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OMB APPROVAL
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OMB Number: 3235-0570
Expires: September 30, 2007
Estimated average burden
hours per response: 19.4
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08529
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Monteagle Funds
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(Exact name of registrant as specified in charter)
6550 Directors Parkway Abilene, Texas 79606
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(Address of principal executive offices) (Zip code)
Carl C. Peterson
Parkway Advisors, L.P. 6550 Directors Parkway Abilene, Texas 79606
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(Name and address of agent for service)
Registrant's telephone number, including area code: (325) 698-3868
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Date of fiscal year end: August 31, 2007
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Date of reporting period: February 28, 2007
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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.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
MONTEAGLE FUNDS
Fixed Income Fund
Quality Growth Fund
Large Cap Growth Fund
Select Value Fund
Value Fund
SEMI-ANNUAL REPORT
February 28, 2007
(Unaudited)
[LOGO]
MONTEAGLE FUNDS
TABLE OF CONTENTS
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SUPPLEMENTARY PORTFOLIO INFORMATION......................................... 1
FINANCIAL STATEMENTS OF THE MONTEAGLE FUNDS
Schedule of Investments:
Fixed Income Fund........................................................ 6
Quality Growth Fund...................................................... 10
Large Cap Growth Fund.................................................... 14
Select Value Fund........................................................ 17
Value Fund............................................................... 20
Statements of Assets and Liabilities........................................ 23
Statements of Operations.................................................... 24
Statements of Changes in Net Assets ........................................ 25
Financial Highlights........................................................ 30
Notes to Financial Statements............................................... 35
Other Information........................................................... 44
Results of Special Meeting of Shareholders.................................. 44
About Your Fund's Expenses.................................................. 45
Board Approval of Investment Sub-Advisory Agreement......................... 48
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MONTEAGLE FIXED INCOME FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
FEBRUARY 28, 2007 (UNAUDITED)
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FUND PROFILE:
TOP TEN PORTFOLIO HOLDINGS (% OF NET ASSETS)
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FNMA, Pool 386008, 4.52%, 04/01/2013 3.13%
GNMA, Series 2003-81-PB, 6.00%, 03/20/2029 2.97%
Denver Colorado City & County School District,
6.76%, 12/15/2007 2.93%
International Business Machines Corp., 5.375%, 02/01/2009 2.92%
FHLMC, 6.05%, 08/15/2014 2.92%
Nabisco, Inc., 7.05%, 07/15/2007 2.92%
Texas Technological University Revenues, 5.32%, 08/15/2007 2.90%
La Grange Georgia Development Authority, 6.10%, 02/01/2010 2.24%
FNMA, Pool 545759, 6.50%, 07/01/2032 1.66%
FNMA, 7.25%, 01/15/2010 1.54%
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26.13%
=======
SECTOR ALLOCATION (% OF NET ASSETS)
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U.S. Government & Agency Obligations 46.36%
Corporate Bonds 25.66%
Mortgage-Backed Securities 13.21%
Municipal Bonds 10.41%
Short-Term Investments 3.37%
Other Assets in Excess of Liabilities 0.99%
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100.00%
=======
1
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MONTEAGLE QUALITY GROWTH FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
FEBRUARY 28, 2007 (UNAUDITED)
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FUND PROFILE:
TOP TEN PORTFOLIO HOLDINGS (% OF NET ASSETS)
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Microsoft Corp. 3.45%
General Electric Co. 3.28%
Walt Disney Co. (The) 2.72%
American International Group, Inc. 2.34%
Air Products and Chemicals, Inc. 2.16%
Cisco Systems, Inc. 2.15%
Texas Instruments, Inc. 1.95%
FedEx Corp. 1.94%
Danaher Corp. 1.91%
Apache Corp. 1.89%
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23.79%
=======
TOP TEN PORTFOLIO INDUSTRIES (% OF NET ASSETS)
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Retail 8.49%
Semiconductors 8.02%
Pharmaceuticals 6.80%
Miscellaneous Manufacturing 6.78%
Computers 6.34%
Software 5.99%
Diversified Financial Services 5.68%
Telecommunications 4.78%
Health Care - Products 4.40%
Food & Beverages 4.12%
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61.40%
=======
ECONOMIC SECTORS (% OF NET ASSETS)
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Information Technology 27.75%
Health Care 14.07%
Industrials 12.49%
Consumer Discretionary 10.71%
Financials 10.31%
Consumer Staples 8.63%
Materials 5.51%
Short-Term Investments 5.32%
Energy 4.80%
Telecommunications Services 1.06%
Other Assets and Liabilities (0.65)%
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100.00%
=======
2
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MONTEAGLE LARGE CAP GROWTH FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
FEBRUARY 28, 2007 (UNAUDITED)
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FUND PROFILE:
TOP TEN PORTFOLIO HOLDINGS (% OF NET ASSETS)
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Cognizant Technology Solutions Corp. - Class A 4.47%
Gilead Sciences, Inc. 4.27%
Lockheed Martin Corp. 4.14%
News Corp. - Class A 4.10%
Lowe's Co., Inc. 3.86%
Franklin Resources, Inc. 3.76%
Lehman Brothers Holdings, Inc. 3.66%
Harley-Davidson, Inc. 3.62%
Moody's Corp. 3.60%
Medtronic, Inc. 3.60%
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39.08%
=======
TOP TEN PORTFOLIO INDUSTRIES (% OF NET ASSETS)
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Diversified Financial Services 20.30%
Aerospace & Defense 7.68%
Computers 7.40%
Retail 7.07%
Health Care - Products 6.77%
Telecommunications 5.46%
Biotechnology 4.70%
Pharmaceuticals 4.27%
Media 4.10%
Leisure Time 3.62%
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71.37%
=======
ECONOMIC SECTORS (% OF NET ASSETS)
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Financials 30.38%
Information Technology 18.76%
Consumer Discretionary 16.56%
Health Care 15.74%
Industrials 10.94%
Consumer Staples 3.21%
Energy 2.10%
Telecommunications Services 1.98%
Short-Term Investments 0.34%
Other Assets and Liabilities (0.01)%
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100.00%
=======
3
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MONTEAGLE SELECT VALUE FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
FEBRUARY 28, 2007 (UNAUDITED)
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FUND PROFILE:
TOP TEN PORTFOLIO HOLDINGS (% OF NET ASSETS)
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AT&T, Inc. 3.49%
Alcoa, Inc. 3.06%
Applied Materials, Inc. 3.06%
Wal-Mart Stores, Inc. 3.00%
Microsoft Corp. 2.93%
Intel Corp. 2.82%
Bristol-Meyers Squibb Co. 2.82%
Sysco Corp. 2.79%
International Paper Co. 2.77%
Colgate-Palmolive Co. 2.77%
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29.51%
=======
TOP TEN PORTFOLIO INDUSTRIES (% OF NET ASSETS)
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Miscellaneous Manufacturing 8.65%
Retail 7.95%
Banks 7.27%
Semiconductors 7.13%
Food & Beverages 5.69%
Telecommunications 5.57%
Computers 5.11%
Oil & Gas 4.69%
Household Products 4.03%
Forest Products & Paper 3.58%
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59.67%
=======
ECONOMIC SECTORS (% OF NET ASSETS)
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Information Technology 18.53%
Industrials 14.84%
Financials 14.06%
Consumer Staples 12.23%
Consumer Discretionary 10.65%
Materials 9.23%
Health Care 8.72%
Energy 6.80%
Telecommunications Services 3.49%
Short-Term Investments 1.34%
Other Assets and Liabilities 0.11%
-------
100.00%
=======
4
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MONTEAGLE VALUE FUND
SUPPLEMENTARY PORTFOLIO INFORMATION
FEBRUARY 28, 2007 (UNAUDITED)
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FUND PROFILE:
TOP TEN PORTFOLIO HOLDINGS (% OF NET ASSETS)
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Trinity Industries, Inc. 5.65%
Transocean, Inc. 5.18%
Tidewater, Inc. 4.91%
Halliburton Co. 4.73%
Sears Holdings Corp. 4.06%
Rowan Cos., Inc. 3.65%
Hess Corp. 3.58%
New Plan Excel Realty Trust 3.39%
E.I. du Pont de Nemours & Co. 3.37%
Barrick Gold Corp. 3.37%
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41.89%
=======
TOP TEN PORTFOLIO INDUSTRIES (% OF NET ASSETS)
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Oil & Gas 15.68%
Oil & Gas Services 14.69%
Mining 8.50%
Retail 6.82%
Media 5.70%
Miscellaneous Manufacturing 5.65%
Telecommunications 5.34%
Chemicals 5.23%
Pharmaceuticals 5.21%
Real Estate Investment Trusts 3.39%
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76.21%
=======
ECONOMIC SECTORS (% OF NET ASSETS)
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Energy 31.85%
Materials 13.74%
Consumer Discretionary 12.52%
Industrials 8.97%
Health Care 8.15%
Short-Term Investments 6.24%
Telecommunications Services 5.34%
Information Technology 4.22%
Financials 3.39%
Consumer Staples 3.21%
Utilities 2.27%
Other Assets and Liabilities 0.10%
-------
100.00%
=======
5
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MONTEAGLE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2007 (UNAUDITED)
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PAR VALUE U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 46.4% VALUE
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FEDERAL FARM CREDIT BANK -- 9.7%
$300,000 4.50%, due 10/24/2007 $ 298,658
500,000 5.26%(a), due 01/18/2008 500,357
300,000 4.30%, due 11/18/2009 295,206
500,000 4.70%, due 05/25/2010 494,882
250,000 5.375%, due 07/18/2012 255,677
400,000 5.00%, due 12/12/2012 395,257
250,000 6.00%, due 06/19/2013 251,851
300,000 4.95%, due 11/12/2013 302,154
300,000 5.40%, due 10/06/2015 298,450
250,000 5.98%, due 09/15/2016 251,595
-----------
3,344,087
-----------
FEDERAL HOME LOAN BANK -- 13.6%
250,000 5.125%, due 06/18/2008 250,812
300,000 4.625%, due 08/25/2008 298,481
250,000 5.00%, due 01/26/2009 249,215
500,000 6.795%, due 06/30/2009 522,844
250,000 5.375%, due 07/17/2009 253,250
500,000 5.00%(a), due 08/09/2010 494,630
300,000 4.85%, due 09/27/2010 297,546
250,000 5.75%, due 05/15/2012 260,863
500,000 6.00%, due 06/18/2013 503,787
250,000 5.125%, due 08/14/2013 254,536
500,000 5.50%, due 08/28/2013 504,869
500,000 5.25%, due 06/15/2014 513,832
