<PAGE> 1
CORRESPONDENT CASH RESERVES
- --------------------------------------------------------------------------------
To Our Shareholders:
The Correspondent Cash Reserves Money Market and Tax Free Portfolios are
open-ended, diversified money market funds that seek to provide investors with
as high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity, and, in the case of the Tax Free
Portfolios, exempt from federal income tax.**
The Money Market Portfolio, which continues to exceed $1 billion in assets under
management, invests in a diversified selection of very high quality, short-term
money market obligations, such as U.S. Treasury bills, short-term corporate
obligations and commercial paper. The Tax Free Portfolio, launched on October 7,
1996, invests in a wide variety of short-term tax-exempt securities issued by
state, county and municipal authorities.* The Portfolios may invest in
instruments rated in either of the top two ratings categories established by
nationally recognized services.
Immediately following this letter, you'll find a pie chart analysis of the
Portfolios, as well as their performance for the six-month period. A schedule of
the portfolios' investments is included in the financial report that follows the
performance table. These investments are actively monitored to ensure that they
maintain their quality status and suitability.
ECONOMIC OVERVIEW
Economic growth surged in the first quarter of 1997 to an annual rate of 5.9%.
As a pre-emptive strike against inflation, the Federal Reserve Board raised
short-term interest rates from 5.25% to 5.50%, its first action in more than a
year. The economy slowed sufficiently in the second quarter to require no
further Fed action, at least through July. Despite the seven-year economic
expansion and the lowest unemployment rate since the early 1970s, there are no
real signs of inflation. Because of the healthy economy, tax revenues have
surged, shrinking the federal budget deficit. The government's reduced need to
borrow is exerting downward pressure on interest rates.
INTEREST-RATE ENVIRONMENT
Although long-term interest rates have been volatile, the money market interest
rate environment has stayed relatively quiet. During the six-month period,
one-month commercial paper yielded about 5.5%, while one-year product was
yielding about 5.9%. Because of the good news on inflation, the yield spread
between one-month and one-year paper narrowed considerably during the period.
However, supply-and-demand conditions change rapidly in the tax-exempt market,
and so tax-exempt yields have been more volatile.
INVESTMENT STRATEGY
Because inflation seems to be under control, we have the confidence to extend
the average maturity of the Money Market Portfolio to 63 days as of June 30,
1997, approximately five to ten days beyond what we understood the Fund's peers
to be doing. During the period, we also shifted some of the portfolio from
commercial paper to banking securities. By employing these strategies, we are
able to obtain slightly higher yields without sacrificing quality or liquidity.
In addition, the portfolio's securities with longer maturities become more
valuable in a falling interest rate environment.
The Tax Free Portfolio currently maintains a maturity of about 48 days and is
managed to provide safety, convenience and federal tax-free income to
shareholders.
- ---------------
** An investment in the Portfolios is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
Portfolios will be able to maintain a stable net asset value of $1.00 per
share.
* The Tax Free Portfolio's income may be subject to certain state and local
taxes and, depending on your tax status, the federal alternative minimum tax.
<PAGE> 2
REPORT FROM THE INVESTMENT ADVISER -- (continued)
- --------------------------------------------------------------------------------
Portfolio Composition*
[PIE CHART]
MONEY MARKET PORTFOLIO
<TABLE>
<S> <C>
Bank Obligations 45%
Commercial Paper 29%
Short-Term Corporate Obligations 11%
Repurchase Agreements 8%
U.S. Treasury Agencies 7%
</TABLE>
[PIE CHART]
TAX FREE PORTFOLIO
<TABLE>
<S> <C>
Commercial Paper 28%
Tax-Exempt Note 18%
Variable-Rate Demand Notes 50%
Tax-Exempt Puts 4%
</TABLE>
* The composition of the Portfolios is subject to change. Percentages are based
on net assets.
PERFORMANCE
As of June 30, 1997, the 7-day and 30-day yields for the Portfolios were as
follows:
<TABLE>
<CAPTION>
7-DAY 30-DAY
YIELD YIELD
----- ------
<S> <C> <C>
Money Market Portfolio*............................ 4.69% 4.70%
Tax Free Portfolio*................................ 3.18% 3.00%
</TABLE>
* For the current 7-day yield as of June 30, 1997, the Portfolio's service
contractors voluntarily waived a portion of their fees. If the service
contractors had not waived a portion of their fees, the 7-day yield shown
would have been 4.59% for the Money Market Portfolio and 2.74% for the Tax
Free Portfolio. These voluntary waivers may be modified or terminated at any
time, which would reduce the performance. Yields will vary with market
conditions, and past performance is not a guarantee of future results.
Investments in the Portfolios are neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that the Portfolios will be able to
maintain a stable net asset value of $1.00 per share.
<PAGE> 3
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
------------------- ---- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 7.0%
Federal Home Loan Bank......................... Aaa/AAA** 5.90% 10/16/97 $ 6,000 $ 6,000,000
Federal Home Loan Bank......................... Aaa/AAA** 5.63 12/26/97 8,000 8,000,000
Federal Home Loan Bank......................... Aaa/AAA** 5.80 2/5/98 6,000 6,000,000
Federal Home Loan Bank......................... Aaa/AAA** 5.88 2/12/98 5,000 5,000,000
Federal Home Loan Bank......................... Aaa/AAA** 5.88 3/19/98 8,000 8,000,000
Federal Home Loan Bank......................... Aaa/AAA** 5.90 3/19/98 4,050 4,050,000
Federal Home Loan Bank......................... Aaa/AAA** 6.13 5/22/98 5,600 5,600,000
