<PAGE>
PARAGON PORTFOLIO
LETTER TO SHAREHOLDERS
DEAR SHAREHOLDERS:
The staff of Premier Investment Advisors, L.L.C. is pleased to report to you
on the results of operations of Paragon Portfolio for the fiscal year ended
November 30, 1995. In this last Paragon Portfolio letter, we will discuss the
economic and market environment and explain how each of the Paragon mutual
funds fared during the year.
THE ECONOMY/INTEREST RATES
The U.S. economy this year could be best described as "mixed". The economy
exhibited robust real growth of 4.2% during the third quarter and this is
likely to be revised upward. Then in October the purchasing manager's survey
reported that its index fell below 47. A reading below 50 indicates a shrink-
ing economy. During the fourth quarter, the economy has undergone an inventory
correction in which excess inventory accumulated in the third quarter is re-
duced by curtailing production. This appears to be largely complete and the
economy should elevate its growth toward a 2.5% rate through 1996. This would
be benign for financial markets because it is conducive to the assumption that
the economy will remain near full employment with little inflation pressure.
The Federal Reserve can further reduce short-term interest rates in this en-
vironment. Current monetary policy is quite restrictive with the Federal Funds
rates at 5.5% and the inflation rate at 2.8% (12 month Consumer Price Index
ended October 31, 1995). The yield curve (the difference between short-term
and long-term treasury rates) is relatively flat at near 1% and will have to
steepen through lower short-term rates in order to achieve the desired rate of
economic growth. In addition, the budget standoff is likely to be resolved
soon. Each of these issues along with the mixed economic performance will pro-
vide justification for lowering the Federal Funds rate by at least 50 basis
points over the next several quarters.
BOND MARKET
In fiscal 1995, bond investors have enjoyed one of the best market perfor-
mances ever. The Lehman Brothers Aggregate Bond Index, a proxy for the overall
bond market, has earned a total return (income plus price appreciation) of
17.64% during that year. This compares to last year's return of (3.07)%. One
could point to several factors that contributed to this powerful rally, but we
believe the most important one was the failure of inflation to accelerate in
1995 as was widely forecasted.
STOCK MARKET
Taking a cue from bonds, stocks staged a rally during fiscal 1995 that ranks
among the top five in this century, surpassing the most optimistic projec-
tions. The broad based S&P 500 Index achieved a total return of 36.98% during
the year. Growth stocks held an advantage over value stocks by earning 4% ad-
ditional return according to the S&P/Barra indices. Larger capitalization
stocks outperformed smaller ones, bucking the trend of small capitalization
outperformance that began in 1990. Market leadership was held by a few stock
groups, including technology stocks and financial stocks. Investors found it
difficult to attain results equal to the market indices without significant
weightings in these groups. More recently, investors have become increasingly
defensive, worrying about the pace of the economy, whether the Fed would lower
rates, and how much earnings might fall short of expectations. Indeed, stocks
have been punished for falling short of expectations by a few pennies or for
even warning of earning shortfalls. Investors have sought out more certainty
in earnings, favoring financials, utilities, consumer staple and health care
stocks.
SUMMARY
We believe that volatility will characterize the stock market in 1996. Earn-
ings may show a tendency to disappoint given tough year over year comparisons
and the effects of economic slowing. A market correction of 5-10% remains
quite possible. However, based on expected earnings in 1996, the low inflation
and falling interest rates, the risk/reward trade off for stocks appears fa-
vorable. Remarkably, the price-earnings ratio, a major valuation tool, has ac-
tually remained stable at 17 over the last twelve months. This is due to the
strong earnings progress among U.S. companies which offsets the healthy price
gains of stock market indices.
Let us now examine how the individual Paragon funds navigated through the
dynamic landscape of 1995.
SHORT-TERM GOVERNMENT FUND
For the fiscal year ended November 30, 1995, the Class A shares of the fund
sustained a return of 9.35% based on net asset value (NAV). This compares with
the Lipper Short U.S. Government Fund Average of 10.88%, and the Lehman Broth-
ers Mutual Fund Short (1-3) year U.S. Government Index return of 10.22% for
the same time period. Class B shares of the Fund recorded a total return of
8.55% based on NAV for the year ended November 30, 1995.
The fund underperformed these benchmarks due to the large holdings in float-
ing rate securities. These securities served the fund well in 1994 but earn
lower total returns than comparable fixed rate securities when interest rates
decline. All of the floating rate securities were sold earlier in the year.
These proceeds were reinvested in the
<PAGE>
PARAGON PORTFOLIO
LETTER TO SHAREHOLDERS--(CONTINUED)
Treasury market in the three to five year area of the curve. Callable agency
issues were also sold to increase total return potential of the fund.
The reduction of coupon income also has been a factor in the
underperformance of this fund. The maturities along with the switching of
callable issues into current market coupons has caused the fund to lag its
peers, but is expected to benefit fund shareholders if short-term rates de-
cline further in 1996, as we expect.
INTERMEDIATE-TERM BOND FUND
For the fiscal year ended November 30, 1995, the Class A shares of the fund
sustained a return of 16.92% based on NAV. This compares with the Lipper In-
termediate U.S. Government Fund Average of 13.88%, and the Lehman Brothers Mu-
tual Fund Intermediate Government/Corporate Bond Index return of 14.54% for
the same time period. Class B shares of the fund recorded a total return of
16.11% based on NAV for the year ended November 30, 1995.
Several changes were made in the portfolio to further enhance the total re-
turn as interest rates continued to move downward throughout the year. The
first was to replace the majority of the callable issues with similar fixed
rate securities that tend to perform better in the current market environment.
The other significant change was in the mortgage-backed sector where CMO PAC
securities were replaced with conventional pass-through pools. These changes
were due to inefficiency in the current CMO market and the ability of the
pools to more closely track the returns of their corresponding treasuries
along the yield curve. Higher than average current income continues to add to
the overall return of the fund.
LOUISIANA TAX-FREE FUND
For the fiscal year ended November 30, 1995, the Class A shares of the fund
sustained a return of 13.11% based on NAV. This compares with the Lipper In-
termediate Municipal Debt Fund Average return of 12.93%, and the Lehman Broth-
ers 7-Year Municipal Bond Index return of 15.25% for the same time period.
Class B shares of the fund recorded a total return of 12.52% based on NAV for
the year ended November 30, 1995.
Louisiana has continued to lag behind in the municipal market due to the
continued concerns with the Louisiana economy. The gambling issue has become
critical to investors in Louisiana due to the uncertainty of how much income
the state and local governments are going to derive from these operations. The
actual revenue has been much less than forecasted. This, along with already
existing budget problems, continues to have the national rating services look-
ing unfavorably at Louisiana debt. These concerns have kept current yields
higher than most other states' debt despite the strong performance of the bond
market in general. The fund continues to carry a high level of AAA insured pa-
per and has reduced the exposure to more volatile issues as we move into 1996.
VALUE GROWTH FUND
During the fiscal year ended November 30, 1995, the Class A shares of the
fund obtained a total return of 29.57% at NAV compared to the S&P 500 Index
return of 36.98% and the Lipper Growth and Income Fund Index return of 29.75%.
The Class B shares of the fund earned 28.74% based on NAV for the year ended
November 30, 1995.
Several factors caused the fund's return to lag that of the S&P 500. First,
the fund's average market capitalization was $19.8 billion as of September 30,
1995 (the most recent data available) compared to the S&P 500 average capital-
ization of $28.4 billion. As stated previously, market capitalization was pos-
itively correlated with investment results in 1995. Another factor was the
disappointing market behavior of several consumer cyclical stocks in the fund.
The shares of Home Depot, Inc., Wal-Mart Stores, Inc., Heilig Myers Co. and
Office Depot, Inc. significantly underperformed the market averages. Two con-
sumer-related convertible bond issues held by the fund were sold after posting
quite disappointing earnings results. These were the Sports and Recreation,
Inc. and the Michaels Stores, Inc. convertible bonds. Investors in the retail-
ing industry found that even industry-leading companies struggled with slug-
gish to negative same store sales results. Many failed to meet analyst earn-
ings expectations. These pressures significantly held back the stock results
in this industry in 1995.
Several energy-related stocks were sold when fundamentals failed to materi-
alize as expected. They include Murphy Oil Co., Sun Co., Inc. and Texaco, Inc.
These stocks diluted the strong results of the fund's holdings in Amoco Corp.
and Western Atlas, Inc.
Fund shareholders benefited from strong performances in several market sec-
tors. Though an underweighted stance was maintained in capital equipment and
services stocks, strong price gains by Loral Corp., General Electric Co.,
Johnson Controls, Inc. and Allied Signal, Inc. enhanced the fund's return. We
moved the fund to an overweighted position in financial stocks during the
year. Excellent returns were earned by holdings in Citicorp, Southtrust Corp.,
an Alabama-based bank holding company, Federal National Mortgage Assn., CCB
2
<PAGE>
PARAGON PORTFOLIO
LETTER TO SHAREHOLDERS--(CONTINUED)
Financial Corp. and Coral Gables Fedcorp, Inc., the latter two being south-
eastern-based savings and loans.
Technology stocks were slightly overweighted in 1995 and the fund's holdings
were among the market leaders. Intel Corp., the fund's largest position at the
end of the fiscal year, almost doubled during the year as shown on the table
below. Texas Instruments, Inc. achieved even better results. Cisco Systems,
Inc., the third largest fund holding, rose 89% since its purchase on June 7,
1995.
The ten largest holdings of the Value Growth Fund on November 30, 1995 are
listed below:
<TABLE>
<CAPTION>
PERCENTAGE OF PRICE
SECURITY NET ASSETS APPRECIATION*
-------- ------------- -------------
<S> <C> <C>
Intel Corp. 4.1% 93.7%
WorldCom, Inc. 3.7 61.5
Cisco Systems, Inc. 3.6 89.0
AT&T Corp. 3.6 43.1
Amoco Corp. 3.1 9.5
Dow Chemical Co. 2.9 10.7
United Healthcare Corp. 2.8 32.0
Foundation Health Corp. 2.8 53.1
Citicorp 2.7 14.6
Texas Instruments, Inc. 2.6 102.0
</TABLE>
* For the period from the latter of December 1, 1994, or the purchase date, to
November 30, 1995.
VALUE EQUITY INCOME FUND
During the fiscal year ended November 30, 1995 the Class A shares of the
fund earned 35.15% compared to 36.98% for the S&P 500 Index, and 27.62% for
the Lipper Equity Income Fund Index. The Class B shares of the fund earned
34.14% during the year. The fund was in line with the S&P 500's return due to
a long standing emphasis on large capitalization stocks which outperformed
smaller issues in fiscal 1995. In addition, excellent stock selection within
several key stock groups greatly propelled the funds results. For example, in
the consumer noncyclical sector, IBP, Inc. appreciated in value during the
year to become the fund's largest holding by fiscal year end. Several capital
equipment stocks we held all year outperformed the average greatly. These in-
clude Lockheed Martin Corp. (formerly Martin Marietta Corp.), Raytheon Co. and
Deere & Co.
In the financial sector, we incorrectly remained underweighted in the group,
especially versus the Lipper Equity Income Fund Index, yet individual fund
holdings in this sector performed extremely well, including Merrill Lynch &
Co., Inc., which was sold for a significant gain, Federal National Mortgage
Assn., which was up for the year and the Citicorp convertible preferred issue,
another top ten fund holding which rose in value.
In the technology sector the fund remained close to a market weighting and
experienced very positive results. Texas Instruments, Inc., a major semi-con-
ductor manufacturer, rose 102% during the year, while Intel Corp. exhibited an
impressive 93.7% rise. Texas Instruments, Inc. was trimmed back during the
year to capture profits and control the fund's risk level.
The fund's top ten holdings as of November 30, 1995 are listed below:
<TABLE>
<CAPTION>
PRICE
PERCENTAGE OF APPRECIATION
SECURITY NET ASSETS (DEPRECIATION)*
-------- ------------- ---------------
<S> <C> <C>
IBP, Inc. 4.3% 85.9%
Lockheed Martin Corp. 3.7 68.4
Citicorp Convertible Preferred 3.7 67.7
Mobil Corp. 3.4 22.4
Dow Chemical Co. 3.4 10.7
Philip Morris Companies, Inc. 3.3 46.9
International Business Machines Corp. 3.2 (12.8)
Schering Plough Corp. 3.1 53.3
First Tennessee National Corp. 2.7 41.5
Premark International, Inc. 2.7 12.1
</TABLE>
* For the period from the latter of December 1, 1994, or the purchase date, to
November 30, 1995.
GULF SOUTH GROWTH FUND
For the fiscal year ended November 30, 1995, the Class A shares of the fund
earned a total return of 25.07% based on NAV while the S&P 500 Index earned
36.98%, the Russell 2000 Index earned 28.52% and the Lipper Small Company
Growth Fund Index earned 32.81%. The Class B shares of the fund earned an an-
nual return of 24.21% based on NAV for the year ended November 30, 1995.
The S&P 500 Index performance advantage over the fund and the other indices
mentioned above can be explained to some extent by the wide variation in aver-
age market capitalization of the S&P 500 versus the others. Large capitaliza-
tion stocks such as those in the S&P 500 outperformed smaller capitalization
stocks in 1995.
The fund's underperformance for the year is due to a number of factors. An
important one was the poor performance of several technology stocks purchased
in the sec ond half of 1995. We increased the weighting in technology stocks
from 7.9% last year to 14.6% of net assets by the end of fiscal 1995. However,
several of the issues purchased experienced earnings disappointments and were
sold. These stocks offset some excellent gains delivered in other technology
stocks, including Acxiom Corp., Mobile
3
<PAGE>
PARAGON PORTFOLIO
LETTER TO SHAREHOLDERS--(CONTINUED)
Telecommunications Technology Corp. and SCI Systems, Inc.
Consumer cyclical stocks also dampened the fund's results during the year.
The sluggish consumer spending environment was evident in the earning results
of several issues held in the fund, including River Oaks Furniture, Inc., a
manufacturer of upholstered residential furniture; Cameron Ashley, Inc., a
distributor of home building supplies; Sports and Recreation, Inc.; Michaels
Stores, Inc.; and Heilig Myers Co. The latter two stocks were sold during the
year. Surprisingly, these well managed companies declined in price during the
year when stocks in general rallied strongly. Investors have fled many con-
sumer cyclical stocks whose underlying earnings have not met expectations.
In the consumer noncyclical sector, we were disappointed by the performance
of several high growth restaurant stocks, including Longhorn Steaks, Inc. and
Wall Street Deli, Inc. Even Cracker Barrel Old Country Store, an historically
reliable growth company, suffered an earnings slowdown, causing the stock to
languish. Fortunately, there were some strong gains in this sector by Apple
South, Inc., an Applebee's franchiser, and Isolyzer Company, Inc., a manufac-
turer of disposable surgical supplies.
Sectors in which our efforts paid off handsomely included the financial sec-
tor which we overweighted during the year. Three of the fund's top ten hold-
ings were in this sector. Stocks which stood out among many strong gainers in-
cluded United Companies Financial Corp. and Medaphis Corp.
In addition, the utilities sector performed well due to gains by EqualNet
Holding Corp., a long distance phone service provider based in Houston, Texas
and WorldCom, Inc., formerly LDDS Communications, Inc.
The table below lists the fund's ten largest holdings as of November 30,
1995:
<TABLE>
<CAPTION>
PERCENTAGE OF PRICE
SECURITY NET ASSETS APPRECIATION*
-------- ------------- -------------
<S> <C> <C>
WorldCom, Inc. 6.0% 61.5%
Medaphis Corp. 5.3 65.6
United Companies Financial Corp. 5.2 140.0
Input/Output, Inc. 4.7 138.1
First Data Corp. 4.6 89.1
Accustaff, Inc. 4.0 209.7
Autozone, Inc. 3.6 13.7
SCI Systems, Inc. 3.4 81.1
Office Depot, Inc. 3.4 3.2
Atlantic Southeast Airlines, Inc. 3.2 72.1
</TABLE>
* For the period from the latter of December 1, 1994, or the purchase date, to
November 30, 1995.