300,000 5.17%, due 09/22/2014 296,463
-----------
4,701,128
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 11.8%
300,000 4.50%, due 02/15/2008 298,261
400,000 7.00%, due 03/15/2010 424,801
250,000 5.00%, due 11/01/2010 248,499
500,000 5.625%, due 03/15/2011 515,233
500,000 5.85%, due 04/11/2013 501,426
1,000,000 6.05%, due 08/15/2014 1,006,809
300,000 6.00%, due 11/20/2015 300,065
500,000 6.00%, due 08/18/2016 506,282
250,000 5.00%(a), due 09/21/2018 248,428
-----------
4,049,804
-----------
6
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MONTEAGLE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 46.4%
PAR VALUE (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 11.3%
$200,000 5.00%, due 12/13/2007 $ 199,731
500,000 7.25%, due 01/15/2010 532,710
500,000 5.125%, due 07/20/2012 496,181
750,000 5.00%, due 08/02/2012 753,647
100,000 6.00%, due 05/28/2014 100,019
500,000 5.00%, due 03/02/2015 505,413
250,000 5.25%, due 03/24/2015 248,578
300,000 6.00%, due 09/01/2015 300,493
500,000 6.07%, due 05/12/2016 503,542
250,000 6.00%, due 08/29/2016 251,098
-----------
3,891,412
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $15,951,993) $15,986,431
-----------
PAR VALUE CORPORATE BONDS -- 25.6% VALUE
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BANKS -- 5.1%
$250,000 Bank of America Corp., 5.875%, due 02/15/2009 $ 254,394
500,000 Bank of America Corp., 4.875%, due 01/15/2013 494,503
500,000 SunTrust Bank, 6.375%, due 04/01/2011 525,053
500,000 Wells Fargo & Co., 5.25%, due 12/01/2007 499,834
-----------
1,773,784
-----------
COMPUTERS -- 2.9%
1,000,000 International Business Machines Corp.,
5.375%, due 02/01/2009 1,008,087
-----------
DIVERSIFIED FINANCIAL SERVICES -- 4.3%
500,000 American Express Co., 4.75%, due 06/17/2009 497,969
500,000 CIT Group, Inc., 4.75%, due 12/15/2010 493,605
500,000 Goldman Sachs Group, Inc., 5.25%, due 10/15/2013 500,275
-----------
1,491,849
-----------
ELECTRICAL COMPONENTS & EQUIPMENT -- 0.7%
250,000 Emerson Electric Co., 5.125%, due 12/01/2016 248,280
-----------
7
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MONTEAGLE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
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PAR VALUE CORPORATE BONDS -- 25.6% (CONTINUED) VALUE
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FOOD & BEVERAGES -- 6.7%
$300,000 Anheuser-Busch Cos., Inc., 6.00%, due 04/15/2011 $ 309,489
500,000 Bottling Group LLC, 4.625%, due 11/15/2012 489,614
500,000 Coca-Cola Co., 5.75%, due 03/15/2011 514,345
1,000,000 Nabisco, Inc., 7.05%, due 07/15/2007 1,005,963
-----------
2,319,411
-----------
HEALTH CARE - SERVICES -- 0.7%
250,000 UnitedHealth Group, Inc., 5.00%, due 08/15/2014 245,735
-----------
MINING -- 1.5%
500,000 Alcoa, Inc., 5.375%, due 01/15/2013 504,434
-----------
OIL & GAS -- 0.7%
250,000 ConocoPhillips, 5.50%, due 04/15/2013 255,441
-----------
PHARMACEUTICALS -- 1.5%
500,000 Abbott Laboratories, 5.40%, due 09/15/2008 502,871
-----------
SOFTWARE -- 0.9%
309,090 First Data Corp., 4.85%, due 10/01/2014 296,754
-----------
TELECOMMUNICATIONS SERVICES -- 0.6%
200,000 SBC Communications, Inc., 5.625%, due 06/15/2016 202,838
-----------
TOTAL CORPORATE BONDS (Cost $9,025,317) $ 8,849,484
-----------
PAR VALUE MORTGAGE-BACKED SECURITIES -- 13.2% VALUE
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FEDERAL HOME LOAN MORTGAGE CORPORATION -- 3.0%
$408,968 Series 2840, 5.00%, due 08/15/2015 $ 407,652
288,526 Series 15-L, 7.00%, due 07/25/2023 299,435
327,691 Series 3058, 5.50%, due 10/15/2035 326,668
-----------
1,033,755
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BONDS -- 5.4%
1,100,000 Pool 386008, 4.52%, due 04/01/2013 1,079,966
556,683 Pool 545759, 6.50%, due 07/01/2032 571,763
214,410 Pool 754289, 6.00%, due 11/01/2033 217,032
-----------
1,868,761
-----------
8
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MONTEAGLE FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
PAR VALUE MORTGAGE-BACKED SECURITIES -- 13.2% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 4.8%
$390,228 Pool 648337, 5.00%, due 10/15/2020 $ 386,707
1,000,000 Series 2003-81-PB, 6.00%, due 03/20/2029 1,022,500
237,161 Pool 476998, 6.50%, due 07/15/2029 244,365
-----------
1,653,572
-----------
TOTAL MORTGAGE-BACKED SECURITIES (Cost $4,632,473) $ 4,556,088
-----------
PAR VALUE MUNICIPAL OBLIGATIONS -- 10.4% VALUE
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COLORADO -- 2.9%
$1,000,000 Denver Colorado City & County School District,
6.76%, due 12/15/2007 $ 1,010,496
-----------
GEORGIA -- 3.1%
300,000 Atlanta & Fulton County Recreation Authority,
6.625%, due 12/01/2011 309,270
750,000 La Grange Georgia Development Authority Revenue,
6.10%, due 02/01/2010 770,790
-----------
1,080,060
-----------
NEW JERSEY -- 1.5%
500,000 New Jersey Sports & Exposition Authority,
7.375%, due 03/01/2007 500,000
-----------
TEXAS -- 2.9%
1,000,000 Texas Technological University Revenue,
5.32%, due 08/15/2007 999,800
-----------
TOTAL MUNICIPAL OBLIGATIONS (Cost $3,555,095) $ 3,590,356
-----------
SHARES SHORT-TERM INVESTMENTS -- 3.4% VALUE
- -----------------------------------------------------------------------------------------
1,160,823 Merrimac U.S. Government Series - Investment Class,
4.74% (a) (Cost $1,160,823) $ 1,160,823
-----------
TOTAL INVESTMENTS AT VALUE -- 99.0% (Cost $34,325,701) $34,143,182
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.0% 341,229
-----------
NET ASSETS -- 100.0% $34,484,411
===========
(a) Variable rate security. The coupon rate shown is the effective interest
rate as of February 28, 2007.
The accompanying notes are an integral part of the financial statements
9
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MONTEAGLE QUALITY GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 95.3% VALUE
- -----------------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 2.6%
1,500 Boeing Co. (The) $ 130,905
3,475 United Technologies Corp. 228,064
-----------
358,969
-----------
APPAREL -- 0.3%
1,565 Hanesbrands, Inc. (a) 44,775
-----------
BANKS -- 1.4%
3,700 Bank of America Corp. 188,219
-----------
BIOTECHNOLOGY -- 1.8%
1,800 Amgen, Inc. (a) 115,668
1,600 Genentech, Inc. (a) 134,992
-----------
250,660
-----------
CHEMICALS -- 3.9%
3,950 Air Products & Chemicals, Inc. 295,539
4,550 Monsanto Co. 239,739
-----------
535,278
-----------
COAL -- 1.4%
4,775 Peabody Energy Corp. 192,910
-----------
COMMERCIAL SERVICES -- 1.0%
5,800 Western Union Co. 125,686
-----------
COMPUTERS -- 6.3%
2,700 Apple, Inc. (a) 228,447
2,825 Cognizant Technology Solutions Corp. (a) 254,815
2,700 Dell, Inc. (a) 61,695
1,400 International Business Machines Corp. 130,214
5,025 Network Appliance, Inc. (a) 194,317
-----------
869,488
-----------
COSMETICS / PERSONAL CARE -- 1.2%
2,575 Procter & Gamble Co. 163,487
-----------
DIVERSIFIED FINANCIAL SERVICES -- 5.7%
3,575 American Express Co. 203,310
2,100 Franklin Resources, Inc. 246,519
1,050 InterContinentalExchange, Inc. (a) 158,392
3,300 Janus Capital Group, Inc. 70,125
1,200 Merrill Lynch & Co., Inc. 100,416
-----------
778,762
-----------
10
- --------------------------------------------------------------------------------
MONTEAGLE QUALITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 95.3% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
ELECTRONICS -- 1.6%
1,000 Amphenol Corp. - Class A $ 64,540
3,500 Thermo Fisher Scientific, Inc. (a) 158,445
-----------
222,985
-----------
FOOD & BEVERAGES -- 4.1%
2,500 Coca-Cola Co. (The) 116,700
3,075 PepsiCo, Inc. 194,186
3,850 Sysco Corp. 126,896
2,675 Whole Foods Market, Inc. 127,785
-----------
565,567
-----------
HEALTH CARE - PRODUCTS -- 4.4%
2,750 C.R. Bard, Inc. 219,450
2,000 Johnson & Johnson 126,100
2,600 Medtronic, Inc. 130,936
3,200 St. Jude Medical, Inc. (a) 126,880
-----------
603,366
-----------
HEALTH CARE - SERVICES -- 1.0%
2,600 DaVita, Inc. (a) 141,830
-----------
HOUSEWARES -- 1.6%
6,925 Newell Rubbermaid, Inc. 212,043
-----------
INSURANCE -- 2.3%
4,775 American International Group, Inc. 320,402
-----------
INTERNET -- 3.2%
4,325 eBay, Inc. (a)(b) 138,659
315 Google, Inc. (a) 141,577
5,200 Yahoo!, Inc. (a) 160,472
-----------
440,708
-----------
MEDIA -- 3.7%
3,300 Viacom, Inc. - Class B (a) 128,832
10,900 Walt Disney Co. (The) 373,434
-----------
502,266
-----------
METAL FABRICATE & HARDWARE -- 1.6%
2,425 Precision Castparts Corp. 220,602
-----------
MISCELLANEOUS MANUFACTURING -- 6.8%
3,650 Danaher Corp. 261,486
12,895 General Electric Co. 450,293
5,200 Trinity Industries, Inc. 217,620
-----------
929,399
-----------
11
- --------------------------------------------------------------------------------
MONTEAGLE QUALITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 95.3% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
OIL & GAS -- 1.9%
3,775 Apache Corp. $ 258,701
-----------
OIL & GAS SERVICES -- 1.5%
3,650 Cameron International Corp. (a) 206,919
-----------
PHARMACEUTICALS -- 6.8%
2,700 Abbott Laboratories 147,474
900 Allergan, Inc. 100,539
2,325 Eli Lilly & Co. 122,388
2,002 Gilead Sciences, Inc. (a)(b) 143,263
9,100 Pfizer, Inc. 227,136
8,175 Schering-Plough Corp. 191,949
-----------
932,749
-----------
RETAIL -- 8.5%
2,550 Bebe Stores, Inc. 46,869
4,800 Burger King Holdings, Inc. 102,240
4,525 Circuit City Stores, Inc. 86,111
3,200 Gamestop Corp. - Class A (a) 167,744
4,325 Lowe's Cos., Inc. 140,822
2,500 Nordstrom, Inc. 132,725
2,200 Target Corp. 135,366
3,000 Walgreen Co. 134,130
4,525 Wal-Mart Stores, Inc. 218,558
-----------
1,164,565
-----------
SEMICONDUCTORS -- 8.0%
7,025 Applied Materials, Inc. 130,454
10,900 Intel Corp. 216,365
3,250 MEMC Electronic Materials, Inc. (a) 167,603
6,300 Microchip Technology, Inc. 224,280
7,800 Micron Technology, Inc. (a) 92,508
8,650 Texas Instruments, Inc. 267,804
-----------
1,099,014
-----------
SOFTWARE -- 6.0%
7,250 Activision, Inc. (a)(b) 121,220
16,800 Microsoft Corp. 473,256
13,800 Oracle Corp. (a) 226,734
-----------
821,210
-----------
TELECOMMUNICATIONS SERVICES -- 4.8%
11,375 Cisco Systems, Inc. (a) 295,068
5,325 QUALCOMM, Inc. 214,491
7,550 Sprint Nextel Corp. 145,564
-----------
655,123
-----------
12
- --------------------------------------------------------------------------------
MONTEAGLE QUALITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 95.3% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
TRANSPORTATION -- 1.9%
2,325 FedEx Corp. $ 265,469
-----------
TOTAL COMMON STOCKS (Cost $12,538,467) $13,071,152
-----------
SHARES SHORT-TERM INVESTMENTS -- 5.3% VALUE
- -----------------------------------------------------------------------------------------
729,656 Merrimac U.S. Government Series -
Investment Class, 4.74% (c) (Cost $729,656) $ 729,656
-----------
TOTAL INVESTMENTS AT VALUE -- 100.6% (Cost $13,268,123) $13,800,808
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.6%) (89,048)
-----------
NET ASSETS -- 100.0% $13,711,760
===========
(a) Non-income producing security.