Federal National Mortgage Assoc................ Aaa/AAA** 5.27* 7/1/97 9,000 8,994,851
Student Loan Marketing Assoc................... Aaa/AAA** 5.63 12/24/97 10,000 10,000,000
Student Loan Marketing Assoc................... Aaa/AAA** 5.75 1/8/98 4,000 4,000,000
Student Loan Marketing Assoc................... Aaa/AAA** 5.75 1/23/98 5,000 5,000,000
Student Loan Marketing Assoc................... Aaa/AAA** 5.85 3/20/98 5,850 5,850,000
--------------
Total U.S. Government and Agency Obligations
(cost $76,494,851)............................. 76,494,851
--------------
BANK NOTES -- 5.1%
DOMESTIC -- 5.1%
Bank of America NT & SA........................ A-1+/P-1 5.55% 7/24/97 $20,000 $ 20,000,000
Bank of America NT & SA........................ A-1+/P-1 5.52 11/21/97 6,900 6,899,453
Bank of America -- Illinois.................... A-1+/P-1 5.66 12/30/97 8,000 7,998,471
Bank of America -- Illinois.................... A-1+/P-1 6.15 5/5/98 5,000 4,999,958
Comerica Bank NA, -- Detroit................... A-1/P-1 6.15 7/11/97 5,000 5,000,000
FCC National Bank.............................. A-1+/P-1 6.00 7/18/97 5,000 4,999,962
Key Bank, NA................................... A-1/P-1 5.60 11/4/97 5,000 5,000,116
--------------
Total Bank Notes (cost $54,897,960).............. 54,897,960
--------------
</TABLE>
Continued
3
<PAGE> 4
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT -- 17.7%
DOMESTIC -- 3.9%
Bankers Trust Co............................... A-1/P-1 6.00% 3/24/98 $ 5,000 $ 4,995,826
Bankers Trust Co............................... A-1/P-1 6.28 4/30/98 10,000 10,001,583
Bankers Trust Co............................... A-1/P-1 6.19 5/26/98 5,000 4,999,141
Bankers Trust Co............................... A-1/P-1 6.16 6/2/98 7,000 6,998,156
Bankers Trust NY Corp.......................... A-1/P-1 5.40* 7/1/97 15,000 14,997,347
--------------
41,992,053
--------------
YANKEE -- 13.8%
ABN Amro Bank N.V.............................. A-1+/P-1 5.50 12/4/97 7,000 6,994,348
ABN Amro Bank N.V.............................. A-1+/P-1 6.14 5/1/98 10,000 9,998,327
Canadian Imperial Bank of Commerce............. A-1+/P-1 5.76 2/27/98 4,000 3,997,701
Commerzbank AG................................. A-1+/P-1 5.48 8/11/97 3,600 3,600,107
Creditanstalt Bankverein....................... A-1/P-1 6.08 6/4/98 6,000 6,003,769
Deutsche Bank AG............................... A-1+/P-1 5.54 7/11/97 6,000 5,999,964
Deutsche Bank AG............................... A-1+/P-1 5.54 7/14/97 10,000 9,999,925
Deutsche Bank AG............................... A-1+/P-1 5.50 7/21/97 15,000 14,998,567
Deutsche Bank AG............................... A-1+/P-1 5.56 7/21/97 15,000 15,000,000
Rabobank Nederland............................. A-1+/P-1(IBCA) 5.98 3/20/98 5,000 4,999,314
Skandinaviska Enskilda Banken.................. A-2/P-1/A-1 5.58 7/9/97 10,000 10,000,022
Skandinaviska Enskilda Banken.................. A-2/P-1/A-1 5.59 7/16/97 20,000 20,000,082
Societe Generale............................... A-1+/P-1 5.47 7/11/97 6,000 6,000,029
Societe Generale............................... A-1+/P-1 5.72 10/21/97 7,000 7,000,000
Societe Generale............................... A-1+/P-1 5.60 11/12/97 7,000 7,000,562
Societe Generale............................... A-1+/P-1 5.72 1/6/98 5,000 4,998,760
Societe Generale............................... A-1+/P-1 5.85 3/3/98 2,000 1,999,486
Societe Generale............................... A-1+/P-1 6.35 4/15/98 4,000 4,001,404
Societe Generale............................... A-1+/P-1 6.20 5/12/98 3,000 3,000,663
Societe Generale............................... A-1+/P-1 5.90 6/16/98 5,000 4,995,372
--------------
150,588,402
--------------
Total Certificates of Deposit (cost
$192,580,455).................................. 192,580,455
--------------
</TABLE>
Continued
4
<PAGE> 5
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER -- 49.3%
ASSET BACKED -- 9.3%
Asset Securitization Cooperative Corp.......... A-1+/P-1 5.62% 7/1/97 $15,000 $ 14,999,999
Asset Securitization Cooperative Corp.......... A-1+/P-1 5.55 7/24/97 10,000 9,964,542
Enterprise Funding Corp........................ A-1+/P-1 5.59 7/3/97 10,000 9,996,894
Enterprise Funding Corp........................ A-1+/P-1 5.57 7/9/97 20,626 20,600,469
Falcon Asset Securitization Corp............... A-1/P-1 5.55 7/9/97 11,432 11,417,901
New Center Asset Trust......................... A-1+/P-1 5.55 7/22/97 5,000 4,983,813
New Center Asset Trust......................... A-1+/P-1 5.55 7/28/97 1,000 995,838
Triple A One Funding........................... A-1/P-1 5.57 7/15/97 12,385 12,358,173
Triple A One Funding........................... A-1/P-1 5.56 7/21/97 15,000 14,953,666
--------------
100,271,295
--------------
AUTO-TRUCK -- 5.5%
Ford Motor Credit Corp......................... A-1/P-1 5.54 7/7/97 40,000 39,963,066
General Motors Acceptance Corp................. P-1/D-1(c) 5.56 7/15/97 15,000 14,967,567
Hertz Corp..................................... A-1/P-1 5.53 7/9/97 5,000 4,993,856
--------------
59,924,489
--------------
BANKING -- 21.4%
BBL North America, Inc......................... A-1/P-1 5.56 7/2/97 5,000 4,999,228
BBL North America, Inc......................... A-1/P-1 5.65 7/28/97 10,000 9,957,625
BEX America Finance Inc........................ A-1/P-1 5.57 7/8/97 20,000 19,978,339
Cariplo Finance Inc............................ A-1/P-1 5.55 7/2/97 10,000 9,998,458
Citicorp....................................... A-1/P-1 6.25 7/1/97 45,000 44,999,999
Credit Italiano Delaware, Inc.................. A-1/P-1 5.56 7/17/97 13,000 12,967,876
Credit Italiano Delaware, Inc.................. A-1/P-1 5.58 7/28/97 5,000 4,979,075
Cregem North America, Inc...................... A-1+/P-1 5.59 8/18/97 5,000 4,962,733
Cregem North America, Inc...................... A-1+/P-1 5.60 9/2/97 10,000 9,902,000
Cregem North America, Inc...................... A-1+/P-1 5.60 9/9/97 10,000 9,891,111
Den Danske Corp................................ A-1/P-1 5.60 7/2/97 8,500 8,498,678
Den Danske Corp................................ A-1/P-1 5.56 7/23/97 9,600 9,567,381
Nordbanken NA, Inc............................. A-1/P-1 5.44 7/7/97 6,000 5,994,560
