (a) | | 494,380 |
| 300,000 | 5.17%, 09/22/2014 | | 288,024 |
| 300,000 | 5.375%, 02/15/2007 | | 299,640 |
| 500,000 | 6.795%, 06/30/2009 | | 519,867 |
| | | | 4,785,689 |
| | FHLMC - 19.66% | | |
| 300,000 | Series MTN, 2.25%, 12/04/2006 | | 296,049 |
| 300,000 | Series 1, 3.75%, 11/15/2006 | | 298,159 |
| 300,000 | 4.50%, 02/15/2008 | | 295,024 |
| 300,000 | 4.68%, 08/15/2006 | | 298,147 |
| 1,000,000 | 4.75%, 12/08/2010 | | 969,892 |
| 434,364 | 5.00%, 08/15/2015 | | 422,681 |
| 378,254 | Series 3058, 5.50%, 10/15/2035 | | 373,918 |
| 300,000 | Series MTN, 6.00%, 11/20/2015 | | 295,873 |
| 329,861 | Series 15, 7.00%, 07/25/2023 | | 337,662 |
| 400,000 | 7.00%, 03/15/2010 | | 420,172 |
| | | | 4,007,577 |
| | FNMA - 26.23% | | |
| 300,000 | 3.25%, 07/12/2006 | | 299,830 |
| 500,000 | 4.50%, 08/04/2008 | | 490,568 |
| 1,100,000 | Pool 386008, 4.52%, 04/01/2013 | | 1,055,036 |
| 1,000,000 | 4.60%, 07/26/2006 | | 996,332 |
| 200,000 | 5.00%, 12/13/2007 | | 198,458 |
| 500,000 | 5.125%, 07/20/2012 | | 484,805 |
| 300,000 | 6.00%, 09/01/2015 | | 295,939 |
| 100,000 | 6.00%, 05/28/2014 | | 99,306 |
| 261,373 | Pool 754289, 6.00%, 11/01/2033 | | 258,057 |
| 635,289 | Pool 545759, 6.50%, 07/01/2032 | | 640,896 |
| 500,000 | 7.25%, 01/15/2010 | | 528,380 |
| | | | 5,347,607 |
| | GNMA - 8.27% | | |
| 454,540 | Pool 648337, 5.00%, 10/15/2020 | | 441,141 |
| 1,000,000 | Series 2003-81, 6.00%, 03/20/2029 | | 1,000,925 |
| 240,092 | Pool 476998, 6.50%, 07/15/2029 | | 243,755 |
| | | | 1,685,821 |
| TOTAL U.S. GOVERNMENT & AGENCY | | |
| OBLIGATIONS (Cost $19,837,480) | $ | 19,434,505 |
| | | | |
Shares | | | Value |
SHORT TERM INVESTMENTS - 4.00% | | |
| 397,116 | Merrimac Treasury Plus Series Fund, | | |
| | 4.38% (a) | $ | 397,116 |
| 418,788 | Merrimac US Government Series | | |
| | Fund, 4.48% (a) | $ | 418,788 |
| TOTAL SHORT TERM INVESTMENTS | | |
| (Cost $815,904) | $ | 815,904 |
Total Investments (Cost $20,653,384) - 99.32% | $ | 20,250,409 |
Other Assets in Excess of Liabilities, Net 0.68% | | 137,692 |
TOTAL NET ASSETS - 100.00% | $ | 20,388,101 |
Percentages are stated as a percent of net assets.
| (a) | Variable rate securities, the coupon rate shown is the effective interest rate as of June 30, 2006. |
The accompanying notes are an integral part of the financial statements
Memorial Funds
GROWTH EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2006 (Unaudited)
Shares | | | Value |
COMMON STOCKS - 97.73% | | |
| | | | |
Advertising - 0.21% | | |
| 640 | Getty Images, Inc. (a) | $ | 40,647 |
Aerospace/Defense - 1.76% | | |
| 5,300 | United Technologies Corp. | | 336,126 |
Agriculture - 1.54% | | |
| 3,500 | Monsanto Co. | | 294,665 |
Banks - 2.63% | | |
| 10,450 | Bank of America Corp. | | 502,645 |
Biotechnology - 4.44% | | |
| 3,400 | Genentech, Inc. (a) | | 278,120 |
| 5,150 | Genzyme Corp. (a) | | 314,408 |
| 4,327 | Gilead Sciences, Inc. (a) | | 255,985 |
| | | | |
| | | | 848,513 |
Chemicals - 1.84% | | |
| 8,650 | Ecolab, Inc. | | 351,017 |
Coal - 1.02% | | |
| 3,500 | Peabody Energy Corp. | | 195,125 |
Commercial Services - 1.52% | | |
| 8,100 | Waste Management, Inc. | | 290,628 |
Computer Software & Services - 3.73% | | |
| 30,600 | Microsoft Corp. | | 712,980 |
Computers - 4.00% | | |
| 4,000 | Apple Computer, Inc. (a) | | 228,480 |
| 7,100 | Autodesk, Inc. (a) | | 244,666 |
| 4,300 | Cognizant Technology Solutions Corp. (a) | | 289,691 |
| | | | |
| | | | 762,837 |
Cosmetics & Personal Care - 1.47% | | |
| | | | |
| 4,700 | Colgate-Palmolive Co. | | 281,530 |
Cosmetics & Toiletries - 2.02% | | |
| 6,925 | Procter & Gamble Co. | | 385,030 |
Diversified Financial Services - 3.92% | | |
| 3,200 | Franklin Resources, Inc. | | 277,792 |
| 8,900 | SLM Corp. | | 470,988 |
| | | | 748,780 |
Electrical Components & Equipment - 2.25% | | |
| 5,125 | Emerson Electric Co. | | 429,526 |
Financial Services - 4.60% | | |
| 9,600 | American Express Co. | | 510,912 |
| 7,600 | Citigroup, Inc. | | 366,624 |
| | | | 877,536 |
Food - 1.37% | | |
| 4,050 | Whole Foods Market, Inc. | | 261,792 |
Food & Beverages - 4.10% | | |
| 13,050 | PepsiCo, Inc. | | 783,522 |
Healthcare - Products - 3.99% | | |
| 4,100 | C R Bard, Inc. | | 300,366 |
| 3,375 | Medtronic, Inc. | | 158,355 |
| 9,350 | St. Jude Medical, Inc. (a) | | 303,127 |
| | | | 761,848 |
Healthcare - Services - 1.86% | | |
| 7,950 | UnitedHealth Group, Inc. | | 356,001 |
Industrial Goods - 1.98% | | |
| 5,900 | Air Products & Chemicals, Inc. | | 377,128 |
Insurance - 3.52% | | |
| 7,400 | American International Group, Inc. | | 436,970 |
| 2,775 | The Hartford Financial Services | | |
| | Group, Inc. | | 234,765 |
| | | | 671,735 |
The accompanying notes are an integral part of the financial statements
Memorial Funds
GROWTH EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2006 (Unaudited)
Shares | | | Value |
Internet Software & Services - 3.96% | | |
| 7,000 | EBay, Inc. (a) | $ | 205,030 |
| 16,700 | Yahoo, Inc. (a) | | 551,100 |
| | | | 756,130 |
Lodging - 1.64% | | |
| 8,200 | Marriott International, Inc. | | 312,584 |
Machinery - Construction & Mining - 1.52% | | |
| 3,900 | Caterpillar, Inc. | | 290,472 |
Machinery - Diversified - 1.55% | | |
| 4,100 | Rockwell Automation, Inc. | | 295,241 |
Metal Fabricate & Hardware - 1.82% | | |
| 5,800 | Precision Castparts Corp. | | 346,608 |
Miscellaneous Manufacturing - 8.81% | | |
| 7,375 | Danaher Corp. | | 474,360 |
| 19,370 | General Electric Co. | | 638,435 |
| 3,900 | Textron, Inc. | | 359,502 |
| 5,200 | Trinity Industries, Inc. | | 210,080 |
| | | | 1,682,377 |
MultiMedia - 2.53% | | |
| 16,100 | The Walt Disney Co. | | 483,000 |
Oil & Gas - 4.77% | | |
| 4,300 | Apache Corp. | | 293,475 |
| 4,100 | Halliburton Co. | | 304,261 |
| 4,800 | Schlumberger Ltd. | | 312,528 |
| | | | 910,264 |
Retail - 8.71% | | |
| 6,800 | Circuit City Stores, Inc. | | 185,096 |
| 14,350 | CVS Corp. | | 440,545 |
| 4,650 | Lowe's Cos., Inc. | | 282,116 |
