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[AMERISTAR MUTUAL FUNDS LOGO]
[EYE IN PYRAMID BACKGROUND]
AMERISTAR PRIME
MONEY MARKET PORTFOLIO
AMERISTAR U.S. TREASURY
MONEY MARKET PORTFOLIO
AMERISTAR CAPITAL
GROWTH PORTFOLIO
AMERISTAR DIVIDEND
GROWTH PORTFOLIO
SEMI-ANNUAL REPORT
AMERISTAR CORE
INCOME PORTFOLIO
AMERISTAR LIMITED
DURATION INCOME PORTFOLIO
AMERISTAR LIMITED DURATION
U.S. GOVERNMENT PORTFOLIO
AMERISTAR TENNESSEE TAX
EXEMPT BOND PORTFOLIO
AMERISTAR LIMITED DURATION
TENNESSEE TAX FREE PORTFOLIO
JUNE 30, 1998
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FUND FACTS
The AmeriStar Funds provide shareholders with a variety of features to
make investing in the Portfolios easy, convenient and manageable.
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AMERISTAR FUND FEATURES AMERISTAR FUND BENEFITS
PROFESSIONAL INVESTMENT The investment managers at First American National Bank are
MANAGEMENT experienced investment professionals who oversee the
investments in each mutual fund.
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LOW MINIMUM INVESTMENT Initial investments in the Portfolios can be as low as
$1,000.
DEDICATED CUSTOMER Account information is available from helpful
SERVICE representatives. Just call 1-800-852-0045.
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AUTOMATIC INVESTMENTS Investments can be made once or twice a month with automatic
transfers from your checking account to your Portfolio
account.
DOLLAR COST AVERAGING Dollar Cost Averaging is a means of investing by which you
invest a fixed dollar amount on a consistent basis. You
invest whether the financial markets are high or low. As a
result, you buy more shares when prices are low and fewer
when prices are high. In this way, you can achieve a lower
average cost per share.*
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AUTOMATIC WITHDRAWALS Automatic withdrawals from your Portfolio account can be
made and credited to any account you designate.
FREE EXCHANGE PRIVILEGES Shares of a Portfolio can be exchanged into shares of other
AmeriStar Portfolios at no cost.**
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REGULAR, INFORMATIVE You will receive account statements after each transaction,
STATEMENTS AND REPORTS plus regular financial reports highlighting performance and
investment strategies.
DIVIDEND REINVESTMENT Dividend income and capital gains can be reinvested
automatically in additional shares of a Portfolio.
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DAILY REDEMPTIONS Shares are redeemable each business day (at the net asset
value per share, which may be worth more or less than your
original cost, next determined after receipt of your
redemption request) by mail, telephone or bank wire.
* 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)
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LETTER FROM THE CHIEF INVESTMENT OFFICER
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To Our Shareholders:
I am pleased to send you the AmeriStar Mutual Funds' semi-annual report for the
six months ended June 30, 1998, a period that saw stocks soar to new levels.
Bond investors also enjoyed returns that were healthy by historical standards,
especially when measured against the tame level of inflation we experienced
during the period.
In January, we introduced Class B shares to our fund family. Unlike our
traditional Class A shares, which carry front-end sales charges, the Class B
shares come with a deferred load, also known as a "contingent deferred sales
charge or CDSC." We feel that Class B shares are ideal for long-term
shareholders.
STOCKS PROVED THAT BIG WAS BETTER
As 1998 began, we felt that the stock market would rotate away from large-cap
stocks and toward mid- and small-cap issues. We believed that larger stocks were
fundamentally overvalued relative to the smaller names in the market. Our
feeling was that smaller stocks -- by that, I mean issues with market
capitalizations of less than $5 billion -- were somewhat sheltered from the
problems in Asia, and that investors would appreciate the relative merits of
these stocks.
However, this scenario simply didn't play out. Instead, a huge flow of money
continued to pour into an extremely narrow group of very large stocks. Investors
preferred companies they believed would continue to generate consistently high
earnings growth for years to come. Foreign players, in particular, focused on
the market's most recognizable names. Fleeing economic turmoil in Asia and
elsewhere, these investors felt comfortable only with the most familiar
companies, and they pushed price-to-earnings multiples and other valuation
measures to extraordinarily high -- some would say dangerous -- levels.
History suggests that these large-cap stocks could be ripe for a fall, but
that's been the case for some time, and market historians have made little money
in recent years. Consequently, we've decided not to "fight the tape," and we've
returned to a strategy of investing in what we perceive to be the best of the
large-cap stocks. For the time being, liquidity, rather than stocks' underlying
fundamentals or valuations, is driving the market. The lion's share of this
liquidity is being driven through the large caps.
BONDS DEPENDED ON THE KINDNESS OF NUMBERS
For the period as a whole, fixed-income investors enjoyed relatively high
returns that were enhanced by continued low inflation. The yield on the
bellwether 30-year Treasury bond fell about 30 basis points (0.30%), which
supported moderately higher bond prices. Overall, the yield curve flattened
dramatically, with shorter-term rates remaining very steady. This was mostly due
to the Federal Reserve Board's (the Fed) decision not to lower the fed funds
rate, the rate banks charge one another for overnight loans. So we saw a
situation in which market forces drove long-term rates down, while the Fed kept
short-term rates artificially high. With inflation virtually nonexistent, our
fixed-income shareholders experienced "real returns" (total return minus
inflation) that were generous by historical standards.
If long-term interest rates continue to decline, investment in capital goods and
building activity could be stimulated. The housing market, for example, could
continue to power up. Our sense is that the Fed doesn't want that to happen;
they're looking to cool off the economy to some degree. Therefore, the Fed is
not likely to lower short-term rates. This suggests that the yield curve could
stay in its current, flat position, which typically has been a precursor to
slower economic growth.
Asia remains the wildest of wild cards. The problems in Asia have had a negative
effect on the earnings of many companies with overseas customers. However, we
believe that Asia is also being used as an excuse for bad management decisions,
or for the normal ebbs and flows of the economic cycle.
Still, we're concerned about Japan, which seems unable or unwilling to do what's
necessary to right its economy. Japan's government has taken some measures in
recent months to mollify critics in the United States and China, but these
actions may prove to be more cosmetic than substantive. Despite the fact that
the prime minister was forced to resign from office in early July, it's possible
that Japan will continue to suffer, at least in the banking sector, in the near
term.
All in all, we think that the climate for stocks and bonds is neutral over the
next six months. There are some underlying forces that remain positive for
investments, including the aging of the population and the move toward saving
for retirement, and a federal government that is as stable as any in the world.
For those and other reasons, we believe that money will continue to flow into
our markets. Frankly, we're surprised that stocks have risen as much as they
have this year. As previously mentioned, we're not going to fight that upward
momentum, and we intend to remain as fully invested as possible.
We thank you for your support and look forward to serving your investment needs
in the months and years to come.
Sincerely,
/s/ Frederick S. Crown Jr.
Frederick S. Crown Jr., CFA
Chief Investment Officer
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SHARON BROWN DONALD F. TURK, CFA
Portfolio Manager Portfolio Manager
Prime Money Market U.S. Treasury Money
[Brown Photo] Portfolio+ [Turk Photo] Market Portfolio+
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INVESTMENT GOAL
The AmeriStar Money Market Portfolios seek to provide as high a level of
current income as is consistent with the preservation of capital and the
maintenance of liquidity. Each Portfolio seeks its objective by investing in:
PRIME MONEY MARKET PORTFOLIO -- A broad range of U.S. Government, bank and
corporate short-term, money-market obligations.
U.S. TREASURY MONEY MARKET PORTFOLIO -- U.S. Treasury securities, other
obligations that are guaranteed as to principal and interest by the U.S.
Government and related repurchase agreements.
Q. WHAT FACTORS AFFECTED THE PERFORMANCE OF THE MONEY MARKET FUNDS?
A. For the last six months, Treasury bill rates were very stable. From January
into April, the 3-month T-bill rate drifted within a fairly tight range of
5.10%-5.22%. Then, from April through the end of June, the rate stayed within an
equally narrow range of 5.03%-5.15%. This was a direct consequence of the
Federal Reserve's keeping the fed funds rate (the rate banks charge one another
for overnight loans) artificially high at 5.5%.
As of June 30, 1998, the average maturity of the Prime Money Market Portfolio
was 9 days; for the U.S. Treasury Money Market Portfolio, it was 52 days.
With the Prime Money Market Portfolio, there was no enticement to go out long on
the yield curve. With the commercial (corporate) paper that is bought by the
Portfolio, we were being offered yields on the short end that were within five
basis points (0.05%) of longer debt. It made more sense to us to stick with
shorter paper and stay as liquid as possible.
With the U.S. Treasury Money Market Portfolio, we were concerned about a
downtrend in interest rates. Consequently, during the period, we made
appropriate adjustments to the Portfolio's average maturity, and to the type of
debt we held. The Fund has maintained Standard & Poor's highest quality rating
of AAA over the reporting period.*
Q. WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. We do not believe the Fed will change the fed funds rate, which should leave
the money markets steady. We will buy short-term paper when it makes sense to do
so and also buy longer-term debt when we can get sufficiently high yields. As
always, remaining liquid for our shareholders will be a priority.
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* The Fund is rated AAA by Standard & Poor's. This rating is historical and is
based upon the Fund's credit quality, market exposure and management. It
signifies that the Fund's safety is excellent and that it has a superior
capacity to maintain a $1.00 net asset value per share.
+ An investment in the AmeriStar Money Market Portfolios is neither insured nor
guaranteed by the U.S. Government. Yields will fluctuate, and there is no
assurance that the Portfolios will be able to maintain a stable net asset
value of $1.00 per share.
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<S> <C>
CHARLES WINGER
Portfolio Manager
Capital Growth
[Winger Photo] Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with the potential to achieve
long-term capital growth by investing primarily in the equity securities of
domestic issuers whose earnings are growing faster than the economy as a
whole. It invests primarily in large U.S. companies with market
capitalizations of at least $500 million. The Portfolio is suitable for
investors who are investing for the long term and are comfortable assuming
the additional risk of investing in stocks in exchange for potentially
higher total returns.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE PERIOD?
A. Despite some volatility, we had a good first half of the year, relative to
historical returns. For the six months ended June 30, 1998, the Portfolio's
total return was 14.22% (Class A Shares at NAV).* In comparison, the Lipper
Growth Fund Index was up 15.57%, and the Standard & Poor's 500 Index rose
17.72%. The Lipper Growth Fund Index is an index of managed funds that is
generally representative of growth stock funds. The S&P 500 is an unmanaged
index that is considered to be generally representative of the U.S. stock market
as a whole.
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. In the first quarter of 1998, we were overweighed in health care and
technology; both sectors performed quite well and helped our performance.
However, in April and May, we became concerned with valuation levels and took a
defensive posture. We raised cash and reduced some of our positions in health
care and technology, two sectors that continued to move upward. We also bought
into the energy sector. Unfortunately, it turned out to be a bad time for energy
stocks, and the Portfolio suffered as a result. The best way to put it is, we
got out of sync with the market. But we righted ourselves and ended up having a
satisfactory period.**
Q. DID YOU CHANGE YOUR FUNDAMENTAL STRATEGY?
A. No, our fundamental investment themes remain the same. We still like
productivity enhancement, which means we believe in technology. We still like
financial services and domestic growth companies. For example, we added Dollar
General (1.23% of the Portfolio), a discount merchandise retailer and Lowe's
Companies (1.89%), a distributor of building materials and supplies. These are
growth companies that have little or no exposure to foreign markets; their
earnings may not be hurt by the problems in Asia.**
Q. WHAT OTHER STOCKS DO YOU PARTICULARLY LIKE?
A. We are still overweighed in technology and health care. Dell Computer (2.3%
of the Portfolio) has performed very well for us. We still like Cisco Systems
(3.1%); it has been among our favorite stocks for some time. Also, Microsoft
(1.8%) remains a leader in its industry and Lucent Technologies (2.6%) has been
a big performer for us in 1998. In health care, two new names in our Portfolio
are Warner-Lambert (2.6%) and Schering-Plough (2.6%).**
Also, at the beginning of the year, we had 25%-30% of our assets invested in the
mid-cap sector (stocks with market capitalization of less than $8 billion).
Those stocks significantly underperformed the market, and we reduced our
position to less than 10% of the Portfolio in mid-caps.**
Q. WHAT'S YOUR OUTLOOK FOR THE REMAINDER OF 1998?
A. We are very concerned with the valuation levels in the market. But being
cautious has not paid off in this bull market. Interest rates are still low, and
corporate earnings are coming through okay. We are not ready to abandon stocks.
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* Including the 4.75% sales load, the Portfolio's return was 8.78%, year to
date; 22.49%, 1-year; 18.33%, 5-year; and 14.33%, for the 10-year period.
** The Portfolio composition is subject to change.
3
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<S> <C>
JAY BAUMGARDNER
Portfolio Manager
Dividend Growth
[Baumgardner Photo] Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with current income and capital
appreciation. The Portfolio invests primarily in dividend-paying equity
securities of domestic issuers that are expected to provide reasonable income
and may have capital appreciation potential.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE PERIOD?
A. We had a very good period relative to our benchmark. For the six months ended
June 30, 1998, the Portfolio's total return was 12.66% (Class A Shares at NAV).*
In comparison, the Lipper Equity Income Index rose 9.59%. The Lipper Equity
Income Index is an index of managed funds that is generally representative of
funds that invest more than 60% of assets in equities.
We were very satisfied with the Portfolio's total return. As noted above, our
Investment Goal stresses current income as well as capital appreciation.
Therefore, such outperformance rewarded our shareholders handsomely.
Q. WHAT FACTORS LED TO THESE STRONG RETURNS?
A. We continued to do well with two of our three primary sectors: financial
stocks and utilities. Our energy holdings didn't fare quite as well, however. In
the first six months of 1998, oil prices plummeted from $18-$20 a barrel to
$12-$13 a barrel. But despite problems with oil stocks, we more than made up
ground in other areas. For example, we had great success in the consumer
staples, health care and technology sectors especially those companies that were
not affected by the "Asian contagion." The key factor driving each of those
areas was consistent, reliable earnings. Food companies such as Heinz (1.8% of
the Portfolio) and Best Foods (2.2%), along with consumer product companies such
as Procter & Gamble (2.2%) and Colgate Palmolive (2.3%), continued to charge
right along. In technology, one of our best stocks was Automatic Data Processing
(2.6%), a payroll processing firm that had very little exposure in Asia. The
stock was up more than 20% during the period. We also benefited from the drop in
interest rates and continued low inflation. This environment was ideal for
financial and utility stocks, which represented a significant portion of our
Portfolio.**
Q. WHAT OTHER STOCKS PERFORMED WELL FOR YOU?
A. We were very happy with the performance of Wal-Mart (1.0% of the Portfolio),
which rose nearly 60% during the period. We were attracted to the stock because
it's a retailer--we were looking to expand our presence in the retail
sector--the company has been a consistent earnings grower and its foreign
exposure is relatively small. Also, Gannett (2.7%), the publisher of USA Today
and other papers, continued to deliver solid returns. As with Wal-Mart, Gannett
has a domestic orientation and delivers consistent earnings growth. The company
also has profited from flat newsprint prices, newsprint being its largest cost
component.**
Q. WITH THE PORTFOLIO'S IMPRESSIVE CAPITAL APPRECIATION, HAVE YOU BEEN ABLE TO
MAINTAIN AN ABOVE-AVERAGE YIELD FOR SHAREHOLDERS?
A. Yes. As of June 30, the Portfolio's dividend yield was 2.3%, versus just 1.4%
for the S&P 500. We received significant yield from our utility holdings and the
real estate investment trusts (REITs) in the Portfolio. After several years of
strong performance, REITs underperformed during the period, due to some negative
stories in the media and skeptical investor psychology. But we believe the real
estate sector is still very viable, and we expect to be rewarded for our
patience.**
Q. WHAT IS YOUR STRATEGY FOR THE NEXT SIX MONTHS?
A. Although we wouldn't be surprised to see the U.S. economy slow down, it still
looks solid compared to the rest of the world. The kinds of companies we focus
on are not necessarily dependent on a growing economy; they're not cyclical in
nature. Asia may continue to be a drag throughout the world, but if you own
Wal-Mart, you may not be terribly concerned about economic conditions in, say,
Japan. We anticipate stable interest rates and benign inflation--all of which
bodes well for a portfolio such as ours. And if oil prices begin to rise, we're
confident our energy holdings will do very well.
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* Including the 4.75% sales load, the Portfolio's return was 7.28%, year to
date; 20.29%, 1-year; 15.12%, 5-year; and 13.92%, for the 10-year period.
** The Portfolio's composition is subject to change.
4
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<TABLE>
<S> <C>
DONALD F. TURK, CFA
Portfolio Manager
Core Income
[Turk Photo] Portfolio
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INVESTMENT GOAL
The Portfolio seeks to provide investors with current income without assuming
undue risk. It invests primarily in investment-grade, U.S. dollar-denominated,
fixed-income securities of domestic and foreign issuers with maturities of any
length. The Portfolio is suitable for investors seeking regular monthly income
without undue risk to principal.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1998?
A. Despite some volatility in the market, the Portfolio performed very well
during the period. For the six months ended June 30, 1998, the Portfolio
produced a total return of 3.93% (Class A Shares at NAV).* In comparison, the
Merrill Lynch Corporate/Government Master Index, an unmanaged benchmark,
produced a total return of 4.24%. The Merrill Lynch Corporate/Government Index
is generally representative of U.S. Treasury and Agency bonds and
investment-grade corporate bonds.
It is also important to recognize income yield to shareholders. As of June 30,
1998, the Portfolio's 30-day SEC yield was 5.00% (Class A Shares at NAV)**,
compared to 5.89% at the end of 1997. The yield percentage is annualized. We
achieved our objectives while maintaining an average credit quality of AA-
(rated by Standard & Poor's). As of June 30, 1998, the Portfolio's average
maturity was 11.4 years.***
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. As the period progressed, corporate spreads widened, largely due to fears
caused by the situation in Asia and the decision by many investors to favor
super-safe Treasury bonds. (Corporate spreads are the additional yield provided
by a corporate bond over a Treasury bond of similar maturity. Spreads often
widen when the demand for a class of security, such as corporate paper, is lower
than the demand for another security, such as Treasury debt.) Also, as interest
rates declined, the prepayments on our limited holdings of mortgage-backed
securities increased, resulting in slightly fewer high-yielding instruments in
our Portfolio.
Q. WITH ALL THIS MOVEMENT IN THE MARKET, WHAT STRATEGIES DID YOU EMPLOY TO HELP
YOU MEET YOUR OBJECTIVES?
A. First, we extended the Portfolio's average weighted maturity from 11.2 years
at the end of December to 11.4 years at the end of June. Second, to increase
income to shareholders, we sold some of our lower-yielding Treasury securities
and replaced them with higher-yielding corporate paper. For example, we moved
from Treasury securities of 2026 into AA-rated Consolidated Natural Gas Bonds of
2027 (2.1% of the Portfolio), which added 63 basis points (0.63%) in yield. And
third, we increased our use of callable bonds. Although callable bonds can be
redeemed before maturity by the issuer, this move enabled us to maintain the
same approximate maturity as with our noncallable bonds, while increasing
interest income significantly. To illustrate, we bought Xerox Credit 7.5% bonds
due in 2012 (0.6% of the Portfolio); these bonds are callable in 1999, but still
increased yield by 2.26% over Treasury securities that come due in 1999. We are
very sensitive to the fact that our shareholders are focused on current income,
and we took prudent steps to boost yield while maintaining the relative
stability of the Portfolio.***
As of June 30, 1998, 79% of the Portfolio was invested in corporate paper, with
a total of 21% invested in Treasury, government agency and pass-through
securities.***
Q. WHAT IS YOUR OUTLOOK?
A. We continue to be positive on the bond market, though we feel most of the
downtrend in yields is behind us. Over the next six months, the yield on the
30-year Treasury bond should remain within a range of 5.5%-6.0%. Looking ahead
into 1999, we expect the yield to dip below 5%. However, the largest wild card
is Asia, especially with regard to the state of the Japanese financial industry.
The trouble in Japan is far from over, and that could have a major impact on the
U.S. economy and our markets.
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* Including the 3.00% sales load, the Portfolio's return was 0.78%, year to
date; 7.23%, 1-year; 5.03%, 5-year; and 7.34%, for the 10-year period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been lower.
*** The Portfolio composition is subject to change.
5
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<TABLE>
<S> <C>
DONALD F. TURK, CFA
Portfolio Manager
Limited Duration
[Turk Photo] Income Portfolio
</TABLE>
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INVESTMENT GOAL
The Portfolio seeks to provide investors with current income without assuming
undue risk. It invests primarily in investment-grade, U.S. dollar-denominated,
fixed-income securities of domestic and foreign issuers that generally have a
duration of under four years. This
Portfolio is suitable for investors seeking regular monthly income without
undue risk to principal.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1998?
A. The Portfolio performed well during the period. For the six months ended June
30, 1998, the Portfolio produced a total return of 2.74% (Class A Shares at
NAV).* In comparison, the Merrill Lynch 1-5 Year Corporate/Government Index, an
unmanaged benchmark, produced a total return of 3.19%. The index is a broad
performance measure of bonds with maturities in the one-to-five-year range.
It is also important to recognize income yield to shareholders. As of June 30,
1998, the Portfolio's 30-day SEC yield was 5.00% (Class A Shares at NAV)**,
compared to 5.92% at the end of 1997. The yield percentage is annualized. We
achieved our objectives while maintaining an average credit quality of AA (rated
by Standard & Poor's). As of June 30, 1998, the Portfolio's average maturity was
3.0 years.***
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. As the period progressed, corporate spreads widened, largely due to fears
caused by the situation in Asia and the decision by many investors to favor
super-safe Treasury bonds. (Corporate spreads are the additional yield provided
by a corporate bond over a Treasury bond of similar maturity. Spreads often
widen when the demand for a class of security, such as corporate paper, is lower
than the demand for another security, such as Treasury debt.) Also, as interest
rates declined, the prepayments on our limited holdings of mortgage-backed
securities increased, resulting in slightly fewer high-yielding instruments in
the Portfolio.
The short end of the yield curve was very flat, and, in fact, was slightly
inverted at times during the period. (An inverted yield curve results when
securities with shorter maturities offer higher yields than securities with
longer maturities.) This was due partly to the fact that the Federal Reserve
kept the fed funds rate "artificially" high, and partly to the widening of
spreads. Consequently, some of the short-maturity paper we held didn't
appreciate in value as much as we expected.
Q. WHAT STRATEGIES DID YOU EMPLOY?
A. We took prudent measures to boost yield for our shareholders while preserving
the relative stability of the Portfolio. First, we continued to maintain the
Portfolio's average maturity at about 3 years throughout the period. Second, we
increased our use of callable agency bonds, which helped us maintain the same
approximate maturity, while increasing interest income significantly. For
example, we bought Federal Home Loan Mortgage Corporation 6.75% notes that
mature in 2008 (2.2% of the Portfolio); these notes are callable in 1999, but
still increased yield by 1.46% over Treasury securities that come due in 1999.
Third, we sold lower-yielding Treasury securities and replaced them with
higher-yielding corporate paper. To illustrate, we moved some money from
Treasury securities into SCANA Corp. 6.25% notes due in 2003 (2.2%). SCANA is
the solid, A-rated parent of South Carolina Electric and Gas, and the paper
yields 75 basis points (0.75%) more than similar Treasury notes.***
As of June 30, 1998, 63% of the Portfolio was invested in corporate paper, with
a total of 37% invested in Treasury, agency and pass-through securities.
Q. WHAT IS YOUR OUTLOOK?
A. The key question to consider is: What will the Fed do? It appears to us that,
unless the economy has a huge, unexpected spurt, the Fed will not raise the fed
funds rate. In that case, the bond market should be in pretty good shape,
barring widespread selling by foreign investors. Over the next six months, the
yield on the 30-year Treasury bond should remain within a range of 5.5%-6.0%.
Looking ahead into 1999, we expect the yield to dip below 5%.***
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* Including the 3.00% sales load, the Portfolio's return was -0.35%, year to
date; 3.44%, 1-year; 4.48%, 5-year; and 6.41%, for the 10-year period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been lower.