In conclusion, we thank you for your support of Paragon Portfolio.
/s/ Donald E. Allred
- --------------------
Donald E. Allred
President & Chief Investment Officer
Premier Investment Advisors, L.L.C.
December 22, 1995
4
<PAGE>
PARAGON PORTFOLIO
PERFORMANCE COMPARISON
In accordance with the requirements of the Securities and Exchange Commission,
the following data is supplied for the periods ended November 30, 1995. Each of
the following Paragon Funds' performance, based on an initial investment of
$10,000 (assuming both no sales charge, and the maximum sales charge of 4.5% or
the contingent deferred sales charge ("CDSC"), as applicable) is compared to the
following:
Fund Compared To:
---- ------------
Short-Term Government: Lehman Brothers Mutual Fund Short (1-3)
Government Index ("Lehman 1-3 Gov't Index");
Lipper Short U.S. Government Fund Average
("Lipper Sh Gov't Avg").
Intermediate-Term Bond: Lehman Brothers Mutual Fund Intermediate
Government/Corporate Index ("Lehman Int
Gov't/Corp Index"); Lipper Intermediate U.S.
Government Fund Average ("Lipper Int Gov't
Avg").
Louisiana Tax-Free: Lehman Brothers 7-Year Municipal Bond Index
("Lehman 7-Yr Muni Index"); Lipper
Intermediate Municipal Debt Fund Average
("Lipper Int Muni Avg").
Value Growth: Standard & Poor's 500 Index with Income ("S&P
500"); Lipper Growth and Income Fund Index
(Lipper Gr & Inc Index").
Value Equity Income: S&P 500; Lipper Equity Income Fund Index
("Lipper Equity Inc Index").
Gulf South Growth: S&P 500, Lipper Small Company Growth Fund Index
("Lipper Sm Co Growth Index").
All performance data shown represents past performance and should not be
considered indicative of future performance which will fluctuate as market
conditions change. The investment return and principal value of an investment
will fluctuate with changes in market conditions so that an investor's shares,
when redeemed, may be worth more or less than their original cost.
Short-Term Government Fund
<TABLE>
<CAPTION>
Class A\r Class A\ Lehman 1-3\rGov't
(w/sales charge) (no sales charge) Index Lipper Sh\rGov't Avg
<S> <C> <C> <C> <C>
1/1/90(a) 9,550 10,000 10,000 10,000
11/30/90 10,257 10,740 10,850 10,747
11/30/91 11,374 11,910 12,076 11,942 Short Term
11/30/92 12,090 12,660 12,907 12,692 Government Fund
11/30/93 12,805 13,408 13,677 13,547 Class A
11/30/94 12,821 13,425 13,774 13,343
11/30/95 14,020 14,680 15,182 14,795
</TABLE>
Average Annual Total Returns
Class A Class A
(no sales charge) (with sales charge)
One Year 9.35% 4.44%
Five Years 6.45% 5.47%
Since Inception (b) 6.74% 5.91%
<TABLE>
<CAPTION>
Class B\r(w/CDSC) Class B\r(no/CDSC) Lehman 1-3\rGov't Lipper Sh\rGov't Avg
Index
<S> <C> <C> <C> <C>
11/1/94 10,000 10,000 10,000 10,000 Short Term
11/30/94 9,971 9,971 9,958 9,960 Government Fund
Class B
11/30/95 10,403 10,824 10,976 11,044
</TABLE>
Average Annual Total Returns
Class B Class B
(no CDSC) (with CDSC)
One Year 8.55% 3.31%
Since Inception (c) 7.23% 3.48%
(a) For comparative purposes, initial investments are assumed to be made on
the first day of the month following the Fund's inception.
(b) Commenced operations on December 29, 1989.
(c) Commenced operations on October 19, 1994.
5
<PAGE>
PARAGON PORTFOLIO
PERFORMANCE COMPARISON--(CONTINUED)
Intermediate-Term Bond Fund
<TABLE>
<CAPTION>
Class A\r(w/sales Class A\r(no sales Lehman Int\r Gov't Lipper Int\rGov't Average
charge) charge) Corp Index
<S> <C> <C> <C> <C>
1/1/90(a) 9,550 10,000 10,000 10,000
11/30/90 10,147 10,625 10,769 10,717
11/30/91 11,500 12,041 12,216 12,081 Intermediate
11/30/92 12,501 13,090 13,234 12,993 Term
11/30/93 13,792 14,442 14,522 14,178 Bond Fund
11/30/94 13,133 13,752 14,300 13,661 Class A
11/30/95 15,355 16,079 16,379 15,557
</TABLE>
Average Annual Total Returns
Class A Class A
(no sales charge) (with sales charge)
One Year 16.92% 11.65%
Five Years 8.63% 7.64%
Since Inception (b) 8.40% 7.56%
<TABLE>
<CAPTION>
Class B\r(w/CDSC) Class B\r(no CDSC) Lehman Int\r Gov't Lipper Int\rGov't Average Intermediate
Corp Index Term
<S> <C> <C> <C> <C> Bond Fund
10/1/94(a) 10,000 10,000 10,000 10,000 Class B
11/30/94 9,929 9,929 9,954 9,901
11/30/95 11,100 11,529 11,401 11,276
</TABLE>
Average Annual Total Returns
Class B Class B
(no CDSC) (with CDSC)
One Year 16.11% 10.81%
Since Inception (c) 12.81% 9.23%
<TABLE>
<CAPTION>
Louisianna Tax-Free Fund
Class A\r(w/sales Class A\r(no sales Lehman 7-Year\r Muni Lipper Int\rMuni Avg
charge) charge) Index
<S> <C> <C> <C> <C>
1/1/90(a) 9,550 10,000 10,000 10,000
11/30/90 10,225 10,706 10,710 10,616 Louisiana
11/30/91 11,089 11,611 11,743 11,551 Tax-Free
11/30/92 11,838 12,614 12,854 12,571 Fund
11/30/93 13,209 13,831 14,053 13,768 Class A
11/30/94 12,816 13,420 13,709 13,311
11/30/95 14,496 15,179 15,800 15,032
</TABLE>
Average Annual Total Returns
Class A Class A
(no sales charge) (with sales charge)
One Year 13.11% 8.02%
Five Years 7.23% 6.24%
Since Inception (b) 7.37% 6.53%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class B\r(w/CDSC) Class B\r(no CDSC) Lehman 7-Year/rMuni Lipper Int\rMuni Avg
Index
10/1/94(a) 10,000 10,000 10,000 10,000 Louisiana
11/30/94 9,766 9,766 9,754 9,736 Tax-Free
Fund
Class B
11/30/95 10,568 10,989 11,242 10,995
</TABLE>
Average Annual Total Returns
Class B Class B
(no CDSC) (with CDSC)
One Year 12.52% 7.30%
Since Inception (d) 7.53% 4.09%
(a) For comparative purposes, initial investments are assumed to be made on
the first day of the month following the Fund's inception.
(b) Commenced operations on December 29, 1989.
(c) Commenced operations on September 28, 1994.
(d) Commenced operations on September 16, 1994.
6
<PAGE>
PARAGON PORTFOLIO
PERFORMANCE COMPARISON--(CONTINUED)
Value Growth Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A\r(w/sales Class A\r(no sales S&P 500 Lipper Gr &\r Inc.
charge) charge) Index Value
1/1/90(a) 9550 10000 10000 10000 Growth
11/30/90 9445 9891 9426 9175 Fund
11/30/91 11804 12360 11343 11020 Class A
11/30/92 14669 15360 13440 13095
11/30/93 16155 16917 14796 14929
11/30/94 15458 16187 14952 15091
11/30/95 20029 20973 20481 19581
</TABLE>
Average Annual Total Return
Class A Class A
(no sales charge) (with sales charge)
One Year 29.57% 23.74%
Five Years 16.21% 15.15%
Since Inception (b) 13.45% 12.57%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class B\r(w/CDSC) Class B\r(no CDSC) S&P 500 Lipper Gr &\r Inc
Index Value
10/1/94(a) 10000 10000 10000 10000 Growth
11/30/94 9478 9478 9853 9682 Fund
Class B
11/30/95 11786 12202 13497 12562
Average Annual Total Return
Class B Class B Value Equity
(no CDSC) (with CDSC) Income
One Year 28.74% 23.55% Fund
Since Inception (b) 14.48% 11.17%
Value Equity Income Fund
Class A\r(w/sales Class A\r(no sales S&P 500 Lipper Equity\r Inc
charge) charge) Index Value
1/1/90(a) 9550 10000 10000 10000 Equity
11/30/90 8778 9191 9426 9315 Fund
11/30/91 10536 11032 11343 11166 Class A
11/30/92 12606 13200 13440 12936
11/30/93 13897 14551 14796 14726
11/30/94 13662 14306 14952 14725
11/30/95 18464 19335 20481 18791
</TABLE>
Average Annual Total Return
Class A Class A
(no sales charge) (with sales charge)
One Year 35.15% 29.07%
Five Years 16.03% 14.96%
Since Inception (b) 11.91% 11.04%
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class B\r(w/CDSC) Class B\r(no CDSC) S&P 500 Lipper Equity &\r Inc.
Index Value
11/1/94(a) 10000 10000 10000 10000 Equity
11/30/94 9546 9546 9636 9630 Fund
Class B
11/30/95 12384 12805 13199 12290
</TABLE>
Average Annual Total Return
Class B Class B
(no CDSC) (with CDSC)
One Year 34.14% 28.89%
Since Inception (d) 24.98% 21.48%
(a) For comparative purposes, initial investments are assumed to be made on
the first day of the month following the Fund's inception.
(b) Commenced operations on December 29, 1989.
(c) Commenced operations on September 9, 1994.
(d) Commenced operations on October 3, 1994.
7
<PAGE>
PARAGON PORTFOLIO
PERFORMANCE COMPARISON--(CONTINUED)
Gulf South Growth Fund
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A\r(w/sales Class A\r(no sales S&P 500 Lipper Sm Co\Growth
charge) charge) Index Gulf
7/1/91 9550 10000 10000 10000 South
11/30/91 11090 11612 10246 11001 Growth
11/30/92 14260 14932 12140 13154 Class A
11/30/93 15558 16291 13365 15084
11/30/94 14523 15207 13507 15304
11/30/95 18164 19019 18502 20325
Average Annual Total Return
Class A Class A
(no sales charge) (with sales charge)
One Year 25.07% 19.44%
Since Inception (b) 15.65% 14.45%
Class B\r(w/CDSC) Class B\r(no CDSC) S&P 500 Lipper Sm Co\Growth
Index Gulf
10/1/94 (a) 10000 10000 10000 10000 South
11/30/94 9183 9183 9853 9768 Growth
Class B
11/30/95 10999 11406 13497 12972
Average Annual Total Return
Class B Class B
(no CDSC) (with CDSC)
One Year 24.21% 19.12%
Since Inception (c) 10.49% 7.21%
</TABLE>
(a) For comparative purposes, initial investments are assumed to be made on
the first day of the month following the Fund's inception
(b) Commenced operations on July 1, 1991.
(c) Commenced operations on September 12, 1994.
8
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON TREASURY MONEY MARKET FUND
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY AMORTIZED
AMOUNT RATE DATE COST
- ------------ -------- -------- ------------
U.S. TREASURY OBLIGATIONS--19.1%
United States Treasury Bills
$ 10,000,000 5.58%(a) 05/02/96 $ 9,771,350
10,000,000 5.42(a) 05/23/96 9,744,800
10,000,000 5.49(a) 05/30/96 9,732,522
25,000,000 5.48(a) 07/25/96 24,139,229
United States Treasury
Notes
10,000,000 6.13 07/31/96 10,034,615
------------
Total U.S. Treasury
Obligations........... $ 63,422,516
------------
PRINCIPAL INTEREST MATURITY AMORTIZED
AMOUNT RATE DATE COST
- ------------ -------- -------- ------------
REPURCHASE AGREEMENTS--81.3%
Joint Repurchase Agreement Account
$269,600,000 5.91% 12/01/95 $269,600,000
------------
Total Investments....... $333,022,516(b)
============
- ------------------------------------------------------------------------------
(a) The rate disclosed for this security represents the yield to maturity.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON SHORT-TERM GOVERNMENT FUND
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ----------- -------- -------- ------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--22.8%
Federal Farm Credit Bank
$ 1,735,000 5.31% 05/26/98 $ 1,726,620
Federal Home Loan Bank
2,000,000 6.85 02/25/97 2,032,960
4,000,000 6.60 04/13/99 4,113,440
Federal National Mortgage Assn.
5,000,000 8.45 10/21/96 5,129,700
3,000,000 5.35 10/10/97 2,986,710
2,000,000 5.30 03/11/98 1,981,260
3,600,000 6.90 03/27/98 3,704,148
4,000,000 5.35 04/01/98 3,965,160
4,000,000 5.18 02/01/99 3,926,560
------------
Total U.S. Government Agency Obligations
(Cost $29,404,446).......................... $ 29,566,558
------------
U.S. TREASURY OBLIGATIONS--73.1%
United States Treasury Notes
$ 5,500,000 6.25% 01/31/97 $ 5,552,855
6,000,000 6.88 04/30/97 6,118,500
3,000,000 6.38 06/30/97 3,044,460
10,000,000 5.75 10/31/97 10,066,000
3,000,000 7.38 11/15/97 3,107,880
9,000,000 6.00 11/30/97 9,104,310
5,000,000 5.13 03/31/98 4,969,850
1,500,000 5.13 04/30/98 1,490,700
10,000,000 6.13 05/15/98 10,164,300
9,000,000 5.13 06/30/98 8,940,690
5,000,000 6.38 01/15/99 5,127,850
5,000,000 6.00 10/15/99 5,089,200
10,000,000 7.13 02/29/00 10,588,600
11,000,000 6.25 05/31/00 11,309,210
------------
Total U.S. Treasury Obligations (Cost
$94,473,775).......................... $94,674,405
------------
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ------------
REPURCHASE AGREEMENTS--3.7%
State Street Bank & Trust Company,
dated 11/30/95, repurchase price
$4,750,693 (U.S. Treasury Note:
$4,849,888, 5.63%, 01/31/98)
$4,750,000 5.25% 12/01/95 $ 4,750,000
------------
Total Repurchase Agreements (Cost
$4,750,000)....................................... $ 4,750,000
------------
Total Investments (Cost $128,628,221(a))...... $128,990,963
============
- ------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost.............................. $ 1,051,618
Gross unrealized loss for investments in which
cost exceeds value.............................. (688,876)
------------
Net unrealized gain.............................. $ 362,742
============
- ------------------------------------------------------------------------------
(a) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON INTERMEDIATE-TERM BOND FUND
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ------------
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)--6.0%
Federal National Mortgage Assn. REMIC Trust 1992-205, Class K
$5,584,000 6.50% 05/25/21 $ 5,543,963
Federal National Mortgage Assn. REMIC Trust 1993-110, Class H
5,000,000 6.50 05/25/23 4,965,350
Federal National Mortgage Assn. REMIC Trust 1993-183, Class H
5,000,000 6.50 03/25/22 4,965,100
Federal National Mortgage Assn. REMIC Trust 1993-225, Class VG
3,595,500 6.35 08/25/13 3,533,945
------------
Total CMOs (Cost $19,344,206)................
$ 19,008,358
------------
CORPORATE OBLIGATIONS--26.5%
BASIC MATERIALS & NATURAL RESOURCES--0.9%
Monsanto Co.
$3,000,000 6.00% 07/01/00 $ 3,013,260
------------
CONSUMER CYCLICAL--1.1%
Dayton Hudson Corp.