| 7,650 | Starbucks Corp. (a) | | 288,864 |
| 9,700 | Wal-Mart Stores, Inc. | | 467,249 |
| | | | 1,663,870 |
Semiconductors - 1.19% | | |
| 6,775 | Microchip Technology, Inc. | | 227,301 |
Telecommunications - 5.32% | | |
| 7,700 | Harris Corp. | | 319,627 |
| 5,100 | NII Holdings, Inc. (a) | | 287,538 |
| 4,425 | Qualcomm, Inc. | | 177,310 |
| 11,550 | Sprint Nextel Corp. | | 230,884 |
| | | | 1,015,359 |
Transportation - 2.14% | | |
| 3,500 | Fedex Corp. | | 409,010 |
| | | | |
| TOTAL COMMON STOCKS (Cost $18,066,603) | $ | 18,661,827 |
| | | |
SHORT TERM INVESTMENTS - 1.86% | | |
| 174,778 | Merrimac Treasury Plus Series | | |
| | Fund, 4.38% (b) | $ | 174,778 |
| 180,050 | Merrimac US Government Series | | |
| | Fund, 4.48% (b) | $ | 180,050 |
| TOTAL SHORT TERM INVESTMENTS | | |
| (Cost $354,828) | $ | 354,828 |
Total Investments (Cost $18,421,431) - 99.59% | $ | 19,016,655 |
Other Assets in Excess of Liabilities, Net 0.41% | | 78,466 |
TOTAL NET ASSETS - 100.00% | $ | 19,095,121 |
| Percentages are stated as a percent of net assets. |
| (a) | Non-income producing security. |
| (b) | Variable rate securities, the coupon rate shown is the effective interest rate as of June 30, 2006. |
The accompanying notes are an integral part of the financial statements
Memorial Funds
VALUE EQUITY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 2006 (Unaudited)
Shares | | | Value |
COMMON STOCKS - 97.19% | | |
| | | |
Apparel - 3.11% | | |
| 2,633 | Nike, Inc. | $ | 213,273 |
| 4,190 | VF Corp. | | 284,585 |
| | | | 497,858 |
Banks - 5.33% | | |
| 6,425 | Bank of America Corp. | | 309,042 |
| 9,013 | Bank of New York Company, Inc. | | 290,219 |
| 6,900 | Fifth Third Bancorp | | 254,955 |
| | | | 854,216 |
Beverages - 5.24% | | |
| 6,600 | Anheuser-Busch Companies, Inc. | | 300,894 |
| 14,100 | Coca-Cola Enterprises, Inc. | | 287,217 |
| 5,844 | Coca-Cola Co. | | 251,409 |
| | | | 839,520 |
Building Materials - 1.69% | | |
| 9,128 | Masco Corp. | | 270,554 |
Chemicals - 5.52% | | |
| 6,500 | Dow Chemical Co. | | 253,695 |
| 7,188 | E.I. Du Pont De Nemours & Co. | | 299,021 |
| 5,035 | PPG Industries, Inc. | | 332,310 |
| | | | 885,026 |
Computer Software & Services - 2.02% | | |
| 13,900 | Microsoft Corp. | | 323,870 |
Computers - 3.33% | | |
| 10,300 | Dell, Inc. (a) | | 251,423 |
| 3,681 | International Business Machines Corp. | | 282,774 |
| | | | 534,197 |
Cosmetics & Personal Care - 2.05% | | |
| 5,487 | Colgate-Palmolive Co. | | 328,671 |
Electronics - 2.44% | | |
| 36,303 | Symbol Technologies, Inc. | | 391,709 |
Entertainment & Leisure - 1.76% | | |
| 8,500 | Brunswick Corp. | | 282,625 |
Financial Services - 3.85% | | |
| 6,167 | Citigroup, Inc. | | 297,496 |
| 7,593 | JPMorgan Chase & Co. | | 318,906 |
| | | | 616,402 |
Food - 3.46% | | |
| 5,104 | General Mills, Inc. | | 263,673 |
| 9,500 | SYSCO Corp. | | 290,320 |
| | | | 553,993 |
Forest Products & Paper - 2.08% | | |
| 10,294 | International Paper Co. | | 332,496 |
Healthcare - Products - 2.51% | | |
| 3,400 | Johnson & Johnson | | 203,728 |
| 4,220 | Medtronic, Inc. | | 198,002 |
| | | | 401,730 |
Healthcare - Services - 1.37% | | |
| 5,091 | HCA, Inc. | | 219,677 |
Home Builders - 0.96% | | |
| 3,350 | KB Home | | 153,598 |
Household Products - 0.56% | | |
| 1,275 | Fortune Brands, Inc. | | 90,538 |
Household Products/Wares - 1.58% | | |
| 4,355 | Avery Dennison Corp. | | 252,851 |
Insurance - 1.59% | | |
| 4,309 | American International Group, Inc. | | 254,447 |
Internet Software & Services - 1.61% | | |
| 8,800 | EBay, Inc. (a) | | 257,752 |
Leisure Time - 1.81% | | |
| 5,278 | Harley Davidson, Inc. | | 289,709 |
The accompanying notes are an integral part of the financial statements
Memorial Funds
SCHEDULE OF INVESTMENTS
JUNE 30, 2006 (Unaudited)
Shares | | | Value |
Media - 1.65% | | |
| 8,537 | Clear Channel Communications, Inc. | $ | 264,220 |
Mining - 2.47% | | |
| 12,234 | Alcoa, Inc. | | 395,892 |
Miscellaneous Manufacturing - 7.21% | | |
| 3,356 | 3M Co. | | 271,064 |
| 7,457 | General Electric Co. | | 245,783 |
| 5,950 | Illinois Tool Works, Inc. | | 282,625 |
| 14,250 | Leggett & Platt, Inc. | | 355,965 |
| | | | 1,155,437 |
MultiMedia - 0.93% | | |
| 4,146 | Viacom Corp. (a) | | 148,593 |
Oil & Gas - 3.74% | | |
| 1,500 | Baker Hughes, Inc. | | 122,775 |
| 2,500 | Chevron Corp. | | 155,150 |
| 2,000 | Noble Corp. | | 148,840 |
| 2,600 | Valero Energy Corp. | | 172,952 |
| | | | 599,717 |
Packaging & Containers - 2.20% | | |
| 11,485 | Bemis Company, Inc. | | 351,671 |
Pharmaceuticals - 4.73% | | |
| 14,262 | Bristol Myers Squibb Co. | | 368,815 |
| 10,660 | Merck & Company, Inc. | | 388,344 |
| | | | 757,159 |
Retail - 4.31% | | |
| 2,520 | Home Depot, Inc. | | 90,191 |
| 3,100 | Target Corp. | | 151,497 |
| 2,290 | Walgreen Co. | | 102,683 |
| 7,200 | Wal-Mart Stores, Inc. | | 346,824 |
| | | | 691,195 |
Savings & Loans - 2.03% | | |
| 7,140 | Washington Mutual, Inc. | | 325,441 |
Semiconductors - 3.47% | | |
| 18,739 | Applied Materials, Inc. | | 305,071 |
| 13,200 | Intel Corp. | | 250,140 |
| | | | 555,211 |
Telecommunications - 6.68% | | |
| 12,688 | AT&T, Inc. | | 353,868 |
| 5,518 | Bellsouth Corp. | | 199,752 |
| 15,400 | Verizon Communications, Inc. | | 515,746 |
| | | | 1,069,366 |
Transportation - 3.90% | | |
| 4,847 | CSX Corp. | | 341,423 |
| 3,434 | United Parcel Service, Inc. | | 282,721 |
| | | | 624,144 |
| TOTAL COMMON STOCKS (Cost $14,480,259) | | 15,569,485 |
| | | |
SHORT TERM INVESTMENTS - 6.48% | | |
| 519,323 | Merrimac Treasury Plus Series | | |
| | Fund, 4.38% (b) | $ | 519,323 |
| 519,189 | Merrimac US Government Series | | |
| | Fund, 4.48% (b) | $ | 519,189 |
| TOTAL SHORT TERM INVESTMENTS | | |
| (Cost $1,038,512) | $ | 1,038,512 |
Total Investments (Cost $15,518,771) - 103.67% | | 16,607,997 |
Liabilities in Excess of Other Assets, Net (3.67)% | | (588,264) |
TOTAL NET ASSETS - 100.00% | $ | 16,019,733 |
Percentages are stated as a percent of net assets.
