<PAGE> 1
CORRESPONDENT CASH RESERVES
- --------------------------------------------------------------------------------
To Our Shareholders:
We are pleased to send you this semiannual report, which covers the six months
ended June 30, 1998.
The Correspondent Cash Reserves Money Market and Tax Free Portfolios are
open-ended, diversified money market funds that seek to provide investors with a
high level of current income, while preserving capital and maintaining
liquidity.* Income provided by the Tax Free Portfolio is intended to be exempt
from federal income tax.
The Money Market Portfolio, which exceeds $1.2 billion in assets under
management, invests in a diversified selection of very high-quality, short-term
money market obligations -- such as U.S. Treasury bills, short-term corporate
obligations and commercial paper. The Tax Free Portfolio invests in a wide
variety of short-term, tax-exempt securities issued by state, county and
municipal authorities.** Both Portfolios may invest in instruments rated in
either of the top two rating categories established by nationally recognized
services.
Following this letter, you'll find a pie-chart analysis of the Portfolios, as
well as their performance for the six-month period ending June 30, 1998. A
schedule of the Portfolios' investments is included in the financial report that
follows the performance table. All investments are actively monitored to ensure
that they maintain their quality status and suitability.
ECONOMIC OVERVIEW
The economic factors that affect money market funds such as ours did not change
significantly during the first six months of 1998. Much of the domestic news was
the same as it had been for some time: good corporate profits, benign inflation,
low unemployment, the creation of new jobs, and healthy home sales and car
sales. The U.S. economy grew at a blistering 5.4% annual rate in the first
quarter, though second-quarter growth was markedly more tame. (As we write this
letter during the second week of July, second-quarter numbers are not yet in,
but we believe growth cooled to a 2.5-2.7% pace.) This performance is very
similar to 1997's, when first-quarter growth surged to a 5.9% annual rate,
before slowing to a more sustainable level later in the year.
Nothing about this situation is unusual. A myriad of factors influences the
economic cycle, and short-term, quarterly fluctuations are normal. We continue
to be encouraged by the economy's steady, longer-term upward trend.
However, the financial problems in Asia have continued to plague most of that
region's economies. In fact, the full extent of the damage in Asia is just now
beginning to come to light. The news so far has been bad, and could get worse.
Consequently, fresh worries about Asia -- and how our own economy might be
affected -- are justified.
INTEREST-RATE ENVIRONMENT
A number of factors worked to flatten the "yield curve," the relationship
between short- and long-term interest rates. On the long end, a flood of money
seeking a "safe haven" from turmoil abroad pushed the 30-year Treasury bond
yield down below the 5.6% level. At the same time, the Federal Reserve (the Fed)
refused to lower short-term rates; the Fed Funds rate remained at 5.5%
throughout the period. As a result, a portion of the yield curve became
"inverted." That is, shorter-maturity securities provided more yield than their
longer counterparts. Taken from a historical perspective, these circumstances
suggest that the economy is in a slower-growth mode.
INVESTMENT STRATEGY
Entering the period, we felt that inflation would pose no risk to the economy
and that interest rates might retreat even further from then-moderate levels.
Fortunately, we were correct on both counts.
<PAGE> 2
REPORT FROM THE INVESTMENT ADVISER -- (continued)
- --------------------------------------------------------------------------------
And while absolute yields were not particularly high, shareholders benefited
from the fact that real returns (yield minus the rate of inflation) from both of
our Funds were quite comfortable by historical standards.
As of June 30, 1998, the Money Market Portfolio's average weighted maturity was
71 days. We continue to maintain the portfolio's maturity at five to ten days
longer than the average money market fund, a strategy that has served us well
during the last year.
As of June 30, 1998, the Tax Free Portfolio maintained an average weighted
maturity of 51 days, compared to 49 days at the end of December. The Portfolio
continues to be managed to provide safety, convenience and federal tax-free
income to investors.*
OUR OUTLOOK FOR THE NEXT SIX MONTHS
As always, our primary objectives continue to be liquidity and quality. We
strive to remain liquid, so that our shareholders can invest and redeem their
money as often as it suits their investment needs. And although there are some
concerns that corporate profits may decline in the coming months, we will
continue to invest only in the highest quality, tier 1 securities, and thereby
minimize any default risk to the Fund.
With the economy slowing at the end of the second quarter, and Asia still a
major concern, we don't expect any moves by the Fed for the next six months. We
should continue to see stable, to possibly lower, short-term rates, with some
degree of volatility.
- ---------------
* The Tax Free Portfolio's income may be subject to certain state and local
taxes and, depending on your tax status, the federal alternative minimum tax.
** An investment in the Portfolios is neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
Portfolios will be able to maintain a stable net asset value (NAV) of $1.00
per share.
<PAGE> 3
REPORT FROM THE INVESTMENT ADVISER -- (continued)
- --------------------------------------------------------------------------------
Portfolio Composition*
<TABLE>
<S> <C>
Commercial Paper Municipal Bonds
30 69
</TABLE>
<TABLE>
<CAPTION>
Short-
Term Certificates U.S. U.S.
iCommercial Corporate of Government Treasury Repurchase
Banknotes Paper Obligations Deposit Agencies Obligations Agreements
<S> <C> <C> <C> <C> <C> <C>
5.27 45 17.6 24.4 6 1 0.6
</TABLE>
*The composition of the Portfolios is subject to change. Percentages are based
on total investments.
PERFORMANCE
As of June 30, 1998, the 7-day and 30-day yields for the Portfolios were as
follows:
<TABLE>
<CAPTION>
7-DAY 30-DAY
YIELD YIELD
----- ------
<S> <C> <C>
Money Market Portfolio*............................ 4.73% 4.72%
Tax Free Portfolio*................................ 2.88% 2.89%
</TABLE>
* For the current 7-day yield as of June 30, 1998, the Portfolio's service
contractors voluntarily waived a portion of their fees. If the service
contractors had not waived a portion of their fees, the 7-day yield shown
would have been 4.61% for the Money Market Portfolio and 2.56% for the Tax
Free Portfolio. These voluntary waivers may be modified or terminated at any
time, which would reduce the performance. Yields will vary with market
conditions, and past performance is not a guarantee of future results.
Investments in the Portfolios are neither insured nor guaranteed by the U.S.
Government. Yields will fluctuate, and there can be no assurance that the
Portfolios will be able to maintain a stable net asset value of $1.00 per
share.
