<PAGE> 1
CORRESPONDENT CASH RESERVES
- --------------------------------------------------------------------------------
To Our Shareholders:
We are pleased to send you this annual report, which covers the 12 months, ended
December 31, 1999.
The Correspondent Cash Reserves Money Market and Tax Free Portfolios are
open-end, diversified money market funds that seek to provide investors with a
high level of current income, while preserving capital and maintaining
liquidity. The income provided by the Tax Free Portfolio is intended to be
exempt from federal income tax.*
The Money Market Portfolio, which exceeds $1.77 billion in assets under
management (up from $1.63 billion at the time of our semi-annual report on June
30, 1999), invests in a diversified selection of very high quality, short-term
money market obligations -- such as U.S. Treasury bills, short-term corporate
obligations and commercial paper. The Tax Free Portfolio invests in a variety of
short-term, tax-exempt securities issued by state, county and municipal
authorities. Both Portfolios frequently invest in instruments in the top tier
category established by nationally recognized statistical rating
organizations.**
Following this letter, you will find a pie-chart analysis of the Portfolios, as
well as their performance for the 12-month period. A schedule of the Portfolios'
investments is included in the financial report that follows the performance
table. We actively monitor all investments to ensure that they maintain their
quality status and suitability.
ECONOMIC OVERVIEW
Over the course of the last year, the global economic situation has undergone a
dramatic facelift. Twelve months ago, economists and politicians alike were
raising concerns about potentially disastrous conditions in Asia, Latin America
and Russia.
As we enter the year 2000, circumstances have changed. Parts of Asia are
flourishing -- indeed, the Japanese stock market posted huge gains in
1999 -- Latin America has not imploded and even Russia seems to have found a
measure of stability, albeit relative.
Here in the U.S., we witnessed an economy that continued to be exceptionally
strong. Although inflation seems to be on everyone's mind, especially Federal
Reserve Board (the Fed) Chairman Alan Greenspan, in our opinion, there has been
very little to worry about. Excluding the volatile food and energy components,
both the Producer Price Index (PPI) and the Consumer Price Index (CPI)
registered very mild inflationary growth; for all of 1999, the PPI rose just
1.8%, while the CPI grew 2.1%. The Fed has been doing a good job heading off
inflation, by imposing relatively gentle, 25-basis point (0.25%) rate hikes.
AS INTEREST RATES ROSE, WE LOWERED AVERAGE MATURITY
In 1998, the Fed lowered the federal funds rate -- the rate banks charge one
another for short-term
- ---------------
* The Tax Free Money Market Portfolio's income may be subject to certain state
and local taxes and, depending on your tax status, the federal alternative
minimum tax.
** An investment in either Portfolio is neither insured nor guaranteed by the
FDIC or any other government agency. Although each Portfolio strives to
maintain the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Portfolios.
<PAGE> 2
CORRESPONDENT CASH RESERVES-- (continued)
- --------------------------------------------------------------------------------
loans -- three times. In 1999, however, the Fed took a more hawkish stance,
determined to warn off inflation. For the first six months of year, Fed Chairman
Greenspan and his colleagues merely hinted at higher rates; this "bias" toward
tighter credit was enough to drive rates higher in and of themselves. At the end
of June 1999, the Fed did indeed take action, raising the fed funds rate by 25
basis points (0.25%). Before the year was over, the Fed tightened twice more, in
August and then again in November of 1999. As we write this report in early
February, the Fed has again raised rates by 25 basis points during their
February meeting.
We started the year with the Portfolios' average weighted maturities a little
longer than average. When we saw that the Fed was adopting a tightening bias we
significantly shortened the average maturities of both Portfolios. With rates
climbing, it made no sense to be too far out on the yield curve.
At the end of 1999, we also had Y2K concerns to consider. No one could predict
the outcome of the Y2K issues, or how much liquidity we would need, therefore,
we had to be prepared for the worst. This was another reason for the short
average maturities of the Portfolio's.
As of December 31, 1999, the average weighted maturity of the Money Market
Portfolio was 40 days, compared to 58 days on June 30, 1999, the time of our
semi-annual report.
As of December 31, 1999, the Tax Free Portfolio maintained an average weighted
maturity of 31 days, compared to 40 days on June 30, 1999. Both Portfolios are
managed to attempt to provide safety, convenience and liquidity to investors.
OUR OUTLOOK FOR 2000
Going forward, we will have to watch the inflation picture closely. Unemployment
is at historic lows; many industries and businesses are having trouble finding
employees, and are offering very attractive compensation packages. This scenario
can help induce an inflationary environment. Consequently, the Fed might
continue with its practice of using 25-basis-point hikes to slow inflation as
gently as possible.
<PAGE> 3
CORRESPONDENT CASH RESERVES-- (continued)
- --------------------------------------------------------------------------------
Portfolio Composition*
TAX FREE MONEY MARKET PORTFOLIO
[PIE CHARTS]
<TABLE>
<CAPTION>
COMMERCIAL PAPER MUNICIPAL BONDS
- ---------------- ---------------
<S> <C>
21.7% 78.30%
</TABLE>
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
SHORT-TERM U.S. GOVERNMENT
CORPORATE CERTIFICATES OF AND AGENCY REPURCHASE
BANK NOTES COMMERCIAL PAPER OBLIGATIONS DEPOSIT OBLIGATIONS AGREEMENTS
- ---------- ---------------- ----------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
5.8% 60.60% 0.70% 12.80% 18.30% 1.80%
</TABLE>
*The composition of the Portfolios is subject to change. Percentages are based
on total investments.
PERFORMANCE
As of December 31, 1999, the 7-day and 30-day yields for the Portfolios were as
follows:
<TABLE>
<CAPTION>
7-DAY 30-DAY
YIELD YIELD
----- ------
<S> <C> <C>
Money Market Portfolio**........................... 4.79% 4.78%
Tax Free Money Market Portfolio**.................. 3.59% 2.98%
</TABLE>
** For the current 7-day yield as of December 31, 1999, the Portfolios' service
contractors voluntarily waived a portion of their fees. If the service
contractors had not waived a portion of their fees, the 7-day yield shown
would have been 4.68% for the Money Market Portfolio and 3.28% for the Tax
Free Money Market Portfolio. These voluntary waivers may be modified or
terminated at any time, which would reduce the performance. Yields will vary
with market conditions, and past performance is not a guarantee of future
results.
An investment in either Portfolio is neither insured nor guaranteed by the
FDIC or any other government agency. Although each Portfolio strives to
maintain the value of your investment at $1.00 per share, it is possible to
lose money by investing in the Portfolios.