</TABLE>
Continued
5
<PAGE> 6
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
------------------- ---- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
Nordbanken NA, Inc............................. A-1/P-1 5.62% 12/11/97 $ 9,600 $ 9,355,717
Svenska Handelsbanken Inc...................... A-1/P-1 5.57 7/23/97 5,000 4,982,981
Unifunding..................................... A-1/P-1 5.55 7/3/97 5,000 4,998,458
Unifunding..................................... A-1/P-1 5.53 7/11/97 13,754 13,732,872
Unifunding..................................... A-1/P-1 5.54 7/11/97 17,000 16,973,839
Unifunding..................................... A-1/P-1 5.58 9/15/97 15,000 14,823,300
Vereinsbank Finance (Delaware) Inc............. A-1+/P-1 5.60 7/9/97 10,000 9,987,556
--------------
231,551,786
--------------
BROKER-DEALER -- 2.7%
Goldman Sachs Group L.P........................ A-1+/P-1 5.63 7/8/97 10,000 9,989,063
Merrill Lynch & Co., Inc....................... A-1+/P-1 5.55 7/17/97 10,000 9,975,333
Merrill Lynch & Co., Inc....................... A-1+/P-1 5.56 7/22/97 9,600 9,568,864
--------------
29,533,260
--------------
DRUGS & HEALTHCARE -- 2.3%
Lilly (Eli) & Co............................... A-1+/P-1 5.35 7/3/97 8,000 7,997,622
Lilly (Eli) & Co............................... A-1+/P-1 5.55 7/14/97 16,500 16,466,931
--------------
24,464,553
--------------
FINANCE-CONDUIT -- 4.5%
Compagnie Bancaire USA Funding Corp............ A-1/P-1 5.60 7/2/97 6,000 5,999,067
Compagnie Bancaire USA Funding Corp............ A-1/P-1 5.59 9/19/97 8,500 8,394,411
SBNSW Delaware Inc............................. A-1+/P-1 5.57 9/18/97 15,000 14,816,654
Skandinaviska Enskilda Banken Funding.......... A-2/P-1/A-1+(IBCA) 5.55 7/11/97 20,000 19,969,167
--------------
49,179,299
--------------
FINANCE-SUBSIDIARY -- 1.8%
National Australia Funding (Delaware) Inc...... A-1+/P-1 5.52 7/9/97 20,000 19,975,467
--------------
RETAIL-MERCHANDISE -- 1.8%
Sears Roebuck Acceptance Corp.................. A-2/P-1/D-1(c) 5.54 7/10/97 20,000 19,972,300
--------------
Total Commercial Paper (cost $534,872,449)....... 534,872,449
--------------
SHORT-TERM CORPORATE OBLIGATIONS -- 11.3%
AUTO-TRUCK -- 0.4%
Ford Motor Credit Co........................... A-1/P-1 6.25 2/26/98 4,000 4,010,070
--------------
</TABLE>
Continued
6
<PAGE> 7
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
BROKER-DEALER -- 5.8%
Bear Stearns Companies, Inc.................... A-1/P-1 5.40%* 7/1/97 $10,000 $ 10,000,000
Bear Stearns Companies, Inc.................... A-1/P-1 5.67* 7/1/97 5,000 5,000,000
Bear Stearns Companies, Inc.................... A-1/P-1 5.67* 7/1/97 10,000 10,000,000
Bear Stearns Companies, Inc.................... A-1/P-1 5.97 7/3/97 5,000 5,000,000
Bear Stearns Companies, Inc.................... A-1/P-1 5.67* 7/28/97 4,000 4,000,000
Bear Stearns Companies, Inc.................... A-1/P-1 6.00 6/22/98 5,000 5,000,000
Merrill Lynch & Co., Inc....................... A-1+/P-1 5.40* 7/1/97 5,000 5,000,000
Merrill Lynch & Co., Inc....................... A-1+/P-1 5.68* 7/1/97 8,000 7,999,486
Merrill Lynch & Co., Inc. CP................... A-1+/P-1 5.68* 7/1/97 5,000 4,999,395
Morgan Stanley Group, Inc...................... A-1/P-1 5.76* 5/18/98 5,000 5,000,000
--------------
61,998,881
--------------
FINANCE-CONSUMER -- 0.3%
Household Finance Corp......................... A-1/P-1 6.25 10/15/97 3,255 3,260,198
--------------
FINANCE-DIVERSIFIED -- 0.6%
CIT Group Holdings, Inc........................ A-1/P-1 5.58* 7/1/97 7,000 6,997,798
--------------
FOOD, BEVERAGE & TOBACCO -- 0.3%
Heinz (H.J.) Co................................ A-1/P-1 5.50 9/15/97 2,950 2,949,288
--------------
INSURANCE -- 0.9%
Prudential Funding Corp........................ A-1+/P-1 5.66 1/6/98 10,000 10,000,000
--------------
MISCELLANEOUS -- 3.0%
Beta Finance Inc............................... A-1+/P-1 5.80 1/13/98 5,000 5,000,000
Beta Finance Inc............................... A-1+/P-1 5.82 1/28/98 5,000 5,000,000
Beta Finance Inc............................... A-1+/P-1 5.83 2/4/98 5,000 5,004,858
Beta Finance Inc............................... A-1+/P-1 6.12 6/10/98 8,000 8,000,000
Beta Finance Inc. (b).......................... A-1+/P-1 5.35* 7/1/97 10,000 10,000,000
--------------
33,004,858
--------------
Total Short-Term Corporate Obligations (cost
$122,221,093).................................. 122,221,093
--------------
</TABLE>
Continued
7
<PAGE> 8
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- --------------
<S> <C> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- 8.2%
Daiwa Securities America, Inc., dated 6/30/97,
(Collateralized by 9,669,000 U.S. Treasury
Notes,
7.13%, due 2/15/23, value--$10,210,464)...... A-2/P-2 5.50% 7/1/97 $10,000 $ 10,000,000
Daiwa Securities America, Inc., dated 6/30/97,
(Collateralized by 30,246,000 U.S. Treasury
Notes,
7.25%, 5/15/16, value--$31,788,546).......... A-2/P-2 5.85 7/1/97 31,135 31,135,000
Goldman Sachs & Co., dated 6/30/97,
(Collateralized by 46,810,000 U.S. Treasury
Notes, 7.25%, 5/15/16, value--$48,986,665)... A-1+/P-1 5.50 7/1/97 48,000 48,000,000
--------------
Total Repurchase Agreements (cost $89,135,000)... 89,135,000
--------------
Total Investments (Amortized Cost
$1,070,201,808)(a) -- 98.6%.................... 1,070,201,808
Assets in excess of other liabilities -- 1.4%.... 15,058,311
--------------
TOTAL NET ASSETS -- 100.0%....................... $1,085,260,119
==============
</TABLE>
- ---------------
Percentages indicated are based on net assets of $1,085,260,119.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Represents a restricted security, purchased under Rule 144A, which is exempt
from registration under the Securities Act of 1933, as amended.
(c) Rating from Duff & Phelps, Fitch, or IBCA.
* Floating or variable rate securities. Maturity date reflects the date in
which the interest rate resets. The rate resets daily, weekly, monthly or
quarterly. The rate reflected is the rate as of June 30, 1997.
** Implied long-term rating.
See Notes to financial statements.