1,250,000 7.25 09/01/04 1,317,750
Dillard Department Stores, Inc.
2,000,000 8.75 06/15/98 2,132,940
------------
3,450,690
------------
CONSUMER NONCYCLICAL--2.7%
Anheuser Busch Companies, Inc.
1,000,000 7.00 09/01/05 1,045,520
Baxter International, Inc.
2,000,000 7.25 02/15/08 2,107,600
Coca Cola Enterprises, Inc.
2,000,000 7.00 11/15/99 2,066,400
Philip Morris Co., Inc.
1,000,000 9.00 01/01/01 1,114,930
2,000,000 7.13 08/15/02 2,078,200
------------
8,412,650
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ------------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
FINANCIAL--16.6%
AmSouth Bancorporation
$2,000,000 9.38% 05/01/99 $ 2,197,200
Aon Corp.
2,000,000 6.70 06/15/03 2,029,140
Bear Stearns Companies, Inc.
5,000,000 8.25 02/01/02 5,462,000
Boatmen's Bancshares, Inc.
5,000,000 7.63 10/01/04 5,372,150
Capital Holding Corp.
2,000,000 8.90 10/20/99 2,180,740
1,000,000 8.98 09/23/03 1,126,320
2,850,000 7.82 06/23/04 3,030,747
Comerica, Inc.
2,990,000 7.25 10/15/02 3,195,951
First Union Corp.
3,000,000 7.05 08/01/05 3,117,810
Ford Motor Credit Corp.
2,000,000 6.75 05/15/05 2,035,420
General Electric Capital Corp.
2,000,000 8.65(a) 05/01/18 2,022,920
Harris Bancorp., Inc.
1,000,000 9.38 06/01/01 1,152,850
J.P. Morgan & Co., Inc.
3,000,000 7.25 10/01/10 3,171,750
Merrill Lynch & Co., Inc.
3,000,000 8.00 02/01/02 3,253,800
1,000,000 8.23(a) 04/30/02 1,044,670
Morgan Stanley Group, Inc.
2,000,000 9.38 06/15/01 2,291,320
NationsBank--Texas
3,000,000 9.50 06/01/04 3,568,260
Sovran Financial Corp.
1,500,000 9.25 06/15/06 1,815,510
SunTrust Banks, Inc.
2,000,000 8.88 02/01/98 2,132,880
Wachovia Corp.
2,000,000 6.38 04/15/03 2,010,540
------------
52,211,978
------------
TECHNOLOGY--0.6%
Motorola, Inc.
2,000,000 6.50 03/01/08 2,042,240
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON INTERMEDIATE-TERM BOND FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ----------- -------- -------- ------------
CORPORATE OBLIGATIONS--CONTINUED
UTILITIES--4.6%
Alltel Corp.
$ 3,000,000 7.25% 04/01/04 $ 3,168,540
Bell Atlantic--Pennsylvania
2,770,000 7.13 01/01/12 2,827,948
Central Telephone Co.
2,000,000 7.17 08/22/05 2,110,780
New York Telephone Co.
2,000,000 7.50 03/01/09 2,067,500
Southwestern Bell Capital Corp.
4,000,000 6.98 06/02/05 4,158,880
------------
14,333,648
------------
Total Corporate Obligations
(Cost $79,256,538)........................ $ 83,464,466
------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--39.8%
Federal Farm Credit Bank
$ 5,000,000 6.88% 05/01/00 $ 5,228,850
2,000,000 7.95 04/01/02 2,069,320
Federal Home Loan Bank
2,000,000 9.25 11/25/98 2,183,080
2,000,000 9.30 01/25/99 2,193,800
3,000,000 8.60 06/25/99 3,277,020
5,000,000 6.27 01/14/04 4,946,400
Federal Home Loan Mortgage Corp.
2,000,000 6.44 01/28/00 2,051,400
4,500,000 7.13 11/18/02 4,800,015
3,000,000 6.78 03/15/04 3,030,270
3,000,000 7.88 04/28/04 3,074,010
5,000,000 7.89 05/12/04 5,127,450
5,049,617 7.00 08/01/25 5,052,747
4,956,178 7.50 08/01/25 5,047,470
4,960,548 7.50 08/01/25 5,051,921
Federal National Mortgage Assn.
1,000,000 9.35 02/12/96 1,007,550
2,000,000 9.20 06/10/97 2,106,480
2,000,000 8.80 07/25/97 2,103,460
4,000,000 8.70 06/10/99 4,378,240
3,000,000 8.90 06/12/00 3,370,920
2,000,000 7.90 04/10/02 2,049,400
750,000 7.80 06/10/02 769,260
3,000,000 6.20 11/12/03 2,990,520
2,820,000 8.05 05/20/04 2,921,210
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ----------- -------- -------- ------------
U.S. GOVERNMENT AGENCY OBLIGATIONS--CONTINUED
Federal National Mortgage Assn.--Continued
$15,000,000 7.16% 05/11/05 $ 16,120,350
5,489,523 7.00 04/01/08 5,552,488
4,767,027 7.00 07/01/10 4,823,469
9,575,496 7.00 02/01/24 9,572,720
4,815,158 7.50 05/01/25 4,899,230
9,577,542 7.50 06/01/25 9,744,766
------------
Total U.S. Government Agency Obligations
(Cost $122,300,440).......................
$125,543,816
------------
U.S. TREASURY OBLIGATIONS--24.5%
United States Treasury Bonds
$ 8,000,000 8.25% 05/15/05 $ 8,774,320
10,000,000 8.38 08/15/08 11,574,200
United States Treasury Notes
500,000 9.25 01/15/96 502,095
4,000,000 8.88 02/15/96 4,026,240
5,000,000 6.00 12/31/97 5,062,950
10,000,000 9.00 05/15/98 10,814,700
1,000,000 8.88 11/15/98 1,092,290
3,400,000 8.88 02/15/99 3,734,662
4,000,000 9.13 05/15/99 4,449,160
2,600,000 6.38 07/15/99 2,674,438
3,000,000 5.50 04/15/00 3,002,520
15,000,000 6.25 02/15/03 15,497,850
3,000,000 6.50 05/15/05 3,155,880
3,000,000 5.88 11/15/05 3,026,130
------------
Total U.S. Treasury Obligations
(Cost $74,365,984)........................
$ 77,387,435
------------
REPURCHASE AGREEMENTS--2.3%
State Street Bank & Trust Company,
dated 11/30/95, repurchase price
$7,385,077 (U.S. Treasury Note:
$7,534,103, 5.63%, 01/31/98)
$ 7,384,000 5.25% 12/01/95 $ 7,384,000
------------
Total Repurchase Agreements
(Cost $7,384,000).........................
$ 7,384,000
------------
Total Investments (Cost $302,651,168(b))...
$312,788,075
============
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON INTERMEDIATE-TERM BOND FUND--(CONTINUED)
NOVEMBER 30, 1995
- ---------------------------
Federal Income Tax Information:
Gross unrealized gain for investments
in which value exceeds cost........ $10,979,252
Gross unrealized loss for investments
in which cost exceeds value........ (842,345)
-----------
Net unrealized gain................. $10,136,907
===========
- ---------------------------
(a) Variable rate security. Coupon rate disclosed is that which is in effect at
November 30, 1995.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON LOUISIANA TAX-FREE FUND
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ----------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--97.4%
GENERAL OBLIGATIONS--29.2%
Caddo Parish (MBIA)
$1,415,000 5.25% 02/01/06 $1,454,917
750,000 5.25 02/01/08 760,058
Caddo Parish School District (MBIA)
500,000 5.00 03/01/03 511,525
Calcasieu Parish School District (BIG)
500,000 7.10 02/01/01 535,070
De Soto Parish School District
120,000 8.00 08/01/05 133,205
Jefferson Parish (FGIC)
500,000 7.10 09/01/97 525,485
500,000 7.40 09/01/99 526,255
250,000 7.70 09/01/02 263,510
Jefferson Parish Construction Waterworks
District #2
400,000 7.25 01/15/00 401,288
LA State
6,160,000 7.00 08/01/02 6,521,038
LA State (FSA)
2,750,000 7.10 09/01/03 3,108,435
LA State (MBIA)
6,290,000 6.00 05/15/99 6,649,348
LA State Series A (AMBAC)
430,000 6.00 05/01/08 463,454
Lafayette Parish (FGIC)
1,000,000 7.80 03/01/01 1,086,860
Lafourche Parish Water District #3
650,000 5.63 01/01/01 678,184
Lincoln Parish School District (MBIA)
500,000 6.20 03/01/03 533,655
1,465,000 6.40 03/01/05 1,559,566
Monroe Parish School District (FGIC)
1,230,000 5.35 03/01/05 1,283,370
1,320,000 5.35 03/01/06 1,372,259
Monroe Parish School District (MBIA)
1,220,000 8.00 03/01/01 1,421,568
1,300,000 7.00 03/01/02 1,477,008
1,390,000 7.00 03/01/03 1,596,276
New Orleans (AMBAC)
3,040,000 4.50 10/01/99 3,081,374
New Orleans (FGIC)
550,000 5.85 11/01/07 582,114
Ouachita Parish West School District
Refunding Series A (FSA)
2,000,000 6.50 03/01/03 2,201,460
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--CONTINUED
GENERAL OBLIGATIONS--Continued
Ouachita Parish West School District
Refunding Series A (FSA)--Continued
$1,250,000 6.60% 03/01/04 $1,375,512
2,695,000 6.65 03/01/05 2,958,571
1,655,000 6.70 03/01/06 1,812,556
Plaquemine Parish (AMBAC)
1,440,000 6.40 08/01/04 1,587,859
Rapides Parish (MBIA)
500,000 7.25 04/01/00 542,265
Rapides Parish School District #11 (FGIC)
670,000 6.90 02/01/01 727,801
1,475,000 6.95 02/01/02 1,602,101
Shreveport
500,000 4.25 12/01/03 479,070
930,000 4.25 12/01/04 879,594
480,000 5.90 02/01/07 501,250
Shreveport (AMBAC)
480,000 6.20 03/01/02 514,613
500,000 6.70 02/01/03 536,450
1,335,000 5.00 02/01/06 1,338,391
St. Charles School District #1 (AMBAC)
1,000,000 6.25 03/01/04 1,078,700
2,350,000 6.45 03/01/06 2,527,190
St. John Baptist Parish School District
500,000 5.10 03/01/08 493,330
St. John Baptist Parish School District #1
870,000 6.25 03/01/05 918,250
St. Landry Parish School District #1 (MBIA)
1,000,000 8.00 05/01/98 1,085,300
750,000 6.10 05/01/07 782,047
St. Tammany Parish (FGIC)
300,000 7.40 03/01/98 320,082
-----------
Total General Obligations....................
60,788,214
-----------
HEALTH CARE REVENUE--13.6%
LA Public Facilities Authority Alton Ochsner
Medical Foundation Series 92-A (MBIA)
2,280,000 6.30 05/15/04 2,482,373
LA Public Facilities Authority General
Health (MBIA)
2,820,000 5.55 11/01/04 2,949,410
LA Public Facilities Authority Health
and Education (Sumitomo Bank--LOC)
1,765,000 7.30(a) 12/01/15 1,839,783
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON LOUISIANA TAX-FREE FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ------------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--CONTINUED
HEALTH CARE REVENUE--Continued
LA Public Facilities Authority Health
and Education Series B
$3,925,000 7.30%(a) 12/01/15 $ 4,039,885
LA Public Facilities Authority Lafayette
Medical Center (FSA)
1,000,000 6.05 10/01/04 1,080,870
LA Public Facilities Authority Mary Bird Perkins
Cancer Center (FSA)
1,135,000 5.50 01/01/04 1,176,950
LA Public Facilities Authority Our Lady of
Lake Hospital (MBIA)
500,000 5.70 12/01/04 528,260
LA Public Facilities Authority St. Francis
Medical Center (FSA)
1,385,000 4.80 07/01/04 1,365,042
870,000 4.90 07/01/05 861,013
LA Public Facilities Authority Woman's
Hospital (FGIC)
500,000 7.20 10/01/97 527,805
1,235,000 6.85 10/01/05 1,322,870
730,000 5.40 10/01/05 755,492
1,715,000 5.50 10/01/06 1,793,941
Lafourche Parish Hospital District #3
750,000 5.50 10/01/04 741,353
Ouachita Parish Glenwood Hospital
2,525,000 7.50 07/01/06 2,843,478
St. Tammany Hospital District #1 (FGIC)
1,815,000 6.30 07/01/07 1,936,696
Terrebonne Parish Hospital Service #1 (BIG)
1,285,000 7.40 04/01/03 1,388,764
Vermilion Parish Hospital (MBIA)
555,000 6.35 05/01/00 597,879
------------
Total Health Care Revenue.................. 28,231,864
------------
HIGHER EDUCATION--4.3%
LA Public Facilities Authority Loyola University
500,000 7.20 10/01/00 558,495
1,960,000 6.60 04/01/05 2,182,362
LA Public Facilities Authority Tulane University
2,145,000 6.25 07/15/06 2,318,252
550,000 6.40 11/15/07 601,117
LA Public Facilities Authority Tulane University (FGIC)
325,000 5.80 02/15/04 347,279
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ---------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--CONTINUED
HIGHER EDUCATION--Continued
LA Public Facilities Authority Tulane
University Series A
$ 300,000 7.50% 05/15/00 $ 328,032
LA Public Facilities Authority Tulane
University Series A1 (FGIC)
725,000 6.00 02/15/07 775,844
LA Public Facilities Authority Tulane
University Series B
605,000 7.00 08/15/97 636,944
170,000 7.20 08/15/98 182,079
LA Public Facilities Authority Tulane
University Series C
750,000 7.00 08/15/97 787,703
300,000 7.20 08/15/98 320,649
----------
Total Higher Education....................... 9,038,756
----------
SALES TAX REVENUE--39.7%
Alexandria Public Improvements (MBIA)
300,000 7.35 08/01/97 316,167
Baton Rouge Public Improvements (AMBAC)
700,000 6.85 08/01/00 772,716
800,000 6.90 08/01/01 880,152
Baton Rouge Public Improvements (FSA)
2,000,000 6.00 08/01/04 2,129,720
1,100,000 6.00 08/01/06 1,162,953
765,000 6.38 08/01/09 803,043
Bossier City Public Improvements (AMBAC)
805,000 6.20 11/01/07 869,142
Bossier City Public Improvements (FGIC)
400,000 6.88 11/01/06 434,944
400,000 6.88 11/01/07 434,944
East Baton Rouge Parish (FGIC)
2,280,000 8.00 02/01/02 2,687,071
1,500,000 4.65 02/01/04 1,474,050
650,000 4.80 02/01/06 634,335
500,000 5.80 02/01/07 529,270
845,000 5.80 02/01/08 888,991
910,000 5.80 02/01/09 939,284
East Baton Rouge Parish (MBIA)
500,000 7.10 02/01/99 540,705
500,000 7.10 02/01/00 545,465
East Baton Rouge Parish Public Improvements
1,085,000 5.15 02/01/05 1,072,067
1,145,000 5.15 02/01/06 1,112,917
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON LOUISIANA TAX-FREE FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- --------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--CONTINUED
SALES TAX REVENUE--Continued
General Baton Parking Authority
$1,390,000 6.38% 07/01/03 $ 1,393,545
Greater Lafourche Port Fourchon Development
1,220,000 5.00 09/01/04 1,196,527
Iberville Parish (MBIA)
300,000 6.20 09/01/98 305,985
Jefferson Parish (AMBAC)
3,180,000 6.50 11/01/06 3,425,560
Jefferson Parish District A (FGIC)
4,920,000 6.75 12/01/06 5,453,131
Jefferson Parish District B (FGIC)
1,985,000 6.75 12/01/06 2,200,095
Jefferson Parish School Board (MBIA)
4,000,000 6.05 02/01/02 4,307,000
1,270,000 6.15 02/01/03 1,384,757
4,500,000 6.25 02/01/08 4,810,680
Jefferson Parish Series B
385,000 4.50 06/01/13 373,577
Kenner (FGIC)
880,000 5.75 06/01/06 937,174
LA Public Facilities Authority Special Assessment (Escrowed)
110,000 7.38 06/01/09 119,052
LA Public Facilities Authority Special Assessment (FSA)
1,000,000 4.60 10/01/02 993,480
LA State Correctional Facilities Corporate
Lease (FSA)
1,250,000 5.60 12/15/03 1,314,387
LA State Energy Power Rodemacher Unit #2
3,020,000 6.75 01/01/08 3,301,555
LA State Gas & Fuel
750,000 7.20 11/15/99 827,827
1,500,000 7.25 11/15/04 1,654,890
LA State Offshore Terminal Authority
400,000 6.00 09/01/01 426,308
700,000 6.10 09/01/02 752,976
LA State Offshore Terminal Authority Series B
2,625,000 6.25 09/01/04 2,861,801
LA State Recovery District Tax
1,410,000 5.70 07/01/98 1,465,892
Lafayette Parish Public Power Improvements (FGIC)
1,120,000 4.75 05/01/06 1,081,046
Lafayette Parish Public Power Authority
1,730,000 6.80 11/01/00 1,820,721
4,000,000 7.13 11/01/07 4,209,360
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--CONTINUED
SALES TAX REVENUE--Continued
Lafayette Parish Public Power Authority (AMBAC)
$ 500,000 5.10% 11/01/07 503,605
Lafayette Parish Public Power Authority (BIG)
500,000 7.25 11/01/12 527,640
Lafayette Parish School Board
500,000 7.20 04/01/99 515,210
1,500,000 7.35 04/01/01 1,546,350
1,075,000 4.88 04/01/04 1,080,655
1,130,000 4.88 04/01/05 1,132,565
Lafayette Parish School Board Series A (FGIC)
2,535,000 4.95 04/01/02 2,588,235
Plaquemine Parish
420,000 6.70 12/01/08 448,657
410,000 6.70 12/01/09 436,461
Plaquemine Parish School Board
605,000 6.65 03/01/05 655,058
St. Charles Parish Public Improvements
750,000 6.60 11/01/07 796,170
St. Charles Parish Public Improvements (FGIC)
600,000 6.80 12/01/98 607,812
St. Tammany Parish (FGIC)
620,000 6.70 04/01/98 657,857
1,000,000 6.50 12/01/02 1,085,960
750,000 6.50 12/01/05 803,100
St. Tammany Parish District #3 Series A (FGIC)
1,000,000 6.50 12/01/03 1,085,960
St. Tammany Parish School District #12 (FGIC)
550,000 6.50 03/01/01 597,267
400,000 6.50 03/01/04 433,408
Sulphur Public Improvements (MBIA)
150,000 6.00 03/01/00 150,769
615,000 6.00 03/01/01 618,155
Tangipahoa Parish School District #1
1,435,000 6.15 12/01/07 1,520,784
-----------
Total Sales Tax Revenue...................... 82,636,940
-----------
UTILITY REVENUE--3.9%
Alexandria (FGIC)
710,000 5.15 05/01/05 721,786
750,000 5.25 05/01/06 769,605
Bossier City Public Improvements (FGIC)
550,000 6.88 11/01/08 594,165
Houma (FGIC)
1,560,000 6.13 01/01/07 1,681,415
Shreveport Water & Sewer
500,000 6.25 12/01/03 548,750
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON LOUISIANA TAX-FREE FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ---------
LOUISIANA MUNICIPAL BOND OBLIGATIONS--CONTINUED
UTILITY REVENUE--Continued
Shreveport Water & Sewer (FGIC)
$ 930,000 7.75% 12/01/02 $ 1,096,144
Terrebonne Parish Waterworks (FGIC)
690,000 5.70 11/01/06 733,863
500,000 5.75 11/01/08 526,655
Ville Platte Parish
1,555,000 5.50 05/01/09 1,531,240
------------
Total Utility Revenue................. 8,203,623
------------
MISCELLANEOUS LOUISIANA MUNICIPAL BONDS--6.7%
Bastrop Pollution Control Industrial
Development Bond (International Paper Co.)