(b) Securities on loan, all or part (Note 5).
(c) Variable rate security. The coupon rate shown is the effective interest
rate as of February 28, 2007.
The accompanying notes are an integral part of the financial statements
13
- --------------------------------------------------------------------------------
MONTEAGLE LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 99.7% VALUE
- -----------------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 7.7%
12,629 Lockheed Martin Corp. $ 1,228,549
16,000 United Technologies Corp. 1,050,080
-----------
2,278,629
-----------
APPAREL -- 3.5%
22,000 Coach, Inc. (a) 1,038,400
-----------
BIOTECHNOLOGY -- 4.7%
15,000 Amgen, Inc. (a) 963,900
5,100 Genentech, Inc. (a) 430,287
-----------
1,394,187
-----------
COMMERCIAL SERVICES -- 3.6%
16,500 Moody's Corp. 1,067,880
-----------
COMPUTERS -- 7.4%
10,300 Apple, Inc. (a) 871,483
14,700 Cognizant Technology Solutions Corp. - Class A (a) 1,325,940
-----------
2,197,423
-----------
DIVERSIFIED FINANCIAL SERVICES -- 20.3%
17,400 American Express Co. 989,538
6,400 BlackRock, Inc. 1,017,856
1,800 Chicago Mercantile Exchange Holdings, Inc. - Class A 970,434
9,500 Franklin Resources, Inc. 1,115,205
14,800 Lehman Brothers Holdings, Inc. 1,084,840
11,300 Morgan Stanley 846,596
-----------
6,024,469
-----------
ELECTRONICS -- 1.8%
10,000 Garmin Ltd. (b) 547,600
-----------
HEALTH CARE - PRODUCTS -- 6.8%
21,200 Medtronic, Inc. 1,067,632
15,200 Stryker Corp. 942,704
-----------
2,010,336
-----------
INSURANCE -- 3.2%
14,000 American International Group, Inc. 939,400
-----------
INTERNET -- 3.5%
2,330 Google, Inc. - Class A (a) 1,047,219
-----------
14
- --------------------------------------------------------------------------------
MONTEAGLE LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 99.7% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
LEISURE TIME -- 3.6%
16,300 Harley-Davidson, Inc. $ 1,074,170
-----------
LODGING -- 1.5%
12,500 Hilton Hotels Corp. 441,250
-----------
MEDIA -- 4.1%
54,000 News Corp. - Class A 1,216,620
-----------
MISCELLANEOUS MANUFACTURING -- 3.3%
27,700 General Electric Co. 967,284
-----------
OIL & GAS SERVICES -- 2.1%
15,200 Smith International, Inc. (b) 623,200
-----------
PHARMACEUTICALS -- 4.3%
17,700 Gilead Sciences, Inc. (a) (b) 1,266,612
-----------
REAL ESTATE -- 3.3%
29,600 CB Richard Ellis Group, Inc. - Class A (a) 986,272
-----------
RETAIL -- 7.1%
35,200 Lowe's Cos., Inc. (b) 1,146,112
21,300 Walgreen Co. 952,323
-----------
2,098,435
-----------
SOFTWARE -- 2.5%
45,000 Oracle Corp. (a) 739,350
-----------
TELECOMMUNICATIONS -- 5.4%
13,400 America Movil SAB de C.V. - ADR 586,920
39,900 Cisco Systems, Inc. (a) 1,035,006
-----------
1,621,926
-----------
TOTAL COMMON STOCKS (Cost $25,205,300) $29,580,662
-----------
15
- --------------------------------------------------------------------------------
MONTEAGLE LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES SHORT-TERM INVESTMENTS -- 0.3% VALUE
- -----------------------------------------------------------------------------------------
101,035 Merrimac U.S. Government Series -
Investment Class, 4.74% (c)(Cost $101,035) $ 101,035
-----------
TOTAL INVESTMENTS AT VALUE -- 100.0% (Cost $25,306,335) $29,681,697
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.0%) (2,842)
-----------
NET ASSETS -- 100.0% $29,678,855
===========
(a) Non-income producing security.
(b) Securities on loan, all or part (Note 5).
(c) Variable rate security. The coupon rate shown is the effective interest
rate as of February 28, 2007.
ADR - American Depositary Receipt
The accompanying notes are an integral part of the financial statements
16
- --------------------------------------------------------------------------------
MONTEAGLE SELECT VALUE FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 98.5% VALUE
- -----------------------------------------------------------------------------------------
APPAREL -- 2.1%
2,633 NIKE, Inc. - Class B $ 275,070
-----------
BANKS -- 7.3%
6,425 Bank of America Corp. 326,840
9,013 Bank of New York Co., Inc. (The) 366,108
6,900 Fifth Third Bancorp 277,932
-----------
970,880
-----------
BIOTECHNOLOGY -- 1.9%
3,900 Amgen, Inc. (a) 250,614
-----------
BUILDING MATERIALS -- 2.5%
11,000 Masco Corp. (b) 328,350
-----------
CHEMICALS -- 2.6%
7,900 Dow Chemical Co. (The) 346,020
-----------
COMPUTERS -- 5.1%
14,900 Dell, Inc. (a) 340,465
3,681 International Business Machines Corp. 342,370
-----------
682,835
-----------
COSMETICS / PERSONAL CARE -- 2.8%
5,487 Colgate-Palmolive Co. 369,604
-----------
DIVERSIFIED FINANCIAL SERVICES -- 2.3%
6,167 Citigroup, Inc. 310,817
-----------
ELECTRONICS -- 1.3%
6,400 Jabil Circuit, Inc. 171,008
-----------
FOOD & BEVERAGES -- 5.7%
5,104 General Mills, Inc. 287,661
1,900 Hershey Co. (The) (b) 100,472
11,300 Sysco Corp. (b) 372,448
-----------
760,581
-----------
FOREST PRODUCTS & PAPER -- 3.5%
10,294 International Paper Co. 370,687
5,200 Louisiana-Pacific Corp. 107,328
-----------
478,015
-----------
17
- --------------------------------------------------------------------------------
MONTEAGLE SELECT VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 98.5% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
HEALTH CARE - PRODUCTS -- 1.6%
3,400 Johnson & Johnson $ 214,370
-----------
HEALTH CARE - SERVICES -- 2.4%
7,300 Aetna, Inc. 323,171
-----------
HOME BUILDERS -- 2.3%
6,200 KB Home 307,520
-----------
HOUSEHOLD PRODUCTS -- 4.0%
4,355 Avery Dennison Corp. (b) 289,433
3,100 Fortune Brands, Inc. 249,240
-----------
538,673
-----------
INSURANCE -- 2.2%
4,309 American International Group, Inc. 289,134
-----------
MINING -- 3.1%
12,234 Alcoa, Inc. 408,738
-----------
MISCELLANEOUS MANUFACTURING -- 8.6%
3,356 3M Co. 248,613
7,457 General Electric Co. 260,398
5,950 Illinois Tool Works, Inc. 307,615
14,250 Leggett & Platt, Inc. (b) 339,435
-----------
1,156,061
-----------
OIL & GAS -- 4.7%
3,200 ConocoPhillips 209,344
6,300 Rowan Cos., Inc. 192,969
3,900 Valero Energy Corp. 224,835
-----------
627,148
-----------
OIL & GAS SERVICES -- 2.1%
9,100 Halliburton Co. 281,008
-----------
PHARMACEUTICALS -- 2.8%
14,262 Bristol-Myers Squibb Co. 376,374
-----------
RETAIL -- 7.9%
7,600 Home Depot, Inc. 300,960
4,200 Target Corp. 258,426
2,290 Walgreen Co. 102,386
8,300 Wal-Mart Stores, Inc. 400,890
-----------
1,062,662
-----------
18
- --------------------------------------------------------------------------------
MONTEAGLE SELECT VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 98.5% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
SAVINGS & LOAN -- 2.3%
7,140 Washington Mutual, Inc. $ 307,591
-----------
SEMICONDUCTORS -- 7.1%
22,000 Applied Materials, Inc. 408,540
19,000 Intel Corp. 377,150
5,100 Maxim Integrated Products, Inc. 167,025
-----------
952,715
-----------
SOFTWARE -- 2.9%
13,900 Microsoft Corp. 391,563
-----------
TELECOMMUNICATIONS -- 5.6%
12,688 AT&T, Inc. 466,918
6,900 QUALCOMM, Inc. 277,932
-----------
744,850
-----------
TRANSPORTATION -- 1.8%
3,434 United Parcel Service, Inc. - Class B 241,033
-----------
TOTAL COMMON STOCKS (Cost $11,617,997) $13,166,405
-----------
SHARES SHORT-TERM INVESTMENTS -- 1.4% VALUE
- -----------------------------------------------------------------------------------------
178,971 Merrimac U.S. Government Series - Investment Class,
4.74% (c) (Cost $178,971) $ 178,971
-----------
TOTAL INVESTMENTS AT VALUE -- 99.9% (Cost $11,796,968) $13,345,376
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% 15,466
-----------
NET ASSETS -- 100.0% $13,360,842
===========
(a) Non-income producing security.
(b) Securities on loan, all or part (Note 5).
(c) Variable rate security. The coupon rate shown is the effective interest
rate as of February 28, 2007.
