<PAGE> 1
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
3435 Stelzer Road
Columbus, OH 43219
DISTRIBUTOR
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
CUSTODIAN
The Bank of New York
90 Washington Street
New York, NY 10286
TRANSFER AGENT & DIVIDEND DISBURSING AGENT
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
BISYS Fund Services 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.
HELPING PEOPLE PLAN
FOR A BRIGHTER FUTURE.(SM)
760004
[AMERISTAR MUTUAL FUNDS LOGO]
AMERISTAR PRIME
MONEY MARKET PORTFOLIO
ANNUAL REPORT
AMERISTAR U. S. TREASURY
MONEY MARKET PORTFOLIO
DECEMBER 31, 1996
<PAGE> 2
FUND FACTS
The AmeriStar Funds provide shareholders with a variety of features to
make investing in the Portfolios easy, convenient and manageable.
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------
AMERISTAR FUND FEATURES AMERISTAR FUND BENEFITS
PROFESSIONAL INVESTMENT The investment managers at First American National Bank are
MANAGEMENT experienced investment professionals who oversee the
investments in each mutual fund.
---------------------------------------------------------------------------------------
LOW MINIMUM INVESTMENT Initial investments in the Portfolios can be as low as
$1,000.
DEDICATED CUSTOMER Account information is available from helpful
SERVICE representatives. Just call 1-800-852-0045.
---------------------------------------------------------------------------------------
AUTOMATIC INVESTMENTS Investments can be made once or twice a month with automatic
transfers from your checking account to your Portfolio
account.
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.*
---------------------------------------------------------------------------------------
AUTOMATIC WITHDRAWALS Automatic withdrawals from your Portfolio account can be made
and credited to any account you designate.
FREE EXCHANGE PRIVILEGES Shares of a Portfolio can be exchanged into shares of other
AmeriStar Portfolios at no cost.**
---------------------------------------------------------------------------------------
REGULAR, INFORMATIVE You will receive account statements after each transaction,
STATEMENTS AND REPORTS plus regular financial reports highlighting performance and
investment strategies.
DIVIDEND REINVESTMENT Dividend income and capital gains can be reinvested
automatically in additional shares of a Portfolio.
---------------------------------------------------------------------------------------
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.
<FN>
* 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.
HELPING PEOPLE PLAN FOR A BRIGHTER FUTURE.(SM)
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
[PHOTO] JACQUELINE R. LUNSFORD, CFA [PHOTO] DONALD F. TURK, CFA
Portfolio Manager Portfolio Manager
Prime Money Market U.S. Treasury Money
Portfolio Market Portfolio
</TABLE>
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. HOW DID THE PORTFOLIOS PERFORM DURING 1996?
A. For the 12 months ended December 31, 1996, the Prime Money Market Fund
produced a total return of 4.88% (Investor shares**). In comparison, the average
fund as tracked by Lipper Analytical Services, Inc. produced a return of 4.80%
for the 288 money market instrument funds listed for the same period. The U.S.
Treasury Money Market Portfolio had a total return of 4.78% (Investor shares***)
for the 12 months ended December 31, 1996, compared to the Lipper average of
4.73% for the 94 U.S. Treasury money market funds ranked for the period.
Q. WHAT FACTORS AFFECTED THE PERFORMANCE OF THE PORTFOLIOS?
A. After rising steadily during the first half of 1996, short-term interest
rates remained in a fairly tight trading range in the second half of the year,
- ----------------------------------------------------
YIELDS (AS OF DECEMBER 31, 1996)
INVESTOR SHARES
<TABLE>
<CAPTION>
PRIME TREASURY
----- --------
<S> <C> <C>
7-Day Yield 4.75% 4.66%
30-Day Yield 4.60 4.57
</TABLE>
TRUST SHARES
<TABLE>
<CAPTION>
PRIME TREASURY
----- --------
<S> <C> <C>
7-Day Yield 5.04% 4.91%
30-Day Yield 4.87 4.82
Yields will vary with market conditions,
and past performance is no guarantee of
future results.
