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[AMERISTAR MUTUAL FUNDS LOGO]
AMERISTAR PRIME
MONEY MARKET PORTFOLIO
AMERISTAR U.S. TREASURY
MONEY MARKET PORTFOLIO
AMERISTAR CAPITAL
GROWTH PORTFOLIO
AMERISTAR DIVIDEND
GROWTH PORTFOLIO
SEMI-ANNUAL REPORT
AMERISTAR CORE
INCOME PORTFOLIO
AMERISTAR LIMITED
DURATION INCOME PORTFOLIO
AMERISTAR LIMITED DURATION
U.S. GOVERNMENT PORTFOLIO
AMERISTAR TENNESSEE TAX
EXEMPT BOND PORTFOLIO
AMERISTAR LIMITED DURATION
TENNESSEE TAX FREE PORTFOLIO
JUNE 30, 1997
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FUND FACTS
The AmeriStar Funds provide shareholders with a variety of features to
make investing in the Portfolios easy, convenient and manageable.
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AMERISTAR FUND FEATURES AMERISTAR FUND BENEFITS
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PROFESSIONAL INVESTMENT The investment managers at First American National Bank are
MANAGEMENT experienced investment professionals who oversee the
investments in each mutual fund.
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LOW MINIMUM INVESTMENT Initial investments in the Portfolios can be as low as
$1,000.
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DEDICATED CUSTOMER Account information is available from helpful
SERVICE representatives. Just call 1-800-852-0045.
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AUTOMATIC INVESTMENTS Investments can be made once or twice a month with automatic
transfers from your checking account to your Portfolio
account.
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DOLLAR COST AVERAGING Dollar Cost Averaging is a means of investing by which you
invest a fixed dollar amount on a consistent basis. You
invest whether the financial markets are high or low. As a
result, you buy more shares when prices are low and fewer
when prices are high. In this way, you can achieve a lower
average cost per share.*
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AUTOMATIC WITHDRAWALS Automatic withdrawals from your Portfolio account can be
made and credited to any account you designate.
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FREE EXCHANGE PRIVILEGES Shares of a Portfolio can be exchanged into shares of other
AmeriStar Portfolios at no cost.**
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REGULAR, INFORMATIVE You will receive account statements after each transaction,
STATEMENTS AND REPORTS plus regular financial reports highlighting performance and
investment strategies.
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DIVIDEND REINVESTMENT Dividend income and capital gains can be reinvested
automatically in additional shares of a Portfolio.
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DAILY REDEMPTIONS Shares are redeemable each business day (at the net asset
value per share, which may be worth more or less than your
original cost, next determined after receipt of your
redemption request) by mail, telephone or bank wire.
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* Dollar Cost Averaging does not assure a profit and does not protect against loss in
declining markets. You should consider your financial ability to continue your
investment program during periods of extreme share price fluctuations.
** Exchange privileges may be modified or discontinued by the Portfolios at any time.
Upon redemption, shares may be worth more or less than their original cost.
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HELPING PEOPLE PLAN FOR A BRIGHTER FUTURE.(SM)
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LETTER FROM THE CHIEF INVESTMENT OFFICER
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To Our Shareholders:
I'm pleased to present the AmeriStar Mutual Fund's semiannual report for the six
months ended June 30, 1997.
"How Sweet It Is," exclaimed the late Jackie Gleason at the beginning of his
weekly television variety show in the 1960s. That description could be used to
characterize the fundamentals of the U.S. economy and the financial markets in
the summer of 1997. The economy's rate of growth has subsided to a moderate
level; inflation remains comparatively low; the bond market is rallying as
interest rates decline; and the stock market continues to set records.
Things are so good that it may be appropriate to be even more alert and well
prepared, since this is when negative surprises can have the most dramatic
impact. The investment community is happy and puzzled that, despite a seven-year
economic expansion, inflation is not yet a problem. As long as inflation
expectations remain low, the bond market should continue to provide average
returns.
Meanwhile, corporate profits are continuing to advance at a healthy clip; the
federal budget deficit is shrinking; and a capital gains tax cut has been signed
by the President. After peaking in mid-April, interest rates began to fall.
Between mid-April and mid-June, the stock market rose 23%, one of the sharpest
advances for a two-month period in this century. If the market holds these gains
through the end of 1997, it will mark the third consecutive year of 20% plus
gains, a feat accomplished only one other time this century.
The financial services, health-care and technology sectors outperformed the S&P
500 Index for the six-month period, while consumer cyclicals, basic materials
and utilities underperformed. Large-capitalization stocks continued to
outperform the small- and mid-cap universe, but by a smaller margin than in
1996. Growth stocks outperformed value stocks.
However, the lofty valuation of the stock market leaves no room for
disappointment on any of the major variables -- interest rates, inflation and
profits. Thus, the market is highly vulnerable to negative news. As a result, we
remain defensive in our investment strategies, taking profits in stocks that we
believe have become overvalued. For reinvestment, we are seeking out those
companies that have sound financial characteristics but, for one reason or
another, have lagged the market.
To give you even more investment alternatives, we have introduced three new
mutual funds during the period, the Dividend Growth Portfolio, the Limited
Duration Tennessee Tax Free Portfolio and the Limited Duration U.S. Government
Portfolio. We're very happy to report that the Dividend Growth Portfolio and the
Capital Growth Portfolio handily beat their investment benchmarks during the
period.
Thanks for the opportunity to help you meet your investment goals.
Sincerely,
/s/ Frederick S. Crown Jr., CFA
Frederick S. Crown Jr., CFA
Chief Investment Officer
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[PHOTO OF JAQUELINE R. LUNDSFORD] [PHOTO OF DONALD F. TURK]
DONALD F. TURK, CFA
JACQUELINE R. LUNSFORD, CFA Portfolio Manager
Portfolio Manager U.S. Treasury Money
Prime Money Market Portfolio Market Portfolio
INVESTMENT GOAL
The AmeriStar money market portfolios seek to provide as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. Each Portfolio seeks its objective by investing in:
PRIME MONEY MARKET PORTFOLIO -- A broad range of U.S. Government, bank and
corporate short-term money-market obligations.
U.S. TREASURY MONEY MARKET PORTFOLIO -- U.S. Treasury securities, other
obligations that are guaranteed as to principal and interest by the U.S.
Government and related repurchase agreements.*
Q. WHAT FACTORS AFFECTED THE PERFORMANCE OF THE MONEY MARKET FUNDS?*
A. Mixed economic indicators and the uncertainty of if and when the Federal
Reserve Board would push interest rates higher kept short-term rates fairly
stable during much of the period. When the Fed raised rates 0.25% on March 25,
investors initially believed that the move would be just one of several. Since
the average maturities of the Funds were fairly short at the end of March, the
Funds were able to extend their maturities and quickly take advantage of the
rate increase. The Fed chose not to increase rates a second time at its May
meeting.
Q. WHAT FACTORS COULD AFFECT THE FUNDS IN THE MONTHS AHEAD?
A. The main factor affecting the Funds, of course, will be the direction of
interest rates. Currently, the continuing strength of the economy has not
precipitated a commensurate increase in inflation, and the Federal Reserve seems
inclined to just watch the situation for now. Any indications of inflation
pressures could cause the Federal Reserve to re-evaluate its position. Our
strategy will continue to keep maturities shorter than average, since yields on
longer maturities are not significantly higher -- and in some cases are actually
lower -- than yields on shorter maturity securities.
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YIELDS (AS OF JUNE 30, 1997)
INVESTOR SHARES
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PRIME TREASURY
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7-Day Yield 4.87% 4.71%
30-Day Yield 4.86% 4.70%
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TRUST SHARES
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<CAPTION>
PRIME TREASURY
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7-Day Yield 5.12% 4.96%
30-Day Yield 5.11% 4.96%
Yields will vary with market conditions, and past
performance is no guarantee of future results.
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Persistently large cash balances held by money market managers industry-wide,
combined with low issuance, continues to contribute to the low interest-rate
environment. This is especially true in the Treasury market, where a decrease in
the government's Treasury bill issuance has caused those rates to decline
sharply over the past few months. In the absence of Fed action, it is likely
that rates paid on short-term instruments will actually decline rather than
remain stable due to these supply/demand factors.
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* An investment in the AmeriStar Money Market Portfolios is neither insured nor
guaranteed by the U.S. Government. Yields will fluctuate, and there is no
assurance that the Portfolios will be able to maintain a stable net asset
value of $1.00 per share.
2
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[PHOTO OF CHARLES WINGER]
CHARLES WINGER
Portfolio Manager
Capital Growth
Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with the potential to achieve
long-term capital growth by investing primarily in the equity securities of
domestic issuers whose earnings are growing faster than the economy as a
whole. It invests primarily in large U.S. companies with market
capitalizations of at least $500 million. This Portfolio is suitable for
investors who are investing for the long term and are comfortable assuming the
additional risk of investing in stocks in exchange for potentially higher
total returns.
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Q. HOW WOULD YOU ASSESS THE PORTFOLIO'S PERFORMANCE FOR THE PERIOD?
A. We're very pleased with our performance, which exceeded the average of growth
funds, as measured by Lipper Analytical. The AmeriStar Capital Growth
Portfolio's total return was 16.21%* for the six months ended June 30, 1997. In
comparison, the Lipper Growth Fund Index was up 15.40%, and the Standard &
Poor's 500 Index was up 20.62%. The Lipper Growth Fund Index is an index of
managed funds that is generally representative of growth stock funds. The S&P
500 is an unmanaged index that is considered to be generally representative of
the U.S. stock market as a whole.
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. Growth stocks continued to do well relative to other sectors of the market.
Another positive trend was the substantial rally in the bond market. After
boosting short-term interest rates a quarter point on March 25, the Federal
Reserve Board decided against a second interest rate increase in May. As a
result, our interest-sensitive stocks in the financial services industry
outperformed other stocks that are less sensitive to interest rates. Other areas
that performed well included pharmaceutical and technology stocks.
Q. WHERE DO YOU SEE THE NEXT AREAS OF GROWTH?
A. Recently, we have added funds to our telecommunications area. Stocks such as
Lucent Technologies (2.0% of the portfolio) and BellSouth (2.3%) have performed
strongly and continue to appear very attractive.** With energy prices coming
down, we also have begun to add transportation companies. Recently, we added
Southwest Airlines (2.2%) because we like their discount strategy and strong
management.
Because of the continuing trend toward consolidation, we continue to emphasize
financial services. Recently, we added Wachovia Bank (2.1%), a very well-run
bank that has lagged other banks in stock price performance. The company has
made some excellent banking acquisitions in the Virginia market. We would prefer
to see banks buy other banks and not get into the brokerage industry. That type
of diversification recalls the banking industry's disastrous move into real
estate in the 1970s at the real estate market's peak.
Q. WHAT AREAS ARE YOU AVOIDING?
A. We've avoided the consumer cyclical stocks such as the retailers, as well as
basic industry companies that are susceptible to an economic slowdown. In
addition, as oil prices softened in the second quarter, we began to cut back on
energy companies. As a defensive measure, we have added another ten companies in
an effort to further diversify the portfolio.
Q. WHAT'S YOUR OUTLOOK?
A. Last December, Federal Reserve Chairman Alan Greenspan accused investors of
"irrational exuberance" in their desire to own stocks. However, we believe that
investor exuberance is quite rational. The economic environment is truly ideal.
Inflation has come down -- and we may actually be in a deflationary environment.
We have had favorable corporate profit growth in the first and second quarters.
Due to the robust economy and the tax revenues it generates, the federal budget
deficit is shrinking faster than anyone expected. In addition, the capital gains
tax rate will be cut, which is favorable for growth stocks in particular.
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* Including the 3.00% sales load, the Portfolio's return was 12.72% for the
period.
** The portfolio's composition is subject to change.
3
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[PHOTO OF JAY BAUMGARDNER]
JAY BAUMGARDNER
Portfolio Manager
Dividend Growth
Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with current income and capital
appreciation. This Portfolio will invest primarily in dividend-paying equity
securities of domestic issuers that are expected to provide reasonable income
and may have capital appreciation potential.
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Q. WHAT IS THE PURPOSE OF THIS NEW FUND?
A. Our goal is to provide above-average income first and capital appreciation
second. The types of stocks in the portfolio are generally household names that
pay a significant dividend. Examples include Bristol-Myers Squibb (2.1% of the
portfolio), Exxon (1.2%) and McGraw-Hill (1.9%).** We would like to achieve a
dividend yield in the Portfolio of one percentage point over the S&P 500 Index,
which is currently yielding 1.7%. Although the Portfolio began operations on
February 28, 1997, it was actually converted from an existing common trust fund
that had been in existence for more than ten years.
Q. HOW WOULD YOU ASSESS THE PORTFOLIO'S PERFORMANCE FOR THE PERIOD?
A. Because of some very good stock selections in the first quarter, the
portfolio's total return for the six months ended June 30, 1997 was 18.26%,*
substantially greater than the Lipper Equity Income Index, which was up 15.40%.
The Lipper Equity Income Index is an unmanaged index generally representative of
funds that invest over 60% of assets in equities.
Since we are trying to provide above-average equity income, we are going to have
a high percentage of energy, financial and utility shares. Energy and
particularly financial stocks were generally strong in the first half. In
addition, a stock such as McGraw-Hill (1.9%), which is in the college textbook
publishing business, is benefiting from demographic trends. Texas and
California, the two biggest markets for educational materials, are in the
process of ordering new books for students. The stock was up 32% during the
period.
Q. WHAT IS THE PORTFOLIO'S STRATEGY FOR ACHIEVING ABOVE-AVERAGE DIVIDEND INCOME?
A. In addition to searching for large-and mid-cap stocks paying above-average
dividends, we are also investing in convertible securities and real estate
investment trusts (REITs). For example, Equity Residential Properties (1.9%),
the largest apartment REIT in the country, is producing a current yield of 5.2%.
We also own a convertible bond issued by Hilton Hotels (0.9%) that offers a 3%
yield and most of the appreciation potential of Hilton's common stock. However,
we chose not to invest in the stock because it does not pay a dividend. It is
important to be very selective in purchasing convertible bonds, because there
are many convertibles in the marketplace issued by companies that are not doing
well.**
Q. WHAT IS YOUR STRATEGY FOR THE NEXT SIX MONTHS?
A. We're starting to realize some profits in the large-capitalization companies
whose prices have risen sharply. We're reinvesting those profits in sectors and
stocks that appear relatively undervalued. For example, we recently added Duke
Energy (2.0%), a North Carolina utility, which has risen just 5% this year. The
stock offers a 4% dividend yield, and we believe that the company has good
long-term prospects. Utilities are defensive when a market correction occurs.
We're also starting to emphasize more mid-cap companies that have good business
niches. An example is Johnson Controls (1.5%), a manufacturer of automobile
parts, heating, air conditioning and other climate controls. We believe that our
strategy of emphasizing dividends will help to cushion the Portfolio in the
event of a stock market sell-off later in 1997.
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* Including the 3.00% sales load, the Portfolio's return was 14.68% for the
period.
The quoted performance of the AmeriStar Dividend Growth Portfolio includes
performance of certain collective trust fund ("Commingled") accounts advised
by First American National Bank, for periods dating back to 12/31/86 and
prior to the mutual fund's commencement of operations on 2/28/97, as
adjusted to reflect the expenses associated with the mutual funds. The
Commingled accounts were not registered with the Securities and Exchange
Commission and, therefore, were not subject to the investment restrictions
imposed by law on registered mutual funds. If the Commingled accounts had
been registered, the Commingled accounts' performance may have been
adversely affected. The performance shown reflects the deduction of fees for
value-added services associated with a mutual fund, such as investment
management and accounting fees. The performance also reflects reinvestment
of all dividends and capital-gains distributions.
** The portfolio's composition is subject to change.
4
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[PHOTO OF DONALD F. TURK]
DONALD F. TURK
Portfolio Manager
Core Income
Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with current income without assuming
undue risk. It invests primarily in investment-grade U.S. dollar-denominated
fixed-income securities of domestic and foreign issuers with maturities of any
length. This Portfolio is suitable for investors seeking regular monthly
income without undue risk to principal.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1997?
A. Due to a volatile interest rate environment in the first quarter, the Core
Income Portfolio produced a total return of 2.14%* for the six-months ended June
30, 1997. In comparison, the Merrill Lynch Corporate/Government Index, an
unmanaged benchmark, produced a total return of 2.79%. The Merrill Lynch
Corporate/Government Master Index is generally representative of U.S. Treasury
and Agency bonds and investment-grade corporate bonds. Total return equals yield
plus or minus the change in the Portfolio's net asset value during the period.
The total return percentage is not annualized.
It is also important to recognize income yield to shareholders. As of June 30,
1997, the Portfolio's 30-day SEC yield was 5.86%** at NAV, compared to 5.30% at
the end of 1996. The yield percentage is annualized.
Q. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE?
A. Two factors affected the Portfolio: the stronger-than-expected economy in the
first quarter and the volatile interest rate environment. In the first quarter,
the Gross Domestic Product grew a sizzling 5.9%. In response, the Federal
Reserve Board increased short-term interest rates from 5.25% to 5.50%.
Meanwhile, the 30-year U.S. Treasury bond peaked at 7.17% before easing to 6.78%
at June 30, 1997. Bond prices move inversely to interest rates.
The reason for the interest rate volatility is that since World War II, economic
expansions have been followed by higher inflation, so many bond investors
thought rates would move higher. Yet, we're in the seventh year of an expansion,
and inflation is actually coming down. Another thing that is unusual is that the
Federal Reserve Board typically raises interest rates more than once. Investors
were expecting the Fed to boost rates at least one more time during the second
quarter, but rates pushed lower after the Fed made no changes.
Q. WHAT WAS YOUR STRATEGY DURING THE PERIOD?
A. In the corporate portfolio, we were able to add yield by purchasing bonds
issued by IBM (1.7% of the portfolio) and Reliance Electric (2.0%). In one
instance, we had a choice between IBM and Eli Lilly; we sold Lilly and bought
IBM because it was yielding 0.60% over Treasuries (whereas Eli Lilly was
yielding only 0.35% over Treasuries). And yet, both companies have fairly
similar credit ratings.***
We have avoided the tobacco bonds for a long time for obvious reasons. Even with
the recent agreement between the states and the tobacco companies, we don't
think we are adequately compensated for the risk of owning them. The details of
the agreement are still too uncertain.
Q. WHAT IS YOUR OUTLOOK?
A. From a credit standpoint, the financial and industrial sectors are doing very
well. Many more bonds have received credit upgrades than downgrades. A lot of
these companies have issued stock and have bolstered the equity on their balance
sheets.
Nevertheless, the financial markets remain event driven and volatile. A negative
economic report or a sudden upward spike in inflation could again prompt the Fed
to increase interest rates as they did in March. Even the perception of a
possible move by the Fed would likely be enough to send yields toward the upper
end of our expected trading range. However, barring a strong resurgence in the
economy or in the rate of inflation, we feel that the previous high of 7.17% for
the 30-year Treasury bond will hold.
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* Including the 3.00% sales load, the Portfolio's return was -0.93% for the
period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been 5.61% at NAV.
*** The portfolio's composition is subject to change.
5
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[PHOTO OF DONALD F. TURK]
DONALD F. TURK
Portfolio Manager
Limited Duration
Income Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with current income without assuming
undue risk. It invests primarily in investment-grade, U.S. dollar-denominated
fixed-income securities of domestic and foreign issuers that generally have a
duration of under four years. This Portfolio is suitable for investors seeking
regular monthly income without undue risk to principal.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1997?
A. Due to rising interest rates in the first quarter, the Limited Duration
Income Portfolio produced a total return of 2.6% for the six-months ended June
30, 1997.* In comparison, the Merrill Lynch 1-5 Year Corporate/Government Index,
an unmanaged benchmark, produced a total return of 2.9%. The index is a broad
performance measure of bonds with maturities in the one-to-five-year range.
Total return equals yield plus or minus the change in the Portfolio's net asset
value during the period. The total return percentage is not annualized.
It is also important to recognize income yield to shareholders. As of June 30,
1997, the Portfolio's 30-day SEC yield was 5.65%** at NAV compared to 5.22% as
of December 31, 1996. The yield percentage is annualized.
Q. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE?