| (a) | Non-income producing security. |
| (b) | Variable rate securities, the coupon rate shown is the effective interest rate as of June 30, 2006. |
The accompanying notes are an integral part of the financial statements
Memorial Funds
STATEMENTS OF ASSETS AND LIABILITIESJUNE 30, 2006 (Unaudited)
| | | Government | | Growth | | Value | |
| | | Bond Fund | | Equity Fund | | Equity Fund | |
ASSETS | | | | | | | |
| Investments in securities at market value | | | | | | | |
| (cost $20,653,384, $18,421,431 and $15,518,771, respectively) | | $ | 20,250,409 | | $ | 19,016,655 | | $ | 16,607,997 | |
| Cash | | | 467 | | | 1,533 | | | — | |
| Collateral for securities loaned (Note 6) | | | — | | | 2,784,627 | | | 262,849 | |
| Receivables: | | | | | | | | | | |
| Capital shares sold | | | — | | | 4,800 | | | — | |
| Dividends and interest | | | 163,069 | | | 14,207 | | | 17,006 | |
| Investments for securities sold | | | — | | | 143,725 | | | 1,239,777 | |
| Reimbursement due from advisor | | | 2,913 | | | 3,768 | | | — | |
| Prepaid expenses | | | 13,380 | | | 11,091 | | | 11,545 | |
Total assets | | | 20,430,238 | | | 21,980,406 | | | 18,139,174 | |
LIABILITIES | | | | | | | | | | |
| Payables for: | | | | | | | | | | |
| Capital shares redeemed | | | — | | | 2,568 | | | 2,919 | |
| Collateral for securities loaned (Note 6) | | | — | | | 2,784,627 | | | 262,849 | |
| Distribution payable | | | 21,603 | | | — | | | 13,148 | |
| Due to Adviser | | | — | | | 4,613 | | | 1,224 | |
| 12b-1 fees to affiliate | | | 4,172 | | | 3,845 | | | 3,243 | |
| Investment for securities purchased | | | — | | | 76,217 | | | 1,824,916 | |
| Administration fees (accounting, distribution & transfer agent) | | | 5,178 | | | 4,770 | | | 4,023 | |
| Accrued expenses and other liabilities | | | 11,184 | | | 8,645 | | | 7,119 | |
Total liabilities | | | 42,137 | | | 2,885,285 | | | 2,119,441 | |
NET ASSETS | | $ | 20,388,101 | | $ | 19,095,121 | | $ | 16,019,733 | |
| | | | | | | | | | | |
NET ASSETS CONSIST OF: | | | | | | | | | | |
| Additional paid-in capital | | $ | 22,004,138 | | $ | 22,462,190 | | $ | 15,005,955 | |
| Accumulated undistributed net investment loss | | | — | | | (12,773 | ) | | — | |
| Accumulated net realized loss on investments | | | (1,213,062 | ) | | (3,949,520 | ) | | (75,448 | ) |
| Net unrealized appreciation/(depreciation) on investments | | | (402,975 | ) | | 595,224 | | | 1,089,226 | |
Total Net Assets | | $ | 20,388,101 | | $ | 19,095,121 | | $ | 16,019,733 | |
| Shares of Beneficial Interest Issued and Outstanding | | | | | | | | | | |
| (Unlimited number of shares authorized with no par value) | | | 2,048,611 | | | 2,460,985 | | | 1,154,649 | |
| Net Asset Value, offering and redemption price per share | | | | | | | | | | |
| ($20,388,101 / 2,048,611 shares, $19,095,121 / 2,460,985 shares, | | | | | | | | | | |
| and $16,019,733 / 1,154,649 shares, respectively) | | $ | 9.95 | | $ | 7.76 | | $ | 13.87 | |
| Market value of securities on loan (Note 6) | | $ | — | | $ | 2,705,217 | | $ | 255,394 | |
The accompanying notes are an integral part of the financial statements
Memorial Funds
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (Unaudited)
| | | Government | | Growth | | Value | |
| | | Bond Fund | | Equity Fund | | Equity Fund | |
INVESTMENT INCOME | | | | | | | |
| Interest | | $ | 499,559 | | $ | 11,770 | | $ | 15,902 | |
| Securities lending income | | | 1,451 | | | 1,043 | | | 153 | |
| Dividends | | | — | | | 95,642 | | | 173,373 | |
Total investment income | | | 501,010 | | | 108,455 | | | 189,428 | |
EXPENSES | | | | | | | | | | |
| Investment Advisory fees (Note 3) | | | 36,080 | | | 48,500 | | | 39,890 | |
| Shareholder service and 12b-1 distribution plan (Note 3) | | | 25,771 | | | 24,250 | | | 19,945 | |
| Administration fees (accounting, distribution & transfer agent) (Note 3) | | | 31,308 | | | 29,458 | | | 24,234 | |
| Legal fees | | | 10,330 | | | 11,020 | | | 10,653 | |
| Audit fees | | | 5,844 | | | 5,499 | | | 4,527 | |
| Custody fees | | | 841 | | | 1,390 | | | 911 | |
| Trustee fees | | | 5,070 | | | 4,490 | | | 3,245 | |
| Registration & filing fees | | | 8,467 | | | 8,651 | | | 6,738 | |
| Report printing & mailing fees | | | 965 | | | 969 | | | 1,128 | |
| Insurance fees | | | 3,826 | | | 2,594 | | | 1,906 | |
| Officers’ compensation | | | 1,605 | | | 1,779 | | | 1,460 | |
| Miscellaneous | | | 11,722 | | | 8,340 | | | 7,544 | |
Total expenses before fee waivers & reimbursements | | | 141,829 | | | 146,940 | | | 122,181 | |
| Waivers & reimbursements by Adviser (Note 4) | | | (38,800 | ) | | (25,712 | ) | | (22,489 | ) |
Total net expenses | | | 103,029 | | | 121,228 | | | 99,692 | |
Net Investment Income/(Loss) | | | 397,981 | | | (12,773 | ) | | 89,736 | |
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: | | | | | | | | | | |
| Net realized gain/(loss) on investments | | | (31,003 | ) | | 520,859 | | | 262,295 | |
| Change in unrealized appreciation/(depreciation) on investments | | | (274,107 | ) | | (846,669 | ) | | 218,294 | |
| Net realized and unrealized gain/(loss) on investments | | | (305,110 | ) | | (325,810 | ) | | 480,589 | |
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING | | | | | | | | | | |
FROM OPERATIONS | | $ | 92,871 | | $ | (338,583 | ) | $ | 570,325 | |
The accompanying notes are an integral part of the financial statements
Memorial Funds
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2006 (Unaudited)
| | | Government | | Growth | | Value | |
| | | Bond Fund | | Equity Fund | | Equity Fund | |
OPERATIONS | | | | | | | |
| Net investment income/(loss) | | $ | 397,981 | | $ | (12,773 | ) | $ | 89,736 | |
| Net realized gain/(loss) on investments | | | (31,033 | ) | | 520,859 | | | 262,295 | |
| Change in unrealized appreciation/(depreciation) on investments | | | (274,107 | ) | | (846,669 | ) | | 218,294 | |
Net increase/(decrease) in net assets resulting from operations | | | 92,871 | | | (338,583 | ) | | 570,325 | |
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM | | | | | | | | | | |
| Net investment income | | | (397,981 | ) | | — | | | (89,736 | ) |
| Net realized capital gain | | | — | | | — | | | — | |
Total dividends and distributions to shareholders | | | (397,981 | ) | | — | | | (89,736 | ) |
CAPITAL SHARE TRANSACTIONS | | | | | | | | | | |
| Sale of capital shares - Institutional shares | | | 247,751 | | | 1,243,300 | | | 691,908 | |
| Reinvestment of distributions - Institutional shares | | | 355,437 | | | — | | | 73,313 | |
| Redemption of capital shares - Institutional shares | | | (1,759,689 | ) | | (1,087,150 | ) | | (1,346,230 | ) |
Net increase/(decrease) from capital share transactions | | | (1,156,501 | ) | | 156,150 | | | (581,009 | ) |
TOTAL DECREASE IN NET ASSETS | | | (1,461,611 | ) | | (182,433 | ) | | (100,420 | ) |
NET ASSETS | | | | | | | | | | |
| Beginning of period | | | 21,849,712 | | | 19,277,554 | | | 16,120,153 | |
| End of period (including accumulated undistributed net investment income of | | | | | | | | | | |
| $0, $0, and $0, respectively) | | $ | 20,388,101 | | $ | 19,095,121 | | $ | 16,019,733 | |
SHARE TRANSACTIONS | | Shares | | Shares | | Shares | |
| Sale of shares - Institutional shares | | | 24,797 | | | 156,389 | | | 49,999 | |
| Reinvestment of distributions - Institutional shares | | | 35,490 | | | — | | | 5,276 | |
| Redemption of shares - Institutional shares | | | (175,406 | ) | | (135,178 | ) | | (96,045 | ) |
| Net increase (decrease) in shares | | | (115,119 | ) | | 21,211 | | | (40,770 | ) |
The accompanying notes are an integral part of the financial statements
Memorial Funds
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
| | | Government | | Growth | | Value | |
| | | Bond Fund | | Equity Fund | | Equity Fund | |
OPERATIONS | | | | | | | |
| Net investment income/(loss) | | $ | 986,995 | | $ | (6,635 | ) | $ | 87,623 | |
