<PAGE> 1
REPORT FROM THE INVESTMENT ADVISER
- --------------------------------------------------------------------------------
Dear Shareholder:
The Correspondent Cash Reserves Money Market Portfolio is an open-end
diversified money market fund that seeks to provide investors with as high a
level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. The Portfolio invests in a diversified selection
of very high-quality, short-term money-market obligations, such as U.S. Treasury
bills, short-term bank obligations and commercial paper.
While the Portfolio may invest in instruments rated in either of the top two
ratings categories established by nationally recognized rating services, it has
been our practice to invest only in instruments rated in the highest category. A
schedule of the Portfolio's investments is included in the financial report that
follows. The Portfolio's investments are actively monitored in order to ensure
that they maintain their quality status and suitability.
ECONOMIC OVERVIEW
Economic growth accelerated in the second quarter at an annual rate of about 4%,
nearly twice the pace of the first quarter. Although investors began to expect
the Federal Reserve Board to raise short-term interest rates to slow the
economy, the Fed did not act in the second quarter. The last Fed action was in
January, when the federal funds rate -- the interest rate banks charge each
other for overnight loans -- was lowered from 5.50% to 5.25%. At the time, the
Fed acted to stimulate the economy, which had grown at just a 0.5% rate during
the fourth quarter of 1995. Although economic activity has since strengthened,
inflation has remained below 3%.
INVESTMENT STRATEGY
Although the federal funds rate remained constant during the six-month period,
yields increased on money-market securities because there was some anticipation
that the Fed would increase the federal funds rate. Our strategy was to maintain
an average maturity of 65 to 75 days, picking and choosing areas where the
market had value. Extending some maturities from overnight to 30 days generated
an additional yield of 0.10% to 0.15%. One-year securities, the longest we will
hold, were yielding nearly 5.90%. Investing in longer-term securities typically
increases yield, but it also increases the risk of capital loss if interest
rates rise, which is why we employ rigorous selection criteria. About 65% of the
securities in the portfolio mature between one and 30 days. The rest is spread
out evenly from three months to one year.
As of June 30, 1996, the Portfolio was comprised of 46% bank obligations, 42%
commercial paper and 9% U.S. Treasury bills, with the rest in cash. The
Portfolio's commercial paper holdings are comprised of high-quality securities
issued by companies in such industries as aerospace/defense, finance, health
care and telecommunications.*
<PAGE> 2
REPORT FROM THE INVESTMENT ADVISER -- (continued)
- --------------------------------------------------------------------------------
OUTLOOK
Although there are conflicting economic data, the consensus seems to be that the
Fed is going to raise short-term interest rates before the end of 1996 in an
effort to slow down the economy. The timing of the increase may be delayed by
the upcoming presidential election. As a result, we will likely shorten the
average weighted maturity of the portfolio to 60-to-65 days, rather than extend
it. By shortening the portfolio, we can reinvest more quickly at higher rates in
anticipation of the Fed's action. We will continue to purchase investments
selectively with regard to quality, liquidity and diversification.
Sincerely,
Mitchell Hutchins Asset Management Inc.
DENNIS MCCAULEY
Managing Director
SUSAN P. MESSINA
Portfolio Manager
- ---------------
* The Portfolio's composition is subject to change.
<PAGE> 3
REPORT FROM THE INVESTMENT ADVISER -- (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
JUNE 30, 1996
PORTFOLIO COMPOSITION*
<S> <C>
U.S. Government Obligations/Agencies 9%
General Trade 3%
Telecommunications 3%
Bank Obligations 36%
Other 2%
Finance 5%
Banking 9%
Asset Backed 11%
Short-Term Corporate Obligations 12%
Broker-Dealer 8%
Electronics 2%
<FN>
* The composition of the Portfolio is subject to change.
</TABLE>
PORTFOLIO PERFORMANCE
As of June 30, 1996, the 7-day and 30-day yields for the Retail and
Institutional Shares were as follows:
<TABLE>
<CAPTION>
7-DAY 30-DAY
YIELD YIELD
----- ------
<S> <C> <C>
Retail Shares**.................................... 4.53% 4.52%
Institutional Shares............................... 5.16% 5.16%
<FN>
Investments in the Portfolio are neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share.
** For the current 7-day and 30-day periods ended June 30, 1996, the service
contractors voluntarily waived 0.10% of their fees for the Retail Shares. If
the service contractors had not waived a portion of their fees, the 7-day and
30-day yields shown would have been 4.43% and 4.42% for the Retail Shares.
This voluntary waivers may be modified or terminated at any time, which would
reduce the performance of the Portfolio's Retail Shares. Yields will vary
with market conditions, and past performance is not a guarantee of future
results.
Concord Financial Group is the distributor of the Portfolio.