<PAGE> 4
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 7.0%
U.S. TREASURY -- 1.0%
U.S. Treasury Bill........................... AAA/Aaa** 5.05% 3/4/99 $ 5,000,000 $ 4,827,458
U.S. Treasury Bill........................... AAA/Aaa** 5.10*** 4/29/99 8,000,000 7,657,734
--------------
12,485,192
--------------
AGENCY -- 6.0%
Federal Farm Credit Bank..................... AAA/Aaa** 5.46 7/1/98 30,000,000 30,000,000
Federal Home Loan Bank....................... AAA/Aaa** 5.60* 10/23/98 5,000,000 4,999,546
Federal Home Loan Bank....................... AAA/Aaa** 5.76 5/6/99 7,000,000 7,000,000
Federal Home Loan Bank....................... AAA/Aaa** 5.65 3/30/99 10,000,000 10,000,000
Federal Home Loan Bank....................... AAA/Aaa** 5.57* 3/26/99 5,000,000 4,998,348
Federal Home Loan Bank....................... AAA/Aaa** 5.76 4/8/99 6,000,000 6,000,000
Federal Home Loan Bank....................... AAA/Aaa** 5.71 3/23/99 9,000,000 9,000,000
Student Loan Marketing Assoc................. AAA/Aaa** 5.85 11/20/98 4,000,000 4,000,000
--------------
75,997,894
--------------
Total U.S. Government and Agency Obligations
(cost $88,483,086)........................... 88,483,086
--------------
BANK NOTES -- 5.1%
DOMESTIC -- 5.1%
Comerica Bank N.A. Detroit................... P-1/A-1 5.67* 10/21/98 8,000,000 7,999,043
FCC National Bank............................ P-1/A-1+ 5.70 1/7/99 13,800,000 13,797,935
First National Bank of Chicago............... P-1/A-1+ 5.61* 7/30/98 9,600,000 9,599,631
PNC Bank, NA................................. P-1/A-1 5.74* 7/2/98 6,000,000 5,999,987
PNC Bank, NA................................. P-1/A-1 5.60* 9/23/98 12,000,000 11,998,133
SunTrust Bank, Central Florida............... P-1/A-1+ 5.83 7/14/98 5,000,000 4,999,888
Wachovia Bank of North Carolina.............. P-1/A-1+ 5.81 10/8/98 10,000,000 9,999,094
--------------
Total Bank Notes (cost $64,393,711)............ 64,393,711
--------------
CERTIFICATES OF DEPOSIT -- 24.2%
DOMESTIC -- 3.0%
Bankers Trust NY Corp........................ P-1/A-1 5.77 5/6/99 5,000,000 4,997,974
Bankers Trust NY Corp........................ P-1/A-1 5.57* 5/14/99 6,000,000 5,995,754
Bankers Trust NY Corp........................ P-1/A-1 6.00 7/7/98 5,000,000 5,000,055
</TABLE>
Continued
4
<PAGE> 5
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT, CONTINUED:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
DOMESTIC, CONTINUED:
Bankers Trust NY Corp........................ P-1/A-1 5.77% 5/21/99 $ 4,000,000 $ 3,998,608
Bankers Trust NY Corp........................ P-1/A-1 5.69 3/5/99 3,000,000 2,999,222
Bankers Trust NY Corp........................ P-1/A-1 5.68 1/8/99 10,000,000 9,998,966
Bankers Trust NY Corp........................ P-1/A-1 5.97 8/28/98 5,000,000 4,999,772
--------------
37,990,351
--------------
YANKEE -- 21.2%
Bank of Nova Scotia.......................... P-1/A-1+ 5.80 4/29/99 15,000,000 14,994,061
Barclays Bank, PLC........................... P-1/A-1+ 5.90 10/22/98 5,000,000 4,999,306
Canadian Imperial Bank of Commerce........... P-1/A-1+ 5.58 9/4/98 20,000,000 19,999,969
Credit Agricole Indosuez..................... P-1/A-1+ 5.65 2/18/99 5,000,000 5,000,000
Credit Agricole Indosuez..................... P-1/A-1+ 5.75 5/19/99 7,000,000 6,994,385
Credit Suisse First Boston................... P-1/A-1+ 5.65* 10/5/98 20,000,000 19,999,999
Deutsche Bank AG............................. P-1/A-1+ 5.64 3/22/99 5,000,000 4,999,099
National Australia Bank Ltd.................. P-1/A-1+ 5.85 10/5/98 7,000,000 6,999,995
National Bank of Canada...................... P-1/A-1 5.87 8/10/98 5,000,000 5,000,053
National Bank of Canada...................... P-1/A-1 5.70 3/5/99 11,000,000 10,997,872
National Bank of Canada...................... P-1/A-1 5.92 11/19/98 4,800,000 4,800,160
National Bank of Canada...................... P-1/A-1 5.92 11/20/98 3,000,000 3,000,419
National Bank of Canada...................... P-1/A-1 5.76 6/9/99 10,000,000 9,996,401
National Bank of Canada...................... P-1/A-1 5.76 6/10/99 6,000,000 5,997,783
National Westminster Bank PLC................ P-1/A-1+ 5.79 7/30/98 12,000,000 11,999,909
Rabobank Nederland........................... P-1/A-1+ 5.75 5/14/99 10,000,000 9,995,842
Royal Bank of Canada......................... P-1/A-1+ 5.70 6/23/99 8,000,000 7,998,091
Royal Bank of Canada......................... P-1/A-1+ 5.80 10/1/98 7,000,000 6,999,156
Skandinaviska Enskilda Banken................ P-1/A-1 5.64 7/29/98 15,000,000 15,000,115
Skandinaviska Enskilda Banken................ P-1/A-1 5.61 7/2/98 15,000,000 15,000,004
Skandinaviska Enskilda Banken................ P-1/A-1 5.66 12/3/98 15,000,000 15,000,628
Societe Generale............................. P-1/A-1+ 5.89 7/24/98 10,000,000 10,000,218
Societe Generale............................. P-1/A-1+ 5.82 10/7/98 4,000,000 3,999,692
Societe Generale............................. P-1/A-1+ 5.85 12/17/98 4,000,000 3,998,406
Societe Generale............................. P-1/A-1+ 5.77 4/19/99 5,000,000 4,998,660
Societe Generale............................. P-/1A-1+ 5.58 2/10/99 5,000,000 4,999,411
Societe Generale............................. P-1/A-1+ 5.97 9/15/98 6,000,000 5,999,924
Societe Generale............................. P-1/A-1+ 5.58* 6/1/99 4,000,000 3,997,151
Societe Generale............................. P-1/A-1+ 5.77 10/9/98 2,000,000 1,999,843
</TABLE>
Continued
5
<PAGE> 6
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT, CONTINUED:
YANKEE, CONTINUED:
Societe Generale............................. P-1/A-1+ 5.75% 4/6/99 $ 4,000,000 $ 3,998,975
Societe Generale............................. P-1/A-1+ 5.76 8/4/98 6,000,000 5,999,732
Svenska Handelsbanken........................ P-1/A-1 5.54 2/23/99 4,000,000 3,998,462
Swiss Bank................................... P-1/A-1+ 5.85 7/17/98 5,000,000 4,999,874
Swiss Bank................................... P-1/A-1+ 5.88 11/20/98 4,000,000 3,999,553
--------------
268,763,148
--------------
Total Certificates of Deposit (cost
$306,753,499)................................ 306,753,499
--------------
COMMERCIAL PAPER -- 44.9%
ASSET BACKED -- 11.0%
Atlantis One Funding Corp.................... P-1/A-1+ 5.53 9/8/98 10,000,000 9,894,008
Atlantis One Funding Corp.................... P-1/A-1+ 5.45 8/28/98 8,750,000 8,673,170
Atlantis One Funding Corp.................... P-1/A-1+ 5.52 8/4/98 8,000,000 7,958,293
Delaware Funding Corp. (b)................... P-1/A-1+ 5.52 7/6/98 7,522,000 7,516,233
Enterprise Funding Corp...................... P-1/A-1+ 5.52 8/14/98 6,198,000 6,156,184
Enterprise Funding Corp...................... P-1/A-1+ 5.54 7/23/98 10,000,000 9,966,144
New Center Asset Trust....................... P-1/A-1+ 6.50 7/1/98 37,000,000 37,000,001
Preferred Receivables Funding Corp........... P-1/A-1 5.55 7/24/98 10,000,000 9,964,542
Preferred Receivables Funding Corp........... P-1/A-1 5.55 7/1/98 14,015,000 14,015,000
Triple A One Funding......................... P-1/A-1 5.56 7/23/98 20,000,000 19,932,044
Triple A One Funding......................... P-1/A-1 5.58 7/20/98 10,000,000 9,970,550
--------------
141,046,169