8
<PAGE> 9
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost............................................... $ 981,066,808
Repurchase agreements, at amortized cost................................................... 89,135,000
Cash....................................................................................... 712
Interest receivable........................................................................ 7,067,050
Receivable for investments sold............................................................ 90,413,000
Receivable from capital shares issued...................................................... 148,152,750
Prepaid expenses and other assets.......................................................... 370,608
--------------
Total assets................................................................................. 1,316,205,928
--------------
LIABILITIES
Dividends payable.......................................................................... 1,599,598
Payable for securities purchased........................................................... 134,127,188
Payable for capital shares redeemed........................................................ 94,460,352
Accrued expenses and other payables:
Advisory fees............................................................................ 84,833
Administration fees...................................................................... 84,833
Distribution fees........................................................................ 556,208
Other.................................................................................... 32,797
--------------
Total liabilities............................................................................ 230,945,809
--------------
NET ASSETS................................................................................... $1,085,260,119
==============
Shares Outstanding ($0.001 par value, 3 billion shares authorized)........................... 1,086,169,048
==============
Net Asset Value, Offering Price and Redemption Price per Share............................... $1.00
====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................. $ 1,086,169
Additional paid-in capital................................................................. 1,085,115,849
Undistributed net investment income........................................................ 4,084
Accumulated net realized losses............................................................ (945,983)
--------------
Net Assets June 30, 1997..................................................................... $1,085,260,119
==============
</TABLE>
- ---------------
See Notes to Financial Statements.
9
<PAGE> 10
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest........................................................................... $29,043,605
Expenses
Advisory fees.................................................................... $ 522,000
Administration fees.............................................................. 522,000
Special management services fees................................................. 521,981
Distribution fees................................................................ 3,132,002
Custodian fees and expenses...................................................... 75,157
Registration fees................................................................ 339,578
Legal fees....................................................................... 40,141
Insurance expense................................................................ 23,025
Reports to shareholders.......................................................... 55,925
Transfer agent fees and expenses................................................. 197,665
Amortization of organization expenses............................................ 560
Audit fees....................................................................... 16,362
Directors' fees.................................................................. 23,690
Other expenses................................................................... 1,748
----------
Total expenses before fee waivers and expense reimbursements................... 5,471,834
Less: Fee waivers and expense reimbursements................................... (521,981)
Less: Expenses paid by third parties........................................... (1,900)
----------
Total Expenses..................................................................... 4,947,953
-----------
Net Investment Income.............................................................. 24,095,652
REALIZED GAINS FROM SECURITIES TRANSACTIONS
Net realized gains from securities transactions.................................. 29,893
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................... $24,125,545
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
10
<PAGE> 11
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,
1997 1996
--------------- ---------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income.................................................... $ 24,095,652 $ 44,071,926
Net realized gains from securities transactions.......................... 29,893 136,504
--------------- ---------------
Net increase in net assets resulting from operations................... 24,125,545 44,208,430
--------------- ---------------
Dividends to shareholders from net investment income
Retail Shares............................................................ (24,095,652) (43,484,087)
Institutional Shares (b)................................................. -- (587,839)(a)
--------------- ---------------
Total dividends to shareholders from net investment income................. (24,095,652) (44,071,926)
--------------- ---------------
Portfolio Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed...................................... 2,993,360,534 5,526,532,249
Net asset value of shares issued to shareholders in reinvestment of
dividends.............................................................. 23,466,933 44,022,773
Cost of shares redeemed.................................................. (2,938,861,997) (5,381,923,610)
--------------- ---------------
Net increase in net assets from Portfolio share transactions........... 77,965,470 188,631,412
--------------- ---------------
Total Increase............................................................. 77,995,363 188,767,916
NET ASSETS
Beginning of period...................................................... 1,007,264,756 818,496,840
--------------- ---------------
End of period............................................................ $ 1,085,260,119 $ 1,007,264,756
=============== ===============
SHARE TRANSACTIONS:
Issued................................................................... 2,993,360,534 5,526,532,249
Reinvested............................................................... 23,466,933 44,022,773
Redeemed................................................................. (2,938,861,997) (5,381,923,610
--------------- ---------------
Change in shares......................................................... 77,965,470 188,631,412
=============== ===============
</TABLE>
- ---------------
(a) For the period from January 1, 1996 through December 25, 1996.