*** The Portfolio's composition is subject to change.
6
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<TABLE>
<S> <C>
DONALD F. TURK
Portfolio Manager
Limited Duration
U.S. Government
[Turk Photo] Portfolio
</TABLE>
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INVESTMENT GOAL
The Portfolio seeks to provide investors with high current income without
assuming undue risk. The Portfolio will invest primarily in a portfolio of
U.S. Government securities that, under normal market conditions, has a
duration that approximates that of the Merrill Lynch 1-5 Year Government Bond
Index.
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Q. HOW DID THE PORTFOLIO PERFORM DURING THE FIRST HALF OF 1998?
A. The Portfolio did very well during the period. For the six months ended June
30, 1998, the Portfolio produced a total return of 2.74% (Class A Shares at
NAV).* In comparison, the Merrill Lynch 1-5 Year Government Bond Index, an
unmanaged benchmark, produced a total return of 3.19%. The index is a broad
performance measure of government bonds with maturities in the one-to-five-year
range.
It is also important to recognize income yield to shareholders. As of June 30,
1998, the Portfolio's 30-day SEC yield was 4.99% (Class A Shares at NAV)**,
compared to 5.92% at the end of 1997. The yield percentage is annualized. We
achieved our objectives while maintaining an average credit quality of AAA (as
rated by Standard & Poor's). As of June 30, 1998, the Portfolio's average
maturity was 3.4 years.***
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. The short end of the yield curve was very flat, and, in fact, was slightly
inverted at times during the period. (An inverted yield curve results when
securities with shorter maturities offer higher yields than securities with
longer maturities.) This was due partly to the fact that the Federal Reserve
kept the fed funds rate "artificially" high, and partly to the widening of
spreads between Treasury and corporate debt. Consequently, some of the
short-maturity paper we held didn't appreciate in value as much as we expected.
Also, as interest rates declined, the prepayments on our limited holdings of
mortgage-backed securities increased, resulting in slightly fewer high-yielding
instruments in the Portfolio.
Q. WHAT STRATEGIES DID YOU EMPLOY?
A. We took prudent measures to generate more yield for our shareholders while
preserving the relative stability of the Portfolio. First, we extended the
Portfolio's average maturity from 3.1 years at the end of December to 3.4 years
at the end of June. Second, we increased our use of callable agency bonds. This
enabled us to maintain the same approximate maturity, but boosted our interest
income significantly. For example, we sold a position in Treasury notes and used
the proceeds to buy Federal Home Loan Bank notes due in 2007 (3.8% of the
Portfolio). These notes are callable in 1999, but still offer 54 basis points
(0.54%) more yield than Treasury securities that come due in 1999. We believe
this was a great opportunity for us; the notes come with virtually no risk of
default and offer a greater spread than we could find in the riskier, corporate
market.***
As of June 30, 1998, 45% of the Portfolio was invested in Treasury securities,
with 51% invested in government agencies and pass-through securities.***
Q. WHAT IS YOUR OUTLOOK?
A. Basically, the economy keeps rolling along in an accommodating environment of
stable interest rates and low inflation. A key question to consider is: What
will the Fed do? It appears to us that, unless the economy has a huge,
unexpected spurt, the Fed will not raise the fed funds rate. In that case, the
bond market should be in pretty good shape, barring widespread selling by
foreign investors. Over the next six months, the yield on the 30-year Treasury
bond should remain within a range of 5.5%-6.0%. Looking ahead into 1999, we
expect the yield to dip below 5%, which would be good for virtually all types of
bonds.***
- ---------------
* Including the 3.00% sales load, the Portfolio's return was -0.32%, year to
date; 3.45%, 1-year; 3.93%, 5-year; and 6.42%, for the 10-year period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/ or reimbursements not been in effect,
the 30-day SEC yield would have been lower.
*** The Portfolio's composition is subject to change.
7
<PAGE> 10
<TABLE>
<S> <C>
SHARON BROWN
Portfolio Manager
Tennessee
Tax Exempt
[Brown Photo] Bond Portfolio
</TABLE>
- ---------------------------------------------------------------
- ---------------------------------------------------------------
INVESTMENT GOAL
The Portfolio seeks to provide investors with current income exempt from
Federal and Tennessee state income taxes without assuming undue risk. The
Portfolio invests primarily in investment-grade Tennessee municipal
obligations, and is suitable for Tennessee residents seeking monthly income
exempt from both federal and Tennessee personal income taxes.+ The Portfolio
affords greater diversification and liquidity than most investors would
achieve by purchasing municipal securities directly.
- ---------------------------------------------------------------
Q. HOW DID THE PORTFOLIO PERFORM DURING THE PERIOD?
A. For the six months ended June 30, 1998, the Portfolio produced a total return
of 1.17% (Class A Shares at NAV).* In comparison, the Portfolio's unmanaged
benchmark, the Lipper States Intermediate Municipal Index, produced a total
return of 2.19%. (The index is a broad performance measure of municipal bonds
with intermediate-term maturities.)
It is also important to recognize income yield to shareholders. As of June 30,
1998, the Portfolio's 30-day SEC yield was 3.11% (Class A Shares at NAV).** For
investors in the 36% federal income tax bracket, that is equivalent to a taxable
yield of 4.86%. The yield percentage is annualized.
We achieved our objectives while maintaining an average credit quality of Aa
(rated by Moody's) and AA (rated by Standard & Poor's). As of June 30, 1998, the
Portfolio's average maturity was 8.9 years.***
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. We saw a good bit of supply come into the market. The period included a new
fiscal year for many municipalities and other government entities; this is a
time when issuers traditionally begin a new borrowing cycle.
For most of the period, municipal bonds in general underperformed Treasury
bonds, which turned in a particularly strong performance. This variance was due
partly to the amount of supply in the municipal market and partly to the fact
that many fixed-income investors continued to show an interest in the equity
market. With stocks soaring the last three years, many long-time bond investors
may have felt that equities offered a better risk-reward tradeoff.
The only significant move we made was a concerted effort to bring this to be an
all-Tennessee fund; we sold most of our out-of-state holdings and used the
proceeds to buy Tennessee municipals. Even though our prospectus allows us to
invest up to 35% of the Portfolio in out-of-state bonds, the vast majority of
our shareholders are residents of Tennessee, and we wanted to give them the
greatest possible tax advantage.
Q. WHAT ARE A FEW OF YOUR FAVORITE BONDS IN THE PORTFOLIO?
A. One of our favorite bonds has been Memphis 6.25%, due 2009 (2.1% of the
Portfolio). This is a noncallable bond, so we're getting an attractive yield
guaranteed for 11 years. On the longer end of the market, we like the Hamilton
County 5.10%, due 2024 (1.7%). We bought these bonds at a discount, and as
interest rates fell during the period, the bonds gained in value.***
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1998?
A. We don't see a whole lot of change going on in the municipal market for the
rest of the year. We're going to still be faced with a healthy amount of supply.
We feel the 30-year Treasury bond is going to remain in a trading range of
5.5%-6.0%, and while municipals don't move in lockstep with Treasuries, they key
off moves in the Treasury market. So we don't foresee a lot of volatility. We're
pretty comfortable with the composition of our Portfolio.***
- ---------------
+ Some investors may be subject to the federal alternative minimum tax and to
certain state and local taxes.
* Including the 3.00% sales load, the Portfolio's return was -1.82%, year to
date; 3.55%, 1-year; 2.77%, 5-year; and 5.07%, for the 10-year period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/or reimbursements not been in effect, the
30-day SEC yield would have been lower.
*** The Portfolio's composition is subject to change.
8
<PAGE> 11
<TABLE>
<S> <C>
SHARON BROWN
Portfolio Manager
Limited Duration
Tennessee Tax Free
[Brown Photo] Portfolio
</TABLE>
- ---------------------------------------------------------------
- ---------------------------------------------------------------
INVESTMENT GOAL
The Portfolio seeks to provide investors with current income exempt from
Federal and Tennessee state income taxes without assuming undue risk+. The
Portfolio invests primarily in investment-grade Tennessee Municipal
Obligation Bonds that generally have a duration of under five years,
producing an effective average portfolio maturity ranging between three and
five years.
- ---------------------------------------------------------------
Q. HOW DID THE PORTFOLIO PERFORM DURING 1997?
A. For the six months ended June 30, 1998, the Portfolio produced a total return
of 1.40% (Class A Shares at NAV).* In comparison, the Portfolio's unmanaged
benchmark, the Lehman Brothers Municipal 1-5 Year Index, produced a total return
of 2.3%, while Lipper states that the Short Intermediate Municipal Debt Index 6
month return was 1.96%. The index is a broad performance measure of municipal
bonds with short-term maturities.
It is also important to recognize income yield to shareholders. As of June 30,
1998, the Portfolio's 30-day SEC yield was 3.11% (Class A Shares at NAV).** For
investors in the 36% federal income tax bracket, that is equivalent to a taxable
yield of 4.83%. The yield percentage is annualized.
We achieved our objectives while maintaining an average credit quality of Aa
(rated by Moody's) and AA (rated by Standard & Poor's). As of June 30, 1998, the
Portfolio's average maturity was 4.6 years.***
Q. WHAT FACTORS AFFECTED YOUR PERFORMANCE?
A. We saw a good bit of supply come into the market. The period included a new
fiscal year for many municipalities and other government entities; this is a
time when issuers traditionally begin a new borrowing cycle.
The yield curve continued to flatten during the period. We saw rates on the
shorter end of the yield curve, where we mostly operate, come down more sharply
than on the longer end of the curve. This was due in part to the Federal
Reserve's decision to keep the fed funds rate (the rate banks charge one another
for overnight loans) at an artificially high 5.5%. Demand on the short end
tended to keep up with supply; the short end didn't underperform, relative to
Treasuries, as much as the longer end of the market.
Q. WHAT ARE A FEW OF YOUR FAVORITE BONDS IN THE PORTFOLIO?
A. We like Metro Nashville Davidson County 6.25%, due 2001 (4.4% of the
Portfolio). This is almost a four-year piece of paper with a good coupon. On the
long end of the yield curve is a bond we've had for quite a while: Knoxville
7.25%, due 2008 (5.0%). We've held this issue for its current yield and the
coupon. Sometime in the next few years we might see a need to change into a
longer bond with the same coupon or rearrange the Portfolio to protect our
yield. But for right now, this bond is adding very nicely to the Portfolio's
yield.***
Q. WHAT IS YOUR OUTLOOK FOR 1998?
A. We don't see a whole lot of change going on in the municipal market for the
rest of the year. We're going to still be faced with a healthy amount of supply.
If the Fed were to juggle the fed funds rate around, obviously that would have
an effect on a Portfolio such as ours. But we don't anticipate such a move and
feel that our end of the market should remain steady. We're pretty comfortable
with the composition of our Portfolio.***
- ---------------
+ Some investors may be subject to the federal alternative minimum tax and to
certain state and local taxes.
* Including the 3.00% sales load, the Portfolio's return was -1.61%, year to
date; 1.92%, 1-year; 2.69%, 5-year; and 4.62%, for the 10-year period.
** During the period, certain expenses were voluntarily waived and/or
reimbursed. Had these waivers and/ or reimbursements not been in effect, the
30-day SEC yield would have been lower.
*** The Portfolio's composition is subject to change.
9
<PAGE> 12
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME 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>
BANK NOTES -- 1.8%
AMEX Centurian.................................. P1/A1 5.71%* 7/13/98 $ 3,000,000 $ 3,000,635
------------
Total Bank Notes (Cost $3,000,635)................ 3,000,635
------------
CERTIFICATES OF DEPOSIT -- 2.4%
DOMESTIC -- 2.4%
CS First Boston................................. P1/A1 5.74* 7/7/98 4,000,000 4,000,000
------------
Total Certificates of Deposit (Cost $4,000,000)... 4,000,000
------------
COMMERCIAL PAPER -- 59.2%
Banca CRT Finance............................... P1/A1 5.58** 7/6/98 5,000,000 4,996,160
Bank One Funding................................ P1/A1+ 5.55** 7/21/98 5,000,000 4,984,694
Banque et d'Epargne de L'Etat................... P1/A1+ 5.55** 7/7/98 5,000,000 4,995,417
Bil North America Inc Bank Luxemborg............ P1/A1+ 5.54** 7/28/98 5,000,000 4,979,375
British Telecommunication PLC................... P1/A1+ 6.05** 7/1/98 5,000,000 5,000,000
Caisse Centrale................................. P1/A1+ 5.55** 7/17/98 5,000,000 4,987,778
Check Point Charley, Inc........................ P1/A1 5.60** 7/8/98 5,000,000 4,994,594
Commonwealth Bank of Australia.................. P1/A1+ 5.55** 7/17/98 5,000,000 4,987,733
Cooperative Tractor A........................... P1/A1+ 5.96** 7/2/98 7,000,000 6,998,844
Deutsche Bank................................... P1/A1+ 5.52** 7/6/98 5,000,000 4,996,201
Ford Motor Co................................... P1/A1 5.68** 7/2/98 5,000,000 4,999,213
General Motors.................................. P1/A1 5.67** 7/2/98 5,000,000 4,999,214
Halifax Building Society........................ P1/A1 5.69** 7/2/98 5,000,000 4,999,211
KFW International Finance....................... P1/A1+ 6.10** 7/2/98 6,900,000 6,898,831
Lloyds Bank PLC................................. P1/A1+ 5.51** 8/14/98 5,000,000 4,966,633
Nordbanken...................................... P1/A1 5.55** 7/17/98 5,000,000 4,987,778
PHH Corp........................................ P1/A1 5.72** 7/27/98 5,000,000 4,979,525
Svenska Handelsbanken........................... P1/A1 5.53** 7/6/98 5,000,000 4,996,194
Thunder Bay..................................... P1/A1 5.61** 7/21/98 3,000,000 2,990,733
------------
Total Commercial Paper (Cost $96,738,128)......... 96,738,128
------------
CORPORATE OBLIGATIONS -- 4.9%
CTN Trust, Series 1, MTN (b).................... P1/A1 6.01* 7/2/98 4,000,000 4,002,398
Merrill Lynch & Co, MTN......................... P1/A1+ 5.72* 7/7/98 4,000,000 4,000,000
------------
Total Corporate Obligations (Cost $8,002,398)..... 8,002,398
------------
U.S. GOVERNMENT AGENCY SECURITIES -- 10.4%
FEDERAL HOME LOAN BANK -- 3.1%
Federal Home Loan Bank.......................... 5.58* 7/1/98 5,000,000 4,998,328
------------
FEDERAL NATIONAL MORTGAGE ASSOC -- 4.2%
Federal National Mortgage Assoc................. 5.60* 7/7/98 5,000,000 4,999,516
Federal National Mortgage Assoc................. 5.35* 9/14/98 2,000,000 1,998,680
------------
6,998,196
------------
</TABLE>
Continued
10
<PAGE> 13
<TABLE>
<CAPTION>
AMORTIZED
MOODY'S/S&P MATURITY PRINCIPAL COST
RATINGS RATE DATE AMOUNT/SHARES (NOTE 2)
----------- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
STUDENT LOAN MARKETING ASSOC. -- 3.1%
Student Loan Marketing Association.............. 5.34%* 7/7/98 $ 5,000,000 $ 4,994,244
------------
Total U.S. Government Agency Securities (Cost
$16,990,768).................................... 16,990,768
------------
REPURCHASE AGREEMENTS -- 21.5%
Goldman Sachs, dated 6/30/98, with a maturity
value of $35,271,924 (Collateralized by
$38,530,577 Federal National Mortgage Assoc.,
6.46%, 5/18/28, fair value -- 36,324,431).... 5.60 7/1/98 35,266,438 35,266,438
------------
Total Repurchase Agreements (Cost $35,266,438).... 35,266,438
------------
MONEY MARKET FUNDS -- 0.0%
Bank of New York Cash Reserve Money Market
Fund......................................... 1,016 1,016
------------
Total Money Market Funds (Cost $1,016)............ 1,016
------------
TOTAL INVESTMENTS (COST $163,999,383)
(a) -- 100.2%................................... 163,999,383
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.2%)... (293,856)
------------
TOTAL NET ASSETS -- 100.0%........................ $163,705,527
============
</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 Securities Act of 1933, as amended. These
securities have been deemed liquid under guidelines established by the Board
of Directors.
* Variable rate security. Rate represents rate in effect at June 30, 1998.
Maturity date reflects the next rate change date.
** Yield effective at purchase.
PLC - Public Limited Company
MTN - Medium Term Note
See Notes to Financial Statements.
11
<PAGE> 14
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............. $128,732,945
Repurchase agreements, at amortized cost.................. 35,266,438
------------
Total Investments...................................... 163,999,383
Interest receivable....................................... 291,393
Receivable for capital shares issued...................... 17,421
Deferred organization costs............................... 10,134
Prepaid expenses and other assets......................... 6,504
------------
Total assets................................................ 164,324,835
------------
LIABILITIES
Distributions payable..................................... 519,631
Payable for capital shares redeemed....................... 18,738
Accrued expenses:
Advisory fees.......................................... 26,369
Administration fees.................................... 10,547
Shareholder servicing fees--Class A Shares............. 14,722
Accounting fees........................................ 5,185
Transfer agent fees.................................... 3,296
Custodian fees......................................... 8,090
Audit fees............................................. 5,927
Other.................................................. 6,803
------------
Total liabilities........................................... 619,308
------------
NET ASSETS
Class A Shares......................................... 107,989,421
Trust Shares........................................... 55,716,106
------------
Total Net Assets............................................ $163,705,527
============
Shares Outstanding ($0.001 par value, 1 billion shares
authorized)
Class A Shares......................................... 107,991,769
Trust Shares........................................... 55,717,185
------------
163,708,954
============
Net Asset Value, Offering Price and Redemption Price per
Share
Class A Shares......................................... $1.00
-----
Trust Shares........................................... $1.00
-----
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par..................... $ 163,709
Additional paid-in capital................................ 163,541,682
Undistributed net investment income....................... 3,563
Accumulated net realized losses on investment
transactions........................................... (3,427)
------------
Net Assets, June 30, 1998................................... $163,705,527
============
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 15
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $3,075,279
Expenses
Advisory fees............................................. $124,342
Sub-advisory fees......................................... 11,578
Administration fees....................................... 54,367
Shareholder servicing fees--Class A Shares................ 80,978
Accounting fees........................................... 31,962
Transfer agent fees and expenses.......................... 31,427
Directors' fees........................................... 2,636
Audit fees................................................ 13,482
Custodian fees............................................ 13,172
Registration fees......................................... 10,792
Legal fees................................................ 10,360
Other expenses............................................ 18,055
--------
Total expenses.............................................. 403,151
----------
Net Investment Income....................................... 2,672,128
----------
REALIZED GAINS (LOSSES) ON INVESTMENT TRANSACTIONS
Net realized gains (losses) on investment transactions.... (1,629)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $2,670,499
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
13
<PAGE> 16
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 2,672,128 $ 3,956,447
Net realized gains (losses) on investment transactions.... (1,629) (760)
------------- -------------
Net increase in net assets resulting from operations...... 2,670,499 3,955,687
------------- -------------
Distributions to Class A Shares
From net investment income................................ (1,560,096) (1,794,260)
Distributions to Trust Shares
From net investment income................................ (1,112,032) (2,162,187)
------------- -------------
Total distributions to shareholders......................... (2,672,128) (3,956,447)
------------- -------------
Capital Share Transactions (at $1.00 per share)
Proceeds from shares issued............................... 291,486,745 347,193,012
Dividends reinvested...................................... 776,167 357,817
Cost of shares redeemed................................... (211,106,103) (335,936,165)
------------- -------------
Net increase in net assets from capital share
transactions........................................... 81,156,809 11,614,664
------------- -------------
Total increase (decrease) in Net Assets..................... 81,155,180 11,613,904
NET ASSETS
Beginning of period....................................... 82,550,347 70,936,443
------------- -------------
End of period............................................. $ 163,705,527 $ 82,550,347
============= =============
SHARE TRANSACTIONS:
Issued.................................................... 291,486,745 347,193,012
Reinvested................................................ 776,167 357,817
Redeemed.................................................. (211,106,103) (335,936,165)
------------- -------------
Change in shares.......................................... 81,156,809 11,614,664
============= =============
</TABLE>
- ---------------
See Notes to Financial Statements.
14
<PAGE> 17
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMORTIZED
MATURITY PRINCIPAL COST
RATE DATE AMOUNT/SHARES (NOTE 2)
---- -------- ------------- ------------
<S> <C> <C> <C> <C>
U.S. TREASURY BILLS -- 3.0%
U.S. Treasury Bill.................................... 4.54%* 7/9/98 $ 5,000,000 $ 4,994,967
------------
Total U.S. Treasury Bills (Cost $4,994,967)............. 4,994,967
------------
U.S. TREASURY NOTES -- 38.6%
U.S. Treasury Note.................................... 6.25 7/31/98 5,000,000 5,002,775
U.S. Treasury Note.................................... 5.88 8/15/98 5,000,000 5,001,307
U.S. Treasury Note.................................... 9.25 8/15/98 5,000,000 5,023,176
U.S. Treasury Note.................................... 4.75 9/30/98 10,000,000 9,983,295
U.S. Treasury Note.................................... 6.00 9/30/98 5,000,000 5,006,927
U.S. Treasury Note.................................... 5.88 10/31/98 5,000,000 5,005,037
U.S. Treasury Note.................................... 5.50 11/15/98 5,000,000 5,000,000
U.S. Treasury Note.................................... 5.75 12/31/98 15,000,000 15,028,362
U.S. Treasury Note.................................... 5.88 1/31/99 5,000,000 5,010,335
U.S. Treasury Note.................................... 5.00 2/15/99 5,000,000 4,984,966
------------
Total U.S. Treasury Notes (Cost $65,046,180)............ 65,046,180
------------
U.S. TREASURY STRIPS -- 2.9%
U.S. Treasury Strip................................... 5.69* 8/15/98 5,000,000 4,965,845
------------
Total U.S. Treasury Strips (Cost $4,965,845)............ 4,965,845
------------
REPURCHASE AGREEMENTS -- 55.4%
Goldman Sachs, dated 6/30/98, with a maturity value of
$9,353,454 (Collateralized by $35,943,000 U.S.
Treasury Strips, 8/15/21, fair
value -- $9,539,380)............................... 5.25 7/1/98 9,352,090 9,352,090
Merrill Lynch, dated 6/30/98, with a maturity value of
$41,951,015 (Collateralized by $14,225,000 U.S.
Treasury Bonds, 10.63%, 8/15/15 fair
value -- $22,399,020; $20,077,000 U.S. Treasury
Notes, 5.50%-6.25%, 5/31/00, fair
value -- $20,391,720).............................. 5.60 7/1/98 41,944,490 41,944,490
------------
Prudential, dated 6/30/98, with a maturity value of
$41,958,052 (Collateralized by $43,236,418
Government National Mortgage Assoc., 4.50%-6.00%,
10/20/27-6/20/28, fair value -- $42,783,380)....... 5.82 7/2/98 41,944,490 41,944,490
------------
Total Repurchase Agreements (Cost $93,241,070).......... 93,241,070
------------
MONEY MARKET FUNDS -- 0.0%
Bank of New York Cash Reserve Money Market Fund....... 1,011 1,011
------------
Total Money Market Funds (Cost $1,011).................. 1,011
------------
TOTAL INVESTMENTS (COST $168,249,073)(a) -- 99.9%....... 168,249,073
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%........... 205,075
------------
TOTAL NET ASSETS -- 100.0%.............................. $168,454,148
============
</TABLE>
- ------------------
(a) Cost for federal income tax and financial reporting purposes are the same.
* Yield effective at purchase.
See Notes to Financial Statements.