- ----------------------------------------------------
<FN>
- ---------------
* While the individual securities in the U.S. Treasury Money Market Portfolio
are guaranteed as to payment of principal and interest by the U.S.
Government, an investment in the AmeriStar Money Market Portfolios is not.
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.
** The total return for the year ended December 31, 1996, was 5.00% for Trust
Shares.
*** The total return for the year ended December 31, 1996 was 4.90% for Trust
Shares.
</TABLE>
1
<PAGE> 4
with 30-day commercial paper yielding between 5.25% and 5.35%. However, the
short-term market did occasionally experience some short-lived swings in rates,
as sporadic fluctuations in releases of various economic data kept investors
guessing as to what direction the Federal Reserve Board would next push interest
rates. Our slightly shorter average maturity structure allowed us to take
advantage of buying opportunities as they arose.
Q. WHAT FACTORS COULD AFFECT THE PORTFOLIOS IN THE MONTHS AHEAD?
A. Despite speculation to the contrary, the Fed hasn't made a change to the
federal funds rate since January of 1996, when it lowered the rate from 5.50% to
5.25%. Since recent indicators -- such as weak Christmas sales -- continue to
show that the economy is not overheating, the general consensus now seems to
favor no Federal Reserve Board action through the first quarter of 1997.
2
<PAGE> 5
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<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 -- 15.6%
Abbey National Treasury, Medium
Term Note....................... A1+/P1 5.05% 3/3/97 $ 2,000 $ 1,999,179
Boatmen's First National Bank of
Kansas City..................... A1/P1 5.35 1/6/97* 2,000 2,000,000
Key Bank New York.................. A1/P1 5.26 2/14/97* 2,000 1,999,828
Marshall & Ilsley Bank............. A1/P1 5.72 1/27/97* 3,100 3,100,610
MBNA America Bank.................. F1+/P1 5.62 1/16/97* 2,000 2,000,000
-----------
Total Bank Notes (Amortized cost --
$11,099,617)....................... 11,099,617
-----------
CERTIFICATES OF DEPOSIT -- YANKEE -- 15.5%
Fuji Bank, New York Branch......... A1/P1 5.89 1/21/97 3,000 3,000,017
Hong Kong Shanghai Bank, New York
Branch.......................... A1/P1 5.24 3/3/97 2,000 2,000,000
Sanwa Bank Ltd., New York Branch... A1/P1 5.49 1/21/97 3,000 3,000,033
Sumitomo Bank Ltd., New York
Branch.......................... A1/P1 5.63 2/6/97 3,000 3,000,000
-----------
Total Certificates of
Deposit -- Yankee (Amortized
cost -- $11,000,050)............... 11,000,050
-----------
COMMERCIAL PAPER -- 32.6%
DOMESTIC -- 21.4%
Countrywide Funding................ A1/F1 6.05 1/9/97 3,000 2,995,966
Dynamic Funding.................... D1/P1 5.62 1/17/97 3,000 2,992,507
Merrill Lynch, Inc................. A1+/P1 5.50 2/13/97 3,000 2,980,292
PHH Corp........................... A1/P1 5.57 2/4/97 3,218 3,201,072
Sanwa Business Credit Corp......... F1/P1 5.36 1/21/97 3,000 2,991,067
-----------
15,160,904
-----------
</TABLE>
Continued
3
<PAGE> 6
<TABLE>
<CAPTION>
S&P/MOODY'S PRINCIPAL AMORTIZED
RATINGS MATURITY AMOUNT COST
(UNAUDITED) RATE DATE (000) (NOTE 2)
----------- ---- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
PRIVATE PLACEMENT -- 11.2%
Dakota Finance (b)................. A1+/P1 5.47% 2/11/97 $ 2,000 $ 1,987,472
Kitty Hawk Funding Corp. (b)....... A1/P1 5.65 1/21/97 3,000 2,990,583
Progress Funding Corp.............. F1/P1 5.60 1/6/97 3,000 2,997,667
-----------
7,975,722
-----------
Total Commercial Paper (Amortized
cost -- $23,136,626)............... 23,136,626
-----------
CORPORATE OBLIGATIONS -- 14.1%
Credit Suisse Financial Products/
SPARCS 1996-12, MTN (b)......... F1+/P1 5.76 1/22/97* 2,500 2,500,000
Goldman Sachs (c).................. A1+/P1 5.67 1/27/97* 2,000 2,000,000
SMM Trust, 1996-B (b).............. A1+/P1 5.76 1/6/97* 2,475 2,475,000
TMG Financial/TIERS Series DCMT
1996-A, MTN (b)................. A1+/P1 5.65 1/15/97* 3,000 3,000,000
-----------
Total Corporate Obligations
(Amortized cost -- $9,975,000)..... 9,975,000
-----------
TIME DEPOSITS -- 4.2%
Bank of Tokyo, Mitsubishi Bank
Ltd., London Branch............. A1/P1 5.44 1/31/97 3,000 3,000,000
-----------
Total Time Deposits (Amortized
cost -- $3,000,000)................ 3,000,000
-----------
</TABLE>
Continued
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
RATE DATE (000) (NOTE 2)
---- -------- --------- -----------
<S> <C> <C> <C> <C>
REGULATED INVESTMENT COMPANIES -- 0.0%
Dreyfus Cash Management Fund...................... 4.00% 1/2/97 $ 1 $ 1
Provident National Fund........................... 4.00 1/2/97 1 1
-----------
Total Regulated Investment Companies (Amortized
cost -- $2)....................................... 2
-----------
REPURCHASE AGREEMENTS -- 22.4%