(b) On December 26, 1996, the Portfolio terminated and redeemed its offering of
Institutional Shares.
See Notes to Financial Statements.
11
<PAGE> 12
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES -- 103.1%
ALASKA -- 0.6%
Valdez Alaska Marine Tax-Exempt Revenue, (Exxon
Pipeline Co. Project) Series 85............... A-1+/P-1 4.00%* 7/1/97 $ 500 $ 500,000
------------
ARIZONA -- 0.8%
Phoenix, Arizona Industrial Development,
Authority Multi-Family Housing Southwest
Villages, LOC: Citibank....................... A-1+/NR 4.15* 7/7/97 700 700,000
------------
CALIFORNIA -- 6.0%
California Higher Education Loan Authority,
Series D-2, LOC: Dresner...................... NR/VMIG1 3.95 7/1/98 500 500,035
California Higher Education Loan Authority,
Student Loan Revenue, LOC: National
Westminster................................... NR/VMIG1 3.95* 7/1/97 500 500,000
California Statewide Community Development Tax &
Revenue Anticipation Note..................... SP1+/MIG1 4.50 6/30/98 600 604,074
Contra Costa County, California Tax & Revenue
Anticipation Notes............................ SP1+/MIG1 4.50 7/3/97 1,500 1,500,060
Fresno, California Tax & Revenue Anticipation
Notes......................................... NR/MIG1 4.25 6/30/98 500 502,150
Los Angeles, California Department of Water, CP,
LOC: Toronto Dominion Bank of Novia Scotia.... A-1+/P-1 3.90 10/14/97 300 300,000
Riverside County, California Tax & Revenue
Anticipation Notes............................ SP1+/MIG1 4.50 6/30/98 300 301,581
San Bernardino County, California Tax & Revenue
Anticipation Notes............................ SP1+/MIG1 4.50 6/30/98 500 503,120
South Coast, California Education, Local
Education Agencies Tax & Revenue Anticipation
Notes......................................... SP1+/MIG1 4.50 6/30/98 500 503,360
------------
5,214,380
------------
COLORADO -- 2.8%
Northglenn, Colorado Industrial Development
Revenue (Castle Gardens Retirement Center)
LOC: Morgan Guaranty Trust.................... NR/VMIG 4.13* 7/1/97 2,400 2,400,000
------------
</TABLE>
Continued
12
<PAGE> 13
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
FLORIDA -- 9.1%
Broward County, Florida School District......... SP1+/MIG1 4.50% 4/22/98 $ 500 $ 502,235
Dade County, Florida Health Facilities
Authority, Hospital Revenue (Miami Children's
Hospital Project) (AMBAC)..................... A-1+/NR 4.15* 7/1/97 2,600 2,600,000
Dade County, Florida School District, General
Obligation (FGIC)............................. AAA/Aaa 7.00 8/1/97 500 501,441
Florida Municipal Power Authority, LOC: First
Union, CP..................................... A-1/P-1 3.65 8/8/97 1,000 1,000,000
Florida Municipal Power Authority, LOC: First
Union, CP..................................... A1/P1 3.60 8/13/97 1,000 1,000,000
Indian Trace Community Development District-
Basin 1 Water Management, Series A
(MBIA/Suisse Bank)............................ A-1+/VMIG1 4.15* 7/7/97 1,900 1,900,000
Putnam County, Florida Development Authority,
Pollution Control Revenue (Seminole Electric
Co-Op, Inc.) SPA-National Rural Utility
Finance....................................... A-1+/MIG1 3.55* 9/15/97 500 500,000
------------
8,003,676
------------
GEORGIA -- 3.2%
De Kalb County, Georgia Tax & Revenue
Anticipation Notes............................ SP1+/MIG1 4.50 12/31/97 500 501,093
De Kalb, Georgia Private Hospital Authority,
Revenue Anticipation Bonds, (Eagleston
Childrens Health Center) LOC: Suntrust Bank... A-1+/VMIG1 4.20* 7/7/97 1,800 1,800,000
Georgia State, General Obligation, Series B..... AA+/Aaa 6.75 3/1/98 500 509,815
------------
2,810,908
------------
ILLINOIS -- 10.5%
Illinois Educational Facilities Authority
Revenue (Cultural Pool Project) LOC: First
National Bank Chicago......................... NR/VMIG1 4.20 7/1/97 1,400 1,400,000
Illinois Educational Facilities Authority,
Depaul University............................. A-1+/VMIG1 4.25* 7/7/97 1,900 1,900,000
Illinois Health Facilities Authority (Advocate
Health Care Network) SPA -- First National
Bank Northern Trust & Harris Trust............ A-1+/VMIG1 4.20* 7/1/97 2,060 2,060,000
</TABLE>
Continued
13
<PAGE> 14
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Illinois Health Facilities Authority Revenue
(Central Dupage), Series 1990, LOC:
Rabobank...................................... NR/VMIG1 4.10%* 7/1/97 $ 1,600 $ 1,600,000
Illinois Health Facilities Authority Revenue
(Elmhurst Memorial Hospital Project), Series
93B, SPA -- Toronto Dominion, La Salle........ NR/VMIG1 4.20* 7/1/97 600 600,000
Illinois Health Facilities Authority Revenue,
(Franciscan Sisters Health Project) SPA -
Toronto Dominion, La Salle.................... NR/VMIG1 4.20* 7/1/97 1,600 1,600,000
------------
9,160,000
------------
IOWA -- 3.1%
Iowa Finance Authority, Small Business
Development Revenue, Multi-Family Housing
Village Court Assoc.-B........................ NR/VMIG1 4.13* 7/7/97 2,700 2,700,000
------------
KANSAS -- 2.7%
Burlington Kansas, Pollution Control Revenue,
(Kansas City Power & Light), CP, LOC: Toronto
Dominion...................................... A-1/P-1 3.85 8/11/97 1,000 1,000,000
City of Burlington, National Rural Utilities,
(Kansas Electric Power), CP................... A-1/P-1 3.65 8/14/97 1,000 1,000,000
Kansas City, Kansas Industrial Revenue (PQ Corp.
Project), LOC: Credit Suisse.................. NR/VMIG1 4.20 7/1/97 300 300,000
------------
................................................ 2,300,000
------------
KENTUCKY -- 0.6%
Trimble County, Kentucky Pollution Control
Revenue, (Louisville Gas & Electric) CP....... A-1+/VMIG1 3.80 7/29/97 500 500,000
------------
LOUISIANA -- 6.3%
Lake Charles Louisiana Harbor & Terminal
District Revenue, (Reynolds Metals Co.
Project) LOC: Canadian Imperial Bank.......... A-1+/NR 4.15* 7/1/97 2,000 2,000,000
Lake Charles, Louisiana Harbor & Terminal
District Revenue (Reynolds Metals Co. Project)
LOC: ABN-AMRO, Bank N.V....................... A-1+/NR 3.81* 12/1/97 500 500,171
</TABLE>
Continued
14
<PAGE> 15
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
Louisiana Public Facilities Authority Revenue,
Industrial Development, (Kenner Hotel Ltd)
LOC: Deutsche Bank............................ NR/P-1 4.15%* 7/1/97 $ 1,000 $ 1,000,000
Plaquemenes, Louisiana Port Authority, Pollution
Control Revenue (Tampa Electric), Tax Exempt
CP............................................ A-1/P-1 3.80 10/7/97 2,000 2,000,000
------------
5,500,171
------------
MARYLAND -- 1.2%
Maryland Health & Higher Education, (John
Hopkins), CP.................................. A-1+/P-1 3.85 8/15/97 1,000 1,000,000
------------
MASSACHUSETTS -- 2.2%
Massachusetts, Health & Education (Boston
University) LOC: Landesbank, CP............... A-1/P-1 3.85 8/19/97 600 600,000
Massachusetts, Water Resource Authority, LOC:
Morgan Guaranty CP............................ A-1/P-1 3.65 8/22/97 1,300 1,300,000
------------
1,900,000
------------
MICHIGAN -- 4.4%
Michigan State Hospital Finance Authority
Revenue, (St. Mary Hospital of Livonia
Project), Series A, LOC: Comerica Bank........ A-1/VMIG1 4.15* 7/7/17 2,000 2,000,000
Michigan State Strategic Funding, (DOW Chemical
Co. Project).................................. A-1/P-1 4.05* 7/1/97 1,300 1,300,000
Michigan State, General Obligation Notes........ SP1+/MIG1 4.50 9/30/97 500 501,236
------------
3,801,236