2,500,000 6.90 03/01/07 2,750,925
Caddo Parish Industrial Development
Revenue Bond (Wal-Mart Stores, Inc.)
470,000 5.95 11/01/07 483,141
De Soto Parish Pollution Control
2,500,000 5.05 12/01/02 2,561,825
East Baton Rouge Mortgage Finance
Authority (GNMA/FNMA collateralized)
1,200,000 5.50 10/01/21 1,210,416
East Baton Rouge Mortgage Finance
Authority Series A
765,000 4.90 10/01/05 729,106
East Baton Rouge Mortgage Finance Authority
Series B (GNMA/FNMA collateralized)
1,390,000 5.10 10/01/03 1,426,501
765,000 4.50 10/01/09 746,854
East Baton Rouge Mortgage Finance Authority
Series C (GNMA/FNMA collateralized)
715,000 4.75 10/01/09 699,670
Iberia Home Mortgage Loan Association
1,505,000 7.38 01/01/11 1,630,081
LA Housing Finance Agency
1,100,000 5.70 06/01/15 1,110,186
LA Public Facilities Authority Multi-Housing
Linlake Village
610,000 5.25(a) 06/01/07 615,984
----------
Total Miscellaneous Louisiana Municipal
Bonds.................................. 13,964,689
-----------
Total Louisiana Municipal Bond Obligations
(Cost $196,540,199)......................... $202,864,086
------------
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------- -------- -------- -----------
SHORT TERM OBLIGATIONS--1.9%
Burke County Georgia Pollution Control
$ 700,000 3.60%(a) 12/01/95 $ 700,000
LA State Recovery District Tax
2,600,000 2.90(a) 12/01/95 2,600,000
700,000 2.90(a) 12/01/95 700,000
------------
Total Short Term Obligations
(Cost $4,000,000).......................... $ 4,000,000
------------
Total Investments (Cost $200,540,199(b)).... $206,864,086
============
- ----------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost............................. $ 6,737,237
Gross unrealized loss for investments in which
cost exceeds value............................. (413,350)
-----------
Net unrealized gain............................. $ 6,323,887
============
- ----------------------------------------------------------------------------
(a) Variable rate security. Rate indicated is rate in effect at November 30,
1995.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
AMBAC--Insured by American Municipal Bond Assurance Corporation.
BIG--Insured by Bond Investors Guaranty Insurance Company.
FGIC--Insured by Financial Guaranty Insurance Corporation.
FSA--Insured by Financial Security Assurance, Inc.
LOC--Letter of Credit.
MBIA--Insured by Municipal Bond Investors Assurance Corporation.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON VALUE GROWTH FUND
NOVEMBER 30, 1995
SHARES DESCRIPTION VALUE
------- ----------- ------------
COMMON STOCKS--91.5%
BASIC MATERIALS & NATURAL RESOURCES--5.1%
90,000 Dow Chemical Co. $ 6,378,750
75,000 Du Pont (E.I.) de Nemours
& Co. 4,987,500
------------
11,366,250
------------
CAPITAL EQUIPMENT & SERVICES--7.4%
70,000 Eaton Corp. 3,815,000
40,000 Illinois Tool Works, Inc. 2,535,000
70,000 Johnson Controls, Inc. 4,847,500
150,000 Loral Corp. 5,081,250
------------
16,278,750
------------
CONSUMER CYCLICAL--11.3%
200,000 Consolidated Stores Corp.(a) 4,950,000
75,000 Equifax, Inc. 3,140,625
65,000 First Data Corp. 4,615,000
100,000 Home Depot, Inc. 4,437,500
180,000 Office Depot, Inc.(a) 4,410,000
140,000 Wal-Mart Stores, Inc. 3,360,000
------------
24,913,125
------------
CONSUMER NONCYCLICAL--16.6%
70,000 Amgen, Inc.(a) 3,473,750
135,000 Foundation Health Corp.(a) 6,176,250
100,000 Pepsico, Inc. 5,525,000
90,000 Pfizer, Inc. 5,220,000
90,000 Schering Plough Corp. 5,163,750
90,000 SmithKline Beecham ADR 4,792,500
100,000 United Healthcare Corp.(a) 6,287,500
------------
36,638,750
------------
ENERGY--7.4%
100,000 Amoco Corp. 6,775,000
75,000 Schlumberger, Ltd. 4,762,500
100,000 Western Atlas, Inc.(a) 4,787,500
------------
16,325,000
------------
SHARES DESCRIPTION VALUE
------- ----------- ------------
COMMON STOCKS--CONTINUED
FINANCE--15.2%
65,000 Barnett Banks, Inc. $ 3,908,125
90,000 CCB Financial Corp.(b) 4,500,000
85,000 Citicorp 6,013,750
50,000 Federal National Mortgage Assn. 5,475,000
120,000 First American Corp. of Tennessee 5,475,000
75,000 First Tennessee National Corp. 4,537,500
144,400 Southtrust Corp. 3,664,150
------------
33,573,525
------------
TECHNOLOGY--16.0%
95,000 Cisco Systems, Inc.(a) 7,991,875
110,000 Compaq Computer Corp.(a) 5,445,000
75,000 General Motors Corp. Class E 3,787,500
150,000 Intel Corp. 9,131,250
10,000 Micron Technology, Inc. 547,500
100,000 Texas Instruments, Inc. 5,787,500
80,000 Vishay Intertechnology, Inc.(a) 2,800,000
------------
35,490,625
------------
TRANSPORTATION--1.2%
100,000 Atlantic Southeast Airlines, Inc. 2,625,000
------------
UTILITIES--11.3%
120,000 AT&T Corp. 7,920,000
83,000 BellSouth Corp. 3,226,625
150,000 Enron Corp. 5,625,000
250,000 WorldCom, Inc.(a) 8,125,000
------------
24,896,625
------------
Total Common Stocks
(Cost $148,177,188)......................... $202,107,650
------------
PREFERRED STOCKS--1.9%
45,000 Ford Motor Corp., Convertible Preferred, 4.20% $ 4,168,125
------------
Total Preferred Stocks
(Cost $4,112,900)........................... $ 4,168,125
------------
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON VALUE GROWTH FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- ----------- -------- -------- ----------
REPURCHASE AGREEMENTS--8.3%
State Street Bank & Trust Co., dated
11/30/95, repurchase price $18,233,659
(U.S. Treasury Note: $18,600,139,
6.00%, 12/31/97)
$18,231,000 5.25% 12/01/95 $ 18,231,000
------------
Total Repurchase
Agreements
(Cost $18,231,000) .......................... $ 18,231,000
------------
Total Investments
(Cost $170,521,088(c))....................... $224,506,775
============
- ---------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in
which value exceeds cost........ $54,056,127
Gross unrealized loss for investments in
which cost exceeds value........ (328,407)
-----------
Net unrealized gain.............. $53,727,720
===========
- ---------------------------
(a) Non-income producing security.
(b) There are common stock rights attached to these securities.
(c) The aggregate cost for federal income tax purposes is $170,779,055.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON VALUE EQUITY INCOME FUND
NOVEMBER 30, 1995
SHARES DESCRIPTION VALUE
------ ----------- ------------
COMMON STOCKS--83.1%
BASIC MATERIALS & NATURAL RESOURCES--8.3%
64,000 Dow Chemical Co. $ 4,536,000
53,000 Du Pont (E.I.) de Nemours & Co. 3,524,500
16,000 Georgia Pacific Corp. 1,244,000
50,000 International Paper Co. 1,906,250
------------
11,210,750
------------
CAPITAL EQUIPMENT & SERVICES--10.4%
60,000 Deere & Co. 1,972,500
21,000 Johnson Controls, Inc. 1,454,250
68,600 Lockheed Martin Corp. 5,033,525
50,000 Loral Corp. 1,693,750
20,000 Paccar, Inc.(b) 875,000
67,200 Raytheon Co.(b) 2,990,400
------------
14,019,425
------------
CONSUMER CYCLICAL--5.7%
45,000 Chrysler Corp. 2,334,375
90,000 Sears Roebuck & Co. 3,543,750
35,000 VF Corp. 1,820,000
------------
7,698,125
------------
CONSUMER NONCYCLICAL--19.2%
85,000 Baxter International, Inc. 3,570,000
25,000 Bristol-Meyers Squibb Co. 2,006,250
35,000 Columbia/HCA Healthcare Corp. 1,806,875
93,000 IBP, Inc. 5,812,500
50,000 Phillip Morris Companies, Inc. 4,387,500
70,000 Premark International, Inc. 3,570,000
10,000 Rhone Poulenc Rorer, Inc. 478,750
72,000 Schering Plough Corp. 4,131,000
------------
25,762,875
------------
ENERGY--7.5%
25,000 Exxon Corp. 1,934,375
44,000 Mobil Corp.(b) 4,592,500
50,000 Phillips Petroleum Co. 1,662,500
15,000 Royal Dutch Petroleum ADR 1,925,625
------------
10,115,000
------------
SHARES DESCRIPTION VALUE
------ ----------- ------------
COMMON STOCKS--CONTINUED
FINANCE--8.0%
18,540 Allstate Corp. $ 760,140
55,000 Bear Stearns Companies, Inc. 1,196,250
19,100 Federal National Mortgage Assn. 2,091,450
60,000 First Tennessee National Corp. 3,630,000
71,000 Reliastar Financial Corp. 3,070,750
------------
10,748,590
------------
TECHNOLOGY--12.1%
66,500 Avnet, Inc. 3,125,500
10,000 BMC Software, Inc.(a) 422,500
23,000 Compaq Computer Corp.(a) 1,138,500
30,000 Dell Computer Corp.(a) 1,327,500
40,000 Intel Corp. 2,435,000
45,000 International Business Machines Corp. 4,348,125
13,400 Texas Instruments, Inc. 775,525
20,000 Xerox Corp. 2,742,500
------------
16,315,150
------------
TRANSPORTATION--1.3%
25,000 British Airways ADR 1,759,375
------------
UTILITIES--10.6%
74,000 BellSouth Corp. 2,876,750
45,000 Entergy Corp. 1,254,375
70,000 GTE Corp. 2,983,750
38,000 Nynex Corp. 1,885,750
90,000 Peco Energy Co. 2,610,000
65,000 SCE Corp. 1,015,625
42,000 Sprint Corp. 1,680,000
------------
14,306,250
------------
Total Common Stocks
(Cost $82,273,359)...................................... $111,935,540
------------
PREFERRED STOCKS--9.0%
15,000 Burlington Northern, Inc., Convertible Preferred, 6.25% $ 1,288,125
26,000 Citicorp, Convertible Preferred, 5.38% 4,992,000
35,600 Ford Motor Co., Convertible Preferred, 4.20% 3,297,450
35,500 General Motors Corp., Convertible Preferred, 3.25% 2,547,125
------------
Total Preferred Stocks
(Cost $9,055,436)....................................... $ 12,124,700
------------
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON VALUE EQUITY INCOME FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ------------
CORPORATE OBLIGATIONS--3.7%
Healthsouth Rehabilitation
$1,000,000 5.00% 04/01/01 $ 1,605,000
Pennzoil Co.
2,250,000 6.50 01/15/03 2,711,250
Sports & Recreation, Inc.
980,000 4.25 11/01/00 671,300
------------
Total Corporate
Obligations
(Cost $4,581,725)..... $ 4,987,550
------------
REPURCHASE AGREEMENTS--3.7%
State Street Bank & Trust Company,
dated 11/30/95, repurchase price
$4,942,721 (U.S. Treasury Note:
$5,043,071, 5.63%, 01/31/98)
$4,942,000 5.25% 12/01/95 $ 4,942,000
------------
Total Repurchase
Agreements
(Cost $4,942,000)..... $ 4,942,000
------------
Total Investments
(Cost
$100,852,520(c))...... $133,989,790
============
- -------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in
which value exceeds cost........ $33,955,770
Gross unrealized loss for investments in
which cost exceeds value........ (818,500)
-----------
Net unrealized gain.............. $33,137,270
===========
- ---------------------------
(a) Non-income producing security.