</TABLE>
<PAGE> 4
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT AMORTIZED
S&P/MOODY'S RATE DATE (000) COST
------------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 9.4%
U.S. Treasury Bills................................. Aaa/AAA 4.84%** 08/22/96 $10,000 $ 9,930,089
U.S. Treasury Bills................................. Aaa/AAA 5.30** 05/29/97 10,000 9,511,222
U.S. Treasury Notes................................. Aaa/AAA 6.88 02/28/97 4,000 4,046,476
Federal Farm Credit Bank (FRN)...................... Aaa/AAA 5.44 07/01/96 7,000 6,998,445
Federal Farm Credit Bank............................ Aaa/AAA 5.30 08/01/96 7,000 7,000,000
Federal Farm Credit Bank............................ Aaa/AAA 5.88 09/03/96 4,000 3,999,289
Federal Home Loan Bank.............................. Aaa/AAA 6.00 06/20/97 6,000 6,000,000
Federal Home Loan Bank.............................. Aaa/AAA 6.06 07/02/97 5,000 5,000,000
Federal Home Loan Mortgage Corp. ................... Aaa/AAA 5.65 08/15/96 4,000 3,993,211
Federal National Mortgage Assoc. ................... Aaa/AAA 4.78 02/14/97 5,000 4,995,795
Student Loan Marketing Assoc. (FRN)................. Aaa/AAA 6.09 07/02/96 8,000 8,000,000
Student Loan Marketing Assoc. (FRN)................. Aaa/AAA 6.07 07/02/96 5,000 5,000,051
Student Loan Marketing Assoc. ...................... Aaa/AAA 5.39 09/12/96 15,000 15,000,000
------------
Total U.S. Government and Agency Obligations
(Amortized cost -- $89,474,578)..................... 89,474,578
------------
BANK NOTES -- 14.8%
DOMESTIC -- 14.8%
Bank of Hawaii...................................... A-1/P-1 5.50 01/03/97 10,000 10,000,000
FCC National Bank (FRN)............................. A-1+/P-1 5.36 07/01/96 7,000 7,000,000
FCC National Bank................................... A-1+/P-1 5.33 07/12/96 5,000 4,999,813
FCC National Bank................................... A-1+/P-1 5.70 10/02/96 7,000 7,010,465
FCC National Bank................................... A-1+/P-1 5.65 11/01/96 5,000 5,000,576
FCC National Bank................................... A-1+/P-1 5.64 04/17/97 6,000 5,997,235
Huntington National Bank (FRN)...................... A-1/P-1 5.51 07/01/96 10,000 9,999,629
LaSalle National Bank............................... A-1+/P-1 5.35 07/02/96 5,000 5,000,000
Morgan Guaranty Trust Co. .......................... A-1+/P-1 5.25 01/15/97 5,000 5,002,421
NationsBank of Texas, N.A. ......................... A-1/P-1 5.55 11/08/96 7,000 6,998,647
Old Kent Bank....................................... A-1/P-1 5.53 12/04/96 6,000 5,999,016
PNC Bank N.A. (FRN)................................. A-1/P-1 5.32 07/01/96 5,000 4,998,677
PNC Bank N.A. (FRN)................................. A-1/P-1 5.51 07/02/96 4,000 3,998,728
PNC Bank N.A. (FRN)................................. A-1/P-1 5.51 07/02/96 5,000 4,998,303
</TABLE>
Continued
4
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT AMORTIZED
S&P/MOODY'S RATE DATE (000) COST
----------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
PNC Bank N.A. (FRN)................................. A-1/P-1 5.40% 07/06/96 $ 7,000 $ 6,996,146
Seattle First National Bank......................... A-1+/P-1 5.73 10/24/96 7,000 6,998,521
Society National Bank (FRN)......................... A-1/P-1 5.39 07/11/96 10,000 9,995,677
Wachovia Bank of N.C. (FRN)......................... A-1+/P-1 5.34 07/05/96 10,000 9,994,300
Wachovia Bank of N.C. .............................. A-1+/P-1 5.32 07/01/96 20,000 20,000,000
------------
Total Bank Notes
(Amortized cost -- $140,988,154).................... 140,988,154
------------
CERTIFICATES OF DEPOSIT -- 19.3%
DOMESTIC -- 2.1%
Union Bank of California............................ A-1/P-1 5.40 07/12/96 20,000 20,000,000
------------
YANKEE -- 16.7%
Bayerische Vereinsbank AG........................... A-1+/P-1 5.80 04/29/97 7,000 7,000,000
Dai-Ichi Kangyo Ltd. ............................... A-1/P-1 5.46 07/08/96 15,000 15,000,082
Deutsche Bank AG.................................... A-1+/P-1 5.57 03/31/97 5,000 5,000,266
Dresdner Bank AG.................................... A-1+/P-1 5.13 11/22/96 7,000 7,000,112
Dresdner Bank AG.................................... A-1+/P-1 5.05 02/26/97 10,000 9,996,831
Fuji Bank Ltd. ..................................... A-2/P-1/A-1+* 5.46 07/02/96 10,000 10,000,003
Fuji Bank Ltd. ..................................... A-2/P-1/A-1+* 5.45 07/03/96 10,000 10,000,006