------------
MINNESOTA -- 1.2%
Rochester, Minnesota Health Facilities
Authority, (Mayo Clinic), CP.................. A-1/P-1 3.75 7/24/97 1,000 1,000,000
------------
NEVADA -- 2.7%
Clark County, Nevada Airport Improvement
Revenue, Series A-1, LOC: Union Bank of
Switzerland................................... A-1+/VMIG1 4.15* 7/7/97 2,300 2,300,000
------------
NEW HAMPSHIRE -- 0.6%
Carroll County, New Hampshire Tax & Revenue
Anticipation Notes............................ NR/NR 4.10 12/29/97 500 500,000
------------
</TABLE>
Continued
15
<PAGE> 16
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NEW MEXICO -- 2.8%
University of New Mexico, University Revenue
(AMBAC)....................................... A-1+/VMIG1 4.15% 7/7/97 $ 2,400 $ 2,400,000
------------
NEW YORK -- 12.8%
Municipal Assistance Corp., New York, LOC:
Landesbank, CP................................ A-1+/VMIG1 3.50 7/17/97 500 500,000
Municipal Assistance Corporation for New York
City, LOC: West Deutsche...................... A-1+/VMIG1 4.05 7/7/97 500 500,000
Nassau County, New York Bond Anticipation Notes,
General Obligation, Series A.................. SP1/MIG1 4.25 8/15/97 1,500 1,501,097
Nassau County, New York General Improvement
Bonds, Series U (AMBAC)....................... AAA/Aaa 5.13 11/1/97 1,000 1,004,767
New York City, New York, CP, LOC: Rabobank
(MBIA)........................................ A-1/VMIG1 3.70 8/12/97 1,000 1,000,000
New York City, New York, CP, LOC: Rabobank
(MBIA)........................................ A-1/VMIG1 3.80 9/12/97 1,000 1,000,000
New York City, New York, Municipal Water CP,
LOC: Westdeutsch, Bayer Landes H.............. A-1+/P-1 3.70 9/29/97 1,300 1,300,000
New York State Energy Research & Development
Authority, Pollution Control Revenue,
(Orange/Rockland Utilities), Series A
(AMBAC)....................................... A-1+/VMIG1 4.05* 7/7/97 1,400 1,400,000
New York State Local Government Assistance
Corp., Series A, LOC: Union Bank of
Switzerland, Credit Suisse.................... A-1+/VMIG1 4.00* 7/7/97 1,500 1,500,000
New York, New York General Obligation, LOC:
Morgan Guaranty............................... A-1+/VMIG1 4.15* 7/1/97 200 200,000
New York, New York General Obligation, Series
B............................................. A-1+/VMIG1 5.50* 7/1/97 300 300,000
Oyster Bay, New York Bond Anticipation Notes.... NR/NR 4.25* 10/3/97 1,000 1,001,208
------------
11,207,072
------------
</TABLE>
Continued
16
<PAGE> 17
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
NORTH CAROLINA -- 2.3%
North Carolina Educational Facilities, Finance
Agency Revenue, (Duke University)............. A-1+/VMIG1 4.07%* 7/7/97 $ 1,700 $ 1,700,000
Raleigh Durham, North Carolina Airport
Authority, Special Facilities Revenue, Series
A, (American Airlines, Inc.) LOC: Royal Bank
of Canada..................................... A-1+/NR 4.10* 7/7/97 300 300,000
------------
2,000,000
------------
OKLAHOMA -- 1.2%
Tulsa, Oklahoma Parking Authority Revenue, First
Mortgage (Williams Center Project), Series A,
LOC: Nationsbank of Texas..................... NR/VMIG1 3.90* 5/15/07 1,000 1,000,000
------------
OREGON -- 0.6%
Oregon State Housing & Community Services,
Single Family Mortgages....................... NR/Aa2 3.95 5/14/98 500 500,000
------------
PENNSYLVANIA -- 5.2%
Montgomery County, Pennsylvania Pollution
Control Revenue, (PICO Energy), CP LOC:
Deutsche Bank................................. A-1+/P-1 3.85 8/20/97 2,000 2,000,000
North Umberland, Pennsylvania Industrial
Development Authority Revenue, (Merck
Project)...................................... A-1+/NR 4.38* 7/7/97 2,000 2,000,000
Temple University of the Commonwealth, System of
Higher Education, University Funding
Obligations................................... SP1+/NR 4.75 5/18/98 500 503,594
------------
4,503,594
------------
PUERTO RICO -- 1.7%
Puerto Rico Commonwealth Tax & Revenue
Anticipation Notes, Series A.................. SP1+/MIG1 4.00 7/30/97 500 500,071
Puerto Rico, Government Development Bank CP..... A-1+/P-1 3.80 8/21/97 1,000 1,000,000
------------
1,500,071
------------
TENNESSEE -- 0.6%
Metropolitan Government, Nashville & Davidson
County Health & Education, CP (Vanderbilt
University)................................... A-1+/VMIG1 3.95* 11/1/97 500 500,000
------------
</TABLE>
Continued
17
<PAGE> 18
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TEXAS -- 10.0%
Austin, Texas CP, Utility System, LOC: Morgan
Guaranty...................................... A-1+/P-1 3.75% 10/10/97 $ 500 $ 500,000
Brazos River, Texas Harbor Industrial
Development, (Dow Chemical) CP................ A-1/P-1 3.60 8/7/97 1,000 1,000,000
Dallas, Texas Area Rapid Transit, LOC: Credit
Suisse, Swiss Bank, CP........................ A-1/P-1 3.55 8/1/97 1,000 1,000,000
Gulf Coast, Texas Pollution Control Revenue
(Exxon), CP................................... A-1/P-1 3.80 7/30/97 1,000 1,000,000
Houston, Texas Series A, CP..................... A-1/P-1 3.75 11/14/97 400 400,000
Houston, Texas Water Systems Revenue Bonds...... AAA/Aaa 7.40 12/1/97 1,000 1,034,975
Port Corpus, Texas, INT of Corpus Christie
Authority of Nucus, Pollution Control Revenue
(Koch Retinery), CP........................... A-1+/P-1 3.85 9/10/97 695 695,000
Texas State Tax & Revenue Anticipation Notes.... SP1+/MIG1 4.75 8/29/97 2,550 2,554,022
Tom Green County, Texas Health Facilities
Development Authority (Universal Health
Services), LOC: Morgan Guaranty............... A-1+/NR 4.10* 7/7/97 600 600,000
------------
8,783,997
------------
UTAH -- 0.7%
Salt Lake County, Utah Pollution Control
Revenue, (SVC Station Holdings Project)....... A-1A+/P-1 4.10 7/1/97 600 600,000
------------
WASHINGTON -- 2.7%
Washington State General Obligation, Series 96B,
SPA Landesbank Hessen......................... A-1+/VMIG1 4.10 7/7/97 2,300 2,300,000
------------
WISCONSIN -- 3.5%
Milwaukee, Wisconsin Revenue School Order Notes,
Series B...................................... SP1+/MIG1 4.25 7/1/97 1,000 1,000,991
Wisconsin, LOC: West Deutsche, Bayer, Landes H,
CP............................................ SP1+/MIG1 3.75 9/12/97 2,000 2,000,000
------------
3,000,991
------------
</TABLE>
Continued
18
<PAGE> 19
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
---------------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
WYOMING -- 1.0%
Lincoln County, Wyoming Pollution Control
Revenue, (Exxon Project)...................... A-1+/P-1 4.10%* 11/1/14 $ 700 $ 700,000
Platte County, Wyoming Pollution Control
Revenue, LOC: Societe Generale................ NR/P-1 4.20* 7/1/97 200 200,000
------------
900,000
------------
Total Municipal Securities (cost $89,486,096)..... 89,486,096
------------
Total Investments (Amortized Cost
$89,486,096)(a) -- 103.1%....................... 89,486,096
Liabilities in excess of other assets (3.1)%...... (2,706,742)
------------
TOTAL NET ASSETS -- 100.0%........................ $ 86,779,354
============
</TABLE>
- ---------------
Percentages indicated are based on net assets of $86,779,354.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Floating or variable rate securities. Maturity date reflects the date in
which the interest rate resets. The rate resets daily, weekly, monthly, or
quarterly. The rate reflected is the rate as of June 30, 1997.