--------------
AUTO-TRUCK -- 2.8%
Ford Motor Credit Corp....................... P-1/A-1 5.52 7/1/98 25,000,000 25,000,000
Ford Motor Credit Corp....................... P-1/A-1 5.53 7/2/98 10,000,000 9,998,464
--------------
34,998,464
--------------
BANKING -- 14.9%
Bankers Trust Corp........................... P-1/A-1 5.51 3/16/99 6,000,000 5,763,178
Banque et Caisse d'Epargne de L'Etat......... P-1/A-1+ 5.52 7/7/98 8,000,000 7,992,640
BBL North America, Inc....................... P-1/A-1+ 5.52 7/15/98 7,000,000 6,984,973
BBL North America, Inc....................... P-1/A-1+ 5.55 7/10/98 22,000,000 21,969,475
BBV Financial (Delaware) Inc................. P-1/A-1+ 5.50 7/6/98 10,000,000 9,992,361
BHF Finance (Delaware) Inc................... P-1/A-2 5.50 7/6/98 19,300,000 19,285,257
</TABLE>
Continued
6
<PAGE> 7
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
BANKING, CONTINUED:
BHF Finance (Delaware) Inc................... P-1/A-2 5.53% 7/16/98 $10,000,000 $ 9,976,958
Cregem N.A. Inc.............................. P-1/A-1+ 5.50 8/7/98 10,000,000 9,943,472
Cregem N.A. Inc.............................. P-1/A-1+ 5.50 7/8/98 10,000,000 9,989,306
Den Danske Corp.............................. P-1/A-1 5.52 8/11/98 17,000,000 16,893,127
Generale Bank Inc............................ P-1/A-1 5.51 9/21/98 10,000,000 9,874,494
KFW International Finance Inc................ P-1/A-1+ 5.53 7/17/98 35,000,000 34,913,978
Nordbanken N.A., Inc......................... P-1/A-1 5.39 8/12/98 5,000,000 4,968,558
Nordbanken N.A., Inc......................... P-1/A-1 5.52 7/8/98 15,000,000 14,983,900
Unifunding................................... P-1/A-1 5.51 9/4/98 6,000,000 5,940,308
--------------
189,471,985
--------------
BROKER-DEALER -- 3.8%
Lehman Brothers Holdings, Inc................ P-2/A-1 5.54 11/16/98 10,000,000 9,787,633
Lehman Brothers Holdings, Inc................ P-2/A-1 5.60 7/13/98 28,000,000 27,947,734
Lehman Brothers Holdings, Inc................ P-2/A-1 5.38 11/13/98 10,000,000 9,798,250
--------------
47,533,617
--------------
DRUGS & HEALTHCARE -- 1.6%
Novartis Finance Corp. (b)................... P-1/A-1+ 5.51 8/14/98 20,000,000 19,865,311
--------------
ELECTRONICS -- 1.3%
Emerson Electric Co.......................... P-1/A-1+ 5.50 7/17/98 16,000,000 15,960,889
--------------
FINANCE-AIRCRAFT -- 1.2%
International Lease Financing................ P-1/A-1+ 5.48 11/5/98 15,000,000 14,710,017
--------------
FINANCE-CONDUIT -- 2.4%
MetLife Funding, Inc......................... P-1/A-1+ 5.55 7/22/98 10,129,000 10,096,207
Svenska Handelsbanken Inc.................... P-1/A-1 5.51 7/27/98 20,000,000 19,920,411
--------------
30,016,618
--------------
FINANCE-SUBSIDIARY -- 1.9%
Deutsche Bank Financial Inc.................. P-1/A-1+ 5.52 7/10/98 10,000,000 9,986,201
National Australia Funding (Delaware) Inc.... P-1/A-1+ 5.54 7/6/98 4,000,000 3,996,922
National Australia Funding (Delaware) Inc.... P-1/A-1+ 5.32 11/10/98 10,000,000 9,804,933
--------------
23,788,056
--------------
MACHINERY -- 1.6%
Caterpillar Financial Services............... P-1/A-1 5.72 7/6/98 20,025,000 20,009,091
--------------
</TABLE>
Continued
7
<PAGE> 8
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
TELECOMMUNICATIONS -- 2.4%
BellSouth Capital Funding Corp. (b).......... P-1/A-1+ 5.56% 7/16/98 $10,973,000 $ 10,947,579
SBC Communications Inc. (b).................. P-1/A-1+ 5.50 7/9/98 20,000,000 19,975,556
--------------
30,923,135
--------------
Total Commercial Paper (cost $568,323,352)..... 568,323,352
--------------
SHORT-TERM CORPORATE OBLIGATIONS -- 17.5%
BANKING -- 0.8%
Bankers Trust NY Corp........................ P-1/A-1 5.68* 2/19/99 9,800,000 9,799,374
--------------
BROKER-DEALER -- 10.6%
Bear Stearns Companies, Inc.................. P-1/A-1 5.80 4/26/99 10,000,000 10,000,000
Bear Stearns Companies, Inc.................. P-1/A-1 5.73* 4/7/99 10,000,000 10,000,000
Bear Stearns Companies, Inc.................. P-1/A-1 5.80 6/14/99 6,000,000 6,000,000
Bear Stearns Companies, Inc.................. P-1/A-1 5.53* 8/5/98 7,000,000 7,000,000
Bear Stearns Companies, Inc.................. P-1/A-1 5.55* 7/8/98 8,000,000 8,000,000
C.S. First Boston, Inc....................... P-1/A-1+ 5.71* 4/5/99 25,000,000 25,000,000
Lehman Brothers Holdings, Inc................ P-2/A-1 5.72* 2/12/99 10,000,000 10,000,000
Lehman Brothers Holdings, Inc................ P-2/A-1 5.72* 3/26/99 4,000,000 4,000,000
Merrill Lynch & Co., Inc..................... P-1/A-1+ 5.60* 2/18/99 5,000,000 5,000,000
Merrill Lynch & Co., Inc..................... P-1/A-1+ 5.57* 12/8/98 4,000,000 4,000,000
Merrill Lynch & Co., Inc..................... P-1/A-1+ 5.96 10/9/98 8,000,000 8,000,000
Morgan Stanley Group, Inc.................... P-1/A-1 5.85* 1/20/99 17,000,000 17,000,000
Morgan Stanley Group, Inc.................... P-1/A-1 5.63 3/1/99 10,900,000 10,901,487
Morgan Stanley/Dean Witter Discover.......... P-1/A-1 5.62* 2/5/99 10,000,000 10,000,000
--------------
134,901,487
--------------
COMPUTER -- 1.6%
IBM Credit Corp.............................. P-1/A-1 5.54* 10/23/98 10,000,000 9,997,882
IBM Credit Corp.............................. P-1/A-1 5.73* 11/10/98 10,000,000 10,000,000
--------------
19,997,882
--------------
FINANCE-DIVERSIFIED -- 0.9%
Associates Corp. of North America............ P-1/A-1+ 6.50 9/9/98 11,430,000 11,446,534
--------------
</TABLE>
Continued
8
<PAGE> 9
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- --------- ----------- --------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM CORPORATE OBLIGATIONS, CONTINUED:
INSURANCE -- 1.7%
Prudential Funding Corp...................... P-1/A-1 5.65%* 3/31/99 $10,000,000 $ 10,000,000
Prudential Funding Corp...................... P-1/A-1 5.59* 3/5/99 6,000,000 6,000,000
Prudential Funding Corp...................... P-1/A-1 5.76* 3/19/99 5,000,000 5,000,000
--------------
21,000,000
--------------
MISCELLANEOUS -- 1.9%
Beta Finance Inc............................. P-1/A-1+ 5.56 2/16/99 5,000,000 5,000,000
Beta Finance Inc............................. P-1/A-1+ 5.70 3/10/99 4,000,000 4,000,000
Beta Finance Inc............................. P-1/A-1+ 5.77 1/15/99 15,000,000 15,000,000
--------------
24,000,000
--------------
Total Short-Term Corporate Obligations (cost
$221,145,277)................................ 221,145,277
--------------
REPURCHASE AGREEMENTS -- 0.6%
HSBC Repo, dated 6/30/98 (Collateralized by
$7,068,000 U.S. Treasury Notes, 7.25%, due
8/15/04, fair value -- $7,863,150)......... 5.70 7/1/98 7,708,000 7,708,000
--------------
Total Repurchase Agreements (cost
$7,708,000).................................. 7,708,000
--------------
Total Investments (cost $1,256,806,925)
(a) -- 99.3%................................. 1,256,806,925
Other assets in excess of liabilities 0.7%..... 8,578,639
--------------
Total Net Assets -- 100.0%..................... $1,265,385,564
==============
</TABLE>
- ---------------
(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 Security Act of 1933, as amended. These
securities have been deemed liquid under guidelines established by the Board
of Directors.