15
<PAGE> 18
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............. $ 75,008,003
Repurchase agreements, at amortized cost.................. 93,241,070
------------
Total Investments...................................... 168,249,073
Interest receivable....................................... 927,837
Receivable for capital shares issued...................... 3,397
Deferred organization costs............................... 10,748
Prepaid expenses and other assets......................... 31,377
------------
Total assets................................................ 169,222,432
------------
LIABILITIES
Distributions payable..................................... 653,943
Payable for capital shares redeemed....................... 722
Accrued expenses:
Advisory fees.......................................... 33,680
Administration fees.................................... 13,472
Shareholder servicing fees--Class A Shares............. 16,263
Accounting fees........................................ 6,615
Transfer agent fees.................................... 278
Custodian fees......................................... 14,932
Audit fees............................................. 6,772
Other.................................................. 21,607
------------
Total liabilities........................................... 768,284
------------
NET ASSETS
Class A Shares......................................... $ 82,829,141
Trust Shares........................................... 85,625,007
------------
$168,454,148
============
Shares Outstanding ($0.001 par value, 1 billion shares
authorized)
Class A Shares......................................... 82,829,141
Trust Shares........................................... 85,625,007
------------
168,454,148
============
Net Asset Value, Offering Price and Redemption Price per
Share
Class A Shares......................................... $1.00
-----
Trust Shares........................................... $1.00
-----
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par..................... $ 168,454
Additional paid-in capital................................ 168,282,155
Undistributed net investment income....................... 3,539
------------
Net Assets, June 30, 1998................................... $168,454,148
============
</TABLE>
- ---------------
See Notes to Financial Statements.
16
<PAGE> 19
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $4,664,619
Expenses
Advisory fees............................................. $212,319
Administration fees....................................... 84,927
Shareholder servicing fees -- Class A Shares.............. 98,227
Accounting fees........................................... 29,817
Transfer agent fees and expenses.......................... 25,344
Directors' fees........................................... 4,411
Reports to shareholders................................... 26,994
Custodian fees............................................ 18,245
Legal fees................................................ 17,364
Audit fees................................................ 9,841
Other Expenses............................................ 28,185
--------
Total expenses.............................................. 555,674
----------
Net Investment Income....................................... 4,108,945
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $4,108,945
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
17
<PAGE> 20
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 4,108,945 $ 9,157,705
------------- -------------
Distributions to Class A Shares:
From net investment income................................ (1,847,664) (3,780,942)
Distributions to Trust Shares:
From net investment income................................ (2,261,281) (5,376,763)
------------- -------------
Total distributions to shareholders......................... (4,108,945) (9,157,705)
------------- -------------
Capital Share Transactions (at $1.00 per share)
Proceeds from shares issued............................... 245,391,183 469,670,555
Dividends reinvested...................................... 122,095 107,555
Cost of shares redeemed................................... (268,298,892) (466,544,751)
------------- -------------
Net increase (decrease) in net assets from capital share
transactions........................................... (22,785,614) 3,233,359
------------- -------------
Total increase (decrease) in Net Assets..................... (22,785,614) 3,233,359
NET ASSETS
Beginning of period....................................... 191,239,762 188,006,403
------------- -------------
End of period............................................. $ 168,454,148 $ 191,239,762
============= =============
SHARE TRANSACTIONS:
Issued.................................................... 245,391,183 469,670,545
Reinvested................................................ 122,095 107,555
Redeemed.................................................. (268,298,892) (466,544,741)
------------- -------------
Change in shares.......................................... (22,785,614) 3,233,359
============= =============
</TABLE>
- ---------------
See Notes to Financial Statements.
18
<PAGE> 21
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------ --------
<S> <C> <C>
COMMON STOCKS -- 92.7%
TRANSPORTATION -- 2.0%
Southwest Airlines Co..................................... 106,450 $ 3,153,581
------------
BANKING -- 7.0%
Banc One Corp. (c)........................................ 41,500 2,316,219
Norwest Corp.............................................. 85,080 3,179,865
Star Banc Corp............................................ 38,500 2,459,188
Wachovia Corp............................................. 38,000 3,210,999
------------
11,166,271
------------
COMPUTER SOFTWARE AND SERVICES -- 9.5%
Cisco Systems, Inc. (b)................................... 54,325 5,001,295
Dell Computer Corp. (b)................................... 40,000 3,712,500
Microsoft Corp. (b)....................................... 27,200 2,947,800
SunGard Data Systems, Inc. (b)............................ 88,000 3,377,000
------------
15,038,595
------------
CONSUMER -- MISCELLANEOUS SERVICES -- 2.1%
Service Corp. International............................... 77,000 3,301,375
------------
COSMETICS & TOILETRIES -- 2.0%
Gillette Co............................................... 56,000 3,174,500
------------
DATA PROCESSING -- 2.9%
Automatic Data Processing, Inc............................ 63,500 4,627,563
------------
ELECTRICAL EQUIPMENT -- 3.6%
General Electric Co....................................... 62,500 5,687,500
------------
ELECTRONIC COMPONENTS -- 0.2%
Applied Materials, Inc. (b)............................... 1,000 29,500
Intel Corp................................................ 3,500 259,438
------------
288,938
------------
ENTERTAINMENT -- 3.0%
The Walt Disney Co........................................ 21,000 2,206,313
Time Warner, Inc.......................................... 29,500 2,520,406
------------
4,726,719
------------
FINANCIAL SERVICES -- 4.3%
Fannie Mae................................................ 73,500 4,465,125
Household International, Inc.............................. 48,500 2,412,875
------------
6,878,000
------------
HEALTH CARE -- DRUGS -- 13.2%
Abbott Labs............................................... 67,000 2,738,625
Amgen, Inc. (b)........................................... 26,000 1,699,750
Bristol Myers Squibb Co................................... 36,500 4,195,218
Pfizer, Inc............................................... 33,400 3,630,163
Schering-Plough Corp...................................... 46,500 4,260,562
Warner-Lambert Co......................................... 61,500 4,266,562
------------
20,790,880
------------
</TABLE>
Continued
19
<PAGE> 22
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------ --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
HEALTH CARE -- REHABILITATIVE SERVICES -- 2.2%
HEALTHSOUTH Rehabilitation Corp. (b)(c)................... 130,500 $ 3,482,719
------------
HOUSEHOLD -- GENERAL PRODUCTS -- 3.6%
Newell Co................................................. 64,200 3,197,963
Procter & Gamble Co....................................... 28,000 2,549,750
------------
5,747,713
------------
INDUSTRIAL GOODS & SERVICES -- 2.4%
Computer Sciences Corp. (b)............................... 46,500 2,976,000
IBM Corp.................................................. 7,000 803,688
------------
3,779,688
------------
INSURANCE -- PROPERTY & CASUALTY -- 2.6%
American International Group, Inc......................... 28,500 4,161,000
------------
MACHINERY & EQUIPMENT -- 0.4%
Sundstrand Corp........................................... 12,000 687,000
------------
MANUFACTURING -- 1.8%
Tyco International (c).................................... 44,510 2,804,130
------------
MEDICAL EQUIPMENT & SUPPLIES -- 2.2%
Boston Scientific Corp. (b)............................... 1,000 71,625
Medtronic, Inc............................................ 39,500 2,518,125
Sybron International Corp. (b)............................ 34,160 862,540
------------
3,452,290
------------
OIL & GAS -- 2.0%
Ensco International, Inc.................................. 2,000 34,750
Texaco, Inc............................................... 51,500 3,073,906
------------
3,108,656
------------
PAPER AND FOREST -- 0.0%
Mead Corp................................................. 2,000 63,500
------------
PETROLEUM -- SERVICES -- 3.7%
Dresser Industries, Inc................................... 36,500 1,608,281
Halliburton Co. (c)....................................... 26,500 1,180,906
Schlumberger Ltd.......................................... 45,500 3,108,219
------------
5,897,406
------------
RETAIL -- 6.2%
Dayton Hudson Corp........................................ 92,000 4,462,000
Dollar General Corp....................................... 50,000 1,978,125
Wal-Mart Stores, Inc...................................... 55,500 3,371,625
------------
9,811,750
------------
RETAIL-SPECIALTY STORES -- 11.8%
Barnes & Noble, Inc. (b).................................. 46,500 1,740,844
CVS Corp.................................................. 66,618 2,593,938
Home Depot, Inc. (c)...................................... 56,750 4,713,797
Lowe's Cos., Inc.......................................... 75,000 3,042,188
Office Depot, Inc. (b).................................... 76,000 2,398,750
Walgreen Co............................................... 102,400 4,230,400
------------
18,719,917
------------
</TABLE>
Continued
20
<PAGE> 23
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------ --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
TELECOMMUNICATIONS -- 4.0%
Ascend Communications, Inc. (b).................................................................. 30,500 $ 1,511,656
Lucent Technologies, Inc......................................................................... 50,800 4,225,925
Premiere Technologies, Inc. (b).................................................................. 70,700 586,589
--------------
6,324,170
--------------
Total Common Stocks (Cost $109,027,889)............................................................ 146,873,861
--------------
REGULATED INVESTMENT COMPANIES -- 6.0%
AIM Liquid Assets Money Market Fund.............................................................. 6,575,551 6,575,551
AIM Prime Money Market Fund...................................................................... 942,752 942,752
Dreyfus Prime Money Market Fund.................................................................. 1 1
S & P 500 Depository Receipt..................................................................... 17,700 2,005,631
--------------
Total Regulated Investment Companies (Cost $9,540,251)............................................. 9,523,935
--------------
</TABLE>
<TABLE>
<CAPTION>
MATURITY PRINCIPAL
RATE DATE AMOUNT
-------- -------- -----------
<S> <C> <C> <C> <C>
U.S. TREASURY BILLS -- 3.1%
U.S. Treasury Bill (c)....................................................... 5.28%* 9/3/98 $ 5,000,000 $4,956,600
------------
Total U.S. Treasury Bills (Cost $4,955,422).................................... 4,956,600
------------
SHORT-TERM SECURITY PURCHASED WITH COLLATERAL -- 25.4%
REPURCHASE AGREEMENTS -- 25.4%
Lehman Brothers, dated 6/30/98, with a maturity value of
$40,244,625, (Collateralized by $41,015,000 Federal
Home Loan Bank, 6.10%, 3/19/03, fair
value -- $41,043,300)..................................................... 6.38 7/1/98 40,237,500 40,237,500
------------
Total Short-Term Security Purchased With Collateral
(Cost $40,237,500)........................................................... 40,237,500
------------
TOTAL INVESTMENTS (COST $163,761,062) (a) -- 127.2%............................ 201,591,896
LIABILITIES IN EXCESS OF OTHER ASSETS -- (27.2%)............................... (43,116,883)
------------
TOTAL NET ASSETS -- 100.0%..................................................... $158,475,013
============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $40,458,274
Unrealized depreciation..................................... (2,627,440)
-----------
Net unrealized appreciation................................. $37,830,834
===========
</TABLE>
(b) Non-income producing security.
(c) All or a portion of this security has been loaned at June 30, 1998.
* Yield effective at purchase.
See Notes to Financial Statements.
21
<PAGE> 24
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $123,523,562)... $161,354,396
Repurchase agreement, at amortized cost................... 40,237,500
------------
Total Investments....................................... 201,591,896
Interest and dividends receivable......................... 89,713
Receivable for investment securities sold................. 737,660
Receivable for capital shares sold........................ 80,439
Deferred organization costs............................... 6,285
Prepaid expenses and other assets......................... 33,004
------------
Total assets................................................ 202,538,997
------------
LIABILITIES
Payable for return of collateral held for securities on
loan.................................................... 40,237,500
Distributions payable..................................... 30,777
Payable for investment securities purchased............... 3,660,174
Accrued expenses:
Advisory fees........................................... 81,833
Administration fees..................................... 18,885
Shareholder servicing fees -- Class B Shares............ 180
Distribution fees -- Class A Shares..................... 429
Distribution fees -- Class B Shares..................... 539
Accounting fees......................................... 5,206
Directors' fees......................................... 106
Reports to shareholders................................. 11,571
Other................................................... 16,784
------------
Total liabilities........................................... 44,063,984
------------
NET ASSETS
Class A Shares.......................................... 2,863,130
Class B Shares.......................................... 1,087,884
Trust Shares............................................ 154,523,999
------------
$158,475,013
============
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares.......................................... 195,856
Class B Shares.......................................... 75,357
Trust Shares............................................ 10,650,474
------------
10,921,687
============
NET ASSET VALUE
Class A Shares -- redemption price per share.............. $14.62
------
Class A Shares -- maximum sales charge.................... 4.75%
------
Class A Shares -- maximum offering price per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent)............................... $15.35
======
Class B Shares -- offering and redemption price per
share*.................................................. $14.44
======
Trust Shares -- offering and redemption price per share... $14.51
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 10,922
Additional paid-in capital................................ 100,890,191
Undistributed (distributions in excess of) net investment
income.................................................. 11,618
Net unrealized appreciation from investments.............. 37,830,834
Accumulated net realized gains on investment
transactions............................................ 19,731,448
------------
Net Assets, June 30, 1998................................... $158,475,013
============
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements.
22
<PAGE> 25
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $ 87,374
Dividends................................................... 738,940
-----------
Total Investment Income..................................... 826,314
Expenses
Advisory fees............................................. $ 490,231
Administration fees....................................... 113,131
Shareholder servicing fees -- Class B Shares.............. 411
Distribution fees -- Class A Shares....................... 1,749
Distribution fees -- Class B Shares....................... 1,233
Accounting fees........................................... 35,197
Transfer agent fees and expenses.......................... 33,743
Directors' fees........................................... 3,880
Registration fees......................................... 24,118
Custodian fees............................................ 20,361
Legal fees................................................ 14,180
Other expenses............................................ 25,035
----------
Total expenses before fee waivers...................... 763,269
Less: Fee waivers...................................... (10,128)
----------
Total expenses......................................... 753,141
-----------
Net Investment Income....................................... 73,173
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... 19,595,747
Net change in unrealized appreciation (depreciation) on
investments............................................ 629,361
-----------
Net Realized and Unrealized Gains (Losses) from
Investments............................................... 20,225,108
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $20,298,281
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
23
<PAGE> 26
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 73,173 $ 641,875
Net realized gains (losses) on investment transactions.... 19,595,747 19,491,761
Net change in unrealized appreciation (depreciation) on
investments............................................ 629,361 11,188,742
------------ -------------
Net increase in net assets resulting from operations...... 20,298,281 31,322,378
------------ -------------
Distributions to Class A Shares
From net investment income................................ -- (374,481)
From net realized gains................................... -- (121,087)
Distributions to Trust Shares
From net investment income................................ (59,448) (266,590)(a)
From net realized gains................................... -- (19,052,919)(a)
------------ -------------
Total distributions to shareholders......................... (59,448) (19,815,077)
------------ -------------
Capital Share Transactions
Proceeds from shares issued............................... 10,076,788 248,661,873
Dividends reinvested...................................... 101,521 19,301,059
Cost of shares redeemed................................... (14,561,487) (185,858,842)
------------ -------------
Net increase in net assets from capital share
transactions........................................... (4,383,178) 82,104,090
------------ -------------
Total increase (decrease) in Net Assets..................... 15,855,655 93,611,391
NET ASSETS
Beginning of period....................................... 142,619,358 49,007,967
------------ -------------
End of period............................................. $158,475,013 $ 142,619,358
============ =============
SHARE TRANSACTIONS
Issued.................................................... 731,379 17,028,511
Reinvested................................................ 7,906 1,524,272
Redeemed.................................................. (1,057,288) (11,641,375)
------------ -------------
Change in shares.......................................... (318,003) 6,911,408
============ =============
</TABLE>
- ---------------
(a) For the period from October 3, 1997 (commencement of operations of Trust
Shares) through December 31, 1997.
See Notes to Financial Statements.
24
<PAGE> 27
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Total Investment Income................................... $ 826,314
Net Expenses.............................................. (753,141)
-------------
Net Investment Income (loss)........................... 73,173
Adjustment to reconcile net investment income to net cash
provided (used) by operating activities:
Amortization of discount/premium.......................... (86,987)
Change in interest and dividend receivable................ 52,164
Change in accrued expenses, other payables, prepaid
expenses and other assets.............................. 77,860
-------------
Total Adjustments......................................... 43,037
-------------
Net cash provided (used) by operating activities....... 116,210
CASH FLOWS FROM INVESTING ACTIVITES:
Proceeds from sales of investments........................ 172,971,186
Purchases of investments.................................. (168,341,972)
Net purchases of short-term investments with cash received
as collateral from securities lending.................. (40,237,500)
-------------
Net cash provided (used) by investing activities....... (35,608,286)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued............................... 10,011,348
Cost of shares redeemed................................... (14,561,487)
Distributions paid to shareholders........................ (296,806)
Dividends reinvested...................................... 101,521
Net collateral received from securities lending........... 40,237,500
-------------
Net cash provided (used) by financing activities....... 35,492,076
Net increase (decrease) in cash............................. --
Cash at beginning of period................................. --
-------------
Cash at end of period....................................... $ --
=============
</TABLE>
- ---------------
See Notes to Financial Statements.
25
<PAGE> 28
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------ --------
<S> <C> <C>
COMMON STOCKS -- 96.0%
AEROSPACE & MILITARY TECHNOLOGY -- 0.1%
United Technologies Corp.................................. 1,000 $ 92,500
------------
AUTOMOBILES -- 0.1%
Ford Motor Co............................................. 1,000 59,000
------------
BANKING -- 7.3%
First Tennessee National Corp............................. 44,000 1,388,750
First Union Corp.......................................... 45,000 2,621,249
NationsBank Corp.......................................... 22,000 1,683,000
Wells Fargo & Co.......................................... 500 184,500
------------
5,877,499
------------
BEVERAGES -- 3.7%
Coca-Cola Co.............................................. 13,000 1,111,500
PepsiCo, Inc.............................................. 45,000 1,853,438
------------
2,964,938
------------
BUILDING & CONSTRUCTION -- 3.0%
Masco Corp................................................ 40,000 2,420,000
------------
CONTAINERS & PACKAGING -- 1.9%
Sherwin Williams Co....................................... 45,000 1,490,625
------------
COSMETICS & TOILETRIES -- 4.4%
Avon Products, Inc........................................ 22,000 1,705,000
Colgate Palmolive Co...................................... 21,000 1,848,000
------------
3,553,000
------------
DATA PROCESSING -- 2.7%
Automatic Data Processing, Inc. (b)....................... 29,400 2,142,525
------------
ELECTRICAL EQUIPMENT -- 6.9%
Emerson Electric.......................................... 35,900 2,165,218
General Electric Co. (b).................................. 22,000 2,002,000
Honeywell, Inc............................................ 16,000 1,337,000
------------
5,504,218
------------
FINANCIAL SERVICES -- 6.2%
American Express Co....................................... 7,000 798,000
Citicorp.................................................. 10,000 1,492,500
Fannie Mae................................................ 43,500 2,642,625
------------
4,933,125
------------
FOOD & RELATED -- 4.1%
Bestfoods................................................. 31,000 1,799,938
H.J. Heinz Co............................................. 26,000 1,459,250
------------
3,259,188
------------
FOOD PRODUCTS & SERVICES -- 1.1%
Kimberly Clark Corp....................................... 20,000 917,500
------------
</TABLE>
Continued
26
<PAGE> 29
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------ --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
HEALTH CARE -- DRUGS -- 9.4%
Abbott Labs (b)........................................... 22,000 $ 899,250
Bristol Myers Squibb Co. (b).............................. 19,000 2,183,813
Glaxo Wellcome PLC -- ADR................................. 30,000 1,794,375
Schering-Plough Corp...................................... 29,000 2,657,124
------------
7,534,562
------------
HOUSEHOLD -- GENERAL PRODUCTS -- 4.4%
Newell Co................................................. 35,000 1,743,438
Procter & Gamble Co....................................... 20,000 1,821,250
------------
3,564,688
------------
INDUSTRIAL GOODS & SERVICES -- 2.7%
Hewlett-Packard Co........................................ 13,000 778,375
IBM Corp.................................................. 12,000 1,377,750
------------
2,156,125
------------
MACHINERY & EQUIPMENT -- 1.2%
Grainger, Inc............................................. 20,000 996,250
------------
MANUFACTURING -- 2.5%
Fortune Brands, Inc....................................... 52,000 1,998,750
------------
MATERIALS -- 1.4%
Textron, Inc.............................................. 16,000 1,147,000
------------
OIL & GAS -- 8.3%
Chevron Corp.............................................. 15,000 1,245,938
Enron Corp................................................ 22,000 1,189,375
Exxon Corp................................................ 18,000 1,283,624
Mobil Corp................................................ 10,000 766,250
Royal Dutch Petroleum..................................... 1,000 54,813
Texaco, Inc. (b).......................................... 35,000 2,089,062
------------
6,629,062
------------
PETROLEUM -- SERVICES -- 2.5%
Dresser Industries, Inc................................... 18,000 793,125
Schlumberger Ltd.......................................... 18,000 1,229,625
------------
2,022,750
------------
PUBLISHING -- 2.7%
Gannett Co., Inc.......................................... 31,000 2,202,938
------------
REAL ESTATE INVESTMENT TRUST -- 4.9%
Equity Office Properties.................................. 14,500 411,438
Equity Residential Property............................... 30,000 1,423,125
Post Properties........................................... 17,000 654,500
Simon Debartolo Group, Inc................................ 19,000 617,500
Trinet Corporate Realty Trust, Inc........................ 24,600 836,400
------------
3,942,963
------------
RETAIL -- 2.5%
Dollar General Stores..................................... 30,000 1,179,375
Wal-Mart Stores, Inc...................................... 13,000 789,750
------------
1,969,125
------------
</TABLE>
Continued
27
<PAGE> 30
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------ --------
<S> <C> <C>
COMMON STOCKS, CONTINUED:
UTILITIES -- 3.2%
DPL, Inc.......................................................................................... 46,000 $ 833,750
Scana Corp........................................................................................ 27,200 810,900
Sierra Pacific Resources.......................................................................... 25,000 907,813
--------------
2,552,463
--------------
UTILITIES-ELECTRIC -- 3.0%
Duke Energy Corp.................................................................................. 24,000 1,422,000
NIPSCO Industries, Inc............................................................................ 36,500 1,022,000
--------------
2,444,000
--------------
UTILITIES-GAS & PIPELINE -- 1.1%
Consolidated Natural Gas Co....................................................................... 15,000 883,125
--------------
UTILITIES-TELEPHONE -- 1.9%
Bell Atlantic Corp................................................................................ 2,000 91,250
Sprint Corp....................................................................................... 20,000 1,410,000
--------------
1,501,250
--------------
WHOLESALE -- 2.8%
Sysco Corp........................................................................................ 88,000 2,255,000
--------------
Total Common Stocks (Cost $69,535,696).............................................................. 77,014,169
--------------
REGULATED INVESTMENT COMPANIES -- 5.2%
AIM Liquid Assets Money Market Fund............................................................... 3,551,877 3,551,877
AIM Prime Money Market Fund....................................................................... 592,029 592,029
--------------
Total Regulated Investment Companies (Cost $4,143,906).............................................. 4,143,906
--------------
</TABLE>
<TABLE>
<CAPTION>
MATURITY PRINCIPAL
RATE DATE AMOUNT
---- -------- ----------
<S> <C> <C> <C> <C>
SHORT-TERM SECURITY PURCHASED WITH COLLATERAL -- 10.6%
REPURCHASE AGREEMENT -- 10.6%
Lehman Brothers, dated 6/30/98, with a maturity value of
$8,532,311, (Collateralized by $3,855,000 Federal Home
Loan Bank, 6.10%, 3/19/03, fair value -- $3,857,660; by
23,270,000 Federal Home Loan Mortgage Corp., 0.00%,
11/13/17, fair value -- $4,847,141)..................................... 6.38% 7/1/98 $8,530,800 $ 8,530,800
-----------
Total Short-Term Security Purchased With Collateral (Cost $8,530,800)........ 8,530,800
-----------
TOTAL INVESTMENTS (COST $82,210,402) (a) -- 111.8%........................... 89,688,875
LIABILITIES IN EXCESS OF OTHER ASSETS -- (11.8%)............................. (9,487,720)
-----------
TOTAL NET ASSETS -- 100.0%................................................... $80,201,155
===========
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................. $ 8,721,626
Unrealized depreciation............................. (1,243,153)
-----------
Net unrealized appreciation......................... $ 7,478,473
===========
</TABLE>
(b) All or a portion of this security has been loaned at June 30, 1998.
PLC - Public Limited Company
ADR - American Depository Receipt
See Notes to Financial Statements.