| Net realized gain/(loss) on investments | | | (691,129 | ) | | 793,110 | | | 612,591 | |
| Change in unrealized appreciation/(depreciation) on investments | | | (62,361 | ) | | (164,736 | ) | | 14,141 | |
Net increase in net assets resulting from operations | | | 233,505 | | | 621,739 | | | 714,355 | |
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM | | | | | | | | | | |
| Net investment income | | | (1,032,643 | ) | | (6,565 | ) | | (85,330 | ) |
| Net realized capital gain | | | — | | | — | | | (134,732 | ) |
Total dividends and distributions to shareholders | | | (1,032,643 | ) | | (6,565 | ) | | (220,062 | ) |
CAPITAL SHARE TRANSACTIONS | | | | | | | | | | |
| Sale of capital shares - Institutional shares | | | 9,785,497 | | | 5,464,798 | | | 8,756,586 | |
| Reinvestment of distributions - Institutional shares | | | 929,841 | | | 6,006 | | | 202,088 | |
| Redemption of capital shares - Institutional shares | | | (31,755,430 | ) | | (2,649,254 | ) | | (1,095,951 | ) |
Net increase/(decrease) from capital share transactions | | | (21,040,092 | ) | | 2,821,550 | | | 7,862,723 | |
TOTAL INCREASE/(DECREASE) IN NET ASSETS | | | (21,839,230 | ) | | 3,436,724 | | | 8,357,016 | |
NET ASSETS | | | | | | | | | | |
| Beginning of period | | | 43,688,942 | | | 15,840,830 | | | 7,763,137 | |
| End of period (including accumulated undistributed net investment income of | | | | | | | | | | |
$0, $0, and $0, respectively) | | $ | 21,849,712 | | $ | 19,277,554 | | $ | 16,120,153 | |
SHARE TRANSACTIONS | | Shares | | Shares | | Shares | |
| Sale of shares - Institutional shares | | | 967,054 | | | 727,858 | | | 689,033 | |
| Reinvestment of distributions - Institutional shares | | | 91,277 | | | 806 | | | 15,075 | |
| Redemption of shares - Institutional shares | | | (3,134,461 | ) | | (348,175 | ) | | (83,128 | ) |
| Net increase (decrease) in shares | | | (2,076,130 | ) | | 380,489 | | | 620,980 | |
The accompanying notes are an integral part of the financial statements
Memorial Funds
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period:
| | | Government Bond Fund | |
| | | Institutional Shares | |
| | | For the | | | | | | | | | | | |
| | | Six Months | | For the Year | | For the Year | | For the Year | | For the Year | | For the Year | |
| | | Ended | | Ended | | Ended | | Ended | | Ended | | Ended | |
| | | June 30, 2006 | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | (Unaudited) | | 2005 | | 2004 | | 2003 | | 2002 | | 2001 | |
Net Asset Value, | | | | | | | | | | | | | |
Beginning of Period | | $ | 10.10 | | $ | 10.30 | | $ | 10.40 | | $ | 10.64 | | $ | 10.27 | | $ | 10.09 | |
| INCOME FROM | | | | | | | | | | | | | | | | | | | |
| INVESTMENT OPERATIONS | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | 0.19 | | | 0.31 | | | 0.28 | | | 0.33 | | | 0.43 | | | 0.50 | |
| Net realized and unrealized | | | | | | | | | | | | | | | | | | | |
| gain/(loss) on investments | | | (0.16 | ) | | (0.20 | ) | | (0.09 | ) | | (0.24 | ) | | 0.37 | | | 0.17 | |
| Total from investment | | | | | | | | | | | | | | | | | | | |
| operations | | | 0.03 | | | 0.11 | | | 0.19 | | | 0.09 | | | 0.80 | | | 0.67 | |
| LESS DIVIDENDS AND | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment | | | | | | | | | | | | | | | | | | | |
| income | | | (0.18 | ) | | (0.31 | ) | | (0.29 | ) | | (0.33 | ) | | (0.43 | ) | | (0.49 | ) |
| Distributions from net realized | | | | | | | | | | | | | | | | | | | |
| capital gain | | | — | | | — | | | — | | | — | | | — | | | — | |
| Total dividends and | | | | | | | | | | | | | | | | | | | |
| distributions | | | (0.18 | ) | | (0.31 | ) | | (0.29 | ) | | (0.33 | ) | | (0.43 | ) | | (0.49 | ) |
Net Asset Value, End of Period | | $ | 9.95 | | $ | 10.10 | | $ | 10.30 | | $ | 10.40 | | $ | 10.64 | | $ | 10.27 | |
Total Return (a) | | | 0.43 | % | | 1.07 | % | | 1.82 | % | | 0.90 | % | | 7.96 | % | | 6.81 | % |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period | | | | | | | | | | | | | | | | | | | |
| (in 000s) | | $ | 20,388 | | $ | 21,850 | | $ | 43,689 | | $ | 20,170 | | $ | 18,710 | | $ | 17,058 | |
| Ratio of operating expenses to | | | | | | | | | | | | | | | | | | | |
| average net assets including | | | | | | | | | | | | | | | | | | | |
| reimbursement/waiver of fees | | | 1.00 | % | | 1.01 | % | | 1.02 | % | | 1.00 | % | | 0.95 | % | | 0.86 | % |
| Ratio of operating expenses to | | | | | | | | | | | | | | | | | | | |
| average net assets excluding | | | | | | | | | | | | | | | | | | | |
| reimbursement/waiver of fees | | | 1.38 | % | | 1.29 | % | | 1.31 | % | | 1.69 | % | | 1.71 | % | | 1.08 | % |
| Ratio of net investment income/ | | | | | | | | | | | | | | | | | | | |
| (loss) to average net assets | | | | | | | | | | | | | | | | | | | |
| including reimbursement/ | | | | | | | | | | | | | | | | | | | |
| waiver of fees | | | 3.86 | % | | 2.84 | % | | 2.73 | % | | 3.11 | % | | 4.13 | % | | 4.93 | % |
| Portfolio turnover rate | | | 6 | % | | 122 | % | | 40 | % | | 82 | % | | 43 | % | | 118 | % |
| (a) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived. |
The accompanying notes are an integral part of the financial statements
Memorial Funds
FINANCIAL HIGHLIGHTS (continued)
For a share outstanding throughout each period:
| | | Growth Equity Fund | |
| | | Institutional Shares | |
| | | For the | | | | | | | | | | | |
| | | Six Months | | For the Year | | For the Year | | For the Year | | For the Year | | For the Year | |
| | | Ended | | Ended | | Ended | | Ended | | Ended | | Ended | |
| | | June 30, 2006 | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | (Unaudited) | | 2005 | | 2004 | | 2003 | | 2002 | | 2001 | |
Net Asset Value, | | | | | | | | | | | | | |
Beginning of Period | | $ | 7.90 | | $ | 7.69 | | $ | 7.40 | | $ | 6.16 | | $ | 7.77 | | $ | 9.26 | |
| INCOME FROM | | | | | | | | | | | | | | | | | | | |
| INVESTMENT OPERATIONS | | | | | | | | | | | | | | | | | | | |
| Net investment income/(loss) | | | (0.01 | ) | | (0.00) | (b) | | 0.01 | | | (0.01 | ) | | (0.01 | ) | | — | |
| Net realized and unrealized | | | | | | | | | | | | | | | | | | | |
| gain/(loss) on investments | | | (0.13 | ) | | 0.21 | | | 0.29 | | | 1.25 | | | (1.60 | ) | | (1.47 | ) |
| Total from investment | | | | | | | | | | | | | | | | | | | |
| operations | | | (0.14 | ) | | 0.21 | | | 0.30 | | | 1.24 | | | (1.61 | ) | | (1.47 | ) |
| LESS DIVIDENDS AND | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment | | | | | | | | | | | | | | | | | | | |
| income | | | — | | | (0.00) | (c) | | (0.01 | ) | | (0.00) | (d) | | — | | | — | |
| Distributions from net realized | | | | | | | | | | | | | | | | | | | |
| capital gain | | | — | | | — | | | — | | | — | | | — | | | (0.02 | ) |
| Total dividends and | | | | | | | | | | | | | | | | | | | |
| distributions | | | — | | | (0.00 | ) | | (0.01 | ) | | — | | | — | | | (0.02 | ) |
Net Asset Value, End of Period | | $ | 7.76 | | $ | 7.90 | | $ | 7.69 | | $ | 7.40 | | $ | 6.16 | | $ | 7.77 | |
Total Return (a) | | | (1.77 | )% | | 2.77 | % | | 4.11 | % | | 20.20 | % | | (20.72 | )% | | (15.82 | )% |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period | | | | | | | | | | | | | | | | | | | |
| (in 000s) | | $ | 19,095 | | $ | 19,278 | | $ | 15,841 | | $ | 13,140 | | $ | 7,775 | | $ | 9,289 | |
| Ratio of operating expenses to | | | | | | | | | | | | | | | | | | | |
| average net assets including | | | | | | | | | | | | | | | | | | | |
| reimbursement/waiver of fees | | | 1.25 | % | | 1.26 | % | | 1.25 | % | | 1.25 | % | | 1.20 | % | | 1.11 | % |
| Ratio of operating expenses to | | | | | | | | | | | | | | | | | | | |
| average net assets excluding | | | | | | | | | | | | | | | | | | | |
| reimbursement/waiver of fees | | | 1.50 | % | | 1.54 | % | | 1.69 | % | | 2.44 | % | | 2.64 | % | | 1.47 | % |