Fuji Bank Ltd. ..................................... A-2/P-1/A-1+* 5.46 07/03/96 7,000 7,000,004
Fuji Bank Ltd. ..................................... A-2/P-1/A-1+* 5.47 07/05/96 5,000 5,000,006
Fuji Bank Ltd. ..................................... A-2/P-1/A-1+* 5.49 07/08/96 8,000 8,000,015
Sanwa Bank Ltd. .................................... A-1/P-1 5.42 07/03/96 5,000 4,999,991
Sanwa Bank Ltd. .................................... A-1/P-1 5.57 10/08/96 7,000 7,000,000
Sanwa Bank Ltd. .................................... A-1/P-1 5.49 08/02/96 10,000 10,000,088
Sanwa Bank Ltd. .................................... A-1/P-1 5.46 08/22/96 5,000 5,000,071
Societe Generale.................................... A-1+/P-1 5.58 03/31/97 5,000 5,000,235
Societe Generale.................................... A-1+/P-1 5.85 05/08/97 4,000 4,000,326
Societe Generale.................................... A-1+/P-1 5.90 05/12/97 5,000 5,003,860
Societe Generale.................................... A-1+/P-1 5.75 05/22/97 5,000 4,997,868
Societe Generale.................................... A-1+/P-1 6.09 06/13/97 4,000 3,997,822
Sumitomo Bank Ltd. ................................. A-1/P-1 5.49 07/08/96 10,000 10,000,020
Sumitomo Bank Ltd. ................................. A-1/P-1 5.47 07/12/96 5,000 5,000,030
</TABLE>
Continued
5
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT AMORTIZED
S&P/MOODY'S RATE DATE (000) COST
------------ ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Sumitomo Bank Ltd. ................................. A-1/P-1 5.56% 08/02/96 $ 5,000 $ 5,000,043
Westpac Banking Corp. .............................. A-1/P-1 5.61 03/19/97 5,000 4,999,455
------------
158,997,134
------------
EURO -- 0.5%
Bank of Tokyo....................................... A-1/P-1 5.48 08/07/96 5,000 5,000,000
------------
Total Certificates of Deposit
(Amortized cost -- $183,997,134).................... 183,997,134
------------
BANKERS ACCEPTANCES -- 1.0%
YANKEE -- 1.0%
Dai-Ichi Kangyo Bank Ltd. .......................... A-1/P-1 5.42 07/17/96 4,600 4,588,919
Fuji Bank Ltd. ..................................... A-2/P-1/A-1+* 5.50 07/12/96 5,000 4,991,597
------------
Total Bankers Acceptances
(Amortized cost -- $9,580,516)...................... 9,580,516
------------
COMMERCIAL PAPER -- 42.1%
ASSET BACKED -- 11.4%
Asset Securitization Cooperative Corp. ............. A-1+/P-1 5.40 07/25/96 10,000 9,964,000
Falcon Asset Securitization Corp. .................. A-1/P-1 5.35 07/15/96 20,000 19,958,389
Falcon Asset Securitization Corp. .................. A-1/P-1 5.39 07/16/96 15,000 14,966,313
Preferred Receivables Funding Corp. ................ A-1/P-1 5.35 07/22/96 20,000 19,937,583
Triple A One Funding................................ A-1/P-1 5.43 07/10/96 4,000 3,994,570
Triple A One Funding................................ A-1/P-1 5.37 07/16/96 5,000 4,988,813
Triple A One Funding................................ A-1/P-1 5.35 07/17/96 22,993 22,938,328
Triple A One Funding................................ A-1/P-1 5.38 07/22/96 7,000 6,978,032
Triple A One Funding................................ A-1/P-1 5.38 07/23/96 5,000 4,983,561
------------
108,709,589
------------
AUTO - TRUCK -- 1.0%
General Motors Acceptance Corp. .................... A-2/P-1 5.40 07/24/96 10,000 9,965,500
------------
BANKING -- 9.1%
ABN Amro North America Finance, Inc. ............... A-1+/P-1 4.98 08/26/96 7,000 6,945,828
Bankers Trust New York Corp. ....................... A-1/P-1 5.26 07/10/96 7,000 6,990,795
</TABLE>
Continued
6
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT AMORTIZED
S&P/MOODY'S RATE DATE (000) COST
------------ ---- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Bankers Trust New York Corp. ....................... A-1/P-1 5.36% 11/18/96 $ 5,000 $ 4,895,778
Bex America Finance, Inc. .......................... A-1/P-1 5.39 07/02/96 15,000 14,997,754
Bex America Finance, Inc. .......................... A-1/P-1 5.45 07/03/96 10,000 9,996,972
Bex America Finance, Inc. .......................... A-1/P-1 4.88 08/16/96 7,000 6,956,396
Cregem North America, Inc. ......................... A-1+/P-1 5.28 08/16/96 5,000 4,966,267
MPS U.S. Commercial Paper Corp. .................... A-1/P-1 5.30 08/13/96 6,000 5,962,017
Societe Generale North America, Inc. ............... A-1+/P-1 4.92 07/10/96 10,000 9,987,700
Societe Generale North America, Inc. ............... A-1+/P-1 5.15 07/19/96 5,000 4,987,125