28
<PAGE> 31
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $73,679,602).... $81,158,075
Repurchase agreement, at amortized cost................... 8,530,800
-----------
Total Investments...................................... 89,688,875
Interest receivable....................................... 157,441
Receivable for capital shares sold........................ 7,240
Deferred organization costs............................... 3,715
Prepaid expenses and other assets......................... 24,607
-----------
Total assets................................................ 89,881,878
-----------
LIABILITIES
Payable for return of collateral held for securities on
loan................................................... 8,530,800
Distributions payable..................................... 82,776
Payable for investment securities purchased............... 987,184
Accrued expenses:
Advisory fees.......................................... 42,113
Administration fees.................................... 9,718
Shareholder servicing fees -- Class B Shares........... 261
Distribution fees -- Class A Shares.................... 270
Distribution fees -- Class B Shares.................... 783
Accounting fees........................................ 4,225
Audit fees............................................. 10,030
Custodian fees......................................... 7,429
Other.................................................. 5,134
-----------
Total liabilities........................................... 9,680,723
-----------
NET ASSETS
Class A Shares......................................... 2,312,541
Class B Shares......................................... 1,652,020
Trust Shares........................................... 76,236,594
-----------
$80,201,155
===========
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares......................................... 198,780
Class B Shares......................................... 142,116
Trust Shares........................................... 6,552,329
-----------
6,893,225
===========
NET ASSET VALUE
Class A Shares -- redemption price per share.............. $11.63
------
Class A Shares -- maximum sales charge.................... 4.75%
------
Class A Shares -- maximum offering price per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent).............................. $12.21
======
Class B Shares -- offering and redemption price per
share*................................................. $11.62
======
Trust Shares -- offering and redemption price per share... $11.64
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 6,893
Additional paid-in capital................................ 56,834,872
Undistributed (distributions in excess of) net investment
income................................................. 12,939
Net unrealized appreciation from investments.............. 7,478,473
Accumulated net realized gains on investment
transactions........................................... 15,867,978
-----------
Net Assets, June 30, 1998................................... $80,201,155
===========
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements.
29
<PAGE> 32
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $ 11,067
Dividends................................................... 850,022
-----------
Total Investment Income..................................... 861,089
Expenses
Advisory fees............................................. $ 242,849
Administration fees....................................... 56,042
Shareholder servicing fees -- Class B Shares.............. 611
Distribution fees -- Class A Shares....................... 909
Distribution fees -- Class B Shares....................... 1,832
Accounting fees........................................... 35,579
Transfer agent fees and expenses.......................... 34,162
Directors' fees........................................... 1,817
Registration fees......................................... 16,340
Custodian fees............................................ 13,211
Other expenses............................................ 19,320
---------
Total expenses before fee waivers...................... 422,672
Less: Fee waivers...................................... (4,867)
---------
Total expenses......................................... 417,805
-----------
Net Investment Income....................................... 443,284
-----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... 13,468,412
Net change in unrealized appreciation (depreciation) on
investments............................................ (4,956,170)
-----------
Net Realized and Unrealized Gains (Losses) from
Investments............................................... 8,512,242
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 8,955,526
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
30
<PAGE> 33
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 (A)
---------------- ---------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 443,284 $ 1,081,521
Net realized gains (losses) on investment transactions.... 13,468,412 12,492,214
Net change in unrealized appreciation (depreciation) on
investments............................................ (4,956,170) 132,903
------------- -------------
Net increase in net assets resulting from operations...... 8,955,526 13,706,638
------------- -------------
Distributions Class A Shares
From net investment income................................ (4,671) (723,804)
From net realized gains................................... -- (45,604)
Distributions to Class B Shares (c)
From net investment income................................ (1,441) --
Distributions to Trust Shares
From net investment income................................ (422,164) (361,492)(b)
From net realized gains................................... -- (10,045,338)(b)
------------- -------------
Total distributions to shareholders......................... (428,276) (11,176,238)
------------- -------------
Capital Share Transactions
Proceeds from shares issued............................... 9,407,733 137,340,554
Dividends reinvested...................................... 27,112 10,088,221
Cost of shares redeemed................................... (6,098,620) (81,621,495)
------------- -------------
Net increase in net assets from capital share
transactions........................................... 3,336,225 65,807,280
------------- -------------
Total increase (decrease) in Net Assets..................... 11,863,475 68,337,680
NET ASSETS
Beginning of period....................................... 68,337,680 --
------------- -------------
End of period............................................. $ 80,201,155 $ 68,337,680
============= =============
SHARE TRANSACTIONS:
Issued.................................................... 837,959 11,546,178
Reinvested................................................ 2,452 988,858
Redeemed.................................................. (539,051) (5,943,171)
------------- -------------
Change in shares.......................................... 301,360 6,591,865
============= =============
</TABLE>
- ---------------
(a) For the period from February 28, 1997 (commencement of operations) to
December 31, 1997.
(b) For the period from October 3, 1997 (commencement of operations of Trust
Shares) through December 31, 1997.
(c) For the period from January 30, 1998 (commencement of operations of Class B
Shares) through June 30, 1998.
- ---------------
See Notes to Financial Statements.
31
<PAGE> 34
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Total Investment Income................................... $ 861,089
Net Expenses.............................................. (417,805)
-------------
Net Investment Income (loss)........................... 443,284
Adjustment to reconcile net investment income to net cash
provided (used) by operating activities:
Amortization of discount/premium.......................... (10,972)
Change in interest and dividend receivable................ (12,624)
Change in accrued expenses, other payables, prepaid
expenses and other assets.............................. 27,092
-------------
Total Adjustments......................................... 3,496
-------------
Net cash provided (used) by operating activities....... 446,780
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments........................ 107,962,249
Purchases of investments.................................. (111,258,162)
Net purchases of short-term investments with cash received
as collateral from securities lending.................. (8,530,800)
-------------
Net cash provided (used) by investing activities....... (11,826,713)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued............................... 9,400,493
Cost of shares redeemed................................... (6,098,620)
Distributions paid to shareholders........................ (479,852)
Dividends reinvested...................................... 27,112
Net collateral received from securities lending........... 8,530,800
-------------
Net cash provided (used) by financing activities....... 11,379,933
Net increase (decrease) in cash............................. --
Cash at beginning of period................................. --
-------------
Cash at end of period....................................... $ --
=============
</TABLE>
- ---------------
See Notes to Financial Statements.
32
<PAGE> 35
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- -------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS -- 79.5%
BANKING -- 10.7%
ABN AMRO Bank.................................... Aa3/A 6.63% 10/31/01 $ 1,550,000 $ 1,575,188
Bank One, Texas.................................. Aa3/AA- 6.25 2/15/08 2,000,000 1,995,000
First Union Corp................................. A1/A 6.18 2/15/36 1,700,000 1,708,500
NationsBank Corp................................. A1/A 7.75 8/15/15 925,000 1,048,719
Wachovia Corp.................................... A1/AA- 6.61 10/1/25 2,100,000 2,197,124
-----------
8,524,531
-----------
FINANCIAL SERVICES -- 15.5%
Associates Corp. N.A............................. Aa3/AA- 7.32 1/13/03 800,000 839,000
Countrywide Home Loan............................ A3/A 6.84 10/22/04 2,400,000 2,474,999
Ford Motor Credit Corp........................... A1/A 7.35 11/7/11 2,000,000 2,092,500
General Electric Capital Corp.................... Aaa/AAA 7.50 8/21/35 1,500,000 1,745,625
General Motors Acceptance Corp................... A3/A- 7.25 5/5/99 1,925,000 1,948,023
Salomon Smith Barney Holdings.................... A2/A 6.13 1/15/03 2,000,000 1,985,000
USLIFE Corp...................................... A2/AA- 6.38 6/15/00 1,250,000 1,251,563
-----------
12,336,710
-----------
INDUSTRIAL GOODS & SERVICES -- 18.5%
Albertson's, Inc................................. Aa3/A+ 6.52 4/10/28 2,000,000 2,032,500
Anheuser-Busch Cos............................... A1/A+ 7.13 7/1/17 1,500,000 1,571,250
General Mills.................................... A2/A+ 7.50 5/1/09 250,000 251,875
Harris Corp...................................... A3/A- 10.38 12/1/18 1,050,000 1,120,875
IBM Corp......................................... A1/A+ 6.25 2/24/00 1,000,000 1,003,500
IBM Corp......................................... A1/A+ 6.50 1/15/28 2,000,000 2,002,500
Lockheed Martin Corp............................. A3/BBB+ 6.55 5/15/99 2,400,000 2,411,999
Reliance Electric Co............................. A2/AA- 6.80 4/15/03 1,500,000 1,554,375
Weyerhaeuser Co.................................. A2/A 7.13 7/15/23 2,250,000 2,354,063
Xerox Corp....................................... A2/A 7.50 4/16/12 500,000 507,411
-----------
14,810,348
-----------
INSURANCE -- PROPERTY & CASUALTY -- 2.4%
Travelers/Aetna Property & Casualty.............. A1/A+ 6.75 4/15/01 1,850,000 1,887,000
-----------
RETAIL-STORES -- 5.2%
Dayton Hudson Co................................. A3/BBB+ 6.80 10/1/01 1,500,000 1,530,000
J C Penney & Co.................................. A2/A 6.50 6/15/02 1,500,000 1,520,625
May Department Stores Co......................... A2/A 7.15 8/15/04 1,000,000 1,055,000
-----------
4,105,625
-----------
</TABLE>
Continued
33
<PAGE> 36
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- ------- ------- ------------- -------------
CORPORATE BONDS, CONTINUED:
<S> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS -- 5.1%
BellSouth Corp..................................... Aaa/AAA 8.25% 7/1/32 $ 475,000 $ 520,719
BellSouth Corp..................................... Aaa/AAA 6.75 10/15/33 2,000,000 1,967,500
GTE Corp., Callable 2/1/07 @ 103.95................ Baa/A 7.90 2/1/27 1,450,000 1,562,375
-------------
4,050,594
-------------
UTILITIES-ELECTRIC -- 15.2%
Florida Power Corp................................. A1/A+ 6.54 7/1/02 1,500,000 1,528,125
Houston Light & Power Corp......................... A3/A- 6.10 3/1/00 1,725,000 1,729,313
National Rural Utilities Corp., Series C, MTN...... A1/AA- 6.49 7/10/02 1,600,000 1,626,000
Public Service Electric & Gas...................... A3/A- 6.25 1/1/07 2,400,000 2,420,999
Puget Sound Power & Light.......................... Baa1/A- 6.61 2/9/00 1,500,000 1,513,125
SCANA Corp., Series B, MTN......................... A3/A- 6.25 7/8/03 1,500,000 1,500,000
Virginia Electric & Power.......................... A2/A 6.63 4/1/03 1,750,000 1,795,938
-------------
12,113,500
-------------
UTILITIES-GAS -- 4.9%
Consolidated Natural Gas........................... A1/AA- 6.80 12/15/27 1,600,000 1,652,000
Smith Enron........................................ NR/NR 5.97 12/15/06 2,263,700 2,258,041
-------------
3,910,041
-------------
UTILITIES-GAS & ELECTRIC -- 2.0%
Washington Gas Light, Series D, MTN................ Aa3/AA- 6.85 3/9/28 1,500,000 1,563,750
-------------
Total Corporate Bonds (Cost $62,044,715).............
63,302,099
-------------
MUNICIPAL BONDS -- 1.1+
GEORGIA -- 1.1%
Atlanta Downtown Development Lease Revenue Bond.... NR/AAA 6.88 2/1/21 800,000 865,000
-------------
Total Municipal Bonds (Cost $761,101)................ 865,000
-------------
U.S. GOVERNMENT AGENCIES -- 8.9%
FEDERAL HOME LOAN MORTGAGE CORP. -- 3.0%
Federal Home Loan Mortgage Corp.................... 6.44 10/24/07 2,300,000 2,392,782
-------------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 1.3%
Federal National Mortgage Assoc., (b).............. 6.35 11/23/01 1,000,000 1,006,780
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 4.6%
Government National Mortgage Assoc., Pool # 407413. 8.00 5/15/10 459,632 476,579
Government National Mortgage Assoc., Pool # 780479. 6.50 8/15/11 925,882 937,159
Government National Mortgage Assoc., Pool # 423914. 7.50 8/15/11 871,128 899,439
Government National Mortgage Assoc., Pool # 423923. 7.00 9/15/11 1,366,772 1,401,365
-------------
3,714,542
-------------
</TABLE>
Continued
34
<PAGE> 37
<TABLE>
<CAPTION> MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT/SHARES (NOTE 2)
------------- ----------- ---------- -------------- --------
<S> <C> <C> <C> <C> <C>
Total U.S. Government Agencies (Cost $7,115,532)............... $7,114,104
-----------
U.S. TREASURY BOND -- 8.1%
U.S. Treasury Bond........................................... 8.13% 8/15/21 $ 600,000 781,872
U.S. Treasury Bond........................................... 6.75 8/15/26 1,000,000 1,144,650
U.S. Treasury Bond (b)....................................... 6.13 11/15/27 4,250,000 4,556,553
-----------
Total U.S. Treasury Bond (Cost $6,189,949)..................... 6,483,075
REGULATED INVESTMENT COMPANIES -- 2.7% -----------
AIM Liquid Assets Money Market Fund.......................... 2,103,078 2,103,078
AIM Prime Money Market Fund.................................. 27,089 27,089
Total Regulated Investment Companies -----------
(Cost $2,130,167)............................................ 2,130,167
SHORT-TERM SECURITY PURCHASED WITH COLLATERAL -- 6.8% -----------
REPURCHASE AGREEMENTS -- 6.8%
Lehman Brothers, dated 6/30/98, with a maturity value of
$5,422,210, (Collateralized by $26,550,000 Federal Home
Loan Mortgage Corp., 0.00%, 11/13/17, fair
value-$5,530,365)......................................... 6.38 7/1/98 $ 5,421,250 5,421,250
Total Short-Term Security Purchased With Collateral (Cost -----------
$5,421,250).................................................. 5,421,250
-----------
TOTAL INVESTMENTS (COST $83,662,714) (a) -- 107.1%............. 85,315,695
LIABILITIES IN EXCESS OF OTHER ASSETS -- (7.1%)................ (5,761,612)
-----------
TOTAL NET ASSETS -- 100.0%..................................... $79,644,083
===========
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation............................. $1,830,351
Unrealized depreciation............................. (177,370)
----------
Net unrealized appreciation......................... $1,652,981
(b) All or a portion of this security has been loaned at June 30, 1998.
MTN - Medium Term Note
See Notes to Financial Statements.
35
<PAGE> 38
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $78,241,464).... $79,894,445
Repurchase agreement, at amortized cost................... 5,421,250
-----------
Total Investments...................................... 85,315,695
Interest receivable....................................... 1,310,817
Receivable for capital shares sold........................ 347,926
Prepaid expenses and other assets......................... 13,434
-----------
Total assets................................................ 86,987,872
-----------
LIABILITIES
Payable for return of collateral held for securities on
loan................................................... 5,421,250
Distributions payable..................................... 356,489
Payable for investment securities purchased............... 1,500,000
Accrued expenses:
Advisory fees.......................................... 32,714
Administration fees.................................... 9,814
Shareholder servicing fees -- Class B Shares........... 109
Distribution fees -- Class A Shares.................... 145
Distribution fees -- Class B Shares.................... 328
Accounting fees........................................ 4,563
Audit fees............................................. 9,202
Other.................................................. 9,175
-----------
Total liabilities........................................... 7,343,789
-----------
NET ASSETS
Class A Shares......................................... 2,055,813
Class B Shares......................................... 623,359
Trust Shares........................................... 76,964,911
-----------
$79,644,083
===========
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares......................................... 198,081
Class B Shares......................................... 60,104
Trust Shares........................................... 7,419,355
-----------
7,677,540
===========
Net Asset Value
Class A Shares -- redemption price per share.............. $10.38
------
Class A Shares -- maximum sales charge.................... 3.00%
------
Class A Shares -- maximum offering price per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent).............................. $10.70
------
------
Class B Shares -- offering and redemption price per
share*................................................. $10.37
------
------
Trust Shares -- offering and redemption price per share... $10.37
------
------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 7,678
Additional paid-in capital................................ 77,056,139
Undistributed (distributions in excess of) net investment
income................................................. (32,876)
Net unrealized appreciation from investments.............. 1,652,981
Accumulated net realized gains on investment
transactions........................................... 960,161
-----------
Net Assets, June 30, 1998................................... $79,644,083
===========
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements.
36
<PAGE> 39
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $2,408,264
Dividends................................................... 43,046
----------
Total Investment Income..................................... 2,451,310
Expenses
Advisory fees............................................. $190,128
Administration fees....................................... 57,039
Shareholder servicing fees -- Class B Shares.............. 300
Distribution fees -- Class A Shares....................... 312
Distribution fees -- Class B Shares....................... 900
Accounting fees........................................... 37,235
Transfer agent fees and expenses.......................... 31,265
Directors' fees........................................... 1,900
Custodian fees............................................ 10,885
Audit fees................................................ 10,219
Registration fees......................................... 11,724
Other expenses............................................ 13,925
--------
Total expenses before fee waivers...................... 365,832
Less: Fee waivers...................................... (3,965)
--------
Total expenses......................................... 361,867
----------
Net Investment Income....................................... 2,089,443
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... 998,249
Net change in unrealized appreciation (depreciation) on
investments............................................ (60,352)
----------
Net Realized and Unrealized Gains (Losses) from
Investments............................................... 937,897
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $3,027,340
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
37
<PAGE> 40
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 2,089,443 $ 3,857,165
Net realized gains (losses) on investment transactions.... 998,249 14,563
Net change in unrealized appreciation (depreciation) on
investments............................................ (60,352) 1,897,381
----------- ------------
Net increase in net assets resulting from operations... 3,027,340 5,769,109
----------- ------------
Distributions to Class A Shares
From net investment income................................ (6,517) (2,755,744)
Distributions to Class B Shares (b)
From net investment income................................ (5,332) --
Distributions to Trust Shares
From net investment income................................ (2,077,594) (1,101,421)(a)
----------- ------------
Total distributions to shareholders......................... (2,089,443) (3,857,165)
----------- ------------
Capital Share Transactions
Proceeds from shares issued............................... 12,310,354 117,853,442
Dividends reinvested...................................... 735,798 1,329,244
Cost of shares redeemed................................... (6,425,640) (87,824,216)
----------- ------------
Net increase in net assets from capital share
transactions........................................... 6,620,512 31,358,470
----------- ------------
Total increase (decrease) in Net Assets..................... 7,558,409 33,270,414
NET ASSETS
Beginning of period....................................... 72,085,674 38,815,260
----------- ------------
End of period............................................. $79,644,083 $ 72,085,674
=========== ============
SHARE TRANSACTIONS
Issued.................................................... 1,193,971 11,695,438
Reinvested................................................ 71,573 132,886
Redeemed.................................................. (623,467) (8,673,388)
----------- ------------
Change in shares.......................................... 642,077 3,154,936
=========== ============
</TABLE>
- ---------------
(a) For the period from October 3, 1997 (commencement of operations of Trust
Shares) through December 31, 1997.
(b) For the period from January 30, 1998 (commencement of operations of Class B
Shares) through June 30, 1998.
See Notes to Financial Statements.
38
<PAGE> 41
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Total Investment Income................................... $ 2,451,310
Net Expenses.............................................. (361,867)
------------
Net Investment Income (loss)........................... 2,089,443
Adjustment to reconcile net investment income to net cash
provided (used) by operating activities:
Amortization of discount/premium.......................... 23,704
Change in interest and dividend receivable................ (105,841)
Change in accrued expenses, other payables, prepaid
expenses and other assets.............................. 25,907
------------
Total Adjustments......................................... (56,230)
------------
Net cash provided (used) by operating activities....... 2,033,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments........................ 40,021,202
Purchases of investments.................................. (46,151,336)
Net purchases of short-term investments with cash received
as collateral from securities lending.................. (5,421,250)
------------
Net cash provided (used) by investing activities....... (11,551,384)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued............................... 11,962,442
Cost of shares redeemed................................... (6,425,640)
Distributions paid to shareholders........................ (2,175,679)
Dividends reinvested...................................... 735,798
Net collateral received from securities lending........... 5,421,250
------------
Net cash provided (used) by financing activities....... 9,518,171
Net increase (decrease) in cash............................. --
Cash at beginning of period................................. --
------------
Cash at end of period....................................... $ --
============
</TABLE>
- ---------------
See Notes to Financial Statements.
39
<PAGE> 42
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS -- 62.2%
BANKING -- 6.1%
ABN AMRO Bank......................... Aa3/A 6.63% 10/31/01 $ 2,000,000 $ 2,032,500
Bankers Trust......................... A2/A 6.75 10/3/01 1,500,000 1,530,000
NationsBank Corp...................... Aa3/A+ 7.00 9/15/01 2,000,000 2,060,000
------------
5,622,500
------------
ENTERTAINMENT -- 1.6%
The Walt Disney Co.................... A2/A 6.38 3/30/01 1,500,000 1,522,500
------------
FINANCIAL SERVICES -- 11.2%
Associates Corp. N.A.................. Aa3/AA- 7.68 3/3/00 1,500,000 1,541,250
Ford Motor Credit Co.................. A1/A 6.50 2/28/02 2,500,000 2,543,750
General Motors Acceptance Corp........ A3/A- 7.75 1/15/99 2,500,000 2,526,825
Merrill Lynch & Co., Inc.............. Aa3/AA- 6.00 1/15/01 1,750,000 1,754,375
Salomon Smith Barney Holdings......... A2/A 6.13 1/15/03 2,000,000 1,985,000
------------
10,351,200
------------
INDUSTRIAL GOODS & SERVICES -- 10.0%
Archer Daniels Midland................ Aa3/AA- 6.25 5/15/03 1,500,000 1,515,000
IBM Corp.............................. A1/A+ 6.25 2/24/00 1,036,000 1,039,626
IBM Corp., MTN........................ A1/A+ 6.04 8/7/00 1,000,000 1,005,000
Imperial Oil Ltd...................... Aa2/AA+ 8.75 10/15/19 3,000,000 3,202,500
Martin Marietta Tech.................. A3/BBB+ 6.50 4/15/03 2,500,000 2,540,625
------------
9,302,751
------------
INSURANCE -- PROPERTY & CASUALTY -- 2.2%
Travelers/Aetna Property & Casualty... A1/A+ 6.75 4/15/01 2,000,000 2,040,000
------------
PAPER PRODUCTS -- 2.2%
International Paper Co................ A3/A- 6.88 7/10/00 2,000,000 2,037,500
------------
RETAIL-STORES -- 7.7%
Dayton Hudson Co...................... A3/BBB+ 6.40 2/15/03 2,500,000 2,528,125
J C Penney & Co....................... A2/A 7.25 4/1/02 2,000,000 2,080,000
Wal-Mart Stores....................... Aa2/AA 5.85 6/1/18 2,500,000 2,500,000
------------
7,108,125
------------
TELECOMMUNICATIONS -- 1.6%
MCI Communication Corp................ Baa2/A 7.13 1/20/00 1,500,000 1,522,500
------------
UTILITIES-ELECTRIC -- 16.4%
Baltimore Gas & Electric.............. A1/AA- 6.50 2/15/03 2,500,000 2,559,375
Central Power & Light Co.............. A3/A 6.00 4/1/00 2,000,000 2,002,500
Florida Power Corp.................... A1/A+ 6.54 7/1/02 2,000,000 2,037,500
MidAmerican Energy.................... A3/A 6.50 12/15/01 2,500,000 2,537,500
National Rural Utilities Corp., Series
C, MTN............................. A1/AA- 6.49 7/10/02 2,000,000 2,032,500
Puget Sound Power & Light............. Baa1/A- 6.61 2/9/00 2,000,000 2,017,500
SCANA Corp., Series B, MTN............ A3/A- 6.25 7/8/03 2,000,000 2,000,000
------------
15,186,875
------------
</TABLE>
Continued
40
<PAGE> 43
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
CORPORATE BONDS, CONTINUED:
UTILITIES-GAS -- 3.2%
ENSERCH Corp.......................... Baa2/BBB 7.00% 8/15/99 $ 1,000,000 $ 1,010,000
Smith Enron........................... NR/NR 5.97 12/15/06 1,995,248 1,990,260
--------------
3,000,260
--------------
Total Corporate Bonds (Cost
$57,206,172).......................... 57,694,211
--------------
U.S. GOVERNMENT AGENCIES -- 23.1%
FEDERAL HOME LOAN BANK -- 4.9%
Federal Home Loan Bank (b)............ 6.00 8/28/01 2,500,000 2,499,675
Federal Home Loan Bank................ 6.10* 12/24/07 2,000,000 2,013,726
--------------
4,513,401
--------------
FEDERAL HOME LOAN MORTGAGE CORP. -- 2.2%
Federal Home Loan Mortgage Corp.
