<PAGE> 1
REPORT FROM THE INVESTMENT ADVISER
- --------------------------------------------------------------------------------
MARK SILVERSTEIN, PORTFOLIO MANAGER OF THE BEA SHORT DURATION PORTFOLIO, ANSWERS
QUESTIONS ABOUT THE PORTFOLIO.
Q. HOW WOULD YOU ASSESS THE PORTFOLIO'S PERFORMANCE DURING THE FIRST HALF OF
1996?
A. For the six months ended June 30, 1996, the Portfolio's total return was
between 2.03% and 2.35%, depending on the class of shares, which are designed
for different investors. In comparison, the Portfolio's unmanaged benchmark, the
Merrill Lynch 1-3 Year Government/Treasury Bond Index, produced a total return
of 1.35%.
The index is a widely accepted measure of the performance of U.S.
Government and Treasury Bonds in this maturity range. The Portfolio compared
well to the index because we have maintained an average maturity of one year,
while the index's average maturity was two years. In a period of rising interest
rates, shorter-maturity portfolios will generally outperform portfolios with
longer maturities. During the past six months, yields on two-year Treasuries
rose a full percentage point, from 5.15% to 6.15%, and prices fell 1.80% as a
result. In contrast, yields on the one-year Treasury bill rose 0.60 percentage
points, from 5.15% to 5.75%, and prices fell 0.55%. So the yield curve has
really steepened from the money market area out to two years.
Q. WHAT HAS BEEN YOUR STRATEGY IN THIS ENVIRONMENT?
A. During the six-month period, the Portfolio shifted toward mortgage-backed
securities because mortgages became cheaper. Homeowners refinance their
mortgages less frequently in a rising-rate environment, so mortgage-backed
securities become more stable. In the corporate area, we continue to like
European banks because we believe that they are about to have some very good
years, just as the U.S. banking industry has strengthened recently. Overall, the
average credit quality of the Portfolio's holdings remains extremely high, at
AA+. Shorter-maturity corporate bonds generally do not pay enough for their
added credit risk. We use lower-rated issues selectively only when we can
receive substantially more yield. A current example would be Time-Warner, which
is rated BBB.
Q. WHY ARE ASSET-BACKED SECURITIES SO ATTRACTIVE?
A. Asset-backed securities, which offer higher yield potential than Treasuries,
have become more popular, so the rise in interest rates did not affect their
performance relative to U.S. Treasuries. Over the past decade, more and more
investors have been permitted to buy asset-backs, and they have proven to be
structurally sound. Their main advantage is that you can buy a corporate name
with a AAA-credit rating at the same yield that you would earn if you purchased
a BBB-rated corporate bond.
Q. WHY HAVE YOU CHOSEN TO FOCUS ON ONE-YEAR MATURITIES?
A. This Fund is typically compared to a money market investment. Over long
periods of time, one-year investments are very attractive relative to shorter
investments. In the one-year market, it's rare to have a capital loss, whereas
you can easily have a capital loss in a two-year investment.
Q. WHAT IS YOUR OUTLOOK?
A. Although no central banks have raised interest rates thus far in 1996, the
possibility of upward adjustment has become more real. In the U.S., for example,
it has become increasingly likely that the Fed will raise rates later in the
year, although we think the odds favor a steady policy. Likewise, Japanese
authorities have broadly hinted that they may also choose to raise rates. Both
the fear of
1
<PAGE> 2
inflation and the associated bond sell-off appear overdone to us. A jittery Wall
Street has reacted very negatively to news that U.S. employment is rising, based
on the assumption that it's a sign of oncoming inflation. We consider this an
overreaction, since the economy is not even close to the overheating level of
activity that typically has preceded past Fed rate hikes. If there is a
tightening, we expect it to be more of a modest fine-tuning of the buoyant
economy over the next few months-- perhaps an increase of 0.25 of a percentage
point--rather than a dramatic tightening such as we saw in 1994. Our feeling is
that over the second half of the year, it will become evident that the economy
isn't as strong as people have feared.