<PAGE> 4
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 18.2%
AGENCY -- 18.2%
Federal Home Loan Bank.......................... AAA/Aaa** 5.63%* 1/3/00 $10,000,000 $ 9,995,426
Federal Home Loan Bank.......................... AAA/Aaa** 5.89* 1/4/00 10,000,000 9,999,470
Federal Home Loan Bank.......................... AAA/Aaa** 5.97* 1/4/00 15,000,000 14,998,237
Federal Home Loan Bank.......................... AAA/Aaa** 4.85 1/19/00 14,500,000 14,500,000
Federal Home Loan Bank.......................... AAA/Aaa** 5.73 2/2/00 10,000,000 9,949,067
Federal Home Loan Bank.......................... AAA/Aaa** 5.73 2/16/00 10,000,000 9,926,783
Federal Home Loan Bank.......................... AAA/Aaa** 5.05 3/1/00 7,000,000 7,000,000
Federal Home Loan Bank.......................... AAA/Aaa** 5.06 3/9/00 15,800,000 15,800,000
Federal Home Loan Mortgage Corp................. AAA/Aaa** 5.96* 1/4/00 10,000,000 9,999,432
Federal Home Loan Mortgage Corp................. AAA/Aaa** 5.62 1/19/00 20,000,000 19,943,800
Federal Home Loan Mortgage Corp................. AAA/Aaa** 5.60 1/27/00 22,000,000 21,911,022
Federal Home Loan Mortgage Corp................. AAA/Aaa** 5.47 1/28/00 10,000,000 9,958,975
Federal Home Loan Mortgage Corp................. AAA/Aaa** 5.36 2/4/00 15,000,000 14,924,067
Federal Home Loan Mortgage Corp................. AAA/Aaa** 5.53 2/11/00 15,000,000 14,905,529
Federal National Mortgage Association........... AAA/Aaa** 5.62* 1/3/00 10,000,000 9,996,981
Federal National Mortgage Association........... AAA/Aaa** 5.53 2/7/00 5,000,000 4,971,582
Federal National Mortgage Association........... AAA/Aaa** 5.52 2/9/00 8,956,000 8,902,443
Student Loan Marketing Association.............. AAA/Aaa** 5.91* 1/4/00 10,000,000 9,998,940
Student Loan Marketing Association.............. AAA/Aaa** 5.94* 1/4/00 15,000,000 14,996,515
Student Loan Marketing Association.............. AAA/Aaa** 6.05* 1/4/00 15,000,000 14,994,630
Student Loan Marketing Association.............. AAA/Aaa** 6.06* 1/4/00 15,000,000 15,000,000
Student Loan Marketing Association.............. AAA/Aaa** 6.11* 1/4/00 10,000,000 9,999,824
Student Loan Marketing Association.............. AAA/Aaa** 6.11* 1/4/00 10,000,000 9,997,063
Student Loan Marketing Association.............. AAA/Aaa** 5.00 1/14/00 6,500,000 6,500,000
Student Loan Marketing Association.............. AAA/Aaa** 5.56* 2/25/00 25,000,000 24,998,531
Tennessee Valley Authority...................... AAA/Aaa** 5.42 1/28/00 10,000,000 9,959,350
--------------
Total U.S. Government and Agency Obligations (Cost
$324,127,667)................................... 324,127,667
--------------
</TABLE>
Continued
4
<PAGE> 5
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
BANK NOTES -- 5.7%
DOMESTIC -- 4.9%
First National Bank of Chicago.................. P-1/A-1+ 5.18% 3/15/00 $ 7,000,000 $ 6,999,180
First Tennessee Bank, N.A. -- Memphis........... P-1/A-1 5.98* 1/4/00 15,000,000 15,000,000
First Tennessee Bank, N.A. -- Memphis........... P-1/A-1 6.02* 1/4/00 10,000,000 10,000,000
First Tennessee Bank, N.A. -- Memphis........... P-1/A-1 5.10 1/14/00 6,000,000 6,000,000
First Tennessee Bank, N.A. -- Memphis........... P-1/A-1 5.21 3/8/00 10,000,000 10,000,000
Harris Trust & Savings Bank..................... P-1/A-1+ 5.00 2/1/00 7,000,000 7,000,000
Harris Trust & Savings Bank..................... P-1/A-1+ 5.05 2/14/00 12,000,000 11,999,103
KeyBank, N.A.................................... P-1/A-1 5.65 6/26/00 10,000,000 9,996,748
NationsBank N.A................................. P-1/A-1+ 5.00 1/6/00 10,000,000 9,999,974
--------------
86,995,005
--------------
YANKEE -- 0.8%
Westpac Banking Corp............................ P-1/A-1+ 5.65 7/17/00 10,000,000 9,997,402
Westpac Banking Corp............................ P-1/A-1+ 5.20 3/1/00 5,000,000 4,999,446
--------------
14,996,848
--------------
Total Bank Notes (Cost $101,991,853).............. 101,991,853
--------------
CERTIFICATES OF DEPOSIT -- 12.7%
YANKEE -- 12.7%
Bank of Nova Scotia............................. P-1/A-1 5.05 1/14/00 5,700,000 5,699,980
Barclays Bank PLC............................... P-1/A-1+ 5.64* 1/3/00 15,000,000 14,998,180
Bayerische Hypo-und Vereinsbank AG.............. P-1/A-1 5.15 4/28/00 10,000,000 9,998,420
Canadian Imperial Bank of Commerce.............. P-1/A-1+ 5.20 2/29/00 10,000,000 10,000,651
Canadian Imperial Bank of Commerce.............. P-1/A-1+ 5.10 4/12/00 6,000,000 5,999,192
National Westminster Bank PLC................... P-1/A-1+ 4.98 1/7/00 15,000,000 14,999,951
Rabobank Nederland.............................. P-1/A-1+ 4.99 2/7/00 14,000,000 13,999,088
Rabobank Nederland.............................. P-1/A-1+ 5.08 4/12/00 6,000,000 5,999,354
Royal Bank of Canada............................ P-1/A-1+ 5.64* 1/3/00 20,000,000 19,996,612
Royal Bank of Canada............................ P-1/A-1+ 5.65* 1/3/00 15,000,000 14,998,875
Royal Bank of Canada............................ P-1/A-1+ 5.27 3/31/00 4,000,000 3,999,668
Svenska Handelsbanken........................... P-1/A-1 4.98 2/4/00 6,000,000 5,999,892
Svenska Handelsbanken........................... P-1/A-1 5.06 2/16/00 5,000,000 4,999,894
</TABLE>
Continued
5
<PAGE> 6
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
CERTIFICATES OF DEPOSIT, CONTINUED:
YANKEE, CONTINUED:
Svenska Handelsbanken........................... P-1/A-1 5.12% 2/22/00 $ 5,000,000 $ 4,999,931
Svenska Handelsbanken........................... P-1/A-1 5.17 2/25/00 8,000,000 7,999,652
Svenska Handelsbanken........................... P-1/A-1 5.28 3/3/00 8,000,000 7,999,195
Svenska Handelsbanken........................... P-1/A-1 5.16 4/4/00 6,000,000 5,999,702
Svenska Handelsbanken........................... P-1/A-1 5.10 4/10/00 6,000,000 5,999,525
Svenska Handelsbanken........................... P-1/A-1 5.28 5/22/00 10,000,000 9,998,504
Toronto-Dominion Bank........................... P-1/A-1+ 5.64* 1/3/00 18,000,000 17,997,296
Toronto-Dominion Bank........................... P-1/A-1+ 4.99 1/7/00 10,000,000 9,999,984
Toronto-Dominion Bank........................... P-1/A-1+ 5.06 4/17/00 7,000,000 6,998,814
Westpac Banking Corp............................ P-1/A-1+ 5.18 3/17/00 10,000,000 9,999,499
Westpac Banking Corp............................ P-1/A-1+ 5.17 3/31/00 7,000,000 6,999,738
--------------
Total Certificates Of Deposit
(Cost $226,681,597)................................... 226,681,597
--------------
COMMERCIAL PAPER -- 60.4%
ASSET BACKED -- AUTO & TRUCK -- 1.1%
New Center Asset Trust.......................... P-1/A-1+ 5.00 1/3/00 20,000,000 19,994,444
--------------
ASSET BACKED -- BANKING -- 1.9%
Atlantis One Funding (b)........................ P-1/A-1+ 5.88 2/15/00 15,000,000 14,889,750
Atlantis One Funding (b)........................ P-1/A-1+ 5.92 3/15/00 20,000,000 19,756,622
--------------
34,646,372
--------------
ASSET BACKED -- FINANCE -- 0.3%
Beta Finance, Inc. (b).......................... P-1/A-1+ 5.88 4/5/00 5,000,000 4,922,417
--------------
ASSET BACKED -- MISCELLANEOUS -- 15.7%
Asset Securitization Cooperative Corp. (b)...... P-1/A-1+ 6.51* 1/14/00 15,000,000 15,000,000
Asset Securitization Cooperative Corp. (b)...... P-1/A-1+ 5.42 1/26/00 20,000,000 19,924,722
Falcon Asset Securitization Corp. (b)........... P-1/A-1 6.07 1/14/00 10,000,000 9,978,081
Falcon Asset Securitization Corp. (b)........... P-1/A-1 5.96 1/25/00 5,000,000 4,980,133
Falcon Asset Securitization Corp. (b)........... P-1/A-1 5.90 1/27/00 10,000,000 9,957,389
Falcon Asset Securitization Corp. (b)........... P-1/A-1 5.90 2/15/00 15,000,000 14,889,375
Preferred Receivables Funding Corp. (b)......... P-1/A-1 5.95 2/10/00 10,000,000 9,933,889