A. Two factors affected the Portfolio: the stronger-than-expected economy in the
first quarter and the volatile interest rate environment. In the first quarter,
the Gross Domestic Product grew a sizzling 5.9%. In response, the Federal
Reserve Board boosted short-term interest rates from 5.25% to 5.50%. Meanwhile,
the five-year U.S. Treasury bond moved from a yield of 6.21% on December 31,
1996, to 6.86% on April 14, 1997. Because the economy slowed in the second
quarter, and the Fed decided not to raise short-term interest rates a second
time, and the five-year U.S. Treasury bond yield eased to 6.14% by June 30,
1997. Bond prices move inversely to interest rates.
The reason for the interest-rate volatility is that since World War II, economic
expansions have been followed by higher inflation, so many investors thought
that rates would move higher. Yet, we're in the seventh year of an expansion,
and inflation is actually coming down. Another thing that is unusual is that the
Federal Reserve Board typically raises interest rates more than once. Investors
were expecting the Fed to boost rates at least one more time during the second
quarter, but rates pushed lower after the Fed made no changes.
Q. WHAT STRATEGIES HAVE YOU EMPLOYED?
A. In an effort to boost the Portfolio's yield, we have shifted some money away
from U.S. Government bonds and into high-grade corporate bonds. Some of the more
attractive names are in banking and finance. For instance, we recently sold some
U.S. Treasury bonds to purchase Bankers Trust bonds (1.45% of the portfolio) due
in 2001. In doing so, we picked up nearly one percentage point in yield.***
Q. HOW HAS THE SHRINKING FEDERAL BUDGET DEFICIT AFFECTED THE MARKET?
A. Consider that foreign buyers purchased $268 billion worth of U.S. Treasury
securities in the first quarter, during which time the U.S. Government issued
only $72 billion in new bonds. Interest rates are falling because the national
debt is growing less rapidly and foreigners are coming in and soaking up what
debt there is. The Japanese will continue to buy our bonds as long as their
ten-year treasury pays only 2.5% while ours pays more than 6%.
Q. WHAT IS YOUR OUTLOOK?
A. It depends on the strength of the economy. The bond market performs well as
long as GDP growth stays in the 2% to 2.5% range. But if we start growing at 3%
to 4%, particularly since the economy is at full employment already, then
interest rates will likely rise again.
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* Including the 3.00% sales load, the Portfolio's return was - 0.54% for the
period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been 5.40% at NAV.
*** The portfolio's composition is subject to change.
6
<PAGE> 9
[PHOTO OF DONALD F. TURK]
DONALD F. TURK
Portfolio Manager
Limited Duration
U.S. Government
Portfolio
===============================================================================
INVESTMENT GOAL
The Portfolio seeks to provide investors with high current income without
assuming undue risk. This Portfolio will invest primarily in a portfolio of
U.S. Government securities that, under normal market conditions, has a
duration that approximates that of the Merrill Lynch Government 1- to 5-Year
Bond Index.
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Q. WHAT IS THE PURPOSE OF THIS NEW FUND?
A. This is an opportunity to invest in a relatively short-term fund of U.S.
Government, agency and selected mortgage-backed securities. Without corporate
securities, the Portfolio offers higher credit quality but somewhat lower yield.
The average maturity of the Portfolio is about three years.
Although this is a new mutual fund, it is not a new portfolio. The Limited
Duration U.S. Government Portfolio began operations on February 28, 1997,
through a transfer of assets from a trust fund managed by First American
National Bank, which used substantially the same investment objective and
methods.
Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1997?
A. The Limited Duration U.S. Government Portfolio produced a total return of
2.3%.* In comparison, the Merrill Lynch 1-5 Year Government Bond Index, an
unmanaged benchmark, produced a total return of 2.8%. The index is a broad
performance measure of government bonds with maturities in the one-to-five-year
range. Total return equals yield plus or minus the change in the Portfolio's net
asset value during the period. The total return percentage is not annualized.
It is also important to recognize income yield to shareholders. As of June 30,
1997, the Portfolio's 30-day SEC yield at NAV was 5.25%.** The yield percentage
is annualized.
Q. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE?
A. Two factors affected the Portfolio: the stronger-than-expected economy in the
first quarter and the volatile interest rate environment. In the first quarter,
the Gross Domestic Product grew a sizzling 5.9%. In response, the Federal
Reserve Board boosted short-term interest rates from 5.25% to 5.50%. Meanwhile,
the five-year U.S. Treasury bond moved from a yield of 6.21% on December 31,
1996, to 6.86% on April 14 and back down to 6.14% on June 30, 1997. Bond prices
move inversely to interest rates.
Q. WHAT IS YOUR STRATEGY?
A. Because interest rates fell in the second quarter, one of our goals has been
to find ways to increase the Portfolio's yield. Agency securities and bonds that
are callable typically offer higher yields. In the second quarter, interest
rates have been falling. As a result, we de-emphasized mortgage-backed
securities -- particularly those with higher coupons -- because they have a
tendency to be refinanced when rates fall.***
Q. WHAT IS YOUR OUTLOOK?
A. There are four developments that bode well for the bond market and lower
interest rates. One is the globalization of the economy. Investments should not
rely solely upon domestic capacity, whether it's labor, materials or
manufacturing capacity. That has had a great disinflationary impact on our
markets. The second is the revolutionary impact of computer technology on cost
efficiencies. Thirdly, the change in demographics is very real. With the aging
population, people are saving and investing huge amounts of money. Finally,
there has been a major change in inflationary psychology. Fifteen years ago,
people thought that you better buy now or the price is going up. Now, you've got
the reverse. Why buy now when the price may be lower tomorrow? This is why we're
in the seventh year of an economic recovery and the consumer price index is
falling.
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* Including the 3.00% sales load, the Portfolio's return was - 0.81% for the
period.
The quoted performance of the AmeriStar Limited Duration U.S. Government
Portfolio includes performance of certain collective trust fund
("Commingled") accounts advised by First American National Bank for periods
dating back to 12/31/86 and prior to the mutual fund's commencement of
operations of 2/28/97, as adjusted to reflect the expenses associated with
the mutual funds. The Commingled accounts were not registered with the
Securities and Exchange Commission and, therefore, were not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled accounts had been registered, the Commingled accounts'
performance may have been adversely affected. The performance shown reflects
the deduction of fees for value-added services associated with a mutual
fund, such as investment management and accounting fees. The performance
also reflects reinvestment of all dividends and capital-gains distributions.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been 4.69% at NAV.
*** The portfolio's composition is subject to change.
7
<PAGE> 10
[PHOTO OF SHARON BROWN]
SHARON BROWN
Portfolio Manager
Tennessee
Tax Exempt
Bond Portfolio
===============================================================================
INVESTMENT GOAL
The Portfolio seeks to provide investors with current income exempt from
federal and Tennessee State income taxes without assuming undue risk. The
Portfolio invests primarily in investment-grade Tennessee municipal
obligations and is suitable for Tennessee residents seeking monthly interest
income exempt from both federal and Tennessee personal income taxes.*** The
Portfolio affords greater diversification and liquidity than most investors
would achieve by purchasing municipal securities directly.
- -------------------------------------------------------------------------------
Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1997?
A. The Portfolio produced a total return of 1.57%* for the six months ended June
30, 1997. In comparison, the Portfolio's unmanaged benchmark, the Lehman
Brothers Municipal 10-Year Index, produced a total return of 3.27%. The index is
a broad performance measure of municipal bonds with intermediate-term
maturities. Total return equals yield plus or minus the change in the
Portfolio's net asset value during the period. The total return percentage is
not annualized.
It is also important to recognize income yield to shareholders. As of June 30,
1997, the Portfolio's 30-day SEC yield at NAV was 4.19%.** For investors in the
36% federal income tax bracket, that is equivalent to a taxable yield of
6.55%.*** The yield percentage is annualized.
Q. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE?
A. The municipal bond market continues to be volatile, reacting very strongly to
any perceived shift in the economy. As a result, the Portfolio's NAV fluctuated
significantly during the period.
The municipal market did not offer much additional yield for longer maturities
or lower credit quality. Beyond 15-year maturities, municipal bond yields were
relatively flat out to 30 years. In addition, we didn't believe we would be
adequately compensated for buying bonds with credit ratings below A.
Another factor exerting downward pressure on yields was the lack of supply of
bonds. In Tennessee, there has been a 30% decline over the last year in the
supply of municipal bond paper. Many municipalities are at their legislative
borrowing limit, without going back to the voters to request an increase. In
addition, many bonds issued prior to the Tax Reform Act of 1986 with ten year
call provisions were finally called out of the marketplace.
Q. WHAT TYPES OF BONDS HAVE YOU PURCHASED RECENTLY?
A. We are geared toward the conservative investor looking for stability of
principal and income, not stretching for yield. As a result, our strategy has
been to match our benchmark of ten years and stick with the high-quality general
obligation and essential revenue bonds. For instance, we recently purchased Knox
County 5% bonds maturing in 2015. Although the bonds are callable, the bonds
will likely trade to the longer maturity date unless interest rates fall
dramatically. In a period of falling interest rates, bonds with longer
maturities appreciate the most. Another recent purchase was Shelby County for
Methodist Hospitals 6.25% due 2008. The bonds are attractive because they have a
high coupon and are not callable. In addition, if interest rates rise, the high
coupon cushions the bond's price decline.
Q. WHAT IS YOUR OUTLOOK?
A. The market was strong in late June and early July and is probably due for a
moderate correction. However, as unemployment remains low and inflation
continues at desirable levels, we remain positive on the municipal bond market
over the long term.
- ---------------
* Including the 3.00% sales load, the Portfolio's return was -1.51% for the
period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been 3.94% at NAV.
*** The Portfolio's income may be subject to certain state and local taxes and,
depending on your tax status, the federal alternative minimum tax.
8
<PAGE> 11
[PHOTO OF SHARON BROWN]
SHARON BROWN
Limited Duration
Tennessee Tax Free
Portfolio
===============================================================================
INVESTMENT GOAL
The Portfolio seeks to provide investors with current income exempt from
Federal and Tennessee income taxes without assuming undue risk. This Portfolio
will invest primarily in a portfolio of investment grade Tennessee Municipal
Obligations that, under normal market conditions, has a duration of under five
years and an effective average portfolio maturity ranging between three and
five years.
- -------------------------------------------------------------------------------
Q. WHAT IS THE PURPOSE OF THIS NEW FUND?
A. The Portfolio is designed to earn a higher rate of return than a tax-free
money market fund without much fluctuation in net asset values. We accomplish
this by investing in high-quality tax-exempt securities with an average maturity
of five years or less.
Although this is a new mutual fund, it is not a new portfolio. The Limited
Duration Tennessee Tax Free Portfolio began operations on February 28, 1997,
through a transfer of assets from certain trust fund accounts managed by First
American National Bank, using substantially the same investment objective and
methods.
Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1997?
A. The Portfolio produced a total return of 1.71%* for the six months ended June
30, 1997. In comparison, the Portfolio's unmanaged benchmark, the Lehman
Brothers Municipal 1-5 Year Index, produced a total return of 2.42%. The index
is a broad performance measure of municipal bonds with short-term maturities.
Total return equals yield plus or minus the change in the Portfolio's net asset
value during the period. The total return percentage is not annualized.
It is also important to recognize income yield to shareholders. As of June 30,
1997, the Portfolio's 30-day SEC yield at NAV was 3.77%**. For investors in the
36% federal income tax bracket, that is equivalent to a taxable yield of
5.89%.*** The yield percentage is annualized.
Q. WHAT FACTORS AFFECTED THE PORTFOLIO'S PERFORMANCE?
A. On the plus side, the relationship between yields on Tennessee tax-exempts
and U.S. Treasuries are quite favorable on maturities up to five years. However,
it was difficult to obtain higher yields than that offered on the highest
quality bonds. Since the market did not compensate us for taking additional
credit risk, we focused on higher credit quality issues.
Another factor exerting downward pressure on yields was the lack of supply of
bonds. In Tennessee, there has been a 30% decline over the last year in the
supply of municipal bonds. Many municipalities are at their legislative
borrowing limit, without going back to the voters to request an increase. In
addition, many bonds issued prior to the Tax Reform Act of 1986 with 10-year
call provisions were finally called out of the marketplace.
Q. WHAT TYPES OF BONDS HAVE YOU PURCHASED RECENTLY?
A. One recent purchase was Johnson City, Tennessee, 6.75% due 2016 but
pre-refunded to 2002. A pre-refunding is a procedure in which a bond issuer
issues a second bond when rates are lower to pay off the first bond on a
particular date. The proceeds from the second bond are safely invested, usually
in U.S. Treasuries, timed to mature at the pre-refunded date. Because of the
pre-refunding, the bonds are rated AAA.
Q. WHAT IS YOUR OUTLOOK?
A. The market was strong in late June and early July and is probably due for a
moderate correction. However, as unemployment remains low and inflation
continues at desirable levels, I'm positive on the municipal bond market over
the long term.
- ---------------
* Including the 3.00% sales load, the Portfolio's return was -1.38% for the
period.
The quoted performance of the AmeriStar Limited Duration Tennessee Tax Free
Portfolio includes performance of certain collective trust fund
("Commingled") accounts advised by First American National Bank, for periods
dating back to 12/31/86 and prior to the mutual fund's commencement of
operations on 2/28/97, as adjusted to reflect the expenses associated with
the mutual funds. The Commingled accounts were not registered with the
Securities and Exchange Commission and, therefore, were not subject to the
investment restrictions imposed by law on registered mutual funds. If the
Commingled accounts had been registered, the Commingled accounts'
performance may have been adversely affected. The performance shown reflects
the deduction of fees for value-added services associated with a mutual
fund, such as investment management and accounting fees. The performance
also reflects reinvestment of all dividends and capital-gains distributions.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been 3.30% at NAV.
*** The Portfolio's income may be subject to certain state and local taxes, and,
depending on your tax status, the federal alternative minimum tax.
9
<PAGE> 12
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME 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>
BANK NOTES -- 7.0%
Morgan Stanley Group Variable Rate.................... A1+/P1 5.76%* 8/18/97 $3,000 $ 3,000,000
Northern Trust........................................ A1+/P1 5.75 3/4/98 3,000 2,998,059
-----------
Total Bank Notes (Cost $5,998,059)...................... 5,998,059
-----------
CERTIFICATES OF DEPOSIT -- 16.3%
DOMESTIC -- 3.5%
Union Bank of California.............................. A1/P1 5.55 7/16/97 3,000 3,000,000
-----------
YANKEE -- 12.8%
Abbey National Treasury plc -- New York Branch,
Variable Rate...................................... A1+/P1 5.65* 7/1/97 3,000 2,998,854
Commerzbank -- New York Branch........................ A1+/P1 5.56 7/7/97 3,000 2,999,981
Dai-Ichi Kangyo Bank, Ltd. -- New York Branch......... A1/P1 5.85 7/18/97 3,000 3,000,174
Dresdner Bank -- New York Branch...................... A1+/P1 5.56 7/2/97 2,000 1,999,998
-----------
10,999,007
-----------
Total Certificates of Deposit (Cost $13,999,007)........ 13,999,007
-----------
COMMERCIAL PAPER -- 34.8%
DOMESTIC -- 31.3%
Aetna Services Inc.................................... A1/P1 5.62 7/7/97 3,000 2,997,189
Bankers Trust......................................... A1+/P1 5.43 10/6/97 3,000 2,956,108
Chrysler Financial Corp............................... A1/F1** 5.60 7/29/97 3,000 2,986,933
Countrywide Funding Corp.............................. A1/F1** 5.57 7/17/97 3,000 2,992,573
Dakota Finance........................................ A1+/P1 5.56 7/23/97 3,000 2,989,807
Dynamic Funding....................................... D1**/P1 5.70 7/14/97 3,000 2,993,825
Mitsubishi Motors Credit of America, LOC: Bank of
Tokyo, Mitsubishi Bank, Ltd........................ A1/P1 5.65 9/8/97 3,000 2,967,513
Sanwa Business Credit Corp............................ D1**/P1 5.65 7/11/97 3,000 2,995,292
Shimizu International Finance (USA), Inc., LOC:
Dai-Ichi Kango Bank Ltd. (c)....................... A1/P1 5.63 8/12/97 3,000 2,980,295
-----------
26,859,535
-----------
FOREIGN -- 3.5%
Pearson Inc........................................... A1/P1 5.58 7/2/97 3,000 2,999,535
-----------
Total Commercial Paper (Cost $29,859,070)............... 29,859,070
-----------
</TABLE>
Continued
10
<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>
CORPORATE OBLIGATIONS -- 26.7%
ABSIT, Series 1997-A, Variable Rate, Medium Term Note
(b)................................................ A1/F1** 5.74%* 7/18/97 $3,000 $ 3,000,000
Credit Suisse Financial Products/SPARCS 1996-12,
Variable Rate, Medium Term Note (b)................ F1+**/P1 5.79* 7/22/97 2,500 2,500,000
Dean Witter, Variable Rate Medium Term Note........... A1/P1 5.77* 7/2/97 3,000 3,002,299
Goldman Sachs, Variable Rate Promissory Note.......... A1+/P1 5.69* 7/12/97 3,000 3,000,000
Merrill Lynch & Co.,Variable Rate Medium Term Note.... A1+/P1 5.65* 7/14/97 3,000 3,000,000
SMM Trust, 1996-B, Variable Rate Medium Term Note
(b)................................................ A1+/P1 5.74* 7/4/97 2,475 2,475,000
TMG Financial/TIERS Series DCMT 1996-A, Variable Rate,
Medium Term Note (b)............................... A1+/P1 5.72* 7/15/97 3,000 3,000,000
U.S. Leasing Capital Corp., Variable Rate Medium Term
Note............................................... A1/P1 5.91* 7/6/97 3,000 3,002,851
-----------
Total Corporate Obligations (Cost $22,980,150).......... 22,980,150
-----------
TIME DEPOSITS -- 3.5%
Bank of Scotland -- Grand Cayman Branch............... A1+/P1 5.69 9/16/97 3,000 3,000,000
-----------
REPURCHASE AGREEMENTS -- 11.4%
Goldman Sachs, dated 6/30/97, with a maturity value of
$9,794,231 (Collateralized by $10,500,000
Commercial Paper, 8/26/97, value -- $10,402,245)... 6.30 7/1/97 9,793 9,792,541
-----------
TOTAL INVESTMENTS (AMORTIZED COST $85,628,827)
(A) -- 99.7%.......................................... 85,628,827
ASSETS IN EXCESS OF OTHER LIABILITIES -- 0.3%........... 281,630
-----------
TOTAL NET ASSETS -- 100.0%.............................. $85,910,457
===========
- ---------------
Percentages indicated are based on net assets of $85,910,457.
<FN>
(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) Illiquid security.