- --------------------------------------------------------------------------------
INVESTMENT GOAL
The BEA Short Duration Portfolio is an open-end mutual fund that seeks to
provide investors with as high a level of current income as is consistent with
the preservation of capital. The Portfolio is normally managed to maintain an
average duration of one year, with a maximum of 1.5 years. A one-year duration
implies that if interest rates move one percentage point down or up, then the
value of the Portfolio should rise or fall by one percentage point. The
Portfolio must maintain an average dollar-weighted credit rating of at least
single A-, and only investment-grade securities may be included in the
Portfolio.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF JUNE 30, 1996
<TABLE>
<CAPTION>
CLIENT SERVICE INVESTOR
SHARES SHARES SHARES
---------- --------- --------
<S> <C> <C> <C>
Inception Date 12/10/92** 12/29/92* 11/4/93*
1 Year 6.09% 5.35% 5.96%
Since Inception 5.39% 4.81% 5.24%
<FN>
- ---------------
* Currently, certain fees are being waived/reimbursed with respect to the BEA
Service and Investor shares. If such fees had not been waived/reimbursed,
total returns would have been lower. This voluntary waiver/reimbursement may
be modified or terminated at any time, which would reduce the Portfolio's
performance.
** The Portfolio operated as a money market fund from August 28, 1990, through
December 9, 1992. This performance is not reflected.
</TABLE>
Past performance is no guarantee of future results. Investment return and
principal values will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
Concord Financial Group, Inc. is the distributor of the Portfolio.
- --------------------------------------------------------------------------------
2
<PAGE> 3
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT MARKET
S&P/MOODY'S RATE DATE (000) VALUE
------------- ---- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
LONG-TERM INVESTMENTS -- 79.9%
CORPORATE OBLIGATIONS -- 51.2%
ASSET BACKED SECURITIES -- 47.0%
AFC Home Equity Loan, Trust Series 1994-1, Class
1A................................................ AAA/Aaa 6.40% 5/25/25 $1,515 $ 1,483,029
Choice Credit Card Master Trust, Series 1992-2,
Class A........................................... AAA/Aaa 5.79* 4/15/99 2,000 2,000,980
DanMall Financial, Inc., Class A-1 (b).............. NR/NR 5.99* 10/20/04 2,130 2,131,331
Discover Card Trust, Series 1991-D, Class A......... AAA/Aaa 8.00 10/16/00 4,500 4,641,074
First of America Credit Card Master Trust........... AAA/Aaa 5.67* 2/15/02 2,000 2,005,340
Fleetwood Credit Corp. Grantor Trust, Series 1992-A,
Class A........................................... AAA/Aaa 7.10 2/15/07 589 592,094
Fleetwood Credit Corp. Grantor Trust, Series
1994-B............................................ AAA/Aaa 6.75 3/15/10 1,342 1,343,029
Ford Credit Auto Loan, Series 1994-1................ AAA/Aaa 5.70 7/15/01 1,355 1,349,959
General Motors Acceptance Corp. .................... A-/A3 7.75 12/10/96 1,650 1,664,723
Green Tree Financial Corp. ......................... AAA/Aa3 6.50 10/15/17 1,050 1,028,716
Green Tree Financial Corp., Series 1994-A, Class
A................................................. Baa3/BBB+ 6.90 2/15/04 1,927 1,911,163
Green Tree Financial Corp., Series 1995-6, Class
A3................................................ AAA/Aaa 6.65 11/25/25 2,265 2,266,699
IBM Credit Receivables Lease Asset Master Trust,
Series 1993-1, Class A............................ AAA/Aaa 4.55 11/15/00 1,006 978,246
Kidder Peabody Acceptance Corp., Series 1993-M1,
Class A1.......................................... Aa2/AA 7.15 4/25/25 1,335 1,314,957
National Financiera Trust Division, Class A-1 (b)... NR/NR 7.91* 3/31/99 502 481,479
NationsCredit Grantor Trust......................... AAA/Aaa 5.85 9/15/11 959 937,278
Nomura Asset Securities Corp., Series 1994.......... AAA/AAA 6.70* 7/7/03 1,220 1,240,199
Pacific Home Equity Loan............................ AAA/Aaa 8.10 6/15/20 75 75,821
Saab Trust, Series 1994-A (b)....................... AAA/Aaa 6.15 4/11/00 420 419,518
Security Pacific Acceptance Corp., 1995-1, Class
A2................................................ AAA/Aaa 6.70 4/10/20 1,350 1,338,039
Time Warner......................................... BBB-/Ba1 6.45 8/15/00 2,000 2,008,530
Volvo Auto Receivables Grantor Trust, Series 1992-A,
Class A........................................... AAA/Aaa 4.65 6/15/98 222 221,135
Vornado Finance Corp., Series 93 M-01 (b)........... AAA/NR 6.05* 12/1/00 4,550 4,545,450