(b) There are common stock rights attached to these securities.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON GULF SOUTH GROWTH FUND
NOVEMBER 30, 1995
SHARES DESCRIPTION VALUE
------ ----------- -----------
COMMON STOCKS--93.2%
BASIC MATERIALS & NATURAL RESOURCES--1.2%
60,000 Quanex Corp.(b) $ 1,177,500
-----------
CAPITAL EQUIPMENT & SERVICES--3.3%
70,000 Alamo Group, Inc. 1,207,500
60,000 Wolverine Tube, Inc.(a) 2,032,500
-----------
3,240,000
-----------
CONSUMER CYCLICAL--21.4%
130,000 Accustaff, Inc.(a) 3,900,000
120,000 Autozone, Inc.(a) 3,495,000
63,436 First Data Corp. 4,503,955
60,000 Garden Ridge Corp.(a) 2,220,000
50,000 Just for Feet, Inc.(a) 1,706,250
135,000 Office Depot, Inc.(a) 3,307,500
120,000 River Oaks Furniture, Inc.(a) 840,000
120,000 Sports & Recreation, Inc.(a) 840,000
-----------
20,812,705
-----------
CONSUMER NONCYCLICAL--12.8%
125,000 Apple South, Inc. 2,625,000
125,000 Coventry Corp.(a) 2,453,125
50,000 HealthSouth Corp.(a) 1,512,500
50,000 HealthWise of America, Inc.(a) 1,562,500
110,000 Inphynet Medical Management, Inc.(a) 2,007,500
43,200 Isolyser Company, Inc.(a) 702,000
100,000 Longhorn Steaks, Inc.(a) 1,625,000
-----------
12,487,625
-----------
ENERGY--8.5%
100,000 Input/Output, Inc.(a) 4,612,500
95,000 Landmark Graphics Corp.(a) 1,900,000
60,000 Tidewater, Inc.(b) 1,717,500
-----------
8,230,000
-----------
SHARES DESCRIPTION VALUE
------ ----------- -----------
COMMON STOCKS--CONTINUED
FINANCE--19.2%
55,000 Concord, EFS, Inc.(a) $ 2,103,750
160,000 Medaphis Corp.(a) 5,200,000
75,000 Olympic Financial Ltd.(a) 1,537,500
180,000 Regional Acceptance Corp.(a) 1,552,500
85,000 Stewart Enterprises, Inc. 2,783,750
14,500 Total Systems Services, Inc. 389,688
154,000 United Companies Financial Corp. 5,082,000
-----------
18,649,188
-----------
TECHNOLOGY--14.6%
60,000 Acxiom Corp.(a) 1,725,000
55,000 DSC Communications Corp.(a) 2,179,375
40,000 Dell Computer Corp.(a) 1,770,000
55,800 Emulux Corp.(a) 697,500
55,000 Mobile Telecomunications Technology Corp.(a) 1,265,000
100,000 SCI Systems, Inc.(a) 3,350,000
85,000 Scientific-Atlanta, Inc.(b) 1,349,375
130,000 Westcott Communications, Inc.(a) 1,852,500
-----------
14,188,750
-----------
TRANSPORTATION--3.2%
120,000 Atlantic Southeast Airlines, Inc. 3,150,000
-----------
UTILITIES--9.0%
150,000 EqualNet Holding Corp.(a) 2,887,500
180,000 WorldCom, Inc.(a) 5,850,000
-----------
8,737,500
-----------
Total Common Stocks
(Cost $60,507,139)........................ $90,673,268
-----------
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
PARAGON PORTFOLIO
STATEMENT OF INVESTMENTS
PARAGON GULF SOUTH GROWTH FUND--(CONTINUED)
NOVEMBER 30, 1995
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
REPURCHASE AGREEMENTS--3.9%
State Street Bank & Trust Company,
dated 11/30/95, repurchase price
$3,803,555 (Treasury Note:
$3,881,723, 6.00%, 12/31/97)
$3,803,000 5.25% 12/01/95 $ 3,803,000
-----------
Total Repurchase Agreements
(Cost $3,803,000)........................... $ 3,803,000
-----------
Total Investments
(Cost $64,310,139(c))....................... $94,476,268
===========
- -----------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments
in which value exceeds cost........ $34,571,942
Gross unrealized loss for investments
in which cost exceeds value........ (4,405,813)
-----------
Net unrealized gain................. $30,166,129
===========
- ---------------------------
(a) Non-income producing security.
(b) There are common stock rights attached to these securities.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
PARAGON PORTFOLIO
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
TREASURY SHORT-TERM
MONEY MARKET GOVERNMENT
FUND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $333,022,516; $128,628,221; $302,651,168;
$200,540,199; $170,521,088; $100,852,520, and
$64,310,139, respectively)........................ $333,022,516 $128,990,963
Cash............................................... 94,692 5,480
Receivables:
Investment securities sold......................... -- --
Interest........................................... 248,993 1,238,017
Dividends.......................................... -- --
Fund shares sold................................... -- --
Deferred organization expenses, net................ -- --
Other.............................................. 16,927 --
------------ ------------
Total assets...................................... 333,383,128 130,234,460
------------ ------------
LIABILITIES:
Payables:
Investment securities purchased.................... -- --
Fund shares redeemed............................... -- 16,224
Dividends and distributions........................ 1,480,469 528,391
Advisory fees...................................... 54,106 53,965
Administrative fees................................ 35,289 15,145
Transfer agent fees................................ 6,769 13,629
Distribution fees (Class B Shares)................. 19 1,590
Accrued expenses and other liabilities............. 48,410 28,790
------------ ------------
Total liabilities................................. 1,625,062 657,734
------------ ------------
NET ASSETS:
Paid-in capital.................................... 331,731,697 130,463,038
Accumulated undistributed (distributions in excess
of) net investment income......................... 13,836 --
Accumulated net realized gain (loss) on investment
transactions...................................... 12,533 (1,249,054)
Net unrealized gain on investments................. -- 362,742
------------ ------------
Net assets........................................ $331,758,066 $129,576,726
============ ============
Shares of beneficial interest outstanding ($0.01
par value),
unlimited number of shares authorized:
Class A Shares.................................... 331,720,669 12,658,894
============ ============
Class B Shares.................................... 11,028 30,361
============ ============
Class A Shares
Net asset value and redemption price per share
(net assets/shares outstanding)................... $ 1.00 $ 10.21
============ ============
Maximum public offering price per share (NAV per
share X 1.0471,
where applicable)................................. $ 1.00 $ 10.69
============ ============
Class B Shares(a)
Net asset value and offering price per share (net
assets/shares outstanding)........................ $ 1.00 $ 10.21
============ ============
</TABLE>
- -------
(a) At redemption, Class B Shares are subject to a contingent deferred sales
charge, assessed on the amount equal to the lesser of the current net
asset value or the original purchase price of the Shares.
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE- LOUISIANA VALUE VALUE EQUITY GULF SOUTH
TERM BOND TAX-FREE GROWTH INCOME GROWTH
FUND FUND FUND FUND FUND
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
$312,788,075 $206,864,086 $224,506,775 $133,989,790 $94,476,268
5,300 490,542 8,079 5,536 5,034
-- -- -- 276,593 3,113,520
4,225,934 3,447,511 2,659 67,775 555
-- -- 373,497 372,553 12,075
112,357 219,564 265,466 355,206 79,127
-- -- -- -- 3,269
335 103 -- -- --
------------ ------------ ------------ ------------ -----------
317,132,001 211,021,806 225,156,476 135,067,453 97,689,848
------------ ------------ ------------ ------------ -----------
-- 1,947,119 3,851,065 -- 284,380
13,782 -- -- -- 11,431
1,530,149 685,939 177,976 298,269 --
128,707 70,152 116,226 67,058 50,920
38,612 17,535 26,830 19,987 11,751
22,151 20,040 45,776 10,610 24,286
5,640 8,002 11,872 2,395 7,921
50,800 39,218 25,815 35,749 17,693
------------ ------------ ------------ ------------ -----------
1,789,841 2,788,005 4,255,560 434,068 408,382
------------ ------------ ------------ ------------ -----------
309,657,562 202,360,006 149,357,937 97,470,660 64,778,780
260,558 -- (2,382) (1,933) --
(4,712,867) (450,092) 17,559,674 4,027,388 2,336,557
10,136,907 6,323,887 53,985,687 33,137,270 30,166,129
------------ ------------ ------------ ------------ -----------
$315,342,160 $208,233,801 $220,900,916 $134,633,385 $97,281,466
============ ============ ============ ============ ===========
30,083,104 19,148,510 12,813,548 9,055,467 5,285,927
============ ============ ============ ============ ===========
127,036 196,004 172,182 63,294 101,412
============ ============ ============ ============ ===========
$ 10.44 $ 10.76 $ 17.01 $ 14.76 $ 18.06
============ ============ ============ ============ ===========
$ 10.93 $ 11.27 $ 17.81 $ 15.46 $ 18.91
============ ============ ============ ============ ===========
$ 10.46 $ 10.79 $ 16.98 $ 14.76 $ 17.89
============ ============ ============ ============ ===========
</TABLE>
25
<PAGE>
PARAGON PORTFOLIO
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
TREASURY SHORT-TERM
MONEY MARKET GOVERNMENT
FUND FUND
------------ -----------
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................ $18,488,953 $ 8,176,348
Dividends (a)....................................... -- --
----------- -----------
Total income....................................... 18,488,953 8,176,348
----------- -----------
EXPENSES:
Advisory fees....................................... 625,920 663,062
Administration fees................................. 469,440 198,919
Transfer agent fees................................. 75,294 57,574
Custodian fees...................................... 64,111 47,913
Professional fees................................... 29,397 20,883
Trustee fees........................................ 5,725 3,719
Amortization of deferred organization expenses...... 1,566 945
Other............................................... 47,514 10,824
----------- -----------
Total expenses..................................... 1,318,967 1,003,839
Class B Share distribution fees.................... 19 1,558
----------- -----------
Total expenses and Class B Share distribution
fees............................................. 1,318,986 1,005,397
Less--Investment advisory and administration fees
waived........................................... -- --
----------- -----------
Net expenses...................................... 1,318,986 1,005,397
----------- -----------
Net investment income (loss)...................... 17,169,967 7,170,951
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions. 203,852 (300,652)
Net change in unrealized gain on investments........ -- 5,037,461
----------- -----------
Net realized and unrealized gain on investments... 203,852 4,736,809
----------- -----------
Net increase in net assets resulting from
operations....................................... $17,373,819 $11,907,760
=========== ===========
</TABLE>
- --------
(a) For the Value Equity Income Fund, amount is net of $24,412 in foreign
withholding taxes.
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE- LOUISIANA VALUE VALUE EQUITY GULF SOUTH
TERM BOND TAX-FREE GROWTH INCOME GROWTH
FUND FUND FUND FUND FUND
------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
$22,669,591 $11,295,102 $ 794,401 $ 614,002 $ 370,664
-- -- 3,554,938 3,198,496 229,730
----------- ----------- ----------- ----------- -----------
22,669,591 11,295,102 4,349,339 3,812,498 600,394
----------- ----------- ----------- ----------- -----------
1,532,802 992,485 1,281,345 759,496 582,482
459,841 297,746 295,695 175,268 134,419
95,616 90,584 190,838 60,266 135,120
83,376 96,105 56,535 46,069 44,100
41,443 24,684 20,883 11,072 9,810
7,441 4,294 3,718 2,002 1,717
1,756 581 518 850 5,628
25,130 20,243 29,105 18,276 8,797
----------- ----------- ----------- ----------- -----------
2,247,405 1,526,722 1,878,637 1,073,299 922,073
5,505 7,742 11,503 2,375 7,762
----------- ----------- ----------- ----------- -----------
2,252,910 1,534,464 1,890,140 1,075,674 929,835
-- (297,743) -- -- --
----------- ----------- ----------- ----------- -----------
2,252,910 1,236,721 1,890,140 1,075,674 929,835
----------- ----------- ----------- ----------- -----------
20,416,681 10,058,381 2,459,199 2,736,824 (329,441)
----------- ----------- ----------- ----------- -----------
(413,707) (10,930) 17,559,019 4,027,095 2,336,392
27,924,824 14,486,631 30,873,707 28,395,100 17,774,277
----------- ----------- ----------- ----------- -----------
27,511,117 14,475,701 48,432,726 32,422,195 20,110,669
----------- ----------- ----------- ----------- -----------
$47,927,798 $24,534,082 $50,891,925 $35,159,019 $19,781,228
=========== =========== =========== =========== ===========
</TABLE>
27
<PAGE>
PARAGON PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
TREASURY SHORT-TERM
MONEY MARKET GOVERNMENT
FUND FUND
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)..................... $ 17,169,967 $ 7,170,951
Net realized gain (loss) on investment
transactions.................................... 203,852 (300,652)
Net change in unrealized gain on investments..... -- 5,037,461
------------- ------------
Increase in net assets resulting from
operations..................................... 17,373,819 11,907,760
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A Shares.................................. (17,156,336) (7,161,419)
Class B Shares.................................. (115) (9,532)
In excess of net investment income
Class A Shares.................................. -- --
Class B Shares.................................. -- --
From net realized gains
Class A Shares.................................. (191,319) --
Class B Shares.................................. -- --
------------- ------------
Total distributions to shareholders............. (17,347,770) (7,170,951)
------------- ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from the sale of shares
Class A......................................... 836,015,723 10,013,873
Class B......................................... 81,531 291,704
Reinvestment of dividends and distributions
Class A......................................... 822,890 412,847
Class B......................................... 50 8,159
Cost of shares redeemed
Class A......................................... (801,482,569) (28,847,273)
Class B......................................... (70,553) (37,911)
------------- ------------
Net increase (decrease) in net assets from Trust
share transactions............................. 35,367,072 (18,158,601)
------------- ------------
Total increase (decrease)....................... 35,393,121 (13,421,792)
------------- ------------
NET ASSETS:
Beginning of year................................ 296,364,945 142,998,518
------------- ------------
End of year...................................... $ 331,758,066 $129,576,726
============= ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS
OF)
NET INVESTMENT INCOME ........................... $ 13,836 $ --
============= ============
SUMMARY OF SHARE TRANSACTIONS:
Class A Shares
Sold............................................. 836,015,723 997,772
Issued on reinvestment of dividends and
distributions................................... 822,890 41,113
Redeemed......................................... (801,482,569) (2,886,727)
------------- ------------
35,356,044 (1,847,842)
------------- ------------
Class B Shares
Sold............................................. 81,531 29,140
Issued on reinvestment of dividends and
distributions................................... 50 808
Redeemed......................................... (70,553) (3,758)
------------- ------------
11,028 26,190
------------- ------------
Net increase (decrease) in shares outstanding.... 35,367,072 (1,821,652)
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE- LOUISIANA VALUE VALUE EQUITY GULF SOUTH
TERM BOND TAX-FREE GROWTH INCOME GROWTH
FUND FUND FUND FUND FUND
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