* Variable rate security. Rate resets weekly, monthly or quarterly. The rate
reflected on the Portfolio of Investments is the rate in effect at June 30,
1997. Maturity date reflects the next reset date.
** NRSRO other than Moody's or S&P.
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 14
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost............................................... $75,836,286
Repurchase agreements, at amortized cost................................................... 9,792,541
Interest receivable........................................................................ 352,749
Receivable for Portfolio shares sold....................................................... 355,453
Deferred organization costs (Note 2)....................................................... 23,045
Prepaid expenses and other assets.......................................................... 2,046
-----------
Total assets................................................................................. 86,362,120
-----------
LIABILITIES
Distributions payable...................................................................... 346,768
Payable for Portfolio shares redeemed...................................................... 33,830
Accrued expenses:
Advisory fees........................................................................... 6,937
Sub-advisory fees....................................................................... 10,406
Administration fees..................................................................... 6,942
Shareholder service fees................................................................ 7,843
Other................................................................................... 38,937
-----------
Total liabilities............................................................................ 451,663
-----------
NET ASSETS
Investor Shares......................................................................... $42,768,668
Trust Shares............................................................................ 43,141,789
-----------
Total Net Assets............................................................................. $85,910,457
==========
Shares Outstanding ($0.001 par value, 1 billion shares authorized)
Investor Shares......................................................................... 42,769,594
Trust Shares............................................................................ 43,141,901
-----------
85,911,495
==========
Net Asset Value, Offering Price and Redemption Price per Share
Investor Shares......................................................................... $1.00
-----
Trust Shares............................................................................ $1.00
=====
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par...................................................... $ 85,911
Additional paid-in capital................................................................. 85,822,021
Undistributed net investment income........................................................ 3,563
Accumulated net realized losses on investment transactions................................. (1,038)
-----------
Net Assets, June 30, 1997.................................................................... $85,910,457
==========
</TABLE>
- ---------------
See Notes to Financial Statements
12
<PAGE> 15
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................. $2,104,694
Expenses
Advisory fees...................................................................... $37,361
Sub-advisory fees.................................................................. 56,042
Administration fees................................................................ 37,361
Shareholder service fees (Investor Shares)......................................... 35,834
Custodian fees..................................................................... 20,624
Accounting fees.................................................................... 30,187
Transfer agent fees and expenses................................................... 22,627
Legal and audit fees............................................................... 12,567
Reports to shareholders............................................................ 790
Amortization of organization expenses.............................................. 6,154
Directors' fees.................................................................... 2,993
Insurance expense.................................................................. 2,099
Registration fees.................................................................. 5,736
Other expenses..................................................................... 1,448
-------
Total expenses.................................................................. 271,823
----------
Net Investment Income................................................................ 1,832,871
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. $1,832,871
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
13
<PAGE> 16
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income................................................. $ 1,832,871 $ 3,612,781
Net realized losses from securities transactions...................... -- (149)
------------- -------------
Net increase in net assets resulting from operations.................. 1,832,871 3,612,632
------------- -------------
Dividends to shareholders:
From net investment income (Investor Shares).......................... (682,049) (2,446,618)
From net investment income (Trust Shares)............................. (1,150,822) (1,166,163)(a)
------------- -------------
Total Dividends to shareholders......................................... (1,832,871) (3,612,781)
------------- -------------
Capital Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed................................... 168,812,387 381,614,137
Net asset value of shares issued to shareholders in reinvestment of
dividends.......................................................... 12,308 26,543
Cost of shares redeemed............................................... (153,850,681) (374,623,264)
------------- -------------
Net increase in net assets from Capital share transactions............ 14,974,014 7,017,416
------------- -------------
Total Increase in Net Assets............................................ 14,974,014 7,017,267
NET ASSETS
Beginning of period................................................... 70,936,443 63,919,176
------------- -------------
End of period......................................................... $ 85,910,457 $ 70,936,443
============= =============
SHARE TRANSACTIONS:
Issued................................................................ 168,812,387 381,614,137
Reinvested............................................................ 12,308 26,543
Redeemed.............................................................. (153,850,681) (374,623,264)
------------- -------------
Change in shares...................................................... 14,974,014 7,017,416
============= =============
- ---------------
<FN>
(a) For the period from July 1, 1996 (commencement of operations of Trust
Shares) through December 31, 1996.
</TABLE>
See Notes to Financial Statements.
14
<PAGE> 17
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
RATE DATE (000) (NOTE 2)
---- -------- --------- ------------
<S> <C> <C> <C> <C>
U.S. TREASURY BILLS -- 19.7%
U.S. Treasury Bill................................................ 5.20%* 7/10/97 $ 5,000 $ 4,993,668
U.S. Treasury Bill................................................ 5.35* 7/24/97 5,000 4,983,804
U.S. Treasury Bill................................................ 5.32* 8/7/97 5,000 4,973,072
U.S. Treasury Bill................................................ 5.16* 8/21/97 5,000 4,964,371
U.S. Treasury Bill................................................ 5.44 9/18/97 5,000 4,941,738
U.S. Treasury Bill................................................ 5.41* 10/2/97 5,000 4,931,671
U.S. Treasury Bill................................................ 5.43* 10/23/97 5,000 4,916,163
------------
Total U.S. Treasury Bills (Cost $34,704,487)........................ 34,704,487
------------
U.S. TREASURY NOTES -- 22.7%
U.S. Treasury Note................................................ 5.88 7/31/97 5,000 5,001,922
U.S. Treasury Note................................................ 5.63 8/31/97 5,000 5,000,535
U.S. Treasury Note................................................ 5.75 9/30/97 5,000 5,001,658
U.S. Treasury Note................................................ 5.63 10/31/97 5,000 5,002,792
U.S. Treasury Note................................................ 5.75 10/31/97 5,000 4,999,126
U.S. Treasury Note................................................ 7.38 11/15/97 5,000 5,032,043
U.S. Treasury Note................................................ 5.38 11/30/97 10,000 9,993,093
------------
Total U.S. Treasury Notes (Cost $40,031,169)........................ 40,031,169
------------
U.S. TREASURY STRIPS -- 8.4%
U.S. Treasury Strip............................................... N/A 8/15/97 10,000 9,797,347
U.S. Treasury Strip............................................... N/A 11/15/97 5,000 4,967,718
------------
Total U.S. Treasury Strips (Cost $14,765,065)....................... 14,765,065
------------
REPURCHASE AGREEMENTS -- 49.4%
Goldman Sachs, dated 6/30/97, with a maturity value of $40,988,110
(Collateralized by $43,784,000 U.S. Treasury Bonds, 6.25%,
8/15/23, value -- $41,801,373)................................. 5.75 7/1/97 40,982 40,981,654
Merrill Lynch, dated 6/30/97, with a maturity value of $5,000,767
(Collateralized by $5,105,000 U.S. Treasury Notes, 6.00%,
6/30/99, value -- $5,101,835).................................. 5.60 7/1/97 5,000 5,000,000
Prudential, dated 6/30/97, with a maturity value of $40,988,166
(Collateralized by $58,725,007 Government National Mortgage
Assoc., 5.50%-12.00%, 1/1/00-8/15/27, value -- $41,815,536).... 5.80 7/1/97 40,982 40,981,654
------------
Total Repurchase Agreements (Cost $86,963,308)...................... 86,963,308
------------
TOTAL INVESTMENTS (AMORTIZED COST $176,464,029) (A) -- 100.2%....... 176,464,029
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.2%)..................... (290,737)
------------
TOTAL NET ASSETS -- 100.0%.......................................... $176,173,292
===========
- ------------------
<FN>
Percentages indicated are based on net assets of $176,173,292.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Effective yield at issue.
N/A = Not applicable.
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 18
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............................................. $ 89,500,721
Repurchase agreements, at amortized cost.................................................. 86,963,308
Interest receivable....................................................................... 491,173
Deferred organization costs (Note 2)...................................................... 24,160
Prepaid expenses and other assets......................................................... 41,000
------------
Total assets................................................................................ 177,020,362
------------
LIABILITIES
Distributions payable..................................................................... 707,350
Accrued expenses:
Advisory fees.......................................................................... 36,450
Administration fees.................................................................... 14,571
Shareholder service fees............................................................... 15,363
Transfer agent fees.................................................................... 4,375
Legal and audit fees................................................................... 16,082
Other.................................................................................. 52,879
------------
Total liabilities........................................................................... 847,070
------------
NET ASSETS
Investor Shares........................................................................... $ 74,982,722
Trust Shares.............................................................................. 101,190,570
------------
$176,173,292
===========
Shares Outstanding ($0.001 par value, 1 billion shares authorized)
Investor Shares........................................................................... 74,982,722
Trust Shares.............................................................................. 101,190,570
------------
176,173,292
===========
Net Asset Value, Offering Price and Redemption Price per Share
Investor Shares........................................................................... $1.00
Trust Shares.............................................................................. $1.00
=====
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par..................................................... $ 176,173
Additional paid-in capital................................................................ 175,993,580
Undistributed net investment income....................................................... 3,539
------------
Net Assets, June 30, 1997................................................................... $176,173,292
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE> 19
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................ $4,968,273
Expenses
Advisory fees..................................................................... $231,916
Administration fees............................................................... 92,766
Shareholder Service fees (Investor Shares)........................................ 98,858
Custodian fees.................................................................... 20,705
Accounting fees................................................................... 37,963
Transfer agent fees and expenses.................................................. 22,325
Legal and audit fees.............................................................. 19,695
Reports to shareholders........................................................... 11,917
Amortization of organization expenses............................................. 6,154
Directors' fees................................................................... 4,349
Insurance expense................................................................. 5,031
Registration fees................................................................. 10,691
--------
Total expenses................................................................. 562,370
----------
Net Investment Income............................................................... 4,405,903
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ $4,405,903
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
17
<PAGE> 20
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- ------------------
UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income.................................................... $ 4,405,903 $ 8,714,947
------------- -------------
Dividends to shareholders:
From net investment income (Investor Shares)............................. (1,818,927) (5,988,175)
From net investment income (Trust Shares)................................ (2,586,976) (2,726,772)(a)
------------- -------------
Total Dividends to shareholders............................................ (4,405,903) (8,714,947)
------------- -------------
Capital Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed...................................... 213,825,664 460,104,988
Net asset value of shares issued to shareholders in reinvestment of
dividends............................................................. 34,711 56,500
Cost of shares redeemed.................................................. (225,693,486) (440,585,214)
------------- -------------
Net increase (decrease) in net assets from Capital share transactions.... (11,833,111) 19,576,274
------------- -------------
Total Increase (Decrease) in Net Assets.................................... (11,833,111) 19,576,274
NET ASSETS
Beginning of period...................................................... 188,006,403 168,430,129
------------- -------------
End of period............................................................ $ 176,173,292 $ 188,006,403
============= =============
SHARE TRANSACTIONS:
Issued................................................................... 213,825,664 460,104,988
Reinvested............................................................... 34,711 56,500
Redeemed................................................................. (225,693,486) (440,585,214)
------------- -------------
Change in shares......................................................... (11,833,111) 19,576,274
============= =============
- ---------------
<FN>
(a) For the period from July 1, 1996 (commencement of operations of Trust
Shares) through December 31, 1996.
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 21
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 97.8%
AIR TRANSPORTATION -- 2.2%
Southwest Airlines Co......................................................... 113,300 $ 2,931,638
------------
BANKING -- 6.8%
Banc One Corp................................................................. 59,000 2,857,813
Norwest Corp.................................................................. 59,540 3,349,124
Wachovia (Wb), (b)............................................................ 48,000 2,799,000
------------
9,005,937
------------
COMPUTER SOFTWARE -- 7.4%
Cisco Systems, Inc. (b)....................................................... 41,050 2,755,480
Computer Sciences Corp. (b)................................................... 27,000 1,947,375
Microsoft Corp. (b)........................................................... 16,500 2,085,188
Oracle Systems Corp. (b)...................................................... 59,127 2,978,522
------------
9,766,565
------------
COMPUTERS-MAIN & MINI -- 1.5%
Hewlett-Packard Co............................................................ 35,300 1,976,800
------------
CONSUMER-MISCELLANEOUS SERVICES -- 5.3%
Corrections Corp. of America (b).............................................. 51,200 2,035,200
Manpower Inc. Wisconsin....................................................... 46,500 2,069,250
Service Corp. International................................................... 88,500 2,909,437
------------
7,013,887
------------
COSMETICS & TOILETRIES -- 2.1%
Gillette Co................................................................... 30,000 2,842,500
------------
DEFENSE -- 1.0%
Boeing Co..................................................................... 25,000 1,326,563
------------
ELECTRICAL EQUIPMENT -- 2.6%
General Electric Co........................................................... 52,300 3,419,113
------------
ELECTRONIC COMPONENTS -- 2.0%
Applied Materials, Inc. (b)................................................... 21,000 1,487,062
Intel Corp.................................................................... 8,300 1,177,044
------------
2,664,106
------------
FINANCIAL SERVICES -- 5.0%
Federal National Mortgage Assoc............................................... 79,500 3,468,187
First Data Corp............................................................... 71,462 3,139,862
------------
6,608,049
------------
FOOD & RELATED -- 2.1%
Conagra, Inc.................................................................. 42,700 2,738,138
------------
FOREST & PAPER PRODUCTS -- 1.5%
Kimberly-Clark Corp........................................................... 39,500 1,965,125
------------
</TABLE>
Continued
19
<PAGE> 22
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
HEALTH CARE-DRUGS -- 10.0%
Amgen, Inc.................................................................... 40,200 $ 2,336,625
Centocor, Inc. (b)............................................................ 44,500 1,382,281
Eli Lilly & Co................................................................ 33,300 3,640,106
Merck & Co.................................................................... 21,700 2,245,950
Pfizer, Inc................................................................... 31,700 3,788,150
------------
13,393,112
------------
HOSPITAL SUPPLY & MANAGEMENT -- 1.0%
Columbia/HCA Healthcare Corp.................................................. 35,000 1,375,938
------------
HOTEL MANAGEMENT & RELATED SERVICES -- 1.1%
Promus Hotel Corp. (b)........................................................ 36,935 1,431,231
------------
HOUSEHOLD-GENERAL PRODUCTS -- 2.7%
Newell Co..................................................................... 91,500 3,625,688
------------
INSURANCE-PROPERTY & CASUALTY -- 2.8%
American International Group, Inc............................................. 25,200 3,764,250
------------
LEISURE TIME -- 1.1%
The Walt Disney Co............................................................ 17,579 1,410,715
------------
MACHINERY & EQUIPMENT -- 2.4%
Deere & Co.................................................................... 58,500 3,210,188
------------
MANUFACTURING -- 2.6%
Tyco International Ltd........................................................ 49,505 3,443,692
------------
MEDICAL EQUIPMENT & SUPPLIES -- 2.6%
Sybron International Corp.-Wisconsin (b)...................................... 86,280 3,440,415
------------
MEDICAL-HOSPITAL MANAGEMENT SERVICES -- 3.0%
Health Care & Retirement Corp. (b)............................................ 54,000 1,802,250
HealthCare Compare Corp.(b)................................................... 42,250 2,212,844
------------
4,015,094
------------
OIL & GAS -- 4.3%
Enron Corp.................................................................... 65,200 2,660,975
Mobil Corp.................................................................... 44,000 3,074,500
------------
5,735,475
------------
PETROLEUM-DOMESTIC -- 1.2%
Anadarko Petroleum Corp....................................................... 26,450 1,587,000
------------
PETROLEUM-SERVICES -- 4.1%
Halliburton Co................................................................ 26,000 2,060,500
Schlumberger Ltd.............................................................. 27,000 3,375,000
------------
5,435,500
------------
RESTAURANTS -- 1.4%
Cracker Barrell Old Country Store, Inc........................................ 70,900 1,878,850
------------
RETAIL-SPECIALTY STORES -- 5.2%
Home Depot, Inc............................................................... 48,500 3,343,469
Walgreen Co................................................................... 66,600 3,571,424
------------
6,914,893
------------
TELECOMMUNICATIONS -- 4.1%
Ericsson (LM) Telephone....................................................... 72,300 2,846,813
Lucent Technologies Inc....................................................... 36,000 2,594,250
------------
5,441,063
------------
</TABLE>
Continued
20
<PAGE> 23
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
--------- ------------
<S> <C> <C>
TELECOMMUNICATIONS-EQUIPMENT -- 1.6%
Newbridge Networks Corp....................................................... 48,100 $ 2,092,350
------------
TOBACCO -- 1.0%
Philip Morris, Inc............................................................ 30,000 1,331,250
------------
TOOLS -- 1.0%
Stanley Works................................................................. 33,300 1,332,000
------------
UTILITIES-GAS & PIPELINE -- 2.8%
Sonat, Inc.................................................................... 72,000 3,690,000
------------
UTILITIES-TELEPHONE -- 2.3%
Bellsouth Corp................................................................ 65,000 3,014,375
------------
Total Common Stocks (Cost -- $95,422,166)....................................... 129,821,500
------------
REGULATED INVESTMENT COMPANIES -- 1.2%
AIM Liquid Assets Money Market Fund........................................... 87,426 87,426
AIM Prime Money Market Fund................................................... 1,516,760 1,516,761
------------
Total Regulated Investment Companies (Cost -- $1,604,187)....................... 1,604,187
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT
RATE DATE (000)
-------- -------- ----------
<S> <C> <C> <C> <C>
U.S. TREASURY BILLS -- 2.2%
U.S. Treasury Bill............................................ 5.21%* 7/17/97 $ 1,000 997,642
U.S. Treasury Bill............................................ 5.01* 9/4/97 2,000 1,981,320
------------
TOTAL U.S. TREASURY BILLS (COST $2,979,837)..................... 2,978,962
------------
TOTAL INVESTMENTS (COST -- $100,006,190)(A) -- 101.2%........... 134,404,649
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.2)%................. (1,577,410)
------------
TOTAL NET ASSETS -- 100.0%...................................... $132,827,239
===========
- ---------------
<FN>
Percentages indicated are based on net assets of $132,827,239.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
</TABLE>
<TABLE>
<S> <C>
Unrealized appreciation............................................................ $35,306,905
Unrealized depreciation............................................................ (908,446)
-----------
Net unrealized appreciation........................................................ $34,398,459
==========
<FN>
(b) Non-income producing security.
* Yield at issue.
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 24
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $100,006,190).................................. $134,404,649
Receivable for investment securities sold................................................ 898,633
Interest and dividends receivable........................................................ 82,525
Deferred organization costs (Note 2)..................................................... 9,069
Prepaid expenses and other assets........................................................ 4,526
------------
Total assets............................................................................... 135,399,402
------------
LIABILITIES
Distributions payable.................................................................... 162,951
Payable for investment securities purchased.............................................. 2,293,922
Accrued expenses:
Advisory fees......................................................................... 70,657
Administration fees................................................................... 16,306
Other................................................................................. 28,327
------------
Total liabilities.......................................................................... 2,572,163
------------
NET ASSETS................................................................................. $132,827,239
============
Shares Outstanding ($0.001 par value, 500 million shares authorized)....................... 10,117,865
============
Calculation of Maximum Offering Price
Net asset value per share................................................................ $13.13
Sales charge -- 3.0% of public offering price............................................ 0.41
------
Maximum Offering Price..................................................................... $13.54
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par........................................................... $ 10,118
Additional paid-in capital............................................................... 91,030,637
Undistributed net investment loss........................................................ (2,911)
Net unrealized appreciation from investments............................................. 34,398,459*
Accumulated net realized gains on investment transactions................................ 7,390,936
------------
Net Assets, June 30, 1997.................................................................. $132,827,239
============
- ---------------
<FN>
*Represents sum of current periods unrealized appreciation plus common trust
fund appreciation.
</TABLE>
See Notes to Financial Statements.
22
<PAGE> 25
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.......................................................................... $ 58,760
Dividends......................................................................... 645,806
-----------
Total Investment Income........................................................... 704,566
Expenses
Advisory fees................................................................... $ 322,864
Administration fees............................................................. 74,507
Distribution fees............................................................... 124,179
Custodian fees.................................................................. 6,126
Accounting fees................................................................. 23,658
Transfer agent fees and expenses................................................ 10,187
Legal and audit fees............................................................ 12,479
Reports to shareholders......................................................... 5,846
Amortization of organization expenses........................................... 1,383
Directors' fees................................................................. 1,951
Insurance expense............................................................... 1,296
Registration fees............................................................... 2,145
Other expenses.................................................................. 665
---------
Total expenses before fee waivers............................................ 587,286
Less: Fee waivers............................................................ (124,179)
---------
Total expenses............................................................... 463,107
-----------
Net Investment Income............................................................. 241,459
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gain from securities transactions.................................. 7,572,990
Net change in unrealized appreciation from investments.......................... 28,554,677*
-----------
Net Realized and Unrealized Gains from Investments................................ 36,127,667
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $36,369,126
===========
- ---------------
<FN>
*Includes appreciation (depreciation) from acquired common trust fund.
</TABLE>
See Notes to Financial Statements.
23
<PAGE> 26
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD FROM
ENDED APRIL 1, 1996(a)
JUNE 30, 1997 TO DECEMBER 31, 1996
------------- --------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income (loss)........................................... $ 241,459 $ (5,801)
Net realized gains(losses) from securities transactions................ 7,572,990 (182,054)
Net change in unrealized appreciation from investments................. 28,554,677 5,843,782
------------ -----------
Net increase in net assets resulting from operations................... 36,369,126 5,655,927
------------ -----------
Dividends to shareholders from net investment income..................... (241,459) --
------------ -----------
Capital Share Transactions
Net proceeds from shares subscribed.................................... 77,968,079 47,441,776
Net asset value of shares issued to shareholders in reinvestment of
dividends........................................................... 27,004 --
Cost of shares redeemed................................................ (30,303,478) (4,089,736)
------------ -----------
Net increase in net assets from Capital share transactions............. 47,691,605 43,352,040
------------ -----------
Total Increase in Net Assets............................................. 83,819,272 49,007,967
NET ASSETS
Beginning of period.................................................... 49,007,967 --
------------ -----------
End of period.......................................................... $ 132,827,239 $ 49,007,967
============ ===========
SHARE TRANSACTIONS
Issued................................................................. 6,632,373 4,712,999
Reinvested............................................................. 2,411 --
Redeemed............................................................... (845,201) (384,717)
------------ -----------
Change in shares....................................................... 5,789,583 4,328,282
============ ===========
- ---------------
<FN>
(a) Commencement of operations.
</TABLE>
See Notes to Financial Statements.