-----------
Total Asset Backed Securities (Cost -- $36,025,178)... 35,978,789
-----------
</TABLE>
Continued
3
<PAGE> 4
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT MARKET
S&P/MOODY'S RATE DATE (000) VALUE
------------- ---- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS -- 4.2%
BANKING, INSURANCE & FINANCE -- 4.2%
Den Norske Bank..................................... NR/NR 5.74*% 11/30/39 $ 700 $ 574,875
Hong Kong Shanghai Bank, Series 3................... NR/A2 5.68* 7/30/49 1,000 831,650
Lloyds Bank PLC, Series 2........................... NR/Aa2 5.68* 11/30/49 890 768,070
Okobank (b)......................................... NR/A3 6.98* 10/29/49 1,000 1,024,000
-----------
Total Corporate Bonds (Cost -- $3,037,174)............ 3,198,595
-----------
Total Corporate Obligations (Cost -- $39,062,352)..... 39,177,384
-----------
OPTIONS -- 0.1%
Aid to Bolivia...................................... NA 1.75 6/19/10 66 40,761
-----------
Total Options (Cost -- $66,432)....................... 40,761
-----------
U.S. GOVERNMENT AGENCIES -- 28.7%
Federal Home Loan Mortgage Corp.:
Pool #M16724........................................ 6.00 12/1/97 19 19,059
Pool #L70346........................................ 6.00 9/1/98 14 13,443
Pool #L71120........................................ 6.00 11/1/98 102 101,783
Pool #L71539........................................ 6.00 1/1/99 596 591,889
Pool #L71700........................................ 6.00 1/1/99 406 401,472
Pool #L71935........................................ 6.00 3/1/99 25 24,778
Pool #L71984........................................ 6.00 3/1/99 131 129,153
Pool #L72002........................................ 6.00 3/1/99 461 455,877
Pool #L72033........................................ 6.00 3/1/99 91 89,469
Pool #G50147........................................ 6.00 4/1/99 129 127,838
Pool #L72140........................................ 6.00 4/1/99 94 93,161
Pool #L72151........................................ 6.00 4/1/99 487 481,387
Pool #L72170........................................ 6.00 4/1/99 595 587,563
Pool #L72207........................................ 6.00 4/1/99 499 493,315
Pool #M90328........................................ 6.00 4/1/99 702 693,208
Pool #L72378........................................ 6.00 5/1/99 30 29,954
Pool #L72529........................................ 6.00 6/1/99 290 286,312
Pool #L72556........................................ 6.00 6/1/99 33 33,087
Pool #L72746........................................ 6.00 6/1/99 215 212,153
Pool #L90109........................................ 6.00 6/1/99 673 665,021
Pool #G50180........................................ 6.00 7/1/99 178 175,585
</TABLE>
Continued
4
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL
RATINGS MATURITY AMOUNT MARKET
S&P/MOODY'S RATE DATE (000) VALUE
------------- ---- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (CONTINUED)
Pool #L72657........................................ 6.00% 7/1/99 $ 697 $ 688,647
Pool #1184.......................................... 8.00 12/15/18 2,296 2,343,045
Federal National Mortgage Assoc.:
Pool #190856........................................ 7.50 2/1/00 5,962 6,051,001
Pool #90-108E....................................... 8.50 6/25/19 1,322 1,351,701
Government National Mortgage Assoc.:
Pool #8765.......................................... 5.50 12/20/25 2,346 2,288,461
Foreign Aid Bonds:
Aid to Bolivia...................................... 6.25* 6/1/10 3,541 3,550,344
-----------
Total U.S. Government Agencies
(Cost -- $21,766,255)............................... 21,978,706
-----------
Total Long-Term Investments (cost $60,828,607)........ 61,156,090
-----------
SHORT TERM INVESTMENTS -- 19.7%
TIME DEPOSITS -- 19.7%
Bayerische Landesbank............................... 5.44 7/1/96 3,800 3,800,000
Commerzbank......................................... 5.35 7/1/96 3,800 3,800,000
Fifth Third Bank.................................... 5.44 7/1/96 3,800 3,800,000
Republic New York................................... 5.13 7/1/96 3,700 3,700,000
-----------
Total Time Deposits (Cost -- $15,100,000)........... 15,100,000
-----------
TOTAL INVESTMENTS (COST -- $75,995,039)(A) -- 99.6%... 76,296,851
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.4%......... 296,562
-----------
NET ASSETS -- 100.0%.................................. $76,593,413
===========
</TABLE>
- ---------------
Percentages indicated are based on net assets of $76,593,413.