The accompanying notes are an integral part of the financial statements
19
- --------------------------------------------------------------------------------
MONTEAGLE VALUE FUND
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 93.7% VALUE
- -----------------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 3.3%
15,000 Goodrich Corp. $ 735,750
-----------
CHEMICALS -- 5.2%
14,750 E.I. du Pont de Nemours & Co. 748,563
20,000 Georgia Gulf Corp. 383,600
2,016 Tronox, Inc. - Class B 29,917
-----------
1,162,080
-----------
ELECTRIC -- 2.3%
25,550 Duke Energy Corp. 503,079
-----------
ELECTRONICS -- 2.2%
34,400 Vishay Intertechnology, Inc. (a) 490,200
-----------
FOOD & BEVERAGES -- 3.2%
19,286 SUPERVALU, Inc. 712,811
-----------
HEALTH CARE - PRODUCTS -- 3.0%
40,000 Boston Scientific Corp. (a) 652,400
-----------
MEDIA -- 5.7%
600 Idearc, Inc. 20,400
15,000 Media General, Inc. - Class A 615,600
21,000 Tribune Co. 630,630
-----------
1,266,630
-----------
MINING -- 8.5%
22,000 Alcoa, Inc. 735,020
25,000 Barrick Gold Corp. 747,750
9,000 Newmont Mining Corp. 405,630
-----------
1,888,400
-----------
MISCELLANEOUS MANUFACTURING -- 5.7%
30,000 Trinity Industries, Inc. 1,255,500
-----------
OIL & GAS -- 15.7%
15,000 Hess Corp. 795,750
8,000 Marathon Oil Corp. 725,920
26,450 Rowan Cos., Inc. 810,163
15,000 Transocean, Inc. (a) 1,150,200
-----------
3,482,033
-----------
20
- --------------------------------------------------------------------------------
MONTEAGLE VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS -- 93.7% (CONTINUED) VALUE
- -----------------------------------------------------------------------------------------
OIL & GAS SERVICES -- 14.7%
7,000 Baker Hughes, Inc. $ 455,770
34,000 Halliburton Co. 1,049,920
14,000 Lone Star Technologies, Inc. (a) 665,420
21,000 Tidewater, Inc. 1,091,370
-----------
3,262,480
-----------
PHARMACEUTICALS -- 5.2%
20,000 Pfizer, Inc. 499,200
28,000 Schering-Plough Corp. 657,440
-----------
1,156,640
-----------
PIPELINES -- 1.5%
12,775 Spectra Energy Corp. 328,701
-----------
REAL ESTATE INVESTMENT TRUSTS -- 3.4%
22,550 New Plan Excel Realty Trust 752,944
-----------
RETAIL -- 6.8%
13,706 Federated Department Stores, Inc. 612,110
5,000 Sears Holdings Corp. (a) 901,250
-----------
1,513,360
-----------
SEMICONDUCTORS -- 2.0%
10,000 Lam Research Corp. (a) 446,600
-----------
TELECOMMUNICATIONS -- 5.3%
20,000 AT&T, Inc. 736,000
12,000 Verizon Communications, Inc. 449,160
-----------
1,185,160
-----------
TOTAL COMMON STOCKS (Cost $14,160,266) $20,794,768
-----------
21
- --------------------------------------------------------------------------------
MONTEAGLE VALUE FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES SHORT-TERM INVESTMENTS -- 6.2% VALUE
- -----------------------------------------------------------------------------------------
1,387,179 Merrimac U.S. Government Series -
Investment Class, 4.74% (b) (Cost $1,387,179) $ 1,387,179
-----------
TOTAL INVESTMENTS AT VALUE -- 99.9% (Cost $15,547,445) $22,181,947
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1% 23,003
-----------
NET ASSETS -- 100.0% $22,204,950
===========
(a) Non-income producing security.
(b) Variable rate security. The coupon rate shown is the effective interest
rate as of February 28, 2007.
The accompanying notes are an integral part of the financial statements
22
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
FIXED QUALITY LARGE CAP SELECT
INCOME GROWTH GROWTH VALUE VALUE
FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment securities:
At amortized cost $ 34,325,701 $ 13,268,123 $ 25,306,335 $11,796,968 $15,547,445
============ ============ ============ =========== ===========
At market value (Note 2) $ 34,143,182 $ 13,800,808 $ 29,681,697 $13,345,376 $22,181,947
Receivables for capital shares sold -- 6,873 -- -- --
Dividends and interest receivable 371,839 21,893 23,657 26,967 42,500
Other assets 3,178 1,131 1,622 993 1,121
------------ ------------ ------------ ----------- -----------
TOTAL ASSETS 34,518,199 13,830,705 29,706,976 13,373,336 22,225,568
------------ ------------ ------------ ----------- -----------
LIABILITIES
Income distribution payable 7,648 -- -- -- --
Payable for investment
securities purchased -- 100,612 -- -- --
Payable for capital shares redeemed 1,000 4,877 -- -- --
Due to Adviser (Note 3) 25,140 13,456 28,121 12,494 20,618
------------ ------------ ------------ ----------- -----------
TOTAL LIABILITIES 33,788 118,945 28,121 12,494 20,618
------------ ------------ ------------ ----------- -----------
NET ASSETS $ 34,484,411 $ 13,711,760 $ 29,678,855 $13,360,842 $22,204,950
============ ============ ============ =========== ===========
NET ASSETS CONSIST OF:
Paid-in capital $ 36,154,165 $ 16,015,550 $ 31,417,661 $11,000,584 $14,716,457
Accumulated undistributed
net investment income (loss) -- 1,678 (75,156) 70,877 12,583
Accumulated net realized gains
(losses) on investments (1,487,235) (2,838,153) (6,039,012) 740,973 841,408
Net unrealized appreciation
(depreciation) on investments (182,519) 532,685 4,375,362 1,548,408 6,634,502
------------ ------------ ------------ ----------- -----------
NET ASSETS $ 34,484,411 $ 13,711,760 $ 29,678,855 $13,360,842 $22,204,950
============ ============ ============ =========== ===========
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) 3,457,352 1,676,982 4,504,804 889,228 1,226,782
============ ============ ============ =========== ===========
Net asset value, offering and
redemption price per share (Note 2) $ 9.97 $ 8.18 $ 6.59 $ 15.03 $ 18.10
============ ============ ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
23
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
STATEMENTS 0F OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
FIXED QUALITY LARGE CAP SELECT
INCOME GROWTH GROWTH VALUE VALUE
FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 935,468 $ -- $ -- $ -- $ --
Securities lending income (Note 5) -- 386 544 174 88
Dividends 30,023 105,924 105,699 170,944 312,026
------------ ------------ ------------ ----------- -----------
Total investment income 965,491 106,310 106,243 171,118 312,114
------------ ------------ ------------ ----------- -----------
EXPENSES
Investment advisory fees (Note 3) 181,816 102,647 177,888 88,585 129,080
Trustee fees 6,556 1,985 3,511 1,714 2,501
------------ ------------ ------------ ----------- -----------
Total expenses 188,372 104,632 181,399 90,299 131,581
------------ ------------ ------------ ----------- -----------
NET INVESTMENT
INCOME (LOSS) 777,119 1,678 (75,156) 80,819 180,533
------------ ------------ ------------ ----------- -----------
REALIZED AND UNREALIZED
GAINS (LOSSES) ON
INVESTMENTS
Net realized gains (losses) on investments (153,883) 1,109,532 1,358,723 962,422 915,252
Net change in unrealized appreciation/
(depreciation) on investments 416,810 (33,334) 1,415,343 468,128 1,200,512
------------ ------------ ------------ ----------- -----------
NET REALIZED AND
UNREALIZED GAINS
ON INVESTMENTS 262,927 1,076,198 2,774,066 1,430,550 2,115,764
------------ ------------ ------------ ----------- -----------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 1,040,046 $ 1,077,876 $ 2,698,910 $ 1,511,369 $ 2,296,297
============ ============ ============ =========== ===========
The accompanying notes are an integral part of the financial statements.
24
- --------------------------------------------------------------------------------
MONTEAGLE FIXED INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
FEBRUARY 28, ENDED
2007 AUGUST 31,
(UNAUDITED) 2006
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 777,119 $ 946,783
Net realized losses on investments (153,883) (66,393)
Net change in unrealized appreciation/(depreciation) on investments 416,810 (404,145)
------------ ------------
Net increase in net assets from operations 1,040,046 476,245
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (777,119) (961,285)
From net realized gains on investments -- (369,193)
------------ ------------
Net decrease in net assets from distributions to shareholders (777,119) (1,330,478)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 28,707 243,888
Shares issued in connection with the Fund merger of the
Memorial Government Bond Fund (Note 8) -- 20,419,271
Reinvestment of distributions to shareholders 654,101 179,039
Payments for shares redeemed (8,908,815) (1,627,474)
------------ ------------
Net increase (decrease) in net assets from capital share transactions (8,226,007) 19,214,724
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (7,963,080) 18,360,491
NET ASSETS
Beginning of period 42,447,491 24,087,000
------------ ------------
End of period $ 34,484,411 $ 42,447,491
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ -- $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 2,888 24,341
Shares issued in connection with the Fund merger of the Memorial Fund -- 2,084,102
Shares issued in reinvestment of distribution to shareholders 65,796 18,124
Shares redeemed (896,332) (162,812)
------------ ------------
Net increase (decrease) in shares outstanding (827,648) 1,963,755
Shares outstanding, beginning of period 4,285,000 2,321,245
------------ ------------
Shares outstanding, end of period 3,457,352 4,285,000
============ ============
The accompanying notes are an integral part of the financial statements.
25
- --------------------------------------------------------------------------------
MONTEAGLE QUALITY GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
FEBRUARY 28, ENDED
2007 AUGUST 31,
(UNAUDITED) 2006(a)
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss) $ 1,678 $ (10,282)
Net realized gains on investments 1,109,532 522,694
Net change in unrealized appreciation/(depreciation) on investments (33,334) (875,874)
------------ ------------
Net increase (decrease) in net assets from operations 1,077,876 (363,462)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 415,419 1,497,886
Payments for shares redeemed (6,851,857) (1,341,656)
------------ ------------
Net increase (decrease) in net assets from capital share transactions (6,436,438) 156,230
------------ ------------
TOTAL DECREASE IN NET ASSETS (5,358,562) (207,232)
NET ASSETS
Beginning of period 19,070,322 19,277,554
------------ ------------
End of period $ 13,711,760 $ 19,070,322
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 1,678 $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 51,113 189,723
Shares redeemed (835,118) (168,510)
------------ ------------
Net increase (decrease) in shares outstanding (784,005) 21,213
Shares outstanding, beginning of period 2,460,987 2,439,774
------------ ------------
Shares outstanding, end of period 1,676,982 2,460,987
============ ============
(a) For the eight months ended August 31, 2006.
The accompanying notes are an integral part of the financial statements.
26
- --------------------------------------------------------------------------------
MONTEAGLE LARGE CAP GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
FEBRUARY 28, ENDED
2007 AUGUST 31,
(UNAUDITED) 2006
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment loss $ (75,156) $ (197,925)
Net realized gains on investments 1,358,723 812,184
Net change in unrealized appreciation/(depreciation) on investments 1,415,343 (1,843,704)
------------ ------------
Net increase (decrease) in net assets from operations 2,698,910 (1,229,445)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 121,364 2,179,967
Payments for shares redeemed (1,914,199) (3,538,949)
------------ ------------
Net decrease in net assets from capital share transactions (1,792,835) (1,358,982)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 906,075 (2,588,427)
NET ASSETS
Beginning of period 28,772,780 31,361,207
------------ ------------
End of period $ 29,678,855 $ 28,772,780
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT LOSS $ (75,156) $ --
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 18,080 314,344
Shares redeemed (296,270) (531,692)
------------ ------------
Net decrease in shares outstanding (278,190) (217,348)
Shares outstanding, beginning of period 4,782,994 5,000,342
------------ ------------
Shares outstanding, end of period 4,504,804 4,782,994
============ ============
The accompanying notes are an integral part of the financial statements.