* Floating or adjustable rate security. The coupon rate shown on floating or
adjustable rate securities represents the rate at June 30, 1998.
** Implied Long Term Rating.
*** Yield effective at purchase.
PLC = Public Limited Company
See Notes to Financial Statements.
9
<PAGE> 10
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............. $1,249,098,925
Repurchase agreements, at amortized cost.................. 7,708,000
--------------
Total Investments......................................... 1,256,806,925
Cash...................................................... 224
Interest receivable....................................... 11,691,319
Prepaid expenses and other assets......................... 47,442
--------------
Total assets................................................ 1,268,545,910
--------------
LIABILITIES
Dividends payable......................................... 2,188,927
Accrued expenses and other payables:
Advisory fees........................................... 107,355
Administration fees..................................... 107,355
Distribution fees....................................... 644,138
Accounting fees......................................... 4,890
Director's fees......................................... 8,706
Custodian fees.......................................... 27,566
Registration Fees....................................... 12,613
Audit fees.............................................. 5,654
Other................................................... 53,142
--------------
Total liabilities........................................... 3,160,346
--------------
NET ASSETS.................................................. $1,265,385,564
==============
Shares Outstanding ($0.001 par value, 3 billion shares
authorized):.............................................. 1,266,326,672
==============
Net Asset Value, Offering Price and Redemption Price per
Share..................................................... $1.00
----
----
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 1,266,327
Additional paid-in capital................................ 1,265,091,776
Accumulated net realized losses........................... (972,539)
--------------
Net Assets, June 30, 1998................................... $1,265,385,564
==============
</TABLE>
- ---------------
See Notes to Financial Statements.
10
<PAGE> 11
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $36,320,599
Expenses
Advisory fees............................................. $ 639,873
Administration fees....................................... 639,873
Special management services fees.......................... 639,873
Distribution fees......................................... 3,839,281
Accounting fees........................................... 28,397
Transfer agent fees and expenses.......................... 353,923
Directors' fees........................................... 32,549
Registration fees......................................... 281,721
Custodian fees and expenses............................... 72,082
Printing fees............................................. 56,543
Legal fees................................................ 40,841
Audit fees................................................ 10,366
Other expenses............................................ 5,673
----------
Total expenses before fee waivers and expense
reimbursements......................................... 6,640,995
Less: Fee waivers and expense reimbursements............ (694,982)
----------
Total Expenses.............................................. 5,946,013
-----------
Net Investment Income....................................... 30,374,586
REALIZED GAINS (LOSSES) ON INVESTMENT TRANSACTIONS
Net realized gains (losses) on investment transactions.... 6,669
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $30,381,255
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 12
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, December 31,
1998 1997
---------------- ---------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 30,374,586 $ 50,905,104
Net realized gains (losses) on investment transactions.... 6,669 (3,332)
--------------- ---------------
Net increase in net assets resulting from operations.... 30,381,255 50,901,772
--------------- ---------------
Dividends to shareholders from net investment income........ (30,380,209) (50,905,104)
--------------- ---------------
Capital Share Transactions (at $1.00 per share)
Proceeds from shares issued............................... 3,718,235,791 6,437,748,169
Dividends reinvestment.................................... 29,437,557 48,756,978
Cost of shares redeemed................................... (3,633,300,698) (6,342,754,703)
--------------- ---------------
Net increase in net assets from Capital share
transactions.......................................... 114,372,650 143,750,444
--------------- ---------------
Total Increase in Net Assets................................ 114,373,696 143,747,112
NET ASSETS
Beginning of period....................................... 1,151,011,868 1,007,264,756
--------------- ---------------
End of period............................................. $ 1,265,385,564 $ 1,151,011,868
=============== ===============
SHARE TRANSACTIONS:
Issued.................................................... 3,718,235,791 6,437,748,169
Reinvested................................................ 29,437,557 48,756,978
Redeemed.................................................. (3,633,300,698) (6,342,754,703)
--------------- ---------------
Change in shares.......................................... 114,372,650 143,750,444
=============== ===============
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 13
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER -- 32.0%
ALABAMA -- 3.0%
Jacksonville Electric Authority................. P-1/A-1+ 3.75% 9/15/98 $ 800,000 $ 800,000
West Orange Memorial Hospital................... VMIG1/NR 3.60 7/13/98 1,900,000 1,900,000
West Orange Memorial Hospital................... VMIG1/NR 3.50 7/21/98 550,000 550,000
------------
3,250,000
------------
CALIFORNIA -- 0.5%
Riverside County Teeter Obligations............. P-1/A-1+ 3.75 7/29/98 500,000 500,000
------------
FLORIDA -- 4.0%
Florida Local Government Finance................ P-1/A 3.50 8/7/98 800,000 800,000
Pinellas Health & Education..................... VMIG1/A-1+ 3.70 8/13/98 1,000,000 1,000,000
Plaquemenes Port Authority PCR (Tampa
Electric)..................................... P-1/A-1 3.50 7/28/98 1,000,000 1,000,000
Sunshine State Local Government................. VMIG1/NR 3.70 9/11/98 1,500,000 1,500,000
------------
4,300,000
------------
ILLINOIS -- 0.5%
Illinois Development Finance Authority Revenue
PCR........................................... VMIG1/A-1 3.55 11/5/98 500,000 500,000
------------
INDIANA -- 2.0%
Beaver County PCR (Duquesne Light Co.).......... VMIG1/A-1+ 3.75 9/9/98 970,000 970,000
City of Indianapolis (Indiana Gas Utility
System)....................................... P-1/A-1 3.55 8/6/98 700,000 700,000
Hoosier City of Sullivan National Rural
Utilities..................................... P-1/A-1+ 3.55 10/13/98 500,000 500,000
------------
2,170,000
------------
KANSAS -- 0.6%
Burlington PCR (Kansas City Power & Light)...... P-1/A-1+ 3.65 8/7/98 600,000 600,000
------------
KENTUCKY -- 0.9%
Trimble County KY PCR (Louisville G&E).......... VMIG1/A-1+ 3.55 9/17/98 1,000,000 1,000,000
------------
MARYLAND -- 0.9%
Montgomery County MD Consolidated............... P-1/A-1+ 3.65 7/14/98 1,000,000 1,000,000