SunTrust Banks, Inc. ............................... A-1/P-1 5.31 08/07/96 10,000 9,945,425
-----------
86,632,057
-----------
BROKER - DEALER -- 7.9%
BT Securities Corp. ................................ A-1/P-1 5.31 07/03/96 8,000 7,997,640
Merrill Lynch & Co., Inc. .......................... A-1+/P-1 4.95 10/28/96 10,000 9,836,375
Morgan Stanley Group, Inc. ......................... A-1+/P-1 5.36 07/01/96 28,000 28,000,000
Morgan Stanley Group, Inc. ......................... A-1+/P-1 5.33 07/11/96 5,000 4,992,597
Morgan Stanley Group, Inc. ......................... A-1+/P-1 5.14 08/01/96 10,000 9,956,428
Nomura Holding America, Inc. ....................... A-1+/P-1 5.55 07/01/96 15,000 15,000,000
-----------
75,783,040
-----------
DRUGS & HEALTHCARE -- 1.0%
Sandoz Corp. ....................................... A-1+/P-1 5.31 07/09/96 5,000 4,994,100
Warner-Lambert...................................... A-1+/P-1 4.84 09/16/96 5,000 4,948,239
-----------
9,942,339
-----------
ELECTRONICS -- 1.6%
Sony Capital Corp. ................................. A-1/P-1 5.34 07/02/96 15,000 14,997,775
-----------
FINANCE - CONDUIT -- 3.7%
Svenska Handelsbanken, Inc. ........................ A-1/P-1 5.34 07/11/96 20,000 19,970,333
Svenska Handelsbanken, Inc. ........................ A-1/P-1 4.96 08/15/96 5,000 4,969,500
Svenska Handelsbanken, Inc. ........................ A-1/P-1 5.05 08/27/96 5,000 4,960,654
Svenska Handelsbanken, Inc. ........................ A-1/P-1 5.08 08/29/96 5,000 4,959,028
-----------
FINANCE - CONSUMER -- 1.1%
Household Finance Corp. ............................ A-1/P-1 5.29 07/08/96 10,000 9,989,714
-----------
</TABLE>
Continued
7
<PAGE> 8
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT AMORTIZED
S&P/MOODY'S RATE DATE (000) COST
------------ ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
GENERAL TRADE -- 2.6%
Mitsubishi International Corp. ..................... A-1+/P-1 5.32% 07/01/96 $20,000 $ 20,000,000
Mitsubishi International Corp. ..................... A-1+/P-1 5.38 08/02/96 5,000 4,976,089
------------
24,976,089
------------
TELECOMMUNICATIONS -- 2.7%
AT&T Corp. ......................................... A-1/P-1 5.37 07/22/96 25,865 25,783,978
------------
Total Commercial Paper
(Amortized cost -- $401,639,596)
SHORT-TERM CORPORATE OBLIGATIONS -- 12.3%
BROKER - DEALER -- 7.3%
Bear Stearns Companies, Inc. (FRN).................. A-1/P-1 5.51 07/06/96 5,000 5,000,000
Bear Stearns Companies, Inc. ....................... A-1/P-1 5.98 06/05/97 5,000 5,000,000
Bear Stearns Companies, Inc. ....................... A-1/P-1 5.78 07/17/96 5,000 5,000,000
Bear Stearns Companies, Inc. ....................... A-1/P-1 5.33 01/09/97 7,000 7,000,000
Bear Stearns Companies, Inc. ....................... A-1/P-1 5.16 01/24/97 5,000 5,000,000
Bear Stearns Companies, Inc. ....................... A-1/P-1 5.24 03/10/97 4,000 4,000,000
Bear Stearns Companies, Inc. ....................... A-1/P-1 6.01 04/21/97 3,900 3,908,853
Bear Stearns Companies, Inc. ....................... A-1/P-1 5.75 04/28/97 7,000 7,000,000
Goldman Sachs Group L.P. (FRN)...................... A-1+/P-1 5.72 07/02/96 5,000 4,999,855
Merrill Lynch & Co., Inc. (FRN)..................... A-1+/P-1 5.42 07/01/96 8,000 8,000,000
Merrill Lynch & Co., Inc. (FRN)..................... A-1+/P-1 5.65 07/02/96 10,000 10,000,000
Merrill Lynch & Co., Inc. .......................... A-1+/P-1 5.56 03/17/97 4,850 4,850,000
------------
BUSINESS SERVICES -- 1.6%
PHH Corp. .......................................... A-1/P-1 5.67 09/16/96 5,000 4,999,493
PHH Corp. .......................................... A-1/P-1 5.33 01/22/97 10,000 9,998,880
------------
14,998,373
------------
DRUGS & HEALTH CARE -- 0.5%
Pfizer, Inc. ....................................... A-1+/P-1 7.13 10/01/96 5,000 5,017,110
------------
</TABLE>
Continued
8
<PAGE> 9
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT AMORTIZED
S&P/MOODY'S RATE DATE (000) COST
------------ ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
FINANCE - DIVERSIFIED -- 2.9%
Bankers Trust NY Corp. (FRN)........................ A-1/P-1 5.48% 07/01/96 $14,000 $ 14,000,000
CIT Group Holdings, Inc. (FRN)...................... A-1/P-1 5.35 07/01/96 10,000 9,992,471
CIT Group Holdings.................................. A-1/P-1 7.13 11/15/96 3,800 3,821,716
------------
27,814,187
------------