Goldman Sachs, dated 12/31/96, with a maturity
value of $15,860,044 (Collateralized by
$16,345,000 U.S. Treasury Bills, 3/20/97,
value -- $16,171,220).......................... 6.90 1/2/97 15,854 15,853,967
-----------
Total Repurchase Agreements (Amortized cost --
$15,853,967)...................................... 15,853,967
-----------
TOTAL INVESTMENTS (AMORTIZED COST -- $74,065,262)
(a) -- 104.4%..................................... 74,065,262
TOTAL LIABILITIES IN EXCESS OF OTHER
ASSETS -- (4.4%).................................. (3,128,819)
-----------
NET ASSETS -- 100.0%................................ $70,936,443
===========
<FN>
- ---------------
Percentages indicated are based on net assets of $70,936,443.
(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. Maturity date reflects the next rate change date.
Rate resets weekly, monthly or quarterly. The rate reflected on the
Portfolio of Investments is the rate in effect at December 31, 1996.
MTN = Medium Term Note.
</TABLE>
See Notes to Financial Statements.
5
<PAGE> 8
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost............................ $58,211,295
Repurchase agreements, at amortized cost................................ 15,853,967
Cash.................................................................... 5,536
Interest receivable..................................................... 223,826
Deferred organization costs (Note 2).................................... 28,039
Prepaid expenses and other assets....................................... 3,605
-----------
Total assets.............................................................. 74,326,268
-----------
LIABILITIES
Distributions payable................................................... 289,820
Payable for investment securities purchased............................. 3,000,000
Accrued expenses:
Advisory fees........................................................ 6,047
Sub-advisory fees.................................................... 9,072
Administration fees.................................................. 6,047
Shareholder service fees............................................. 5,135
Other................................................................ 73,704
-----------
Total liabilities......................................................... 3,389,825
-----------
NET ASSETS
Investor Shares...................................................... $22,835,804
Trust Shares......................................................... 48,100,639
-----------
Total Net Assets.......................................................... $70,936,443
===========
Shares Outstanding ($0.001 par value, 750 million shares authorized)
Investor Shares...................................................... 22,836,730
Trust Shares......................................................... 48,100,751
-----------
70,937,481
===========
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................................... $ 70,937
Additional paid-in capital.............................................. 70,862,981
Undistributed net investment income..................................... 3,563
Accumulated net realized losses on investment transactions.............. (1,038)
-----------
Net Assets, December 31, 1996............................................. $70,936,443
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
6
<PAGE> 9
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.......................................................... $4,110,788
Expenses
Advisory fees................................................... $ 74,618
Sub-advisory fees............................................... 111,623
Administration fees............................................. 74,618
Shareholder Services fees (Investor Shares)..................... 121,038
Custodian fees.................................................. 30,482
Accounting fees................................................. 39,468
Transfer agent fees and expenses................................ 39,951
Legal and audit fees............................................ 33,087
Reports to shareholders......................................... 9,004
Amortization of organization expenses........................... 12,524
Directors' fees................................................. 13,385
Insurance expense............................................... 8,278
Registration fees............................................... 18,463
Other expenses.................................................. 303
-------
Total expenses before fee waivers and expenses paid by third
parties..................................................... 586,842
Less: Fee waivers............................................... (88,752)
Less: Expenses paid by third parties............................ (83)
-------