Preferred Receivables Funding Corp. (b)......... P-1/A-1 5.95 2/22/00 25,000,000 24,785,140
</TABLE>
Continued
6
<PAGE> 7
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
ASSET BACKED -- MISCELLANEOUS, CONTINUED:
Preferred Receivables Funding Corp. (b)......... P-1/A-1 5.95% 2/25/00 $10,000,000 $ 9,909,097
Preferred Receivables Funding Corp. (b)......... P-1/A-1 5.80 3/9/00 14,090,000 13,935,636
Quincy Capital Corp. (b)........................ P-1/A-1+ 5.84 2/9/00 20,000,000 19,873,467
Quincy Capital Corp. (b)........................ P-1/A-1+ 5.94 2/10/00 5,056,000 5,022,630
Quincy Capital Corp. (b)........................ P-1/A-1+ 5.85 2/15/00 15,000,000 14,890,313
Receivables Capital Corp. (b)................... P-1/A-1+ 5.88 2/24/00 25,000,000 24,779,500
Triple A One Funding (b)........................ P-1/A-1 6.60 1/6/00 15,000,000 14,986,250
Triple A One Funding (b)........................ P-1/A-1 6.26 1/12/00 10,000,000 9,980,872
Triple A One Funding (b)........................ P-1/A-1 6.16 1/20/00 15,000,000 14,951,233
Variable Funding Capital Corp. (b).............. P-1/A-1 6.50 1/7/00 10,000,000 9,989,167
Variable Funding Capital Corp. (b).............. P-1/A-1 5.87 1/14/00 15,000,000 14,968,204
Variable Funding Capital Corp. (b).............. P-1/A-1 5.80 1/19/00 15,000,000 14,956,500
--------------
277,691,598
--------------
AUTO-TRUCK -- 0.7%
General Motors Acceptance Corp.................. P-1/A-1 5.87 1/18/00 11,888,000 11,855,047
--------------
BANKING -- 21.0%
Abbey National North America.................... P-1/A-1+ 12.00 1/4/00 10,000,000 9,990,000
Abbey National North America.................... P-1/A-1+ 5.85 2/25/00 27,000,000 26,758,688
Bank of America Corporation..................... P-1/A-1 5.85 2/17/00 10,000,000 9,923,625
Banque Et Caisse d'Epargne de L'Etat............ P-1/A-1+ 5.85 2/11/00 50,000,000 49,666,874
BBL North America Funding, Inc. (b)............. P-1/A-1+ 6.02 1/20/00 10,000,000 9,968,228
CBA Delaware Finance, Inc....................... P-1/A-1+ 5.83 2/14/00 30,000,000 29,786,417
CBA Delaware Finance, Inc....................... P-1/A-1+ 5.84 2/22/00 10,000,000 9,915,644
Cregem N.A., Inc................................ P-1/A-1+ 5.91 3/13/00 15,000,000 14,822,700
Dexia CLF Finance............................... P-1/A-1+ 5.97 3/10/00 10,000,000 9,885,575
Fortis Funding LLC.............................. P-1/A-1+ 5.84 2/15/00 25,000,000 24,817,500
Fortis Funding LLC.............................. P-1/A-1+ 5.83 2/24/00 10,000,000 9,912,550
Halifax PLC..................................... P-1/A-1+ 5.84 2/14/00 25,000,000 24,821,556
J.P. Morgan & Co., Inc.......................... P-1/A-1+ 5.83 2/24/00 15,000,000 14,868,825
J.P. Morgan & Co., Inc.......................... P-1/A-1+ 5.80 3/31/00 3,500,000 3,449,250
Nationwide Building Society..................... P-1/A-1 5.85 2/7/00 10,000,000 9,939,875
Nationwide Building Society..................... P-1/A-1 5.86 2/17/00 20,000,000 19,846,989
</TABLE>
Continued
7
<PAGE> 8
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
BANKING, CONTINUED:
Nationwide Building Society..................... P-1/A-1 5.91% 3/7/00 $35,000,000 $ 34,620,500
Santander Finance, Inc.......................... P-1/A-1 5.97 2/4/00 15,000,000 14,915,425
Societe Genarale N.A., Inc...................... P-1/A-1+ 5.95 2/10/00 10,000,000 9,933,889
Westpac Capital Corp............................ P-1/A-1+ 5.83 4/7/00 25,000,000 24,607,285
Westpac Trust Securities........................ P-1/A-1+ 5.89 2/7/00 10,000,000 9,939,464
--------------
372,390,859
--------------
BROKER/DEALER -- 8.8%
Bear Stearns Companies, Inc..................... P-1/A-1 5.94 2/29/00 20,000,000 19,805,300
Bear Stearns Companies, Inc..................... P-1/A-1 5.98 3/14/00 15,000,000 14,818,108
Goldman Sachs Group, Inc........................ P-1/A-1+ 6.07 2/22/00 25,000,000 24,780,806
Goldman Sachs Group, Inc........................ P-1/A-1+ 6.22 2/23/00 10,000,000 9,908,428
Goldman Sachs Group, Inc........................ P-1/A-1+ 6.15 2/29/00 15,000,000 14,848,813
Merrill Lynch & Co., Inc........................ P-1/A-1+ 5.95 3/15/00 15,000,000 14,816,542
Morgan Stanley, Dean Witter & Co................ P-1/A-1 5.08* 1/3/00 10,000,000 10,000,000
Morgan Stanley, Dean Witter & Co................ P-1/A-1 5.18* 1/3/00 10,000,000 10,000,000
Morgan Stanley, Dean Witter & Co................ P-1/A-1 5.18* 1/3/00 10,000,000 10,000,000
Morgan Stanley, Dean Witter & Co................ P-1/A-1 6.03 1/11/00 6,000,000 5,989,950
Morgan Stanley, Dean Witter & Co................ P-1/A-1 5.92 1/18/00 10,000,000 9,972,044
Morgan Stanley, Dean Witter & Co................ P-1/A-1 5.93 2/3/00 10,000,000 9,945,642
--------------
154,885,633
--------------
CONSUMER PRODUCTS -- 0.6%
Gillette Company (b)............................ P-1/A-1+ 6.65 1/4/00 10,000,000 9,994,458
--------------
ELECTRONICS -- 3.3%
Motorola, Inc................................... P-1/A-1 5.81 2/11/00 10,000,000 9,933,831
Motorola, Inc................................... P-1/A-1 5.82 2/17/00 50,000,000 49,620,083
--------------
59,553,914
--------------
FINANCE-AIRCRAFT -- 1.1%
International Lease Financing................... P-1-/A-1+ 5.80 2/22/00 20,000,000 19,832,444
--------------
FINANCE-CONDUIT -- 1.1%
UBS Finance (Delaware) LLC...................... P-1/A-1+ 5.00 1/3/00 20,000,000 19,994,444
--------------
</TABLE>
Continued
8
<PAGE> 9
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
INSURANCE -- 0.4%
Allstate Corporation (b)........................ P-1/A-1 5.97% 2/11/00 $ 7,500,000 $ 7,449,006
--------------
METALS & MINING -- 3.0%
Rio Tinto America, Inc. (b)..................... P-1/A-1+ 5.84 2/14/00 5,000,000 4,964,311
Rio Tinto America, Inc. (b)..................... P-1/A-1+ 5.85 2/28/00 15,000,000 14,858,625
Rio Tinto America, Inc. (b)..................... P-1/A-1+ 5.81 3/8/00 34,180,000 33,810,410
--------------
53,633,346
--------------
PAPER PRODUCTS -- 0.4%
Weyerhaeuser Co................................. P-1/A-1 6.10 2/23/00 7,774,000 7,704,185
--------------
TELECOMMUNICATIONS -- 1.0%
Bell Atlantic Network Funding Corp.............. P-1/A-1+ 5.35 1/5/00 7,603,000 7,598,480
BellSouth Telecommunications.................... P-1/A-1+ 5.85 2/4/00 10,000,000 9,944,750
--------------
17,543,230
--------------
Total Commercial Paper (Cost $1,072,091,397)...... 1,072,091,397
--------------
SHORT-TERM CORPORATE OBLIGATIONS -- 0.7%
FINANCE-DIVERSIFIED -- 0.7%
Associates Corp. of N.A......................... P-1/A-1+ 6.41* 1/31/00 12,000,000 11,996,447
--------------
Total Short-Term Corporate Obligations
(Cost $11,996,447).................................... 11,996,447
--------------
</TABLE>
Continued
9
<PAGE> 10
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ----- -------- ----------- --------------
<S> <C> <C> <C> <C> <C>
REPURCHASE AGREEMENTS -- 1.8%
S.G. Cowen Securities Corp., dated 12/31/99,
(Collateralized by $34,164,000, U.S. Treasury
Bills, due 10/12/00, fair
value -- $32,626,620)......................... 3.00% 1/3/00 $31,986,000 $ 31,986,000
--------------
Total Repurchase Agreements (Cost $31,986,000).... 31,986,000
--------------
Total Investments (Cost $1,768,874,961)
(a) -- 99.5%.................................... 1,768,874,961
Other assets in excess of liabilities -- 0.5%..... 9,454,901
--------------
Total Net Assets -- 100.0%........................ $1,778,329,862
==============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Represents a restricted security, purchased under Rule 144A or Section 4(2),
which is exempt from registration under the Security Act of 1933, as
amended. These securities have been deemed liquid under guidelines
established by the Board of Directors.