Total Short-Term Corporate Obligations
(Amortized cost -- $117,588,378).................... 117,588,378
------------
Total Investments in Securities
(Amortized cost -- $943,268,356).................... 943,268,356
------------
REPURCHASE AGREEMENTS -- 2.3%
Daiwa Securities America, Inc., dated 06/28/96,
(Collateralized by $21,664,000 U.S. Treasury
Bonds, 7.50%, due 11/15/16,
proceeds -- $22,768,864).......................... NA 5.40 07/01/96 22,301 22,301,000
------------
Total Repurchase Agreements
(Amortized cost -- $22,301,000)..................... 22,301,000
------------
Total Investments
(Amortized cost -- $965,569,356)(a) -- 101.2%....... 965,569,356
Liabilities in excess of other assets -- (1.2%)....... (11,281,739)
------------
Net Assets -- 100.0%.................................. $954,287,617
============
- ----------
<FN>
Percentages indicated are based on net assets of $954,287,617.
(a) Cost for federal income tax and financial reporting purposes are the same.
FRN Floating or variable rate securities. Maturity date reflects the earlier of
the reset date or the maturity date.
* Fitch Rating.
** Effective yield at date of purchase.
NA Not applicable.
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 10
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (amortized cost $943,268,356)......................... $ 943,268,356
Repurchase agreements (amortized cost $22,301,000)........................................ 22,301,000
Cash...................................................................................... 608
Interest receivable....................................................................... 5,819,017
Receivable for investments sold........................................................... 54,436,000
Receivable from capital shares issued..................................................... 97,277,045
Prepaid expenses.......................................................................... 241,431
--------------
Total assets................................................................................ 1,123,343,457
--------------
LIABILITIES
Dividends payable......................................................................... 1,300,713
Payable for securities purchased.......................................................... 80,281,039
Payable for capital shares redeemed....................................................... 86,793,346
Accrued expenses and other payables:
Advisory fees........................................................................... 78,048
Administration fees..................................................................... 78,077
Distribution fees (Retail Shares)....................................................... 432,063
Other................................................................................... 92,554
--------------
Total liabilities........................................................................... 169,055,840
--------------
NET ASSETS.................................................................................. $ 954,287,617
==============
Net Assets
Retail Shares............................................................................. $ 922,043,272
Institutional Shares...................................................................... 32,244,345
--------------
$ 954,287,617
==============
Shares Outstanding ($0.001 par value, 2 billion shares authorized):
Retail Shares............................................................................. 923,066,735
Institutional Shares...................................................................... 32,284,494
--------------
Total Shares Outstanding.................................................................... 955,351,229
==============
Net Asset Value, Offering Price and Redemption Price per Share (Retail and Institutional
Shares)................................................................................... $1.00
=====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................ $ 955,351
Additional paid-in capital................................................................ 954,395,877
Accumulated net realized losses on investment transactions................................ (1,063,611)
--------------
Net Assets, June 30, 1996................................................................... $ 954,287,617
==============
</TABLE>
- ---------------
See Notes to Financial Statements.