(b)................................ 6.75 4/1/08 2,000,000 2,002,020
--------------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 1.6%
Federal National Mortgage Assoc.
(b)................................ 6.35 11/23/01 1,500,000 1,510,170
--------------
GOVERNMENT NATIONAL MORTGAGE
ASSOC. -- 12.8%
Government National Mortgage Assoc.,
Pool # 339455...................... 8.00 12/15/07 628,922 652,111
Government National Mortgage Assoc.,
Pool # 358725...................... 8.00 8/15/08 1,192,437 1,236,402
Government National Mortgage Assoc.,
Pool # 392085...................... 7.50 4/15/09 675,905 697,872
Government National Mortgage Assoc.,
Pool # 368641...................... 7.50 4/15/09 569,417 587,923
Government National Mortgage Assoc.,
Pool # 345752...................... 7.50 6/15/09 589,403 608,559
Government National Mortgage Assoc.,
Pool # 376589...................... 8.50 9/15/09 817,729 856,056
Government National Mortgage Assoc.,
Pool # 380660...................... 8.00 11/15/09 1,389,799 1,441,040
Government National Mortgage Assoc.,
Pool # 392814...................... 8.50 12/15/09 687,707 719,940
Government National Mortgage Assoc.,
Pool # 392770...................... 8.50 12/15/09 437,418 457,920
Government National Mortgage Assoc.,
Pool # 407337...................... 8.00 4/15/10 1,202,228 1,246,554
Government National Mortgage Assoc.,
Pool # 405445...................... 8.00 4/15/10 1,369,545 1,420,040
Government National Mortgage Assoc.,
Pool # 423983...................... 7.50 8/15/11 1,871,178 1,931,992
--------------
11,856,409
--------------
STUDENT LOAN MARKETING ASSOC. -- 1.6%
Student Loan Marketing Assoc.......... 5.81 1/23/01 1,500,000 1,499,565
--------------
Total U.S. Government Agencies (Cost
$20,945,486).......................... 21,381,565
--------------
U.S. TREASURY NOTES -- 11.6%
U.S. Treasury Note.................... 7.75 1/31/00 1,500,000 1,550,160
U.S. Treasury Note.................... 6.25 10/31/01 1,000,000 1,020,930
U.S. Treasury Note.................... 6.25 6/30/02 2,000,000 2,050,260
U.S. Treasury Note (b)................ 6.63 7/31/01 2,000,000 2,060,600
U.S. Treasury Note (b)................ 6.25 1/31/02 4,000,000 4,089,560
--------------
Total U.S. Treasury Notes (Cost
$10,566,255).......................... 10,771,510
--------------
</TABLE>
Continued
41
<PAGE> 44
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
REGULATED INVESTMENT COMPANIES -- 1.9% RATINGS RATE DATE AMOUNT/SHARES (NOTE 2)
------------- --------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
1,774,490 $ 1,774,489
AIM Liquid Assets Money Market Fund...
1,527 1,527
AIM Prime Money Market Fund...........
--------------
Total Regulated Investment Companies 1,776,016
(Cost $1,776,016).....................
--------------
SHORT-TERM SECURITY PURCHASED WITH COLLATERAL -- 12.7%
REPURCHASE AGREEMENT -- 12.7%
Lehman Brothers, dated 6/30/98, with a
maturity value of $11,796,589,
(Collateralized by $57,760,000 Federal
Home Loan Mortgage Corp., 0.00%, 6.38% 7/1/98 $ 11,794,500 11,794,500
11/13/17, $12,031,408)................
--------------
Total Short-Term Security Purchased With 11,794,500
Collateral (Cost $11,794,500).........
--------------
TOTAL INVESTMENTS (COST $102,288,429) 103,417,802
(A) -- 111.5%.........................
LIABILITIES IN EXCESS OF OTHER (10,692,488)
ASSETS -- (11.5%).....................
--------------
$ 92,725,314
TOTAL NET ASSETS -- 100.0%..............
==============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized appreciation..................................... $1,158,322
Unrealized depreciation..................................... (28,949)
----------
Net unrealized appreciation................................. $1,129,373
==========
</TABLE>
(b) All or a portion of this security has been loaned at June 30, 1998.
* Variable rate security. Rate represents rate in effect at June 30, 1998.
MTN -- Medium Term Note
See Notes to Financial Statements.
42
<PAGE> 45
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $90,493,929).... $91,623,302
Repurchase agreement, at amortized cost................... 11,794,500
-----------
Total Investments...................................... 103,417,802
Interest receivable....................................... 1,524,952
Receivable for capital shares sold........................ 22,020
Receivable for investment securities sold................. 2,034,688
Deferred organization costs............................... 9,511
Prepaid expenses.......................................... 10,616
-----------
Total assets................................................ 107,019,589
-----------
LIABILITIES
Payable for return of collateral held for securities on
loan................................................... 11,794,500
Distributions payable..................................... 416,093
Payable for investment securities purchased............... 2,000,000
Payable for capital shares redeemed....................... 2,935
Accrued expenses and other payables:
Advisory fees.......................................... 38,189
Administration fees.................................... 11,457
Shareholder servicing fees -- Class B Shares........... 62
Distribution fees -- Class A Shares.................... 1,227
Distribution fees -- Class B Shares.................... 185
Accounting fees........................................ 4,572
Custodian fees......................................... 11,174
Audit fees............................................. 8,419
Other.................................................. 5,462
-----------
Total liabilities........................................... 14,294,275
-----------
NET ASSETS
Class A Shares......................................... 7,077,462
Class B Shares......................................... 310,959
Trust Shares........................................... 85,336,893
-----------
$92,725,314
===========
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares......................................... 708,078
Class B Shares......................................... 31,164
Trust Shares........................................... 8,538,736
-----------
9,277,978
===========
NET ASSET VALUE
Class A Shares -- redemption price per share.............. $10.00
------
Class A Shares -- maximum sales charge.................... 3.00%
------
Class A Shares -- maximum sales charge per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent).............................. $10.31
======
Class B Shares -- offering and redemption price per
share*................................................. $9.98
======
Trust Shares -- offering and redemption price per share... $9.99
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 9,278
Additional paid-in capital................................ 91,453,523
Undistributed (distributions in excess of) net investment
income................................................. (1,454)
Net unrealized appreciation from investments.............. 1,129,373
Accumulated net realized gains from investment
transactions........................................... 134,594
-----------
Net Assets, June 30, 1998................................... $92,725,314
===========
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements.
43
<PAGE> 46
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $2,823,619
Dividends................................................... 103,040
----------
Total Investment Income..................................... 2,926,659
Expenses
Advisory fees............................................. $ 227,538
Administration fees....................................... 68,262
Shareholder servicing fees -- Class B Shares.............. 206
Distribution fees -- Class A Shares....................... 7,333
Distribution fees -- Class B Shares....................... 619
Accounting fees........................................... 37,222
Transfer agent fees and expenses.......................... 33,285
Directors' fees........................................... 2,359
Custodian fees............................................ 12,323
Audit fees................................................ 11,060
Reports to shareholders................................... 9,690
Other expenses............................................ 21,073
----------
Total expenses before fee waivers...................... 430,970
Less: Fee waivers...................................... (4,977)
----------
Total expenses......................................... 425,993
----------
Net Investment Income....................................... 2,500,666
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... 124,457
Net change in unrealized appreciation (depreciation) on
investments............................................ (28,192)
----------
Net Realized and Unrealized Gains (Losses) from
Investments............................................... 96,265
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $2,596,931
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
44
<PAGE> 47
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 2,500,666 $ 5,905,203
Net realized gains (losses) on investment transactions.... 124,457 87,039
Net change in unrealized appreciation (depreciation) on
investments............................................ (28,192) 185,389
------------ ------------
Net increase in net assets resulting from operations...... 2,596,931 6,177,631
------------ ------------
Distributions to Class A Shares
From net investment income................................ (155,284) (4,572,712)
From net realized gains................................... -- (3,598)
Distributions to Class B Shares (b)
From net investment income................................ (3,708) --
Distributions to Trust Shares
From net investment income................................ (2,343,971) (1,330,194)(a)
From net realized gains................................... -- (49,934)(a)
------------ ------------
Total distributions to shareholders......................... (2,502,963) (5,956,438)
------------ ------------
Capital Share Transactions
Proceeds from shares issued............................... 12,721,782 115,326,621
Dividends reinvested...................................... 996,613 2,802,526
Cost of shares redeemed................................... (11,866,560) (125,767,873)
------------ ------------
Net increase (decrease) in net assets from capital share
transactions........................................... 1,851,835 (7,638,726)
------------ ------------
Total increase (decrease) in Net Assets..................... 1,945,803 (7,417,533)
NET ASSETS
Beginning of period....................................... 90,779,511 98,197,044
------------ ------------
End of period............................................. $ 92,725,314 $ 90,779,511
============ ============
SHARE TRANSACTIONS:
Issued.................................................... 1,272,303 11,542,505
Reinvested................................................ 99,720 281,855
Redeemed.................................................. (1,186,722) (12,593,661)
------------ ------------
Change in shares.......................................... 185,301 (769,301)
============ ============
</TABLE>
- ---------------
(a) For the period from October 3, 1997 (commencement of operations of Trust
Shares) through December 31, 1997.
(b) For the period from January 30, 1998 (commencement of operations of Class B
Shares) through June 30, 1998.
See Notes to Financial Statements.
45
<PAGE> 48
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Total Investment Income................................... $ 2,926,659
Net Expenses.............................................. (425,993)
------------
Net Investment Income (loss)........................... 2,500,666
Adjustment to reconcile net investment income to net cash
provided (used) by operating activities:
Amortization of discount/premium.......................... 50,698
Change in interest and dividend receivable................ (23,637)
Change in accrued expenses, other payables, prepaid
expenses and other assets.............................. 45,974
------------
Total Adjustments......................................... 73,035
------------
Net cash provided (used) by operating activities....... 2,573,701
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of investments........................ 47,098,490
Purchases of investments.................................. (48,906,120)
Net purchases of short-term investments with cash received
as collateral from securities lending.................. (11,794,500)
------------
Net cash provided (used) by investing activities....... (13,602,130)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued............................... 12,700,232
Cost of shares redeemed................................... (11,885,413)
Distributions paid to shareholders........................ (2,577,503)
Dividends reinvested...................................... 996,613
Net collateral received from securities lending........... 11,794,500
------------
Net cash provided (used) by financing activites........ 11,028,429
Net increase (decrease) in cash............................. --
Cash at beginning of period................................. --
------------
Cash at end of period....................................... $ --
============
</TABLE>
- ---------------
See Notes to Financial Statements.
46
<PAGE> 49
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
MATURITY PRINCIPAL VALUE
RATE DATE AMOUNT (NOTE 2)
---- -------- ------------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES -- 50.9%
FEDERAL FARM CREDIT BANK -- 8.7%
Federal Farm Credit Bank.................................. 6.15% 3/23/05 $1,000,000 $ 999,870
Federal Farm Credit Bank.................................. 7.34 8/27/07 750,000 751,305
-----------
1,751,175
-----------
FEDERAL HOME LOAN BANK -- 7.4%
Federal Home Loan Bank.................................... 6.00 8/28/01 750,000 749,903
Federal Home Loan Bank.................................... 6.10* 12/24/07 750,000 755,147
-----------
1,505,050
-----------
FEDERAL HOME LOAN MORTGAGE CORP. -- 5.0%
Federal Home Loan Mortgage Corp........................... 6.16 9/25/02 500,000 508,415
Federal Home Loan Mortgage Corp........................... 6.58 9/30/02 500,000 500,430
-----------
1,008,845
-----------
FEDERAL NATIONAL MORTGAGE ASSOC. -- 7.6%
Federal National Mortgage Assoc........................... 5.98 11/12/02 500,000 505,105
Federal National Mortgage Assoc........................... 6.44 8/14/07 500,000 519,500
Federal National Mortgage Assoc........................... 6.65 11/14/07 500,000 510,170
-----------
1,534,775
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOC. -- 19.2%
Government National Mortgage Assoc., Pool # 152718........ 9.00 12/15/01 45,466 47,711
Government National Mortgage Assoc., Pool # 248038........ 9.00 2/15/03 152,519 160,049
Government National Mortgage Assoc., Pool # 407408........ 7.50 5/15/10 604,035 623,667
Government National Mortgage Assoc., Pool # 423984........ 7.00 8/15/11 846,796 868,228
Government National Mortgage Assoc., Pool # 423914........ 7.50 8/15/11 871,128 899,438
Government National Mortgage Assoc., Pool # 423923........ 7.00 9/15/11 696,106 713,724
Government National Mortgage Assoc., Pool # 431451........ 7.50 10/15/11 558,530 576,682
-----------
3,889,499
-----------
STUDENT LOAN MARKETING ASSOC. -- 3.0%
Student Loan Marketing Assoc.............................. 5.81 1/23/01 600,000 599,826
-----------
Total U.S. Government Agencies (Cost $10,181,183)........... 10,289,170
-----------
</TABLE>
Continued
47
<PAGE> 50
<TABLE>
<CAPTION>
MARKET
MATURITY PRINCIPAL VALUE
RATE DATE AMOUNT/SHARES (NOTE 2)
--------- ---------- -------------- -------------
<S> <C> <C> <C> <C>
U.S. TREASURY NOTES -- 44.6%
U.S. Treasury Note........................................................ 5.75% 12/31/98 $ 250,000 $ 250,545
U.S. Treasury Note........................................................ 6.00 8/15/99 1,000,000 1,005,500
U.S. Treasury Note........................................................ 6.38 5/15/00 500,000 507,545
U.S. Treasury Note........................................................ 6.25 5/31/00 750,000 759,908
U.S. Treasury Note........................................................ 7.50 11/15/01 2,500,000 2,647,799
U.S. Treasury Note........................................................ 7.50 5/15/02 1,000,000 1,067,370
U.S. Treasury Note........................................................ 6.25 6/30/02 750,000 768,848
U.S. Treasury Note........................................................ 5.63 12/31/02 1,250,000 1,255,150
U.S. Treasury Note........................................................ 5.50 1/31/03 750,000 749,348
-------------
Total U.S. Treasury Notes (Cost $8,846,604)................................. 9,012,013
-------------
REGULATED INVESTMENT COMPANIES -- 4.0%
AIM Treasury Money Market Fund............................................ 807,254 807,255
Dreyfus Prime Money Market Fund........................................... 1,585 1,585
-------------
Total Regulated Investment Companies (Cost $808,840)........................ 808,840
-------------
TOTAL INVESTMENTS (COST $19,836,627) (a) -- 99.5%........................... 20,110,023
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.5%............................... 92,739
-------------
TOTAL NET ASSETS -- 100.0%.................................................. $20,202,762
=============
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation..................................... $289,530
Unrealized depreciation..................................... (16,134)
--------
Net unrealized appreciation................................. $273,396
========
* Variable rate security. Rate represents rate in effect at June 30, 1998.
See Notes to Financial Statements.
48
<PAGE> 51
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $19,836,627).... $20,110,023
Interest and dividends receivable......................... 214,920
Deferred organization costs............................... 1,349
Prepaid expenses and other assets......................... 1,041
-----------
Total assets................................................ 20,327,333
-----------
LIABILITIES
Distributions payable..................................... 86,062
Accrued expenses:
Advisory fees.......................................... 5,640
Administration fees.................................... 664
Shareholder servicing fees -- Class B Shares........... 23
Distribution fees -- Class B Shares.................... 70
Accounting fees........................................ 5,118
Directors' fees........................................ 34
Audit fees............................................. 10,831
Legal fees............................................. 6,147
Other.................................................. 9,982
-----------
Total liabilities........................................... 124,571
-----------
NET ASSETS
Class A Shares............................................ 20,049,523
Class B Shares............................................ 153,239
-----------
$20,202,762
===========
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares............................................ 1,978,620
Class B Shares............................................ 15,110
-----------
1,993,730
===========
NET ASSET VALUE
Class A Shares -- redemption price per share.............. $ 10.13
-----------
Class A Shares -- maximum sales charge.................... 3.00%
-----------
Class A Shares -- maximum offering price per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent).............................. $ 10.44
===========
Class B Shares -- offering and redemption price per
share*................................................. $ 10.14
===========
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 1,994
Additional paid-in capital................................ 19,932,157
Undistributed (distributions in excess of) net investment
income................................................. (1,440)
Net unrealized appreciation from investments.............. 273,396
Accumulated net realized losses on investment
transactions........................................... (3,345)
-----------
Net Assets, June 30, 1998................................... $20,202,762
===========
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements.
49
<PAGE> 52
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $608,886
Dividends................................................... 16,684
--------
Total Investment Income..................................... 625,570
Expenses
Advisory fees............................................. $ 49,864
Administration fees....................................... 14,959
Shareholder servicing fees -- Class B Shares.............. 60
Distribution fees -- Class A Shares....................... 24,733
Distribution fees -- Class B Shares....................... 178
Accounting fees........................................... 29,593
Transfer agent fees and expenses.......................... 16,604
Directors' fees........................................... 516
Audit fees................................................ 5,507
Registration fees......................................... 5,280
Other expenses............................................ 7,226
--------
Total expenses before fee waivers...................... 154,520
Less: Fee waivers...................................... (52,609)
--------
Total expenses......................................... 101,911
--------
Net Investment Income....................................... 523,659
--------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... (2,446)
Net change in unrealized appreciation (depreciation) on
investments............................................ 25,845
--------
Net Realized and Unrealized Gains (Losses) from
Investments............................................ 23,399
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $547,058
========
</TABLE>
- ---------------
See Notes to Financial Statements.
50
<PAGE> 53
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 (A)
---------------- ---------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations Net investment income............................ $ 523,659 $ 865,919
Net realized gains (losses) on investment transactions.... (2,446) (2,339)
Net change in unrealized appreciation (depreciation) on
investments............................................ 25,845 220,368
----------- -----------
Net increase in net assets resulting from operations...... 547,058 1,083,948
----------- -----------
Distributions to Class A Shares
From net investment income................................ (522,700) (865,919)
Distributions to Class B Shares (b)
From net investment income................................ (959) --
----------- -----------
Total distributions to shareholders......................... (523,659) (865,919)
----------- -----------
Capital Share Transactions
Proceeds from shares issued............................... 2,383,373 22,172,121
Dividends reinvested...................................... 5,061 4,769
Cost of shares redeemed................................... (2,312,422) (2,291,568)
----------- -----------
Net increase in net assets from capital share
transactions........................................... 76,012 19,885,322
----------- -----------
Total increase (decrease) in Net Assets..................... 99,411 20,103,351
NET ASSETS
Beginning of period....................................... 20,103,351 --
----------- -----------
End of period............................................. $20,202,762 $20,103,351
=========== ===========
SHARE TRANSACTIONS
Issued.................................................... 235,075 2,213,380
Reinvested................................................ 499 473
Redeemed.................................................. (227,833) (227,864)
----------- -----------
Change in shares............................................ 7,741 1,985,989
=========== ===========
</TABLE>
- ---------------
(a) For the period from February 28, 1997 (commencement of operations) to
December 31, 1997.
(b) For the period from January 30, 1998 (commencement of operations of Class B
Shares) to June 30, 1998.
See Notes to Financial Statements.