(a) Represents cost for federal income tax purpose and differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 659,918
Unrealized depreciation (358,106)
---------
Net unrealized appreciation $ 301,812
=========
<FN>
(b) Represents a restricted security, purchased under Rule 144A, which is exempt
from registration under the Securities Act of 1933, as amended.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of
market interest rates. The rate reflected on the Portfolio of Investments is
the rate in effect at June 30, 1996.
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 6
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $75,995,039)....................................... $76,296,851
Cash......................................................................................... 167,796
Interest receivable.......................................................................... 473,630
Receivable from capital shares issued........................................................ 2,465
Receivable from Investment Adviser........................................................... 41,378
Deferred organization costs.................................................................. 28,642
Prepaid expenses............................................................................. 19,848
-----------
Total assets................................................................................... 77,030,610
-----------
LIABILITIES
Dividends payable............................................................................ 368,808
Accrued expenses and other payables:
Advisory fees.............................................................................. 9,388
Administration fees........................................................................ 7,513
Distribution fees (BEA Service Shares)..................................................... 365
Special investors services fees (BEA Service Shares)....................................... 507
Other...................................................................................... 50,616
-----------
Total liabilities.............................................................................. 437,197
-----------
NET ASSETS..................................................................................... $76,593,413
===========
Net Asset Value and Redemption Price Per Share:
BEA Client Shares:
($76,495,804/15,408,293 shares of common stock issued and outstanding)....................... $4.96
=====
BEA Service Shares:
($1,023/206 shares of common stock issued and outstanding)................................... $4.96
=====
BEA Investor Shares:
($96,586/19,463 shares of common stock issued and outstanding)............................... $4.96
=====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par ($0.001 per share)............................................ $ 15,428
Additional paid-in capital................................................................... 77,246,725
Net unrealized appreciation from investments................................................. 301,812
Accumulated net realized losses.............................................................. (970,552)
-----------
Net Assets, June 30, 1996...................................................................... $76,593,413
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
6
<PAGE> 7
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................. $2,848,081
Expenses
Advisory fees...................................................................... $ 66,702
Administration fees................................................................ 53,362
Special investors services fees (BEA Investor Shares).............................. 9,858
Custodian fees and expenses........................................................ 43,931
Audit fees......................................................................... 11,516
Legal fees......................................................................... 9,715
Insurance expense.................................................................. 2,464
Directors' fees.................................................................... 1,765
Registration fees.................................................................. 15,191
Amortization of organization expenses.............................................. 9,437
Transfer agent fees and expenses................................................... 45,757
Reports to shareholders............................................................ 10,719
Other expenses..................................................................... 1,666
--------
Total expenses before waivers/reimbursements..................................... 282,083
Waivers/reimbursements........................................................... (33,788)
Expenses paid by third parties................................................... (10,580)
--------
Total Expenses....................................................................... 237,715
----------
Net Investment Income................................................................ 2,610,366
----------
REALIZED AND UNREALIZED GAINS FROM SECURITIES TRANSACTIONS
Net realized gains from securities transactions.................................... 327,077
Net change in unrealized appreciation from investments............................. (836,367)
----------
Net Realized and Unrealized Gains from Investments................................... (509,290)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. $2,101,076
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
7
<PAGE> 8
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION 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....................................................................... $ 2,610,366 $ 7,020,860
Net realized gains from securities transactions............................................. 327,077 77,225
Net change in unrealized appreciation from investments...................................... (836,367) 2,319,671
------------ ------------
Net increase in net assets resulting from operations...................................... 2,101,076 9,417,756