10
<PAGE> 11
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest........................................................................... $25,031,629
Expenses
Advisory fees.................................................................... $ 454,587
Administration fees.............................................................. 454,587
Special management services fees (Retail Shares)................................. 437,781
Distribution fees (Retail Shares)................................................ 2,635,863
Custodian fees and expenses...................................................... 68,178
Registration fees................................................................ 87,165
Legal fees....................................................................... 40,197
Insurance expense................................................................ 11,950
Reports to shareholders.......................................................... 3,534
Transfer agent fees and expenses................................................. 202,540
Amortization of organization expenses............................................ 10,843
Audit fees....................................................................... 11,331
Directors' fees.................................................................. 14,993
Other expenses................................................................... 2,729
----------
Total expenses before fee waivers.............................................. 4,436,278
Less: Fee waivers.............................................................. (667,703)
Expenses paid by third parties............................................. (7,613)
----------
Total Expenses..................................................................... 3,760,962
-----------
Net Investment Income.............................................................. 21,270,667
REALIZED GAINS FROM SECURITIES TRANSACTIONS
Net realized gains from securities transactions.................................. 48,769
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................... $21,319,436
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 12
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
1996 1995
--------------- ---------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................................... $ 21,270,667 $ 33,179,248
Net realized gains from securities transactions........................... 48,769 130,404
--------------- ---------------
Net increase in net assets resulting from operations.................... 21,319,436 33,309,652
--------------- ---------------
Dividends to shareholders from net investment income
Retail Shares............................................................. (20,399,852) (31,381,356)
Institutional Shares...................................................... (870,815) (1,797,892)
--------------- ---------------
Total dividends to shareholders from net investment income.............. (21,270,667) (33,179,248)
--------------- ---------------
Portfolio Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed....................................... 2,834,998,121 3,863,586,535
Net asset value of shares issued to shareholders in reinvestment of
dividends............................................................... 19,714,465 29,259,566
Cost of shares redeemed................................................... (2,718,970,578) (3,563,662,794)
--------------- ---------------
Net increase in net assets from Portfolio share transactions............ 135,742,008 329,183,307
--------------- ---------------
Total Increase.............................................................. 135,790,777 329,313,711
NET ASSETS
Beginning of period....................................................... 818,496,840 489,183,129
--------------- ---------------
End of period............................................................. $ 954,287,617 $ 818,496,840
=============== ===============
SHARE TRANSACTIONS:
Issued.................................................................... 2,834,998,121 3,863,586,535
Reinvested................................................................ 19,714,465 29,259,566
Redeemed.................................................................. (2,718,970,578) (3,563,662,794)
--------------- ---------------
Change in shares.......................................................... 135,742,008 329,183,307
=============== ===============
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 13
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE 1 -- GENERAL
The Infinity Mutual Funds, Inc, (the "Fund") was organized as a Maryland
corporation on March 6, 1990 and is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Fund operates as a series company currently comprising twelve portfolios.
The accompanying financial statements and notes relate only to Correspondent
Cash Reserves Money Market Portfolio (the "Portfolio"). The Portfolio's
investment objective is to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity.
The Portfolio issues two classes of shares (Retail Shares and Institutional
Shares). Retail Shares and Institutional Shares are substantially the same,
except that Retail Shares bear the fees that are payable under a Distribution
Plan adopted by the Board of Directors (the "Distribution Plan"). Additionally,
the Retail Shares bear the fees that are payable to Mitchell Hutchins Asset
Management Inc. ("Mitchell Hutchins") and Concord Holding Corporation
("Concord") under the Special Management Services Agreement (the "Services
Agreement"). In addition to the fees paid pursuant to the Distribution Plan and
the Services Agreement, each class also bears the expenses associated with the
printing of their shareholder reports, transfer agent fees and registration
fees.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Portfolio in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
A) Securities Valuation
Portfolio securities are valued at amortized cost, which approximates market
value. The amortized cost method involves valuing a security at its cost on the
date of purchase and thereafter assuming a constant amortization to maturity of
the difference between the principal amount due at maturity and cost. In
addition, the Portfolio may not a) purchase any instrument with a remaining
maturity greater than thirteen months unless such investment is subject to a
demand feature, or b) maintain a dollar-weighted average portfolio maturity
which exceeds 90 days.
B) Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realized gains and
losses on the sales of investments are calculated on the identified cost basis.
Interest income, including accretion of discount and amortization of premium on
investments, is accrued daily. The investment income of the Portfolio is
allocated to the separate classes of shares based upon their relative net asset
value.
C) Repurchase Agreements
The Portfolio's custodian and other banks acting in a sub-custodian
capacity take possession of the collateral pledged for investments in repurchase
agreements. The underlying collateral is valued daily on a mark-to-market basis
to determine that the value, including accrued interest, exceeds the
13
<PAGE> 14
repurchase price. In the event of the seller's default of the obligation to
repurchase, the Portfolio has the right to liquidate the collateral and apply
the proceeds in satisfaction of the obligation. Under certain circumstances, in
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral may be subject to legal
proceedings.
D) Expenses
Organization costs totaling $8,711 have been deferred and are being
amortized by the Portfolio on a straight-line basis over five years. Direct
expenses of the Portfolio are borne solely by the Portfolio and general Fund
expenses are allocated among the Fund's respective investment portfolios.
Portfolio expenses (other than transfer agent fees and expenses, reports to
shareholders expenses, registration and filing fees, expenses incurred under the
Distribution Plan and expenses incurred under the Services Agreement) are
allocated to their separate classes of shares based upon their relative net
asset value.
E) Federal Income Taxes
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies and to
distribute substantially all of its income to shareholders. Therefore, no
federal income tax provision is required.
At December 31, 1995, the Portfolio had a capital loss carryover of
approximately $1,112,380 which is available to offset future net realized gains
on securities transactions to the extent provided for in the Code. Such capital
loss carryover will expire in fiscal year 2002.