51
<PAGE> 54
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS -- 99.0%
GEORGIA -- 1.7%
Fulton County School District
Refunded, GO....................... Aa2/AA 6.38% 5/1/11 $1,480,000 $ 1,722,350
------------
PENNSYLVANIA -- 1.1%
Indiana County Industrial Development
Authority, Pollution Control
Revenue, MBIA...................... Aaa/AAA 5.35 11/1/10 1,000,000 1,067,500
------------
TENNESSEE -- 94.6%
Bristol Health & Educational
Facilities Revenue, Bristol
Memorial Hospital, Revenue Bond,
FGIC............................... Aaa/AAA 6.75 9/1/07 2,140,000 2,503,800
Chattanooga-Hamilton County Hospital
Authority, Hospital Revenue,
Erlanger Medical Center, Series A,
Callable 4/1/08 @ 101.............. Aaa/AAA 5.00 10/1/28 1,000,000 971,250
Dickson County, GO, FGIC.............. Aaa/NR 6.25 4/1/08 1,220,000 1,395,375
Hamilton County, Callable 8/1/07 @
101, GO............................ Aa2/NR 4.75 8/1/11 1,200,000 1,212,000
Hamilton County Industrial Development
Board Lease, Rent Revenue, FGIC.... Aaa/AAA 5.75 9/1/05 1,000,000 1,085,000
Hamilton County Refunded, Series B,
GO................................. Aa2/NR 5.10 8/1/24 1,585,000 1,622,644
Humphreys County Industrial
Development Board, Solid Waste
Disposal Revenue, E.I. Dupont de
Nemours & Co. Project, Callable
5/1/04 @ 102....................... Aa3/AA- 6.70 5/1/24 1,455,000 1,609,594
Johnson City Health & Educational
Improvements, Revenue Bond,
Prerefunded 7/1/01 @ 102, MBIA..... Aaa/AAA 6.75 7/1/16 1,000,000 1,095,000
Johnson City Refunded, FGIC........... Aaa/AAA 5.25 6/1/10 1,260,000 1,337,175
Johnson City Refunded Water & Sewer,
FGIC............................... Aaa/AAA 5.25 6/1/10 1,270,000 1,347,788
Knox County, GO, Callable 4/1/03 @
102................................ Aa/AA 6.50 4/1/04 1,965,000 2,186,063
Knox County, Callable 2/1/04 @ 101.... Aa3/AA 5.00 2/1/13 2,000,000 2,030,000
Knox County, GO, Callable 2/1/04 @
101................................ Aa3/AA 5.00 2/1/15 1,000,000 1,006,250
Knox County Health, Education &
Housing Facilities Board, Hospital
Facilities Revenue, Fort Sanders
Alliance, MBIA..................... Aaa/AAA 6.25 1/1/13 1,000,000 1,143,750
Knoxville, Refunded Public Improvement
GO, Callable 5/1/05 @ 101.......... Aa3/AA 5.00 5/1/09 2,820,000 2,915,175
Lawrenceburg Electric, Revenue Bond,
MBIA............................... Aaa/AAA 6.63 7/1/18 1,250,000 1,507,813
Memphis, GO........................... Aa/AA 6.25 7/1/04 1,500,000 1,657,500
Memphis, GO........................... Aa/AA 6.00 11/1/06 1,000,000 1,113,750
Memphis Electric System Revenue....... Aa/AA 5.90 1/1/04 1,415,000 1,531,738
Memphis-Shelby County Airport
Authority, Revenue Bonds, MBIA..... Aaa/AAA 6.25 2/15/09 1,790,000 2,024,938
Metropolitan Government Nashville &
Davidson County, Series A, GO,
Callable 11/15/06 @ 101............ Aa2/AA 5.13 11/15/10 2,000,000 2,077,500
Metropolitan Government Nashville &
Davidson County Electric Revenue
Refunded, Series B................. Aa3/AA 5.50 5/15/08 3,780,000 4,039,874
Metropolitan Government Nashville &
Davidson County Health & Education
Facility, Series C................. Aa3/AA 5.00 10/1/10 1,955,000 2,006,319
</TABLE>
Continued
52
<PAGE> 55
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
TENNESSEE, CONTINUED:
Metropolitan Government Nashville &
Davidson County Health & Education
Revenue, Series A, Callable 5/1/08
@ 101.............................. Aaa/AAA 4.75% 11/1/18 $ 3,750,000 $ 3,553,125
Metropolitan Government Nashville &
Davidson County Health & Education
Revenue, Series A, Callable 5/1/08
@ 101.............................. Aaa/AAA 4.88 11/1/28 3,000,000 2,842,500
Metropolitan Government, Nashville &
Davidson County, GO, Callable
5/15/06 @ 101...................... Aa/AA 5.60 5/15/07 1,045,000 1,135,131
Metropolitan Government, Nashville &
Davidson County, Series A, GO,
Callable 11/15/06 @ 101............ Aa2/AA 5.13 11/15/19 2,000,000 2,000,000
Metropolitan Government, Nashville &
Davidson County Energy Project,
Series B, Revenue Bond............. Aaa/AAA 6.00 7/1/10 1,335,000 1,506,881
Metropolitan Government, Nashville &
Davidson County Health &
Educational Facilities Board,
Refunding & Improvements, Meharry
Medical College, AMBAC............. Aaa/AAA 6.00 12/1/09 1,000,000 1,122,500
Metropolitan Government, Nashville &
Davidson County Water & Sewer
Revenue............................ Aaa/AAA 6.50 4/1/03 1,000,000 1,100,000
Metropolitan Government, Nashville &
Davidson County, Health &
Educational Facilities Board,
Refunding & Improvements, Meharry
Medical College, AMBAC............. Aaa/AAA 6.00 12/1/13 2,030,000 2,276,138
Metropolitan Government, Nashville &
Davidson County, Meharry Medical
College Project, Prerefunded
12/1/04 @ 102, AMBAC............... Aaa/AAA 6.88 12/1/24 4,750,000 5,527,812
Metropolitan Government, Nashville &
Davidson County, Vanderbuilt
University, Series A............... Aa3/AA 5.75 1/1/07 1,035,000 1,129,444
Rutherford County Capital Outlay,
GO................................. Aa3/AA- 6.00 4/1/04 1,370,000 1,489,875
Rutherford County Capital Outlay,
Series A........................... Aa3/AA- 6.25 5/1/05 3,500,000 3,893,749
Shelby County, Series A, GO........... Aa2/AA+ 6.75 4/1/05 1,000,000 1,142,500
Shelby County, Series A, GO........... Aa2/AA+ 5.63 6/1/05 1,000,000 1,078,750
Shelby County, Series B, GO........... Aa2/AA+ 6.00 12/1/05 2,000,000 2,212,500
Shelby County Health, Education &
Housing Facilities Board, Hospital
Revenue, Methodist Health Systems,
Inc., MBIA......................... Aaa/AAA 6.25 8/1/07 3,500,000 3,933,124
Shelby County Health, Educational &
Housing Facilities Board, Hospital
Revenue, Methodist Health Systems,
Inc., MBIA......................... Aaa/AAA 5.50 8/1/05 3,000,000 3,195,000
Shelby County Health, Educational &
Housing Facilities Board, Hospital
Revenue, Methodist Health Systems,
Inc., MBIA......................... Aaa/AAA 6.25 8/1/08 2,000,000 2,262,500
Shelby County Refunded, Series A,
GO................................. Aa2/AA+ 5.25 4/1/06 1,000,000 1,058,750
Shelby County Refunded, Series B, GO,
Callable 8/1/07 @ 101.............. Aa2/AA+ 5.00 8/1/11 2,500,000 2,571,875
Tennessee State Refunded, Series B,
GO................................. Aaa/AAA 5.50 5/1/03 1,000,000 1,061,250
Tennessee State Refunded, Series B,
GO................................. Aaa/AA+ 6.00 5/1/05 3,000,000 3,307,500
Tennessee State Refunded, Series B,
GO................................. Aaa/AAA 6.00 5/1/06 1,000,000 1,111,250
</TABLE>
Continued
53
<PAGE> 56
<TABLE>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT/SHARES (NOTE 2)
------------- --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
TENNESSEE, CONTINUED:
Tennessee State, Series A, GO,
Callable 5/1/08 @ 101.............. Aaa/AAA 5.00% 5/1/11 $ 2,000,000 $ 2,055,000
Williamson County Public Improvement,
GO................................. Aa1/NR 6.25 4/1/06 1,000,000 1,126,250
--------------
93,113,700
--------------
WISCONSIN -- 1.6%
Milwaukee Refunding, GO............... Aa1/AA+ 6.00 2/1/09 1,380,000 1,550,775
--------------
Total Municipal Bonds (Cost
$95,659,388).......................... 97,454,325
--------------
REGULATED INVESTMENT COMPANIES -- 0.7%
AIM Tax Free Money Market Fund........ 686,061 686,061
Dreyfus Tax Free Money Market Fund.... 15,849 15,849
--------------
Total Regulated Investment Companies
(Cost $701,910)....................... 701,910
--------------
TOTAL INVESTMENTS (COST $96,361,298) (A)
- 99.7%............................... 98,156,235
OTHER ASSETS IN EXCESS OF LIABILITIES -
0.3%.................................. 305,451
--------------
TOTAL NET ASSETS -- 100.0%............. $ 98,461,686
==============
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
Unrealized appreciation............................. $1,924,111
Unrealized depreciation............................. (129,174)
----------
Net unrealized appreciation......................... $1,794,937
==========
</TABLE>
<TABLE>
<S> <C>
AMBAC - Insured by American Municipal Bond Assurance Corp.
FGIC - Insured by Financial Guaranty Insurance Corp.
GO - General Obligation
MBIA - Insured by Municipal Bond Insurance Assoc.
See Notes to Financial Statements.
54
</TABLE>
<PAGE> 57
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $96,361,298).... $ 98,156,235
Cash...................................................... 3,129
Interest receivable....................................... 1,395,470
Receivable for investment securities sold................. 3,060,110
Receivable for capital shares issued...................... 4,223
Deferred organization costs............................... 9,418
Prepaid expenses.......................................... 12,309
------------
Total assets................................................ 102,640,894
------------
LIABILITIES
Distributions payable..................................... 303,154
Payable for investment securities purchased............... 3,800,854
Accrued expenses:
Advisory fees.......................................... 40,946
Administration fees.................................... 12,284
Shareholder servicing fees -- Class B Shares........... 147
Distribution fees -- Class A Shares.................... 542
Distribution fees -- Class B Shares.................... 440
Accounting fees........................................ 4,688
Audit fees............................................. 7,747
Other.................................................. 8,406
------------
Total liabilities........................................... 4,179,208
------------
NET ASSETS
Class A Shares......................................... 2,705,060
Class B Shares......................................... 735,254
Trust Shares........................................... 95,021,372
------------
$ 98,461,686
============
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares......................................... 267,237
Class B Shares......................................... 72,484
Trust Shares........................................... 9,388,840
------------
9,728,561
============
NET ASSET VALUE
Class A Shares -- redemption price per share.............. $10.12
------
Class A Shares -- maximum sales charge.................... 3.00%
------
Class A Shares -- maximum offering price per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent).............................. $10.43
======
Class B Shares -- offering and redemption price per
share*................................................. $10.14
======
Trust Shares -- offering and redemption price per share... $10.12
======
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 9,729
Additional paid-in capital................................ 96,761,695
Undistributed (distributions in excess of) net investment
income................................................. 5,860
Net unrealized appreciation from investments.............. 1,794,937
Accumulated net realized losses from investment
transactions........................................... (110,535)
------------
Net Assets, June 30, 1998................................... $ 98,461,686
============
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements
55
<PAGE> 58
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $2,276,206
Dividends................................................... 61,440
----------
Total Investment Income..................................... 2,337,646
Expenses Advisory fees...................................... $248,500
Administration fees....................................... 74,550
Shareholder servicing fees -- Class B Shares.............. 411
Distribution fees -- Class A Shares....................... 2,815
Distribution fees -- Class B Shares....................... 1,231
Accounting fees........................................... 37,702
Transfer agent fees and expenses.......................... 34,043
Directors' fees........................................... 2,604
Custodian fees............................................ 15,158
Reports to shareholders................................... 12,904
Audit fees................................................ 11,513
Other expenses............................................ 23,961
--------
Total expenses before fee waivers...................... 465,392
Less: Fee waivers...................................... (5,617)
--------
Total expenses......................................... 459,775
----------
Net Investment Income....................................... 1,877,871
----------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... 549,968
Net change in unrealized appreciation (depreciation) on
investments............................................ (1,096,807)
----------
Net Realized and Unrealized Gains (Losses) from
Investments............................................ (546,839)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $1,331,032
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
56
<PAGE> 59
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 1,877,871 $ 4,158,493
Net realized gains (losses) on investment transactions.... 549,968 495,596
Net change in unrealized appreciation (depreciation) on
investments............................................ (1,096,807) 2,311,170
----------- ------------
Net increase in net assets resulting from operations... 1,331,032 6,965,259
----------- ------------
Distributions to Class A Shares
From net investment income................................ (39,812) (3,124,095)
Distributions to Class B Shares (b)
From net investment income................................ (4,423) --
Distributions to Trust Shares
From net investment income................................ (1,833,636) (1,034,398)(a)
----------- ------------
Total distributions to shareholders......................... (1,877,871) (4,158,493)
----------- ------------
Capital Share Transactions
Proceeds from shares issued............................... 6,863,364 126,708,115
Dividends reinvested...................................... 78,705 233,018
Cost of shares redeemed................................... (10,344,439) (115,420,799)
----------- ------------
Net increase (decrease) in net assets from capital share
transactions........................................... (3,402,370) 11,520,334
----------- ------------
Total increase (decrease) in Net Assets..................... (3,949,209) 14,327,100
NET ASSETS
Beginning of period....................................... 102,410,895 88,083,795
----------- ------------
End of period............................................. $98,461,686 $102,410,895
=========== ============
SHARE TRANSACTIONS
Issued.................................................... 676,688 12,634,903
Reinvested................................................ 7,756 23,483
Redeemed.................................................. (1,017,786) (11,495,098)
----------- ------------
Change in shares.......................................... (333,342) 1,163,288
=========== ============
</TABLE>
- ---------------
(a) For the period from October 3, 1997 (commencement of operations of Trust
Shares) through December 31, 1997.
(b) For the period from January 30, 1998 (commencement of operations of Class B
Shares) through June 30, 1998.
See Notes to Financial Statements.
57
<PAGE> 60
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
MOODY'S/S&P MATURITY PRINCIPAL VALUE
RATINGS RATE DATE AMOUNT (NOTE 2)
----------- -------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS -- 96.9%
TENNESSEE -- 96.9%
Chattanooga Public & Sewer Improvements, GO...... A1/AA- 7.75% 8/1/01 $ 550,000 $ 608,438
Chattanooga, Health Education & Housing,
Facilities Board Revenue, Series A............ Aa2/AA 5.25 12/1/02 1,000,000 1,040,000
Hamilton County Industrial Development Board,
Lease/Rent Revenue Bond, FGIC................. Aaa/AAA... 5.50 9/1/02 750,000 789,375
Knox County, GO, Callable 4/1/03 @ 102........... Aa/AA 6.50 4/1/04 1,000,000 1,112,500
Knox County, Health Education & Housing,
Facilities Board Hospital Revenue Refunding,
MBIA.......................................... Aaa/AAA... 7.25 1/1/08 1,000,000 1,201,250
Memphis, GO...................................... Aa2/AA 6.00 7/1/03 500,000 541,875
Memphis, GO...................................... Aa/AA 6.00 11/1/03 500,000 544,375
Memphis, GO...................................... Aa2/AA 6.00 7/1/04 1,000,000 1,091,250
Memphis Electrical System Revenue Refunding,
Revenue Bond.................................. Aa/AA 5.80 1/1/03 1,000,000 1,068,750
Memphis, GO...................................... Aa/AA 5.25 7/1/02 1,200,000 1,251,000
Memphis, Sanitary Sewer System Revenue Bond...... Aa2/AA+ 5.25 1/1/03 1,000,000 1,047,500
Metropolitan Government, Nashville & Davidson
County........................................ Aa2/AA 6.25 12/1/01 1,000,000 1,071,250
Metropolitan Government, Nashville & Davidson
County Energy Production Facilities, Revenue
Bond, AMBAC................................... Aaa/AAA 5.20 7/1/05 1,000,000 1,050,000
Metropolitan Government, Nashville & Davidson
County, Electric Revenue, Callable 5/15/02 @
102........................................... Aa/AA 5.63 5/15/03 1,000,000 1,065,000
Metropolitan Government, Nashville & Davidson
County, Health & Education Facilities Board
Revenue, The Vanderbilt University, Series
A............................................. Aa3/AA 6.00 7/1/07 625,000 696,094
Metropolitan Nashville Airport Authority Revenue,
5.00%, 7/1/03, FGIC........................... Aaa/AAA 5.00 7/1/03 1,920,000 1,988,582
Shelby County Refunding, Series B, GO............ Aa2/AA+ 5.00 8/1/03 1,000,000 1,041,250
Shelby County, Series A, GO...................... Aa2/AA+ 5.70 12/1/00 1,275,000 1,326,000
Tennessee State, Series B, GO.................... Aaa/AA+ 6.20 6/1/01 1,350,000 1,434,375
Tennessee State, Series B, GO, Prerefunded 6/1/01
@ 102......................................... Aaa/AA+... 6.50 6/1/01 1,115,000 1,205,594
Tennessee State Refunded, Series B, GO........... Aaa/AAA 5.50 5/1/03 1,000,000 1,061,250
Tennessee State Refunding Bonds, Series C, GO.... Aaa/AA+ 5.00 3/1/05 1,000,000 1,042,500
-----------
Total Municipal Bonds (Cost $23,098,521)........... 23,278,208
-----------
</TABLE>
Continued
58
<PAGE> 61
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (NOTE 2)
------- -----------
<S> <C> <C>
REGULATED INVESTMENT COMPANIES -- 3.8%
AIM Tax Free Money Market Fund............................ 923,657 923,657
Dreyfus Tax Free Money Market Fund........................ 1,308 1,308
-----------
Total Regulated Investment Companies (Cost $924,965)........ 924,965
-----------
TOTAL INVESTMENTS (COST $24,023,486) (A) -- 100.7%.......... 24,203,173
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%)............. (163,042)
-----------
TOTAL NET ASSETS -- 100.0%.................................. $24,040,131
===========
</TABLE>
- ---------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................. $194,178
Unrealized depreciation............................. (14,491)
--------
Net unrealized appreciation......................... $179,687
========
</TABLE>
AMBAC - Insured by American Municipal Bond Assurance Corp.
FGIC - Insured by Financial Guaranty Insurance Corp.
GO - General Obligation
MBIA - Insured by Municipal Bond Insurance Assoc.
See Notes to Financial Statements.
59
<PAGE> 62
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $24,023,486).... $24,203,173
Interest receivable....................................... 420,409
Receivable for investment securities sold................. 1,506,409
Deferred organization costs............................... 1,516
-----------
Total assets................................................ 26,131,507
-----------
LIABILITIES
Distributions payable..................................... 61,674
Payable for investment securities purchased............... 1,988,582
Cash overdraft............................................ 3,647
Accrued expenses:
Advisory fees.......................................... 7,693
Administration fees.................................... 789
Shareholder servicing fees -- Class B Shares........... 110
Distribution fees -- Class B Shares.................... 330
Accounting fees........................................ 4,621
Transfer agent fees.................................... 360
Audit fees............................................. 10,795
Custodian fees......................................... 3,986
Other.................................................. 8,789
-----------
Total liabilities........................................... 2,091,376
-----------
NET ASSETS
Class A Shares............................................ 23,501,127
Class B Shares............................................ 539,004
-----------
$24,040,131
===========
Shares Outstanding ($0.001 par value, 500 million shares
authorized)
Class A Shares............................................ 2,324,704
Class B Shares............................................ 53,317
-----------
2,378,021
===========
NET ASSET VALUE
Class A Shares -- redemption price per share.............. $10.11
------
Class A Shares -- maximum sales charge.................... 3.00%
------
Class A Shares -- maximum offering price per share
(100%/(100% -- maximum sales charge) of net asset value
adjusted to nearest cent).............................. $10.42
------
------
Class B Shares -- offering and redemption price per
share*................................................. $10.11
------
------
COMPOSITION OF NET ASSETS:
Shares of common stock, at par............................ $ 2,378
Additional paid-in capital................................ 23,790,793
Net unrealized appreciation from investments.............. 179,687
Accumulated net realized gains from investment
transactions........................................... 67,273
-----------
Net Assets, June 30, 1998................................... $24,040,131
===========
</TABLE>
- ---------------
* Redemption price per share varies by length of time shares are held.
See Notes to Financial Statements.
60
<PAGE> 63
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $472,056
Dividends................................................... 21,700
--------
Total Investment Income..................................... 493,756
Expenses
Advisory fees............................................. $ 58,497
Administration fees....................................... 17,549
Shareholder servicing fees -- Class B..................... 304
Distribution fees -- Class A Shares....................... 28,787
Distribution fees -- Class B.............................. 913
Accounting fees........................................... 29,484
Transfer agent fees and expenses.......................... 20,151
Directors' fees........................................... 576
Registration fees......................................... 6,587
Custodian fees............................................ 5,829
Other expenses............................................ 7,782
--------
Total expenses before fee waivers...................... 176,459
Less: Fee waivers...................................... (55,504)
--------
Total expenses......................................... 120,955
--------
Net Investment Income....................................... 372,801
--------
REALIZED AND UNREALIZED GAINS (LOSSES) FROM INVESTMENTS
Net realized gains (losses) on investment transactions.... 62,067
Net change in unrealized appreciation (depreciation) on
investments............................................ (121,600)
--------
Net Realized and Unrealized Gains (Losses) from
Investments............................................... (59,533)
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $313,268
========
</TABLE>
- ---------------
See Notes to Financial Statements.
61
<PAGE> 64
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, DECEMBER 31,
1998 1997 (A)
---------------- -------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income..................................... $ 372,801 $ 651,831
Net realized gains (losses) on investment transactions.... 62,067 5,206
Net change in unrealized appreciation (depreciation) on
investments............................................ (121,600) 174,157
----------- -----------
Net increase in net assets resulting from operations...... 313,268 831,194
----------- -----------
Distributions to Class A Shares
From net investment income................................ (370,192) (651,831)
Distributions to Class B Shares (b)
From net investment income................................ (2,609) --
----------- -----------
Total distributions to shareholders......................... (372,801) (651,831)
----------- -----------
Capital Share Transactions
Proceeds from shares issued............................... 2,828,313 28,464,155
Dividends reinvested...................................... 1,337 6
Cost of shares redeemed................................... (1,623,046) (5,750,464)
----------- -----------
Net increase in net assets from capital share
transactions........................................... 1,206,604 22,713,697
----------- -----------
Total increase (decrease) in Net Assets..................... 1,147,071 22,893,060
NET ASSETS
Beginning of period....................................... 22,893,060 --
----------- -----------
End of period............................................. $24,040,131 $22,893,060
=========== ===========
SHARE TRANSACTIONS
Issued.................................................... 279,031 2,833,470
Reinvested................................................ 132 1
Redeemed.................................................. (160,241) (574,372)
----------- -----------
Change in shares.......................................... 118,922 2,259,099
=========== ===========
</TABLE>
- ---------------
(a) For the period from February 28, 1997 (commencement of operations) to
December 31, 1997.
(b) For the period from January 30, 1998 (commencement of operations of Class B
Shares) through June 30, 1998.
See Notes to Financial Statements.
62
<PAGE> 65
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR FUNDS
- --------------------------------------------------------------------------------
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 to the AmeriStar Prime
Money Market Portfolio, the AmeriStar U.S. Treasury Money Market Portfolio, the
AmeriStar Capital Growth Portfolio, the AmeriStar Dividend Growth Portfolio, the
AmeriStar Core Income Portfolio, the AmeriStar Limited Duration Income
Portfolio, the AmeriStar Limited Duration U.S. Government Portfolio, the
AmeriStar Tennessee Tax Exempt Bond Portfolio and the AmeriStar Limited Duration
Tennessee Tax Free Portfolio (together the "Portfolios" and individually a
"Portfolio").
The Prime Money Market Portfolio and U.S. Treasury Money Market Portfolio
both seek to provide investors with as high a level of current income as is
consistent with the preservation of capital and the maintenance of liquidity.
The Prime Money Market Portfolio invests in short-term money market instruments
consisting of securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities. The U.S. Treasury Money Market Portfolio invests
only in U.S. Treasury securities and in other securities guaranteed as the
principal and interest by the U.S. Government.
The Capital Growth Portfolio seeks to provide investors with capital growth
by investing primarily in the equity securities of domestic issuers. The
Dividend Growth Portfolio seeks to provide investors with current income and
capital appreciation. This Portfolio will invest primarily in dividend-paying
equity securities of domestic issuers that are expected to provide reasonable
income and may have capital appreciation potential.
The Core Income Portfolio seeks to provide investors with current income
without assuming undue risk. This Portfolio will invest primarily in investment
grade, U.S. dollar denominated fixed-income securities of domestic and foreign
issuers. The Limited Duration Income Portfolio's investment objective is to
provide investors with current income without assuming undue risk. This
Portfolio will invest primarily in investment grade, U.S. dollar denominated
fixed-income securities of domestic and foreign issuers. Under normal market
conditions, the Limited Duration Income Portfolio will invest in a portfolio of
securities that has a duration of less than four years. The Limited Duration
U.S. Government Portfolio seeks to provide investors with high current income
without assuming undue risk. This Portfolio will invest primarily in a portfolio
of U.S. Government securities that, under normal market conditions, has an
effective duration that approximates that of the Merrill Lynch Government 1 to 5
Year Bond Index.
The Tennessee Tax Exempt Bond Portfolio's investment objective is to
provide investors with current income exempt from Federal and Tennessee income
taxes without assuming undue risk. This Portfolio will invest primarily in
investment grade Tennessee Municipal Obligations without regard to maturity. The
Limited Duration Tennessee Tax Free Portfolio seeks to provide investors with
current income exempt from Federal and Tennessee income taxes without assuming
undue risk. This Portfolio will invest primarily in a portfolio of investment
grade Tennessee Municipal Obligations that, under normal market conditions, has
a duration of under five years and an effective average portfolio maturity
ranging between three and five years.
The Portfolios are authorized to issue three classes of shares as follows:
Class A Shares, Class B Shares (effective January 30, 1998) and Trust Shares.
Class A and B Shares and Trust Shares are substantially the same, except that
Class A and B Shares bear the fees that are payable under the plans adopted by
the Fund's Board of Directors. Under the shareholder services plan (the
"Shareholder Service Plan") for the Prime Money Market Portfolio and U.S.
Treasury Money Market Portfolio (the "Money Market Portfolios"), fees are
payable at an annual rate of 0.25% of each Money Market Portfolio's average
daily net assets represented by Class A Shares and 0.75% of the Prime Money
Market Portfolio's average daily net assets represented by Class B Shares. Under
the plan adopted pursuant to Rule 12b-1 under the Act (the "Distribution Plan"),
the Capital Growth Portfolio, Dividend Growth Portfolio, Core Income Portfolio,
Limited Duration Income Portfolio, Limited Duration U.S. Government Portfolio,
Tennessee Tax Exempt Bond Portfolio and Limited Duration Tennessee Tax Free
Portfolio (the "Variable Net Asset Value Portfolios") pay fees at an annual rate
of 0.25% of each Variable Net Asset Value Portfolio's average daily net assets
represented by Class A Shares and 0.75% of each Variable Net Asset Value
Portfolio's average daily net assets represented by Class B Shares. As of June
30, 1998, both the Limited Duration U.S. Government Portfolio and the Limited
Duration Tennessee Tax Free Portfolio offer only Class A Shares and Class B
Shares.
Continued
63
<PAGE> 66
- --------------------------------------------------------------------------------
At June 30, 1998, there were 2.25 billion shares of the Money Markets
Portfolios' $0.001 par value common stock authorized, of which each Portfolio's
shares are classified into Class A Shares (500 million shares authorized per
Portfolio), Class B Shares (250 million shares authorized for the Prime Money
Market Portfolio), and Trust Shares (500 million shares authorized per
Portfolio). There were 5.25 billion shares of the Variable Net Asset Value
Portfolios' $0.001 par value common stock authorized, of which each Portfolio's
shares are classified into Class A Shares (250 million shares authorized per
Portfolio), Class B Shares (250 million shares authorized per Portfolio), and
Trust Shares (250 million shares authorized per Portfolio).