24
<PAGE> 27
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
COMMON STOCKS -- 81.3%
BANKING -- 5.4%
Chase Manhattan............................................................... 9,000 $ 873,563
First Tennessee National Corp................................................. 18,000 864,000
Mellon Bank Corp.............................................................. 22,000 992,750
Nationsbank Corp.............................................................. 9,000 580,500
-----------
3,310,813
-----------
BEVERAGES -- 1.2%
PepsiCo, Inc.................................................................. 19,000 713,688
-----------
CHEMICALS-SPECIALTY -- 1.1%
Witco Corp.................................................................... 17,000 644,938
-----------
COMPUTER SOFTWARE -- 1.3%
Automatic Data Processing, Inc................................................ 16,400 770,800
-----------
COMPUTERS -- 1.1%
Xerox Corp.................................................................... 8,500 670,438
-----------
COSMETICS & TOILETRIES -- 1.7%
Colgate Palmolive Co.......................................................... 16,000 1,044,000
-----------
DEFENSE -- 1.0%
Boeing Co..................................................................... 12,000 636,750
-----------
DIVERSIFIED PRODUCTS -- 1.0%
E. I. dupont De Nemours Co.................................................... 10,000 628,750
-----------
ELECTRICAL EQUIPMENT -- 2.9%
Emerson Electric.............................................................. 32,000 1,762,000
-----------
FINANCIAL SERVICES -- 4.2%
American Express Co........................................................... 16,000 1,192,000
Federal National Mortgage Assoc............................................... 31,000 1,352,375
-----------
2,544,375
-----------
FOOD & RELATED -- 1.5%
Conagra, Inc.................................................................. 14,000 897,750
-----------
FOREST & PAPER PRODUCTS -- 2.2%
Kimberly-Clark Corp........................................................... 15,000 746,250
Weyerhaeuser Co............................................................... 12,000 624,000
-----------
1,370,250
-----------
HEALTH CARE-DRUGS -- 6.1%
American Home Products Corp................................................... 16,000 1,224,000
Bristol Myers Squibb Co....................................................... 16,000 1,295,999
Glaxo Holdings (b)............................................................ 29,000 1,212,563
-----------
3,732,562
-----------
HOUSEHOLD-GENERAL PRODUCTS -- 2.2%
Newell Co..................................................................... 34,000 1,347,250
-----------
</TABLE>
Continued
25
<PAGE> 28
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
INSURANCE -- 2.4%
AFLAC, Inc.................................................................... 13,000 $ 614,250
Allstate Corp................................................................. 12,000 876,000
-----------
1,490,250
-----------
MANUFACTURING -- 1.5%
Johnson Controls, Inc......................................................... 23,000 944,438
-----------
MEDICAL EQUIPMENT & SUPPLIES -- 1.5%
Baxter International, Inc..................................................... 18,000 940,500
-----------
MOTOR VEHICLE PARTS -- 2.2%
Genuine Parts Co.............................................................. 39,750 1,346,531
-----------
OIL & GAS -- 5.7%
Exxon Corp.................................................................... 12,000 738,000
Mobil Corp.................................................................... 14,000 978,250
Royal Dutch Petroleum......................................................... 20,000 1,087,500
Texaco, Inc................................................................... 6,000 652,500
-----------
3,456,250
-----------
PETROLEUM-SERVICES -- 1.9%
Dresser Industries, Inc....................................................... 31,000 1,154,750
-----------
PUBLISHING -- 3.5%
Gannett Co., Inc.............................................................. 10,000 987,500
McGraw Hill, Inc.............................................................. 20,000 1,176,250
-----------
2,163,750
-----------
RAILROAD -- 1.4%
Union Pacific Corp............................................................ 12,000 846,000
-----------
REAL ESTATE -- 2.1%
Crescent Operating, Inc. (b).................................................. 3,800 45,600
Crescent Real Estate.......................................................... 38,000 1,206,500
-----------
1,252,100
-----------
REAL ESTATE INVESTMENT TRUST -- 3.5%
Equity Residential Property................................................... 24,000 1,140,000
Post Properties............................................................... 10,000 405,625
Spieker Properties............................................................ 17,000 598,188
-----------
2,143,813
-----------
RETAIL-GENERAL MERCHANDISE -- 1.6%
Wal Mart Stores, Inc.......................................................... 28,000 946,750
-----------
TOBACCO -- 0.9%
Philip Morris, Inc............................................................ 13,000 576,875
-----------
UTILITIES -- 2.4%
DPL, Inc...................................................................... 60,000 1,477,500
-----------
UTILITIES-ELECTRIC -- 7.4%
Duke Energy Corp. (b)......................................................... 25,000 1,198,438
Nipsco Industries, Inc........................................................ 33,400 1,379,837
Scana Corp.................................................................... 27,200 674,900
Teco Energy, Inc.............................................................. 48,600 1,242,337
-----------
4,495,512
-----------
</TABLE>
Continued
26
<PAGE> 29
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
UTILITIES-GAS & PIPELINE -- 3.2%
Consolidated Natural Gas Co................................................... 18,000 $ 968,625
Sonat, Inc.................................................................... 19,000 973,750
-----------
1,942,375
-----------
UTILITIES-TELEPHONE -- 5.7%
Bellsouth Corp................................................................ 33,000 1,530,374
General Telephone Electric Corp............................................... 19,000 833,625
SBC Communications, Inc. (b).................................................. 18,000 1,113,750
-----------
3,477,749
-----------
WHOLESALE -- 1.5%
Sysco Corp.................................................................... 25,000 912,500
-----------
Total Common Stocks (Cost -- $37,612,260)....................................... 49,642,007
-----------
PREFERRED STOCKS -- 3.0%
COMPUTER SOFTWARE -- 1.1%
Microsoft Corp................................................................ 8,000 696,000
-----------
INDUSTRIAL GOODS & SERVICES -- 1.9%
Aetna Services, Inc........................................................... 12,000 1,125,000
-----------
Total Preferred Stocks (Cost -- $1,683,934)..................................... 1,821,000
-----------
REGULATED INVESTMENT COMPANIES -- 8.8%
AIM Liquid Assets Money Market Fund........................................... 3,011,214 3,011,214
AIM Prime Money Market Fund................................................... 2,349,740 2,349,740
-----------
Total Regulated Investment Companies (Cost -- $5,360,954)....................... 5,360,954
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT
RATE DATE (000)
---- -------- ---------
<S> <C> <C> <C> <C>
CONVERTIBLE BONDS -- 4.6%
FINANCIAL SERVICES -- 2.3%
First Financial Management........................................ 5.00% 12/15/99 $ 700 1,420,125
----------
HOTELS & LODGING -- 0.9%
Hilton Hotels Corp................................................ 5.00 5/15/06 500 532,500
----------
PETROLEUM-SERVICES -- 1.4%
Pennzoil Co....................................................... 6.50 1/15/03 500 880,000
----------
Total Convertible Bonds (Cost -- $2,330,889)........................ 2,832,625
----------
U.S. TREASURY BILLS -- 2.8%
U.S. Treasury Bill................................................ 5.46* 8/21/97 1,000 992,788
U.S. Treasury Bill................................................ 5.61 5/28/98 750 712,995
----------
Total U.S. Treasury Bills (Cost -- $1,703,962)...................... 1,705,783
----------
TOTAL INVESTMENTS (COST -- $48,691,999)(A) -- 100.5%............................ $61,362,369
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5)%................................. (331,259)
----------
TOTAL NET ASSETS -- 100.0%...................................................... $61,031,110
==========
- ---------------
<FN>
Percentages indicated are based on net assets of $61,031,110.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
</TABLE>
<TABLE>
<S> <C>
Unrealized appreciation............................................................ $12,793,917
Unrealized depreciation............................................................ (123,547)
-----------
Net unrealized appreciation........................................................ $12,670,370
==========
<FN>
(b) Non-income producing security.
* Yield at issue.
</TABLE>
See Notes to Financial Statements.
27
<PAGE> 30
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $48,691,999)..................................... $61,362,369
Interest receivable........................................................................ 141,010
Deferred organization costs (Note 2)....................................................... 5,959
Prepaid expenses and other assets.......................................................... 1,293
-----------
Total assets................................................................................. 61,510,631
-----------
LIABILITIES
Distributions payable...................................................................... 82,424
Payable for investment securities purchased................................................ 339,338
Accrued expenses:
Advisory fees........................................................................... 32,458
Administration fees..................................................................... 7,490
Custodian fees.......................................................................... 669
Legal and audit fees.................................................................... 11,272
Other................................................................................... 5,870
-----------
Total liabilities............................................................................ 479,521
-----------
NET ASSETS................................................................................... $61,031,110
==========
Shares Outstanding ($0.001 par value, 500 million shares authorized)......................... 5,548,979
==========
Calculation of Maximum Offering Price
Net asset value per share.................................................................. $11.00
Sales charge -- 3.0% of public offering price.............................................. 0.34
------
Maximum Offering Price....................................................................... $11.34
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................. $ 5,549
Additional paid-in capital................................................................. 42,790,252
Net unrealized appreciation from investments............................................... 12,670,370*
Accumulated net realized gains on investment transactions.................................. 5,564,939
-----------
Net Assets, June 30, 1997.................................................................... $61,031,110
==========
- ---------------
<FN>
*Represents sum of current periods unrealized appreciation plus common trust
fund appreciation.
</TABLE>
See Notes to Financial Statements.
28
<PAGE> 31
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 28, 1997(a) TO JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest......................................................................... $ 103,978
Dividends........................................................................ 503,239
-----------
Total Investment Income.......................................................... 607,217
Expenses
Advisory fees.................................................................. $124,552
Administration fees............................................................ 28,743
Distribution fees.............................................................. 47,905
Custodian fees................................................................. 3,770
Accounting fees................................................................ 16,482
Transfer agent fees and expenses............................................... 7,376
Legal and audit fees........................................................... 15,142
Reports to shareholders........................................................ 1,935
Amortization of organization expenses.......................................... 1,440
Directors' fees................................................................ 840
Insurance expense.............................................................. 692
Registration fees.............................................................. 1,460
Other expenses................................................................. 11
--------
Total expenses before fee waivers........................................... 250,348
Less: Fee waivers........................................................... (50,526)
--------
Total expenses.............................................................. 199,822
-----------
Net Investment Income............................................................ 407,395
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains from securities transactions................................ 5,564,939
Net change in unrealized appreciation from investments......................... 12,670,370(b)
-----------
Net Realized and Unrealized Gains from Investments............................... 18,235,309
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $18,642,704
===========
- ---------------
<FN>
(a) Commencement of operations.
(b) Includes appreciation from acquired common trust fund.
</TABLE>
See Notes to Financial Statements.
29
<PAGE> 32
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FEBRUARY 28, 1997(a)
TO JUNE 30, 1997
---------------------
(UNAUDITED)
<S> <C>
INCREASE IN NET ASSETS
Operations
Net investment income................................................................ $ 407,395
Net realized gains from securities transactions...................................... 5,564,939
Net change in unrealized appreciation from investments............................... 12,670,370
---------------
Net increase in net assets resulting from operations................................. 18,642,704
---------------
Dividends to shareholders from net investment income................................... (407,395)
---------------
Capital Share Transactions
Net proceeds from shares subscribed.................................................. 56,921,225
Net asset value of shares issued to shareholders in reinvestment of dividends........ 3,070
Cost of shares redeemed.............................................................. (14,128,494)
---------------
Net increase in net assets from Capital share transactions........................... 42,795,801
---------------
Total Increase in Net Assets........................................................... 61,031,110
NET ASSETS
Beginning of period.................................................................. --
---------------
End of period........................................................................ $ 61,031,110
===============
SHARE TRANSACTIONS
Issued............................................................................... 5,726,624
Reinvested........................................................................... 296
Redeemed............................................................................. (177,941)
---------------
Change in shares..................................................................... 5,548,979
===============
- ---------------
<FN>
(a) Commencement of operations.
</TABLE>
See Notes to Financial Statements.
30
<PAGE> 33
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS -- 65.6%
BANKING -- 12.2%
ABN Amro Bank....................................... A/Aa3 6.63% 10/31/01 $1,950 $ 1,942,688
First Union Corp.................................... A/A1 6.18 2/15/36 1,800 1,723,500
NationsBank Corp.................................... A/A2 7.75 8/15/15 925 944,656
Suntrust Banks...................................... A/A2 7.38 7/1/06 2,200 2,246,750
Wachovia Corp....................................... AA-/A1 6.61 10/1/25 2,100 2,063,250
-----------
8,920,844
-----------
FINANCIAL SERVICES -- 12.4%
Associates Corp. N.A................................ AA-/Aa3 7.30 3/15/98 1,000 1,010,430
Associates Corp. N.A................................ AA-/Aa3 7.32 1/13/03 800 820,000
Ford Motor Credit Corp.............................. A+/A1 6.38 10/6/00 1,500 1,492,500
General Electric Capital Corp....................... AAA/Aaa 7.50 8/21/35 1,925 1,953,875
General Motors Acceptance Corp...................... A-/A3 7.25 5/5/99 1,925 1,958,687
Travelers/Aetna Property & Casualty................. A+/A1 6.75 4/15/01 1,850 1,852,313
-----------
9,087,805
-----------
HEALTH CARE -- 3.0%
Columbia/HCA Healthcare Corp........................ A-/A2 7.25 5/20/08 2,175 2,180,438
-----------
INDUSTRIAL GOODS & SERVICES -- 15.0%
Air Products & Chemicals............................ A/A2 7.80 6/15/26 2,500 2,562,499
Harris Corp., Callable 12/1/98 @ 105.14............. A-/A3 10.38 12/1/18 1,050 1,148,438
IBM Corp............................................ A/A1 7.00 10/30/25 1,350 1,269,000
Lockheed Martin Corp................................ BBB+/A3 6.55 5/15/99 2,400 2,411,999
Motorola, Inc....................................... AA/Aa3 6.50 3/1/08 2,150 2,082,813
Reliance Electric Co................................ AA-/A2 6.80 4/15/03 1,500 1,503,750
-----------
10,978,499
-----------
RAILROADS -- 2.8%
Union Pacific Corp.,................................ 8.50 1/15/98 2,000 2,025,890
-----------
RETAIL-STORES -- 2.6%
Dayton Hudson Co.................................... BBB+/Baa1 6.80 10/1/01 1,925 1,917,781
-----------
TELECOMMUNICATIONS -- 4.1%
BellSouth Corp...................................... AAA/Aaa 8.25 7/1/32 450 473,063
GTE Corp., Callable 2/1/10 @ 102.77................. A/A3 7.90 2/1/27 1,450 1,462,687
GTE Corp., Callable 9/15/97 @ 105.13................ A-/A3 10.75 9/15/17 1,000 1,057,500
-----------
2,993,250
-----------
</TABLE>
Continued
31
<PAGE> 34
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
--------- ----- -------- ------ -----------
<S> <C> <C> <C> <C> <C>
UTILITIES-ELECTRIC -- 10.5%
Central Hudson Gas & Electric....................... A-/Baa1 5.38% 1/15/99 $1,000 $ 986,250
Houston Light & Power Corp.......................... A-/A3 6.10 3/1/00 1,725 1,705,594
Midwest Power System................................ A+/A2 6.25 2/1/98 1,600 1,604,000
National Rural Utilities Cooperative Finance
Corp............................................. AA-/A1 6.09 12/15/97 1,850 1,852,312
Public Service Electric & Gas....................... A-/A-3 6.50 6/1/00 1,500 1,500,000
-----------
7,648,156
-----------
UTILITIES-GAS -- 3.0%
Smith Enron......................................... NR/NR 5.97 12/15/06 2,316 2,229,150
-----------
Total Corporate Bonds (Cost $48,137,299).............. 47,981,813
-----------
MUNICIPAL BONDS -- 1.0%
GEORGIA -- 1.0%
Atlanta Revenue Bond, Callable 2/1/10 @ 100......... 6.88 2/1/21 750 713,438
-----------
Total Municipal Bonds (Cost $708,174)................. 713,438
-----------
U.S. GOVERNMENT AGENCIES -- 7.1%
FEDERAL NATIONAL MORTGAGE ASSOC. -- 2.7%
Federal National Mortgage Assoc..................... 6.35 11/23/01 2,000 1,979,520
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 4.4%
Government National Mortgage Assoc. Pool# 423914
CMO.............................................. 7.50 8/15/11 938 956,033
Government National Mortgage Assoc. Pool# 423923.... 7.00 9/15/11 1,454 1,457,827
Government National Mortgage Assoc.................. 8.00 5/15/10 800 826,257
-----------
3,240,117
-----------
Total U.S. Government Agencies (Cost $5,404,528)...... 5,219,637
-----------
U.S. TREASURY BOND -- 6.1%
U.S. Treasury Bond.................................. 8.13 8/15/21 3,050 3,493,501
U.S. Treasury Bond.................................. 6.75 8/15/26 1,000 989,830
-----------
Total U.S. Treasury Bond (Cost $4,564,306)............ 4,483,331
-----------
U.S. TREASURY NOTES -- 16.7%
U.S. Treasury Note.................................. 5.88 8/15/98 1,000 999,870
U.S. Treasury Note.................................. 7.13 10/15/98 2,000 2,029,820
U.S. Treasury Note.................................. 6.25 5/31/00 500 500,355
U.S. Treasury Note.................................. 5.88 6/30/00 3,000 2,972,070
U.S. Treasury Note.................................. 7.50 5/15/02 2,500 2,617,400
U.S. Treasury Note.................................. 6.88 5/15/06 2,000 2,041,600
U.S. Treasury Note.................................. 7.00 7/15/06 1,000 1,028,900
-----------
Total U.S. Treasury Notes (Cost $12,225,568).......... 12,190,015
-----------
</TABLE>
Continued
32
<PAGE> 35
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 2)
---------- -----------
<S> <C> <C>
REGULATED INVESTMENT COMPANIES -- 2.4%
AIM Liquid Assets Money Market Fund.................................................. 1,627,198 $ 1,627,198
AIM Prime Money Market Fund.......................................................... 149,820 149,820
-----------
Total Regulated Investment Companies (Cost $1,777,018).............................................. 1,777,018
-----------
TOTAL INVESTMENTS (COST $72,816,893) (A) -- 98.9%................................................... 72,365,252
ASSETS IN EXCESS OF OTHER LIABILITIES -- 1.1%....................................................... 774,808
-----------
TOTAL NET ASSETS -- 100.0%.......................................................................... $73,140,060
===========
- ---------------
<FN>
Percentages indicated are based on net assets of $73,140,060.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
</TABLE>
<TABLE>
<S> <C>
Unrealized appreciation......................................................... $ 189,797
Unrealized depreciation......................................................... (641,438)
---------
Net unrealized depreciation..................................................... $(451,641)
=========
<FN>
* Yield at issue.
</TABLE>
See Notes to Financial Statements.
33
<PAGE> 36
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $72,816,893)..................................... $72,365,252
Interest receivable........................................................................ 1,176,438
Deferred organization costs (Note 2)....................................................... 2,981
Prepaid expenses and other assets.......................................................... 900
-----------
Total assets................................................................................. 73,545,571
-----------
LIABILITIES
Distributions payable...................................................................... 337,653
Accrued expenses:
Advisory fees........................................................................... 29,700
Administration fees..................................................................... 8,910
Custodian fees.......................................................................... 6,966
Legal and audit fees.................................................................... 13,180
Other................................................................................... 9,102
-----------
Total liabilities............................................................................ 405,511
-----------
NET ASSETS................................................................................... $73,140,060
===========
Shares Outstanding ($0.001 par value, 500 million shares authorized)......................... 7,367,244
===========
Calculation of Maximum Offering Price
Net asset value per share.................................................................. $ 9.93
Sales charge -- 3.0% of public offering price.............................................. 0.31
-----------
Maximum Offering Price....................................................................... $ 10.24
===========
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................. $ 7,367
Additional paid-in capital................................................................. 73,715,464
Undistributed net investment loss.......................................................... (49)
Net unrealized depreciation from investments............................................... (451,641)*
Accumulated net realized losses on investment transactions................................. (131,081)
-----------
Net Assets, June 30, 1997.................................................................... $73,140,060
===========
- ---------------
<FN>
*Represents sum of current periods unrealized appreciation (depreciation) plus
common trust fund appreciation (depreciation).
</TABLE>
See Notes to Financial Statements.