* Variable rate security. Rate presented represents the rate in effect at
December 31, 1999. Maturity date reflects earlier of reset or maturity date.
** Implied Long Term Rating.
- ---------------
See Notes to Financial Statements.
10
<PAGE> 11
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............. $1,768,874,961
Cash...................................................... 949
Interest receivable....................................... 13,579,413
Prepaid expenses and other assets......................... 20,808
--------------
Total assets................................................ 1,782,476,131
--------------
LIABILITIES
Dividends payable......................................... 2,669,539
Accrued expenses and other payables:
Advisory fees........................................... 155,834
Administration fees..................................... 155,834
Distribution fees....................................... 920,018
Other................................................... 245,044
--------------
Total liabilities........................................... 4,146,269
--------------
NET ASSETS.................................................. $1,778,329,862
==============
Shares Outstanding ($0.001 par value, 3 billion shares
authorized):.............................................. 1,779,151,625
==============
Net Asset Value, Offering Price and Redemption Price per
Share..................................................... $1.00
====
COMPOSITION OF NET ASSETS
Shares of common stock, at par............................ $ 1,779,152
Additional paid-in capital................................ 1,777,403,904
Accumulated net realized losses........................... (853,194)
--------------
Net Assets.................................................. $1,778,329,862
==============
</TABLE>
- ---------------
See Notes to Financial Statements.
11
<PAGE> 12
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $87,431,527
Expenses
Advisory fees............................................. $1,669,144
Administration fees....................................... 1,669,144
Distribution fees......................................... 10,014,988
Special management services fees.......................... 1,669,144
Accounting fees........................................... 66,736
Transfer agent fees and expenses.......................... 730,377
Directors' fees........................................... 62,187
Other expenses............................................ 1,318,030
-----------
Total expenses before fee waivers....................... 17,199,750
Less: Fee waivers....................................... (1,855,810)
-----------
Total Expenses.............................................. 15,343,940
-----------
Net Investment Income....................................... 72,087,587
REALIZED GAINS ON INVESTMENT TRANSACTIONS
Net realized gains on investment transactions............. 38,118
-----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. $72,125,705
===========
</TABLE>
- ---------------
See Notes to Financial Statements.
12
<PAGE> 13
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1999 1998
--------------- ---------------
<S> <C> <C>
CHANGE IN NET ASSETS
Operations
Net investment income..................................... $ 72,087,587 $ 61,692,419
Net realized gains on investment transactions............. 38,118 87,896
--------------- ---------------
Change in net assets resulting from operations.......... 72,125,705 61,780,315
--------------- ---------------
Dividends to shareholders from net investment income........ (72,087,587) (61,698,042)
--------------- ---------------
Capital Share Transactions
Proceeds from shares issued............................... 9,242,772,486 7,074,460,107
Dividends reinvested...................................... 69,939,206 59,507,058
Cost of shares redeemed................................... (8,922,323,338) (6,897,157,916)
--------------- ---------------
Change in net assets from capital share transactions.... 390,388,354 236,809,249
--------------- ---------------
Change in Net Assets........................................ 390,426,472 236,891,522
NET ASSETS
Beginning of period....................................... 1,387,903,390 1,151,011,868
--------------- ---------------
End of period............................................. $1,778,329,862 $ 1,387,903,390
=============== ===============
SHARE TRANSACTIONS
Issued.................................................... 9,242,772,486 7,074,460,107
Reinvested................................................ 69,939,206 59,507,058
Redeemed.................................................. (8,922,323,338) (6,897,157,916)
--------------- ---------------
Change in shares.......................................... 390,388,354 236,809,249
=============== ===============
</TABLE>
- ---------------
See Notes to Financial Statements.
13
<PAGE> 14
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER -- 21.5%
FLORIDA -- 0.9%
Plaquemines Port Authority, PCR (Tampa Electric).... P-1/A-1 3.75% 1/18/00 $1,000,000 $ 1,000,000
------------
GEORGIA -- 2.7%
Burke County Development Authority, Georgia Power... VMIG1/A-1 3.70 4/25/00 1,500,000 1,500,000
Burke County Development Authority, Oglethorpe
Power............................................. VMIG1/A-1 3.60 3/6/00 1,500,000 1,500,000
------------
3,000,000
------------
ILLINOIS -- 1.4%
Illinois Health Facility Authority (Evanston
Hospital)......................................... NR/A-1+ 3.25 5/31/00 500,000 500,000
Illinois Educational Facilities Authority Revenue
(Field Museum of Natural History)................. VMIG1/A-1+ 3.90* 5/5/00 1,000,000 1,000,000
------------
1,500,000
------------
INDIANA -- 0.8%
City of Indianapolis Gas Utility System............. P-1/A-1 3.60 1/28/00 500,000 500,000
Hoosier City of Sullivan National Rural Utilities
(Hoosier Energy).................................. P-1/A-1 3.65 1/24/00 400,000 400,000
------------
900,000
------------
KENTUCKY -- 2.5%
Jefferson, PCR (Louisville G&E)..................... VMIG1/A-1 3.40 1/18/00 700,000 700,000
Jefferson, PCR (Louisville G&E)..................... VMIG1/A-1 3.40 2/11/00 1,000,000 1,000,000
Trimble County, PCR (Louisville G&E)................ VMIG1/A-1 3.50 2/8/00 1,000,000 1,000,000
------------
2,700,000
------------
MARYLAND -- 0.5%
Maryland Health & Education (John Hopkins).......... P-1/A-1+ 3.65 4/11/00 500,000 500,000
------------
NEBRASKA -- 2.7%
Omaha Public Power District......................... P-1/A-1+ 3.50 1/21/00 1,000,000 1,000,000
Omaha Public Power District......................... P-1/A-1+ 3.40 2/8/00 990,000 990,000
Omaha Public Power District......................... P-1/A-1+ 3.40 2/23/00 1,000,000 1,000,000
------------
2,990,000
------------
</TABLE>
Continued
14
<PAGE> 15
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER, CONTINUED:
NEW JERSEY -- 0.9%
New Jersey Tax & Revenue Anticipation Note.......... P-1/A-1+ 3.95% 1/14/00 $1,000,000 $ 1,000,000
------------
NEW YORK -- 1.8%
Metropolitan Transportation Authority............... P-1/A-1+ 3.60 3/1/00 1,000,000 1,000,000
Metropolitan Transportation Authority............... P-1/A-1+ 3.60 3/7/00 1,000,000 1,000,000
------------
2,000,000
------------
SOUTH CAROLINA -- 1.8%
South Carolina Public Service Authority............. P-1/A-1+ 3.35 1/27/00 1,000,000 1,000,000
South Carolina Public Service Authority............. P-1/A-1+ 3.80* 2/10/00 1,000,000 1,000,000
------------
2,000,000
------------
TENNESSEE -- 1.4%
Tennessee School Board.............................. P-1/A-1+ 3.75 2/14/00 1,500,000 1,500,000
------------
TEXAS -- 1.8%
City of Brownsville Utility System.................. P-1/A-1+ 3.80 4/7/00 1,000,000 1,000,000
City of Houston Water & Sewer....................... P-1/A-1 3.75 4/12/00 1,000,000 1,000,000
------------
2,000,000
------------
VIRGINIA -- 1.4%
Town of Louisa Industrial Development Authority, PCR
(Virginia Electric Power)......................... VMIG1/A-1 3.40 2/17/00 1,000,000 1,000,000
Town of Louisa Industrial Development Authority, PCR
(Virginia Electric Power)......................... VMIG1/A-1 3.75 2/21/00 500,000 500,000
------------
1,500,000
------------
WASHINGTON -- 0.9%
Port Seattle Sub Lien............................... NR/NR 3.75 3/9/00 1,000,000 1,000,000
------------
Total Commercial Paper (Cost $23,590,000)............. 23,590,000
------------
</TABLE>
Continued
15
<PAGE> 16
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS -- 77.8%
ARIZONA -- 2.1%
Maricopa County, PCR, Series C (Arizona Public
Service Co.)...................................... P-1/A-1+ 4.80%* 5/1/29 $ 300,000 $ 300,000
Pima County Industrial Development Authority Revenue
(Tucson Electric Light & Power Improvements)...... VMIG1/A-1+ 5.65* 12/1/22 1,500,000 1,500,000
Scottsdale Industrial Development Authority,
Hospital Revenue, Series B (Scottsdale Memorial
Health System).................................... VMIG1/A-1+ 5.15* 9/1/22 500,000 500,000
------------
2,300,000
------------
FLORIDA -- 3.1%
Dade County Water & Sewer System Revenue............ VMIG1/A-1+ 4.75* 10/5/22 2,300,000 2,300,000
Volusia County Housing Finance Authority,
Multi-Family Housing Revenue, Series H (Sun Pointe
Apartments Project)............................... VMIG1/NR 5.20* 12/1/05 1,100,000 1,100,000
------------
3,400,000
------------
GEORGIA -- 2.1%
De Kalb Private Hospital Authority, Revenue
Anticipation Bonds (Eagleston Childrens Health
Center)........................................... VMIG1/A-1+ 5.20* 12/1/17 1,750,000 1,750,000
Gwinett County Housing Authority, Multi-Family
Housing (Post Court).............................. NR/A-1+ 5.50* 6/1/25 500,000 500,000
------------
2,250,000
------------
ILLINOIS -- 13.0%
Chicago O'Hare International Airport Revenue, Series
C, General Airport, Second Lien................... VMIG1/A-1+ 5.40* 1/1/18 1,000,000 1,000,000
Cook County Public Improvements, GO, MBIA........... NR/NR 7.15 11/1/00** 500,000 522,133
Illinois Development Finance Authority (Francis W.