$ 20,416,681 $ 10,058,381 $ 2,459,199 $ 2,736,824 $ (329,441)
(413,707) (10,930) 17,559,019 4,027,095 2,336,392
27,924,824 14,486,631 30,873,707 28,395,100 17,774,277
------------ ------------ ------------ ------------ -----------
47,927,798 24,534,082 50,891,925 35,159,019 19,781,228
------------ ------------ ------------ ------------ -----------
(20,393,495) (10,014,351) (2,449,418) (2,743,438) --
(42,603) (44,030) (6,178) (4,407) --
-- -- -- (984) --
-- -- (2,708) (949) --
-- -- (5,514,632) (3,322,240) (1,410,185)
-- -- (18,700) (1,060) (7,604)
------------ ------------ ------------ ------------ -----------
(20,436,098) (10,058,381) (7,991,636) (6,073,078) (1,417,789)
------------ ------------ ------------ ------------ -----------
29,129,199 25,633,720 21,981,433 13,206,502 12,266,188
1,106,611 1,934,020 2,278,315 834,412 1,508,611
1,387,170 1,948,437 1,451,998 313,164 320,587
38,213 31,477 27,739 6,568 7,754
(41,057,873) (32,701,367) (21,210,284) (12,189,314) (12,837,158)
(125,495) (112,037) (138,427) (18,966) (118,944)
------------ ------------ ------------ ------------ -----------
(9,522,175) (3,265,750) 4,390,774 2,152,366 1,147,038
------------ ------------ ------------ ------------ -----------
17,969,525 11,209,951 47,291,063 31,238,307 19,510,477
------------ ------------ ------------ ------------ -----------
297,372,635 197,023,850 173,609,853 103,395,078 77,770,989
------------ ------------ ------------ ------------ -----------
$315,342,160 $208,233,801 $220,900,916 $134,633,385 $97,281,466
============ ============ ============ ============ ===========
$ 260,558 $ -- $ (2,382) $ (1,933) $ --
============ ============ ============ ============ ===========
2,892,868 2,426,280 1,479,317 1,046,644 749,767
137,853 185,608 104,342 26,133 21,504
(4,091,710) (3,127,265) (1,389,420) (964,673) (760,534)
------------ ------------ ------------ ------------ -----------
(1,060,989) (515,377) 194,239 108,104 10,737
------------ ------------ ------------ ------------ -----------
109,338 183,225 148,906 61,518 92,244
3,749 2,967 1,979 495 523
(12,229) (10,566) (8,821) (1,380) (7,113)
------------ ------------ ------------ ------------ -----------
100,858 175,626 142,064 60,633 85,654
------------ ------------ ------------ ------------ -----------
(960,131) (339,751) 336,303 168,737 96,391
============ ============ ============ ============ ===========
</TABLE>
29
<PAGE>
PARAGON PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED NOVEMBER 30, 1994
<TABLE>
<CAPTION>
TREASURY SHORT-TERM
MONEY MARKET GOVERNMENT
FUND FUND
------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)..................... $ 10,164,395 $ 7,847,949
Net realized gain (loss) on investment
transactions.................................... 4,992 (442,989)
Net change in unrealized gain (loss) on invest-
ments........................................... -- (7,178,320)
------------- ------------
Increase (decrease) in net assets resulting from
operations..................................... 10,169,387 226,640
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A Shares.................................. (10,162,326) (7,847,743)
Class B Shares.................................. -- (206)
In excess of net investment income
Class A Shares.................................. -- --
From net realized gains
Class A Shares.................................. (23,225) --
In excess of net realized gains
Class A Shares.................................. -- --
------------- ------------
Total distributions to shareholders............. (10,185,551) (7,847,949)
------------- ------------
TRUST SHARE TRANSACTIONS:
Net proceeds from the sale of shares............. 984,598,161 37,944,427
Reinvestment of dividends and distributions...... 180,411 392,469
Cost of shares redeemed.......................... (984,527,520) (57,707,000)
------------- ------------
Net increase (decrease) in net assets from Trust
share transactions............................. 251,052 (19,370,104)
------------- ------------
Total increase (decrease)....................... 234,888 (26,991,413)
------------- ------------
NET ASSETS:
Beginning of year................................ 296,130,057 169,989,931
------------- ------------
End of year...................................... $ 296,364,945 $142,998,518
============= ============
ACCUMULATED UNDISTRIBUTED (DISTRIBUTIONS IN EXCESS
OF)
NET INVESTMENT INCOME ........................... $ 320 $ --
============= ============
SUMMARY OF SHARE TRANSACTIONS:
Class A Shares
Sold............................................. 984,598,161 3,731,929
Issued on reinvestment of dividends and
distributions................................... 180,411 38,942
Redeemed......................................... (984,527,520) (5,709,112)
------------- ------------
251,052 (1,938,241)
------------- ------------
Class B Shares
Sold............................................. -- 4,150
Issued on reinvestment of dividends and
distributions................................... -- 21
Redeemed......................................... -- --
------------- ------------
-- 4,171
------------- ------------
Net increase (decrease) in shares outstanding.... 251,052 (1,934,070)
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE- LOUISIANA VALUE VALUE EQUITY GULF SOUTH
TERM BOND TAX-FREE GROWTH INCOME GROWTH
FUND FUND FUND FUND FUND
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
$ 21,188,128 $ 10,034,099 $ 2,380,116 $ 2,624,949 $ (304,341)
(4,254,181) (403,188) 5,533,531 3,338,407 1,417,789
(32,996,842) (15,995,358) (15,998,469) (7,781,546) (6,751,273)
------------ ------------ ------------ ------------ -----------
(16,062,895) (6,364,447) (8,084,822) (1,818,190) (5,637,825)
------------ ------------ ------------ ------------ -----------
(21,186,974) (10,032,553) (2,546,306) (2,973,890) --
(1,154) (1,546) (752) (78) --
-- -- (3,277) -- --
(4,432,431) (2,114,555) (8,389,918) (5,318,242) (649,788)
(44,979) (35,974) -- -- --
------------ ------------ ------------ ------------ -----------
(25,665,538) (12,184,628) (10,940,253) (8,292,210) (649,788)
------------ ------------ ------------ ------------ -----------
54,826,753 44,951,435 36,323,019 20,175,920 18,519,488
1,726,372 2,652,558 1,878,153 337,716 119,773
(58,987,271) (28,564,772) (16,706,771) (9,806,704) (9,562,871)
------------ ------------ ------------ ------------ -----------
(2,434,146) 19,039,221 21,494,401 10,706,932 9,076,390
------------ ------------ ------------ ------------ -----------
(44,162,579) 490,146 2,469,326 596,532 2,788,777
------------ ------------ ------------ ------------ -----------
341,535,214 196,533,704 171,140,527 102,798,546 74,982,212
------------ ------------ ------------ ------------ -----------
$297,372,635 $197,023,850 $173,609,853 $103,395,078 $77,770,989
============ ============ ============ ============ ===========
$ 279,975 $ -- $ (3,277) $ 11,021 $ --
============ ============ ============ ============ ===========
5,310,502 4,228,003 2,439,323 1,661,828 1,146,632
169,665 250,440 128,595 27,823 7,377
(5,844,772) (2,741,741) (1,142,802) (812,422) (600,948)
------------ ------------ ------------ ------------ -----------
(364,605) 1,736,702 1,425,116 877,229 553,061
------------ ------------ ------------ ------------ -----------
26,061 22,736 30,070 2,653 15,758
117 117 55 8 --
-- (2,475) (7) -- --
------------ ------------ ------------ ------------ -----------
26,178 20,378 30,118 2,661 15,758
------------ ------------ ------------ ------------ -----------
(338,427) 1,757,080 1,455,234 879,890 568,819
============ ============ ============ ============ ===========
</TABLE>
31
<PAGE>
PARAGON PORTFOLIO
TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT DISTRIBUTIONS TO
OPERATIONS SHAREHOLDERS FROM:
---------------------- ------------------------
NET ASSET TOTAL TOTAL NET ASSET RATIO OF NET
VALUE AT NET INCOME FROM NET DISTRIBUTIONS VALUE AT EXPENSES TO
BEGINNING INVESTMENT INVESTMENT INVESTMENT TO SHARE- END TOTAL AVERAGE NET
OF PERIOD INCOME OPERATIONS INCOME HOLDERS OF PERIOD RETURN(A) ASSETS
--------- ---------- ----------- ---------- ------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $1.00 $0.06 $0.06 $(0.06) $(0.06) $1.00 5.69% 0.42%
1995 Class B Shares(b) 1.00 0.01 0.01 (0.01) (0.01) 1.00 5.05(c) 1.17(c)
1994 Class A Shares 1.00 0.04 0.04 (0.04) (0.04) 1.00 3.68 0.43
1993 Class A Shares 1.00 0.03 0.03 (0.03) (0.03) 1.00 2.84 0.45
1992 Class A Shares 1.00 0.04 0.04 (0.04) (0.04) 1.00 3.71 0.46
1991 Class A Shares 1.00 0.06 0.06 (0.06) (0.06) 1.00 6.00 0.50
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 1.00 0.07 0.07 (0.07) (0.07) 1.00 7.91(c) 0.46(c)
<CAPTION>
RATIO OF NET NET
INVESTMENT ASSETS AT
INCOME END
TO AVERAGE OF PERIOD
NET ASSETS (000'S)
----------- ---------
<S> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares 5.56% $331,747
1995 Class B Shares(b) 4.81(c) 11
1994 Class A Shares 3.60 296,365
1993 Class A Shares 2.76 296,130
1992 Class A Shares 3.43 334,003
1991 Class A Shares 5.67 300,539
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 7.73(c) 236,504
</TABLE>
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period. For Class
B Shares, total return would be reduced if a contingent deferred sales
charge were taken into account.
(b) Class B share activity commenced on October 4, 1995.
(c) Annualized.
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
PARAGON PORTFOLIO
SHORT-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DISTRIBUTIONS TO SHAREHOLDERS
INCOME FROM INVESTMENT OPERATIONS FROM:
-------------------------------------------- ------------------------------
NET REALIZED
NET ASSET AND UNREALIZED TOTAL NET TOTAL
VALUE AT NET GAIN (LOSS) INCOME (LOSS) FROM NET REALIZED DISTRIBUTIONS
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT GAIN ON TO SHARE-
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INVESTMENTS HOLDERS
--------- ---------- -------------- ------------------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $ 9.85 $0.54 $ 0.36 $ 0.90 $(0.54) $ - $(0.54)
1995 Class B Shares 9.85 0.47 0.36 0.83 (0.47) - (0.47)
1994 Class A Shares 10.34 0.50 (0.49) 0.01 (0.50) - (0.50)
1994 Class B Shares(c) 9.95 0.05 (0.10) (0.05) (0.05) - (0.05)
1993 Class A Shares 10.30 0.56 0.04 0.60 (0.56) - (0.56)
1992 Class A Shares 10.35 0.67 (0.03) 0.64 (0.67) - (0.69)
1991 Class A Shares 10.04 0.74 0.31 1.05 (0.74) - (0.74)
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.00 0.69 0.04 0.73 (0.69) - (0.69)
<CAPTION>
RATIO OF NET NET
NET ASSET RATIO OF NET INVESTMENT ASSETS AT
VALUE AT EXPENSES TO INCOME PORTFOLIO END
END TOTAL AVERAGE NET TO AVERAGE TURNOVER OF PERIOD
OF PERIOD RETURN(A) ASSETS NET ASSETS RATE (000'S)
--------- --------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $10.21 9.35% 0.76% 5.41% 49% $129,267
1995 Class B Shares 10.21 8.55 1.51 4.58 49 310
1994 Class A Shares 9.85 0.12 0.77 4.89 40 142,958
1994 Class B Shares(c) 9.85 (0.39) 1.53(b) 4.92(b) 40 41
1993 Class A Shares 10.34 5.91 0.78 5.35 44 169,990
1992 Class A Shares 10.30 6.29 0.81 6.44 22 123,528
1991 Class A Shares 10.35 10.90 0.84 7.34 15 76,921
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.04 7.67 0.84(b) 7.60(b) 33 87,096
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge for Class A
Shares or a contingent deferred sales charge for Class B Shares were taken
into account.
(b) Annualized.
(c) Class B Share activity commenced on October 19, 1994.
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
PARAGON PORTFOLIO
INTERMEDIATE-TERM BOND FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS FROM:
-------------------------------------------- ------------------------------------
NET REALIZED
NET ASSET AND UNREALIZED TOTAL NET TOTAL
VALUE AT NET GAIN (LOSS) INCOME (LOSS) FROM NET REALIZED DISTRIBUTIONS
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT GAIN ON TO SHARE-
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INVESTMENTS HOLDERS
--------- ---------- -------------- ------------------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $ 9.54 $0.67 $ 0.90 $ 1.57 $(0.67) $ - $(0.67)
1995 Class B Shares 9.56 0.60 0.90 1.50 (0.60) - (0.60)
1994 Class A Shares 10.84 0.66 (1.16) (0.50) (0.66) (0.14) (0.80)
1994 Class B Shares(c) 9.74 0.10 (0.18) (0.08) (0.10) - (0.10)
1993 Class A Shares 10.53 0.71 0.36 1.07 (0.70) (0.06) (0.76)
1992 Class A Shares 10.41 0.76 0.12 0.88 (0.76) - (0.76)
1991 Class A Shares 9.91 0.77 0.50 1.27 (0.77) - (0.77)
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.00 0.71 (0.09) 0.62 (0.71) - (0.71)
<CAPTION>
RATIO OF NET NET
NET ASSET RATIO OF NET INVESTMENT ASSETS AT
VALUE AT EXPENSES TO INCOME PORTFOLIO END
END TOTAL AVERAGE NET TO AVERAGE TURNOVER OF PERIOD
OF PERIOD RETURN(A) ASSETS NET ASSETS RATE (000'S)
--------- --------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $10.44 16.92% 0.73% 6.67% 42% $314,013
1995 Class B Shares 10.46 16.11 1.48 5.82 42 1,329
1994 Class A Shares 9.54 (4.77) 0.76 6.56 38 297,123
1994 Class B Shares(c) 9.56 (0.76) 1.52(b) 6.38(b) 38 250
1993 Class A Shares 10.84 10.32 0.74 6.46 38 341,535
1992 Class A Shares 10.53 8.71 0.78 7.17 24 285,684
1991 Class A Shares 10.41 13.34 0.78 7.69 15 221,916
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 9.91 6.59 0.80(b) 7.91(b) 14 165,464
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge for Class A
Shares or a contingent deferred sales charge for Class B shares were taken
into account.
(b) Annualized.
(c) Class B Share activity commenced on September 28, 1994.
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
PARAGON PORTFOLIO
LOUISIANA TAX-FREE FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS FROM:
----------------------------------------------- ------------------------------------
NET REALIZED
AND TOTAL
NET ASSET UNREALIZED INCOME NET TOTAL
VALUE AT NET GAIN (LOSS) ON (LOSS) FROM NET REALIZED DISTRIBUTIONS
BEGINNING INVESTMENT INVESTMENT INVESTMENT INVESTMENT GAIN ON TO SHARE-
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INVESTMENTS HOLDERS
--------- ---------- -------------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $10.01 $0.53 $0.75 $1.28 $(0.53) $ - $(0.53)
1995 Class B Shares 10.01 0.45 0.78 1.23 (0.45) - (0.45)
1994 Class A Shares 10.96 0.52 (0.84) (0.32) (0.52) (0.11) (0.63)
1994 Class B Shares(c) 10.41 0.09 (0.40) (0.31) (0.09) - (0.09)
1993 Class A Shares 10.59 0.55 0.45 1.00 (0.55) (0.08) (0.63)
1992 Class A Shares 10.38 0.59 0.28 0.87 (0.59) (0.07) (0.66)
1991 Class A Shares 10.15 0.60 0.23 0.83 (0.60) - (0.60)
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.00 0.57 0.15 0.72 (0.57) - (0.57)
<CAPTION>
RATIOS ASSUMING NO
WAIVER OF FEES
------------------
RATIO OF NET NET RATIO OF NET
NET ASSET RATIO OF NET INVESTMENT ASSETS AT RATIO OF INVESTMENT
VALUE AT EXPENSES TO INCOME PORTFOLIO END EXPENSES INCOME TO
END TOTAL AVERAGE NET TO AVERAGE TURNOVER OF PERIOD TO AVERAGE AVERAGE
OF PERIOD RETURN(A) ASSETS NET ASSETS RATE (000'S) NET ASSETS NET ASSETS
--------- --------- ------------ ------------ --------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $10.76 13.11% 0.62% 5.07% 28% $206,119 0.77% 4.92%
1995 Class B Shares 10.79 12.52 1.37 4.27 28 2,115 1.52 4.12
1994 Class A Shares 10.01 (2.97) 0.65 4.97 24 196,820 0.80 4.82
1994 Class B Shares(c) 10.01 (2.94) 1.41(b) 4.45(b) 24 204 1.56(b) 4.30(b)
1993 Class A Shares 10.96 9.65 0.62 5.07 25 196,534 0.78 4.91
1992 Class A Shares 10.59 8.64 0.58 5.70 32 135,692 0.83 5.45
1991 Class A Shares 10.38 8.45 0.61 5.86 35 88,503 0.86 5.61
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.15 7.48 0.64(b) 6.20(b) 5 59,375 0.86(b) 5.98(b)
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge for Class A
Shares or a contingent deferred sales charge for Class B Shares were taken
into account.