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Portfolios in preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles (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) Security Valuation:
The Money Market Portfolios' securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and cost.
The Variable Net Asset Value Portfolios' investments are valued each
business day using available market quotations or at fair value as determined by
one or more independent pricing services (collectively, the "Service") approved
by the Board of Directors. The Service may use available market quotations,
employ electronic data processing techniques and/or a matrix system to determine
valuations. Restricted securities and securities for which market quotations are
not readily available, if any, are valued at fair value using methods approved
by the Board of Directors. Debt securities with remaining maturities of 60 days
or less are normally valued at amortized cost, which approximates market value.
The amortized cost method involves valuing a security at its cost on the date of
purchase or, in the case of securities purchased more than 60 days to maturity,
at their market value each day until the 61st day prior to maturity, and there
after assuming a constant amortization to maturity of the difference between the
principal amount due at maturity and such valuation.
B) Security Transactions and Investment Income:
Security transactions are recorded on trade date. Realized gains and losses
from sales of investments are calculated on the identified cost basis. Interest
income, including accretion of discount and amortization of premium on
investments, is accrued daily. Dividend income is recorded on the ex-dividend
date.
C) Repurchase Agreements:
The Portfolios may purchase instruments from financial institutions, such
as banks and broker-dealers approved by the Board of Directors, subject to the
seller's agreement to repurchase them at an agreed upon time and price
("repurchase agreements"). Default by the seller would expose the relevant
Portfolio 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 agreements. Accordingly, the Portfolios could receive less than the
carrying value upon the sale of the underlying collateral securities.
D) Expenses:
The Fund accounts separately for the assets, liabilities and operations of
each Portfolio. Direct expenses of a Portfolio are charged to that Portfolio
while general Fund expenses are allocated among the Fund's respective portfolios
based on the relative net asset of each Portfolio.
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
Continued
64
<PAGE> 67
- --------------------------------------------------------------------------------
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.
F) Dividends and Distributions to Shareholders:
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and are paid monthly for the Prime Money
Market Portfolio, U.S. Treasury Money Market Portfolio, Core Income Portfolio,
Limited Duration Income Portfolio, Limited Duration U.S. Government Portfolio,
Tennessee Tax Exempt Bond Portfolio and the Limited Duration Tennessee Tax Free
Portfolio. Dividends are declared and paid quarterly for the Capital Growth
Portfolio. Dividends are declared and paid monthly for the Dividend Growth
Portfolio. For all Portfolios, distributions of net realized gains, if any, will
be paid at least annually. Dividends and distributions are recorded on the
ex-dividend date.
Distributions from net investment income and from net realized gains are
determined in accordance with income tax regulations that may differ from GAAP.
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) Lending Portfolio Securities:
To generate additional income, the Portfolios may lend up to 33.3% of
securities in which they are invested pursuant to agreements requiring that the
loan be continuously secured by cash, U.S. Government or U.S. Government Agency
securities, or any combination of cash and such securities as collateral equal
at all times to at least 100% of the market value plus accrued interest on the
securities lent. The Portfolios continue to earn interest and dividends on
securities lent while simultaneously seeking to earn interest on the investment
of collateral.
When cash is received as collateral for securities loaned, the Portfolios
may invest such cash in short-term U.S. Government Securities, Repurchase
Agreements, or other short-term corporate securities. The cash or subsequent
short-term investments are recorded as assets of the Portfolios, offset by a
corresponding liability to repay the cash at the termination of the loan. In
addition, the short-term securities purchased with the cash collateral are
included in the accompanying schedules of portfolio investments. Fixed income
securities received as collateral are not recorded as an asset or liability of
the Portfolio because the Portfolio does not have effective control of such
securities.
There may be risks of delay in recovery of the securities or even loss of
rights in the collateral should the borrower of the securities fail financially.
However, loans will be made only to borrowers deemed by the Adviser to be of
good standing and creditworthy under guidelines established by the Board of
Directors and when, in the judgment of the Adviser, the consideration which can
be earned currently from such securities loans justifies the attendant risks.
Loans are subject to termination by the Portfolios or the borrower at any time,
and are, therefore, not considered to be illiquid investments. According to
GAAP, a statement of cash flows is presented if the Portfolio lent out, on
average, more than 10% of net assets during the year. Under this guideline, a
statement of cash flows is presented for each of the Portfolios listed below. As
of June 30, 1998, the following Portfolios had securities with the following
market values on loan:
<TABLE>
<CAPTION>
MARKET MARKET VALUE
VALUE OF OF LOANED
COLLATERAL SECURITIES
------------ ------------
<S> <C> <C>
Capital Growth Portfolio.................................... $40,237,500 $39,049,225
Dividend Growth Portfolio................................... 8,530,800 8,281,625
Core Income Portfolio....................................... 5,421,250 5,295,300
Limited Duration Income Portfolio........................... 11,794,500 11,362,129
</TABLE>
The loaned securities were fully collateralized by cash as of June 30,
1998.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
First American National Bank ("First American") serves as the Portfolios'
investment adviser. Barnett Capital Advisors, Inc. ("Barnett") served as the
sub-investment adviser with respect to the Prime Money Market Portfolio until
January 30, 1998 when the agreement was terminated and First American assumed
the day-to-day management of the Prime Money Market Portfolio's investments.
BISYS Fund Services Limited Partnership ("BISYS") serves as the Portfolios'
administrator and distributor of the Portfolios' shares. BISYS is a subsidiary
of The BISYS Group, Inc.
As investment adviser, First American manages the investments of each
Portfolio, and is responsible for all purchases and sales of each Portfolio's
investment securities.
Continued
65
<PAGE> 68
- --------------------------------------------------------------------------------
As sub-investment adviser, Barnett provided the day-to-day management of
the Prime Money Market Portfolio's investments. For its services, the Prime
Money Market Portfolio had 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
were accrued daily and paid monthly.
As administrator, BISYS assists in supervising the operations of the
Portfolios. For its services, BISYS is entitled to receive a fee at the annual
rate of 0.10% of the average daily net assets of each Money Market Portfolio and
0.15% of the average daily net assets of each Variable Net Asset Value
Portfolio.
Pursuant to the Shareholder Service Plan, the Money Market Portfolios pay
BISYS for the provision of certain services to the holders of Class A Shares at
an annual rate of 0.25% of the average daily net assets of the Money Market
Portfolios' Class A Shares. Pursuant to the Shareholder Service Plan, the Prime
Money Market Portfolio and each Variable Net Asset Value Portfolio pays BISYS
for the provision of certain services to the holders of Class B Shares at an
annual rate of 0.25% of the average daily net assets of the Prime Money Market
Portfolios' and Variable Net Asset Value Portfolios' Class B Shares. The
services provided may include personal services relating to shareholder accounts
and services related to the maintenance of such shareholder accounts. BISYS may
pay financial institutions, including the investment adviser, broker/dealers and
other institutions in respect of these services.
Pursuant to the Distribution Plan, each Variable Net Asset Value Portfolio
pays BISYS for advertising, marketing and distributing such Portfolios' Class A
Shares and Class B Shares at an annual rate of 0.25% and 0.75% of the average
daily net assets of such Class A Shares and Class B Shares, respectively. BISYS
may pay financial institutions, broker/dealers and other institutions, in
respect of these services.
Pursuant to the Fund Accounting Agreement, BISYS is entitled to receive a
fee at the annual rate of 0.03% of the daily net assets of each portfolio,
provided however that such fee shall be subject to a minimum annual fee amount
of $48,000 per Portfolio. Also, Portfolios having two or more classes of shares
each having different net asset values or paying different daily dividends are
subject to an additional annual fee of $10,000 per additional class per
Portfolio.
Certain officers and Directors of the Fund are "affiliated persons" (as
defined in the Act) of BISYS and therefore do not receive compensation for being
on the Board of Directors. 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.
Information regarding these transactions for the six months ended June 30,
1998 is as follows:
<TABLE>
<CAPTION>
INVESTMENT ADVISORY FEES
-------------------------------
ANNUAL FEE AS A 12B-1 FEES
PERCENTAGE OF FEES ADMINISTRATION FEES VOLUNTARILY
AVERAGE DAILY NET VOLUNTARILY VOLUNTARILY REDUCED - ACCOUNTING
ASSETS REDUCED REDUCED CLASS A FEES**
----------------- ----------- ------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Prime Money Market Portfolio....... 0.25% $ -- $ -- $ -- $23,282
U.S. Treasury Money Market
Portfolio........................ 0.25% -- -- -- 25,478
Capital Growth Portfolio........... 0.65% 10,128 -- -- 23,655
Dividend Growth Portfolio.......... 0.65% 4,867 -- -- 23,705
Core Income Portfolio.............. 0.50% 3,965 -- -- 23,789
Limited Duration Income
Portfolio........................ 0.50% 4,977 -- -- 23,648
Limited Duration U.S. Government
Portfolio........................ 0.50% 16,906 10,970 24,733 23,677
Tennessee Tax Exempt Bond
Portfolio........................ 0.50% 5,617 -- -- 23,381
Limited Duration Tennessee Tax Free
Portfolio........................ 0.50% 13,848 12,869 28,787 23,337
</TABLE>
** Accounting fees do not include out-of-pocket expenses.
Continued
66
<PAGE> 69
- --------------------------------------------------------------------------------
NOTE 4 -- SECURITIES TRANSACTIONS
For the six months ended June 30, 1998, the cost of purchases and the
proceeds from sales of portfolio securities (excluding short-term investments)
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- ------------
<S> <C> <C>
Capital Growth Portfolio.................................... $97,624,411 $107,673,490
Dividend Growth Portfolio................................... $72,280,687 $ 69,562,859
Core Income Portfolio....................................... $29,504,300 $ 22,267,291
Limited Duration Income Portfolio........................... $25,754,376 $ 23,423,140
Limited Duration U.S. Government Portfolio.................. $ 4,776,882 $ 3,714,226
Tennessee Tax Exempt Bond Portfolio......................... $66,604,620 $ 68,537,791
Limited Duration Tennessee Tax Free Portfolio............... $25,396,830 $ 24,561,557
</TABLE>
NOTE 5 -- CONCENTRATION OF CREDIT RISK
The Tennessee Tax Exempt Bond Portfolio and Limited Duration Tennessee Tax
Free Portfolio invest substantially all of their assets in a non-diversified
portfolio of tax-exempt debt obligations primarily consisting of securities
issued by the State of Tennessee, its municipalities, counties and other taxing
districts. The issuers' abilities to meet their obligations may be affected by
Tennessee economic, regional and political developments.
The Tennessee Tax Exempt Bond Portfolio and Limited Duration Tennessee Tax
Free Portfolio had the following concentrations by sector at June 30, 1998 (as a
percentage of total investments):
<TABLE>
<CAPTION>
LIMITED DURATION
TENNESSEE TENNESSEE
TAX EXEMPT TAX FREE
BOND PORTFOLIO PORTFOLIO
-------------- ----------------
<S> <C> <C>
General Obligations......................................... 40.6% 50.6%
Revenue Bonds:
Utilities................................................. 15.3% 17.5%
Health & Medical.......................................... 15.4% 9.3%
Educational............................................... 18.8% 2.9%
Transportation............................................ 2.1% 8.2%
Housing................................................... 1.1% 3.3%
Others.................................................... 6.0% 4.4%
Cash and Cash Equivalents................................... 0.7% 3.8%
----- -----
100.0% 100.0%
===== =====
</TABLE>
Continued
67
<PAGE> 70
- --------------------------------------------------------------------------------
NOTE 6 -- CAPITAL SHARE TRANSACTIONS
Transactions in shares in the multi-class Portfolios are summarized below:
<TABLE>
<CAPTION>
U.S. TREASURY
PRIME MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
------------------------------------ ------------------------------------
YEAR ENDED YEAR ENDED
SIX MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
JUNE 30, 1998 1997 JUNE 30, 1998 1997
---------------- ----------------- ---------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares issued............................ 194,390,885 203,448,543 173,027,811 261,551,242
Dividends reinvested..................... 776,166 357,816 122,095 107,555
Shares redeemed.......................... (143,337,856) (170,480,515) (167,385,851) (262,902,182)
------------ ------------ ------------ ------------
51,829,195 33,325,844 5,764,055 (1,243,385)
============ ============ ============ ============
TRUST SHARES
Shares issued............................ 97,095,860 143,744,469 72,363,372 208,119,313
Dividends reinvested..................... 1 1 -- --
Shares redeemed.......................... (67,768,247) (165,455,650) (100,913,041) (203,642,569)
------------ ------------ ------------ ------------
29,327,614 (21,711,180) (28,549,669) 4,476,744
============ ============ ============ ============
Net increase/(decrease).................. 81,156,809 11,614,664 (22,785,614) 3,233,359
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
CAPITAL GROWTH PORTFOLIO
---------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------------------------ ------------------------------------
(UNAUDITED)
AMOUNT SHARES AMOUNT SHARES
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares issued............................ $ 1,983,412 141,776 $101,329,579 6,860,600
Dividends reinvested..................... 1,331 105 250,838 19,516
Shares redeemed.......................... (182,789) (13,102) (179,442,673) (11,141,321)
------------ ------------ ------------ ------------
$ 1,801,954 128,779 $(77,862,256) (4,261,205)
============ ============ ============ ============
CLASS B SHARES (A)
Shares issued............................ $ 1,104,646 78,803 $ -- --
Dividends reinvested..................... -- -- -- --
Shares redeemed.......................... (47,592) (3,446) -- --
------------ ------------ ------------ ------------
$ 1,057,054 75,357 $ -- --
============ ============ ============ ============
TRUST SHARES (B)
Shares issued............................ $ 6,988,730 510,800 $147,332,294 10,167,911
Dividends reinvested..................... 100,190 7,801 19,050,221 1,504,756
Shares redeemed.......................... (14,331,106) (1,040,740) (6,416,169) (500,054)
------------ ------------ ------------ ------------
$ (7,242,186) (522,139) $159,966,346 11,172,613
============ ============ ============ ============
Net increase/(decrease).................. $ (4,383,178) (318,003) $ 82,104,090 6,911,408
============ ============ ============ ============
</TABLE>
- ---------------
(a) Class B Shares commenced operations on January 30, 1998.
(b) Trust Shares commenced operations on October 3, 1997.
Continued
68
<PAGE> 71
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVIDEND GROWTH PORTFOLIO
---------------------------------------------------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 (C)
---------------------- -------------------------
<CAPTION>
(UNAUDITED)
AMOUNT SHARES AMOUNT SHARES
---------- -------- ----------- ----------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares issued........................................ $1,968,341 171,797 $71,071,654 5,889,075
Dividends reinvested................................. 2,575 234 58,646 5,646
Shares redeemed...................................... (115,475) (10,724) (80,669,327) (5,857,248)
---------- -------- ----------- ----------
$1,855,441 161,307 $(9,539,027) 37,473
========== ======== =========== ==========
CLASS B SHARES (A)
Shares issued........................................ $1,635,054 143,206 $ -- --
Dividends reinvested................................. 684 60 -- --
Shares redeemed...................................... (13,312) (1,150) -- --
---------- -------- ----------- ----------
$1,622,426 142,116 $ -- --
========== ======== =========== ==========
TRUST SHARES (B)
Shares issued........................................ $5,804,338 522,956 $66,268,900 5,657,103
Dividends reinvested................................. 23,853 2,158 10,029,575 983,212
Shares redeemed...................................... (5,969,833) (527,177) (952,168) (85,923)
---------- -------- ----------- ----------
$ (141,642) (2,063) $75,346,307 6,554,392
========== ======== =========== ==========
Net increase/(decrease).............................. $3,336,225 301,360 $65,807,280 6,591,865
========== ======== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
CORE INCOME PORTFOLIO
----------------------------------------------------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------------- --------------------------
<CAPTION>
(UNAUDITED)
AMOUNT SHARES AMOUNT SHARES
---------- -------- ------------ ----------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares issued....................................... $1,953,094 188,777 $ 43,676,646 4,394,727
Dividends reinvested................................ 727 71 1,100,106 110,432
Shares redeemed..................................... -- -- (84,785,631) (8,376,453)
---------- -------- ------------ ----------
$1,953,821 188,848 $(40,008,879) (3,871,294)
========== ======== ============ ==========
CLASS B SHARES (A)
Shares issued....................................... $ 615,607 59,836 $ -- --
Dividends reinvested................................ 2,771 269 -- --
Shares redeemed..................................... (11) (1) -- --
---------- -------- ------------ ----------
$ 618,367 60,104 $ -- --
========== ======== ============ ==========
TRUST SHARES (B)
Shares issued....................................... $9,741,653 945,358 $ 74,176,796 7,300,711
Dividends reinvested................................ 732,300 71,233 229,138 22,454
Shares redeemed..................................... (6,425,629) (623,466) (3,038,585) (296,935)
---------- -------- ------------ ----------
$4,048,324 393,125 $ 71,367,349 7,026,230
========== ======== ============ ==========
Net increase/(decrease)............................. $6,620,512 642,077 $ 31,358,470 3,154,936
========== ======== ============ ==========
</TABLE>
- ---------------
(a) Class B Shares commenced operations on January 30, 1998.
(b) Trust Shares commenced operations on October 3, 1997.
(c) For the period from February 28,1997 (commencements of operations) through
December 31, 1997.
Continued
69
<PAGE> 72
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED DURATION INCOME PORTFOLIO
---------------------------------------------------------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------------- ----------------------------
<CAPTION>
(UNAUDITED)
AMOUNT SHARES AMOUNT SHARES
----------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares issued................................... $ 2,320,249 232,265 $ 18,061,691 1,811,625
Dividends reinvested............................ 156,739 15,676 2,425,448 244,124
Shares redeemed................................. (1,300,474) (130,101) (113,120,158) (11,327,489)
----------- ---------- ------------- -----------
$ 1,176,514 117,840 $ (92,633,019) (9,271,740)
=========== ========== ============= ===========
CLASS B SHARES (A)
Shares issued................................... $ 310,482 31,079 $ -- --
Dividends reinvested............................ 1,692 170 -- --
Shares redeemed................................. (848) (85) -- --
----------- ---------- ------------- -----------
$ 311,326 31,164 $ -- --
=========== ========== ============= ===========
TRUST SHARES (B)
Shares issued................................... $10,091,051 1,008,959 $ 97,264,930 9,730,880
Dividends reinvested............................ 838,182 83,874 377,078 37,731
Shares redeemed................................. (10,565,238) (1,056,536) (12,647,715) (1,266,172)
----------- ---------- ------------- -----------
$ 363,995 36,297 $ 84,994,293 8,502,439
=========== ========== ============= ===========
Net increase/(decrease)......................... $ 1,851,835 185,301 $ (7,638,726) (769,301)
=========== ========== ============= ===========
</TABLE>
<TABLE>
<CAPTION>
LIMITED DURATION
U.S. GOVERNMENT PORTFOLIO
----------------------------
SIX MONTHS ENDED
JUNE 30, 1998
----------------------------
(UNAUDITED)
AMOUNT SHARES
------------- -----------
<S> <C> <C>
CLASS A SHARES
Shares issued............................................... $ 2,230,857 220,020
Dividends reinvested........................................ 4,509 444
Shares redeemed............................................. (2,312,422) (227,833)
------------- -----------
$ (77,056) (7,369)
============= ===========
CLASS B SHARES (A)
Shares issued............................................... $ 152,516 15,055
Dividends reinvested........................................ 552 55
Shares redeemed............................................. -- --
------------- -----------
$ 153,068 15,110
============= ===========
Net increase/(decrease)..................................... $ 76,012 7,741
============= ===========
</TABLE>
- ---------------
(a) Class B Shares commenced operations on January 30, 1998.
(b) Trust Shares commenced operations on October 3, 1997
Continued
70
<PAGE> 73
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TENNESSEE TAX EXEMPT BOND PORTFOLIO
--------------------------------------------------------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------------------ ----------------------------
<CAPTION>
(UNAUDITED)
AMOUNT SHARES AMOUNT SHARES
------------ -------- ------------- -----------
<S> <C> <C> <C> <C>
CLASS A SHARES
Shares issued................................... $ 1,293,474 126,853 $ 23,465,567 2,362,712
Dividends reinvested............................ 18,778 1,850 208,184 21,009
Shares redeemed................................. (257,277) (25,382) (111,627,908) (11,118,420)
------------ -------- ------------- -----------
$ 1,054,975 103,321 $ (87,954,157) (8,734,699)
============ ======== ============= ===========
CLASS B SHARES (A)
Shares issued................................... $ 802,682 79,265 $ -- --
Dividends reinvested............................ 1,407 139 -- --
Shares redeemed................................. (69,661) (6,920) -- --
------------ -------- ------------- -----------
$ 734,428 72,484 $ -- --
============ ======== ============= ===========
TRUST SHARES (B)
Shares issued................................... $ 4,767,208 470,570 $ 103,242,548 10,272,191
Dividends reinvested............................ 58,520 5,767 24,834 2,474
Shares redeemed................................. (10,017,501) (985,484) (3,792,891) (376,678)
------------ -------- ------------- -----------
$ (5,191,773) (509,147) $ 99,474,491 9,897,987
============ ======== ============= ===========
Net increase/(decrease)......................... $ (3,402,370) (333,342) $ 11,520,334 1,163,288
============ ======== ============= ===========
</TABLE>
<TABLE>
<CAPTION>
LIMITED DURATION TENNESSEE
TAX FREE PORTFOLIO
----------------------------
SIX MONTHS ENDED
JUNE 30, 1998
----------------------------
(UNAUDITED)
AMOUNT SHARES
------------- -----------
<S> <C> <C>
CLASS A SHARES
Shares issued............................................. $ 2,291,041 225,819
Dividends reinvested...................................... 275 27
Shares redeemed........................................... (1,623,046) (160,241)
------------- -----------
$ 668,270 65,605
============= ===========
CLASS B SHARES (A)
Shares issued............................................. $ 537,272 53,212
Dividends reinvested...................................... 1,062 105
Shares redeemed........................................... -- --
------------- -----------
$ 538,334 53,317
============= ===========
Net increase/(decrease)................................... $ 1,206,604 118,922
============= ===========
</TABLE>
- ---------------
(a) Class B Shares commenced operations on January 30, 1998.
(b) Trust Shares commenced operations on October 3, 1997
Continued
71
<PAGE> 74
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
------------------- ----------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- ------- ------- ------- -------
Income from investment
operations:
Net investment income.... 0.024 0.048 0.048 0.054 0.031
Less distributions:
Net investment income.... (0.024) (0.048) (0.048) (0.054) (0.031)
-------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======= ======= ======= =======
Total Return............... 2.41%(a) 4.90% 4.88% 5.51% 3.13%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)............... $107,989 $56,163 $22,836 $63,919 $82,351
Ratio of expenses to
average net assets.... 0.84%(b) 0.87% 0.68% 0.65% 0.63%(b)
Ratio of net investment
income to average net
assets................ 4.82%(b) 4.82% 4.83% 5.37% 4.00%(b)
Ratio of expenses to
average net
assets**.............. 0.84%(b)(c) 0.87%(c) 0.86% 0.90% 0.93%(b)
Ratio of net investment
income to average net
assets**.............. 4.82%(b)(c) 4.82%(c) 4.65% 5.12% 3.76%(b)
</TABLE>
- ---------------
* 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) There were no fee waivers or expense reimbursements for this class during
this period.
See Notes to Financial Statements.
72
<PAGE> 75
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR PRIME MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996*
---------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 1.000 $ 1.000 $ 1.000
------- ------- -------
Income from investment operations:
Net investment income.................................. 0.025 0.051 0.024
Less distributions:
Net investment income.................................. (0.025) (0.051) (0.024)
------- ------- -------
NET ASSET VALUE, END OF PERIOD........................... $ 1.000 $ 1.000 $ 1.000
======= ======= =======
Total Return............................................. 2.54%(a) 5.17% 2.46%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)...................... $55,716 $26,389 $48,101
Ratio of expenses to average net assets................ 0.59%(b) 0.62% 0.65%(b)
Ratio of net investment income to average net assets... 5.06%(b) 5.05% 4.86%(b)
</TABLE>
- ---------------
* For the period from July 1, 1996 (commencement of operations) through
December 31, 1996.
(a) Not annualized.