F) Dividends and Distributions
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and are paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. Dividends and
distributions are recorded on the ex-dividend date. Distributions from net
investment income and from net realized gains are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. Timing differences relating to shareholder distributions have been
reclassified to paid-in-capital. These differences are primarily due to
deferrals of certain losses and expiring capital loss carryovers.
G) Other
The Portfolio maintains a cash balance with its custodian and receives a
reduction of its custody fees and expenses for the amounts of interest earned on
such uninvested cash balances. For financial reporting purposes for the six
months ended June 30, 1996, custodian fees and expenses and expenses paid by
third parties were increased by $7,613. There was no effect on net investment
income. The Portfolio could have invested such cash amounts in an income
producing asset if it had not agreed to a reduction of fees or expenses under
the expense offset arrangement with its custodian.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Mitchell Hutchins, a wholly-owned subsidiary of Paine Webber Incorporated
("Paine Webber"), serves as the Portfolio's investment adviser. Concord serves
as the Portfolio's administrator and Concord Financial Group, Inc.
("Distributor") serves as the distributor of the Portfolio's shares.
14
<PAGE> 15
Concord and the Distributor are each a wholly owned subsidiary of The BISYS
Group, Inc.
As investment adviser, Mitchell Hutchins supervises and assists in the
overall operations of the Portfolio. Pursuant to the terms of the Investment
Advisory Agreement, Mitchell Hutchins is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
the Portfolio.
As administrator, Concord assists in supervising the operations of the
Portfolio. For its services, Concord is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
the Portfolio. The Distributor does not receive a fee under the Distribution
Agreement.
Under the terms of the Special Management Services Agreement, the Portfolio
has agreed to pay Mitchell Hutchins and Concord each a monthly fee at the annual
rate of 0.05% of the net asset value of the Portfolio's outstanding Retail
Shares for certain services, other than those provided pursuant to the
Portfolio's Distribution Plan. These services include developing and monitoring
customized investor programs including individual retirement accounts and other
ERISA options, automatic deposit and withdrawal programs and other programs
requested by certain securities dealers that have entered into securities
clearing arrangements with Paine Webber. For the six months ended June 30, 1996,
Mitchell Hutchins and Concord waived a total of $437,781 with regards to the
Special Management Services Agreement.
The Portfolio has adopted a Distribution Plan pursuant to Rule 12b-1 under
the Act. Pursuant to the Distribution Plan, the Portfolio is authorized to pay
Correspondent Services Corporation (CSC), an affiliate of Paine Webber, and
certain securities dealers that have entered into clearing arrangements with
CSC, a monthly fee at an annual rate of up to 0.60% of the net asset value of
the Portfolio's outstanding Retail Shares held in accounts serviced by such
firms. Such fees will be paid in respect of certain services provided by such
firms, including answering client inquiries regarding the Portfolio; assisting
clients in changing dividend options, account designations and addresses;
performing sub-accounting; establishing and maintaining shareholder accounts and
records; processing purchase and redemption transactions; investing client cash
account balances automatically in Portfolio shares; providing periodic
statements showing a client's account balance and integrating such statements
with those of other transactions and balances in the client's other accounts
serviced by such firm; arranging for bank wires; and such other services as the
clients may request. For the six months ended June 30, 1996, the Portfolio
incurred expenses of $2,635,863 pursuant to the Distribution Plan. For the six
months ended June 30, 1996, the Distributor waived $229,922.
Certain Directors and officers of the Fund are "affiliated persons" (as
defined in the Act) of Concord. Each "non-affiliated" Director receives an
annual fee of $12,000 and a meeting fee of $1,500 per meeting for services
relating to all of the portfolios constituting that Fund.
NOTE 4 -- CONCENTRATION OF CREDIT RISK
The Portfolio invests substantially all of its assets in a diversified
portfolio of high quality U.S. dollar denominated money market instruments as
disclosed in the Portfolio of Investments by security type.
15
<PAGE> 16
The Portfolio had the following concentration by industry sector at June
30, 1996 (as a percentage of total investments):
<TABLE>
<S> <C>
Bank Obligations.................. 36%
Short-Term Corporate
Obligations..................... 12%
Asset Backed Commercial Paper..... 11%
Banking........................... 9%
U.S. Government
Obligations/Agencies............ 9%
Broker-Dealer..................... 8%
Finance........................... 5%
General Trade..................... 3%
Telecommunications................ 3%
Electronics....................... 2%
Other............................. 2%
------
100.0%
======
</TABLE>
The issuers' abilities to meet their obligations may be affected by
domestic and foreign economic, regional and political developments.