34
<PAGE> 37
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.......................................................................... $1,910,443
Dividend.......................................................................... 43,962
----------
Total Investment Income........................................................... 1,954,405
Expenses
Advisory fees................................................................... $ 147,606
Administration fees............................................................. 44,282
Distribution fees............................................................... 73,803
Custodian fees.................................................................. 1,274
Accounting fees................................................................. 26,166
Transfer agent fees and expenses................................................ 12,063
Legal and audit fees............................................................ 14,561
Amortization of organization expenses........................................... 4,788
Directors' fees................................................................. 1,658
Insurance expense............................................................... 389
Registration fees............................................................... 2,745
----------
Total expenses before fee waivers............................................ 329,335
Less: Fee waivers............................................................ (73,803)
Total expenses............................................................... 255,532
----------
Net Investment Income............................................................. 1,698,873
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized losses from securities transactions................................ (45,603)
Net change in unrealized depreciation from investments.......................... (594,919)(a)
----------
Net Realized and Unrealized Gains (Losses) from Investments....................... (640,522)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................. $1,058,351
==========
- ---------------
<FN>
(a) Includes appreciation (depreciation) from acquired common trust fund.
</TABLE>
See Notes to Financial Statements.
35
<PAGE> 38
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FOR THE PERIOD FROM
JUNE 30, APRIL 1, 1996 (a)
1997 TO DECEMBER 31, 1996
----------- --------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................................... $ 1,698,873 $ 1,465,659
Net realized losses from securities transactions.......................... (45,603) (85,527)
Net change in unrealized appreciation (depreciation) from investments..... (594,919) 143,278
----------- -----------
Net increase in net assets resulting from operations................... 1,058,351 1,523,410
----------- -----------
Dividends to shareholders from net investment income........................ (1,698,873) (1,465,659)
----------- -----------
Capital Share Transactions
Net proceeds from shares subscribed....................................... 39,048,175 39,728,939
Net asset value of shares issued to shareholders in reinvestment of
dividends.............................................................. 624,875 754,643
Cost of shares redeemed................................................... (4,707,728) (1,726,073)
----------- -----------
Net increase in net assets from Capital share transactions................ 34,965,322 38,757,509
----------- -----------
Total Increase in Net Assets................................................ 34,324,800 38,815,260
NET ASSETS
Beginning of period....................................................... 38,815,260 --
----------- -----------
End of period............................................................. $73,140,060 $ 38,815,260
=========== ===========
SHARE TRANSACTIONS
Issued.................................................................... 3,901,952 3,978,187
Reinvested................................................................ 63,178 76,179
Redeemed.................................................................. (478,413) (173,839)
----------- -----------
Change in shares.......................................................... 3,486,717 3,880,527
=========== ===========
- ---------------
<FN>
(a) Commencement of operations.
</TABLE>
See Notes to Financial Statements.
36
<PAGE> 39
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
RATE DATE (000) (NOTE 2)
-------- -------- ---------- ------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES -- 19.8%
U.S. Treasury Note.................................. 5.88% 8/15/98 $ 4,500 $ 4,499,415
U.S. Treasury Note.................................. 6.13 5/15/98 3,000 3,009,840
U.S. Treasury Note.................................. 6.13 12/31/01 2,000 1,980,300
U.S. Treasury Note.................................. 6.25 10/31/01 1,250 1,244,250
U.S. Treasury Note.................................. 6.25 1/31/02 4,000 3,979,320
U.S. Treasury Note.................................. 6.63 7/31/01 2,000 2,019,340
U.S. Treasury Note.................................. 6.88 7/31/99 2,100 2,130,723
U.S. Treasury Note.................................. 7.75 1/31/00 1,500 1,554,495
-----------
Total U.S. Treasury Notes(Cost $20,423,709)........... 20,417,683
-----------
U.S. GOVERNMENT AGENCIES -- 22.1%
FEDERAL HOME LOAN BANK -- 2.6%
Federal Home Loan Bank, Discount Note............... 1/26/98 2,750 2,663,210
-----------
FEDERAL HOME LOAN MORTGAGE CORP. -- 2.4%
Federal Home Loan Mortgage Corp., Callable 12/10/97
@ 100............................................ 6.51 12/10/01 2,500 2,484,675
-----------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 2.2%
Federal National Mortgage Assoc..................... 5.12 1/22/99 750 737,880
Federal National Mortgage Assoc..................... 6.35 11/23/01 1,500 1,484,640
-----------
2,222,520
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 14.9%
Government National Mortgage Assoc. Pool# 339455.... 8.00 12/15/07 850 878,030
Government National Mortgage Assoc. Pool# 345752.... 7.50 6/15/09 672 684,873
Government National Mortgage Assoc. Pool# 358725.... 8.00 8/15/08 1,489 1,537,935
Government National Mortgage Assoc. Pool# 368641.... 7.50 4/15/09 695 708,409
Government National Mortgage Assoc. Pool# 376589.... 8.50 9/15/09 1,273 1,322,038
Government National Mortgage Assoc. Pool# 380660.... 8.00 11/15/09 1,507 1,556,509
</TABLE>
Continued
37
<PAGE> 40
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Government National Mortgage Assoc. Pool# 392085.... 7.50% 4/15/09 $ 787 $ 801,843
Government National Mortgage Assoc. Pool# 392770.... 8.50 12/15/09 743 771,482
Government National Mortgage Assoc. Pool# 392814.... 8.50 12/15/09 1,123 1,166,182
Government National Mortgage Assoc. Pool# 405445.... 8.00 4/15/10 1,810 1,869,488
Government National Mortgage Assoc. Pool# 407337.... 8.00 4/15/10 1,732 1,789,768
Government National Mortgage Assoc. Pool# 423983.... 7.50 8/15/11 2,338 2,382,781
-----------
15,469,338
-----------
Total U.S. Government Agencies (Cost $22,458,143)..... 22,839,743
-----------
CORPORATE BONDS -- 50.8%
BANKING -- 5.3%
ABN Amro Bank....................................... A/Aa3 6.63 10/31/01 2,000 1,992,500
Bankers Trust....................................... A/A2 6.75 10/3/01 1,500 1,498,125
NationsBank Corp.................................... A+/A1 7.00 9/15/01 2,000 2,015,000
-----------
5,505,625
-----------
ENTERTAINMENT -- 1.4%
The Walt Disney Co.................................. A/A2 6.38 3/30/01 1,500 1,488,750
-----------
FINANCIAL SERVICES -- 11.7%
Associates Corp. N.A................................ AA-/Aa3 6.59 1/12/98 2,400 2,411,304
General Motors Acceptance Corp...................... A-/A3 7.75 1/15/99 2,500 2,556,250
Merrill Lynch & Co., Inc............................ AA-/Aa3 6.00 1/15/01 1,750 1,715,000
Norwest Financial, Inc.............................. AA-/Aa3 6.00 8/15/97 2,500 2,501,414
Travelers/Aetna Property & Casualty................. A+/A1 6.75 4/15/01 3,000 3,003,750
-----------
12,187,718
-----------
HEALTH CARE -- 1.5%
Columbia/HCA Healthcare Corp........................ A-/A2 6.88 7/15/01 1,500 1,505,625
-----------
INDUSTRIAL GOODS & SERVICES -- 6.1%
Imperial Oil Ltd.................................... AA+/Aa2 8.75 10/15/19 3,000 3,236,250
Lockheed Martin Corp................................ BBB+/A3 6.55 5/15/99 3,000 3,015,000
-----------
6,251,250
-----------
PAPER PRODUCTS -- 2.0%
International Paper Co.............................. A-/A3 6.88 7/10/00 2,000 2,017,500
-----------
RAILROADS -- 2.9%
Union Pacific Railroad Co........................... A/Aa3 6.44 1/15/98 3,000 3,006,840
-----------
</TABLE>
Continued
38
<PAGE> 41
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
RETAIL-STORES -- 3.6%
Dayton Hudson Co.................................... BBB+/Baa1 7.50% 3/1/99 $ 2,000 $ 2,037,500
Wal-Mart Stores, Inc................................ AA/Aa2 5.50 3/1/98 1,700 1,694,934
-----------
3,732,434
-----------
TELECOMMUNICATIONS -- 7.1%
Bell Atlantic Financial Services, Inc............... A+/A1 6.63 11/30/97 2,700 2,709,666
GTE Corp., Callable 9/15/97 @ 105.13................ A-/A3 10.75 9/15/17 2,500 2,643,750
New England Telephone & Telegraph Co................ AA-/Aa2 6.25 12/15/97 2,000 2,007,500
-----------
7,360,916
-----------
UTILITIES-ELECTRIC -- 6.7%
Central Hudson Gas & Electric....................... A-/Baa1 5.38 1/15/99 1,000 986,250
Central Power & Light Co............................ A/A2 6.00 4/1/00 2,000 1,970,000
Florida Power & Light Co............................ AA-/Aa3 6.20 2/2/98 2,000 2,002,500
National Rural Utilities Cooperative Finance
Corp............................................. AA-/A1 6.09 12/15/97 2,000 2,002,500
-----------
6,961,250
-----------
UTILITIES-GAS -- 2.5%
ENSERCH Corp........................................ BBB/Baa2 7.00 8/15/99 1,000 1,008,750
Smith Enron......................................... NR/NR 5.97 12/15/06 1,586 1,526,525
-----------
2,535,275
-----------
Total Corporate Bonds (Cost $52,385,870).............. 52,553,183
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
(000)
----------
<S> <C> <C> <C> <C> <C>
REGULATED INVESTMENT COMPANIES -- 5.6%
AIM Liquid Assets Money Market Fund.................. 4,632 4,631,681
AIM Prime Money Market Fund.......................... 1,119 1,118,756
----------
Total Regulated Investment Companies (Cost
$5,750,437).......................................... 5,750,437
----------
TOTAL INVESTMENTS (COST $101,018,159) (a) -- 98.3%..... 101,561,046
ASSETS IN EXCESS OF OTHER LIABILITIES 1.7%............. 1,710,185
----------
TOTAL NET ASSETS -- 100.0%............................. $103,271,231
==========
- ---------------
<FN>
Percentages indicated are based on net assets of $103,271,231.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
</TABLE>
<TABLE>
<S> <C>
Unrealized appreciation......................................................... $ 748,159
Unrealized depreciation......................................................... (205,272)
---------
Net unrealized appreciation..................................................... $ 542,887
=========
</TABLE>
See Notes to Financial Statements.
39
<PAGE> 42
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $101,018,159)................................... $101,561,046
Interest receivable....................................................................... 1,601,726
Receivable for Capital shares issued...................................................... 749,389
Deferred organization costs (Note 2)...................................................... 21,692
------------
Total assets................................................................................ 103,933,853
------------
LIABILITIES
Distributions payable..................................................................... 494,095
Payable for Capital shares redeemed....................................................... 79,928
Accrued expenses and other payables:
Advisory fees.......................................................................... 41,737
Administration fees.................................................................... 12,521
Legal and audit fees................................................................... 12,678
Other.................................................................................. 21,663
------------
Total liabilities........................................................................... 662,622
------------
NET ASSETS.................................................................................. $103,271,231
============
Shares Outstanding ($0.001 par value, 500 million shares authorized)........................ 10,405,961
============
Calculation of Maximum Offering Price
Net asset value per share................................................................. $9.92
Sales charge -- 3.0% of public offering price............................................. 0.31
------------
Maximum Offering Price...................................................................... $10.23
============
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................ $10,406
Additional paid-in capital................................................................ 102,714,539
Undistributed net investment income....................................................... 1,644
Net unrealized appreciation from investments.............................................. 542,887
Accumulated net realized gains from investment transactions............................... 1,755
------------
Net Assets, June 30, 1997................................................................... $103,271,231
============
</TABLE>
- ---------------
See Notes to Financial Statements.
40
<PAGE> 43
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest........................................................................... $3,186,391
Dividends.......................................................................... 132,254
----------
Total Investment Income............................................................ 3,318,645
Expenses
Advisory fees.................................................................... $ 246,501
Administration fees.............................................................. 73,951
Distribution fees................................................................ 123,251
Custodian fees................................................................... 11,926
Accounting fees.................................................................. 26,953
Transfer agent fees and expenses................................................. 14,708
Legal and audit fees............................................................. 13,903
Reports to shareholders.......................................................... 2,664
Amortization of organization expenses............................................ 5,792
Directors' fees.................................................................. 2,814
Insurance fees................................................................... 2,914
Registration fees................................................................ 4,124
Other expenses................................................................... 1,466
--------
Total expenses before fee waivers............................................. 530,967
Less: Fee Waivers............................................................. (123,251)
--------
Total expenses................................................................ 407,716
----------
Net Investment Income.............................................................. 2,910,929
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains from securities transactions.................................. 28,223
Net change in unrealized depreciation from investments........................... (429,289)
----------
Net Realized and Unrealized Losses from Investments................................ (401,066)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................... $2,509,863
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
41
<PAGE> 44
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income...................................................... $ 2,910,929 $ 6,053,847
Net realized gains from securities transactions............................ 28,223 11,672
Net change in unrealized appreciation (depreciation) from investments...... (429,289) (1,745,157)
------------ ------------
Net increase in net assets resulting from operations....................... 2,509,863 4,320,362
------------ ------------
Dividends to shareholders from net investment income......................... (2,910,929) (6,053,731)
Distributions to shareholders from net realized gains on securities
transactions............................................................... -- (11,672)
Distributions in excess of net realized gains................................ -- (38,269)
------------ ------------
Total dividends and distributions to shareholders............................ (2,910,929) (6,103,672)
------------ ------------
Capital Share Transactions
Net proceeds from shares subscribed........................................ 12,998,261 25,676,365
Net asset value of shares issued to shareholders in reinvestment of
dividends............................................................... 1,408,551 2,714,914
Cost of shares redeemed.................................................... (8,931,559) (31,792,677)
------------ ------------
Net increase (decrease) in net assets from Capital share transactions...... 5,475,253 (3,401,398)
------------ ------------
Total Increase (Decrease) in Net Assets...................................... 5,074,187 (5,184,708)
NET ASSETS
Beginning of period........................................................ 98,197,044 103,381,752
------------ ------------
End of period.............................................................. $ 103,271,231 $ 98,197,044
============ ============
SHARE TRANSACTIONS:
Issued..................................................................... 1,303,029 2,575,513
Reinvested................................................................. 142,056 272,329
Redeemed................................................................... (901,102) (3,194,471)
------------ ------------
Change in shares........................................................... 543,983 (346,629)
============ ============
</TABLE>
See Notes to Financial Statements.
42
<PAGE> 45
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
RATE DATE (000) (NOTE 2)
----- --------- ---------- ------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES -- 30.7%
FEDERAL HOME LOAN BANK -- 3.8%
Federal Home Loan Bank................................... 5.38%* 7/23/97 $ 500 $498,394
Federal Home Loan Bank................................... 5.44* 1/26/98 250 242,110
-------
740,504
-------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 3.7%
Federal National Mortgage Assoc.......................... 5.40* 12/17/97 750 730,733
-------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 23.2%
Government National Mortgage Assoc....................... 9.00 12/1/01 104 108,630
Government National Mortgage Assoc....................... 9.00 2/15/03 182 190,467
Government National Mortgage Assoc....................... 7.50 5/15/10 791 806,621
Government National Mortgage Assoc....................... 7.00 8/15/11 958 961,153
Government National Mortgage Assoc. Pool# 423914 CMO..... 7.50 8/15/11 938 956,033
Government National Mortgage Assoc. Pool# 423923......... 7.00 9/15/11 740 742,480
Government National Mortgage Assoc....................... 7.50 10/15/11 730 743,888
-------
4,509,272
-------
Total U.S. Government Agencies (Cost $5,984,962)........... 5,980,509
-------
U.S. TREASURY NOTES -- 66.1%
U.S. Treasury Note....................................... 6.00 8/31/97 500 500,375
U.S. Treasury Note....................................... 5.75 10/31/97 500 500,485
U.S. Treasury Note....................................... 6.13 5/15/98 750 752,460
U.S. Treasury Note....................................... 5.13 11/30/98 1,000 989,070
U.S. Treasury Note....................................... 5.75 12/31/98 2,500 2,492,925
U.S. Treasury Note....................................... 5.88 3/31/99 1,250 1,247,088
U.S. Treasury Note....................................... 6.00 8/15/99 1,000 997,750
U.S. Treasury Note....................................... 6.38 5/15/00 500 501,820
U.S. Treasury Note....................................... 6.25 5/31/00 1,250 1,250,888
U.S. Treasury Note....................................... 7.50 11/15/01 2,500 2,605,924
U.S. Treasury Note....................................... 7.50 5/15/02 1,000 1,046,960
-------
Total U.S. Treasury Notes (Cost $12,858,655)............... 12,885,745
-------
SHARES
(000)
-------
REGULATED INVESTMENT COMPANIES -- 3.1%
AIM Treasury Money Market Fund........................... 321 321,275
Dreyfus Treasury Prime Money Market Fund................. 286 286,185
-------
Total Regulated Investment Companies (Cost $607,460)....... 607,460
-------
TOTAL INVESTMENTS (COST $19,451,077)(A) -- 99.9%........... 19,473,714
ASSETS IN EXCESS OF OTHER LIABILITIES -- 0.1%.............. 28,505
-------
TOTAL NET ASSETS -- 100.0%................................. $19,502,219
=======
</TABLE>
- ---------------
Percentages indicated are based on net assets of $19,502,219.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................................. $ 142,931
Unrealized depreciation............................................................. (120,294)
---------
Net unrealized appreciation......................................................... $ 22,637
=========
<FN>
* Yield at issue.
CMO = Collateralized Mortgage Obligation
</TABLE>
- ---------------
See Notes to Financial Statements.
43
<PAGE> 46
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $19,451,077).................................... $19,473,714
Interest and dividends receivable......................................................... 134,578
Deferred organization costs (Note 2)...................................................... 2,261
Prepaid expenses and other assets......................................................... 1,089
-----------
Total assets................................................................................ 19,611,642
-----------
LIABILITIES
Distributions payable..................................................................... 83,453
Accrued expenses:
Advisory fees.......................................................................... 4,778
Administration fees.................................................................... 637
Legal and audit fees................................................................... 13,487
Custodian fees......................................................................... 2,409
Accounting fees........................................................................ 3,842
Other.................................................................................. 817
-----------
Total liabilities........................................................................... 109,423
-----------
NET ASSETS.................................................................................. $19,502,219
===========
Shares Outstanding ($0.001 par value, 500 million shares authorized)........................ 1,948,838
===========
Calculation of Maximum Offering Price
Net asset value per share................................................................. $10.01
Sales charge -- 3.0% of public offering price............................................. 0.31
------
Maximum Offering Price...................................................................... $10.32
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................ $ 1,949
Additional paid-in capital................................................................ 19,481,109
Undistributed net investment loss......................................................... (233)
Net unrealized appreciation from investments.............................................. 22,637*
Accumulated net realized losses on investment transactions................................ (3,243)
-----------
Net Assets, June 30, 1997................................................................... $19,502,219
===========
- ---------------
<FN>
*Represents sum of current periods unrealized appreciation plus common trust
fund appreciation.
</TABLE>
See Notes to Financial Statements.
44
<PAGE> 47
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 28, 1997 (a) TO JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................. $385,194
Dividends............................................................................ 14,709
--------
Total Investment Income.............................................................. 399,903
Expenses
Advisory fees...................................................................... $ 32,020
Administration fees................................................................ 9,606
Distribution fees.................................................................. 16,010
Custodian fees..................................................................... 3,770
Accounting fees.................................................................... 16,524
Transfer agent fees and expenses................................................... 7,432
Legal and audit fees............................................................... 14,988
Reports to shareholders............................................................ 459
Amortization of organization expenses.............................................. 600
Directors' fees.................................................................... 346
Insurance expense.................................................................. 226
Registration fees.................................................................. 1,460
Other expenses..................................................................... 599
--------
Total expenses before fee waivers............................................... 104,040
Less: Fee waivers............................................................... (36,205)
--------
Total expenses.................................................................. 67,835
--------
Net Investment Income................................................................ 332,068
--------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized losses from securities transactions................................... (3,243)
Net change in unrealized appreciation from investments............................. 22,637(b)
--------
Net Realized and Unrealized Gains from Investments................................... 19,394
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................. $351,462
========
- ------------------------
<FN>
(a) Commencement of operations.
(b) Includes appreciation (depreciation) from acquired common trust fund.
</TABLE>
See Notes to Financial Statements.