| Ratio of net investment income/ | | | | | | | | | | | | | | | | | | | |
| (loss) to average net assets | | | | | | | | | | | | | | | | | | | |
| including reimbursement/ | | | | | | | | | | | | | | | | | | | |
| waiver of fees | | | (0.13 | )% | | (0.04 | )% | | 0.19 | % | | (0.11 | )% | | (0.18 | )% | | (0.06 | )% |
| Portfolio turnover rate | | | 49 | % | | 92 | % | | 94 | % | | 88 | % | | 58 | % | | 52 | % |
| (a) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived. |
| (b) | Net investment loss per share was $(0.0031) |
| (c) | Distributions per share were $(0.0032) |
| (d) | Distributions per share were $(0.0038) |
The accompanying notes are an integral part of the financial statements
Memorial Funds
FINANCIAL HIGHLIGHTS (concluded)
For a share outstanding throughout each period:
| | | | | | | Value Equity Fund | | | | | |
| | | | | | | Institutional Shares | | | | | |
| | | For the | | | | | | | | | | | |
| | | Six Months | | For the Year | | For the Year | | For the Year | | For the Year | | For the Year | |
| | | Ended | | Ended | | Ended | | Ended | | Ended | | Ended | |
| | | June 30, 2006 | | December 31, | | December 31, | | December 31, | | December 31, | | December 31, | |
| | | (Unaudited) | | 2005 | | 2004 | | 2003 | | 2002 | | 2001 | |
Net Asset Value, | | | | | | | | | | | | | |
Beginning of Period | | $ | 13.48 | | $ | 13.51 | | $ | 11.84 | | $ | 8.95 | | $ | 10.26 | | $ | 9.12 | |
| INCOME FROM | | | | | | | | | | | | | | | | | | | |
| INVESTMENT OPERATIONS | | | | | | | | | | | | | | | | | | | |
| Net investment income | | | 0.08 | | | 0.11 | | | 0.12 | | | 0.14 | | | 0.12 | | | 0.13 | |
| Net realized and unrealized | | | | | | | | | | | | | | | | | | | |
| gain/(loss) on investments | | | 0.39 | | | 0.08 | | | 1.67 | | | 2.90 | | | (1.31 | ) | | 1.15 | |
| Total from investment | | | | | | | | | | | | | | | | | | | |
| operations | | | 0.47 | | | 0.19 | | | 1.79 | | | 3.04 | | | (1.19 | ) | | 1.28 | |
| LESS DIVIDENDS AND | | | | | | | | | | | | | | | | | | | |
| DISTRIBUTIONS | | | | | | | | | | | | | | | | | | | |
| Dividends from net investment | | | | | | | | | | | | | | | | | | | |
| income | | | (0.08 | ) | | (0.11 | ) | | (0.12 | ) | | (0.15 | ) | | (0.12 | ) | | (0.14 | ) |
| Distributions from net realized | | | | | | | | | | | | | | | | | | | |
| capital gain | | | — | | | (0.11 | ) | | — | | | — | | | — | | | — | |
| Total dividends and | | | | | | | | | | | | | | | | | | | |
| distributions | | | (0.08 | ) | | (0.22 | ) | | (0.12 | ) | | (0.15 | ) | | (0.12 | ) | | (0.14 | ) |
Net Asset Value, End of Period | | $ | 13.87 | | $ | 13.48 | | $ | 13.51 | | $ | 11.84 | | $ | 8.95 | | $ | 10.26 | |
Total Return (a) | | | 3.48 | % | | 1.45 | % | | 15.18 | % | | 34.24 | % | | (11.66 | )% | | 14.08 | % |
Ratios/Supplemental Data | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period | | | | | | | | | | | | | | | | | | | |
| (in 000s) | | $ | 16,020 | | $ | 16,120 | | $ | 7,763 | | $ | 3,985 | | $ | 2,634 | | $ | 3,210 | |
| Ratio of operating expenses to | | | | | | | | | | | | | | | | | | | |
| average net assets including | | | | | | | | | | | | | | | | | | | |
| reimbursement/waiver of fees | | | 1.25 | % | | 1.26 | % | | 1.17 | % | | 1.25 | % | | 1.20 | % | | 1.09 | % |
| Ratio of operating expenses to | | | | | | | | | | | | | | | | | | | |
| average net assets excluding | | | | | | | | | | | | | | | | | | | |
| reimbursement/waiver of fees | | | 1.53 | % | | 1.66 | % | | 1.78 | % | | 3.87 | % | | 5.06 | % | | 1.82 | % |
| Ratio of net investment income/ | | | | | | | | | | | | | | | | | | | |
| (loss) to average net assets | | | | | | | | | | | | | | | | | | | |
| including reimbursement/ | | | | | | | | | | | | | | | | | | | |
| waiver of fees | | | 1.12 | % | | 0.93 | % | | 0.98 | % | | 1.44 | % | | 1.13 | % | | 1.26 | % |
| Portfolio turnover rate | | | 21 | % | | 71 | % | | 69 | % | | 26 | % | | 90 | % | | 45 | % |
| (a) | Total return in the above table represents the rate that the investor would have earned or lost on an investment in the Fund assuming reinvestment of dividends. Total return would have been lower if certain expenses had not been reimbursed or waived. |
The accompanying notes are an integral part of the financial statements
Memorial Funds
MEMORIAL FUNDS
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2006 (Unaudited)
NOTE 1. ORGANIZATION
Memorial Funds (the “Trust”) is an open-end management investment company organized as a Delaware business trust. The Trust currently has three diversified investment portfolios (each a “Fund” and, collectively, the “Funds”). The principal investment objective of the Memorial Government Bond Fund (“Government Bond Fund”) is to provide a high level of income consistent with maximum credit protection and moderate fluctuation in principal value. The principal investment objective of the Memorial Growth Equity Fund (“Growth Equity Fund”) is long-term capital appreciation. The principal investment objective of the Memorial Value Equity Fund (“Value Equity Fund”) is long-term capital appreciation. The Trust’s declaration of trust authorizes each Fund to issue an unlimited number of shares of beneficial interest authorized with no par value. The dates of commencement of operations for each Fund are as follows:
| Government Bond Fund | March 30, 1998 |
| Growth Equity Fund | March 30, 1998 |
| Value Equity Fund | March 30, 1998 |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following represents significant accounting policies of the Funds:
Use of Estimates - These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
Security Valuation - Securities, other than short-term securities, held by the Funds for which market quotations are readily available are valued using the last reported sales price or the official closing price provided by independent pricing services as of the close of trading on the New York Stock Exchange (normally 4:00 p.m. Eastern time) on each Fund’s business day. If no sales are reported, the average of the last bid and ask price is used. If no average price is available, the last bid price is used. Debt securities are generally traded in the over-the-counter market and are valued at a price deemed best to reflect their values as quoted by dealers who make markets in those securities or by an independent pricing source. U.S. Government obligations are valued at the last reported bid price. In the absence of readily available market quotations, securities are valued at fair value as determined by the Board of Trustees. At June 30, 2006, no securities were valued at fair value as determined by the Board of Trustees. Securities with maturities of 60 days or less are valued at amortized cost. The ability of issuers of debt securities held by the Funds to meet their obligations may be affected by economic and political developments in a specific country or region.
Realized Gain and Loss - Security transactions are accounted for on a trade date basis and realized gains and losses on investments sold are determined on the basis of specific identification.
Interest and Dividend Income - Interest income is accrued as earned. Dividends on securities held by the Funds are recorded on the ex-dividend date. Discounts and premiums on securities purchased are amortized over the lives of the respective securities.
Memorial Funds
MEMORIAL FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006 (Unaudited)
Dividends and Distributions to Shareholders - Distributions of net investment income to shareholders are declared daily and paid monthly by the Government Bond Fund. Net investment income distributions, if any for the Growth Equity Fund and the Value Equity Fund, are declared and paid quarterly. Net capital gains for the Funds, if any, are distributed to shareholders at least annually. Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date.