(b) Annualized.
See Notes to Financial Statements.
73
<PAGE> 76
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
----------------- ----------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------- ------- -------- -------- --------
Income from investment
operations:
Net investment income.... 0.023 0.047 0.047 0.053 0.030
Less distributions:
Net investment income.... (0.023) (0.047) (0.047) (0.053) (0.030)
------- ------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======== ======== ========
Total Return............... 2.35%(a) 4.78% 4.78% 5.41% 3.01%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)............... $82,829 $77,065 $ 78,308 $168,430 $139,715
Ratio of expenses to
average net assets.... 0.79%(b) 0.75% 0.56% 0.50% 0.54%(b)
Ratio of net investment
income to average net
assets................ 4.70%(b) 4.68% 4.72% 5.28% 4.02%(b)
Ratio of expenses to
average net
assets**.............. 0.79%(b)(c) 0.75%(c) 0.74% 0.75% 0.83%(b)
Ratio of net investment
income to average net
assets**.............. 4.70%(b)(c) 4.68%(c) 4.54% 5.03% 3.73%(b)
</TABLE>
- ---------------
* For the period from 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) There were no fee waivers or expense reimbursements for this class during
this period.
See Notes to Financial Statements.
74
<PAGE> 77
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996*
----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..................... $ 1.000 $ 1.000 $ 1.000
------- -------- --------
Income from investment operations:
Net investment income.................................. 0.025 0.049 0.024
Less distributions:
Net investment income.................................. (0.025) (0.049) (0.024)
------- -------- --------
NET ASSET VALUE, END OF PERIOD........................... $ 1.000 $ 1.000 $ 1.000
======= ======== ========
Total Return............................................. 2.48%(a) 5.05% 2.43%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)...................... $85,625 $114,175 $109,698
Ratio of expenses to average net assets................ 0.54%(b) 0.50% 0.52%(b)
Ratio of net investment income to average net assets... 4.95%(b) 4.94% 4.78%(b)
</TABLE>
- ---------------
* For the period from July 1, 1996 (commencement of operations) through
December 31, 1996.
(a) Not annualized.
(b) Annualized.
See Notes to Financial Statements.
75
<PAGE> 78
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996*
----------------- ----------------- -------------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................... $ 12.80 $ 11.32 $ 10.00
------- ------- -------
Income from investment operations:
Net investment income................................. -- 0.06 --
Net realized and unrealized gains on securities
transactions....................................... 1.82 3.40 1.32
------- ------- -------
Net income from investment operations................. 1.82 3.46 1.32
------- ------- -------
Less distributions:
Net investment income................................. -- (0.06) --
Net realized gains.................................... -- (1.92) --
------- ------- -------
Total distributions................................... -- (1.98) --
------- ------- -------
Net change in net asset value........................... 1.82 1.48 1.32
------- ------- -------
NET ASSET VALUE, END OF PERIOD.......................... $ 14.62 $ 12.80 $ 11.32
======= ======= =======
Total Return (excluding sales charge)................... 14.22%(a) 30.79% 22.26%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)..................... $ 2,863 $ 858 $49,008
Ratio of expenses to average net assets............... 1.24%(b) 0.93% 1.20%(b)
Ratio of net investment gain (loss) to average net
assets............................................. (0.13)%(b) 0.42% (0.02)%(b)
Ratio of expenses to average net assets**............. 1.25%(b) 1.18% 1.39%(b)
Ratio of net investment gain (loss) to average net
assets**........................................... (0.14)%(b) 0.17% (0.21)%(b)
Portfolio Turnover (c)................................ 69% 116% 69%
</TABLE>
- ---------------
* For the period from April 1, 1996 (commencement of operations) through
December 31, 1996.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
76
<PAGE> 79
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998*
--------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 13.18
--------
Income from investment operations:
Net investment income..................................... (0.02)
Net realized and unrealized gains (losses) on securities
transactions........................................... 1.28
--------
Net income from investment operations..................... 1.26
--------
Net change in net asset value............................... 1.26
--------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.44
========
Total Return................................................ 10.23% (a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 1,088
Ratio of expenses to average net assets................... 1.93% (b)
Ratio of net investment income to average net assets...... (0.85%)(b)
Portfolio Turnover (c).................................... 69%
</TABLE>
- ---------------
* For the period from February 6, 1998 (commencement of operations) through
June 30, 1998.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
77
<PAGE> 80
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- -------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 12.69 $ 14.51
-------- --------
Income from investment operations:
Net investment income..................................... 0.01 0.02
Net realized and unrealized gains (losses) on securities
transactions........................................... 1.82 0.10
-------- --------
Net income from investment operations..................... 1.83 0.12
-------- --------
Less distributions:
Net investment income..................................... (0.01) (0.02)
Net realized gains........................................ -- (1.92)
-------- --------
Total distributions....................................... (0.01) (1.94)
-------- --------
Net change in net asset value............................... 1.82 (1.82)
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 14.51 $ 12.69
======== ========
Total Return................................................ 14.39%(a) 0.88%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $154,524 $141,761
Ratio of expenses to average net assets................... 0.99%(b) 0.58%(b)
Ratio of net investment income to average net assets...... 0.10%(b) (0.80)%(b)
Ratio of expenses to average net assets**................. 1.00%(b) 0.99%(b)
Ratio of net investment income to average net assets**.... 0.09%(b) 0.39%(b)
Portfolio Turnover (c).................................... 69% 116%
</TABLE>
- ---------------
* For the period from October 3, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
78
<PAGE> 81
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
------------------ ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.37 $ 10.00
------- -------
Income from investment operations:
Net investment income..................................... 0.05 0.65
Net realized and unrealized gains on securities
transactions........................................... 1.26 1.71
------- -------
Net income from investment operations..................... 1.31 2.36
------- -------
Less distributions:
Net investment income..................................... (0.05) (0.19)
Net realized gains........................................ -- (1.80)
------- -------
Total distributions....................................... (0.05) (1.99)
------- -------
Net change in net asset value............................... 1.26 0.37
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.63 $ 10.37
======= =======
Total Return (excluding sales charge)....................... 12.66%(a) 24.20%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 2,313 $ 388
Ratio of expenses to average net assets................... 1.36%(b) 1.06%(b)
Ratio of net investment income to average net assets...... 0.99%(b) 2.11%(b)
Ratio of expenses to average net assets**................. 1.37%(b) 1.31%(b)
Ratio of net investment income to average net assets**.... 0.98%(b) 1.86%(b)
Portfolio Turnover(c)..................................... 97% 86%
</TABLE>
- ---------------
* For the period from February 28, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
79
<PAGE> 82
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998*
--------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.63
-------
Income from investment operations:
Net investment income..................................... 0.02
Net realized and unrealized gains (losses) on securities
transactions........................................... 1.00
-------
Net income from investment operations..................... 1.02
-------
Less distributions:
Net investment income..................................... (0.03)
-------
Net change in net asset value............................... 0.99
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.62
=======
Total Return................................................ 9.57%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 1,652
Ratio of expenses to average net assets................... 2.04%(b)
Ratio of net investment income to average net assets...... 0.26%(b)
Portfolio Turnover (c).................................... 97%
</TABLE>
- ---------------
* For the period from February 4, 1998 (commencement of operations) through
June 30, 1998.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
80
<PAGE> 83
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR DIVIDEND GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.37 $ 11.73
------- -------
Income from investment operations:
Net investment income..................................... 0.07 0.06
Net realized and unrealized gains (losses)
on securities transactions............................. 1.26 0.44
------- -------
Net income from investment operations..................... 1.33 0.50
------- -------
Less distributions:
Net investment income..................................... (0.06) (0.06)
Net realized gains........................................ -- (1.80)
------- -------
Total distributions....................................... (0.06) (1.86)
------- -------
Net change in net asset value............................... 1.27 (1.36)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 11.64 $ 10.37
======= =======
Total Return................................................ 12.88%(a) 4.62%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $76,237 $67,949
Ratio of expenses to average net assets................... 1.11%(b) 0.68%(b)
Ratio of net investment income to average net assets...... 1.19%(b) 2.15%(b)
Ratio of expenses to average net assets**................. 1.12%(b) 1.09%(b)
Ratio of net investment income to average net assets**.... 1.18%(b) 1.74%(b)
Portfolio Turnover (c).................................... 97% 86%
</TABLE>
- ---------------
* For the period from October 3, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
81
<PAGE> 84
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996*
---------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $10.25 $10.00 $ 10.00
------ ------ -------
Income from investment operations:
Net investment income.................................... 0.27 0.58 0.40
Net realized and unrealized gains (losses) on securities
transactions.......................................... 0.13 0.26 --
------ ------ -------
Net income from investment operations.................... 0.40 0.84 0.40
------ ------ -------
Less distributions:
Net investment income.................................... (0.27) (0.59) (0.40)
------ ------ -------
Net change in net asset value.............................. 0.13 0.25 --
------ ------ -------
NET ASSET VALUE, END OF PERIOD............................. $10.38 $10.25 $ 10.00
====== ====== =======
Total Return (excluding sales charge)...................... 3.93%(a) 8.66% 1.12%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................ $2,056 $ 95 $38,815
Ratio of expenses to average net assets.................. 1.15%(b) 0.87% 1.13%(b)
Ratio of net investment income to average net assets..... 5.00%(b) 5.74% 5.37%(b)
Ratio of expenses to average net assets**................ 1.15%(b)(d) 1.12% 1.32%(b)
Ratio of net investment income to average net assets**... 5.00%(b)(d) 5.49% 5.18%(b)
Portfolio Turnover (c)................................... 30% 56% 65%
</TABLE>
- ---------------
* For the period from April 1, 1996 (commencement of operations) through
December 31, 1996.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
(d) There were no fee waivers or expense reimbursements for this class during
this period.
See Notes to Financial Statements.
82
<PAGE> 85
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998*
--------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.29
-------
Income from investment operations:
Net investment income..................................... 0.25
Net realized and unrealized gains (losses) on securities
transactions........................................... 0.08
-------
Net income from investment operations..................... 0.33
-------
Less distributions:
Net investment income..................................... (0.25)
-------
Net change in net asset value............................... 0.08
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.37
=======
Total Return................................................ 2.42%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 623
Ratio of expenses to average net assets................... 1.90%(b)
Ratio of net investment income to average net assets...... 4.32%(b)
Portfolio Turnover (c).................................... 30%
</TABLE>
- ---------------
* For the period from February 5, 1998 (commencement of operations) through
June 30, 1998.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
83
<PAGE> 86
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR CORE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.25 $ 10.16
------- -------
Income from investment operations:
Net investment income..................................... 0.28 0.16
Net realized and unrealized gains (losses) on securities
transactions........................................... 0.12 0.09
------- -------
Net income from investment operations..................... 0.40 0.25
------- -------
Less distributions:
Net investment income..................................... (0.28) (0.16)
------- -------
Net change in net asset value............................... 0.12 0.09
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.37 $ 10.25
======= =======
Total Return................................................ 3.96%(a) 2.45%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $76,965 $71,991
Ratio of expenses to average net assets................... 0.95%(b) 0.60%(b)
Ratio of net investment income to average net assets...... 5.50%(b) 6.28%(b)
Ratio of expenses to average net assets**................. 0.96%(b) 0.92%(b)
Ratio of net investment income to average net assets**.... 5.49%(b) 5.96%(b)
Portfolio Turnover (c).................................... 30% 56%
</TABLE>
- ---------------
* For the period from October 3, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
84
<PAGE> 87
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
---------------- ----------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD..................... $ 9.99 $ 9.96 $ 10.13 $ 9.66 $ 10.00
------- ------- ------- -------- -------
Income from investment
operations:
Net investment income...... 0.26 0.59 0.58 0.59 0.38
Net realized and unrealized
gains (losses) on
securities
transactions............ 0.01 0.04 (0.16) 0.47 (0.34)
------- ------- ------- -------- -------
Net income from investment
operations.............. 0.27 0.63 0.42 1.06 0.04
------- ------- ------- -------- -------
Less distributions:
Net investment income...... (0.26) (0.59) (0.58) (0.59) (0.38)
Net realized gains......... -- (0.01) (0.01) -- --
------- ------- ------- -------- -------
Total distributions........ (0.26) (0.60) (0.59) (0.59) (0.38)
------- ------- ------- -------- -------
Net change in net asset
value...................... 0.01 0.03 (0.17) 0.47 (0.34)
------- ------- ------- -------- -------
NET ASSET VALUE, END OF
PERIOD..................... $ 10.00 $ 9.99 $ 9.96 $ 10.13 $ 9.66
======= ======= ======= ======== =======
Total Return (excluding sales
charge).................... 2.74%(a) 6.47% 4.28% 11.20% 0.42%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)................. $ 7,077 $ 5,894 $98,197 $103,382 $93,189
Ratio of expenses to
average net assets...... 1.17%(b) 0.83% 0.83% 0.87% 0.83%(b)
Ratio of net investment
income to average net
assets.................. 5.27%(b) 5.92% 5.84% 5.89% 5.27%(b)
Ratio of expenses to
average net assets**.... 1.18%(b) 1.09% 1.08% 1.12% 1.28%(b)
Ratio of net investment
income to average net
assets**................ 5.26%(b) 5.66% 5.59% 5.64% 4.82%(b)
Portfolio Turnover (c)..... 27% 45% 51% 28% 6%
</TABLE>
- ---------------
* For the period from March 28, 1994 (commencement of operations) through
December 31, 1994.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
85
<PAGE> 88
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998*
--------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.02
------
Income from investment operations:
Net investment income..................................... 0.24
Net realized and unrealized gains (losses) on securities
transactions........................................... (0.04)
------
Net income from investment operations..................... 0.20
------
Less distributions:
Net investment income..................................... (0.24)
------
Net change in net asset value............................... (0.04)
------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.98
======
Total Return................................................ 1.36%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 311
Ratio of expenses to average net assets................... 1.89%(b)
Ratio of net investment income to average net assets...... 4.39%(b)
Portfolio Turnover (c).................................... 27%
</TABLE>
- ---------------
* For the period from February 5, 1998 (commencement of operations) through
June 30, 1998.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
86
<PAGE> 89
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION INCOME PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.98 $ 10.00
------- -------
Income from investment operations:
Net investment income..................................... 0.27 0.15
Net realized and unrealized gains (losses) on securities
transactions........................................... 0.01 (0.01)
------- -------
Net income from investment operations..................... 0.28 0.14
------- -------
Less distributions:
Net investment income..................................... (0.27) (0.15)
Net realized gains........................................ -- (0.01)
------- -------
Total distributions.................................... (0.27) (0.16)
------- -------
Net change in net asset value............................... 0.01 (0.02)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 9.99 $ 9.98
======= =======
Total Return................................................ 2.87%(a) 1.36%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $85,337 $84,886
Ratio of expenses to average net assets................... 0.92%(b) 0.56%(b)
Ratio of net investment income to average net assets...... 5.51%(b) 6.08%(b)
Ratio of expenses to average net assets**................. 0.93%(b) 0.87%(b)
Ratio of net investment income to average net assets**.... 5.50%(b) 5.77%(b)
Portfolio Turnover (c).................................... 27% 45%
</TABLE>
- ---------------
* For the period from October 3, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
87
<PAGE> 90
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.12 $ 10.00
------- -------
Income from investment operations:
Net investment income..................................... 0.26 0.42
Net realized and unrealized gains (losses) on securities
transactions........................................... 0.01 0.12
------- -------
Net income from investment operations..................... 0.27 0.54
------- -------
Less distributions:
Net investment income..................................... (0.26) (0.42)
------- -------
Net change in net asset value............................... 0.01 0.12
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.13 $ 10.12
======= =======
Total Return (excluding sales charge)....................... 2.74%(a) 5.54%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $20,050 $20,103
Ratio of expenses to average net assets................... 1.02%(b) 1.00%(b)
Ratio of net investment income to average net assets...... 5.25%(b) 5.34%(b)
Ratio of expenses to average net assets**................. 1.55%(b) 1.62%(b)
Ratio of net investment income to average net assets**.... 4.72%(b) 4.72%(b)
Portfolio Turnover (c).................................... 19% 52%
</TABLE>
- ---------------
* For the period from February 28, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
88
<PAGE> 91
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION U.S. GOVERNMENT PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998
-------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.12
------
Income from investment operations:
Net investment income..................................... 0.23
Net realized and unrealized gains (losses) on securities
transactions........................................... 0.02
------
Net income from investment operations..................... 0.25
------
Less distributions:
Net investment income..................................... (0.23)
------
Net change in net asset value............................... 0.02
------
NET ASSET VALUE, END OF PERIOD.............................. $10.14
======
Total Return................................................ 1.61%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 153
Ratio of expenses to average net assets................... 1.93%(b)
Ratio of net investment income to average net assets...... 3.91%(b)
Ratio of expenses to average net assets**................. 2.95%(b)
Ratio of net investment income to average net assets**.... 2.89%(b)
Portfolio Turnover (c).................................... 19%
</TABLE>
- ---------------
* For the period from March 4, 1998 (commencement of operations) through June
30, 1998.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
89
<PAGE> 92
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994*
----------------- ----------------- ----------------- ----------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 10.18 $ 9.90 $ 10.19 $ 9.40 $ 10.00
------- ------- ------- ------- -------
Income from investment
operations:
Net investment income..... 0.18 0.44 0.42 0.45 0.34
Net realized and
unrealized gains
(losses) on securities
transactions............ (0.06) 0.25 (0.29) 0.79 (0.60)
------- ------- ------- ------- -------
Net income (loss) from
investment operations... 0.12 0.69 0.13 1.24 (0.26)
------- ------- ------- ------- -------
Less distributions:
Net investment income..... (0.18) (0.41) (0.42) (0.45) (0.34)
------- ------- ------- ------- -------
Net change in net asset
value..................... (0.06) 0.28 (0.29) 0.79 (0.60)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD.................... $ 10.12 $ 10.18 $ 9.90 $ 10.19 $ 9.40
======= ======= ======= ======= =======
Total Return (excluding
sales charge)............. 1.17%(a) 7.13% 1.39% 13.40% 2.63%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's)................. $ 2,705 $ 1,669 $88,084 $94,143 $86,127
Ratio of expenses to
average net assets...... 1.17%(b) 0.84% 0.86% 0.87% 0.82%(b)
Ratio of net investment
income to average net
assets.................. 3.52%(b) 4.13% 4.29% 4.52% 4.61%(b)
Ratio of expenses to
average net assets**.... 1.18%(b) 1.09% 1.11% 1.12% 1.18%(b)
Ratio of net investment
income to average net
assets**................ 3.51%(b) 3.88% 4.04% 4.27% 4.25%(b)
Portfolio Turnover (c).... 68% 253% 219% 188% 0.41%
</TABLE>
- ---------------
* For the period from March 28, 1994 (commencement of operations) through
December 31, 1994.
** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
90
<PAGE> 93
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998*
--------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.23
------
Income from investment operations:
Net investment income..................................... 0.16
Net realized and unrealized gains (losses) on securities
transactions........................................... (0.09)
------
Net income from investment operations..................... 0.07
------
Less distributions:
Net investment income..................................... (0.16)
------
Net change in net asset value............................... (0.09)
------
NET ASSET VALUE, END OF PERIOD.............................. $10.14
======
Total Return................................................ 0.51%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 735
Ratio of expenses to average net assets................... 1.87%(b)
Ratio of net investment income to average net assets...... 2.63%(b)
Portfolio Turnover (c).................................... 68%
</TABLE>
- ---------------
* For the period from February 25, 1998 (commencement of operations) through
June 30, 1998.
(a) Not annualized.
(b) Annualized.
(c) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
91
<PAGE> 94
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR TENNESSEE TAX EXEMPT BOND PORTFOLIO
- --------------------------------------------------------------------------------
TRUST SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....................... $ 10.18 $ 10.05
------- --------
Income from investment operations:
Net investment income.................................... 0.19 0.10
Net realized and unrealized gains (losses) on securities
transactions.......................................... (0.06) 0.13
------- --------
Net income from investment operations.................... 0.13 0.23
------- --------
Less distributions:
Net investment income.................................... (0.19) (0.10)
------- --------
Net change in net asset value.............................. (0.06) 0.13
------- --------
NET ASSET VALUE, END OF PERIOD............................. $ 10.12 $ 10.18
======= ========
Total Return............................................... 1.30%(a) 2.35%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)........................ $95,021 $100,742
Ratio of expenses to average net assets.................. 0.92%(b) 0.56%(b)
Ratio of net investment income to average net assets..... 3.79%(b) 4.22%(b)
Ratio of expenses to average net assets**................ 0.93%(b) 0.87%(b)
Ratio of net investment income to average net assets**... 3.78%(b) 3.91%(b)
Portfolio Turnover (c)................................... 68% 253%
</TABLE>
- ---------------
* For the period from October 3, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
92
<PAGE> 95
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1998 DECEMBER 31, 1997*
---------------- ------------------
(UNAUDITED)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.13 $ 10.00
------- -------
Income from investment operations:
Net investment income..................................... 0.16 0.29
Net realized and unrealized gains (losses) on securities
transactions........................................... (0.02) 0.13
------- -------
Net income from investment operations..................... 0.14 0.42
------- -------
Less distributions:
Net investment income..................................... (0.16) (0.29)
------- -------
Net change in net asset value............................... (0.02) 0.13
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.11 $ 10.13
======= =======
Total Return (excluding sales charge)....................... 1.40%(a) 4.26%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $23,501 $22,893
Ratio of expenses to average net assets................... 1.02%(b) 0.98%(b)
Ratio of net investment income to average net assets...... 3.20%(b) 3.48%(b)
Ratio of expenses to average net assets**................. 1.49%(b) 1.52%(b)
Ratio of net investment income to average net assets**.... 2.73%(b) 2.94%(b)
Portfolio Turnover (c).................................... 113% 179%
</TABLE>
- ---------------
* For the period from February 28, 1997 (commencement of operations) through
December 31, 1997.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
93
<PAGE> 96
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR LIMITED DURATION TENNESSEE TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1998*
--------------
(UNAUDITED)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.18
-------
Income from investment operations:
Net investment income..................................... 0.12
Net realized and unrealized gains (losses) on securities
transactions........................................... (0.07)
-------
Net income from investment operations..................... 0.05
-------
Less distributions:
Net investment income..................................... (0.12)
-------
Net change in net asset value............................... (0.07)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.11
=======
Total Return................................................ 0.59%(a)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)......................... $ 539
Ratio of expenses to average net assets................... 1.98%(b)
Ratio of net investment income to average net assets...... 2.09%(b)
Ratio of expenses to average net assets**................. 2.71%(b)
Ratio of net investment income to average net assets**.... 1.36%(b)
Portfolio Turnover........................................ 113%
</TABLE>
- ---------------
* For the period from February 4, 1998 (commencement of operations) through
June 30, 1998.
** 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) Portfolio turnover is calculated on the basis of the Fund as a whole,
without distinguishing between the classes of shares issued.
See Notes to Financial Statements.
94
<PAGE> 97
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR MUTUAL FUNDS
3435 Stelzer Road - Columbus, OH 43219
INVESTMENT ADVISER
First American National Bank
315 Deaderick Street - Nashville, TN 37237-0401
ADMINISTRATOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road - Columbus, OH 43219
DISTRIBUTOR
BISYS Fund Services Limited Partnership
3435 Stelzer Road - Columbus, OH 43219
CUSTODIAN
The Bank of New York
90 Washington Street - New York, NY 10286
TRANSFER AGENT & DIVIDEND DISBURSING AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road - Columbus, OH 43219
BISYS Fund Services Limited Partnership is the Portfolios'
distributor and is unaffiliated with First American National
Bank, the Portfolios' adviser.
Investments in the Portfolios are neither guaranteed by nor
obligations of First American National Bank or any other
bank and are not insured by the FDIC or any other government
agency. Investments in mutual funds involve risk, including
the possible loss of principal. This material must be preceded
or accompanied by a current prospectus.
<PAGE> 98
[AMERISTAR MUTUAL FUNDS LOGO]
HELPING PEOPLE PLAN
FOR A BRIGHTER FUTURE.(SM)
[EYE IN PYRAMID BACKGROUND]
--------------
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OH
PERMIT NO.1
--------------
8/98 AME-SANN-6/98