45
<PAGE> 48
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FEBRUARY 28, 1997 (a)
TO JUNE 30, 1997
---------------------
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................................................... $ 332,068
Net realized losses from securities transactions........................................ (3,243)
Net change in unrealized appreciation from investments.................................. 22,637
-----------
Net increase in net assets resulting from operations.................................... 351,462
-----------
Dividends to shareholders from net investment income...................................... (332,301)
-----------
Capital Share Transactions
Net proceeds from shares subscribed..................................................... 20,636,401
Net asset value of shares issued to shareholders in reinvestment of dividends........... 157
Cost of shares redeemed................................................................. (1,153,500)
-----------
Net increase in net assets from Capital share transactions.............................. 19,483,058
-----------
Total Increase in Net Assets.............................................................. 19,502,219
NET ASSETS
Beginning of period..................................................................... --
-----------
End of period........................................................................... $19,502,219
===========
SHARE TRANSACTIONS
Issued.................................................................................. 2,063,765
Reinvested.............................................................................. 15
Redeemed................................................................................ (114,942)
-----------
Change in shares........................................................................ 1,948,838
===========
- ---------------
<FN>
(a) Commencement of operations.
</TABLE>
- ---------------
See Notes to Financial Statements.
46
<PAGE> 49
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS -- 93.3%
ILLINOIS -- 1.1%
Alton Health Facilities Revenue, Refunding &
Improvement, Christian Health, Callable 2/15/01
@102 (FGIC)...................................... AAA/Aaa 7.20% 2/15/21 $ 1,000 $ 1,107,500
------------
KENTUCKY -- 3.0%
Louisville & Jefferson County, Revenue Bond,
Metropolitan Sewer District, Sewer & Drain
Systems (MBIA)................................... AAA/Aaa 6.50 5/15/07 1,770 1,982,400
State Turnpike Authority, Economic Development
Revenue Revitalization Projects (AMBAC).......... AAA/Aaa 6.50 7/1/07 1,000 1,126,250
------------
3,108,650
------------
NEW JERSEY -- 1.0%
State Refunding -- Series B......................... AA+/Aa1 6.20 1/15/00 1,000 1,045,000
------------
NORTH CAROLINA -- 5.8%
Medical Care Common Hospital Revenue, Presbyterian
Hospital Project................................. AAA/AAA 7.38 10/1/00 4,315 4,778,863
Municipal Power Agency No 1, Catawba Electric
Revenue (MBIA)................................... AAA/Aaa 6.00 1/1/10 1,000 1,072,500
------------
5,851,363
------------
OREGON -- 1.0%
Washington & Clackamas Counties, School District No
23 J Tigard (FGIC)............................... AAA/Aaa 5.40 6/1/05 1,000 1,037,500
------------
TENNESSEE -- 75.5%
Bristol Health & Educational Facilities Revenue,
Bristol Memorial Hospital (FGIC)................. AAA/Aaa 6.75 9/1/07 2,140 2,447,625
Hamilton County, Industrial Development Board Lease
Rent Revenue (FGIC).............................. AAA/Aaa 5.75 9/1/05 1,000 1,062,500
Hamilton County, Tennessee Public School
Improvements Series A, Callable 10/1/02 @ 102.... NR/Aa2 5.50 10/1/04 1,930 2,021,675
Humphreys County, Industrial Development Board,
Solid Waste Disposal Revenue, E.I. DuPont
DeNemours & Co. Project, Callable 5/1/04 @ 102... AA-/Aa3 6.70 5/1/24 1,455 1,569,581
Johnson City, General Obligation, School Sales Tax
Revenue, Callable 5/1/06 @ 100 (AMBAC)........... AAA/Aaa 6.70 5/1/21 1,250 1,418,750
Johnson City, Refunding General Obligation (FGIC)... AAA/Aaa 5.55* 5/1/10 1,100 561,000
Johnson City, Refunding General Obligation (FGIC)... AAA/Aaa 5.60* 5/1/11 1,430 691,763
Johnson City, Tennessee Health & Educational
Improvements Revenue (MBIA)...................... AAA/Aaa 6.75 7/1/16 1,000 1,101,250
Kingsport, Public Improvement, General Obligation,
Callable 9/1/02 @102............................. A+/A-1 5.60 9/1/03 1,200 1,252,500
Knox County, General Obligation, Callable 2/1/04 @
101.............................................. AA/Aa3 5.00 2/1/15 2,000 1,910,000
</TABLE>
Continued
47
<PAGE> 50
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TENNESSEE (CONTINUED)
Knox County, Health, Education & Housing Facilities
Board, Hospital Facilities Revenue, Fort Sanders
Alliance Obligation (MBIA)....................... AAA/Aaa 6.25 1/1/13 $ 1,000 $ 1,088,750
Knox County, Health, Education & Housing Facilities
Board, Hospital Facilities Revenue, Fort Sanders
Alliance Obligation, Series C, (MBIA)............ AAA/Aaa 7.00 1/1/15 1,500 1,621,875
Knox County, Tennessee General Obligation, Callable
4/1/03 @ 102..................................... AA/Aa 6.50 4/1/04 1,965 2,161,500
Lawrenceburg Electric Revenue (MBIA)................ AAA/Aaa 6.63 7/1/18 1,250 1,432,813
Loudon County, Industrial Development Board, Solid
Waste Disposal Revenue, Kimberly-Clark Corp.
Project, Callable 2/1/03 @ 102................... AA/Aa2 6.20 2/1/23 2,000 2,047,500
Memphis, General Obligation......................... AA/Aa 6.00 11/1/03 1,250 1,348,438
Memphis, General Obligation......................... AA/Aa 6.25 7/1/04 1,000 1,093,750
Memphis, General Obligation......................... AA/Aa 6.00 11/1/06 1,000 1,088,750
Memphis, General Obligation......................... NR/AAA 7.00 10/1/13 1,000 1,105,000
Metropolitan Government, Nashville & Davidson County
Health & Education Facilities Board, Refunding &
Improvements, Meharry Medical College Project
(AMBAC).......................................... AAA/Aaa 6.00 12/1/07 1,415 1,544,119
Metropolitan Government, Nashville & Davidson County
Health & Educational Facilities Board, Refunding
& Improvement, Meharry Medical College (AMBAC)... AAA/Aaa 6.00 12/1/09 1,000 1,088,750
Metropolitan Government, Nashville & Davidson
County, Energy Product General Obligation, Series
A, (AMBAC) Callable 7/1/07 @ 101................. AAA/Aaa 5.25 7/1/13 2,515 2,474,131
Metropolitan Government, Nashville & Davidson
County, General Obligation....................... AA/Aa 5.60 5/15/07 1,045 1,101,169
Metropolitan Government, Nashville & Davidson
County, Health & Educational Facilities Board
Revenue, Vanderbilt University, Series A,
Callable 7/1/07 @ 101............................ AA/Aa3 5.38 7/1/18 2,535 2,477,962
Metropolitan Government, Nashville & Davidson
County, Health & Educational Facilities Board,
Refunding & Improvement, Meharry Medical College
(AMBAC).......................................... AAA/Aaa 6.00 12/1/13 2,030 2,161,950
Metropolitan Government, Nashville & Davidson
County, Sports Authority Public Improvement,
Stadium Project (AMBAC), Callable 7/1/06 @ 101... AAA/Aaa 5.75 7/1/16 1,400 1,428,574
Metropolitan Government, Nashville & Davidson
County, Vanderbilt University, Series A.......... AA/Aa3 5.75 1/1/07 1,035 1,094,513
Metropolitan Government, Nashville & Davidson
County, Water & Sewer Revenue (MBIA)............. AAA/Aaa 6.00 1/1/04 2,000 2,145,000
Metropolitan Government, Nashville & Davidson
County, Water & Sewer Revenue.................... AAA/AAA 6.50 4/1/03 1,000 1,093,750
Rutherford County Capital Outlay, Series A.......... AA-Aa 6.25% 5/1/05 3,500 3,828,124
Rutherford County Capital Outlay, Series A.......... AA-/Aa 6.50 5/1/06 1,250 1,396,875
Shelby County General Obligation, Series A.......... AA+/Aa2 6.75 4/1/05 1,000 1,123,750
Shelby County General Obligation, Series A.......... AA+/Aa2 5.63 6/1/05 1,000 1,056,250
Shelby County Health, Educational & Housing
Facilities Board, Hospital Revenue, Methodist
Health Systems, Inc. (MBIA)...................... AAA/Aaa 6.25 8/1/08 2,000 2,212,500
Shelby County, General Obligation, Series A......... AA+/Aa2 6.75 4/1/04 2,000 2,227,500
Shelby County, General Obligation, Series A......... AA+/Aa2 5.63 6/1/09 1,000 1,040,000
</TABLE>
Continued
48
<PAGE> 51
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
TENNESSEE (CONTINUED)
Shelby County, General Obligation, Series A,
Callable 3/1/01 @ 102............................ AA+/Aa2 5.25 3/1/11 $ 1,000 $ 1,001,250
Shelby County, General Obligation, Series A,
Callable 8/1/06 @ 100............................ AA+/Aa2 5.60 8/1/08 1,125 1,151,719
Shelby County, Health, Educational & Housing
Facilities Board, Hospital Revenue, Methodist
Health Systems, Inc. (MBIA)...................... AAA/Aaa 5.50 8/1/05 3,000 3,131,249
Shelby County, Health, Educational & Housing
Facilities Board, Hospital Revenue, Methodist
Health Systems, Inc. (MBIA), Callable 8/1/05 @
102.............................................. AAA/Aaa 5.50 8/1/12 1,000 1,003,750
Shelby County, Tennessee Health, Educational &
Housing Facilities Board, Hospital Revenue,
Methodist Health Systems, Inc. (MBIA)............ AAA/Aaa 6.25 8/1/07 2,000 2,215,000
State General Obligation, Series B.................. AA+/Aaa 6.20 6/1/01 1,350 1,441,125
State Housing Development Agency Revenue, Callable
7/1/07 @ 102..................................... AA/Aa2 5.85 7/1/23 1,230 1,231,538
State Local Development Authority Revenue, Series
A................................................ AA-/A 5.75 3/1/11 1,000 1,028,750
State, General Obligation, Callable 5/1/07 @
101.5............................................ AAA/Aaa 5.25 5/1/14 1,275 1,287,750
State, General Obligation, Series A................. AAA/Aaa 5.55 3/1/10 2,000 2,077,500
State, General Obligation, Series A, Callable 5/1/06
@ 100............................................ AAA/Aaa 4.75 5/1/09 4,000 3,914,999
Williamson County, Public Improvement, General
Obligation....................................... NR/Aa 6.25 4/1/06 1,000 1,101,250
------------
77,105,817
------------
TEXAS -- 2.1%
Austin, Texas Independent School District, General
Obligation....................................... AAA/Aaa 6.00 8/1/05 2,000 2,165,000
------------
UTAH -- 1.0%
Intermountain Power Agency Revenue,
Utah Power Supply, Series A, Callable 7/1/03 @
102............................................ A+/A1 5.50 7/1/10 1,000 1,008,750
------------
VIRGINIA -- 1.9%
State Public Building Authority Revenue............. AA/Aa 4.90 8/1/09 2,000 1,946,580
------------
WISCONSIN -- 0.9%
State, General Obligation, Series 1, Callable 5/1/06
@ 100............................................ AA/Aa2 5.00 5/1/15 1,000 952,500
------------
Total Municipal Bonds (Cost $94,690,068).............. 95,328,660
------------
</TABLE>
Continued
49
<PAGE> 52
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
RATE DATE (000) (NOTE 2)
------ -------- --------- ------------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY BILL -- 6.8%
U.S. Treasury Bill (Cost $6,998,195)................ 4.73%* 7/3/97 $ 7,000 $ 6,997,293
------------
REGULATED INVESTMENT COMPANIES -- 4.9%
Aim Tax Free Money Market Fund...................... 4,418 4,418,074
Dreyfus Tax Free Money Market Fund.................. 572 572,268
------------
Total Regulated Investment Companies (Cost
$4,990,342)......................................... 4,990,342
------------
TOTAL INVESTMENTS (COST $106,678,605) (a) -- 105.0%... 107,316,295
LIABILITIES IN EXCESS OF OTHER ASSETS -- (5.0)%....... (4,994,485)
------------
TOTAL NET ASSETS -- 100.0%............................ $102,321,810
============
- ---------------
<FN>
Percentages indicated are based on net assets of $102,321,810.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation............. $ 852,643
Unrealized depreciation............. (214,953)
---------
Net unrealized appreciation......... $ 637,690
=========
* Yield at issue.
FGIC = Insured by Financial Guaranty Insurance Corp.
AMBAC = Insured by AMBAC Indemnity Corporation
MBIA = Insured by Municipal Bond Insurance Association
</TABLE>
See Notes to Financial Statements.
50
<PAGE> 53
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $106,678,605).................................. $107,316,295
Interest receivable...................................................................... 1,479,240
Receivable for investment securities sold................................................ 1,002,520
Receivable for Capital shares issued..................................................... 132,732
Deferred organization costs (Note 2)..................................................... 21,599
Prepaid expenses......................................................................... 393
------------
Total assets............................................................................... 109,952,779
------------
LIABILITIES
Distributions payable.................................................................... 346,076
Payable for investment securities purchased.............................................. 7,193,016
Accrued expenses:
Advisory fees......................................................................... 42,291
Administration fees................................................................... 12,688
Legal and audit fees.................................................................. 11,182
Other................................................................................. 25,716
------------
Total liabilities.......................................................................... 7,630,969
------------
NET ASSETS................................................................................. $102,321,810
===========
Shares Outstanding ($0.001 par value, 500 million shares authorized)....................... 10,384,182
===========
Calculation of Maximum Offering Price
Net asset value per share................................................................ $ 9.85
Sales charge -- 3.0% of public offering price............................................ 0.30
------
Maximum Offering Price..................................................................... $10.15
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par........................................................... $ 10,384
Additional paid-in capital............................................................... 103,399,836
Undistributed net investment income...................................................... 4,829
Net unrealized appreciation from investments............................................. 637,690*
Accumulated net realized losses from investment transactions............................. (1,730,929)
------------
Net Assets, June 30, 1997.................................................................. $102,321,810
===========
- ---------------
<FN>
*Represents sum of current periods unrealized appreciation plus common trust
fund appreciation.
</TABLE>
See Notes to Financial Statements.
51
<PAGE> 54
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest......................................................................... $2,343,188
Dividends........................................................................ 78,055
----------
Total Investment Income.......................................................... 2,421,243
Expenses
Advisory fees.................................................................. $ 241,719
Administration fees............................................................ 72,516
Distribution fees.............................................................. 120,860
Custodian fees................................................................. 12,384
Accounting fees................................................................ 26,965
Transfer agent fees and expenses............................................... 14,501
Legal and audit fees........................................................... 15,167
Amortization of organization expenses.......................................... 5,792
Directors' fees................................................................ 2,709
Insurance expense.............................................................. 2,651
Registration fees.............................................................. 3,770
Other expenses................................................................. 3,529
---------
Total expenses before fee waivers........................................... 522,563
Less: Fee waivers........................................................... (120,860)
---------
Total expenses.............................................................. 401,703
----------
Net Investment Income............................................................ 2,019,540
----------
REALIZED AND UNREALIZED GAINS(LOSSES) FROM INVESTMENTS
Net realized losses from securities transactions............................... (574,830)
Net change in unrealized appreciation from investments......................... 134,821(a)
----------
Net Realized and Unrealized Losses from Investments.............................. (440,009)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................. $1,579,531
==========
- ---------------
<FN>
(a) Includes appreciation (depreciation) from acquired common trust fund.
</TABLE>
See Notes to Financial Statements.
52
<PAGE> 55
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- ------------------
(UNAUDITED)
<S> <C> <C>
INCREASE IN NET ASSETS
Operations
Net investment income..................................................... $ 2,019,540 $ 3,906,644
Net realized gains (losses) from securities transactions.................. (574,830) (577,774)
Net change in unrealized appreciation (depreciation) from investments..... 134,821 (2,118,918)
------------ ------------
Net increase in net assets resulting from operations...................... 1,579,531 1,209,952
------------ ------------
Dividends to shareholders from net investment income........................ (2,019,540) (3,905,475)
------------ ------------
Capital Share Transactions
Net proceeds from shares subscribed....................................... 20,523,495 9,672,959
Net asset value of shares issued to shareholders in reinvestment of
dividends.............................................................. 100,001 187,651
Cost of shares redeemed................................................... (5,945,472) (13,224,484)
------------ ------------
Net increase (decrease) in net assets from Capital share transactions..... 14,678,024 (3,363,874)
------------ ------------
Total Increase (Decrease) in Net Assets..................................... 14,238,015 (6,059,397)
NET ASSETS
Beginning of period....................................................... 88,083,795 94,143,192
------------ ------------
End of period............................................................. $ 102,321,810 $ 88,083,795
============ ============
SHARE TRANSACTIONS
Issued.................................................................... 2,076,297 980,116
Reinvested................................................................ 10,188 19,014
Redeemed.................................................................. (600,918) (1,339,773)
------------ ------------
Change in shares.......................................................... 1,485,567 (340,643)
============ ============
</TABLE>
- ---------------
See Notes to Financial Statements.
53
<PAGE> 56
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL
RATINGS MATURITY AMOUNT VALUE
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS -- 95.7%
TENNESSEE -- 95.7%
Chattanooga, Tennessee Public & Sewer Improvements..... AA-/A1 7.75% 8/1/01 $ 550 $ 616,000
Clarksville, Tennessee Water Sewer & Gas Revenue
(MBIA).............................................. NR/Aaa 4.60 2/1/01 575 575,719
Cookeville, Tennessee Industrial Development Board
Refunding, General Hospital Project................. A/NR 4.75 10/1/99 200 201,750
Hamilton County, Tennessee Public School Improvements
Series A, Callable 10/1/02 @ 102.................... NR/Aa2 5.50 10/1/04 1,000 1,047,500
Hamilton County, Tennessee Industrial Development,
Board Lease Rent Revenue Bond (FGIC)................ AAA/Aaa 5.50 9/1/02 750 783,750
Hamilton County, Tennessee Refunding, Series A......... NR/Aa2 4.90 9/1/04 750 755,625
Jackson, Tennessee Hospital Revenue Refunding &
Improvements........................................ A+/A1 4.80 4/1/02 500 500,625
Johnson City, Tennessee Health & Educational
Improvements Revenue (MBIA)......................... AAA/Aaa 6.75 7/1/16 1,000 1,101,249
Kingsport, Tennessee General Improvement............... A+/NR 6.80 6/1/02 500 522,670
Knox County, Tennessee 1st Utility District Water &
Sewer -- Series A, Refunding & Improvement (MBIA)... AAA/Aaa 4.50 12/1/01 975 976,219
Knox County, Tennessee General Obligation, Callable
4/1/03 @ 102........................................ AA/Aa 6.50 4/1/04 1,000 1,100,000
Knox County, Tennessee Health, Educational & Housing
Facilities Board, Hospital Revenue, Fort Sanders
Alliance Obligation (MBIA).......................... AAA/Aaa 6.95 1/1/03 500 540,000
Knoxville, Tennessee Refunding & Public Improvement.... AA/Aa3 4.65 5/1/01 650 650,000
Maury County, Tennessee, Callable 6/1/03 @ 100......... NR/A1 4.63 6/1/04 750 748,868
Memphis, General Obligation............................ AA/Aa 6.00 11/1/03 500 539,375
Memphis, Tennessee Electric System Revenue............. AA/Aa 6.40 1/1/00 500 522,500
Memphis, Tennessee Electrical System Revenue
Refunding........................................... AA/Aa 5.80 1/1/03 1,000 1,056,250
Metropolitan Government, Nashville & Davidson County,
Tennessee Energy Product, Series A.................. AAA/Aaa 5.75 7/1/00 750 780,000
Metropolitan Government, Nashville & Davidson County,
Tennessee Health & Educational Facilities Board
Revenue, The Vanderbilt University, Series A,....... AA/Aa3 6.00 7/1/07 625 675,000
Rutherford County, Tennessee Refunding................. AA-/Aa 4.75 4/1/01 750 762,188
Sevier County, Tennessee Utility District Gassys
Revenue (AMBAC)..................................... NR/Aaa 4.90 5/1/04 500 500,000
Shelby County, Tennessee Health Educational & Hospital
Facilities Board Revenue............................ NR/Baa2 5.20 9/1/04 640 633,600
Shelby County, Tennessee Health, Educational & Housing
Facilities Board, Hospital Revenue, Methodist Health
Systems, Inc. (MBIA)................................ AAA/Aaa 6.25 8/1/07 1,500 1,661,249
Shelby County, Tennessee Refunding, Series B........... AA+/Aa2 5.55 3/1/04 750 775,313
Sullivan County, Tennessee Educational & Housing
Facility, Callable 2/15/03 @ 102.................... AAA/Aaa 5.38 2/15/04 650 671,938
Sullivan County, Tennessee Health, Educational &
Housing Facility Board Revenue, Hospital -- Holston
Valley Health Care (MBIA)........................... AAA/Aaa 7.13 2/15/05 1,000 1,086,250
Tennessee State........................................ AA+/Aaa 5.00 3/1/01 750 754,425
Tennessee State General Obligation Series B, Callable
6/1/01 @ 101.5...................................... AA+/Aaa 6.50 6/1/03 1,115 1,213,955
-----------
Total Municipal Bonds (Cost $21,809,450)................. 21,752,018
-----------
</TABLE>
Continued
54
<PAGE> 57
<TABLE>
<CAPTION>
PRINCIPAL
MATURITY AMOUNT VALUE
RATE DATE (000) (NOTE 2)
---- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
U.S. TREASURY BILL -- 2.2%
U.S. Treasury Bill (Cost $499,874)..................... 4.60* 7/3/97 $ 500 $ 499,839
-----------
REGULATED INVESTMENT COMPANIES -- 4.2%
Aim Tax Free Money Market Fund......................... 964 963,618
Dreyfus Tax Free Money Market Fund..................... -- 436
-----------
Total Regulated Investment Companies (Cost $964,054)..... 964,054
-----------
TOTAL INVESTMENTS (COST $23,273,378) (a) -- 102.1%....... 23,215,911
LIABILITIES IN EXCESS OF OTHER ASSETS -- (2.1)%.......... (486,168)
-----------
TOTAL NET ASSETS -- 100.0%............................... $22,729,743
===========
- ---------------
<FN>
Percentages indicated are based on net assets of $22,729,743.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows:
Unrealized appreciation............................................................. $ 57,894
Unrealized depreciation............................................................. (115,361)
---------
Net unrealized depreciation......................................................... $ (57,467)
=========
* Yield at issue.