Federal Taxes - Each Fund intends to qualify each year as a regulated investment company in accordance with Sub-Chapter M of the Internal Revenue Code and distribute all of its taxable income. In addition, by distributing in each calendar year substantially all of its net investment income, capital gains and certain other amounts, if any, each Fund will not be subject to a federal excise tax. As the Funds intend to meet these minimum distribution requirements, no federal income tax provision is required.
Security Loans - The Funds may receive fees or retain a portion of interest on the securities or cash received as collateral for lending securities. A Fund also continues to receive interest or dividends on the securities loaned. Securities loaned are secured by collateral whose fair value must always exceed the market value of the securities loaned plus accrued interest. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan is reflected in the value of the Funds. The Funds have the right under the security lending agreement to recover the securities from the borrower on demand.
Other - The treatment for financial reporting purposes of distributions made to shareholders during the year from net investment income or net realized capital gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused by differences in the timing of the recognition of certain components of income, expense or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of the net assets based on their ultimate characterization for federal income tax purposes. Any such reclassifications will have no effect on net assets, result of operations or net asset values per share of the Funds.
As of December 31, 2005, amounts of $43,788, $13,200 and $132,439 were reclassified from accumulated net investment loss and accumulated net realized gains/losses to paid-in-capital for the Government Bond Fund, Growth Equity Fund, Value Equity Fund, respectively, due to distributions in excess of ordinary income earned. Amounts are not classified as return of capital for tax purposes due to current year earnings and profits.
NOTE 3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser of each Fund is Parkway Advisors, L.P. (the “Adviser”). Subject to the general control of the Board of Trustees, the Adviser is responsible for among other things, developing a continuing investment program for the Funds in accordance with their investment objectives, reviewing the investment strategies and policies of the Funds, and advising the Board on the selection of sub-advisers. The advisory fees paid to the Adviser are 0.35% of the average daily net assets of the Government Bond Fund and 0.50% of the average daily net assets of the Growth Equity Fund and the Value Equity Fund. For the year ended December 31, 2006, the Adviser has agreed to cap expenses at 1.00% of the average daily net assets of the Government Bond Fund and 1.25% of the average daily net assets of the Growth Equity Fund and the Value Equity Fund. The Adviser has agreed to extend the expense limitation agreement through December 31, 2006. The agreement was designed to place a maximum limit on expenses including all fees to be paid to the Adviser but excluding taxes, interest, brokerage commissions and other portfolio transaction expenses and extraordinary expenses including certain legal costs. Total fees earned by the Adviser during the six month period ended June 30, 2006 for the Government Bond Fund, Growth Equity Fund and Value Equity Fund were $36,080, $48,500 and $39,890, respectively. At June 30, 2006, the Government Bond Fund, Growth Equity Fund and Value Equity Fund owed the Adviser $0, $4,613, and $1,224, respectively. The Adviser has retained Davis Hamilton Jackson & Associates to act as the investment sub-adviser for the Growth Equity Fund pursuant to an investment sub-advisory agreement with the Adviser. For the six month period ended June 30, 2006, Davis Hamilton was paid an annual percentage rate of 0.30% of the daily average net assets by the Adviser.
Memorial Funds
MEMORIAL FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006 (Unaudited)
On behalf of each Fund, the Trust entered into a Mutual Fund Services Agreement with Citco Mutual Fund Services, Inc., (“Citco”) effective August 19, 2003, to provide day-to-day accounting and administrative services to the Funds including, but not limited to, accounting, transfer agent, dividend disbursement, registrar and record keeping services. For its services, Citco receives an annual fee that is the greater of $175,000 or an asset-based fee that declines as the aggregate assets of the Funds increase: 0.10% of the Funds’ first $400 million in assets; 0.04% of the Funds’ assets in excess of $400 million up to $600 million; and 0.03% of the Funds’ assets in excess of $600 million. Citco is currently earning the minimum fee.
On behalf of each Fund, the Trust entered into a Distribution Agreement with Citco Mutual Fund Distributors, Inc. (the “Distributor”) effective August 19, 2003 to serve as the Funds’ principal underwriter. By serving as the principal underwriter for the Funds, the Distributor facilitates the distribution of the Funds’ shares. For its services in conjunction with registration of Fund shares with the states, Citco Mutual Fund Distributors, Inc. receives $5,000 annually from the Trust. This amount is credited back against the fees paid under the Mutual Fund Services Agreement to Citco.
Total fees earned by Citco and the Distributor during the six month period ended June 30, 2006 for the Government Bond Fund, Growth Equity Fund and the Value Equity Fund were $31,308, $29,458, and $24,234, respectively. At June 30, 2006, the Government Bond Fund, Growth Equity Fund and Value Equity Fund owed Citco $5,178, $4,770 and $4,023, respectively.
Investors Bank & Trust Company serves as the custodian for each Fund, for which it receives a fee from each Fund at an annual rate as follows: 0.01% of the average daily net assets of the Fund for the first $100 million in Fund assets and 0.005% of the average daily net assets of the Fund for the remaining Fund assets. The custodian is also paid certain transaction fees. These fees are accrued daily by the Funds and are paid monthly based on average net assets and transactions for the previous month.
On behalf of each Fund, the Trust has adopted a Shareholder Service and Distribution Plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940, as amended. Under this Plan, each Fund may pay a servicing or Rule 12b-1 fee at an annual rate of 0.25% of each Fund’s average net assets on a monthly basis to persons or institutions for performing certain servicing functions for each Fund’s shareholders. The Plan also allows the Funds to pay or reimburse expenditures in connection with sales and promotional services related to distribution of each Fund’s shares, including personal services provided to prospective and existing shareholders. Total fees incurred under the Plan during the six month period ended June 30, 2006, for the Government Bond Fund, Growth Equity Fund and Value Equity Fund were $25,771, $24,250, and $19,945, respectively. These fees were paid to Parkway Advisors Group, Inc., the General Partner of the Adviser, to be used for payment to brokers and other 12b-1 expenditures. At June 30, 2006, the Government Bond Fund, Growth Equity Fund and Value Equity Fund had 12b-1 fees payable of $4,172, $3,845, and $3,243, respectively, and are included in accrued expenses and other liabilities.
Two officers of the Adviser are also officers of the Trust; one of them is also an interested trustee.
Each Trustee who is not an “affiliated person” as defined in the Act receives from the Trust an annual fee of $5,000 plus out of pocket expenses. In addition, each Trustee receives $500 per meeting attended.
Memorial Funds
MEMORIAL FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006 (Unaudited)
NOTE 4. WAIVER OF FEES AND ADVISER REIMBURSEMENTS
The Adviser, under certain circumstances, may waive advisory fees and reimburse certain expenses of the Funds. For the six month period ended June 30, 2006 the Adviser agreed to cap expenses at 1.00% of the average daily net assets of the Government Bond Fund and 1.25% of the average daily net assets of the Growth Equity Fund and the Value Equity Fund, including all fees paid to the Adviser but excluding taxes, interest, brokerage commissions and other portfolio transaction expenses and extraordinary expenses. Effective March 1, 2004, the Trust has agreed to repay the Adviser for the amounts which the Adviser has waived and/or reimbursed the Trust through the period ending February 28, 2007, but only if the operating expenses of that fund, without regard to such repayment, are at an annual rate less than the expense limits. At June 30, 2006, the Adviser owed the Government Bond Fund, Growth Equity Fund and Value Equity Fund $2,913, $3,768, and $0, respectively. For the six month period ended June 30, 2006, Parkway Advisors, L.P. has waived fees and reimbursed the Funds for expenses as follows:
| | | | | Adviser | |
| | | Waiver of Fees | | Reimbursements | |
| Government Bond Fund | | $ | 34,427 | | $ | 4,373 | |
| Growth Equity Fund | | | 19,400 | | | 6,312 | |
| Value Equity Fund | | | 22,489 | | | — | |
The following is a cumulative list of the amounts the Adviser may recapture from the Funds prior to February 28, 2007.
| | | June 30, 2006 | | December 31, 2005 | | December 31, 2004 | |
| Government Bond Fund | | $ | 38,800 | | $ | 95,167 | | $ | 93,221 | |
| Growth Equity Fund | | | 25,712 | | | 45,600 | | | 55,803 | |
| Value Equity Fund | | | 22,489 | | | 38,458 | | | 31,473 | |
NOTE 5. SECURITIES TRANSACTIONS
The aggregate cost of securities purchased and the proceeds from sales of securities, other than short-term securities, for the period ended June 30, 2006, were as follows:
| | | Purchases | | Sales | |
| | | U.S. Government | | | | U.S. Government | | | |
| | | Obligations | | Other | | Obligations | | Other | |
| Government Bond Fund | | $ | — | | $ | 995,298 | | $ | — | | $ | 1,097,194 | |
| Growth Equity Fund | | | — | | | 9,639,750 | | | — | | | 8,797,267 | |
| Value Equity Fund | | | — | | | 3,260,989 | | | — | | | 2,887,045 | |
NOTE 6. SECURITIES LENDING
As of June 30, 2006, the Growth Equity and Value Equity Funds have loaned securities in return for securities and cash collateral, which was invested in various short-term fixed income securities such as repurchase agreements, commercial paper and government and corporate notes and bonds. The risks to the Fund from securities lending are that the borrower may not provide additional collateral when required or return the securities when due or when called by the Fund.