27
- --------------------------------------------------------------------------------
MONTEAGLE SELECT VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD
FEBRUARY 28, ENDED
2007 AUGUST 31,
(UNAUDITED) 2006(a)
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 80,819 $ 133,649
Net realized gains on investments 962,422 389,248
Net change in unrealized appreciation/(depreciation) on investments 468,128 209,348
------------ ------------
Net increase in net assets from operations 1,511,369 732,245
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (53,855) (89,736)
From net realized gains on investments (272,954) --
------------ ------------
Net decrease in net assets from distributions to shareholders (326,809) (89,736)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 67,737 706,685
Reinvestment of distributions to shareholders 286,707 73,313
Payments for shares redeemed (4,243,595) (1,477,227)
------------ ------------
Net decrease in net assets from capital share transactions (3,889,151) (697,229)
------------ ------------
TOTAL DECREASE IN NET ASSETS (2,704,591) (54,720)
NET ASSETS
Beginning of period 16,065,433 16,120,153
------------ ------------
End of period $ 13,360,842 $ 16,065,433
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 70,877 $ 43,913
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 4,637 51,081
Shares issued in reinvestment of distributions to shareholders 19,150 5,277
Shares redeemed (280,644) (105,692)
------------ ------------
Net decrease in shares outstanding (256,857) (49,334)
Shares outstanding, beginning of period 1,146,085 1,195,419
------------ ------------
Shares outstanding, end of period 889,228 1,146,085
============ ============
(a) For the eight months ended August 31, 2006.
The accompanying notes are an integral part of the financial statements.
28
- --------------------------------------------------------------------------------
MONTEAGLE VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR
FEBRUARY 28, ENDED
2007 AUGUST 31,
(UNAUDITED) 2006
- ------------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 180,533 $ 239,004
Net realized gains on investments 915,252 292,710
Net change in unrealized appreciation/(depreciation) on investments 1,200,512 1,119,820
------------ ------------
Net increase in net assets from operations 2,296,297 1,651,534
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (358,645) (186,005)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 249,322 270,917
Payments for shares redeemed (875,259) (966,040)
------------ ------------
Net decrease in net assets from capital share transactions (625,937) (695,123)
------------ ------------
TOTAL INCREASE IN NET ASSETS 1,311,715 770,406
NET ASSETS
Beginning of period 20,893,235 20,122,829
------------ ------------
End of period $ 22,204,950 $ 20,893,235
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 12,583 $ 190,695
============ ============
SUMMARY OF CAPITAL SHARE ACTIVITY
Shares sold 14,241 17,349
Shares redeemed (49,935) (59,388)
------------ ------------
Net decrease in shares outstanding (35,694) (42,039)
Shares oustanding, beginning of period 1,262,476 1,304,515
------------ ------------
Shares oustanding, end of period 1,226,782 1,262,476
============ ============
The accompanying notes are an integral part of the financial statements.
29
- --------------------------------------------------------------------------------
MONTEAGLE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
FEBRUARY 28, ENDED ENDED ENDED ENDED ENDED
2007 AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 9.91 $ 10.38 $ 10.77 $ 10.96 $ 11.17 $ 10.82
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income 0.20 0.38(a) 0.38 0.41 0.42(a) 0.49(a)
Net realized and unrealized
gains (losses) on investments 0.06 (0.31) (0.20) (0.03) (0.08) 0.35
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.26 0.07 0.18 0.38 0.34 0.84
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.20) (0.38) (0.38) (0.41) (0.42) (0.49)
From net realized
gains on investments -- (0.16) (0.19) (0.16) (0.13) --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.20) (0.54) (0.57) (0.57) (0.55) (0.49)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 9.97 $ 9.91 $ 10.38 $ 10.77 $ 10.96 $ 11.17
========== ========== ========== ========== ========== ==========
Total return (b) 2.64%(c) 0.78% 1.72% 3.49% 3.06% 8.00%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 34,484 $ 42,447 $ 24,087 $ 26,423 $ 29,562 $ 37,626
========== ========== ========== ========== ========== ==========
Ratio of operating expenses to
average net assets including
reimbursement/waiver of fees 1.00%(d) 1.00% 1.17% 1.15% 1.14% 0.97%
Ratio of operating expenses to
average net assets excluding
reimbursement/waiver of fees 1.00%(d) 1.13% 1.17% 1.15% 1.14% 0.97%
Ratio of net investment income to
average net assets including
reimbursement/waiver of fees 4.13%(d) 3.75% 3.63% 3.71% 3.76% 4.56%
Portfolio turnover rate 8%(c) 17% 58% 27% 21% 49%
(a) Net investment income per share is based on average shares outstanding
during the period.
(b) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital
gains distributions are reinvested in shares of the Fund. Returns shown do
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
The accompanying notes are an integral part of the financial statements.
30
- --------------------------------------------------------------------------------
MONTEAGLE QUALITY GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
SIX MONTHS
ENDED EIGHT MONTHS YEAR YEAR YEAR YEAR
FEBRUARY 28, ENDED ENDED ENDED ENDED ENDED
2007 AUGUST 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 2006 * 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 7.75 $ 7.90 $ 7.69 $ 7.40 $ 6.16 $ 7.77
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income (loss) 0.00(a) (0.00)(b)(c) (0.00)(b)(d) 0.01(b) (0.01)(b) (0.01)(b)
Net realized and unrealized
gains (losses) on
investments 0.43 (0.15) 0.21 0.29 1.25 (1.60)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations 0.43 (0.15) 0.21 0.30 1.24 (1.61)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income -- -- (0.00)(e) (0.01) (0.00)(f) --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of
period $ 8.18 $ 7.75 $ 7.90 $ 7.69 $ 7.40 $ 6.16
========== ========== ========== ========== ========== ==========
Total return (g) 5.55%(h) (1.90)%(h) 2.77% 4.11% 20.20% (20.72)%
========== ========== ========== ========== ========== ==========
Net assets at end of
period (000's) $ 13,712 $ 19,070 $ 19,278 $ 15,841 $ 13,140 $ 7,775
========== ========== ========== ========== ========== ==========
Ratio of operating expenses to
average net assets including
reimbursement/waiver of fees 1.23%(i) 1.26%(i) 1.26% 1.25% 1.25% 1.20%
Ratio of operating expenses to
average net assets excluding
reimbursement/waiver of fees 1.23%(i) 1.48%(i) 1.54% 1.69% 2.44% 2.64%
Ratio of net investment income
(loss) to average net assets
including reimbursement/
waiver of fees 0.02%(i) (0.08)%(i) (0.04)% 0.19% (0.11)% (0.18)%
Portfolio turnover rate 50%(h) 63% 92% 94% 88% 58%
(a) Amount rounds to less than $0.01.
(b) Net investment income (loss) per share is based on average shares
outstanding during the period.
(c) Net investment loss per share was $(0.0042)
(d) Net investment loss per share was $(0.0031)
(e) Distributions per share were $(0.0032)
(f) Distributions per share were $(0.0038)
(g) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital
gains distributions are reinvested in shares of the Fund. Returns shown do
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(h) Not annualized.
(i) Annualized.
* Fund changed fiscal year end to August 31.
The accompanying notes are an integral part of the financial statements.
31
- --------------------------------------------------------------------------------
MONTEAGLE LARGE CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
FEBRUARY 28, ENDED ENDED ENDED ENDED ENDED
2007 AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 2006 2005 2004 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 6.02 $ 6.27 $ 5.43 $ 4.99 $ 4.62 $ 6.70
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income (loss) (0.02) (0.04)(a) (0.03) (0.04) 0.01 (a) (0.02)(a)
Net realized and unrealized
gains (losses) on investments 0.59 (0.21) 0.87 0.49 0.36 (2.06)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 0.57 (0.25) 0.84 0.45 0.37 (2.08)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income -- -- -- (0.01) -- --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 6.59 $ 6.02 $ 6.27 $ 5.43 $ 4.99 $ 4.62
========== ========== ========== ========== ========== ==========
Total return (b) 9.47%(c) (3.99)% 15.47% 8.89% 8.01% (31.04)%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 29,679 $ 28,773 $ 31,361 $ 12,867 $ 4,061 $ 6,661
========== ========== ========== ========== ========== ==========
Ratio of operating expenses to
average net assets including
reimbursement/waiver of fees 1.21%(d) 1.21% 1.36% 1.37% 1.27% 1.03%
Ratio of operating expenses to
average net assets excluding
reimbursement/waiver of fees 1.21%(d) 1.32% 1.36% 1.37% 1.27% 1.03%
Ratio of net investment income
(loss) to average net assets
including reimbursement/waiver
of fees (0.50%)(d) (0.62)% (0.56)% (0.75)% 0.12% (0.26)%
Portfolio turnover rate 31%(c) 76% 60% 67%(e) 27% 87%
(a) Net investment income (loss) per share is based on average shares
outstanding during the period.
(b) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital
gains distributions are reinvested in shares of the Fund. Returns shown do
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
(e) Portfolio turnover percentage increased 39.59% compared to prior year due
to change in adviser effective September 1, 2003.
The accompanying notes are an integral part of the financial statements.
32
- --------------------------------------------------------------------------------
MONTEAGLE SELECT VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
SIX MONTHS
ENDED EIGHT MONTHS YEAR YEAR YEAR YEAR
FEBRUARY 28, ENDED ENDED ENDED ENDED ENDED
2007 AUGUST 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(UNAUDITED) 2006 * 2005 2004 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 14.02 $ 13.48 $ 13.51 $ 11.84 $ 8.95 $ 10.26
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income 0.09 0.12(a) 0.11(a) 0.12(a) 0.14(a) 0.12(a)
Net realized and unrealized
gains (losses) on investments 1.28 0.50 0.08 1.67 2.90 (1.31)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.37 0.62 0.19 1.79 3.04 (1.19)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.05) (0.08) (0.11) (0.12) (0.15) (0.12)
From net realized gains
on investments (0.31) -- (0.11) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.36) (0.08) (0.22) (0.12) (0.15) (0.12)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 15.03 $ 14.02 $ 13.48 $ 13.51 $ 11.84 $ 8.95
========== ========== ========== ========== ========== ==========
Total return (b) 9.78%(c) 4.60% 1.45% 15.18% 34.24% (11.66)%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 13,361 $ 16,065 $ 16,120 $ 7,763 $ 3,985 $ 2,634
========== ========== ========== ========== ========== ==========
Ratio of operating expenses to
average net assets including
reimbursement/waiver of fees 1.22%(d) 1.26%(d) 1.26% 1.17% 1.25% 1.20%
Ratio of operating expenses to
average net assets excluding
reimbursement/waiver of fees 1.22%(d) 1.49%(d) 1.66% 1.78% 3.87% 5.06%
Ratio of net investment income to
average net assets including
reimbursement/waiver of fees 1.10%(d) 1.25%(d) 0.93% 0.98% 1.44% 1.13%
Portfolio turnover rate 15%(c) 31% 71% 69% 26% 90%
(a) Net investment income per share is based on average shares outstanding
during the period.
(b) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital
gains distributions are reinvested in shares of the Fund. Returns shown do
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
* Fund changed fiscal year end to August 31.
The accompanying notes are an integral part of the financial statements.