Total expenses............................................... 498,007
----------
Net Investment Income............................................. 3,612,781
----------
REALIZED LOSSES ON SECURITIES TRANSACTIONS
Net realized losses on securities transactions.................. (149)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............. $3,612,632
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
7
<PAGE> 10
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................. $ 3,612,781 $ 3,490,950
Net realized losses from securities transactions...... (149) --
------------- -------------
Net increase in net assets resulting from
operations......................................... 3,612,632 3,490,950
------------- -------------
Dividends to shareholders:
From net investment income (Investor Shares).......... (2,446,618) (3,490,950)
From net investment income (Trust Shares)(a).......... (1,166,163) --
------------- -------------
Total Dividends to shareholders....................... (3,612,781) (3,490,950)
------------- -------------
Portfolio Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed................... 381,614,137 225,004,855
Net asset value of shares issued to shareholders in
reinvestment of dividends.......................... 26,543 16,317
Cost of shares redeemed............................... (374,623,264) (243,452,709)
------------- -------------
Net increase (decrease) in net assets from Portfolio
share transactions................................. 7,017,416 (18,431,537)
------------- -------------
Total Increase (Decrease)............................... 7,017,267 (18,431,537)
NET ASSETS
Beginning of period................................... 63,919,176 82,350,713
------------- -------------
End of period......................................... $ 70,936,443 $ 63,919,176
============= =============
SHARE TRANSACTIONS:
Issued................................................ 381,614,137 225,004,855
Reinvested............................................ 26,543 16,317
Redeemed.............................................. (374,623,264) (243,452,709)
------------- -------------
Change in shares...................................... 7,017,416 (18,431,537)
============= =============
<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.
8
<PAGE> 11
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
RATE DATE (000) (NOTE 2)
---- -------- ----------- ------------
<S> <C> <C> <C> <C>
U.S. TREASURY BILLS -- 44.8%
U.S. Treasury Bill......................... 5.49%* 1/09/97 $ 5,000 $ 4,994,144
U.S. Treasury Bill......................... 5.35* 1/16/97 10,000 9,978,510
U.S. Treasury Bill......................... 5.52* 1/23/97 5,000 4,983,806
U.S. Treasury Bill......................... 5.33* 2/06/97 5,000 4,974,450
U.S. Treasury Bill......................... 5.02* 2/13/97 5,000 4,969,751
U.S. Treasury Bill......................... 5.20* 2/20/97 5,000 4,965,000
U.S. Treasury Bill......................... 5.22* 2/27/97 5,000 4,960,060
U.S. Treasury Bill......................... 5.21* 3/06/97 5,000 4,955,244
U.S. Treasury Bill......................... 5.15* 3/27/97 5,000 4,940,736
U.S. Treasury Bill......................... 5.03* 4/03/97 5,000 4,935,728
U.S. Treasury Bill......................... 5.24* 4/10/97 5,000 4,930,563
U.S. Treasury Bill......................... 5.24* 4/17/97 5,000 4,925,506
U.S. Treasury Bill......................... 5.23* 4/24/97 5,000 4,920,822
U.S. Treasury Bill......................... 5.24* 5/22/97 5,000 4,901,006
U.S. Treasury Bill......................... 5.20* 5/29/97 5,000 4,897,017
U.S. Treasury Bill......................... 5.03* 6/05/97 5,000 4,891,715
------------
Total U.S. Treasury Bills
(Amortized cost -- $84,124,058)............ 84,124,058
------------
U.S. TREASURY STRIPS -- 5.2%
U.S. Treasury Strip........................ 5.30 5/15/97 5,000 4,904,362
U.S. Treasury Strip........................ 5.40 5/15/97 5,000 4,902,998
------------
Total U.S. Treasury Strips
(Amortized cost -- $9,807,360)............. 9,807,360
------------
</TABLE>
Continued
9
<PAGE> 12
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
RATE DATE (000) (NOTE 2)
---- -------- ----------- ------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- 50.5%
Goldman Sachs, dated 12/31/96, with a
maturity value of $42,825,560
(Collateralized by $54,189,301
Government National Mortgage Assoc.,
6.00%-11.50%, 1/1/00-12/20/26,
value -- $43,709,084)................... 6.80% 1/02/97 $42,809,388 $ 42,809,388
Merrill Lynch, dated 12/31/96, with a
maturity value of $42,826,036
(Collateralized by $48,992,181
Government National Mortgage Assoc.,
5.50%-9.50%, various due dates,
value -- $43,666,09).................... 7.00 1/02/97 42,809,388 42,809,388
Prudential, dated 12/31/96, with a maturity
value of $9,303,539 (Collateralized by