(b) Annualized.
(c) Class B Share activity commenced on September 16, 1994.
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
PARAGON PORTFOLIO
VALUE GROWTH FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DISTRIBUTIONS TO SHAREHOLDERS
INCOME FROM INVESTMENT OPERATIONS FROM:
----------------------------------------- ------------------------------
NET REALIZED
NET ASSET AND UNREALIZED TOTAL NET TOTAL NET ASSET
VALUE AT NET GAIN (LOSS) INCOME (LOSS) NET REALIZED DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT FROM INVESTMENT INVESTMENT GAIN ON TO SHARE- END
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INVESTMENTS HOLDERS OF PERIOD
--------- ---------- -------------- --------------- ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $13.73 $0.19 $3.72 $3.91 $(0.19) $(0.44) $(0.63) $17.01
1995 Class B Shares 13.70 0.07 3.75 3.82 (0.10) (0.44) (0.54) 16.98
1994 Class A Shares 15.29 0.20 (0.86) (0.66) (0.21) (0.69) (0.90) 13.73
1994 Class B Shares(d) 14.98 0.03 (1.28) (1.25) (0.03) - (0.03) 13.70
1993 Class A Shares 14.38 0.17 1.25 1.42 (0.18) (0.33) (0.51) 15.29
1992 Class A Shares 11.90 0.17 2.68 2.85 (0.15) (0.22) (0.37) 14.38
1991 Class A Shares 9.75 0.19 2.19 2.38 (0.21) (0.02) (0.23) 11.90
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.00 0.24 (0.28) (0.04) (0.21) -- (0.21) 9.75
<CAPTION>
RATIO OF NET NET
RATIO OF NET INVESTMENT ASSETS AT
EXPENSES TO INCOME PORTFOLIO END
TOTAL AVERAGE NET TO AVERAGE TURNOVER OF PERIOD
RETURN(a) ASSETS NET ASSETS RATE (000'S)
--------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares 29.57% 0.95% 1.25% 77% $217,978
1995 Class B Shares 28.74 1.70 0.38 77 2,923
1994 Class A Shares (4.32) 0.96 1.34 53 173,198
1994 Class B Shares(d) (8.31) 1.71(b) 0.76(b) 53 412
1993 Class A Shares 10.13 0.96 1.21 66 171,141
1992 Class A Shares 24.27 0.97 1.25 43 133,614
1991 Class A Shares 24.97 0.95(c) 1.73(c) 54 93,400
FOR THE PERIOD DECEMBER 29, 1989 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares (0.40) 1.03(b) 2.68(b) 53 45,937
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge for Class A
Shares or a contingent deferred sales charge for Class B Shares were taken
into account.
(b) Annualized.
(c) Had the Administrator not voluntarily waived a portion of the
administration fee, the expense ratio and the ratio of net investment
income to average net assets for the year ended November 30, 1991 would
have been 1.02% and 1.66% for Class A Shares.
(d) Class B Share activity commenced on September 9, 1994.
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
PARAGON PORTFOLIO
VALUE EQUITY INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DISTRIBUTIONS TO SHAREHOLDERS
INCOME FROM INVESTMENT OPERATIONS FROM:
----------------------------------------- ------------------------------
NET REALIZED
NET ASSET AND UNREALIZED TOTAL NET TOTAL NET ASSET
VALUE AT NET GAIN (LOSS) INCOME (LOSS) NET REALIZED DISTRIBUTIONS VALUE AT
BEGINNING INVESTMENT ON INVESTMENT FROM INVESTMENT INVESTMENT GAIN ON TO SHARE- END
OF PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INVESTMENTS HOLDERS OF PERIOD
--------- ---------- -------------- --------------- ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares $11.55 $0.31 $3.58 $3.89 $(0.31) $(0.37) $(0.68) $14.76
1995 Class B Shares 11.56 0.22 3.57 3.79 (0.22) (0.37) (0.59) 14.76
1994 Class A Shares 12.74 0.30 (0.54) (0.24) (0.34) (0.61) (0.95) 11.55
1994 Class B Shares(d) 12.01 0.04 (0.45) (0.41) (0.04) - (0.04) 11.56
1993 Class A Shares 12.20 0.28 0.93 1.21 (0.28) (0.39) (0.67) 12.74
1992 Class A Shares 10.42 0.27 1.76 2.03 (0.25) - (0.25) 12.20
1991 Class A Shares 9.00 0.29 1.45 1.74 (0.32) - (0.32) 10.42
FOR THE PERIOD DECEMBER 28, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares 10.00 0.31 (1.04) (0.73) (0.27) - (0.27) 9.00
<CAPTION>
RATIO OF NET NET
RATIO OF NET INVESTMENT ASSETS AT
EXPENSES TO INCOME PORTFOLIO END
TOTAL AVERAGE NET TO AVERAGE TURNOVER OF PERIOD
RETURN(a) ASSETS NET ASSETS RATE (000'S)
--------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDED NOVEMBER 30,
- --------------------------------
1995 Class A Shares 35.15% 0.92% 2.34% 38% $133,699
1995 Class B Shares 34.14 1.67 1.40 38 934
1994 Class A Shares (1.69) 0.93 2.50 49 103,364
1994 Class B Shares(d) (3.40) 1.67(b) 1.71(b) 49 31
1993 Class A Shares 10.24 0.93 2.30 51 102,799
1992 Class A Shares 19.65 0.98 2.38 36 83,136
1991 Class A Shares 20.03 0.95(c) 3.53(c) 50 59,854
FOR THE PERIOD DECEMBER 28, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- ----------------------------------------------------------------------------------
1990 Class A Shares (7.40) 0.99(b) 3.62(b) 56 72,783
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge for Class A
Shares or a contingent deferred sales charge for Class B Shares were taken
into account.
(b) Annualized.
(c) Had the Administrator not voluntarily waived a portion of the
administration fee, the expense ratio and the ratio of net investment
income to average net assets for the year ended November 30, 1991 would
have been 1.01% and 3.47% for Class A Shares.
(d) Class B Share activity commenced on October 3, 1994.
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
PARAGON PORTFOLIO
GULF SOUTH GROWTH FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DISTRIBUTIONS TO SHAREHOLDERS
INCOME FROM INVESTMENT OPERATIONS FROM:
----------------------------------------- ------------------------------
NET REALIZED
NET ASSET NET AND UNREALIZED TOTAL NET TOTAL NET ASSET
VALUE AT INVESTMENT GAIN (LOSS) INCOME (LOSS) NET REALIZED DISTRIBUTIONS VALUE AT
BEGINNING INCOME ON INVESTMENT FROM INVESTMENT INVESTMENT GAIN ON TO SHARE- END
OF PERIOD (LOSS) TRANSACTIONS OPERATIONS INCOME INVESTMENTS HOLDERS OF PERIOD
--------- ---------- -------------- --------------- ---------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEARS ENDING NOVEMBER 30,
- ---------------------------------
1995 Class A Shares $14.70 $(0.06) $3.69 $3.63 $ - $(0.27) $(0.27) $18.06
1995 Class B Shares 14.66 (0.11) 3.61 3.50 - (0.27) (0.27) 17.89
1994 Class A Shares 15.88 (0.06) (0.99) (1.05) - (0.13) (0.13) 14.70
1994 Class B Shares(c) 16.10 (0.01) (1.43) (1.44) - - - 14.66
1993 Class A Shares 14.89 (0.03) 1.38 1.35 (0.01) (0.35) (0.36) 15.88
1992 Class A Shares 11.59 0.02 3.29 3.31 (0.01) - (0.01) 14.89
FOR THE PERIOD JULY 1, 1991 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- -----------------------------------------------------------------------------
1991 Class A Shares 10.00 0.02 1.59 1.61 (0.02) - (0.02) 11.59
<CAPTION>
RATIO OF NET NET
RATIO OF NET INVESTMENT ASSETS AT
EXPENSES TO INCOME (LOSS) PORTFOLIO END
TOTAL AVERAGE NET TO AVERAGE TURNOVER OF PERIOD
RETURN(A) ASSETS NET ASSETS RATE (000'S)
--------- ------------ ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
FOR THE YEARS ENDING NOVEMBER 30,
- ---------------------------------
1995 Class A Shares 25.07% 1.03% (0.36)% 65% $95,467
1995 Class B Shares 24.21 1.78 (1.16) 65 1,814
1994 Class A Shares (6.66) 1.00 (0.38) 51 77,540
1994 Class B Shares(c) (9.08) 1.75(b) (0.90)(b) 51 231
1993 Class A Shares 9.10 1.01 (0.21) 59 74,982
1992 Class A Shares 28.59 1.00 0.15 42 55,719
FOR THE PERIOD JULY 1, 1991 (COMMENCEMENT OF OPERATIONS) THROUGH NOVEMBER 30,
- -----------------------------------------------------------------------------
1991 Class A Shares 16.12 1.05(b) 0.31(b) 12 34,546
</TABLE>
- ----
(a) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge for Class A
Shares or a contingent deferred sales charge for Class B shares were taken
into account.
(b) Annualized.
(c) Class B Share activity commenced on September 12, 1994.
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
PARAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Paragon Portfolio (the "Trust") is a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company. The Trust consists of eleven portfolios, seven
of which (the "Funds") are contained herein: Paragon Short-Term Government
Fund, Paragon Intermediate-Term Bond Fund, Paragon Louisiana Tax-Free Fund,
Paragon Value Growth Fund, Paragon Value Equity Income Fund and Paragon Gulf
South Growth Fund (collectively, the "Non-Money Market Funds") and Paragon
Treasury Money Market Fund (the "Money Market Fund"). Each of the Funds offers
two classes of shares, Class A Shares and Class B Shares. Class B Shares of
the Money Market Fund will be issued only upon an exchange of Class B Shares
of any of the Non-Money Market Funds. Paragon Gulf South Growth Fund is a non-
diversified portfolio; all other portfolios are diversified. The following is
a summary of significant accounting policies followed by the Funds which are
in conformity with those generally accepted in the investment company
industry.
Investment Valuation. Portfolio securities of the Money Market Fund are
valued at amortized cost which approximates market value. Under this method,
all investments purchased at a discount or a premium are valued by amortizing
the difference between original purchase price and maturity value of the issue
over the period to maturity. For the Non-Money Market Funds, equity securities
traded on a national securities exchange or the National Association of
Securities Dealers NASDAQ System ("NASDAQ") are valued at their last sale
price on the principal exchange on which they are traded or NASDAQ (if NASDAQ
is the principal market for such securities) on the valuation day or, if no
sale occurs, at the mean between the closing bid and asked prices. Unlisted
equity securities for which market quotations are available are valued at the
mean between the most recent bid and asked prices. Fixed-income securities are
valued at prices supplied by an independent pricing service which reflect
broker/dealer-supplied valuations and electronic data processing techniques.
Short-term debt obligations maturing in sixty days or less are valued at
amortized cost. Other assets and assets whose market values, in the investment
adviser's opinion, do not reflect fair value are valued at fair value using
methods determined in good faith by the Board of Trustees.
Securities Transactions and Investment Income. Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Dividend income is recorded on
the ex-dividend date and interest income is recorded on the accrual basis.
Premiums and Discounts on Debt Securities Owned. The Paragon Intermediate-
Term Bond and Paragon Short-Term Government Funds accrete market discounts on
long-term debt securities and do not amortize premiums. These funds may invest
in mortgage-backed securities. Certain mortgage security paydown gains and
losses are taxable as ordinary income. Such paydown gains and losses increase
or decrease taxable ordinary income available for distributions and are
classified as interest income in the accompanying Statements of Operations.
The Paragon Louisiana Tax-Free Fund amortizes premiums on debt securities on
the effective yield basis, and does not accrete market discounts on debt
securities. The Paragon Value Growth, Paragon Value Equity Income, and Paragon
Gulf South Growth Funds accrete discounts and amortize premiums on long-term
debt securities. For all Funds, original issue discounts on debt securities
are amortized to interest income over the life of the security with a
corresponding increase in the cost basis of that security.
Federal Taxes. The Trust's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute each year substantially all of the investment company taxable and
tax-exempt income to the shareholders of each Fund. Accordingly, no federal
tax provisions are required.
At November 30, 1995, the following Funds had approximately the following
amounts of capital loss carryforward for U.S. federal tax purposes:
<TABLE>
<CAPTION>
FUND AMOUNT YEARS OF EXPIRATION
---- ---------- -------------------
<S> <C> <C>
Paragon Short-Term Government Fund........ $1,249,000 2000 to 2003
Paragon Intermediate-Term Bond Fund....... $4,671,000 2002 to 2003
Paragon Louisiana Tax-Free Fund........... $ 451,000 2002 to 2003
</TABLE>
These amounts are available to be carried forward to offset future capital
gains of the corresponding funds to the extent permitted by applicable laws or
regulations.
39
<PAGE>
PARAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1995
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
Deferred Organization Costs. Organization-related costs are being amortized
on a straight-line basis over a period of five years.
Expenses. Expenses incurred by the Funds which do not specifically relate to
an individual Fund are allocated to the Funds based on each Fund's relative
average net assets for the period. Shareholders of Class B Shares bear all
expenses which are directly attributable to such shares.
NOTE 2. AGREEMENTS
The Non-Money Market Funds have entered into Investment Advisory Agreements
with Premier Investment Advisors, L.L.C., ("Premier"), the successor to
Premier Investment Advisors, Inc. effective December 31, 1993 and a subsidiary
of Premier Bank, N.A. The Money Market Fund has entered into an Investment
Advisory Agreement with Goldman Sachs Asset Management ("GSAM"), a separate
operating division of Goldman, Sachs & Co.("Goldman Sachs"), and into a
Subadvisory Agreement with Premier and GSAM. Pursuant to the terms of the
Investment Advisory Agreements, Premier and GSAM manage the investments and
make investment decisions for each Non-Money Market Fund and for the Money
Market Fund, respectively. For these services, each Fund pays its investment
adviser a monthly fee at the following annual rate of the corresponding Fund's
average daily net assets:
<TABLE>
<S> <C>
Paragon Treasury Money Market Fund.................................. .20%
Paragon Short-Term Government Fund.................................. .50%
Paragon Intermediate-Term Bond Fund................................. .50%
Paragon Louisiana Tax-Free Fund..................................... .50%
Paragon Value Growth Fund........................................... .65%
Paragon Value Equity Income Fund.................................... .65%
Paragon Gulf South Growth Fund...................................... .65%
</TABLE>
With respect to the Paragon Louisiana Tax-Free Fund, Premier has advised the
Trust that, as of January 1, 1993 and until further notice, it has voluntarily
agreed to reduce its advisory fee from an annual rate of .50% to .40% of the
Fund's average daily net assets. For the year ended November 30, 1995, Premier
waived $198,495 of its advisory fee for the Paragon Louisiana Tax-Free Fund.