------------ ------------
Dividends to shareholders from net investment income:
BEA Client Shares........................................................................... (2,226,878) (4,611,592)
BEA Service Shares.......................................................................... (27) (124,208)
BEA Investor Shares......................................................................... (383,459) (1,754,109)
------------ ------------
Total dividends to shareholders from net investment income................................... (2,610,364) (6,489,909)
------------ ------------
Dividends to shareholders in excess of net investment income:
BEA Client Shares........................................................................... -- (75,299)
BEA Service Shares.......................................................................... -- (2,028)
BEA Investor Shares......................................................................... -- (28,642)
------------ ------------
Total dividends to shareholders in excess of net investment income........................... -- (105,969)
------------ ------------
Return of capital distributions:
BEA Client Shares........................................................................... -- (301,983)
BEA Service Shares.......................................................................... -- (8,134)
BEA Investor Shares......................................................................... -- (114,865)
------------ ------------
Total return of capital distributions........................................................ -- (424,982)
------------ ------------
Total dividends and distributions to shareholders............................................ (2,610,364) (7,020,860)
------------ ------------
Portfolio Share Transactions
Net proceeds from shares subscribed......................................................... 653,148 5,826,109
Net asset value of shares issued to shareholders in reinvestment of dividends and
distributions............................................................................. 2,729,855 6,920,991
Cost of shares redeemed..................................................................... (36,114,037) (48,396,100)
------------ ------------
Net decrease in net assets from Portfolio share transactions.............................. (32,731,034) (35,649,000)
------------ ------------
Total Decrease............................................................................... (33,240,322) (33,252,104)
NET ASSETS
Beginning of period......................................................................... 109,833,735 143,085,839
------------ ------------
End of period............................................................................... $ 76,593,413 $109,833,735
============ ============
SHARE TRANSACTIONS:
Issued...................................................................................... 122,894 1,174,247
Reinvested.................................................................................. 405,563 1,398,285
Redeemed.................................................................................... (7,118,252) (9,814,580)
------------ ------------
Change in shares............................................................................ (6,589,795) (7,242,048)
============ ============
</TABLE>
- ---------------
See Notes to Financial Statements.
8
<PAGE> 9
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (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 the BEA Short
Duration Portfolio (the "Portfolio"). The Portfolio seeks to provide investors
with as high a level of current income as is consistent with the preservation of
capital.
The Portfolio issues three classes of shares as follows: BEA Client Shares,
BEA Service Shares and BEA Investor Shares. BEA Client Shares, BEA Service
Shares, and BEA Investor Shares are substantially the same, except as follows:
(a) BEA Service Shares bear fees payable to the Distributor under a plan adopted
by the Fund's Board of Directors pursuant to Rule 12b-1 under the Act (the
"Distribution Plan") and (b) BEA Service Shares and BEA Investor Shares bear
fees payable to certain service organizations under the Special Investors
Services Plan (the "Services Plan"). In addition to the fees paid pursuant to
the Distribution Plan and the Services Plan by the relevant class, each class
also bears the expenses associated with the printing of their shareholder
reports, transfer agent fees and expenses and registration fees.
At June 30, 1996, there were one billion shares of the Portfolio's $0.0001
par value capital stock authorized, of which 500 million shares were classified
as BEA Client Shares, 250 million shares were classified as BEA Service Shares
and 250 million shares were classified as BEA Investor Shares.
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 through the use of an independent pricing
service (the "Service") approved by the Board of Directors. The Service values
portfolio securities at the mean between the most recent bid and asked prices
based upon its evaluation of the market for such securities. Portfolio
securities which cannot be valued as set forth above are valued by independent
broker dealer quotes. Investment securities denominated in foreign currencies
are valued in U.S. dollars using market quotes as provided by the Service. Debt
securities with remaining maturities of 60 days or less are normally valued at
amortized cost, which approximates market value. The amortized cost method
involves valuing a security at its cost on the date of purchase or, in the case
of securities purchased with more than 60 days to maturity, at their market
value each day until the 61st day prior to maturity, and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and such valuation.
9
<PAGE> 10
B) Securities Transactions and Investment Income
Securities 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 the relative net asset
value of each class.
C) Expenses
Organization costs were deferred and are being amortized by the Portfolio
on a straight-line basis for 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.