33
- --------------------------------------------------------------------------------
MONTEAGLE VALUE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For a Share Outstanding Throughout Each Period
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
FEBRUARY 28, ENDED ENDED ENDED ENDED ENDED
2007 AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
(UNAUDITED) 2006 2005 2004 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value at
beginning of period $ 16.55 $ 15.43 $ 12.16 $ 10.92 $ 9.77 $ 13.34
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) from investment
operations:
Net investment income 0.15 0.19(a) 0.15 0.10 0.16(a) 0.17(a)
Net realized and unrealized
gains (losses) on investments 1.69 1.07 3.16 1.33 1.14 (2.17)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations 1.84 1.26 3.31 1.43 1.30 (2.00)
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.29) (0.14) (0.04) (0.10) (0.15) (0.15)
From net realized gains
on investments -- -- -- (0.09) -- (1.42)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.29) (0.14) (0.04) (0.19) (0.15) (1.57)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value at end of period $ 18.10 $ 16.55 $ 15.43 $ 12.16 $ 10.92 $ 9.77
========== ========== ========== ========== ========== ==========
Total return (b) 11.17%(c) 8.25% 27.30% 13.10% 13.49% (16.95)%
========== ========== ========== ========== ========== ==========
Net assets at end of period (000's) $ 22,205 $ 20,893 $ 20,123 $ 16,328 $ 14,652 $ 19,010
========== ========== ========== ========== ========== ==========
Ratio of operating expenses to
average net assets including
reimbursement/waiver of fees 1.22%(d) 1.23% 1.37% 1.36% 1.36% 1.35%
Ratio of operating expenses to
average net assets excluding
reimbursement/waiver of fees 1.22%(d) 1.35% 1.37% 1.36% 1.36% 1.35%
Ratio of net investment income to
average net assets including
reimbursement/waiver of fees 1.68%(d) 1.14% 1.07% 0.85% 1.72% 1.37%
Portfolio turnover rate 7%(c) 28% 25% 35% 28% 59%
(a) Net investment income per share is based on average shares outstanding
during the period.
(b) Total return is a measure of the change in value of an investment in the
Fund over the periods covered, which assumes any dividends or capital
gains distributions are reinvested in shares of the Fund. Returns shown do
not reflect the deduction of taxes a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) Not annualized.
(d) Annualized.
The accompanying notes are an integral part of the financial statements.
34
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2007 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Monteagle Funds ("the Trust") was organized as a business trust under the laws
of the State of Delaware on November 26, 1997 as Memorial Funds. The Trust
changed its name to Monteagle Funds in July 2006.
The Trust is registered with the SEC as an open-end, management investment
company under the Investment Company Act of 1940. The Trust is authorized by its
Declaration of Trust to issue an unlimited number of shares of beneficial
interest in its series. The Trust currently consists of the following shares of
beneficial interest:
Monteagle Fixed Income Fund
Monteagle Quality Growth Fund (formerly known as the Memorial Growth
Equity Fund)
Monteagle Large Cap Growth Fund
Monteagle Select Value Fund (formerly known as the Memorial Value Equity
Fund)
Monteagle Value Fund (each a "Fund" and collectively the "Funds").
Prior to July 15, 2006, the Trust consisted of the following shares of
beneficial interest:
Memorial Government Bond Fund
Memorial Growth Equity Fund
Memorial Value Equity Fund.
Each Fund is a diversified series of Monteagle Funds. The principal investment
objective of the Monteagle Fixed Income Fund ("Fixed Income Fund") is total
return. The principal investment objective of each of the Monteagle Quality
Growth Fund ("Quality Growth Fund"), the Monteagle Large Cap Growth Fund ("Large
Cap Growth Fund"), the Monteagle Select Value Fund ("Select Value Fund") and the
Monteagle Value Fund ("Value Fund") is long-term capital appreciation.
On June 5, 2006, the Trust and Board of Trustees of the Unified Series Trust
("Unified") approved the reorganization of the Monteagle Value Fund and the
Monteagle Large Cap Growth Fund into two newly created series of the Trust with
the same fund names. In addition, the Trust and Trustees of Unified approved the
merger of the Memorial Government Bond Fund with the Monteagle Fixed Income Fund
(See Note 8). These tax-free reorganizations were effective after the net asset
values were calculated on July 14, 2006.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Funds' significant accounting policies:
SECURITIES 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
35
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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
February 28, 2007, no securities were valued at fair value. 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.
SHARE VALUATION -- Shares of each Fund are sold at net asset value. To calculate
the net asset value, each Fund's assets are valued and totaled, liabilities are
subtracted, and the balance is divided by the number of shares outstanding. The
offering price and redemption price per share are equal to the net asset value
per share for each Fund.
SECURITY TRANSACTIONS -- 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.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Distributions of net investment
income to shareholders are declared daily and paid monthly by the Fixed Income
Fund. Net investment income distributions, if any, for the Quality Growth Fund,
Large Cap Growth Fund, Select Value Fund and the Value Fund are declared and
paid quarterly at the discretion of each Fund's advisor. 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.
The tax character of distributions paid during the six months ended February 28,
2007 was as follows:
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
- --------------------------------------------------------------------------------
Fixed Income Fund $777,119 $ -- $ 777,119
Select Value Fund 187,163 139,646 326,809
Value Fund 358,645 -- 358,645
- --------------------------------------------------------------------------------
The tax character of distributions paid during the period ended August 31, 2006
was as follows:
ORDINARY LONG-TERM
INCOME CAPITAL GAIN TOTAL
- --------------------------------------------------------------------------------
Fixed Income Fund $961,285 $ 369,193 $1,330,478
Select Value Fund 89,736* -- 89,736
Value Fund 186,005* -- 186,005
- --------------------------------------------------------------------------------
* Represents distributions from January 1, 2006 - August 31, 2006.
36
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
3. ADVISORY, SERVICING FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT
Parkway Advisors, L.P. ("Parkway") and Nashville Capital Corporation ("Nashville
Capital"), (each an "Adviser" and, collectively, the "Advisers") serve as the
Advisers to the Funds. Parkway is the Adviser for the Quality Growth Fund and
the Select Value Fund and Nashville Capital is the Adviser for the Fixed Income
Fund, Large Cap Growth Fund and the Value Fund. Subject to the general control
of the Board of Trustees, the Advisers are 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. Each Fund is
authorized to pay its Adviser a fee based on average daily net assets at the
following annual rates:
FIXED QUALITY LARGE CAP SELECT
INCOME GROWTH GROWTH VALUE VALUE
ASSETS FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------
Up to and
including $25 million 0.965% 1.200% 1.200% 1.200% 1.200%
From $25 up to and
including $50 million 0.965% 1.115% 1.115% 1.115% 1.115%
From $50 up to and
including $100 million 0.845% 0.975% 0.975% 0.975% 0.975%
Over $100 million 0.775% 0.875% 0.875% 0.875% 0.875%
- --------------------------------------------------------------------------------
37
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Under the terms of each Fund's advisory agreement (the "Agreement"), the
Advisers manage each Fund's investments subject to approval of the Board and pay
all of the expenses of each Fund except brokerage fees and commissions, taxes,
borrowing costs (such as (a) interest and (b) dividend expenses on securities
sold short), fees and expenses of non-interested person Trustees, and
extraordinary expenses. For the six months ended February 28, 2007, the amounts
earned by and payable to the Advisers were as follows:
ADVISORY
ADVISORY FEES PAYABLE
FEES EARNED AS OF 2/28/2007
- --------------------------------------------------------------------------------
Fixed Income Fund $181,816 $25,140
Quality Growth Fund $120,647 $13,456
Large Cap Growth Fund $177,888 $28,121
Select Value Fund $ 88,585 $12,494
Value Fund $129,080 $20,618
- --------------------------------------------------------------------------------
FIXED INCOME FUND -- Nashville Capital has retained Howe & Rusling Inc. ("H &
R") to serve as the sub-adviser to the Fixed Income Fund. Nashville Capital has
agreed to pay H & R an annual advisory fee of 0.30% of average daily net assets
up to $25 million, 0.25% of average daily net assets from $25 million up to $50
million, and 0.20% of average daily net assets of $50 million and greater.
QUALITY GROWTH FUND -- Parkway has retained Davis Hamilton Jackson & Associates
("DHJA") to serve as the sub-adviser to the Quality Growth Fund. Parkway has
agreed to pay DHJA an annual advisory fee of 0.30% of average daily net assets.
LARGE CAP GROWTH FUND -- Nashville Capital has retained Northstar Capital
Management ("Northstar") to serve as the sub-adviser to the Large Cap Growth
Fund. Nashville Capital has agreed to pay Northstar an annual advisory fee of
0.50% of average daily net assets.
VALUE FUND -- Nashville Capital has retained Robinson Investment Group, Inc.
("Robinson") to serve as the sub-adviser to the Value Fund. Nashville Capital
has agreed to pay Robinson an annual advisory fee of 0.60% of average daily net
assets up to $25 million, 0.45% of average daily net assets from $25 million up
to $50 million, 0.35% of average daily net assets from $50 million up to $100
million, and 0.30% of average daily net assets of $100 million and greater.
Two officers of Parkway are also officers of the Trust; one of them is also an
interested trustee.
MUTUAL FUND SERVICES AGREEMENT
Pursuant to a Mutual Fund Services Agreement between the Funds and Ultimus Fund
Solutions, LLC ("Ultimus") effective February 2, 2007, Ultimus provides
administrative, fund accounting and pricing, and transfer agent and shareholder
services to the Funds. For these services, Ultimus receives an annual base fee
of $225,000, plus an asset-based fee at the annual rate of 0.15% of the Funds
average daily net assets from $200 million to $300 million; 0.125% from $300
million to $400 million; and 0.10% on such assets in excess of $400 million. The
fees payable to Ultimus are paid by the Advisers (not the Funds).
38
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Prior to February 2, 2007, the Trust had a Mutual Fund Services Agreement with
Citco Mutual Fund Services, Inc. ("Citco"). For its services, Citco received an
annual fee that was the greater of $225,000 or an asset-based fee that declined
as the aggregate assets of the Funds increased: 0.05% of the Funds' assets in
excess of $300 million up to $500 million; and 0.03% of the Funds' assets in
excess of $500 million. Citco was earning the minimum fee.
DISTRIBUTION AGREEMENT
Pursuant to the terms of a Distribution Agreement with the Trust effective
February 2, 2007, Ultimus Fund Distributors, LLC (the "Distributor") serves as
the Funds' principal underwriter. The Distributor receives annual compensation
of $6,000 for such services. The fees payable to the Distributor are paid by the
Advisers (not the Funds).
Prior to February 2, 2007, the Trust had a Distribution Agreement with Citco
Mutual Fund Distributors, Inc. For its services, Citco Mutual Fund Distributors,
Inc. received $5,000 annually.
4. SECURITIES TRANSACTIONS
During the six months ended February 28, 2007, cost of purchases and proceeds
from sales and maturities of investment securities, excluding short-term
investments and U.S. government securities, were as follows:
FIXED QUALITY LARGE CAP SELECT
INCOME GROWTH GROWTH VALUE VALUE
FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------
Purchases of
investment securities $ 813,037 $ 8,192,009 $ 9,100,091 $ 2,132,666 $ 1,490,734
=========== =========== =========== =========== ===========
Proceeds from sales of
investment securities $ 3,965,696 $14,825,746 $10,068,251 $ 5,657,056 $ 2,851,319
=========== =========== =========== =========== ===========
- ----------------------------------------------------------------------------------------------
5. SECURITIES LENDING
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.
As of February 28, 2007, the Quality Growth Fund, Large Cap Growth Fund and
Select Value Fund had 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 Funds from securities lending are that
39
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
the borrower may not provide additional collateral when required or may not
return the securities when due or when called by the Funds. As of February 28,
2007, the market value of the securities on loan and the value of the related
collateral was as follows:
MARKET VALUE OF VALUE OF RELATED
SECURITIES ON LOAN COLLATERAL
- --------------------------------------------------------------------------------
Quality Growth Fund $ 362,178 $ 373,269
========== ==========
Large Cap Growth Fund $3,583,524 $3,669,600
========== ==========
Select Value Fund $1,058,562 $1,096,246
========== ==========
6. TAX MATTERS
FEDERAL INCOME TAXES -- It is each Fund's policy to comply with the special
provisions of Subchapter M of the Internal Revenue Code applicable to regulated
investment companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable income, such Fund (but not
the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income and 98% of its
net realized capital gains plus undistributed amounts from prior years.