Pursuant to the Subadvisory Agreement among the Money Market Fund, GSAM and
Premier, Premier reviews on a quarterly basis the portfolio and investment
strategy of the Money Market Fund and consults with GSAM as needed concerning
that Fund's investments. As compensation, GSAM pays to Premier quarterly a
subadvisory fee equal to, on an annual basis, .10% of that Fund's average
daily net assets.
GSAM serves as the Trust's administrator pursuant to an Administration
Agreement. Under the Administration Agreement, GSAM administers the Trust's
business affairs. As compensation for services rendered under the
Administration Agreement, each Fund pays GSAM a fee, computed daily and
payable monthly, at the annual rate of .15% of the average daily net assets of
the corresponding Fund. With respect to the Paragon Louisiana Tax-Free Fund,
GSAM has advised the Trust that, as of February 5, 1990, and until further
notice, it has voluntarily agreed to reduce its administration fee from .15%
to .10% of the Fund's average daily net assets. For the year ended November
30, 1995, GSAM waived $99,248 of its administration fee for the Paragon
Louisiana Tax-Free Fund.
Goldman Sachs serves as the Distributor of shares of the Funds pursuant to a
Distribution Agreement with the Trust. Goldman Sachs may receive a portion of
the sales load imposed on the sale of Class A Shares of the Non-Money Market
Funds and has advised the Trust that it retained approximately $45,300 during
the year ended November 30, 1995.
The Trust, on behalf of each Fund, has adopted a Distribution Plan for Class
B Shares (the "Class B Plan") pursuant to Rule 12b-1. Under the Class B Plan,
each Fund pays Goldman Sachs a quarterly fee for distribution services with
respect to the Class B Shares equal to, on an annual basis, .75% of each
Fund's average daily net assets attributable to the Class B Shares of such
Fund.
40
<PAGE>
PARAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1995
NOTE 2. AGREEMENTS - (CONTINUED)
The Distributor collects distribution expenses with respect to the Class B
Shares through the receipt of contingent deferred sales charges.
Goldman Sachs also serves as Transfer Agent of the Funds for a fee.
For further discussion of agreements, see Note 9.
NOTE 3. INVESTMENT TRANSACTIONS
Purchases and proceeds of sales or maturities of long-term investments for
the year ended November 30, 1995, were as follows:
PARAGON SHORT-TERM GOVERNMENT FUND
<TABLE>
<S> <C>
Purchases (excluding U.S. Government and agency obligations)....... $ --
Sales (excluding U.S. Government and agency obligations)........... --
Purchases of U.S. Government and agency obligations................ 62,513,813
Sales of U.S. Government and agency obligations.................... 81,061,194
PARAGON INTERMEDIATE-TERM BOND FUND
Purchases (excluding U.S. Government and agency obligations)....... $ 20,009,460
Sales (excluding U.S. Government and agency obligations)........... 20,699,166
Purchases of U.S. Government and agency obligations................ 93,336,965
Sales of U.S. Government and agency obligations.................... 100,281,965
PARAGON LOUISIANA TAX-FREE FUND
Purchases (excluding U.S. Government and agency obligations)....... $ 54,571,560
Sales (excluding U.S. Government and agency obligations)........... 56,303,082
Purchases of U.S. Government and agency obligations................ --
Sales of U.S. Government and agency obligations.................... --
PARAGON VALUE GROWTH FUND
Purchases (excluding U.S. Government and agency obligations)....... $142,506,841
Sales (excluding U.S. Government and agency obligations)........... 155,278,954
Purchases of U.S. Government and agency obligations................ --
Sales of U.S. Government and agency obligations.................... --
PARAGON VALUE EQUITY INCOME FUND
Purchases (excluding U.S. Government and agency obligations)....... $ 45,355,053
Sales (excluding U.S. Government and agency obligations)........... 45,076,096
Purchases of U.S. Government and agency obligations................ --
Sales of U.S. Government and agency obligations.................... --
PARAGON GULF SOUTH GROWTH FUND
Purchases (excluding U.S. Government and agency obligations)....... $ 55,574,779
Sales (excluding U.S. Government and agency obligations)........... 53,951,180
Purchases of U.S. Government and agency obligations................ --
Sales of U.S. Government and agency obligations.................... --
</TABLE>
The Money Market Fund invests only in short-term investments.
NOTE 4. REPURCHASE AGREEMENTS
During the term of a repurchase agreement, the value of the underlying
securities, including accrued interest, is required to equal or exceed the
value of the repurchase agreement. The underlying securities for all
repurchase agreements are held in safekeeping in the customer-only account of
State Street Bank & Trust Co., the Funds' custodian, at the Federal Reserve
Bank of Boston, or at sub-custodians. The market values of the underlying
securities are monitored by pricing them daily.
In connection with transactions in repurchase agreements, if the seller
defaults and the value of the collateral declines, or if the seller enters an
insolvency proceeding, realization of the collateral by the Trust may be
delayed or limited.
41
<PAGE>
PARAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1995
NOTE 5. JOINT REPURCHASE AGREEMENT ACCOUNT
The Money Market Fund, together with other registered investment companies
having advisory agreements with GSAM, transfers uninvested cash balances into
a joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements. The underlying securities for the repurchase
agreements are U.S. Treasury obligations. As of November 30, 1995, the Money
Market Fund had a 6.20% undivided interest in the repurchase agreements in
this joint account which equalled $269,600,000 in principal amount. At
November 30, 1995, the repurchase agreements in the joint account along with
the corresponding underlying securities (including the type of security,
market value, interest rate and maturity date) were as follows:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY AMORTIZED
AMOUNT RATE DATE COST
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Bankers Trust Securities Corp.,
dated 11/30/95, repurchase
price $550,090,139 (U.S. Trea-
sury Notes: $561,254,088,
7.25-8.50%, 11/30/96-07/15/97). $550,000,000 5.90% 12/01/95 $ 550,000,000
Bear Stearns Companies, dated
11/30/95, repurchase price
$500,082,083 (U.S. Treasury
Strips: $511,463,322,
11/15/96-02/15/00)............. 500,000,000 5.91 12/01/95 500,000,000
Daiwa Securities, Inc., dated
11/30/95, repurchase price
$400,065,667 (U.S. Treasury
Note: $203,863,714,
6.50%, 04/30/97) (U.S. Treasury
Bills: $204,137,216,
05/30/96-08/22/96)............. 400,000,000 5.91 12/01/95 400,000,000
Deutsche Bank Securities Corp.,
dated 11/30/95, repurchase
price $200,032,778 (U.S. Trea-
sury Note: $204,059,795, 6.63%,
03/31/97)...................... 200,000,000 5.90 12/01/95 200,000,000
First Boston Corp., dated
11/30/95, repurchase price
$300,049,167 (U.S. Treasury
Bill: $306,750,655,
07/25/96)...................... 300,000,000 5.90 12/01/95 300,000,000
J.P. Morgan Securities, Inc.,
dated 11/30/95, repurchase
price $200,032,778 (U.S. Trea-
sury Notes: $204,418,905,
6.50-7.88%, 01/15/98-04/30/99). 200,000,000 5.90 12/01/95 200,000,000
Lehman Brothers Government Secu-
rities, Inc., dated 11/30/95,
repurchase price $150,025,000
(U.S. Treasury Notes:
$13,268,851, 6.88-8.50%,
02/15/00-03/31/00) (U.S. Trea-
sury Interest-Only Strips:
$84,242,029, 05/15/97-
11/15/99), (U.S. Treasury Prin-
cipal-Only Strips: $55,487,376,
02/15/96-08/15/02)............. 150,000,000 6.00 12/01/95 150,000,000
Lehman Brothers Government Secu-
rities, Inc., dated 11/30/95,
repurchase price $45,107,705
(U.S. Treasury Interest-Only
Strips: $46,003,684, 02/15/96-
05/15/97)...................... 45,100,000 6.15 12/01/95 45,100,000
Morgan Stanley & Co., Inc.,
dated 11/30/95, repurchase
price $700,114,722 (U.S. Trea-
sury Bills: $714,018,426,
02/08/96-09/19/96)............. 700,000,000 5.90 12/01/95 700,000,000
Sanwa Securities Co., dated
11/30/95, repurchase price
$400,065,556 (U.S. Treasury
Notes: $256,065,720,
5.38-5.75%, 11/30/97-10/31/00)
(U.S. Treasury Bills:
$151,935,206, 05/30/96-
09/19/96)...................... 400,000,000 5.90 12/01/95 400,000,000
Smith Barney, Inc., dated
11/30/95, repurchase price
$300,049,417 (U.S. Treasury
Note: $306,000,179,
5.75%, 09/30/97)............... 300,000,000 5.93 12/01/95 300,000,000
Swiss Bank Corp., dated
11/30/95, repurchase price
$600,098,500 (U.S. Treasury
Notes: $586,297,743,
4.38-8.50%, 05/31/96-09/30/00)
(U.S. Treasury Bill:
$25,783,674, 10/17/96)......... 600,000,000 5.91 12/01/95 600,000,000
--------------
Total Joint Repurchase Agreement
Account........................ $4,345,100,000
==============
</TABLE>
42
<PAGE>
PARAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1995
NOTE 6. CAPITAL SHARES AND DISTRIBUTIONS
As of November 30, 1995, Premier Bank, N.A. Trustee, in its capacity as
trustee or fiduciary of trusts and employee benefit plans, is the beneficial
owner of approximately the following percentages of the outstanding shares of
beneficial interest of each of the Funds:
<TABLE>
<S> <C>
Paragon Treasury Money Market Fund.................................... 93%
Paragon Short-Term Government Fund.................................... 92%
Paragon Intermediate-Term Bond Fund................................... 90%
Paragon Louisiana Tax-Free Fund....................................... 70%
Paragon Value Growth Fund............................................. 82%
Paragon Value Equity Income Fund...................................... 92%
Paragon Gulf South Growth Fund........................................ 78%
</TABLE>
Subsequent to November 30, 1995, Paragon Value Growth, Paragon Value Equity
Income and Paragon Gulf South Growth Funds distributed to their shareholders
all of their respective accumulated undistributed realized gains as of
November 30, 1995.
NOTE 7. CONCENTRATION OF CREDIT RISK
The Paragon Louisiana Tax-Free Fund invests substantially all of its assets
in debt obligations of issuers located in the State of Louisiana. The issuers'
abilities to meet their obligations may be affected by Louisiana economic or
political developments.
NOTE 8. CERTAIN RECLASSIFICATIONS
In accordance with Statement of Position 93-2, the Paragon Gulf South Growth
Fund has reclassified $329,441 of accumulated net investment loss to paid-in
capital. This reclassification has no impact on the net asset value of the
fund and is designed to present the fund's capital accounts on tax basis.
NOTE 9. OTHER MATTERS
Pursuant to the approval of the Board of Trustees of the Paragon Portfolio
("Trustees") on October 31, 1995 and the shareholders on December 20, 1995,
the Paragon Funds have entered into an Investment Advisory Agreement with Banc
One Investment Advisors Corporation ("Banc One") effective January 2, 1996.
Subject to the terms of the Investment Advisory Agreement, Banc One has agreed
to furnish investment advisory and related services to the Paragon Funds. For
these services, each Paragon Fund will pay Banc One an advisory fee, computed
daily and paid monthly, at an annual rate of average net assets as stated in
Note 2. Effective January 2, 1996, Banc One has entered into a subadvisory
agreement with GSAM to act as investment subadviser on behalf of the Money
Market Fund. For investment management services rendered, Banc One will pay
GSAM a fee, payable monthly, at an annual rate equal to .10% of the average
daily net assets. Pursuant to the approval of the Trustees on October 31,
1995, The One Group Services Company will act as distributor of the shares of
beneficial interest of each of the Paragon Funds under the Distribution
Agreement effective January 2, 1996.
On October 31, 1995, the Trustees approved an Agreement and Plan of
Reorganization ("Reorganization") pursuant to which Paragon Treasury Money
Market, Paragon Short-Term Government, Paragon Intermediate-Term Bond, Paragon
Value Equity Income, Paragon Louisiana Tax-Free, Paragon Value Growth and
Paragon Gulf South Growth Funds (individually, a "Paragon Fund" and
collectively, the "Paragon Funds") would be reorganized into One Group U.S.
Treasury Securities Money Market Fund, One Group Limited Volatility Bond Fund,
One Group Government Bond Fund, One Group Income Equity Fund, One Group
Louisiana Municipal Bond Fund, One Group Value Growth Fund and One Group Gulf
South Growth Fund (individually, a "One Group Fund" and collectively, the "One
Group Funds"), respectively. The transaction is expected to occur on or about
March 22, 1996 (the "Exchange Date"). The Trustees unanimously recommended to
the shareholders that they vote for the Reorganization. If the Reorganization
43
<PAGE>
PARAGON PORTFOLIO
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1995
NOTE 9. OTHER MATTERS--(CONTINUED)
is approved by the shareholders, on the Exchange Date, the Paragon Funds will
transfer all of their assets and liabilities to the respective One Group Fund,
in exchange for shares of the One Group Funds having an aggregate net asset
value equal to the aggregate value of the net assets acquired from
corresponding Paragon Fund. As a result, each Paragon Fund shareholder will
receive, on a tax-free basis, a number of full and fractional shares equal in
value at the date of the exchange to the value of the net assets of the
respective Paragon Fund transferred to the respective One Group Fund. After
the Reorganization, it is the Trustee's intention to terminate the Trust.
44
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Paragon Portfolio
In our opinion, the accompanying statements of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Paragon
Treasury Money Market Fund, the Paragon Short-Term Government Fund, the
Paragon Intermediate-Term Bond Fund, the Paragon Louisiana Tax-Free Fund, the
Paragon Value Growth Fund, the Paragon Value Equity Income Fund and the
Paragon Gulf South Growth Fund (constituting the Paragon Portfolio, hereafter
referred to as the "Portfolio") at November 30, 1995, the results of each of
their operations for the year then ended, the changes in each of their net
assets for the two years in the period then ended and the financial highlights
for each of the respective periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Portfolio's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audits in accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentment. We believe that our audits, which included
confirmation of securities at November 30, 1995 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
As more fully described in Note 9, the Trustees have approved the merger of
the Portfolio into One Group Funds.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
January 19, 1996
45
<PAGE>
PARAGON PORTFOLIO
------------------------
TRUSTEES
Paul C. Nagel, Jr.,
Chairman
Ernest E. Howard III
OFFICERS
Paul W. Klug
President
Marcia L. Beck
Vice President
John W. Mosior
Vice President
Nancy L. Mucker
Vice President
Pauline Taylor
Vice President
Scott M. Gilman
Treasurer
Michael J. Richman
Secretary
Howard B. Surloff
Assistant Secretary
This Annual Report is authorized for distribution to prospective investors
only when preceded or accompanied by a Paragon Portfolio Prospectus which
contains facts concerning Paragon Portfolio's objectives and policies,
management, expenses and other information.
<PAGE>
PARAGON PORTFOLIO
4900 Sears Tower
Chicago, Illinois 60606
INVESTMENT ADVISOR
Premier Investment Advisors, L.L.C.
451 Florida Street
Baton Rouge, Louisiana 70801
INVESTMENT ADVISOR AND ADMINISTRATOR
Goldman Sachs Asset Management
One New York Plaza
New York, New York 10004
DISTRIBUTOR
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
Goldman, Sachs & Co.
4900 Sears Tower
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, Massachusetts 02109
PA-ANN95
PARAGON PORTFOLIO
---------------------------------------------
Annual Report
-------------------------------
November 30, 1995
LOGO
Paragon Treasury Money Market Fund
Paragon Short-Term Government Fund
Paragon Intermediate-Term Bond Fund
Paragon Louisiana Tax-Free Fund
Paragon Value Growth Fund
Paragon Value Equity Income Fund
Paragon Gulf South Growth Fund