Parker School Project)............................ VMIG1/NR 5.40* 4/1/29 500,000 500,000
Illinois Development Finance Authority, PCR (A.E.
Staley Manufacturing Co.)......................... P-1/NR 5.15* 12/1/05 1,800,000 1,800,000
</TABLE>
Continued
16
<PAGE> 17
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
ILLINOIS, CONTINUED:
Illinois Educational Facilities Authority Revenue,
Series Cp-1 (DePaul University)................... VMIG1/A-1+ 5.35%* 4/1/26 $1,800,000 $ 1,800,000
Illinois Health Facilities Authority Revenue
(Combined Health & NW Community).................. VMIG1/NR 4.80* 10/1/15 1,900,000 1,900,000
Illinois Health Facilities Authority Revenue
(Elmhurst Memorial Health System)................. VMIG1/NR 4.80* 1/1/28 1,200,000 1,200,000
Illinois Health Facilities Authority Revenue
(Evanston Hospital Corp. Project)................. VMIG1/NR 3.05 2/15/00 1,000,000 1,000,000
Illinois Health Facilities Authority Revenue
(Evanston Hospital Corp. Project)................. VMIG1/NR 4.00* 11/30/00 1,000,000 1,000,000
Illinois Health Facilities Authority Revenue, Series
A (Resurrection Health Care)...................... VMIG1/A-1+ 5.00* 5/15/29 300,000 300,000
Illinois Health Facilities Authority Revenue, Series
B (Advocate Health Care).......................... VMIG1/A-1+ 5.35* 8/15/22 1,860,000 1,860,000
Illinois Health Facilities Authority Revenue, Series
B (St. Luke's Medical Center)..................... VMIG1/A-1+ 5.60* 11/15/23 400,000 400,000
Illinois State Toll Highway Authority, Toll Highway
Priority Refunding Revenue, Series B.............. VMIG1/A-1+ 5.15* 1/1/10 1,000,000 1,000,000
------------
14,282,133
------------
INDIANA -- 4.3%
Indiana Advance Funding Program Note, Series A-2.... MIG1/SP1+ 3.50 1/19/00 1,500,000 1,500,385
Indiana Health Facilities Financing Authority,
Hospital Revenue (Aces Rehabilitation Hospital)... VMIG1/NR 5.15* 11/1/20 500,000 500,000
Indiana Municipal Power Agency, Series A (Agency
Power Supply System Revenue)...................... VMIG1/A-1+ 5.20* 1/1/18 1,000,000 1,000,000
Indianapolis Local Public Improvement Bond, Series
A................................................. NR/SP1+ 4.00 1/10/00 750,000 750,136
Rockport, PCR, Series B (Indiana Power Co.
Project).......................................... NR/A-1+ 5.50* 6/1/25 1,000,000 1,000,000
------------
4,750,521
------------
</TABLE>
Continued
17
<PAGE> 18
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
KENTUCKY -- 1.2%
Kentucky Turnpike Authority Economic Development,
Revenue Bond...................................... NR/NR 7.25% 5/15/00** $ 750,000 $ 771,220
Kentucky, Tax & Revenue Anticipation Notes.......... MIG1/SP1+ 4.00 6/30/00 500,000 501,207
------------
1,272,427
------------
LOUISIANA -- 2.0%
East Baton Rouge Parish, PCR (Exxon Project)........ P-1/A-1+ 4.79* 3/1/22 1,400,000 1,400,000
Louisiana State Offshore Terminal Authority
(Loop)............................................ NR/A-1+ 5.40* 9/1/08 820,000 820,000
------------
2,220,000
------------
MASSACHUSETTS -- 3.8%
Massachusetts Bay Transit Authority, Series A, GO... MIG1/SP1+ 3.50 2/25/00 500,000 500,439
Massachusetts Health & Education Facilities
Authority, Revenue Bonds (Harvard University)..... VMIG1/A-1+ 5.40* 2/1/16 1,000,000 1,000,000
Massachusetts Health & Educational Facilities
Authority, Revenue Bonds, Series B (Capital Asset
Program).......................................... VMIG1/A-1+ 4.90* 7/1/10 400,000 400,000
Massachussetts Municipal Wholesale Electrical Corp.,
Power Supply System Revenue, Series C............. VMIG1/A-1+ 5.50* 7/1/19 1,000,000 1,000,000
Montachusett Mass Regional Vocational Technical
School District, Bond Anticipation Notes, GO...... MIG1/NR 4.00 1/21/00 660,000 660,130
Narragansett Regional School District, Bond
Anticipation Notes, GO............................ NR/NR 4.25 6/9/00 600,000 601,649
------------
4,162,218
------------
</TABLE>
Continued
18
<PAGE> 19
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
MICHIGAN -- 2.2%
Delta County Economic Development Corp.,
Environmental Improvement Revenue, Series D (Mead
Escanaba Paper Co.)............................... P-1/NR 4.80%* 12/1/23 $ 400,000 $ 400,000
Michigan State Hospital Finance Authority Revenue,
Series A (St. Mary Hospital of Livonia Project)... VMIG1/A-1 5.65* 7/1/17 1,840,000 1,840,000
Michigan State Strategic Fund Limited Obligation
Revenue (DOW Chemical Co. Project)................ P-1/A-1 4.80* 2/1/09 200,000 200,000
------------
2,440,000
------------
MISSISSIPPI -- 0.1%
Harrison County, PCR (E.I. Dupont De Nemours)....... P-1/A-1+ 4.80* 9/1/10 100,000 100,000
------------
MISSOURI -- 0.5%
Missouri Health & Education Facilities Authority
Revenue, Series A (Medical Research
Facilities -- Stowers)............................ NR/A-1+ 5.65* 4/1/38 500,000 500,000
------------
NEBRASKA -- 1.2%
Nebraska Help Increase Revenue, Series E, Student
Loan Revenue Bond, MBIA........................... VMIG1/A-1+ 5.60* 12/1/15 1,300,000 1,300,000
------------
NEW HAMPSHIRE -- 1.3%
State Housing Finance Authority, Multi-Family
Revenues (EQR Bond Partnership)................... VMIG1/NR 5.50* 9/15/26 1,400,000 1,400,000
------------
NEW JERSEY -- 1.5%
Monmouth County Improvement Authority Revenue
(Pooled Government Loan Program).................. VMIG1/NR 5.25* 8/1/16 1,650,000 1,650,000
------------
NEW MEXICO -- 1.5%
University of New Mexico (University Revenue)....... VMIG1/A-1+ 5.15* 6/1/06 1,700,000 1,700,000
------------
</TABLE>
Continued
19
<PAGE> 20
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
NEW YORK -- 4.1%
City of New York Municipal Water Finance Authority,
Water & Sewer System Revenue, Series C, FGIC...... VMIG1/A-1+ 5.00%* 6/15/23 $ 700,000 $ 700,000
New York Energy Research & Development Authority,
PCR, Series B (New York Electric & Gas)........... VMIG1/A-1+ 5.05* 2/1/29 700,000 700,000
New York Energy Research & Development Authority,
PCR, Series B (Niagra Mohawk Power Corp.)......... P-1/NR 4.90* 12/1/25 400,000 400,000
New York Local Government Assistance Corp., Series
B................................................. VMIG1/A-1 5.40* 4/1/25 1,400,000 1,400,000
New York Medical Care Facilities Financing Agency
Revenue, Series A (Pooled Equipment Loan Program
II)............................................... VMIG1/NR 5.10* 11/1/03 300,000 300,000
New York State, Dorm Authority Revenue, Series B
(State University)................................ NR/NR 7.38 5/15/00** 1,000,000 1,035,025
------------
4,535,025
------------
NORTH CAROLINA -- 5.6%
North Carolina Community Hospital Revenue, Series A
(Duke University Hospital Project)................ VMIG1/A-1+ 4.95* 6/1/23 1,500,000 1,500,000
North Carolina Educational Facilities, Finance
Agency Revenue, Series B (Duke University)........ VMIG1/A-1+ 4.95* 12/1/21 1,700,000 1,700,000
Union, North Carolina, PCR (Square D), Revenue
Bonds............................................. VMIG1/NR 5.35* 3/1/03 1,400,000 1,400,000
University of North Carolina Chapel Hill Foundation