NOTE 5 -- CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Portfolio (at $1.00 per share) are summarized
below:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1996 1995
-------------- --------------
(UNAUDITED)
<S> <C> <C>
RETAIL SHARES:
Shares sold.......................... 2,541,988,942 3,571,545,151
Shares issued in reinvestment of
dividends and distributions........ 19,714,465 29,259,565
Shares redeemed...................... (2,418,706,880) (3,279,990,042)
-------------- --------------
Net increase in Retail Shares........ 142,996,527 320,814,674
-------------- --------------
INSTITUTIONAL SHARES:
Shares sold.......................... 293,009,179 292,041,384
Shares issued in reinvestment of
dividends and distributions........ -- 1
Shares redeemed...................... (300,263,698) (283,672,752)
-------------- --------------
Net increase (decrease) in
Institutional Shares............... (7,254,519) 8,368,633
-------------- --------------
Net increase in Portfolio Shares..... 135,742,008 329,183,307
============== ==============
</TABLE>
16
<PAGE> 17
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
RETAIL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000 $ 1.0000
--------- ---------- ---------- ---------- ----------
Income from investment operations
Net investment income..................... 0.0232 0.0512 0.0340 0.0245 0.0306
Net realized gains (losses) from
securities transactions................. 0.0003 0.0011 (0.0024) (0.0001) --
--------- ---------- ---------- ---------- ----------
Net income from investment operations..... 0.0235 0.0523 0.0316 0.0244 0.0306
--------- ---------- ---------- ---------- ----------
Dividends from net investment income........ (0.0232) (0.0512) (0.0340) (0.0245) (0.0306)
--------- ---------- ---------- ---------- ----------
Net change in net asset value............... 0.0003 0.0011 (0.0024) (0.0001) --
--------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD.............. $ 0.9989 $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000
========= ========== ========== ========== ==========
Total return................................ 2.34%(a) 5.24% 3.45% 2.48% 3.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......... $ 922,043 $ 779,011 $ 458,092 $ 331,210 $ 267,895
Ratio of expenses to average net assets... 0.85%(b) 0.85% 0.94% 1.02% 1.12%
Ratio of net investment income to average
net assets.............................. 4.66%(b) 5.14% 3.47% 2.44% 3.01%
Ratio of expenses to average net
assets*................................. 1.00%(b)** 1.03% 1.12% 1.20% 1.35%
Ratio of net investment income to average
net assets*............................. 4.56%(b) 4.96% 3.29% 2.26% 2.78%
<FN>
- ---------------
* During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Portfolio received credits
from its custodian for interest earned on uninvested cash balances which
were used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 18
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31,
JUNE 30, -----------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD........ $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000 $ 1.0000
--------- ---------- ---------- ---------- ----------
Income from investment activities
Net investment income..................... 0.0258 0.0563 0.0402 0.0320 0.0391
Net realized gains (losses) from
securities transactions................. 0.0002 0.0011 (0.0024) (0.0001) --
--------- ---------- ---------- ---------- ----------
Net income from investment operations..... 0.0260 0.0574 0.0378 0.0319 0.0391
--------- ---------- ---------- ---------- ----------
Distributions
Dividends from net investment income...... (0.0258) (0.0563) (0.0402) (0.0320) (0.0391)
--------- ---------- ---------- ---------- ----------
Net change in net asset value............... 0.0002 0.0011 (0.0024) (0.0001) --
--------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD.............. $ 0.9988 $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000
--------- ---------- ---------- ---------- ----------
Total return................................ 2.60%(a) 5.78% 4.09% 3.25% 3.98%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......... $ 32,244 $ 39,485 $ 31,091 $ 67,230 $ 64,306
Ratio of expenses to average net assets... 0.27%(b) 0.34% 0.31% 0.25% 0.27%
Ratio of net investment income to average
net assets.............................. 4.42%(b) 5.66% 3.87% 3.20% 3.73%
Ratio of expenses to average net
assets*................................. 0.27%(b)** 0.34% 0.31% 0.25% 0.32%
Ratio of net investment income to average
net assets*............................. 4.42%(b) 5.66% 3.87% 3.20% 3.68%
<FN>
- ---------------
* During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
** During the six months ended June 30, 1996, the Portfolio received credits
from its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not occurred,
the expense ratio would have been as indicated. The ratio of net investment
income was not affected.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 19
CORRESPONDENT CASH
RESERVES
- ---------------------------------------------------
THE INFINITY MUTUAL FUNDS, INC.
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
INVESTMENT ADVISER
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
1285 Avenue of the Americas
New York, NY 10019
- ---------------------------------------------------
ADMINISTRATOR
CONCORD HOLDING CORPORATION
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
DISTRIBUTOR
CONCORD FINANCIAL GROUP, INC.
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286
- ---------------------------------------------------
TRANSFER AGENT
& DIVIDEND DISBURSING AGENT
BISYS FUND SERVICES OHIO, INC.
3435 Stelzer Road
Columbus, OH 43219
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
[RECYCLE LOGO]
CORRESPONDENT CASH
RESERVES
[LOGO]
SEMI-ANNUAL REPORT
------------------
JUNE 30, 1996
COICCRD96SA