------------
MINNESOTA -- 0.9%
Rochester Health Care Facility Revenue Bonds
(Mayo Foundation/Mayo Medical Center
Project)...................................... NR/A-1+ 3.70 8/21/98 1,000,000 1,000,000
------------
</TABLE>
Continued
13
<PAGE> 14
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
MISSOURI -- 1.4%
<S> <C> <C> <C> <C> <C>
Missouri Health & Education (SSM Health)........ MIG1/NR 3.75% 8/17/98 $1,500,000 $ 1,500,000
------------
NEVADA -- 1.1%
Las Vegas Valley Water District................. P-1/A-1+ 3.65 8/10/98 500,000 500,000
Las Vegas Valley Water District................. P-1/A-1+ 3.50 8/14/98 700,000 700,000
------------
1,200,000
------------
NEW YORK -- 4.6%
New York City................................... VMIG1/A-1 3.80 7/20/98 1,000,000 1,000,000
New York City................................... VMIG1/A-1 3.55 7/24/98 700,000 700,000
New York City Municipal Water................... P-1/A-1+ 3.65 7/15/98 1,000,000 1,000,000
Authority New York State Power Authority........ P-1/A-1 3.65 10/9/98 1,300,000 1,300,000
New York State Power Authority.................. P-1/A-1 3.65 10/13/98 1,000,000 1,000,000
------------
5,000,000
------------
OHIO -- 0.9%
Ohio Water Revenue Authority PCR (Cleveland
Electric Illuminating)........................ VMIG1/A-1+ 3.80 7/23/98 1,000,000 1,000,000
------------
TENNESSEE -- 2.4%
Health & Education Board of Metropolitan
Government, Nashville (Vanderbuilt
University)..................................... VMIG1/A-1+ 3.70 7/24/98 500,000 500,000
Shelby County, Tennessee........................ P-1/A-1+ 3.70 10/7/98 1,000,000 1,000,000
Tennessee School Bond Authority................. P-1/A-1+ 3.70 7/17/98 1,100,000 1,100,000
------------
2,600,000
------------
TEXAS -- 3.3%
City of Houston................................. P-1/A-1+ 3.50 7/16/98 1,500,000 1,500,000
City of Houston................................. P-1/A-1+ 3.50 8/17/98 1,000,000 1,000,000
Houston Water & Sewer........................... P-1/A-1 3.70 10/8/98 500,000 500,000
University of Texas Board of Regents............ P-1/A-1+ 3.75 9/10/98 500,000 500,000
------------
3,500,000
------------
UTAH -- 1.2%
State of Utah Highway Commercial Paper Notes.... P-1/A-1+ 3.60 9/30/98 1,300,000 1,300,000
------------
</TABLE>
Continued
14
<PAGE> 15
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
VIRGINIA -- 3.3%
State of Virginia............................... P-1/A-1+ 3.70% 8/28/98 $1,000,000 $ 1,000,000
Town of Louisa Industrial Development Authority
(Virginia Electric Power)..................... VMIG1/A-1 3.60 8/12/98 1,000,000 1,000,000
Town of Louisa Industrial Development Authority
(Virginia Electric Power)..................... VMIG1/A-1 3.60 8/20/98 500,000 500,000
Town of Louisa Industrial Development Authority
(Virginia Electric Power)..................... VMIG1/A-1 3.65 8/26/98 1,000,000 1,000,000
------------
3,500,000
------------
WYOMING -- 0.5%
Lincoln County, Wyoming PCR (Pacificorp)........ VMIG1/A-1+ 3.70 8/18/98 500,000 500,000
------------
Total Commercial Paper (cost $34,420,000)......... 34,420,000
------------
MUNICIPAL BONDS -- 72.9%
ARIZONA -- 3.9%
Phoenix Industrial Development Authority
Multi-Family Housing (Southwest Villages)..... NR/A-1+ 3.35* 12/1/06 2,200,000 2,200,000
Pima County Industrial Development Authority
Revenue (Tucson Electric Light & Power
Improvements)................................. VMIG1/A-1+ 3.55* 12/1/22 1,500,000 1,500,000
Scottsdale Industrial Development Authority
Hospital Revenue, Series A (Memorial
Hospital)..................................... NR/NR 7.05 9/1/18 500,000 503,490
------------
4,203,490
------------
ARKANSAS -- 0.5%
University of Arkansas Revenue (Athletic
Facilities Fayetteville)...................... A1/NR 4.50 9/15/98 500,000 500,500
------------
CALIFORNIA -- 2.8%
California Higher Education Loan Authority Inc.,
Student Loan Revenue, Series D-2.............. VMIG1/NR 4.00* 7/1/98 500,000 500,000
California Higher Education Loan Authority Inc.,
Student Loan Revenue, Series D-2.............. VMIG1/NR 3.65* 7/1/99 500,000 500,000
</TABLE>
Continued
15
<PAGE> 16
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
CALIFORNIA, CONTINUED:
California Higher Education Loan Authority,
Student Loan Revenue.......................... VMIG1/NR 3.80%* 5/1/99 $ 500,000 $ 500,000
California School Cash Reserve Program
Authority, Revenue Bonds...................... MIG1/SP1+ 4.50 7/2/99 1,000,000 1,007,320
Santa Cruz County Board of Education, Tax &
Revenue Anticipation Notes.................... NR/SP1+ 4.00 6/30/99 510,000 511,561
------------
3,018,881
------------
COLORADO -- 1.8%
Northglenn Industrial Development Revenue
(Castle Gardens Retirement Center)............ VMIG/NR 3.50* 1/1/09 1,900,000 1,900,000
------------
DISTRICT OF COLUMBIA -- 0.5%
District of Columbia, Tax and Revenue
Anticipation Notes, Series B.................. MIG1/SP1+ 4.50 9/30/98 500,000 500,755
------------
FLORIDA -- 3.6%
Dade County Health Facilities Authority Hospital
Revenue (Miami Children's Hospital Project)... NR/A-1+ 3.40* 9/1/25 2,100,000 2,100,000
Indian Trace Community Development District,
Series A (Basin 1 Water Management)........... VMIG1/A-1+ 3.40* 11/1/99 1,800,000 1,800,000
------------
3,900,000
------------
GEORGIA -- 3.8%
Burke County Georgia Development Authority PCR,
Series A...................................... VMIG1/A-1+ 3.40* 1/1/19 1,800,000 1,800,000
De Kalb Private Hospital Authority Revenue
Anticipation Bonds (Eagleston Childrens Health
Center)....................................... VMIG1/A-1+ 3.45* 12/1/17 1,800,000 1,800,000
Gwinett County Housing Authority, Multi-Family
Housing (Post Court).......................... NR/A-1+ 3.60* 6/1/25 500,000 500,000
------------
4,100,000
------------
</TABLE>
Continued
16
<PAGE> 17
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
ILLINOIS -- 7.8%
Illinois Educational Facilities Authority
Revenue (Field Museum of Natural History)..... VMIG1/A-1+ 3.65% 1/28/99 $1,000,000 $ 1,000,000
Illinois Educational Facilities Authority
Revenue, Series Cp-1 (DePaul University),
Series Cp-1................................... VMIG1/A-1+ 3.50* 4/1/26 1,900,000 1,900,000
Illinois Health Facilities Authority Revenue
(Elmhurst Memorial Health System)............. VMIG1/NR 3.85* 1/1/28 200,000 200,000
Illinois Health Facilities Authority Revenue
(Evanston Northwestern Corp.)................. VMIG1/NR 3.70* 6/1/99 500,000 500,000
Illinois Health Facilities Authority Revenue,
Series B (Advocate Health Care)............... VMIG1/A-1+ 3.55* 8/15/22 2,060,000 2,060,001
Illinois Health Facilities Authority Revenue,
Series B (Elmhurst Memorial Hospital
Project)...................................... VMIG1/NR 3.85* 1/1/20 800,000 800,000
Illinois Health Facilities Authority Revenue
(Evanston Hospital Corp. Project)............. VMIG1/NR 3.70 3/1/99 1,000,000 1,000,000
Illinois State Toll Highway Authority, Toll
Highway Priority Refunding Revenue, Series
B............................................. VMIG1/A-1+ 3.40* 1/1/10 1,000,000 1,000,000
------------
8,460,001
------------
INDIANA -- 0.8%
Indianapolis Local Public Improvements, Series
H............................................. NR/SP1 4.25* 7/9/98 900,000 900,087
------------
IOWA -- 2.8%
Iowa Finance Authority Small Business
Development Revenue, Series B, Multi-Family
Housing (Village Court Assoc.)................ VMIG1/NR 3.50* 11/1/15 3,000,000 3,000,000
------------
MASSACHUSETTS -- 1.9%
Massachusetts Municipal Wholesale Electrical
Corp., Power Supply System Revenue, Series