$9,400,000 Government National Mortgage
Assoc., 6.50%, 12/20/26,
value -- $9,489,005).................... 6.85 1/02/97 9,300,000 9,300,000
------------
Total Repurchase Agreements (Amortized
cost -- $94,918,776)....................... 94,918,776
------------
TOTAL INVESTMENTS (AMORTIZED COST --
$188,850,194) (a) -- 100.5%................ 188,850,194
Total Liabilities in excess of other
assets -- (0.5%)........................ (843,791)
------------
NET ASSETS -- 100.0%....................... $188,006,403
============
<FN>
- ------------------
Percentages indicated are based on net assets of $188,006,403.
* Effective Yield.
(a) Cost for federal income tax and financial reporting purposes are the same.
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 13
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost........................... $ 93,931,418
Repurchase agreements, at amortized cost............................... 94,918,776
Interest receivable.................................................... 18,180
Deferred organization costs (Note 2)................................... 27,897
Prepaid expenses and other assets...................................... 42,199
------------
Total assets............................................................. 188,938,470
------------
LIABILITIES
Distributions payable.................................................. 765,529
Accrued expenses:
Advisory fees....................................................... 40,437
Administration fees................................................. 16,174
Shareholder service fees............................................ 17,001
Transfer agent fees................................................. 19,011
Legal and audit fees................................................ 16,706
Other............................................................... 57,209
------------
Total liabilities........................................................ 932,067
------------
NET ASSETS
Investor Shares........................................................ $ 78,308,471
Trust Shares........................................................... $109,697,932
------------
$188,006,403
============
Shares Outstanding ($0.001 par value, 750 million shares authorized)
Investor Shares........................................................ 78,308,471
Trust Shares........................................................... 109,697,932
------------
188,006,403
============
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.................................. $ 188,006
Additional paid-in capital............................................. 187,814,858
Undistributed net investment income.................................... 3,539
------------
Net Assets, December 31, 1996............................................ $188,006,403
============
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 14
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest........................................................ $9,714,813
Expenses
Advisory fees................................................. $ 459,479
Administration fees........................................... 183,791
Shareholder Services fees (Investor Shares)................... 309,951
Custodian fees................................................ 40,201
Accounting fees............................................... 47,634
Transfer agent fees and expenses.............................. 47,160
Legal and audit fees.......................................... 35,490
Reports to shareholders....................................... 7,404
Amortization of organization expenses......................... 12,454
Directors' fees............................................... 20,968
Insurance expense............................................. 10,381
Registration fees............................................. 27,729
Other expenses................................................ 22,859
----------
Total expenses before fee waivers and expenses paid
by third parties......................................... 1,225,501
Less: Fee waivers............................................. (224,563)
Less: Expenses paid by third parties.......................... (1,072)
----------
Total expenses............................................. 999,866
----------
Net Investment Income........................................... 8,714,947
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $8,714,947
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 15
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income................................. $ 8,714,947 $ 7,556,840
------------- -------------
Dividends to shareholders:
From net investment income (Investor Shares).......... (5,988,175) (7,556,840)
From net investment income (Trust Shares)(a).......... (2,726,772) --
