PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for the First
Priority Funds (the "Funds"). This report covers activity in the First Priority
Treasury Money Market Fund, the First Priority Fixed Income Fund, and the First
Priority Equity Fund over the six-month period ending May 31, 1994. The report
includes a complete list of each Fund's investments and its financial
statements.
Thank you for selecting the First Priority Funds to pursue your financial goals.
Through the First Priority Treasury Money Market Fund, you can put your cash to
work pursuing daily income.* First Priority Fixed Income Fund gives you the
opportunity to earn monthly income from a portfolio of corporate and government
bonds. To help your money grow over time for your long-term goals, First
Priority Equity Fund invests in a diversified portfolio of high quality stocks.
Thank you for your confidence in the First Priority Funds. We will continue to
keep you up to date on your investment as we provide your account with the
highest level of personal service.
Sincerely,
Edward C. Gonzales
President
July 15, 1994
*As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so. An
investment in the Fund is neither insured nor guaranteed by the U.S.
government.
FIRST PRIORITY TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- --------------- ------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--91.4%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--6.6%
-------------------------------------------------------------------------------
$ 8,000,000 4.25%-8.00%, 7/15/94-8/31/94 $ 8,024,288
-------------------------------------------------------------------------------
U.S. TREASURY BILLS--84.8%
-------------------------------------------------------------------------------
103,000,000 6/2/94-10/20/94 102,311,314
------------------------------------------------------------------------------- ---------------
TOTAL U.S. TREASURY OBLIGATIONS, AT AMORTIZED COST 110,335,602
------------------------------------------------------------------------------- ---------------
MUTUAL FUND SHARES--8.7%
- ------------------------------------------------------------------------------------------------
3,248,996 Fidelity U.S. Treasury Income Portfolio 3,248,996
-------------------------------------------------------------------------------
3,455,419 Franklin U.S. Treasury Money Market Portfolio 3,455,419
-------------------------------------------------------------------------------
3,754,429 Goldman Sachs I.L.A. Treasury Portfolio 3,754,429
------------------------------------------------------------------------------- ---------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 10,458,844
------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS, AT AMORTIZED COST AND VALUE $ 120,794,446\
------------------------------------------------------------------------------- ---------------
</TABLE>
\ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($120,709,316) at
May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--19.3%
- ------------------------------------------------------------------------------------------------
DIVERSIFIED--0.6%
--------------------------------------------------------------------------------
$ 1,000,000 United Technologies, 9.625%, 5/15/99 $ 1,057,910
-------------------------------------------------------------------------------- ---------------
ELECTRICAL EQUIPMENT--1.0%
--------------------------------------------------------------------------------
2,000,000 General Electric Capital Corp., 5.50%, 11/1/2001 1,798,340
-------------------------------------------------------------------------------- ---------------
ELECTRICAL POWER--1.8%
--------------------------------------------------------------------------------
1,000,000 Orange/Rockland Utilities, 9.375%, 3/15/2000 1,099,300
--------------------------------------------------------------------------------
1,000,000 Public Service Electric & Gas, 6.00%, 6/1/95 999,110
--------------------------------------------------------------------------------
1,000,000 Virginia Electric & Power, 8.875%, 6/1/99 1,067,190
-------------------------------------------------------------------------------- ---------------
Total 3,165,600
-------------------------------------------------------------------------------- ---------------
ELECTRONICS--0.6%
--------------------------------------------------------------------------------
1,000,000 Eastman Kodak, 9.125%, 3/1/98 1,029,860
-------------------------------------------------------------------------------- ---------------
FINANCE-AUTOMOTIVE--3.4%
--------------------------------------------------------------------------------
2,000,000 Ford Motor Credit Corporation, 5.35%, 7/24/95 1,980,020
--------------------------------------------------------------------------------
1,000,000 Ford Motor Credit Corporation, 6.35%, 2/11/98 968,390
--------------------------------------------------------------------------------
1,000,000 General Motors Acceptance Corporation, 7.75%, 1/15/99 1,012,480
--------------------------------------------------------------------------------
2,000,000 General Motors Acceptance Corporation, 4.625%,10/1/99 1,995,540
-------------------------------------------------------------------------------- ---------------
Total 5,956,430
-------------------------------------------------------------------------------- ---------------
FINANCE-COMMERCIAL--0.6%
--------------------------------------------------------------------------------
1,000,000 Household Finance Corp., 9.25%, 2/15/95 1,021,620
-------------------------------------------------------------------------------- ---------------
FINANCE-RETAIL--0.6%
--------------------------------------------------------------------------------
1,000,000 American General Finance, 9.25%, 7/1/94 1,002,380
-------------------------------------------------------------------------------- ---------------
INSURANCE--1.1%
--------------------------------------------------------------------------------
2,000,000 U.S. Life Corp., 6.75%, 1/15/98 1,968,880
-------------------------------------------------------------------------------- ---------------
LEASING--2.2%
--------------------------------------------------------------------------------
4,000,000 International Lease Finance, 4.75%, 7/15/96 3,844,520
-------------------------------------------------------------------------------- ---------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
OIL & FINANCE--0.6%
--------------------------------------------------------------------------------
$ 1,000,000 Texaco Capital, Inc., 7.875%, 5/1/95 $ 1,017,190
-------------------------------------------------------------------------------- ---------------
RETAIL--0.6%
--------------------------------------------------------------------------------
1,000,000 Limited, Inc., 9.125%, 2/1/2001 1,080,830
-------------------------------------------------------------------------------- ---------------