All other expenses (other than transfer agent fees and expenses, reports to
shareholders expenses, registration and filing fees, and Securities and Exchange
Commission filing fees) are allocated to their separate classes of shares based
upon the relative net asset value of each class.
D) 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 has a capital loss carryover of
approximately $1,297,629 which is available to offset future net realized gains
on securities transactions to the extent provided for in the Code. Such capital
loss carryovers will expire December 31, 2002.
E) 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.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
BEA Associates ("BEA") serves as the Portfolio's investment adviser.
Concord Holding Corporation ("Concord") serves as the Portfolio's administrator
and Concord Financial Group, Inc. (the "Distributor") serves as the distributor
of the Portfolio's shares. Concord and the Distributor are each a subsidiary of
The BISYS Group, Inc.
As Investment Adviser, BEA supervises and assists in the overall operations
of the Portfolio. Pursuant to the terms of the Investment Advisory Agreement,
BEA is entitled to a fee from the Portfolio at an annual rate of 0.15% of the
Portfolio's average daily net assets. For the six months ended June 30, 1996,
BEA did not waive any fees related to the Investment Advisory Agreement.
As Administrator, Concord assists in supervising the operations of the
Portfolio. Pursuant to the terms of the Administration Agreement, Concord is
entitled to a fee from the Portfolio at an annual
10
<PAGE> 11
rate of 0.12% of the Portfolio's average daily net assets.
Concord and BEA have voluntarily agreed to limit the aggregate expenses of
the Portfolio (generally including fees payable to Concord and BEA but excluding
brokerage commissions, extraordinary expenses and fees payable under the
Distribution Plan and the Services Plan) to 0.55%, 0.70% and 0.95% of the
Portfolio's average daily net assets of the BEA Client Class, BEA Investor Class
and BEA Service Class, respectively. If such expenses exceed this limitation,
Concord and BEA will reimburse the Portfolio for any such excess expenses. For
the six months ended June 30, 1996, Concord and BEA voluntarily reduced expenses
in the amount of $7,403, $4,884 and $11,643 for BEA Service Shares, BEA Client
Shares and BEA Investor Shares, respectively, in order to comply with this
voluntary limitation.
Pursuant to the Distribution Plan, the Portfolio pays the Distributor for
advertising, marketing and distributing BEA Service Shares at an annual rate of
0.25% of the average daily net assets of BEA Service Shares. For the six months
ended June 30, 1996, BEA Service Shares incurred no fees pursuant to the Plan.
Pursuant to the Special Investors Services Plan, the Portfolio has agreed
to pay one or more service organizations, including BEA Associates, a fee at an
annual rate of up to 0.15% of the average daily net assets of the outstanding
BEA Service Shares and BEA Investor Shares for shareholder services provided to
holders of the BEA Service Shares and BEA Investor Shares. For the six months
ended June 30, 1996, BEA Service Shares and BEA Investor Shares incurred $0 and
$9,858, respectively, pursuant to the Special Investors Services Plan. For the
six months ended June 30, 1996, fees in the amount of $9,858 were waived with
respect to the BEA Investor Shares.
Certain officers and Directors 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 the Fund.
NOTE 4 -- CONCENTRATION OF CREDIT RISK
The Portfolio invests a portion of its assets in a diversified portfolio of
U.S. dollar denominated fixed income securities as disclosed in the portfolio of
investments by security type. The issuer's abilities to meet their obligations
may be affected by domestic economic, regional and political developments.
The Portfolio had the following concentrations of securities at June 30,
1996 (as a percentage of total investments):
<TABLE>
<S> <C>
Asset Backed Securities............ 47.0%
U.S. Government
Obligations/Agencies............. 28.7%
Time Deposits...................... 19.7%
Corporate Bonds.................... 4.2%
------
99.6%
=====
</TABLE>
NOTE 5 -- SECURITIES TRANSACTIONS
For the six months ended June 30, 1996, the cost of purchases and the
proceeds from sales of the Portfolio's securities (excluding short-term
investments) amounted to $12,868,249 and $47,297,961, respectively.