MBIA = Insured by Municipal Bond Insurance Association
FGIC = Insured by Financial Guaranty Insurance Corp.
AMBAC = Insured by AMBAC Indemnity Corporation
</TABLE>
See Notes to Financial Statements.
55
<PAGE> 58
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (Cost $23,273,378).................................... $23,215,911
Interest receivable....................................................................... 353,533
Deferred organization costs (Note 2)...................................................... 2,586
Prepaid expenses and other assets......................................................... 1,099
-----------
Total assets................................................................................ 23,573,129
-----------
LIABILITIES
Distributions payable..................................................................... 62,836
Payable for investment securities purchased............................................... 748,868
Accrued expenses:
Advisory fees.......................................................................... 7,298
Administration fees.................................................................... 749
Legal and audit fees................................................................... 13,265
Other.................................................................................. 10,370
-----------
Total liabilities........................................................................... 843,386
-----------
NET ASSETS.................................................................................. $22,729,743
===========
Shares Outstanding ($0.001 par value, 500 million shares authorized)........................ 2,285,345
===========
Calculation of Maximum Offering Price
Net asset value per share................................................................. $ 9.95
Sales charge -- 3.0% of public offering price............................................. 0.31
-----------
Maximum Offering Price...................................................................... $ 10.26
===========
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................................................ $ 2,285
Additional paid-in capital................................................................ 22,864,215
Undistributed net investment income (loss)................................................ (3,630)
Net unrealized depreciation from investments.............................................. (57,467)*
Accumulated net realized losses from investment transactions.............................. (75,660)
-----------
Net Assets, June 30, 1997................................................................... $22,729,743
===========
- ---------------
<FN>
*Represents sum of current periods unrealized appreciation (depreciation) plus
common trust fund appreciation (depreciation).
</TABLE>
See Notes to Financial Statements.
56
<PAGE> 59
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 28, 1997(a) TO JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest............................................................................ $ 285,296
Dividends........................................................................... 14,810
----------
Total Investment Income............................................................. 300,106
Expenses
Advisory fees..................................................................... $ 34,695
Administration fees............................................................... 10,409
Distribution fees................................................................. 17,348
Custodian fees.................................................................... 3,770
Accounting fees................................................................... 16,510
Transfer agent fees and expenses.................................................. 7,376
Legal and audit fees.............................................................. 15,002
Reports to shareholders........................................................... 829
Amortization of organization expenses............................................. 720
Directors' fees................................................................... 360
Insurance expense................................................................. 332
Registration fees................................................................. 1,460
Other expenses.................................................................... 256
-------
Total expenses before fee waivers.............................................. 109,067
Less: Fee waivers.............................................................. (33,105)
-------
Total expenses................................................................. 75,962
----------
Net Investment Income............................................................... 224,144
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized losses from securities transactions.................................. (75,660)
Net change in unrealized depreciation from investments............................ (57,467)(b)
----------
Net Realized and Unrealized Losses from Investments................................. (133,127)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 91,017
==========
- ---------------
<FN>
(a) Commencement of operations.
(b) Includes appreciation (depreciation) from acquired common trust fund.
</TABLE>
See Notes to Financial Statements.
57
<PAGE> 60
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FEBRUARY 28, 1997(a)
TO JUNE 30, 1997
--------------------
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................................................ $ 224,144
Net realized losses from securities transactions..................................... (75,660)
Net change in unrealized depreciation from investments............................... (57,467)
-------------
Net increase in net assets resulting from operations................................. 91,017
-------------
Dividends to shareholders from net investment income................................... (227,774)
-------------
Capital Share Transactions
Net proceeds from shares subscribed.................................................. 25,001,920
Cost of shares redeemed.............................................................. (2,135,420)
-------------
Net increase in net assets from Capital share transactions........................... 22,866,500
-------------
Total Increase in Net Assets........................................................... 22,729,743
NET ASSETS
Beginning of period.................................................................. --
-------------
End of period........................................................................ $ 22,729,743
=============
SHARE TRANSACTIONS
Issued............................................................................... 2,500,230
Redeemed............................................................................. (214,885)
-------------
Change in shares..................................................................... 2,285,345
=============
- ---------------
<FN>
(a) Commencement of operations.
</TABLE>
See Notes to Financial Statements.
58
<PAGE> 61
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR FUNDS
- --------------------------------------------------------------------------------
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 to the AmeriStar Prime
Money Market Portfolio, the AmeriStar U.S. Treasury Money Market Portfolio, the
AmeriStar Capital Growth Portfolio, the AmeriStar Dividend Growth Portfolio, the
AmeriStar Core Income Portfolio, the AmeriStar Limited Duration Income
Portfolio, the AmeriStar Limited Duration U.S. Government Portfolio, the
AmeriStar Tennessee Tax Exempt Bond Portfolio, and the AmeriStar Limited
Duration Tennessee Tax Free Portfolio (together the "Portfolios").
The Prime Money Market Portfolio and U.S. Treasury Money Market Portfolio
both 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.
The Prime Money Market Portfolio invests in short-term money market instruments
consisting of securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities. The U.S. Treasury Money Market Portfolio invests
only in U.S. Treasury securities and in other securities guaranteed as the
principal and interest by the U.S. Government. The Capital Growth Portfolio
seeks to provide investors with capital growth by investing primarily in the
equity securities of domestic issuers. The Dividend Growth Portfolio seeks to
provide investors with current income and capital appreciation. This Portfolio
will invest primarily in dividend-paying equity securities of domestic issuers
which are expected to provide reasonable income and may have capital
appreciation potential. The Core Income Portfolio seeks to provide investors
with current income without assuming undue risk. This Portfolio will invest
primarily in investment grade, U.S. dollar denominated fixed-income securities
of domestic and foreign issuers. Under normal market conditions, the Core Income
Portfolio will invest in a portfolio of securities, except when maintaining a
temporary defensive position, that has an effective duration of 50% to 150% of
that of the Merrill Lynch Corporate Government Master Index. The Limited
Duration Income Portfolio's investment objective is to provide investors with
current income without assuming undue risk. This Portfolio will invest primarily
in investment grade, U.S. dollar denominated fixed-income securities of domestic
and foreign issuers. Under normal market conditions, the
Limited Duration Income Portfolio will invest in a portfolio of securities that
has a duration of under four years. The Limited Duration U.S. Government
Portfolio seeks to provide investors with high current income without assuming
undue risk. This Portfolio will invest primarily in a portfolio of U.S.
Government securities that, under normal market conditions, has an effective
duration that approximates that of the Merrill Lynch Government 1 to 5 Year Bond
Index. The Tennessee Tax Exempt Bond Portfolio's investment objective is to
provide investors with current income exempt from federal and Tennessee income
taxes without assuming undue risk. This Portfolio will invest primarily in
investment grade Tennessee Municipal Obligations without regard to maturity. The
Limited Duration Tennessee Tax Free Portfolio seeks to provide investors with
current income exempt from Federal and Tennessee income taxes without assuming
undue risk. This Portfolio will invest primarily in a portfolio of investment
grade Tennessee Municipal Obligations that, under normal market conditions, has
a duration of under five years and an effective average portfolio maturity
ranging between three and five years.
The Portfolios are authorized to issue two classes of shares as follows:
Investor Shares and Trust Shares. Investor Shares and Trust Shares are
substantially the same, except that Investor Shares bear the fees that are
payable under the plans adopted by the Fund's Board of Directors. Under the
shareholder services plan (the "Shareholder Service Plan") for the Prime Money
Market Portfolio and U.S. Treasury Money Market Portfolio (the "Money Market
Portfolios"), fees are payable at an annual rate of 0.25% of each Money Market
Portfolio's average daily net assets represented by Investor Shares. Under the
plan adopted pursuant to Rule 12b-1 under the Act (the "Distribution Plan"), the
Capital Growth Portfolio, the Dividend Growth Portfolio, the Core Income
Portfolio, the Limited Duration Income Portfolio, the Limited Duration U.S.
Government Portfolio, Tennessee Tax Exempt Bond Portfolio and the Limited
Duration Tennessee Tax Free Portfolio (the "Variable Net Asset Value
Portfolios") pay fees at an annual rate of 0.25% of each Variable Net Asset
Value Portfolio's average daily net assets represented by Investor Shares. As of
June 30, 1997, the Variable Net Asset Value Portfolios only offer Investor
Shares.
At June 30, 1997, there were 2.0 billion shares of the Money Markets
Portfolios' $0.001 par value common stock authorized, of which each Portfolio's
shares are classified into Investor Shares (500 million shares authorized per
Portfolio)
Continued
59
<PAGE> 62
- --------------------------------------------------------------------------------
and Trust Shares (500 million shares authorized per Portfolio). There were 3.5
billion shares of the Variable Net Asset Value Portfolios' $0.001 par value
common stock authorized, of which each Portfolio's shares are classified into
Investor Shares (250 million shares authorized per Portfolio) and Trust Shares
(250 million shares authorized per Portfolio).
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Portfolios in preparation of their 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) Security Valuation:
The Money Market Portfolios' securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and cost. In addition, the Money Market 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.
The Variable Net Asset Value Portfolios' investments are valued each
business day using available market quotations or at fair value as determined by
one or more independent pricing services (collectively, the "Service") approved
by the Board of Directors. The Service may use available market quotations,
employ electronic data processing techniques and/or a matrix system to determine
valuations. Restricted securities and securities for which market quotations are
not readily available, if any, are valued at fair value using methods approved
by the Board of Directors. 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 more than 60 days to maturity,
at their market value each day until the 61st day prior to maturity, and there
after assuming a constant amortization to maturity of the difference between the
principal amount due at maturity and such valuation.
B) Security Transactions and Investment Income:
Security transactions are recorded on trade date. Realized gains and losses
from 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. Dividend income is recorded on the ex-dividend
date.
C) Repurchase Agreements:
The Portfolios' 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 on the obligation to repurchase, the
Portfolios have 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:
The Portfolios incurred certain costs in connection with their
organization. These costs were deferred and are being amortized on a
straight-line basis over five years from their commencement of operations. The
Fund accounts separately for the assets, liabilities and operations of each
Portfolio. Direct expenses of a Portfolio are charged to that Portfolio while
general Fund expenses are allocated among the Fund's respective portfolios based
on the relative net assets of each Portfolio. At June 30, 1997, deferred
organization costs were $23,045, $24,160 $9,069, $5,959, $2,981, $21,692,
$2,261, $21,599 and $2,586 for the Prime Money Market Portfolio, the U.S.
Treasury Money Market Portfolio, the Capital Growth Portfolio, the Dividend
Growth Portfolio, the Core Income Portfolio, the Limited Duration Income
Portfolio, the Limited Duration U.S. Government Portfolio, the Tennessee Tax
Exempt Bond Portfolio and the Limited Duration Tennessee Tax Free Portfolio,
respectively.
E) Federal Income Taxes:
For federal income tax purposes, each Portfolio is treated as a separate
entity for the purpose of determining its qualification as a regulated
investment company under the Internal Revenue Code (the "Code"). It is the
policy of each Portfolio to meet the requirements of the Code applicable to
regulated investment companies, including the requirement
Continued
60
<PAGE> 63
- --------------------------------------------------------------------------------
that they distribute substantially all of their income to shareholders.
Therefore, no federal income tax provision is required.
At December 31, 1996, capital loss carryovers are available to offset
future net realized gains on securities transactions to the extent provided for
in the Code. Such capital loss carryover are detailed as follows:
<TABLE>
<CAPTION>
PRIME MONEY TENNESSEE
MARKET CAPITAL GROWTH CORE INCOME TAX EXEMPT
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- -------------- ----------- ----------
<S> <C> <C> <C> <C>
Capital Loss
Carryover...... $ 889 $157,938 $85,478 $ 577,919
Expires in
year........... 2002 2004 2004 2002
Capital Loss
Carryover...... $ 149 -- -- $ 578,180
Expires in
year........... 2004 -- -- 2004
Total
Carryover...... $ 1,038 $157,938 $85,478 $1,156,099
</TABLE>
F) Dividends and Distributions to Shareholders:
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and are paid monthly for the Prime Money
Market Portfolio, U.S. Treasury Money Market Portfolio, Core Income Portfolio,
Limited Duration Income Portfolio, Limited Duration U.S. Government Portfolio,
Tennessee Tax Exempt Bond Portfolio and the Limited Duration Tennessee Tax Free
Portfolio. Dividends are declared and paid quarterly for the Capital Growth
Portfolio. Dividends are declared and paid monthly for the Dividend Growth
Portfolio. For all Portfolios, distributions of net realized gains, if any, will
be paid at least annually. Dividends and distributions are recorded on the
exdividend date. Distributions from net investment income and from net realized
gains are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. Timing differences relating to
shareholder distributions have been reclassified to paid-in-capital. These
differences are primarily due to deferrals of certain losses and expiring
capital loss carryovers.
G) Other:
Each Portfolio maintains a cash balance with its custodian and receives a
reduction of its custody fees for the amounts of interest earned on such
uninvested cash balances. For financial reporting purposes for the six months
ended June 30, 1997, there were no reductions in custodian fees and expenses
paid by third parties. There was no effect on net investment income. Each
Portfolio could have invested such cash amounts, if any, in an income producing
asset if it had not agreed to a reduction of fees and expenses under the expense
offset arrangement with its custodian.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
First American National Bank ("First American") serves as the Portfolios'
investment adviser. Barnett Capital Advisors, Inc. ("Barnett") serves as the
sub-investment adviser with respect to the Prime Money Market Portfolio. BISYS
Fund Services Limited Partnership ("BISYS") serves as the Portfolios'
administrator and distributor of the Portfolios' shares. BISYS is a subsidiary
of The BISYS Group, Inc.
As investment adviser, First American manages the investments of each
Portfolio, supervises the sub-investment adviser with respect to the Prime Money
Market Portfolio and is responsible for all purchases and sales of each
Portfolio's investment securities. For its services, First American is entitled
to receive fees at an annual rate of 0.25% of the average daily net assets of
each Money Market Portfolio less, in the case of the Prime Money Market
Portfolio any amounts payable to Barnett, 0.65% of the average daily net assets
of the Capital Growth Portfolio and the Dividend Growth Portfolio and 0.50% of
the average daily net assets of the Core Income Portfolio, the Limited Duration
Income Portfolio, Limited Duration U.S. Government Portfolio, Tennessee Tax
Exempt Bond Portfolio, and the Limited Duration Tennessee Tax Free Portfolio.
For the six months ended June 30, 1997, First American waived $2,130, $13,110,
and $8,078 in advisory fees with respect to the Dividend Growth Portfolio,
Limited Duration U.S. Government Portfolio, and Limited Duration Tennessee Tax
Free Portfolio, respectively.
As sub-investment adviser, Barnett provides the day-to-day management of
the Prime Money Market Portfolio's investments. For its services, the Prime
Money Market Portfolio has agreed to pay Barnett a fee at an annual rate of
0.15% of the Prime Money Market Portfolio's average daily net assets. Such fees
are accrued daily and paid monthly.
As administrator, BISYS assists in supervising the operations of the
Portfolios. For its services, BISYS is entitled to receive a fee at the annual
rate of 0.10% of the average daily net assets of each Money Market Portfolio and
0.15% of the average daily net assets of each Variable Net Asset Value
Portfolio. For the six months ended June 30, 1997, BISYS waived $491, $7,085,
and $7,679 in administration fees with respect to Dividend Growth Portfolio,
Limited Duration U.S. Government Portfolio, and Limited Duration Tennessee Tax
Free Portfolio, respectively.
Pursuant to the Shareholder Service Plan, the Money Market Portfolios pay
BISYS for the provision of certain services to the holders of Investor Shares at
an annual rate of 0.25% of the average daily net assets of the Money Market
Portfolios' Investor Shares. The services provided may include personal services
relating to shareholder accounts and services related to the maintenance of such
shareholder accounts. BISYS may pay financial institutions, including
Continued
61
<PAGE> 64
- --------------------------------------------------------------------------------
the investment adviser, broker/dealers and other institutions in respect of
these services. For the six months ended June 30, 1997, no shareholder services
fees under the Shareholder Service Plan were waived by BISYS.
Pursuant to the Distribution Plan, each Variable Net Asset Value Portfolio
pays BISYS for advertising, marketing and distributing such Portfolios' Investor
Shares at an annual rate of 0.25% of the average daily net assets of such
Investor Shares, BISYS may pay financial institutions, broker/dealers and other
institutions, in respect of these services. For the six months ended June 30,
1997, BISYS waived $124,179, $47,905, $73,803, $123,251, $16,010, $120,860 and
$17,348 in Distribution Plan fees with respect to the Capital Growth Portfolio,
Dividend Growth Portfolio, Core Income Portfolio, Limited Duration Income
Portfolio, Limited Duration U.S. Government Portfolio, Tennessee Tax Exempt Bond
Portfolio and Limited Duration Tennessee Tax Free Portfolio, respectively.
Certain officers and Directors of the Fund are "affiliated persons" (each
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 the Portfolios constituting the Fund.
NOTE 4 -- SECURITIES TRANSACTIONS
For the six months ended June 30, 1997, the cost of purchases and the
proceeds from sales of portfolio securities (excluding short-term investments)
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Capital Growth Portfolio......... $ 91,166,648 $ 42,048,846
Dividend Growth Portfolio(a)..... $ 54,860,839 $ 18,797,183
Core Income Portfolio............ $ 43,042,515 $ 11,759,139
Limited Duration Income
Portfolio...................... $ 11,996,356 $ 8,698,125
Limited Duration U.S. Government
Portfolio(a)................... $ 19,454,114 $ 2,323,239
Tennessee Tax Exempt Bond
Portfolio...................... $137,671,081 $128,098,984
Limited Duration Tennessee Tax
Free Portfolio(a).............. $ 34,434,725 $ 12,478,767
- ---------------
<FN>
(a) For the period from February 28, 1997(commencement of operations) through
June 30, 1997.
</TABLE>
NOTE 5 -- CONCENTRATION OF CREDIT RISK
The Prime Money Market Portfolio invests substantially all of its assets in
a diversified portfolio of high quality U.S. dollar dominated money market
instruments as disclosed in the Portfolio of Investments by security type. The
issuers' abilities to meet their obligations may be affected by domestic and
foreign economic, regional and political developments.