C............................................. VMIG1/A-1+ 3.35* 7/1/19 1,000,000 1,000,000
Mohawk Trail Regional School District, Bond
Anticipation Notes, GO........................ NR/NR 4.10 11/2/98 1,000,000 1,000,659
------------
2,000,659
------------
</TABLE>
Continued
17
<PAGE> 18
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
MICHIGAN -- 1.9%
Michigan State Hospital Finance Authority
Revenue, Series A (St. Mary Hospital of
Livonia Project).............................. VMIG1/A-1 3.50%* 7/1/17 $2,000,000 $ 2,000,000
------------
MISSISSIPPI -- 1.1%
Harrison County PCR (E.I. Dupont De Nemours).... P-1/A-1+ 3.80* 9/1/10 700,000 700,000
State Health & Educational Facilities Authority
School District Advance Funding Program
(Mehlville School District)................... NR/SP1+ 4.50 9/14/98 500,000 500,413
------------
1,200,413
------------
MISSOURI -- 0.5%
Missouri State Environmental Improvement &
Energy Resolution Authority, PCR (Union
Electric Co.)................................. P-1/A-1+ 3.75* 6/1/99 500,000 500,000
------------
NEVADA -- 2.1%
Clark County Airport Improvement Revenue, Series
A............................................... VMIG1/A-1+ 3.40* 7/1/25 2,300,000 2,300,000
------------
NEW HAMPSHIRE -- 1.9%
State Housing Finance Authority Multi-Family
Revenues (EQR Bond Partnership)............... VMIG1/NR 3.60* 9/15/26 1,400,000 1,400,000
Stratford County Transportation Revenue, Bond
Anticipation Notes............................ NR/NR 4.30 4/15/99 594,516 595,896
------------
1,995,896
------------
NEW JERSEY -- 1.9%
New Jersey Transportation Funding Authority
Revenue, Series A............................. NR/NR 5.00 12/15/98 500,000 503,133
New Jersey Transportation Funding Authority
Revenue, Series A............................. NR/NR 4.50 6/15/99 500,000 503,903
South Plainfield Bond Anticipation Notes, GO.... NR/NR 4.25 7/22/98 1,000,000 1,000,128
------------
2,007,164
------------
NEW MEXICO -- 2.6%
New Mexico, Tax & Revenue Anticipation Notes.... MIG1/SP1+ 4.25 6/30/99 500,000 503,120
University of New Mexico, University Revenue.... VMIG1/A-1+ 3.40* 6/1/06 2,300,000 2,300,000
------------
2,803,120
------------
</TABLE>
Continued
18
<PAGE> 19
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
NEW YORK -- 7.4%
Local Government Assistance Corp. Revenue,
Series A...................................... VMIG1/A-1+ 3.20%* 4/1/22 $1,400,000 $ 1,400,000
Municipal Assistance Corporation for New York
City, Revenue Bond............................ VMIG1/A-1+ 3.20* 7/1/08 500,000 500,000
New York City Cultural Research Revenue
(American Museum of Natural History).......... VMIG1/A-1+ 3.25* 4/1/21 2,000,000 2,000,000
New York NY Public Improvements, Series B, GO... VMIG1/A-1+ 4.10* 10/1/22 600,000 600,000
New York NY Public Improvements, Subseries
B-3........................................... VMIG1/A-1+ 4.10* 8/15/17 200,000 200,000
New York State, GO.............................. NR/NR 7.80 11/15/98 1,000,000 1,014,535
Suffolk County Water Authority Anticipation
Revenue Notes................................. MIG1/NR 3.35* 11/1/02 1,400,000 1,400,000
Triborough Bridge and Tunnel Authority Special
Obligation.................................... VMIG1/A-1+ 3.20* 1/1/24 1,000,000 1,000,000
------------
8,114,535
------------
NORTH CAROLINA -- 7.4%
North Carolina Educational Facilities, Finance
Agency Revenue, Series B (Duke University).... VMIG1/A-1+ 3.45* 12/1/21 1,700,000 1,700,000
North Carolina Medical Care Revenue (Carol Woods
Project)...................................... VMIG1/NR 4.10* 4/1/21 2,500,000 2,500,000
Union, North Carolina PCR, Square D, Revenue
Bonds......................................... VMIG1/NR 3.50* 3/1/03 2,400,000 2,400,000
University of North Carolina Chapel Hill
Foundation (Certification of Participation)... VMIG1/NR 3.65* 10/1/09 1,500,000 1,500,000
------------
8,100,000
------------
NORTH DAKOTA -- 0.6%
Grand Forks Health Care Facilities Revenue,
Series A (United Hospital Obligation Group)... VMIG1/NR 3.80* 12/1/25 400,000 400,000
Grand Forks Hospital Facilities Revenue (United
Hospital Obligation Group).................... VMIG1/NR 3.80* 12/1/16 200,000 200,000
------------
600,000
------------
</TABLE>
Continued
19
<PAGE> 20
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
OKLAHOMA -- 0.9%
Tulsa Parking Authority Revenue First Mortgage,
Series A (Williams Center Project)............ VMIG1/NR 3.80%* 11/15/98 $ 945,000 $ 945,000
------------
OREGON -- 0.5%
Multnomah County OR School District, Tax &
Revenue Anticipation Notes.................... MIG1/SP1+ 4.25 6/30/99 500,000 502,875
------------
PENNSYLVANIA -- 5.8%
Allegheny County Hospital Development Authority
Revenue, Series B (Childrens Hospital
Pittsburgh)................................... VMIG1/A-1 3.45* 12/1/15 700,000 700,000
Delaware Valley Regulatory Financing Authority
Local Government Revenue...................... VMIG1/A-1+ 3.45* 8/1/16 1,000,000 1,000,000
Delaware Valley Regulatory Financing Authority
Local Government Revenue, Series A............ VMIG1/A-1+ 3.45* 12/1/19 2,000,000 2,000,000
North Umberland Industrial Development Authority
Revenue (Merck Project)....................... NR/A-1+ 3.75* 10/1/22 2,000,000 2,000,000
Philadelphia, Tax & Revenue Anticipation
Notes......................................... MIG1/SP1+ 4.25 6/30/99 500,000 502,955
------------
6,202,955
------------
PUERTO RICO -- 0.9%
Aqueduct and Sewer Authority Revenue............ NR/NR 4.40 7/1/98 490,000 490,000
Puerto Rico Commonwealth Tax and Revenue
Anticipation Notes, Series A.................. VMG1/SP1+ 4.50 7/30/98 500,000 500,292
------------
990,292
------------
TEXAS -- 1.3%
Denton Independant School District, GO.......... NR/NR 3.90 8/15/21 500,000 500,000
Nueces River Authority Pollution Revenue
(Reynolds Metals Co. Project)................. P-1/NR 4.10* 12/1/99 300,000 300,000
Tom Green County Health Facilities Development
Corp., Health Facilities Revenue (Universal
Health Services).............................. NR/A-1+ 3.50* 12/1/15 600,000 600,000
------------
1,400,000
------------
</TABLE>
Continued
20
<PAGE> 21
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT (NOTE 2)
---------------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
UTAH -- 0.9%
Salt Lake County Tax & Revenue Anticipation
Notes, GO..................................... NR/NR 4.00% 12/31/98 $1,000,000 $ 1,002,040
------------
WASHINGTON -- 2.1%
Washington State, Series 96B, GO................ VMIG1/A-1+ 3.45* 6/1/20 2,000,000 2,000,000
Washington State Health Revenue (Fred
Hutchinson)................................... VMIG1/NR 3.75* 1/1/18 300,000 300,000
------------
2,300,000
------------
WISCONSIN -- 2.3%
Milwaukee County, GO............................ NR/NR 5.60 12/1/98 750,000 755,661
Racine School District Tax and Revenue
Anticipation Notes............................ NR/SP1+ 4.25 8/24/98 1,200,000 1,200,586
Wisconsin State, Operating Notes................ MIG1/SP1+ 4.50 6/15/99 500,000 504,435
------------
2,460,682
------------
WYOMING -- 0.6%
Lincoln County PCR, Series B (Exxon Project)...... P1/A-1+ 4.00* 11/1/14 600,000 600,000
------------
Total Municipal Bonds (cost $78,509,345).......... 78,509,345
------------
Total Investments
(cost $112,929,345)(a) - 104.9%................. 112,929,345
Liabilities in excess of other assets - (4.9%).... (5,301,399)
------------
Total Net Assets -- 100.0%........................ $107,627,946
============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes are the same.