The tax character of distributable earnings/(deficit) at February 28, 2007 was
as follows:
FIXED QUALITY LARGE CAP SELECT
INCOME GROWTH GROWTH VALUE VALUE
FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------
Accumulated ordinary
income (loss) $ -- $ 1,678 $ (75,156) $ 70,877 $ 12,583
Capital loss carryforwards (1,253,316) (3,918,410) (7,396,689) -- (73,842)
Other gains (losses) (233,919) 1,143,756 1,358,723 740,973 915,252
Net unrealized appreciation
(depreciation) (182,519) 469,186 4,374,316 1,548,408 6,634,500
----------- ----------- ----------- ----------- -----------
Total distributable
earnings (deficit) $(1,669,754) $(2,303,790) $(1,738,806) $ 2,360,258 $ 7,488,493
=========== =========== =========== =========== ===========
- -----------------------------------------------------------------------------------------------------
40
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
As of February 28, 2007, the Funds had the following capital loss carryforwards
for federal income tax purposes. These capital loss carryforwards may be
utilized in the current and future years to offset net realized capital gains,
if any, prior to distributing such gains to shareholders.
AMOUNT EXPIRATION DATE
- --------------------------------------------------------------------------------
Fixed Income Fund $ 367,674 2009
100,359 2010
698,715 2012
86,568 2013
----------
$1,253,316
----------
- --------------------------------------------------------------------------------
Quality Growth Fund $1,492,338 2009
1,658,403 2010
471,453 2011
296,216 2012
----------
$3,918,410
----------
- --------------------------------------------------------------------------------
Large Cap Growth Fund $ 470,032 2008
826,803 2009
425,424 2010
3,044,365 2011
2,165,647 2012
309,209 2013
155,209 2014
----------
$7,396,689
----------
- --------------------------------------------------------------------------------
Value Fund $ 73,842 2012
- --------------------------------------------------------------------------------
The following information is based upon the federal income tax cost of the
investment securities as of February 28, 2007:
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------------------------------------------------------
Fixed Income Fund $34,325,701 $ 128,517 $ (311,036) $ (182,519)
Quality Growth Fund 13,331,622 1,013,954 (544,768) 469,186
Large Cap Growth Fund 25,307,381 4,851,517 (477,201) 4,374,316
Select Value Fund 11,796,968 1,626,378 (77,970) 1,548,408
Value Fund 15,547,447 6,875,044 (240,544) 6,634,500
- --------------------------------------------------------------------------------
41
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
The difference between the federal income tax cost of portfolio investments and
the financial statement cost for the Quality Growth Fund, Large Cap Growth Fund
and Value Fund is due to certain timing differences in the recognition of
capital losses under income tax regulations and accounting principles generally
accepted in the United States of America. These "book/tax" differences are
temporary in nature and are due to the tax deferral of losses on wash sales.
7. 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 February 28, 2007,
the following shareholders held, for the benefit of its customers, the following
percentages of the outstanding shares of each Fund:
PERCENT OWNED
AS OF
SHAREHOLDER FEBRUARY 28, 2007
- --------------------------------------------------------------------------------
Fixed Income Fund Farmers and Merchant Corp. 57%
Hubco Regions Financial Corp. 33%
Quality Growth Fund Charles Schwab & Co., Inc. 53%
Hubco Regions Financial Corp. 28%
Large Cap Growth Fund Farmers and Merchant Corp. 100%
Select Value Fund Hubco Regions Financial Corp. 83%
Value Fund Farmers and Merchant Corp. 100%
- --------------------------------------------------------------------------------
8. REORGANIZATION INVOLVING FIXED INCOME FUND
On July 17, 2006, the Monteagle Fixed Income Fund acquired substantially all of
the assets and liabilities of the Memorial Government Bond Fund (the "Bond
Fund") pursuant to an Agreement and Plan of Reorganization (the
"Reorganization") approved by the Bond Fund shareholders on or about June 28,
2006. The acquisition was accomplished by a tax-free exchange of 2,048,566
shares of the Bond Fund (valued at $9.97 per share) outstanding on July 14, 2006
for 2,084,103 shares of the Fixed Income Fund (valued at $9.80 per share). One
share of the Fixed Income Fund was exchanged for .9836 shares of the Bond Fund.
The Bond Fund's net assets on the date of the reorganization of $20,419,271,
including $371,355 of unrealized depreciation and $1,213,062 of capital loss
carryforwards, were combined with those of the Fixed Income Fund. The aggregate
net assets of the Fixed Income Fund and the Bond Fund immediately before the
acquisition were $21,666,451 and $20,419,271, respectively. The combined assets
immediately after the acquisition amounted to $42,085,722 for 4,293,892 shares
outstanding. After the reorganization was completed, the Fixed Income Fund held
all of the portfolio holdings previously held by the Bond Fund. Under applicable
Internal Revenue Service ("IRS") rules and regulations, the Fixed Income Fund is
required to hold a certain percentage of the Bond Fund's portfolio holdings for
a prescribed period of time.
42
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
9. CONTINGENCIES AND COMMITMENTS
The Funds indemnify the Trust's officers and trustees for certain liabilities
that might arise from their performance of their duties to the Funds.
Additionally, in the normal course of business the Funds enter into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. Each Fund's maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Funds that have not yet occurred. However, based on experience, the Funds expect
the risk of loss to be remote.
10. ACCOUNTING PRONOUNCEMENTS
On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB
Interpretation No. 48 (FIN 48) "Accounting for Uncertainty in Income Taxes." FIN
48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken in the course of preparing the fund's tax
returns to determine whether the tax positions are "more-likely-than-not" of
being sustained by the applicable tax authority. Tax benefits of positions not
deemed to meet the more-likely-than-not threshold would be booked as a tax
expense in the current year and recognized as: a liability for unrecognized tax
benefits; a reduction of an income tax refund receivable; a reduction of
deferred tax asset; an increase in deferred tax liability; or a combination
thereof. Adoption of FIN 48 is required for fiscal years beginning after
December 15, 2006 and is to be applied to all open tax years as of the effective
date. Recent SEC guidance allows implementing FIN 48 in net asset value
calculations as late as the last such calculation in the first required
financial statement reporting period. As a result the Funds will incorporate FIN
48 in their semi-annual report on February 29, 2008.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current generally accepted accounting principles from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of February 28, 2007, the Funds do not believe the
adoption of SFAS No. 157 will impact the amounts reported in the financial
statements, however, additional disclosures may be required about the inputs
used to develop the measurements and the effect of certain of the measurements
reported on the statement of changes in net assets for a fiscal period.
43
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
OTHER INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
PROXY POLICIES -- The Trust has adopted Proxy Voting Polices and Procedures
under which the Fund's vote proxies related to securities 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://www.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. The Funds' Form N-PX is available without charge, upon request, by calling
the Fund toll free at 1-888-263-5593, or on the Securities and Exchange
Commission's website at http://www.sec.gov.
N-Q FILING -- 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 the Monteagle Funds, this would be for the fiscal
quarters ending November 30 and May 31. The Form N-Q filing must be made within
60 days of the end of the quarter. The Funds' Forms N-Q are available on the
SEC's website at http://www.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).
- --------------------------------------------------------------------------------
MONTEAGLE FIXED INCOME FUND
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 30, 2006 (UNAUDITED)
- --------------------------------------------------------------------------------
The shareholders of the Fixed Income Fund approved the following proposal at the
special meeting of shareholders held on November 30, 2006. The description of
the proposal and the number of shares voted are as follows:
Proposal: To approve a new Sub-advisory Agreement between and among the Trust,
Nashville Capital Corporation and Howe and Rusling, Inc.
VOTES FOR VOTES AGAINST VOTES ABSTAINED
- --------------------------------------------------------------------------------
3,309,375.535 0 0
- --------------------------------------------------------------------------------
44
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
ABOUT YOUR FUND'S EXPENSES (UNAUDITED)
- --------------------------------------------------------------------------------
We believe it is important for you to understand the impact of costs on your
investment. As a shareholder of the Funds, you incur two types of costs: (1)
transaction costs and (2) ongoing costs, including management fees and other
Fund expenses. The following examples are intended to help you understand your
ongoing costs (in dollars) of investing in the Funds and to compare these costs
with the ongoing costs of investing in other mutual funds.
A mutual fund's ongoing costs are expressed as a percentage of its average net
assets. This figure is known as the expense ratio. The expenses in the tables
below are based on an investment of $1,000 made at the beginning of the most
recent semi-annual period (September 1, 2006) and held until the end of the
period (February 28, 2007).
The tables that follow illustrate each Fund's costs in two ways:
ACTUAL FUND RETURN - This section helps you to estimate the actual expenses that
you paid over the period. The "Ending Account Value" shown is derived from each
Fund's actual return, and the third column shows the dollar amount of operating
expenses that would have been paid by an investor who started with $1,000 in the
Funds. You may use the information here, together with the amount you invested,
to estimate the expenses that you paid over the period.
To do so, 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
given for the Funds under the heading "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN - This section is intended to help you compare the Funds'
costs with those of other mutual funds. It assumes that each Fund had an annual
return of 5% before expenses during the period shown, but that the expense ratio
is unchanged. In this case, because the return used is not the Funds' actual
returns, the results do not apply to your investment. The example is useful in
making comparisons because the Securities and Exchange Commission requires all
mutual funds to calculate expenses based on a 5% return. You can assess each
Fund's costs by comparing this hypothetical example with the hypothetical
examples that appear in shareholder reports of other funds.
Note that expenses shown in the table are meant to highlight and help you
compare ongoing costs only. The Funds do not charge a sales load.
The calculations assume no shares were bought or sold during the period. Your
actual costs may have been higher or lower, depending on the amount of your
investment and the timing of any purchases or redemptions.
45
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
ABOUT YOUR FUND'S EXPENSES (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
More information about the Funds' expenses, including historical annual expense
ratios, can be found in this report. For additional information on operating
expenses and other shareholder costs, please refer to each Fund's Prospectus.
FIXED INCOME FUND
- -------------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
SEPTEMBER 1, 2006 FEBRUARY 28, 2007 DURING PERIOD*
- -------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,026.40 $5.02
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,019.84 $5.01
- -------------------------------------------------------------------------------------
* Expenses are equal to the Fixed Income Fund's annualized expense ratio of
1.00% for the period, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
QUALITY GROWTH FUND
- -------------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
SEPTEMBER 1, 2006 FEBRUARY 28, 2007 DURING PERIOD*
- -------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,055.50 $6.27
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.70 $6.16
- -------------------------------------------------------------------------------------
* Expenses are equal to the Quality Growth Fund's annualized expense ratio
of 1.23% for the period, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
LARGE CAP GROWTH FUND
- -------------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
SEPTEMBER 1, 2006 FEBRUARY 28, 2007 DURING PERIOD*
- -------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,094.70 $6.28
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.79 $6.06
- -------------------------------------------------------------------------------------
* Expenses are equal to the Large Cap Growth Fund's annualized expense ratio
of 1.21% for the period, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
46
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
ABOUT YOUR FUND'S EXPENSES (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
SELECT VALUE FUND
- -------------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
SEPTEMBER 1, 2006 FEBRUARY 28, 2007 DURING PERIOD*
- -------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,097.80 $6.35
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.74 $6.11
- -------------------------------------------------------------------------------------
* Expenses are equal to the Select Value Fund's annualized expense ratio of
1.22% for the period, multiplied by the average account value over the
period, multiplied by 181/365 (to reflect the one-half year period).