------------- -------------
Total Dividends to shareholders......................... (8,714,947) (7,556,840)
------------- -------------
Portfolio Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed................... 460,104,988 321,162,078
Net asset value of shares issued to shareholders in
reinvestment of dividends.......................... 56,500 15,142
Cost of shares redeemed............................... (440,585,214) (292,461,858)
------------- -------------
Net increase in net assets from Portfolio share
transactions....................................... 19,576,274 28,715,362
------------- -------------
Total Increase.......................................... 19,576,274 28,715,362
NET ASSETS
Beginning of period................................... 168,430,129 139,714,767
------------- -------------
End of period......................................... $ 188,006,403 $ 168,430,129
============= =============
SHARE TRANSACTIONS:
Issued................................................ 460,104,988 321,162,078
Reinvested............................................ 56,500 15,142
Redeemed.............................................. (440,585,214) (292,461,858)
------------- -------------
Change in shares...................................... 19,576,274 28,715,362
============= =============
<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.
13
<PAGE> 16
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 (formerly the ValueStar Prime Money Market Portfolio) and
the AmeriStar U.S. Treasury Money Market Portfolio (formerly the ValueStar U.S.
Treasury Money Market Portfolio) (together the "Portfolios") only. Each
Portfolio seeks to provide investors with as high a level of current income as
is consistent with the preservation of capital and the maintenance of liquidity.
The 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 a plan adopted by the Fund's Board of Directors (the "Shareholder
Services Plan").
At December 31, 1996, there were 1.5 billion shares of the Portfolios'
$0.001 par value common stock authorized, of which each Portfolio's shares are
classified as Investor Shares (375 million shares authorized per Portfolio) and
Trust Shares (375 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:
Portfolio securities are valued at amortized cost, which approximates
market value. The amortized cost method involves valuing a security at its cost
on the date of purchase and thereafter assuming a constant amortization to
maturity of the difference between the principal amount due at maturity and
cost. In addition, the Portfolios may not: a) purchase any instrument with a
remaining maturity greater than 397 days unless such investment is subject to a
demand feature, or b) maintain a dollar-weighted average portfolio maturity
which exceeds 90 days.
B) Security Transactions and Investment Income:
Security transactions are recorded on a 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.
C) Expenses:
The Portfolios incurred certain costs in connection with their
organization. These costs were deferred and are being amortized on a
straight-line basis through 1999 (five years from commencement of operations).
The Fund accounts separately for the assets, liabilities and operations of each
Portfolio. Direct expenses of a Portfolio are
14
<PAGE> 17
- --------------------------------------------------------------------------------
charged to that Portfolio and general Fund expenses are allocated among the
Fund's respective Portfolios.
D) Repurchase Agreements:
The Portfolios' custodian and other banks acting in a subcustodian 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.
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 that they distribute
substantially all of their income to shareholders. Therefore, no federal income
tax provision is required.
At December 31, 1996, the Prime Money Market Portfolio had a capital loss
carryover of approximately $1,038 which is available to offset future net
realized gains on securities transactions to the extent provided for in the
Code. Such capital loss carryover expires in 2002 ($889) and 2004 ($149). At
December 31, 1996, the cost of portfolio securities held by the Portfolio for
federal income tax purposes was substantially the same as for financial
reporting purposes.
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. Distributions of net
realized gains, if any, will be paid at least annually. Dividends and
distributions are recorded on the ex-dividend date. Distributions from net
investment income and from net realized gains are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. Timing differences relating to shareholder distributions have been
reclassified to paid-in-capital. These differences are primarily due to
deferrals of certain losses and expiring capital loss carryovers.