Memorial Funds
MEMORIAL FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006 (Unaudited)
NOTE 7. TAX MATTERS
For U.S federal income tax purposes, the tax cost basis of investment securities owned, the aggregate gross unrealized appreciation, the aggregate gross unrealized depreciation and net unrealized appreciation/(depreciation) as of June 30, 2006 were as follows:
| | | | | Gross | | Gross | | Net Unrealized | |
| | | | | Unrealized | | Unrealized | | Appreciation | |
| | | Tax Cost | | Appreciation | | Depreciation | | (Depreciation) | |
| Government Bond Fund | | $ | 20,653,384 | | $ | 11,055 | | $ | (414,030 | ) | $ | (402,975 | ) |
| Growth Equity Fund | | | 18,450,703 | | | 1,450,484 | | | (884,532 | ) | | 565,952 | |
| Value Equity Fund | | | 15,529,452 | | | 1,370,394 | | | (291,849 | ) | | 1,078,545 | |
Differences between book basis and tax basis unrealized appreciation/(depreciation) is attributable primarily to the deferral of post-October losses and the tax deferral of losses on wash sales.
The Funds’ tax basis capital gains and losses are determined only at the end of each fiscal year. As of December 31, 2005, the tax basis components of distributable earnings were as follows:
| | | Undistributed | | Net | | Net Unrealized | | Distributable | |
| | | Ordinary | | Accumulated | | Appreciation | | Earnings/Net | |
| | | Income | | Capital Loss | | (Depreciation) | | Accumulated Losses | |
| Government Bond Fund | | $ | — | | $ | (1,178,672 | ) | $ | (176,043 | ) | $ | (1,354,715 | ) |
| Growth Equity Fund | | | — | | | (4,389,237 | ) | | 1,360,751 | | | (3,028,486 | ) |
| Value Equity Fund | | | — | | | (174,582 | ) | | 707,771 | | | 533,189 | |
Net investment income and realized gains and losses for federal income tax purposes differ from that reported in the financial statements because of permanent and temporary book and tax differences.
For tax purposes at December 31, 2005, the Funds have capital loss carryovers in the following amounts:
| | | Amount | | Expiration Date | |
| Government Bond Fund | | $ | 379,598 | | | 12/31/2008 | |
| | | | 100,359 | | | 12/31/2012 | |
| | | | 698,715 | | | 12/31/2013 | |
| Growth Equity Fund | | | 1,963,164 | | | 12/31/2009 | |
| | | | 1,658,405 | | | 12/31/2010 | |
| | | | 471,452 | | | 12/31/2011 | |
| | | | 296,216 | | | 12/31/2012 | |
| Value Equity Fund | | | 174,582 | | | 12/31/2008 | |
During the fiscal year ended December 31, 2005 the Growth Equity Fund and Value Equity Fund utilized $741,210 and $740,577, respectively, of prior year capital loss carryovers.
Memorial Funds
MEMORIAL FUNDS
NOTES TO FINANCIAL STATEMENTS (continued)
JUNE 30, 2006 (Unaudited)
The Government Bond Fund and the Value Equity Fund elected to defer post-October losses in the amounts of $47,175 and $141,284, respectively.
NOTE 8. DISTRIBUTIONS TO SHAREHOLDERS
The tax character of distributions paid during the past two fiscal years were as follows:
| | | Ordinary Income | | Ordinary Income | |
| | | Fiscal Year Ending | | Fiscal Year Ending | |
| | | December 31, 2005 | | December 31, 2004 | |
| Government Bond Fund | | $ | 1,032,643 | | $ | 975,518 | |
| Growth Equity Fund | | | 6,565 | | | 28,665 | |
| Value Equity Fund | | | 220,062 | | | 55,492 | |
The tax character of distributions paid during the six month period ended June 30, 2006 was as follows:
| | | Ordinary Income | |
| | | Six Months Ended | |
| | | June 30, 2006 | |
| Government Bond Fund | | $ | 397,982 | |
| Value Equity Fund | | | 89,736 | |
NOTE 9. CONTROL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a Fund creates presumption of control of the Fund under Section 2(a) 9 of the Investment Company Act of 1940. As of June 30, 2006, ISTCO held for the benefit of others in aggregate, approximately 95% of the Government Bond Fund and approximately 87% of the Value Equity Fund; Charles Schwab & Co. held for the benefit of others in aggregate, approximately 38% of the Growth Equity Fund.
NOTE 10. SUBSEQUENT EVENT
On June 28, 2006, the Shareholders approved the overall reorganization plan discussed in the proxy materials. The reorganization combined six (6) separate funds of two (2) Trusts: Unified Series Trust — (Monteagle Large Cap Growth Fund, Monteagle Value Fund, Monteagle Fixed Income Fund) and Memorial Trust — (Memorial Government Bond Fund, Memorial Growth Equity Fund, Memorial Value Equity Fund) into five (5) separate funds under Memorial’s trust structure (Monteagle Value Fund, Monteagle Large Cap Growth Fund, Monteagle Quality Growth Fund, Monteagle Select Value Fund, and Monteagle Fixed Income Fund). Simultaneous with the reorganization, the Memorial Trust and related funds changed their names to Monteagle. The transaction closed as described herein on July 14, 2006.
Memorial Funds
MEMORIAL FUNDS
ADDITIONAL INFORMATION
JUNE 30, 2006 (Unaudited)
Proxy Policies (Unaudited)
The Trust has adopted Proxy Voting Policies and Procedures under which the Funds’ vote proxies related to securities (“funds proxies”) held by the Funds. A description of the Funds’ policies and procedures is available without charge, upon request, by calling the Funds toll free at 1-888-263-5593, or on the Securities and Exchange Commission’s website at http://sec.gov.
In addition, the Funds are required to file Form N-PX, with its complete voting record for the 12 months ended June 30th, no later than August 31st of each year. Once filed, the Fund’s Form N-PX will be available without charge, upon request, by calling the Fund toll free at 1-800-232-0224, or on the Securities and Exchange Commission’s website at http://sec.gov.
N-Q Filing (Unaudited)
The SEC has adopted the requirement that all mutual funds file a complete schedule of investments with the SEC for their first and third fiscal quarters on Form N-Q for fiscal quarters ending after July 9, 2004. For the Memorial Funds, this would be for the fiscal quarters ending March 31 and September 30. The Form N-Q filing must be made within 60 days of the end of the quarter. The Funds’ Form N-Q are available on the SEC’s website at http://sec.gov., or they may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC (call 1-800-732-0330 for information on the operation of the Public Reference Room).