VALUE FUND
- -------------------------------------------------------------------------------------
BEGINNING ENDING
ACCOUNT VALUE ACCOUNT VALUE EXPENSES PAID
SEPTEMBER 1, 2006 FEBRUARY 28, 2007 DURING PERIOD*
- -------------------------------------------------------------------------------------
Based on Actual Fund Return $1,000.00 $1,055.50 $6.27
Based on Hypothetical 5% Return
(before expenses) $1,000.00 $1,018.70 $6.16
- -------------------------------------------------------------------------------------
* Expenses are equal to the Value Fund's annualized expense ratio of 1.23%
for the period, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
47
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
BOARD APPROVAL OF INVESTMENT SUB-ADVISORY AGREEMENT
FOR THE MONTEAGLE FIXED INCOME FUND (UNAUDITED)
- --------------------------------------------------------------------------------
At a Special Meeting of Shareholders on November 30, 2006, Shareholders of the
Fixed Income Fund approved the Sub-advisory Agreement between the Trust, Adviser
and Sub-adviser (Howe and Rusling, Inc. referred to as "H & R"). Proxy materials
were prepared after Board consideration of data concerning H & R. At its meeting
on October 26, 2006, the Board considered:
1. In connection with reviewing data bearing on the nature, quality and
extent of services furnished by H & R to the Fund, the Board assessed data
concerning H & R's staffing, systems, and facilities. The Board also
assessed H & R's non-trust business to see if there are any initiatives
that would dilute service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other
services being provided to the Fund is satisfactory, as evidenced in
part by the performance record of the Fund compared with the
performance records of a peer group of comparable funds. The
comparison revealed that the Fixed Income Fund has been managed with
a long-term perspective and has been strictly managed within stated
objectives and limitations to maintain the desired style; and, while
short-term performance of the strategy has not lead to performance
better than the benchmarks, H & R's long-term performance was better
than the benchmarks;
B. That H & R has made significant expenditures to ensure that it has
the systems and personnel necessary for it to be able to continue to
provide quality service to the Fund's shareholders; and
C. That the Board is satisfied with the research, portfolio management,
and trading services, among others, being provided by H & R to the
Funds, and is charging fair, reasonable, and competitive fees.
2. In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by H & R and its related companies
from the relationship with the Trust, the Board considered comparative
data, data concerning H & R's soft-dollar arrangements, costs borne by H &
R in providing sub-advisory services to the Fund and the profitability of
H & R in light of the estimated profitability analyses which had been
provided by H & R, and other benefits to H & R from serving as the Fund's
sub-adviser.
A. With respect to the soft-dollar arrangements the Board had assessed
all facets of the arrangements - including the quality of trade
execution. It was noted that H & R receives research assistance from
the use of soft dollars generated from Fund portfolio transactions
and that such research assists H & R in providing quality investment
advisory services [however, the arrangements do not affect fixed
income accounts including the Fund]. The Board concluded that the
arrangements do not affect the Fund and are not detrimental to its
shareholders.
B. The Board also noted the risks assumed by H & R in providing
investment advisory services to the Fund, including the capital
commitments which have been made in the past and which continue to
be made by H & R to ensure the continuation of quality of service to
the Fund is made with the recognition that the Fund's sub-advisory
relationship with H & R can be terminated at any time and must be
renewed on an annual basis.
48
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
BOARD APPROVAL OF INVESTMENT SUB-ADVISORY AGREEMENT
FOR THE MONTEAGLE FIXED INCOME FUND (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
3. In connection with assessing data bearing upon the fairness of fee
arrangements, the Board used data concerning funds of similar size and
funds of larger size, as well as data concerning H & R's other clients and
noted:
A. That upon review of the advisory fee structures of the Fund in
comparison with other similarity-managed funds, the level of
investment advisory fees paid by the Fund below the median of
comparable advisory fees;
B. That the expense ratio of the Fund is lower than similarly-managed
funds;
C. That the advisory and other fees payable by the Fund to H & R are
essentially fees which would be similar to those which would have
resulted solely from "arm's-length bargaining, and may well be lower
than fees arrived solely from such arm's-length negotiation; and
D. The fees paid to H & R by other institutional accounts are not lower
than the fees paid by the Fund.
Based on these considerations, among others, the Board, including all the
Independent Trustees, concluded that the continuation of the Sub-Advisory
Agreement was in the best interests of the Fund and its shareholders; that the
services to be performed under the agreement were services required for the
operation of the Fund; H & R had provided satisfactory advisory services to the
Fund in the past, and the fees for the advisory services which H & R would
perform and other benefits from the relationship with the Trust are consistent
with the fees paid by similar funds, are reasonable in light of the comparative
data and would be within the range of what would have been negotiated at arm's
length in light of the circumstances.
49
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
BOARD APPROVAL OF INVESTMENT SUB-ADVISORY AGREEMENT
FOR THE MONTEAGLE QUALITY GROWTH FUND (UNAUDITED)
- --------------------------------------------------------------------------------
On October 26, 2006, the Board met and evaluated the Sub-advisory Agreement
between the Trust, the Adviser and Davis Hamilton Jackson & Associates, L.P.
("DHJA") with respect to the Quality Growth Fund. The Board considered:
1. In connection with reviewing data bearing on the nature, quality and
extent of services furnished by DHJA to the Fund, the Board assessed data
concerning DHJA's staffing, systems, and facilities. The Board also
assessed DHJA's non-trust business to see if there are any initiatives
that would dilute service to the Trust. It was noted:
A. That the breadth and the quality of investment advisory and other
services being provided to the Fund is satisfactory, as evidenced in
part by the performance record of the Fund compared with the
performance records of a peer group of comparable funds. The
comparison revealed that the Quality Growth Fund has been managed
with a long-term perspective and has been strictly managed within
stated objectives and limitations to maintain the desired style;
and, while short-term performance of the strategy has not lead to
performance better than the benchmarks, DHJA's long-term performance
was consistent with the strategy of quality large cap selections;
B. That DHJA has made significant expenditures to ensure that it has
the systems and personnel necessary for it to be able to continue to
provide quality service to the Fund's shareholders; and
C. That the Board is satisfied with the research, portfolio management,
and trading services, among others, being provided by Nashville
Capital to the Funds, and is charging fair, reasonable, and
competitive fees.
2. In connection with reviewing data bearing upon the costs of services to be
provided and profits to be realized by DHJA and its related companies from
the relationship with the Trust, the Board considered comparative data,
data concerning DHJA's soft-dollar arrangements, costs borne by DHJA in
providing sub-advisory services to the Fund and the profitability of DHJA
in light of the estimated profitability analyses which had been provided
by DHJA, and other benefits to DHJA from serving as the Fund's
sub-adviser.
A. With respect to the soft-dollar arrangements the Board had assessed
all facets of the arrangements - including the quality of trade
execution. It was noted that DHJA receives research assistance from
the use of soft dollars generated from Fund portfolio transactions
and that such research assists DHJA in providing quality investment
advisory services. The Board concluded that the arrangements are
consistent with fund brokerage practice and benefit the Fund and its
shareholders.
B. The Board also noted the risks assumed by DHJA in providing
investment advisory services to the Fund, including the capital
commitments which have been made in the past and which continue to
be made by DHJA to ensure the continuation of quality of service to
the Fund is made with the recognition that the Fund's sub-advisory
relationship with DHJA can be terminated at any time and must be
renewed on an annual basis.
50
- --------------------------------------------------------------------------------
MONTEAGLE FUNDS
BOARD APPROVAL OF INVESTMENT SUB-ADVISORY AGREEMENT
FOR THE MONTEAGLE QUALITY GROWTH FUND (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
3. In connection with assessing data bearing upon the fairness of fee
arrangements, the Board used data concerning funds of similar size and
funds of larger size, as well as data concerning DHJA's other clients and
noted:
A. That upon review of the advisory fee structures of the Fund in
comparison with other similarity-managed funds, the level of
investment advisory fees paid by the Fund below the median of
comparable advisory fees;
B. That the expense ratio of the Fund is lower than similarly-managed
funds;
C. That the advisory and other fees payable by the Fund to DHJA are
essentially fees which would be similar to those which would have
resulted solely from "arm's-length bargaining, and may well be lower
than fees arrived solely from such arm's-length negotiation; and
D. The fees paid to DHJA by other institutional accounts are not lower
than the fees paid by the Fund.
Based on these considerations, among others, the Board, including all the
Independent Trustees, concluded that the continuation of the Sub-Advisory
Agreement was in the best interests of the Fund and its shareholders; that the
services to be performed under the agreement were services required for the
operation of the Fund; DHJA had provided satisfactory advisory services to the
Fund in the past, and the fees for the advisory services which DHJA would
perform and other benefits from the relationship with the Trust are consistent
with the fees paid by similar funds, are reasonable in light of the comparative
data and would be within the range of what would have been negotiated at arm's
length in light of the circumstances.
51
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- --------------------------------------------------------------------------------
[LOGO]
MONTEAGLE FUNDS
THE MONTEAGLE FUNDS
INVESTMENT ADVISERS
Parkway Advisors, L.P.
6550 Directors Parkway
Abilene, Texas 79606
Nashville Capital Corporation
209 10th Ave. South, Suite 332
Nashville, TN 37203
DISTRIBUTOR
Ultimus Fund Distributors, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
TRANSFER AGENT, ADMINISTRATOR
& SHAREHOLDER SERVICING AGENT
Ultimus Fund Solutions, LLC
225 Pictoria Drive, Suite 450
Cincinnati, Ohio 45246
This report is submitted for the general information the shareholders of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by a current prospectus, which includes
information regarding the Fund's objectives and policies, experience of its
management, marketability of shares, and other information.
- --------------------------------------------------------------------------------
ITEM 2. CODE OF ETHICS.
Not required
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not required
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not required
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. SCHEDULE OF INVESTMENTS.
Not applicable [schedule filed with Item 1]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
Not applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not adopted procedures by which shareholders may recommend
nominees to the registrant's board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) as of a date within 90 days of the filing date of this report, the
registrant's principal executive officer and principal financial officer have
concluded that such disclosure controls and procedures are reasonably designed
and are operating effectively to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to them
by others within those entities, particularly during the period in which this
report is being prepared, and that the information required in filings on Form
N-CSR is recorded, processed, summarized, and reported on a timely basis.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not required
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2(a)): Attached hereto
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under
the Act (17 CFR 270.23c-1) sent or given during the period covered by the report
by or on behalf of the registrant to 10 or more persons: Not applicable
(b) Certifications required by Rule 30a-2(b) under the Act (17 CFR
270.30a-2(b)): Attached hereto
Exhibit 99.CERT Certifications required by Rule 30a-2(a) under the Act
Exhibit 99.906CERT Certifications required by Rule 30a-2(b) under the Act
SIGNATURES
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.
(Registrant) Monteagle Funds
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By (Signature and Title)* /s/ Carl C. Peterson
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Carl C. Peterson, President
Date May 1, 2007
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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.
By (Signature and Title)* /s/ Carl C. Peterson
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Carl C. Peterson, President
Date May 1, 2007
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By (Signature and Title)* /s/ Mark J. Seger
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Mark J. Seger, Treasurer
Date May 1, 2007
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* Print the name and title of each signing officer under his or her signature.