(Certification of Participation).................. VMIG1/NR 5.50* 10/1/09 1,500,000 1,500,000
------------
6,100,000
------------
OHIO -- 0.9%
Ohio State Air Quality Development Authority (Ohio
Edison)........................................... VMIG1/A-1+ 3.65* 2/1/00 1,000,000 1,000,000
------------
OREGON -- 0.9%
Portland Tax Anticipation Notes, GO................. NR/NR 4.25 6/29/00 950,000 953,613
------------
</TABLE>
Continued
20
<PAGE> 21
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
PENNSYLVANIA -- 8.1%
Allegheny County Hospital Development Authority
Revenue, Series B (Children's Hospital
Pittsburgh)....................................... VMIG1/A-1 4.75%* 12/1/15 $ 700,000 $ 700,000
Bucks County Industrial Development Authority,
Revenue Bonds..................................... P-1/NR 5.00* 7/1/15 2,600,000 2,600,000
Delaware Valley Regulatory Financing Authority,
Local Government Revenue, Series A................ VMIG1/A-1+ 5.20* 12/1/19 2,000,000 2,000,000
North Umberland Industrial Development Authority
Revenue (Merck Project)........................... NR/A-1+ 5.25* 10/1/22 2,000,000 2,000,000
Philadelphia Authority For Industrial Development
(Fox Chase Cancer Center Project)................. NR/A-1+ 4.80* 7/1/25 700,000 700,000
Philadelphia Water & Wastewater Revenue, Series B... VMIG1/A-1+ 5.15* 8/1/27 900,000 900,000
------------
8,900,000
------------
SOUTH CAROLINA -- 2.2%
South Carolina Jobs Economic Development Authority,
Hospital Facilities Revenue....................... NR/A-1+ 5.15* 2/15/28 2,400,000 2,400,000
------------
TENNESSEE -- 1.6%
Chattanooga-Hamilton County Hospital Authority,
Hospital Revenue (Erlanger Project)............... NR/A-1+ 4.80* 10/1/17 1,800,000 1,800,000
------------
TEXAS -- 9.1%
Austin County Industrial Development Corp.,
Industrial Development Revenue (Justin Industries,
Inc. Project)..................................... P-1/NR 5.20* 12/1/14 1,000,000 1,000,000
Brazos River Harbor Navigation District Brazoria
County Revenue, Series A (Dow Chemical Co.
Project).......................................... P-1/NR 5.10* 8/1/22 400,000 400,000
Guadalupe Blanco River Authority, PCR (Central Power
& Light Corp. Project)............................ VMIG1/A-1+ 4.80* 11/1/15 2,000,000 2,000,000
Gulf Coast Waste Disposal Authority, PCR (Amoco Oil
Project).......................................... Aa1/A-1+ 3.60* 7/15/08 500,000 500,019
Gulf Coast Waste Disposal Authority, PCR (Exxon
Corp. Project).................................... VMIG1/A-1+ 4.85* 6/1/20 700,000 700,000
</TABLE>
Continued
21
<PAGE> 22
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
TEXAS, CONTINUED:
Harris County Industrial Development Corp., PCR
(Exxon Corp. Project)............................. NR/A-1+ 4.80%* 3/1/24 $ 800,000 $ 800,000
Houston Independent School District, Series A, GO,
PSF-GTD........................................... NR/NR 5.20 8/15/00 1,000,000 1,007,218
Texas, Tax & Revenue Anticipation Notes, Series A... MIG1/SP-1+ 4.50 8/31/00 3,000,000 3,015,299
Tom Green County Health Facilities Development
Corp., Health Facilities Revenue (Universal Health
Services)......................................... NR/A-1+ 5.40* 12/1/15 600,000 600,000
------------
10,022,536
------------
VERMONT -- 0.7%
Vermont Educational & Buildings Financing Agency
Revenue (Middlebury College Project).............. NR/A-1+ 3.15* 5/1/00 800,000 800,000
------------
VIRGINIA -- 1.1%
Loudoun County Industrial Development Authority
(Falcons Landing Project)......................... VMIG1/NR 5.20* 11/1/28 1,200,000 1,200,000
------------
WASHINGTON -- 2.2%
Port Seattle Industrial Development (Alaska
Airlines, Inc.)................................... P-1/NR 4.40* 12/1/09 400,000 400,000
Washington State, Series 96B, GO.................... VMIG1/A-1+ 5.40* 6/1/20 2,000,000 2,000,000
------------
2,400,000
------------
</TABLE>
Continued
22
<PAGE> 23
<TABLE>
<CAPTION>
MOODY'S/S&P AMORTIZED
RATINGS MATURITY PRINCIPAL COST
(UNAUDITED) RATE DATE AMOUNT (NOTE 2)
----------- ---- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL BONDS, CONTINUED:
WYOMING -- 1.4%
Sweetwater County PCR, Series C (Idaho Power Co.
Project).......................................... VMIG1/A-1 4.80%* 7/15/26 $1,500,000 $ 1,500,000
------------
Total Municipal Bonds (Cost $85,338,473).............. 85,338,473
------------
Total Investments (Cost $108,928,473)(a) -- 99.3%..... 108,928,473
Other assets in excess of liabilities -- 0.7%......... 772,708
------------
Total Net Assets -- 100.0%............................ $109,701,181
============
</TABLE>
- ---------------
(a) Cost for federal income tax and financial reporting purposes are the same.
* Floating or adjustable rate security. The coupon rate shown on floating or
adjustable rates securities represents the rate at December 31, 1999.
** Put or demand features exist allowing the fund to require the repurchase of
the investment within variable time periods ranging from daily, weekly,
monthly or semi-annually. Maturity date reflects the next put date for these
securities. For all other securities held by the Portfolio, maturity date
reflects final maturity date.
GO = General Obligation
MBIA = Insured by Municipal Bond Insurance Assoc.
NR = Not rated
PCR = Pollution Control Revenue
PSF-GTD = Permanent School Fund Guarantee
- ---------------
See Notes to Financial Statements.
23
<PAGE> 24
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at amortized cost.............. $108,928,473
Cash...................................................... 191,978
Interest receivable....................................... 787,461
Prepaid expenses and other assets......................... 11,785
------------
Total assets................................................ 109,919,697
------------
LIABILITIES
Dividends payable......................................... 125,046
Accrued expenses and other payables:
Advisory fees........................................... 10,133
Administration fees..................................... 6,080
Distribution fees....................................... 43,574
Other................................................... 33,683
------------
Total liabilities........................................... 218,516
------------
NET ASSETS.................................................. $109,701,181
============
Shares Outstanding ($0.001 par value, 3 billion shares
authorized):.............................................. 109,700,058
============
Net Asset Value, Offering Price and Redemption Price per
Share..................................................... $1.00
====
COMPOSITION OF NET ASSETS
Shares of common stock, at par............................ $ 109,700
Additional paid-in capital................................ 109,590,357
Undistributed net investment income....................... 1,031
Accumulated net realized gains............................ 93
------------
Net Assets.................................................. $109,701,181
============
</TABLE>
- ---------------
See Notes to Financial Statements.