11
<PAGE> 12
NOTE 6 -- 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
----------- ------------
<S> <C> <C>
CLIENT SHARES:
Shares sold............ 89,698 703,605
Shares issued in
reinvestment of
dividends and
distributions........ 373,537 988,897
Shares redeemed........ (358,285) (8,196,200)
---------- -----------
Net increase in Retail
Shares................. 104,950 (6,503,698)
---------- -----------
SERVICE SHARES:
Shares sold............ -- 192,373
Shares issued in
reinvestment of
dividends and
distributions........ 4 26,033
Shares redeemed........ -- (1,357,212)
---------- -----------
Net increase (decrease)
in Institutional
Shares................. 4 (1,138,806)
---------- -----------
INVESTOR SHARES:
Shares sold............ 33,196 278,269
Shares issued in
reinvestment of
dividends and
distributions........ 32,022 383,355
Shares redeemed........ (6,759,967) (261,168)
---------- -----------
Net increase (decrease)
in Institutional
Shares................. (6,694,749) 400,456
---------- -----------
Net increase in Portfolio
Shares................. (6,589,795) (7,242,048)
========== ===========
</TABLE>
12
<PAGE> 13
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ------------------------------------------------------------
ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
JUNE 30, 1996 1995 1994 1993 1992**
------------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BEA CLIENT SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 4.99 $ 4.89 $ 5.01 $ 5.00 $ 5.00
------- -------- -------- -------- --------
Income from investment operations:
Net investment income.................. 0.15 0.30 0.25 0.22 0.20
Net realized and unrealized gains
(losses) from securities
transactions......................... (0.03) 0.10 (0.12) 0.05 0.01
------- -------- -------- -------- --------
Total from investment operations....... 0.12 0.40 0.13 0.27 0.21
------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income... (0.15) (0.28) (0.25) (0.22) (0.20)
Return of capital distributions........ -- (0.02) -- -- --
Distributions from net realized gains
on securities transactions........... -- -- -- (0.04) (0.01)
------- -------- -------- -------- --------
Total dividends and distributions........ (0.15) (0.30) (0.25) (0.26) (0.21)
------- -------- -------- -------- --------
Net change in net asset value............ (0.03) 0.10 (0.12) 0.01 --
------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD........... $ 4.96 $ 4.99 $ 4.89 $ 5.01 $ 5.00
======= ======== ======== ======== ========
Total return............................. 2.35%(a) 8.30% 2.75% 5.06% 4.28%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).......... $76,496 $ 76,354 $106,659 $119,854 $126,619
Ratio of expenses to average net
assets............................... 0.52%(b) 0.54% 0.48% 0.50% 0.16%
Ratio of net investment income to
average net assets................... 5.91%(b) 5.98% 5.12% 4.44% 4.09%
Ratio of expenses to average net
assets*.............................. 0.52%(b) 0.54% 0.48% 0.51% 0.27%
Ratio of net investment income to
average net assets*.................. 5.91%(b) 5.98% 5.12% 4.43% 3.98%
Portfolio turnover..................... 18% 69% 263% 407% 70%
<FN>
- ---------------
* During the period, certain fees were voluntarily reduced and/or certain
expenses were reimbursed. If such voluntary fee reductions and/or
reimbursements had not occurred, the ratios would have been as indicated.