AMBAC = Insured by AMBAC Indemnity Corporation
NR = No Rating
LOC = Letter of Credit
See Notes to Financial Statements.
19
<PAGE> 20
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............................................. $ 89,486,096
Cash...................................................................................... 1,278
Interest receivable....................................................................... 644,411
Receivable for investments sold........................................................... 2,200,000
Receivable from capital shares issued..................................................... 1,118,458
Prepaid expenses.......................................................................... 51,993
-----------
Total assets................................................................................ 93,502,236
-----------
LIABILITIES
Dividends payable......................................................................... 91,252
Payable for securities purchased.......................................................... 3,424,175
Payable for capital shares redeemed....................................................... 3,091,984
Accrued expenses and other payables:
Advisory fees........................................................................... 7,214
Administration fees..................................................................... 2,886
Distribution fees....................................................................... 58,286
Other................................................................................... 47,085
-----------
Total liabilities........................................................................... 6,722,882
-----------
NET ASSETS.................................................................................. $ 86,779,354
===========
Shares Outstanding ($0.001 par value, 3 billion shares authorized).......................... 86,780,082
===========
Net Asset Value, Offering Price and Redemption Price per Share.............................. $1.00
====
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................ $ 86,780
Additional paid-in capital................................................................ 86,693,302
Accumulated net realized losses on investment transactions................................ (728)
-----------
Net Assets June 30, 1997.................................................................... $ 86,779,354
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
20
<PAGE> 21
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................. $1,637,230
Expenses
Advisory fees...................................................................... $ 45,482
Administration fees................................................................ 45,482
Special Management Services fees................................................... 45,566
Distribution fees.................................................................. 272,891
Custodian fees and expenses........................................................ 39,761
Registration fees.................................................................. 49,270
Legal fees......................................................................... 5,927
Insurance expense.................................................................. 3,630
Reports to shareholders............................................................ 7,135
Transfer agent fees and expenses................................................... 11,095
Amortization of organization expenses.............................................. 1,408
Audit fees......................................................................... 7,645
Directors' fees.................................................................... 1,802
Other expenses..................................................................... 183
---------
Total expenses before fee waivers and expense reimbursements..................... 537,277
Less: Fee waivers and expense reimbursements..................................... (202,009)
---------
Total Expenses....................................................................... 335,268
----------
Net Investment Income................................................................ 1,301,962
REALIZED LOSSES FROM SECURITIES TRANSACTIONS
Net realized loss from securities transactions..................................... (728)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. $1,301,234
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
21
<PAGE> 22
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
from October
Six Months 7,
Ended 1996 through
June 30, December 31,
1997 1996*
------------- --------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income.................................................... $ 1,301,962 $ 558,131
Net realized loss from securities transactions........................... (728) --
------------- --------------
Net increase in net assets resulting from operations................... 1,301,234 558,131
------------- --------------
Dividends to shareholders from net investment income....................... (1,301,962) (558,131)
------------- --------------
Portfolio Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed...................................... 239,082,658 166,978,246
Net asset value of shares issued to shareholders in reinvestment of
dividends.............................................................. 1,259,808 460,012
Cost of shares redeemed.................................................. (233,971,656) (87,028,986)
------------- --------------
Net increase in net assets from Portfolio share transactions........... 6,370,810 80,409,272
------------- --------------
Total Increase............................................................. 6,370,082 80,409,272
NET ASSETS
Beginning of period...................................................... 80,409,272 --
------------- --------------
End of period............................................................ $ 86,779,354 $ 80,409,272
============ ===============
SHARE TRANSACTIONS:
Issued................................................................... 239,082,658 166,978,246
Reinvested............................................................... 1,259,808 460,012
Redeemed................................................................. (233,971,656) (87,028,986)
------------- --------------
Change in shares......................................................... 6,370,810 80,409,272
============ ===============
</TABLE>
- ---------------
* Period from commencement of operations.
See Notes to Financial Statements.
22
<PAGE> 23
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (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 Correspondent
Cash Reserves Money Market Portfolio (the "Money Market Portfolio") and the
Correspondent Cash Reserves Tax Free Money Market Portfolio (the "Tax Free Money
Market Portfolio"), which commenced operations on October 7, 1996 (together the
"Portfolios"). The Money Market 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 by making investments
in short-term money market obligations. The Tax Free Money Market Portfolio
seeks to provide investors with as high a level of current income exempt from
Federal income tax as is consistent with the preservation of capital and the
maintenance of liquidity by investing in short-term municipal obligations.
Before December 26, 1996, the Money Market Portfolio issued two classes of
shares (Retail shares and Institutional shares). On December 26, 1996 the
Portfolio terminated and redeemed its offering of Institutional shares.
Currently both Portfolios have only one class of shares.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
each 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 and Restrictions
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. The Portfolios
may not a) purchase any instrument with a remaining maturity greater than 397
days 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 sale of investments are calculated on the identified cost basis.
Interest income, including accretion of discount and amortization of premium on
investments, is accrued daily.
23
<PAGE> 24
C) Repurchase Agreements
The Money Market 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 repurchase price. In the event of the seller's default of the
obligation to repurchase, the Money Market 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 have been deferred and are being amortized by the
Portfolios on a straight-line basis over five years. Direct expenses of the
Portfolios are borne solely by each Portfolio and general Fund expenses are
allocated among the Fund's respective investment portfolios based on the
relative net assets of each Portfolio.
E) Federal Income taxes
It is the policy of the Portfolios to meet the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies and to
distribute substantially all of their income to shareholders. Therefore, no
federal income tax provision is required.
At December 31, 1996, the Money Market Portfolio had capital loss
carryovers of approximately $975,876 which are 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. The Tax Free
Money Market Portfolio did not have any capital loss carryover available.
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. Reclassifications are made to the Portfolios' capital accounts to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Net investment income, net realized
gains and net assets are not affected by this change.
G) Other
Each Portfolio maintains a cash balance with its custodian and receives a
reduction of their custody fees for the amounts of interest earned on such
uninvested cash balance. For financial reporting purposes, custody fees and
expenses paid by third parties were increased by $1,900 for the Money Market
Portfolio and $0 for the Tax Free Money Market Portfolio for the six months
ended June 30, 1997. There was no effect on net investment income. The
Portfolios could have invested such cash amounts in an income producing asset if
they had not agreed to a reduction of fees or expenses under the expense offset
arrangement with their custodian.