24
<PAGE> 25
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest.................................................... $3,729,442
Expenses
Advisory fees............................................. $ 115,099
Administration fees....................................... 115,099
Distribution fees......................................... 690,600
Special management services fees.......................... 115,099
Accounting fees........................................... 28,356
Transfer agent fees and expenses.......................... 30,338
Directors' fees........................................... 4,297
Other expenses............................................ 106,664
----------
Total expenses before fee waivers....................... 1,205,552
Less: Fee waivers....................................... (356,807)
----------
Total Expenses.............................................. 848,745
----------
Net Investment Income....................................... 2,880,697
REALIZED GAINS ON INVESTMENT TRANSACTIONS
Net realized gains on investment transactions............. 93
----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.............. $2,880,790
==========
</TABLE>
- ---------------
See Notes to Financial Statements.
25
<PAGE> 26
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
CHANGE IN NET ASSETS
Operations
Net investment income..................................... $ 2,880,697 $ 3,169,653
Net realized gains on investment transactions............. 93 3,211
------------- -------------
Change in net assets resulting from operations.......... 2,880,790 3,172,864
------------- -------------
Distributions to shareholders
From net investment income................................ (2,880,697) (3,169,653)
From net realized gains on investment transactions........ (1,226) --
------------- -------------
Change in net assets from shareholder distributions..... (2,881,923) (3,169,653)
------------- -------------
Capital Share Transactions
Proceeds from shares issued............................... 556,836,765 547,622,475
Dividends reinvested...................................... 2,779,335 3,105,194
Cost of shares redeemed................................... (552,734,718) (551,308,528)
------------- -------------
Change in net assets from capital share transactions.... 6,881,382 (580,859)
------------- -------------
Change in net assets........................................ 6,880,249 (577,648)
NET ASSETS
Beginning of period....................................... 102,820,932 103,398,580
------------- -------------
End of period............................................. $109,701,181 $ 102,820,932
============= =============
SHARE TRANSACTIONS
Issued.................................................... 556,836,765 547,622,475
Reinvested................................................ 2,779,335 3,105,194
Redeemed.................................................. (552,734,718) (551,308,528)
------------- -------------
Change in shares.......................................... 6,881,382 (580,859)
============= =============
</TABLE>
- ---------------
See Notes to Financial Statements.
26
<PAGE> 27
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
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 twenty-three
portfolios. The accompanying financial statements and notes relate only to the
Correspondent Cash Reserves Money Market Portfolio (the "Money Market
Portfolio") which commenced operations on May 20, 1991, and the Correspondent
Cash Reserves Tax Free Money Market Portfolio (the "Tax Free Money Market
Portfolio"), which commenced operations on October 7, 1996 (collectively the
"Portfolios"). The Money Market Portfolio's investment objective is to provide
investors with as high a level of current income as is consistent with the
preservation of capital and the maintenance of liquidity by making investments
in short-term money market obligations. The Tax Free Money Market Portfolio
seeks to provide investors with as high a level of current income exempt from
Federal income tax as is consistent with the preservation of capital and the
maintenance of liquidity by investing in short-term municipal obligations.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
each Portfolio in preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles (GAAP). The preparation
of financial statements requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
A) Securities Valuation
Securities are valued at amortized cost, which approximates market value.
The amortized cost method involves valuing a security at its cost on the date of
purchase and thereafter assuming a constant amortization to maturity of the
difference between the principal amount due at maturity and cost.
B) Security Transactions and Investment Income
Security transactions are recorded on the trade date. Realized gains and
losses on the sale of investments are calculated on the identified cost basis.
Interest income, including accretion of discount and amortization of premium on
investments, is accrued daily.
C) Repurchase Agreements
The Portfolios may purchase instruments from financial institutions, such
as banks and broker-dealers, subject to the seller's agreement to repurchase
them at an agreed upon time and price ("repurchase agreements"). The seller
under a repurchase agreement is required to maintain the value of the collateral
at not less than the repurchase price. Default by the seller would, however,
expose the Portfolios to possible loss because of
Continued
27
<PAGE> 28
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
Direct expenses of the Portfolios are borne solely by each Portfolio and
general Fund expenses are allocated among the Fund's respective investment
portfolios based on the relative net assets of the Portfolios.
E) Federal Income Taxes
It is the policy of the Portfolios to meet the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies and to
distribute substantially all of their income and gains to shareholders.
Therefore, no federal income tax provision is required.
At December 31, 1999, the Money Market Portfolio had capital loss
carryovers of approximately $853,194 which are available to offset future net
realized gains on securities transactions to the extent provided for in the
Code. Such capital loss carryover will expire in fiscal year 2002.
F) Dividends and Distributions
Dividends are declared daily to shareholders of record at the close of
business on the day of declaration and are paid monthly. Distributions of net
realized gains, if any, will be paid at least annually. Dividends and
distributions are recorded on the ex-dividend date.
Distributions from net investment income and from net realized gains are
determined in accordance with federal income tax regulations which may differ
from GAAP. These "book/tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the composition of net assets based on
their federal tax-basis treatment; temporary differences do not require
reclassification. As of December 31, 1999 a reclassification was made in the Tax
Free Money Market Portfolio to increase undistributed net investment income and
decrease accumulated net realized gains by $91. Distributions to shareholders
which exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income or net realized gains. To the extent they exceed
net investment income and net realized gains for tax purposes, they are reported
as distributions of capital.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Mitchell Hutchins Asset Management, Inc. ("Mitchell Hutchins"), a
wholly-owned subsidiary of PaineWebber Incorporated ("PaineWebber"), serves as
the Portfolios' investment adviser. BISYS Fund Services Ohio, Inc. ("BISYS")
serves as the Portfolios' administrator and BISYS Fund Services LP ("BISYS LP")
serves as the Portfolios' distributor of Portfolio shares. BISYS and BISYS LP
are wholly-owned subsidiaries of The BISYS Group, Inc.
Continued
28
<PAGE> 29
As investment adviser, Mitchell Hutchins supervises and assists in the
overall operations of the Portfolios. Pursuant to the terms of the Investment
Advisory Agreement, Mitchell Hutchins is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
each Portfolio.
As administrator, BISYS assists in supervising the operations of the
Portfolios. For its services, BISYS is entitled to a fee, accrued daily and
payable monthly, at an annual rate of 0.10% of the average daily net assets of
each Portfolio. For the period ended December 31, 1999, BISYS waived fees of
$46,040 with respect to the Tax Free Money Market Portfolio.
Under the terms of the Special Management Services Agreement, the
Portfolios have agreed to pay Mitchell Hutchins and BISYS each a monthly fee at
the annual rate of 0.05% of the average daily net assets of each Portfolio for
certain services, other than those provided pursuant to the Portfolios'
Distribution Plan. These services include developing and monitoring customized
investor programs including individual retirement accounts and other ERISA
options, automatic deposit and withdrawal programs and other programs requested
by certain securities dealers that have entered into securities clearing
arrangements with PaineWebber. Mitchell Hutchins and BISYS collectively waived
$1,669,144 for the Money Market Portfolio and $115,099 for the Tax Free Money
Market Portfolio for the period ended December 31, 1999, under the Special
Management Services Agreement, which represented 100% of the fee charged.
The Portfolios have adopted a Distribution Plan pursuant to Rule 12b-1
under the Act. Pursuant to the Distribution Plan, the Portfolios are authorized
to pay Correspondent Services Corporation (CSC), an affiliate of PaineWebber,
and certain securities dealers that have entered into clearing arrangements with
CSC, a monthly fee at an annual rate of up to 0.60% of the average daily net
assets of each Portfolio's shares held in accounts serviced by such firms. Such
fees will be paid in respect to certain services provided by such firms,
including personal services relating to shareholder accounts and services
related to the maintenance of such shareholder accounts. For the period ended
December 31, 1999, CSC waived fees of $186,666 for the Money Market Portfolio
and $195,668 for the Tax Free Money Market Portfolio.