** Immediately after the close of business an December 9, 1992 the Portfolio
underwent a reverse 5 for 1 stock split. Subsequently, the Portfolio changed
its investment objective from that of a money market with a stable net asset
value of $1.00 per share, to a non-money market fund with a fluctuating net
asset value.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 14
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS -------------------------------------------- PERIOD ENDED
ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
JUNE 30, 1996 1995 1994 1993 1992*
------------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BEA SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 4.99 $ 4.89 $ 5.01 $ 5.00 $ 5.01
------- ------ ------ -------- ------
Income from investment operations:
Dividends from net investment
income............................ 0.13 0.27 0.23 0.20 --
Net realized and unrealized gains
(losses) from securities
transactions...................... (0.03) 0.10 (0.12) 0.05 --
------- ------ ------ -------- ------
Total from investment operations.... 0.10 0.37 0.11 0.25 --
------- ------ ------ -------- ------
Less dividends and distributions:
Dividends from net investment
income............................ (0.13) (0.25) (0.23) (0.20) --
Return of capital distributions..... -- (0.02) -- -- --
Distributions from net realized
gains on securities
transactions...................... -- -- -- (0.04) (0.01)
------- ------ ------ -------- ------
Total distributions................... (0.13) (0.27) (0.23) (0.24) (0.01)
------- ------ ------ -------- ------
Net change in net asset value......... (0.03) 0.10 (0.12) 0.01 (0.01)
------- ------ ------ -------- ------
NET ASSET VALUE, END OF PERIOD........ $ 4.96 $ 4.99 $ 4.89 $ 5.01 $ 5.00
======= ====== ====== ======== ======
Total return.......................... 2.03%(a) 7.67% 2.25% 4.62% 0.33%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..... $ 1 $ 1 $5,566 $ 36,821 $1,085
Ratio of expenses to average net
assets............................ 0.95%(b) 0.95% 0.95% 0.93% 0.79%(b)
Ratio of net investment income to
average net assets................ 5.20%(b) 5.58% 4.46% 4.01% 4.77%(b)
Ratio of expenses to average net
assets**.......................... 1.15%(b) 2.06% 1.29% 0.98% 0.79%(b)
Ratio of net investment income to
average net assets**.............. 5.00%(b) 4.48% 4.12% 3.96% 4.77%(b)
Portfolio turnover.................. 18% 69% 263% 407% 70%
<FN>
- ---------------
* Period from December 29, 1992 (initial offering of Service Shares) through
December 31, 1992.
** During the period, certain fees were voluntarily reduced and certain
expenses were reimbursed. If such voluntary fee reductions and/or
reimbursements had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements.
14
<PAGE> 15
THE INFINITY MUTUAL FUNDS, INC.
BEA SHORT DURATION PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
SIX MONTHS ---------------------------- PERIOD ENDED
ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31,
JUNE 30, 1996 1995 1994 1993*
------------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
BEA INVESTOR SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD................ $4.99 $ 4.89 $ 5.00 $ 5.04
----- -------- -------- --------
Income from investment operations:
Dividends from net investment income.............. (0.58) 0.29 0.25 0.03
Net realized and unrealized gains (losses) from
securities transactions......................... 0.69 0.10 (0.11) --
----- -------- -------- --------
Total from investment operations.................. 0.11 0.39 0.14 0.03
----- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income.............. (0.14) (0.27) (0.25) (0.03)
Return of capital distributions................... -- (0.02) -- --
Distributions from net realized gains on
securities transactions......................... -- -- -- (0.04)
----- -------- -------- --------
Total distributions................................. (0.14) (0.29) (0.25) (0.07)
----- -------- -------- --------
Net change in net asset value....................... (0.03) 0.10 (0.11) (0.04)
----- -------- -------- --------
NET ASSET VALUE, END OF PERIOD...................... $4.96 $ 4.99 $ 4.89 $ 5.00
===== ======== ======== ========
Total return........................................ 2.28%(a) 8.21% 2.88% 0.59%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................... $ 97 $ 33,479 $ 30,861 $ 24,847
Ratio of expenses to average net assets........... 0.59%(b) 0.63% 0.55% 0.55%(b)
Ratio of net investment income to average net
assets.......................................... 5.64%(b) 5.90% 5.03% 4.48%(b)
Ratio of expenses to average net assets**......... 0.74%(b) 0.76% 0.71% 0.70%(b)
Ratio of net investment income to average net
assets**........................................ 5.49%(b) 5.77% 4.87% 4.33%(b)
Portfolio turnover................................ 18% 69% 263% 407%
<FN>
- ---------------
* Period from November 4, 1993 (initial offering of Investor Shares) through
December 31, 1993.
** During the period, certain fees were voluntarily reduced and certain
expenses were reimbursed. If such voluntary fee reductions and/or
reimbursements had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 16
------------------------------------------------
THE INFINITY MUTUAL FUNDS, INC.
3435 Stelzer Road
Columbus, OH 43219
1-800-852-9730
------------------------------------------------
INVESTMENT ADVISER
BEA ASSOCIATES
One Citicorp Center
153 East 53rd Street
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.
COIBEAD96SA
-------------------------------------------
THE INFINITY MUTUAL FUNDS, INC.
-------------------------------------------
BEA
SHORT DURATION
PORTFOLIO
------------------
SEMI-ANNUAL REPORT
------------------
June 30, 1996
B E A
-------------------------------------------