The Prime Money Market Portfolio had the following concentrations by
industry sector at June 30, 1997 (as a percentage of total investments):
<TABLE>
<S> <C>
Commercial Paper........................... 34.9%
Repurchase Agreements...................... 11.5%
Bank Notes................................. 7.0%
Certificates of Deposit.................... 16.3%
Corporate Obligations...................... 26.8%
Time Deposits.............................. 3.5%
-------
100.0%
======
</TABLE>
The Tennessee Tax Exempt Bond Portfolio and Limited Duration Tennessee Tax
Free Portfolio invest substantially all of their assets in a non-diversified
portfolio of tax-exempt debt obligations primarily consisting of securities
issued by the State of Tennessee, its municipalities, counties and other taxing
districts. The issuers' abilities to meet their obligations may be affected by
Tennessee economic, regional and political developments.
The Tennessee Tax Exempt Bond Portfolio and Limited Duration Tennessee Tax
Free Portfolio had the following concentrations by sector at June 30, 1997 (as a
percentage of total investments):
<TABLE>
<CAPTION>
LIMITED DURATION
TENNESSEE TENNESSEE
TAX EXEMPT TAX FREE
BOND PORTFOLIO PORTFOLIO
-------------- ----------------
<S> <C> <C>
General Obligations...... 34.2% 12.3%
Utilities................ 9.6% 21.7%
Health & Medical......... 23.8% 22.8%
Educational.............. 5.2% 9.2%
Housing.................. 3.2% 6.3%
Cash and Cash 11.1% 6.3%
Equivalents............
Other.................... 12.9% 21.4%
------ ------
100.0% 100.0%
=========== ============
</TABLE>
Continued
62
<PAGE> 65
- --------------------------------------------------------------------------------
NOTE 6 -- CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Prime Money Market Portfolio and the U.S.
Treasury Money Market Portfolio (at $1.00 per share) are summarized below:
<TABLE>
<CAPTION>
PRIME MONEY MARKET PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(UNAUDITED)
<S> <C> <C>
INVESTOR SHARES
Shares sold..................... 90,437,682 243,644,595
Shares issued in reinvestment of
dividends and distributions... 12,308 26,543
Shares redeemed................. (70,517,126) (284,754,474)
------------- -----------------
19,932,864 (41,083,336)
============ =================
TRUST SHARES
Shares sold..................... 78,374,705 137,969,542
Shares issued in reinvestment of
dividends and distributions... -- --
Shares redeemed................. (83,333,555) (89,868,790)
------------- -----------------
(4,958,850) 48,100,752
============ =================
Net increase in Capital Shares.... 14,974,014 7,017,416
============ =================
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY
MONEY MARKET PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
(UNAUDITED)
<S> <C> <C>
INVESTOR SHARES
Shares sold..................... 127,303,446 277,704,916
Shares issued in reinvestment of
dividends and distributions... 34,711 56,500
Shares redeemed................. (130,663,905) (367,883,074)
------------- -----------------
(3,325,748) (90,121,658)
============ =================
TRUST SHARES
Shares sold..................... 86,522,208 182,400,072
Shares issued in reinvestment of
dividends and distributions... -- --
Shares redeemed................. (95,029,571) (72,702,140)
------------- -----------------
(8,507,363) 109,697,932
============ =================
Net increase (decrease) in Capital
Shares.......................... (11,833,111) 19,576,274
============ =================
</TABLE>
NOTE 7 -- CONVERSION OF COMMON TRUST FUNDS:
On March 3, 1997, the Capital Growth Portfolio, Dividend Growth Portfolio,
Core Income Portfolio, Limited Duration U.S. Government Portfolio, Tennessee Tax
Exempt Bond Portfolio and Limited Duration Tennessee Tax Free Portfolio issued
shares to acquire all of the assets and liabilities of certain common trust
funds of First American National Bank. The following is a summary of shares
issued, net assets converted, net asset value per share and unrealized
appreciation (depreciation) as of the conversion date (amounts in thousands,
except per share amounts):
<TABLE>
<CAPTION>
NET ASSET UNREALIZED
NET VALUE APPRECIATION
SHARES ASSETS PER SHARE (DEPRECIATION)
------ ------- ---------- --------------
<S> <C> <C> <C> <C>
Capital Growth Portfolio....................................... 6,276 $73,749 $11.75 $ 20,169
Dividend Growth Portfolio...................................... 5,499 54,987 10.00 12,302
Core Income Portfolio.......................................... 3,314 32,904 9.93 (332)
Limited Duration U.S. Government Portfolio..................... 1,993 19,925 10.00 8
Tennessee Tax Exempt Bond Portfolio............................ 1,679 16,624 9.90 48
Limited Duration Tennessee Tax Free Portfolio.................. 2,105 $21,050 $10.00 $ (30)
</TABLE>
Continued
63
<PAGE> 66
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED YEAR ENDED PERIOD ENDED
ENDED JUNE 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
------------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- ------- -------
Income from investment operations:
Net investment income................... 0.023 0.048 0.054 0.031
------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment income.... (0.023) (0.048) (0.054) (0.031)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............ $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= =======
Total Return.............................. 2.37%(a) 4.88% 5.51% 3.13%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)....... $42,769 $22,836 $63,919 $ 82,351
Ratio of expenses to average net
assets............................... 0.88%(c) 0.68% 0.65% 0.63%(c)
Ratio of net investment income to
average net assets................... 4.66%(c) 4.83% 5.37% 4.06%(c)
Ratio of expenses to average net
assets**............................. 0.88%(b)(c) 0.86%(d) 0.90% 0.93%(c)
Ratio of net investment income to
average net assets**................. 4.66%(b)(c) 4.65% 5.12% 3.76%(c)
- ---------------
<FN>
* For the period from March 24, 1994 (commencement of operations) through
December 31, 1994.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) There were no fee waivers or expense reimbursements for this fund during
this period.
(c) Annualized.
(d) 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.
</TABLE>
See Notes to Financial Statements.
64
<PAGE> 67
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS FROM JULY 1,
ENDED 1996 THROUGH
JUNE 30, DECEMBER 31,
1997 1996 *
---------- -----------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................... $ 1.000 $ 1.000
------- -------
Income from investment operations:
Net investment income................................................. 0.025 0.024
------- -------
Less dividends and distributions:
Dividends from net investment income.................................. (0.025) (0.024)
------- -------
NET ASSET VALUE, END OF PERIOD.......................................... $ 1.000 $ 1.000
======= =======
Total Return............................................................ 2.50%(a) 5.00%(a)(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)..................................... $ 43,142 $48,101
Ratio of expenses to average net assets............................... 0.63%(c) 0.65%(c)
Ratio of net investment income to average net assets.................. 4.91%(c) 4.86%(c)
Ratio of expenses to average net assets**............................. 0.63%(c) 0.65%(c)(d)
Ratio of net investment income to average net assets**................ 4.91%(c) 4.86%(c)
- ---------------
<FN>
* Period from commencement of operations.
** There were no fee waivers or expense reimbursements for this fund.
(a) Not annualized.
(b) Represents total return for Investor Shares from January 1, 1996 through
June 30, 1996 plus total return for Trust Shares from July 1, 1996 through
December 1, 1996
(c) Annualized.
(d) 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.
</TABLE>
- ---------------
See Notes to Financial Statements.
65
<PAGE> 68
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
---------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- -------- -------- --------
Income from investment operations:
Net investment income................... 0.023 0.047 0.053 0.030
------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income.... (0.023) (0.047) (0.053) (0.030)
------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD............ $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======== ======== ========
Total Return.............................. 2.30%(a) 4.78% 5.41% 3.01%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)....... $ 74,983 $78,308 $ 168,430 $139,715
Ratio of expenses to average net
assets............................... 0.75%(c) 0.56% 0.50% 0.54%(c)
Ratio of net investment income to
average net assets................... 4.50%(c) 4.72% 5.28% 4.02%(c)
Ratio of expenses to average net
assets**............................. 0.75%(b)(c) 0.74%(d) 0.75% 0.83%(c)
Ratio of net investment income to
average net assets**................. 4.50%(b)(c) 4.54% 5.03% 3.73%(c)
- ---------------
<FN>
* For the period March 29, 1994 (commencement of operations) through December
31, 1994.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) There were no fee waivers or expense reimbursements for this fund during
this period.
(c) Annualized.
(d) 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.
</TABLE>
See Notes to Financial Statements.
66
<PAGE> 69
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD FROM
ENDED JULY 1, 1996 THROUGH
JUNE 30, 1997 DECEMBER 31, 1996*
------------- --------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................................. $ 1.000 $ 1.000
-------- --------
Income from investment operations:
Net investment income............................................... 0.024 0.024
-------- --------
Less dividends and distributions:
Dividends from net investment income................................ (0.024) (0.024)
-------- --------
NET ASSET VALUE, END OF PERIOD........................................ $ 1.000 $ 1.000
======== ========
Total Return.......................................................... 2.43%(a) 4.90%(a)(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)................................... $ 101,191 $109,698
Ratio of expenses to average net assets............................. 0.50%(c) 0.52%(c)
Ratio of net investment income to average net assets................ 4.75%(c) 4.78%(c)
Ratio of expenses to average net assets**........................... 0.50%(c) 0.52%(c)(d)
Ratio of net investment income to average net assets**.............. 4.75%(c) 4.78%(c)
- ---------------
<FN>
* Period from commencement of operations.
** There were no fee waivers or expense reimbursements for this fund.
(a) Not annualized.
(b) Represents total return for Investor Shares from January 1, 1996 through
June 30, 1996 plus total return for Trust Shares from July 1, 1996 through
December 1, 1996.
(c) Annualized.
(d) 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.
</TABLE>
See Notes to Financial Statements.
67
<PAGE> 70
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD FROM
ENDED APRIL 1, 1996 THROUGH
JUNE 30, 1997 DECEMBER 31, 1996*
------------- ---------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................................... $ 11.32 $ 10.00
-------- -------
Income from investment operations:
Net investment income.................................................... 0.02 --
Net realized and unrealized gains on securities transactions............. 1.81 1.32
-------- -------
Net income from investment operations.................................... 1.83 1.32
-------- -------
Less dividends and distributions:
Dividends from net investment income..................................... (0.02) --
-------- -------
Net change in net asset value.............................................. 1.81 1.32
-------- -------
NET ASSET VALUE, END OF PERIOD............................................. $ 13.13 $ 11.32
======== =======
Total Return (excluding sales charge)...................................... 16.21%(d) 22.26%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................................ $ 132,827 $49,008
Ratio of expenses to average net assets.................................. 0.93%(b) 1.20%(b)
Ratio of net investment income (loss) to average net assets.............. 0.49%(b) (0.02%)(b)
Ratio of expenses to average net assets**................................ 1.18%(b) 1.39%(b)(c)
Ratio of net investment income (loss) to average net assets**............ 0.24%(b) (0.21%)(b)
Portfolio Turnover....................................................... 48% 69%
Average commission rate paid(e).......................................... $ 0.0877 $0.0838
- ---------------
<FN>
* Period from commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized. The quoted return of the Portfolio includes performance of
certain collective trust portfolio ("Commingled") accounts for the period
from December 31, 1995 to the Mutual Fund's commencement of operations on
April 1, 1996, as adjusted to reflect the expenses associated with the
Portfolio.
(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.
(d) Not annualized.
(e) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
</TABLE>
See Notes to Financial Statements.
68
<PAGE> 71
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM FEBRUARY 28
1997 THROUGH
JUNE 30, 1997*
----------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...................................................... $ 10.00
-------
Income from investment operations:
Net investment income................................................................... 0.07
Net realized and unrealized gains on securities transactions............................ 1.00
-------
Net income from investment operations................................................... 1.07
-------
Less dividends and distributions:
Dividends from net investment income.................................................... (0.07)
-------
Total dividends and distributions......................................................... (0.07)
-------
Net change in net asset value............................................................. 1.00
-------
NET ASSET VALUE, END OF PERIOD............................................................ $ 11.00
=======
Total Return (excluding sales charge)..................................................... 10.78%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)....................................................... $ 61,031
Ratio of expenses to average net assets................................................. 1.04%(b)
Ratio of net investment income to average net assets.................................... 2.13%(b)
Ratio of expenses to average net assets**............................................... 1.30%(b)
Ratio of net investment income to average net assets**.................................. 1.87%(b)
Portfolio Turnover...................................................................... 36%
Average commission rate paid(c)......................................................... $ 0.0979
- ---------------
<FN>
* Period from commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Represents the total dollar amount of commissions paid on portfolio
transactions divided by total number of portfolio shares purchased and sold
for which commissions were charged.
</TABLE>
See Notes to Financial Statements.
69
<PAGE> 72
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM APRIL 1,
SIX MONTHS ENDED 1998 THROUGH
JUNE 30, 1997 DECEMBER 31, 1996*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................. $ 10.00 $ 10.00
------- -------
Income from investment operations:
Net investment income.............................................. 0.28 0.40
Net realized and unrealized losses on securities transactions...... (0.07) --
------- -------
Net income from investment operations.............................. 0.21 0.40
------- -------
Less dividends and distributions:
Dividends from net investment income............................... (0.28) (0.40)
------- -------
Net change in net asset value........................................ (0.07) 0.00
------- -------
NET ASSET VALUE, END OF PERIOD....................................... $ 9.93 $ 10.00
======= =======
Total Return (excluding sales charge)................................ 2.14%(d) 1.12%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).................................. $ 73,140 $ 38,815
Ratio of expenses to average net assets............................ 0.87%(b) 1.13%(b)
Ratio of net investment income to average net assets............... 5.75%(b) 5.37%(b)
Ratio of expenses to average net assets**.......................... 1.12%(b) 1.32%(b)(c)
Ratio of net investment income to average net assets**............. 5.50%(b) 5.18%(b)
Portfolio Turnover................................................. 22% 65%
- ---------------
<FN>
* Period from commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized. The quoted return of the Portfolio includes performance of
certain collective trust portfolio ("Commingled") accounts for the period
from December 31, 1995 to the Mutual Fund's commencement of operations on
April 1, 1996, as adjusted to reflect the expenses associated with the
Portfolio.
(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.
(d) Not annualized.
</TABLE>
See Notes to Financial Statements.
70
<PAGE> 73
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED YEAR ENDED PERIOD ENDED
1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
---------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........ $9.96 $10.13 $9.66 $10.00
-------- ------- -------- --------
Income from investment operations:
Net investment income..................... 0.29 0.58 0.59 0.38
Net realized and unrealized gains (losses)
on securities transactions............. (0.03) (0.16) 0.47 (0.34)
-------- ------- -------- --------
Net income from investment operations..... 0.26 0.42 1.06 0.04
-------- ------- -------- --------
Less dividends and distributions:
Dividends from net investment income...... (0.29) (0.58) (0.59) (0.38)
Distributions from net realized gains on
securities transactions................ (0.01) (0.01) -- --
-------- ------- -------- --------
Net change in net asset value............... (0.04) (0.17) 0.47 (0.34)
-------- ------- -------- --------
NET ASSET VALUE, END OF PERIOD.............. $9.92 $9.96 $10.13 $9.66
======== ======= ======== ========
Total Return (excluding sales charge)....... 2.55%(a) 4.28% 11.20% 0.42%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......... $103,271 $98,197 $103,382 $93,189
Ratio of expenses to average net assets... 0.83%(b) 0.83% 0.87% 0.83%(b)
Ratio of net investment income to average
net assets............................. 5.90%(b) 5.84% 5.89% 5.27%(b)
Ratio of expenses to average net
assets**............................... 1.08%(b) 1.08%(c) 1.12% 1.28%(b)
Ratio of net investment income to average
net assets**........................... 5.65%(b) 5.59% 5.64% 4.82%(b)
Portfolio Turnover........................ 9% 51% 28% 6%
- ---------------
<FN>
* For the period March 28, 1994 (commencement of operations) through December
31, 1994.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions 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.
</TABLE>
See Notes to Financial Statements.
71
<PAGE> 74
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FEBRUARY 28, 1997 THROUGH
JUNE 30, 1997*
-------------------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD................................................. $ 10.00
-------
Income from investment operations:
Net investment income.............................................................. 0.16
Net realized and unrealized gains on securities transactions....................... 0.01
-------
Net income from investment operations.............................................. 0.17
-------
Less dividends and distributions:
Dividends from net investment income............................................... (0.16)
-------
Total dividends and distributions.................................................. (0.16)
-------
Net change in net asset value........................................................ 0.01
-------
NET ASSET VALUE, END OF PERIOD....................................................... $ 10.01
=======
Total Return (excluding sales charge)................................................ 1.67%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).................................................. $19,502
Ratio of expenses to average net assets............................................ 1.06%(b)
Ratio of net investment income to average net assets............................... 5.19%(b)
Ratio of expenses to average net assets**.......................................... 1.62%(b)
Ratio of net investment income to average net assets**............................. 4.63%(b)
Portfolio Turnover................................................................. 13%
- ---------------
<FN>
* Period from commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements
72
<PAGE> 75
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
---------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 9.90 $ 10.19 $ 9.40 $ 10.00
-------- ------- ------- -------
Income from investment operations:
Net investment income............... 0.20 0.42 0.45 0.34
Net realized and unrealized gains
(losses) on securities
transactions..................... (0.05) (0.29) 0.79 (0.60)
-------- ------- ------- -------
Net income (loss) from investment
operations....................... 0.15 0.13 1.24 (0.26)
-------- ------- ------- -------
Less dividends and distributions:
Dividends from net investment
income........................... (0.20) (0.42) (0.45) (0.34)
-------- ------- ------- -------
Net change in net asset value......... (0.05) (0.29) 0.79 (0.60)
-------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD........ $ 9.85 $ 9.90 $ 10.19 $ 9.40
======== ======= ======= =======
Total Return (excluding sales
charge)............................. 1.57%(b) 1.39% 13.40% (2.63)%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)... $102,322 $88,084 $94,143 $ 86,127
Ratio of expenses to average net
assets........................... 0.83%(b) 0.86% 0.87% 0.82%(b)
Ratio of net investment income to
average net assets............... 4.18%(b) 4.29% 4.52% 4.61%(b)
Ratio of expenses to average net
assets**......................... 1.08%(b) 1.11%(c) 1.12% 1.18%(b)
Ratio of net investment income to
average net assets**............. 3.93%(b) 4.04% 4.27% 4.25%(b)
Portfolio Turnover.................. 139% 219% 188% 41%
- ---------------
<FN>
* For the period March 28, 1994 (commencement of operations) through December
31, 1994.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions 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.
</TABLE>
See Notes to Financial Statements.
73
<PAGE> 76
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FEBRUARY 28, 1997
THROUGH JUNE 30, 1997*
----------------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................................... $ 10.00
-------
Income from investment operations:
Net investment income............................................................ 0.11
Net realized and unrealized losses on securities transactions.................... (0.05)
-------
Net income from investment operations............................................ 0.08
-------
Less dividends and distributions:
Dividends from net investment income............................................. (0.11)
-------
Total dividends and distributions................................................ (0.11)
-------
Net change in net asset value...................................................... (0.05)
-------
NET ASSET VALUE, END OF PERIOD..................................................... $ 9.95
=======
Total Return (excluding sales charge).............................................. 0.59%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)................................................ $ 22,730
Ratio of expenses to average net assets.......................................... 1.09%(b)
Ratio of net investment income to average net assets............................. 3.23%(b)
Ratio of expenses to average net assets**........................................ 1.57%(b)
Ratio of net investment income to average net assets**........................... 2.75%(b)
Portfolio Turnover............................................................... 64%
- ---------------
<FN>
* Period from commencement of operations.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
</TABLE>
See Notes to Financial Statements.
74
<PAGE> 77
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR MUTUAL FUNDS
3435 Stelzer Road - Columbus, OH 43219
INVESTMENT ADVISER
First American National Bank
315 Deaderick Street - Nashville, TN 37237-0401
ADMINISTRATOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road - Columbus, OH 43219
DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road - Columbus, OH 43219
CUSTODIAN
The Bank of New York
90 Washington Street - New York, New York 10286
TRANSFER AGENT & DIVIDEND DISBURSING AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road - Columbus, OH 43219
BISYS Fund Services Limited Partnership is the Portfolios' distributor and is
unaffiliated with First American National Bank, the Portfolios' adviser.
Investments in the Portfolios are neither guaranteed by nor obligations of
First American National Bank or any other bank and are not insured by the FDIC
or any other government agency. Investments in mutual funds involve risk,
including the possible loss of principal. This material must be preceded or
accompanied by a current prospectus.
<PAGE> 78
[AMERISTAR MUTUAL FUNDS LOGO]
HELPING PEOPLE PLAN
FOR A BRIGHTER FUTURE. (SM)
760007
8/97
--------------
BULK RATE
U.S. POSTAGE
PAID
COLUMBUS, OH
PERMIT NO. 688
--------------