* Floating or adjustable rate security. The coupon rate shown on floating or
adjustable rate securities represents the rate at June 30, 1998.
GO = General Obligation
NR = Not rated
PCR = Pollution Control Revenue
See Notes to Financial Statements.
21
<PAGE> 22
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............. $112,929,345
Cash...................................................... 286,161
Interest receivable....................................... 665,212
Prepaid expenses.......................................... 87
------------
Total assets................................................ 113,880,805
------------
LIABILITIES
Dividends payable......................................... 113,574
Payable for securities purchased.......................... 6,034,306
Accrued expenses and other payables:
Advisory fees........................................... 9,032
Administration fees..................................... 5,419
Distribution fees....................................... 38,836
Transfer agent fees and expenses........................ 5,173
Directors' fees......................................... 442
Custodian fees.......................................... 15,815
Legal fees.............................................. 3,990
Audit fees.............................................. 6,389
Registration fees....................................... 11,042
Other................................................... 8,841
------------
Total liabilities........................................... 6,252,859
------------
NET ASSETS.................................................. $107,627,946
============
Shares Outstanding ($0.001 par value, 3 billion shares
authorized):.............................................. 107,627,006
============
Net Asset Value, Offering Price and Redemption Price per
Share..................................................... $1.00
----
----
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 107,627
Additional paid-in capital................................ 107,519,379
Accumulated net realized gains............................ 940
------------
Net Assets, June 30, 1998................................... $107,627,946
============
</TABLE>
- ---------------
See Notes to Financial Statements.
22
<PAGE> 23
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $1,979,768
Expenses
Advisory fees............................................. $ 55,034
Administration fees....................................... 55,034
Special management services fees.......................... 55,034
Distribution fees......................................... 330,206
Accounting fees........................................... 14,889
Transfer agent fees and expenses.......................... 10,505
Directors' fees........................................... 2,531
Audit fees................................................ 15,052
Custodian fees and expenses............................... 11,956
Registration fees......................................... 10,634
Legal fees................................................ 3,071
Other expenses............................................ 2,221
---------
Total expenses before fee waivers and expense
reimbursements......................................... 566,167
Less: Fee waivers and expense reimbursements............ (175,576)
---------
Total Expenses.............................................. 390,591
----------
Net Investment Income....................................... 1,589,177
REALIZED GAINS (LOSSES) ON INVESTMENT TRANSACTIONS
Net realized gains (losses) on investment transactions.... 1,894
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $1,591,071
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
23
<PAGE> 24
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, December 31,
1998 1997
---------------- ------------
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 1,589,177 $ 2,676,436
Net realized gains (losses) on investment transactions.... 1,894 (954)
------------- -------------
Net increase in net assets resulting from operations.... 1,591,071 2,675,482
------------- -------------
Dividends to shareholders from net investment income........ (1,589,177) (2,676,436)
------------- -------------
Capital Share Transactions (at $1.00 per share)
Proceeds from shares issued............................... 286,002,770 492,981,689
Dividends reinvestment.................................... 1,562,576 2,390,128
Cost of shares redeemed................................... (283,337,874) (472,381,555)
------------- -------------
Net increase in net assets from Capital share
transactions.......................................... 4,227,472 22,990,262
------------- -------------
Total Increase in Net Assets................................ 4,229,366 22,989,308
NET ASSETS
Beginning of period....................................... 103,398,580 80,409,272
------------- -------------
End of period............................................. $ 107,627,946 $ 103,398,580
============= =============
SHARE TRANSACTIONS:
Issued.................................................... 286,002,770 492,981,689
Reinvested................................................ 1,562,576 2,390,128
Redeemed.................................................. (283,337,874) (472,381,555)
------------- -------------
Change in shares.......................................... 4,227,472 22,990,262
============= =============
</TABLE>
- ---------------
See Notes to Financial Statements.
24
<PAGE> 25
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (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 eleven portfolios.
The accompanying financial statements and notes relate only to the Correspondent
Cash Reserves Money Market Portfolio (the "Money Market Portfolio") which
commenced operations on May 20, 1991, and the Correspondent Cash Reserves Tax
Free Money Market Portfolio (the "Tax Free Money Market Portfolio"), which
commenced operations on October 7, 1996 (together the "Portfolios"). The Money
Market Portfolio's investment objective is to provide investors with as high a
level of current income as is consistent with the preservation of capital and
the maintenance of liquidity by making investments in short-term money market
obligations. The Tax Free Money Market Portfolio seeks to provide investors with
as high a level of current income exempt from Federal income tax as is
consistent with the preservation of capital and the maintenance of liquidity by
investing in short-term municipal obligations.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
each Portfolio in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles (GAAP). The preparation
of financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
A) Securities Valuation and Restrictions
Securities are valued at amortized cost, which approximates market value.
The amortized cost method involves valuing a security at its cost on the date of
purchase and thereafter assuming a constant amortization to maturity of the
difference between the principal amount due at maturity and cost.
B) Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realized gains and
losses on the sale of investments are calculated on the identified cost basis.
Interest income, including accretion of discount and amortization of premium on
investments, is accrued daily.
C) Repurchase Agreements
The Portfolios may purchase instruments from financial institutions, such
as banks and broker-dealers, subject to the seller's agreement to repurchase
them at an agreed upon time and price ("repurchase agreements"). The seller
under a repurchase agreement is required to maintain the value of the collateral
at not less than the repurchase price. Default by the seller would, however,
expose the Portfolios to possible loss because of adverse market action or delay
in connection with the disposition of the underlying obligations. Risks may
arise from the potential inability of counterparties to honor the terms of the
repurchase
25
<PAGE> 26
agreements. Accordingly, the Portfolios could receive less than the carrying
value upon the sale of the underlying collateral securities.
D) Expenses
Direct expenses of the Portfolios are borne solely by each Portfolio and
general Fund expenses are allocated among the Fund's respective investment
portfolios based on the relative net assets of each Portfolio.
E) Federal Income taxes
It is the policy of the Portfolios to meet the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies and to
distribute substantially all of their income to shareholders. Therefore, no
federal income tax provision is required.
F) Dividends and Distributions
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and are paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. Dividends and
distributions are recorded on the ex-dividend date. Distributions from net
investment income and from net realized gains are determined in accordance with
income tax regulations which may differ from GAAP. Reclassifications are made to
the Portfolios' capital accounts to reflect permanent book/tax differences and
income and gains available for distributions under income tax regulations. Net
investment income, net realized gains and net assets are not affected by this
change.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Mitchell Hutchins Asset Management Inc. ("Mitchell Hutchins"), a
wholly-owned subsidiary of Paine Webber Incorporated ("Paine Webber"), serves as
the Portfolios' investment adviser. BISYS Fund Services Limited Partnership
("BISYS") serves as the Portfolios' administrator and distributor of Portfolio
shares. BISYS is a wholly-owned subsidiary of The BISYS Group, Inc.