G) Other:
Each Portfolio maintains a cash balance with its custodian and receive a
reduction of its custody fees for the amounts of interest earned on such
uninvested cash balances. For financial reporting purposes for the year ended
December 31, 1996, custodian fees and expenses paid by third parties were
increased by $83 and $1,072 for the Prime Money Market Portfolio and the U.S.
Treasury Money Market Portfolio, respectively. There was no effect on net
investment income. The Portfolios could have invested such cash amounts in an
income producing asset if they had not agreed to a reduction of fees or expenses
under the expense offset arrangement with its custodian.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
First American National Bank ("First American") serves as the Portfolios'
investment adviser. Barnett Banks Trust Company, N.A. ("Barnett") serves as the
sub-investment adviser with respect to the Prime Money Market Portfolio.
Effective April 4, 1996, BISYS Fund Services Limited Partnership ("BISYS")
became the Portfolios'
15
<PAGE> 18
- --------------------------------------------------------------------------------
administrator. Concord Financial Group, Inc. (the "Distributor") serves as the
distributor of the Portfolios' shares. BISYS and the Distributor are each a
subsidiary of The BISYS Group, Inc.
As investment adviser, First American supervises the sub-investment adviser
with respect to the Prime Money Market Portfolio, and manages the investments of
each Portfolio. For its services, First American is entitled to receive fees at
an annual rate of 0.25% of each Portfolio's average daily net assets less, in
the case of the Prime Money Market Portfolio, any amount payable by the
Portfolio to Barnett pursuant to the Sub-Investment Advisory Agreement.
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 of the Portfolios.
Pursuant to the Shareholder Services Plan, the Portfolios pay the
Distributor 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
Investor Shares. These fees are used by the Distributor to pay financial
institutions, including the investment adviser, broker/ dealers and other
institutions, or to reimburse the Distributor or its affiliates, for
administration, distribution and shareholder services in connection with the
distribution of fund shares. The services provided may include personal
services relating to shareholder accounts and services related to the
maintenance of such shareholder accounts. For the year ended December 31, 1996,
the Distributor waived $88,752 and $224,563 in shareholder services fees from
the Prime Money Market Portfolio and the U.S. Treasury Money Market Portfolio,
respectively. The Prime Money Market Portfolio and U.S. Treasury Money Market
Portfolio paid $32,286 and $85,388, respectively in Shareholder Service fees
for the year ended December 31, 1996.
Certain officers and Directors of the Fund are "affiliated persons" (as
defined in the Act) of BISYS or the Distributor. 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 -- 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
financial instrument type at December 31, 1996 (as a percentage of total
investments):
<TABLE>
<S> <C>
Commercial Paper.................. 31.2%
Repurchase Agreements............. 21.4%
Bank Notes........................ 15.0%
Certificates of Deposit........... 14.8%
Corporate Obligations............. 13.5%
Time Deposits..................... 4.1%
-----
100.0%
=====
</TABLE>
16
<PAGE> 19
- --------------------------------------------------------------------------------
NOTE 5 -- CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Portfolios (at $1.00 per share) are
summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------
PRIME MONEY U.S. TREASURY MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
INVESTOR SHARES:
Shares sold......... 243,644,595 277,704,916
Shares issued in
reinvestment of
dividends and
distributions..... 26,543 56,500
Shares redeemed..... (284,754,474) (367,883,074)
----------- -----------
Net decrease in
Investor Shares..... (41,083,336) (90,121,658)
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------
PRIME MONEY U.S. TREASURY MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------- -------------------
<S> <C> <C>
TRUST SHARES:
Shares sold......... 137,969,542 182,400,072
Shares issued in
reinvestment of
dividends and
distributions..... -- --
Shares redeemed..... (89,868,790) (72,702,140)
----------- -----------
Net increase in Trust
Shares.............. 48,100,752 109,697,932
=========== ===========
Net increase in
Portfolio Shares.... 7,017,416 19,576,274
=========== ===========
</TABLE>
17
<PAGE> 20
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
----------------- ----------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $ 1.000 $ 1.000 $ 1.000
Income from investment operations:
Net investment income................ 0.048 0.054 0.031
------- ------- -------
Less dividends and distributions:
Dividends from net investment
income............................ (0.048) (0.054) (0.031)
------- ------- -------
NET ASSET VALUE, END OF PERIOD......... $ 1.000 $ 1.000 $ 1.000
======= ======= =======
Total Return........................... 4.88% 5.51% 3.13%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).... $22,836 $63,919 $ 82,351
Ratio of expenses to average net
assets............................ 0.68% 0.65% 0.63%(b)
Ratio of net investment income to
average net assets................ 4.83% 5.37% 4.06%(b)
Ratio of expenses to average net
assets**.......................... 0.86%(c) 0.90% 0.93%(b)
Ratio of net investment income to
average net assets**.............. 4.65% 5.12% 3.76%(b)
<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) 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.