Certain directors and officers of the Fund are "affiliated persons" (as
defined in the Act) of BISYS. Prior to the August 12, 1999 board meeting, each
"non-affiliated" director received an annual fee of $12,000 (paid quarterly) and
a meeting fee of $1,500 per meeting for services relating to the Fund. Effective
with the August 12, 1999 board meeting, each "non-affiliated" director received
an annual fee of $14,000 (paid quarterly), a meeting fee of $2,500 per meeting
and $1,000 for each telephonic meeting for services relating to the Fund.
Continued
29
<PAGE> 30
NOTE 4 -- CONCENTRATION OF CREDIT RISK
The Tax Free Money Market Portfolio invests substantially all of its assets
in a diversified portfolio of high quality municipal obligations. The Portfolio
had the following concentration by security type at December 31, 1999 (as a
percentage of total investments):
<TABLE>
<S> <C>
Commercial Paper.................. 21.7%
General Obligation................ 5.7%
Revenue Bonds:
Utilities....................... 20.4%
Health.......................... 18.6%
Education....................... 11.2%
Housing......................... 2.8%
Transportation.................. 2.5%
Other........................... 17.1%
------
100.0%
======
</TABLE>
The issuers' abilities to meet their obligations may be affected by
domestic and foreign economic, regional and political developments.
NOTE 5 -- SUBSEQUENT EVENT
As approved at the November 12, 1999 Special Meeting of Shareholders and
effective January 24, 2000, the Correspondent Cash Reserves Money Market
Portfolio and the Correspondent Cash Reserves Tax Free Money Market Portfolio
reorganized into LIR Premier Money Market Fund and LIR Premier Tax-Free Money
Market Fund, respectively, which are two new series of Mitchell Hutchins LIR
Money Series. In addition, the administrator and distributor changed from BISYS
and BISYS LP, respectively to Mitchell Hutchins. All other service providers
remained the same.
Continued
30
<PAGE> 31
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................. $ 0.9994 $ 0.9992 $ 0.9991 $ 0.9986 $ 0.9975
---------- ---------- ---------- ---------- --------
Income from investment operations
Net investment income............... 0.0431 0.0465 0.0467 0.0462 0.0512
Net realized gains on investment
transactions...................... 0.0001 0.0002 0.0001 0.0005 0.0011
---------- ---------- ---------- ---------- --------
Total from investment operations.... 0.0432 0.0467 0.0468 0.0467 0.0523
---------- ---------- ---------- ---------- --------
Dividends to shareholders from net
investment income................... (0.0431) (0.0465) (0.0467) (0.0462) (0.0512)
---------- ---------- ---------- ---------- --------
Net change in asset value............. 0.0001 0.0002 0.0001 0.0005 0.0011
---------- ---------- ---------- ---------- --------
NET ASSET VALUE, END OF PERIOD........ $ 0.9995 $ 0.9994 $ 0.9992 $ 0.9991 $ 0.9986
========== ========== ========== ========== ========
Total Return.......................... 4.40% 4.75% 4.77% 4.72% 5.24%
RATIOS/SUPPLEMENTARY DATA:
Net assets, end of period (000's)... $1,778,330 $1,387,903 $1,151,012 $1,007,265 $779,011
Ratio of expenses to average net
assets............................ 0.92% 0.93% 0.95% 0.88% 0.85%
Ratio of net investment income to
average net assets................ 4.32% 4.64% 4.68% 4.65% 5.14%
Ratio of expenses to average net
assets*........................... 1.03% 1.04% 1.06% 1.01% 1.03%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily waived and/or reimbursed. If
such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
See Notes to Financial Statements.
31
<PAGE> 32
THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
YEARS ENDED FROM OCTOBER 7,
------------------------------------------ 1996 THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996*
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............. $ 1.0000 $ 1.0000 $ 1.0000 $1.0000
-------- -------- -------- -------
Income from investment operations
Net investment income........................... 0.0250 0.0279 0.0286 0.0100
-------- -------- -------- -------
Total from investment operations................ 0.0250 0.0279 0.0286 0.0100
-------- -------- -------- -------
Dividends to shareholders from net investment
income.......................................... (0.0250) (0.0279) (0.0286) (0.0100)
-------- -------- -------- -------
Net change in net asset value..................... -- -- -- --
-------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD.................... $ 1.0000 $ 1.0000 $ 1.0000 $1.0000
======== ======== ======== =======
Total Return...................................... 2.53% 2.83% 2.90% 0.66%(a)
RATIOS/SUPPLEMENTARY DATA:
Net assets, end of period (000's)............... $109,701 $102,821 $103,399 $80,409
Ratio of expenses to average net assets......... 0.74% 0.71% 0.78% 0.74%(b)
Ratio of net investment income to average net
assets........................................ 2.50% 2.79% 2.86% 2.80%(b)
Ratio of expenses to average net assets**....... 1.05% 1.02% 1.18% 1.20%(b)
</TABLE>
- ---------------
* Period from commencement of operations.
** During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratio would have been as indicated.
(a) Not annualized.
(b) Annualized.
See Notes to Financial Statements.
32
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The Infinity Mutual Funds, Inc. --
The Correspondent Cash Reserves:
We have audited the accompanying statements of assets and liabilities of The
Infinity Mutual Funds, Inc. -- The Correspondent Cash Reserves (Correspondent
Cash Reserves Money Market Portfolio and Correspondent Cash Reserves Tax Free
Money Market Portfolio) including the schedules of portfolio investments, as of
December 31, 1999, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the management of The Infinity Mutual Funds, Inc. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1999, by confirmation with the custodian, correspondence with
brokers and other appropriate audit procedures. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned portfolios comprising The Infinity Mutual Funds,
Inc. -- The Correspondent Cash Reserves as of December 31, 1999, the results of
their operations, the changes in their net assets and the financial highlights
for each of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
January 28, 2000
<PAGE> 34
CORRESPONDENT CASH
---------------------------------------------
--------------------------------------------
RESERVES
- ---------------------------------------------------
THE INFINITY MUTUAL FUNDS, INC.
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
INVESTMENT ADVISER
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
1285 Avenue of the Americas
New York, NY 10019
- ---------------------------------------------------
DISTRIBUTOR
BISYS FUND SERVICES, LP
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286
- ---------------------------------------------------
ADMINISTRATOR, TRANSFER AGENT
& DIVIDEND DISBURSING AGENT
BISYS FUND SERVICES OHIO, INC.
3435 Stelzer Road
Columbus, OH 43219
- ---------------------------------------------------
AUDITORS
KPMG LLP
Two Nationwide Plaza
Columbus, OH 43215
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
(LOGO)
COICCRD99A 2/00
CORRESPONDENT CASH
---------------------------------------------------
--------------------------------------------------
RESERVES
LOGO
ANNUAL REPORT
------------------------
DECEMBER 31, 1999
<PAGE> 35
[This Page Intentionally Left Blank]
<PAGE> 36
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIOS
SUPPLEMENT TO ANNUAL REPORT
DATED DECEMBER 31, 1999
RESULTS OF SPECIAL SHAREHOLDER MEETING
(UNAUDITED)
A Special Meeting of Shareholders of the Correspondent Cash Reserves Money
Market Portfolios was held November 12, 1999. At that meeting, shareholders of
the Correspondent Cash Reserves Tax Free Money Market Portfolio voted on the
following matter:
PROPOSAL 1:
- -----------
To approve the Agreement and Plan of Conversion and Termination providing for
the conversion of Correspondent Cash Reserves Tax Free Money Market Portfolio
into LIR Premier Tax-Free Money Market Fund, a new series of Mitchell Hutchins
LIR Money Series:
For............ 61,044,149
Against........ 2,090,508
Abstain........ 2,671,825
At that time, the requisite vote to approve the proposal had not yet been
obtained for the Correspondent Cash Reserves Money Market Portfolio, and the
meeting was adjourned until December 3, 1999, for that Portfolio.
At the reconvened Special Meeting on December 3, 1999, shareholders of the
Correspondent Cash Reserves Money Market Portfolio voted on the following
matter:
PROPOSAL 1:
- -----------
To approve the Agreement and Plan of Conversion and Termination providing for
the conversion of Correspondent Cash Reserves Money Market Portfolio into LIR
Premier Money Market Fund, a new series of Mitchell Hutchins LIR Money Series:
For............ 858,438,623
Against........ 18,023,219
Abstain........ 34,329,492