As investment adviser, Mitchell Hutchins supervises and assists in the
overall operations of the Portfolios. Pursuant to the terms of the Investment
Advisory Agreement, Mitchell Hutchins is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
each Portfolio. For the six months ended June 30, 1998, there were no waivers
with respect to the Money Market Portfolio or the Tax Free Money Market
Portfolio.
As administrator, BISYS assists in supervising the operations of the
Portfolios. For its services, BISYS is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
each Portfolio. For the six months ended June 30, 1998, BISYS waived fees of
$24,002 with respect to the Tax Free Money Market Portfolio.
Under the terms of the Special Management Services Agreement, the
Portfolios have agreed to pay Mitchell Hutchins and BISYS each a monthly fee at
the annual rate of 0.05% of the average daily net assets of each Portfolio for
certain services, other than those provided pursuant to the Portfolios'
Distribution Plan. These services include developing and monitoring customized
investor programs including individual retirement accounts and other ERISA
options, automatic deposit and withdrawal programs and other programs requested
by certain securities dealers that have entered into securities clearing
arrangements with Paine Web-
26
<PAGE> 27
ber. Mitchell Hutchins and BISYS together waived $639,873 for the Money Market
Portfolio and $55,034 for the Tax Free Money Market Portfolio for the six months
ended June 30, 1998, under the Special Management Services Agreement, which
represented 100% of the fee charged.
The Portfolios have adopted a Distribution Plan pursuant to Rule 12b-1
under the Act. Pursuant to the Distribution Plan, the Portfolios are authorized
to pay Correspondent Services Corporation (CSC), an affiliate of Paine Webber,
and certain securities dealers that have entered into clearing arrangements with
CSC, a monthly fee at an annual rate of up to 0.60% of the average daily net
assets of each Portfolio's shares held in accounts serviced by such firms. Such
fees will be paid in respect of certain services provided by such firms,
including answering client inquiries regarding the Portfolios; assisting clients
in changing dividend options, account designations and addresses; performing
sub-accounting; establishing and maintaining shareholder accounts and records;
processing purchase and redemption transactions; investing client cash account
balances automatically in Portfolio shares; providing periodic statements
showing a client's account balance and integrating such statements with those of
other transactions and balances in the client's other accounts serviced by such
firm; arranging for bank wires; and such other services as the clients may
request. For the six months ended June 30, 1998, the Money Market Portfolio
incurred expenses of $3,839,281 and the Tax Free Money Market Portfolio incurred
expenses of $330,206 pursuant to the Distribution Plan. For the six months ended
June 30, 1998, CSC waived fees of $55,109 for the Money Market Portfolio and
$96,540 for the Tax Free Money Market Portfolio.
Certain Directors and officers of the Fund are "affiliated persons" (as
defined in the Act) of BISYS. Each "non-affiliated" Director receives an annual
fee of $12,000 and a meeting fee of $1,500 per meeting for services relating to
all of the portfolios constituting that Fund.
NOTE 4 -- CONCENTRATION OF CREDIT RISK
The Tax Free Money Market Portfolio invests substantially all of its assets
in a diversified portfolio of high quality municipal obligations. The Portfolio
had the following concentration by security type at June 30, 1998 (as a
percentage of total investments):
<TABLE>
<S> <C>
Commercial Paper.................. 30.5%
General Obligations............... 6.3%
Revenue Bonds:
Education....................... 15.5%
Health.......................... 13.2%
Utilities....................... 11.9%
Housing......................... 8.6%
Transportation.................. 6.1%
Other........................... 7.9%
------
100.0%
======
</TABLE>
The issuers' abilities to meet their obligations may be affected by
domestic and foreign economic, regional and political developments.
27
<PAGE> 28
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED ------------------------------------------------------------------------
JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996 1995 1994 1993
---------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..... $ 0.9992 $ 0.9991 $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000
---------- ---------- ---------- -------- -------- --------
Income from investment
operations:
Net investment income... 0.0235 0.0467 0.0462 0.0512 0.0340 0.0245
Net realized gains
(losses) on investment
transactions.......... 0.0001 0.0001 0.0005 0.0011 (0.0024) (0.0001)
---------- ---------- ---------- -------- -------- --------
Total from investment
operations............ 0.0236 0.0468 0.0467 0.0523 0.0316 0.0244
---------- ---------- ---------- -------- -------- --------
Dividends to shareholders
from net investment
income.................. (0.0235) (0.0467) (0.0462) (0.0512) (0.0340) (0.0245)
---------- ---------- ---------- -------- -------- --------
Net change in net asset
value................. 0.0001 0.0001 0.0005 0.0011 (0.0024) (0.0001)
---------- ---------- ---------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD.................. $ 0.9993 $ 0.9992 $ 0.9991 $ 0.9986 $ 0.9975 $ 0.9999
========== ========== ========== ======== ======== ========
Total Return............. 2.38%(a) 4.77% 4.72% 5.24% 3.45% 2.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of
period (000's)........ $1,265,386 $1,151,012 $1,007,265 $779,011 $458,092 $331,210
Ratio of expenses to
average net assets.... 0.93%(b) 0.95% 0.88% 0.85% 0.94% 1.02%
Ratio of net investment
income to average net
assets................ 4.75%(b) 4.68% 4.65% 5.14% 3.47% 2.44%
Ratio of expenses to
average net assets
*..................... 1.04%(b) 1.06% 1.01% 1.03% 1.12% 1.20%
Ratio of net investment
income to average net
assets *.............. 4.64%(b) 4.57% 4.53% 4.96% 3.29% 2.26%
</TABLE>
- ---------------
* During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See Notes to Financial Statements.
28
<PAGE> 29
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM OCTOBER
7, 1996
SIX MONTHS ENDED YEAR ENDED THROUGH
JUNE 30, DECEMBER 31, DECEMBER 31,
1998 1997 1996*
---------------- ------------ ---------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................... $ 1.0000 $ 1.0000 $1.0000
-------- -------- -------
Income from investment operations
Net investment income................................. 0.0143 0.0286 0.0100
-------- -------- -------
Total from investment operations...................... 0.0143 0.0286 0.0100
-------- -------- -------
Dividends to shareholders from net investment income.... (0.0143) (0.0286) (0.0100)
-------- -------- -------
Net change in net asset value........................... -- -- --
-------- -------- -------
NET ASSET VALUE, END OF PERIOD.......................... $ 1.0000 $ 1.0000 $1.0000
======== ======== =======
Total Return............................................ 1.44%(a) 2.90% 0.66%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)..................... $107,628 $103,399 $80,409
Ratio of expenses to average net assets............... 0.71%(b) 0.78% 0.74%(b)
Ratio of net investment income to average net
assets.............................................. 2.89%(b) 2.86% 2.80%(b)
Ratio of expenses to average net assets **............ 1.03%(b) 1.18% 1.20%(b)
Ratio of net investment income to average net assets
**.................................................. 2.57%(b) 2.46% 2.34%(b)
</TABLE>
- ---------------
* Period from commencement of operations.
** During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
See Notes to Financial Statements.
29
<PAGE> 30
CORRESPONDENT CASH
---------------------------------------------
--------------------------------------------
RESERVES
- ---------------------------------------------------
THE INFINITY MUTUAL FUNDS, INC.
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
INVESTMENT ADVISER
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
1285 Avenue of the Americas
New York, NY 10019
- ---------------------------------------------------
ADMINISTRATOR AND DISTRIBUTOR
BISYS FUND SERVICES, LP
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286
- ---------------------------------------------------
TRANSFER AGENT
& DIVIDEND DISBURSING AGENT
BISYS FUND SERVICES OHIO, INC.
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, OH 43215
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
CORRESPONDENT CASH
---------------------------------------------
--------------------------------------------
RESERVES
LOGO
SEMI-ANNUAL REPORT
------------------
JUNE 30, 1998
(LOGO)
COICCRD98SA 8/98