Memorial Funds
MEMORIAL FUNDS
JUNE 30, 2006
TRUSTEES AND OFFICERS (Unaudited)
| | | | | Number of | |
| | | Term of | | Portfolios in | Other |
| | | Office and | | Complex | Directorships |
| | Position(s) | Length of | Principal Occupation(s) | Overseen by | Held by |
Name, Address and Age | with Fund | Time Served | for the Last Five Years | Director | Trustee |
OFFICERS: | | | | | |
| Carl Clayton Peterson* | President | Indefinite | Parkway Advisors, L.P., CEO from | 3 | None |
| 6550 Directors Parkway | and Trustee | until | 04/01 to present; Directors | | |
| Abilene, Texas 79606 | | successor | Investment Group, Inc., Director | | |
| 46 | | elected and | from 04/03 to present; Parkway | | |
| | | qualified; | Advisors Group, Inc. and Parkway | | |
| | | 11/29/2002 | Advisors Holdings, Inc., President | | |
| | | to present | from 04/01 to present; Citizens | | |
| | | | Bank, N.A., Advisory Board | | |
| | | | Member from 06/99 to 04/01; | | |
| | | | Directors Air Corporation, Vice | | |
| | | | President/CFO from 12/96 to 04/01; | | |
| | | | Directors Capital Ventures, Inc., | | |
| | | | Directors Financial Management, | | |
| | | | L.P., Directors Real Estate | | |
| | | | Management, L.P., Directors Real | | |
| | | | Estate Management, L.P., and | | |
| | | | Directors Travel, L.P., Vice | | |
| | | | President/CFO from 12/95 to 04/01; | | |
| | | | Directors Holding Corporation and | | |
| | | | Directors Investment Group, Inc., | | |
| | | | Vice President/CFO from 11/91 | | |
| | | | to 04/01; Funeral Agency, Inc., | | |
| | | | Accountant from 09/89 to 04/01; | | |
| | | | Funeral Directors Life Insurance Co., | | |
| | | | Vice President/CFO from 08/88 to | | |
| | | | 04/01; Abilene Fireman’s Relief and | | |
| | | | Retirement Fund, Trustee from 05/97 | | |
| | | | to 06/00; Affiliated Funeral Supply | | |
| | | | Co., Accountant from 02/89 to 11/96. | | |
Memorial Funds
MEMORIAL FUNDS
JUNE 30, 2006
TRUSTEES AND OFFICERS (Unaudited) (continued)
| | | | | | Number of | |
| | | Term of | | | Portfolios in | Other |
| | | Office and | | | Complex | Directorships |
| | Position(s) | Length of | Principal Occupation(s) | | Overseen by | Held by |
Name, Address and Age | with Fund | Time Served | for the Last Five Years | | Director | Trustee |
OFFICERS: (Continued) | | | | | | |
| Paul B. Ordonio | Vice | Indefinite | Parkway Advisors, L.P., Vice | | 3 | None |
| 6550 Directors Parkway | President/ | until | President & Counsel from 08/02 to | | | |
| Abilene, Texas 79606 | Secretary/ | successor | present; Parkway Advisors Group, | | | |
| 38 | Chief | elected and | Inc., Vice President and Counsel | | | |
| | Compliance | qualified: | from 08/02 to present; Aftermath | | | |
| | Officer | 11/29/2002 | Consulting, Inc., Director from | | | |
| | | to present | 05/02 to present; P.O. Properties, | | | |
| | | | Inc., Vice President from 06/99 to | | | |
| | | | present; WordWise Document | | | |
| | | | Services, LLC, President from | | | |
| | | | 08/97 to present; Ordonio & Assoc., | | | |
| | | | President from 11/97 to present; | | | |
| | | | MGL Consulting Corporation, Vice | | | |
| | | | President, Counsel and Senior | | | |
| | | | Associate from 01/99 to 08/02; | | | |
| | | | Wetzel, Henri & Drucker, LLP, | | | |
| | | | Associate Attorney from 06/95 to | | | |
| | | | 11/97. | | | |
| Thomas W. Alesi | Vice | Indefinite | Cassatt RRG Holding Company, | | 3 | None |
| 6550 Directors Parkway | President | until | Director of Finance from 03/06 to | | | |
| Abilene, Texas 79606 | and Chief | successor | present. American Healthcare | | | |
| 47 | Financial | elected and | Providers Insurance Services Co., | | | |
| | Officer | qualified; | LLC, Chief Financial Officer from | | | |
| | | 8/19/2003 | 06/04 to 10/05. Parkway Advisors, | | | |
| | | to present | L.P., Vice President of Corporate | | | |
| | | | Development from 07/02 to 05/04; | | | |
| | | | Parkway Advisors Group, Inc., Vice | | | |
| | | | President from 07/02 to 05/04; | | | |
| | | | InCap Securities, Inc., Registered | | | |
| | | | Representative from 01/03 to 10/03; | | | |
| | | | American Data Source, Inc., Vice | | | |
| | | | President & Chief Operating Officer | | | |
| | | | from 05/95 to 06/02. Mr. Alesi is a | | | |
| | | | Certified Public Accountant and | | | |
| | | | received a Bachelor of Science | | | |
| | | | degree in Accounting in 1981 from | | | |
| | | | LaSalle University. | | | |
Memorial Funds
MEMORIAL FUNDS
JUNE 30, 2006
TRUSTEES AND OFFICERS (Unaudited)(continued)
| | | | | Number of | |
| | | Term of | | Portfolios in | Other |
| | | Office and | | Complex | Directorships |
| | Position(s) | Length of | Principal Occupation(s) | Overseen by | Held by |
Name, Address and Age | with Fund | Time Served | for the Last Five Years | Director | Trustee |
INDEPENDENT TRUSTEES: | | | | |
Larry Joe Anderson**+ | Trustee | Indefinite | Certified Public Accountant, | 3 | None |
| 4208 College Avenue | | until | Anderson & West, P. C., | | |
| Snyder, Texas 79549 | | successor | January 1985 to present. | | |
| 58 | | elected and | | | |
| | | qualified; | | | |
| | | 11/29/2002 | | | |
| | | to present | | | |
Brian Joseph Green**+ | Trustee | Indefinite | Restaurateur, Cypress Street Station, | 3 | None |
| 158 Cypress | | until | February 1993 to present. | | |
| Abilene, Texas 79601 | | successor | | | |
| 48 | | elected and | | | |
| | | qualified; | | | |
| | | 11/29/2002 | | | |
| | | to present | | | |
| Charles Michael Kinard | Trustee | Indefinite | Retired since 1998; Senior Vice- | 3 | None |
*/**+ | | until | President and Trust Officer, First | | |
| 1725 Richland Drive | | successor | National Bank of Abilene to | | |
| Abilene, Texas 79603 | | elected and | December 1998. | | |
| 62 | | qualified; | | | |
| | | 11/29/2002 | | | |
| | | to present | | | |
| * | Member of the Valuation Committee, which is responsible for determining and monitoring the value of the Funds’ assets. The valuation Committee was not required to meet during the Trust’s most recent fiscal year. |
| ** | Member of the Nominating Committee, which is responsible for overseeing the composition of both the Board as well as the various com- mittees of the Trust to ensure that these positions are filled by competent and capable candidates. The Nominating Committee did not meet during the Trust’s most recent fiscal year. The Nominating Committee does not currently consider for nomination candidates proposed by shareholders for election as Trustees. |
| + | Member of the Audit Committee, which is responsible for meeting with the Trust’s independent certified public accountants to: (a) review the arrangements and scope of any audit; (b) discuss matters of concern relating to the Trust’s financial statements, including any adjustments to such statements recommended by the accountants, or other results of any audit; (c) consider the accountants’ comments with respect to the Trust’s financial policies, procedures and internal accounting controls; and (d) review any form of opinion the accountants propose to render to the Trust. The Audit Committee met twice during the Trust’s most recent fiscal year. |
Memorial Funds
THE MEMORIAL FUNDS
Privacy Statement
At the Memorial Funds, we are committed to protecting your financial privacy.
The personal information that we have about you comes directly from you. You disclosed much of this information on your mutual fund account application or we may have contacted you by telephone or mail for additional information.
We keep information about the investments you purchase, transactions and payment history. We may in extreme cases collect personal information from outside sources, including consumer reporting agencies.
We do not sell shareholder information to anyone. We do not disclose your personal information to companies or organizations not affiliated with us. We may use your personal information to communicate with you about your investments. In addition, we may, as permitted by law and without your prior permission, provide personal information about you contained in our records or files to persons or organizations such as:
| • | Persons who perform business functions for us, such as third partiers that provide assistance in processing and servicing your account; |
| • | The Fund’s investment adviser; and |
| • | Regulatory or law-enforcement authorities |
We recognize the need to provide protection against unauthorized access to the information we collect, including that held in an electronic format on our computer systems. We maintain physical, electronic, and organizational safeguards to protect your personal information. We continually review our policies and practices, monitor our computer networks and test the strength of our security in order to help us ensure the safety of client information.
The Memorial Funds consider privacy a fundamental right of shareholders and take seriously the obligation to safeguard shareholder information. We will adhere to the policies and practices above for both current and former shareholders. If you believe that any information about you is not accurate, please let us know.
Memorial Funds
THE MEMORIAL FUNDS
Investment Adviser
Parkway Advisors, L.P.
6550 Directors Parkway
Abilene, Texas 79606
Shareholder Servicing Agent
Parkway Advisors Group, Inc.
6550 Directors Parkway
Abilene, Texas 79606
Distributor
Citco Mutual Fund Distributors
83 General Warren Blvd., Suite 200
Malvern, Pennsylvania 19355
Transfer Agent & Administrator
Citco Mutual Fund Services, Inc.
83 General Warren Blvd., Suite 200
Malvern, Pennsylvania 19355
This report is submitted for the general information of the shareholders of the Funds. It is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus, which includes information regarding the Fund’s objectives and policies, experience of its management, marketability of shares, and other information.
Not applicable at this time.
Not applicable at this time.
Not applicable at this time.
Not applicable at this time.
Included in the Semi-Annual Report to Shareholders filed under Item 1 of this form.
Not applicable.
Not applicable.
Not applicable.
There has been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Carl C. Peterson, President
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Thomas W. Alesi., Principal Financial Officer