24
<PAGE> 25
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Mitchell Hutchins Asset Management Inc. ("Mitchel Hutchins"), a
wholly-owned subsidiary of PaineWebber Incorporated ("PaineWebber"), serves as
the Portfolios' investment adviser. BISYS Fund Services Limited Partnership
("BISYS") serves as the Portfolios' administrator and distributor of Portfolio
shares. BISYS is a wholly-owned subsidiary of The BISYS Group, Inc.
As investment adviser, Mitchell Hutchins supervises and assists in the
overall operations of the Portfolios. 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
each Portfolio. For the six months ended June 30, 1997, there were no waivers
with respect to the Money Market Portfolio and Mitchell Hutchins waived fees of
$14,024 with respect to the Tax Free Money Market Portfolio.
As administrator, BISYS assists in supervising the operations of the
Portfolios. For its services, BISYS is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
each Portfolio. For the six months ended June 30, 1997, there were no waivers
with respect to the Money Market Portfolio and BISYS waived fees of $38,201 with
respect to the Tax Free Money Market Portfolio.
Under the terms of the Special Management Services Agreement, the
Portfolios have agreed to pay Mitchell Hutchins and BISYS each a monthly fee at
the annual rate of 0.05% of the average daily net assets of each Portfolio for
certain services, other than those provided pursuant to the Portfolios'
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 PaineWebber. Mitchell Hutchins and BISYS together waived
$521,981 for the Money Market Portfolio and $45,566 for the Tax Free Money
Market Portfolio for the six months ended June 30, 1997, under the Special
Management Services Agreement, which represented 100% of the fee charged.
The Portfolios have adopted a Distribution Plan pursuant to Rule 12b-1
under the Act. Pursuant to the Distribution Plan, the Portfolios are authorized
to pay Correspondent Services Corporation (CSC), an affiliate of PaineWebber,
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 average daily net
assets of each Portfolio's 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 Portfolios; 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, 1997, the Money Market Portfolio
incurred expenses of $3,132,002 and the
25
<PAGE> 26
Tax Free Money Market Portfolio incurred expenses of $272,891 pursuant to the
Distribution Plan. For the six months ended June 30, 1997, CSC waived fees of $0
for the Money Market Portfolio and $104,218 for the Tax Free Money Market
Portfolio.
Certain Directors and officers of the Fund are "affiliated persons" (as
defined in the Act) of BISYS. 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 Money Market 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. The
Tax Free Money Market Portfolio invests substantially all of its assets in a
diversified portfolio of high quality municipal obligations.
The Money Market Portfolio had the following concentration by security type
at June 30, 1997 (as a percentage of total investments):
<TABLE>
<S> <C>
Commercial Paper.................. 50.1%
Certificates of Deposit........... 18.0%
Short Term Corporate
Obligations..................... 11.4%
U.S. Government Obligations and
Agency Obligations.............. 7.1%
Bank Notes........................ 5.1%
Other............................. 8.3%
---
100.0%
===
</TABLE>
The issuers' abilities to meet their obligations may be affected by
domestic and foreign economic, regional and political developments.
26
<PAGE> 27
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992
SIX MONTHS ------------ ------------ ------------ ------------ ------------
ENDED
JUNE 30,
1997
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 0.9991 $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000 $ 1.0000
---------- ---------- -------- -------- -------- --------
Income from investment
operations
Net investment income....... 0.0229 0.0462 0.0512 0.0340 0.0245 0.0306
Net realized gains (losses)
from securities
transactions.............. -- 0.0005 0.0011 (0.0024) (0.0001) --
---------- ---------- -------- -------- -------- --------
Net income from investment
operations................ 0.0229 0.0467 0.0523 0.0316 0.0244 0.0306
---------- ---------- -------- -------- -------- --------
Dividends from net investment
income...................... (0.0229) (0.0462) (0.0512) (0.0340) (0.0245) (0.0306)
---------- ---------- -------- -------- -------- --------
Net change in net asset
value..................... -- 0.0005 0.0011 (0.0024) (0.0001) --
---------- ---------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD...................... $ 0.9991 $ 0.9991 $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000
========== ========== ======== ======== ======== ========
Total Return................. 2.31%(a) 4.72% 5.24% 3.45% 2.48% 3.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)................... $1,085,260 $1,007,265 $779,011 $458,092 $331,210 $267,895
Ratio of expenses to average
net assets................ 0.95%(b) 0.88% 0.85% 0.94% 1.02% 1.12%
Ratio of net investment
income to average net
assets.................... 4.62%(b) 4.65% 5.14% 3.47% 2.44% 3.01%
Ratio of expenses to average
net assets *.............. 1.05%(b)** 1.01%** 1.03% 1.12% 1.20% 1.35%
Ratio of net investment
income to average net
assets *.................. 4.52%(b) 4.53% 4.96% 3.29% 2.26% 2.78%
</TABLE>
- ---------------
* 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, 1997 and the year ended December 31,
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.
See Notes to Financial Statements.
27
<PAGE> 28
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS FROM OCTOBER 7,
ENDED 1996 THROUGH
JUNE 30, DECEMBER 31,
1997 1996 *
---------- ---------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................................ $ 1.0000 $1.0000
------- -------
Income from investment operations
Net investment income..................................................... 0.0142 0.0100
------- -------
Net income from investment operations..................................... 0.0142 0.0100
------- -------
Dividends from net investment income........................................ (0.0142) (0.0100)
------- -------
Net change in net asset value............................................... -- --
------- -------
NET ASSET VALUE, END OF PERIOD.............................................. $ 1.0000 $1.0000
======= =======
Total Return................................................................ 1.43%(a) 0.66%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................................... $ 86,779 $80,409
Ratio of expenses to average net assets................................... 0.74%(b) 0.74%(b)
Ratio of net investment income to average net assets...................... 2.86%(b) 2.80%(b)
Ratio of expenses to average net assets **................................ 1.18%(b) 1.20%(b)(c)
Ratio of net investment income to average net assets **................... 2.42%(b) 2.34%(b)
</TABLE>
- ---------------
* Period from commencement of operations.
** 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.
(a) Not annualized.
(b) Annualized.
(c) During the year ended December 31, 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.
See Notes to Financial Statements.
28
<PAGE> 29
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
BISYS FUND SERVICES, LLP
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
DISTRIBUTOR
BISYS FUND SERVICES, LLP
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
CORRESPONDENT CASH
---------------------------------------------
--------------------------------------------
RESERVES
LOGO
SEMI-ANNUAL REPORT
------------------
JUNE 30, 1997
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
(LOGO)
COICCRD97SA 8/97