18
<PAGE> 21
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JULY 1, 1996
THROUGH
DECEMBER 31, 1996 *
-------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 1.000
Income from investment operations:
Net investment income.......................................... 0.024
-------
Less dividends and distributions:
Dividends from net investment income........................... (0.024)
-------
NET ASSET VALUE, END OF PERIOD................................... $ 1.000
=======
Total Return..................................................... 5.00%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).............................. $48,101
Ratio of expenses to average net assets........................ 0.65%(b)
Ratio of net investment income to average net assets........... 4.86%(b)
Ratio of expenses to average net assets**...................... 0.65%(b)(c)
Ratio of net investment income to average net assets**......... 4.86%(b)
<FN>
- ---------------
* Period from commencement of operations.
** There were no fee waivers or expense reimbursements for the period.
(a) 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 31, 1996.
(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.
19
<PAGE> 22
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
INVESTOR SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
----------------- ----------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $ 1.000 $ 1.000 $ 1.000
------- -------- --------
Income from investment operations:
Net investment income................ 0.047 0.053 0.030
------- -------- --------
Less dividends and distributions:
Dividends from net investment
income............................ (0.047) (0.053) (0.030)
------- -------- --------
NET ASSET VALUE, END OF PERIOD......... $ 1.000 $ 1.000 $ 1.000
======= ======== ========
Total Return........................... 4.78% 5.41% 3.01%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's).... $78,308 $ 168,430 $139,715
Ratio of expenses to average net
assets............................ 0.56% 0.50% 0.54%(b)
Ratio of net investment income to
average net assets................ 4.72% 5.28% 4.02%(b)
Ratio of expenses to average net
assets**.......................... 0.74%(c) 0.75% 0.83%(b)
Ratio of net investment income to
average net assets**.............. 4.54% 5.03% 3.73%(b)
<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) 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.
20
<PAGE> 23
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
JULY 1, 1996 THROUGH
DECEMBER 31, 1996*
--------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $ 1.000
--------
Income from investment operations:
Net investment income........................................... 0.024
--------
Less dividends and distributions:
Dividends from net investment income............................ (0.024)
--------
NET ASSET VALUE, END OF PERIOD.................................... $ 1.000
========
Total Return...................................................... 4.90%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)............................... $109,698
Ratio of expenses to average net assets......................... 0.52%(b)
Ratio of net investment income to average net assets............ 4.78%(b)
Ratio of expenses to average net assets**....................... 0.52%(b)(c)
Ratio of net investment income to average net assets**.......... 4.78%(b)
<FN>
- ---------------
* Period from commencement of operations.
** There were no fee waivers or expense reimbursements for the period.
(a) 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 31, 1996.
(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.
21
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
The Infinity Mutual Funds, Inc. -- The AmeriStar Mutual Funds:
We have audited the accompanying statements of assets and liabilities as of the
AmeriStar Prime Money Market Portfolio (formerly the ValueStar Prime Money
Market Portfolio) and the AmeriStar U.S. Treasury Money Market Portfolio
(formerly the ValueStar U.S. Treasury Money Market Portfolio) (collectively, the
Money Market Portfolios), including the portfolios of investments, as of
December 31, 1996, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Money Market Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1996, by confirmation with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market Portfolios as of December 31, 1996, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 18, 1997
22