SECURITIES--3.3%
--------------------------------------------------------------------------------
2,000,000 Merrill Lynch & Co., 6.14%,1/26/2000 1,977,760
--------------------------------------------------------------------------------
4,000,000 Goldman Sachs & Co., 7.80%, 7/15/2002 (a)
3,898,000
-------------------------------------------------------------------------------- ---------------
Total 5,875,760
-------------------------------------------------------------------------------- ---------------
TOBACCO--1.7%
--------------------------------------------------------------------------------
2,000,000 Philip Morris Cos. Inc., 5.20%, 8/21/95 1,973,120
--------------------------------------------------------------------------------
1,000,000 Philip Morris Cos. Inc., 9.00%, 1/1/2001 1,075,210
-------------------------------------------------------------------------------- ---------------
Total 3,048,330
-------------------------------------------------------------------------------- ---------------
TRANSPORTATION--1.2%
--------------------------------------------------------------------------------
1,000,000 Ford Motor Co., Delaware, 8.875%, 4/1/2006 1,067,110
--------------------------------------------------------------------------------
1,000,000 General Motors Corp., 8.00%, 7/1/94 1,001,190
-------------------------------------------------------------------------------- ---------------
Total 2,068,300
-------------------------------------------------------------------------------- ---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $34,454,684) 33,935,950
-------------------------------------------------------------------------------- ---------------
U.S. GOVERNMENT AGENCIES--40.0%
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--5.8%
--------------------------------------------------------------------------------
1,000,000 5.613%, 6/23/97 999,960
--------------------------------------------------------------------------------
1,000,000 5.80%, 6/10/98 999,460
--------------------------------------------------------------------------------
3,000,000 5.00%, 12/28/98 2,949,390
--------------------------------------------------------------------------------
3,400,000 4.625%, 11/5/2003 3,329,892
--------------------------------------------------------------------------------
2,000,000 6.50%, 6/7/2004 2,000,000
-------------------------------------------------------------------------------- ---------------
Total 10,278,702
-------------------------------------------------------------------------------- ---------------
FEDERAL HOME LOAN MORTGAGE CORP.--13.0%
--------------------------------------------------------------------------------
3,000,000 4.75%, 2/2/99 2,818,110
--------------------------------------------------------------------------------
2,040,833 PC, 1386C, 4.88% Floating Rate Note*, 10/15/2007 2,052,915
--------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.--CONTINUED
--------------------------------------------------------------------------------
$ 314,132 PC, 1414F, 4.93% Floating Rate Note*, 11/15/2007 $ 314,235
--------------------------------------------------------------------------------
1,225,000 7.55%, 11/27/2007 1,218,434
--------------------------------------------------------------------------------
6,210,627 PC, 1544L, 6.09% Floating Rate Note*, 7/15/2008 6,179,574
--------------------------------------------------------------------------------
5,000,000 1604FC, 6.38% Floating Rate Note*, 11/15/2008 4,995,000
--------------------------------------------------------------------------------
6,000,000 PC, 1403M, 6.50%, 12/15/2021 5,371,200
-------------------------------------------------------------------------------- ---------------
Total 22,949,468
-------------------------------------------------------------------------------- ---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--18.6%
--------------------------------------------------------------------------------
3,000,000 REMIC, 1993-G06/J, 7.00%, 12/25/99 2,905,980
--------------------------------------------------------------------------------
5,000,000 Step-up, 0/7.89%, 3/9/2002 4,111,500
--------------------------------------------------------------------------------
2,000,000 Step-up, 0/7.56%, 12/20/2001 1,615,620
--------------------------------------------------------------------------------
2,000,000 REMIC, 1992-G40/K, 7.00%, 6/25/2002 1,927,020
--------------------------------------------------------------------------------
4,000,000 5.82%, 11/4/2003 3,501,080
--------------------------------------------------------------------------------
2,250,000 REMIC, 1992-G35/EC, 8.25%, 7/25/2005 2,230,537
--------------------------------------------------------------------------------
1,250,000 REMIC, 1992-209/F, 5.30% Floating Rate Note*, 11/25/2007 1,260,762
--------------------------------------------------------------------------------
4,216,165 REMIC, 1993-G32J, 6.75%, 5/25/2009 3,799,271
--------------------------------------------------------------------------------
4,041,125 REMIC, 1994-10/KC, 6.50%, 10/25/2010 3,557,241
--------------------------------------------------------------------------------
8,601,615 REMIC, 1993-202/PH, 6.50%, 2/25/2022 7,653,029
-------------------------------------------------------------------------------- ---------------
Total 32,562,040
-------------------------------------------------------------------------------- ---------------
TENNESSEE VALLEY AUTHORITY--2.6%
--------------------------------------------------------------------------------
5,000,000 6.125%, 7/15/2003 4,544,800
-------------------------------------------------------------------------------- ---------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $74,731,448) 70,335,010
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--39.4%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--39.4%
--------------------------------------------------------------------------------
3,000,000 4.25%, 5/15/96 2,905,980
--------------------------------------------------------------------------------
7,800,000 STRIP, 11/15/96 6,696,768
--------------------------------------------------------------------------------
3,000,000 5.125%, 3/31/98 2,854,860
--------------------------------------------------------------------------------
4,000,000 6.375%, 7/15/99 3,933,120
--------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
--------------------------------------------------------------------------------
$ 8,000,000 5.50%, 4/15/2000 $ 7,495,120
--------------------------------------------------------------------------------
8,000,000 7.50%, 11/15/2001 8,206,080
--------------------------------------------------------------------------------
8,000,000 7.50%, 5/15/2002 8,206,560
--------------------------------------------------------------------------------
8,000,000 6.25%, 2/15/2003 7,541,680
--------------------------------------------------------------------------------
14,000,000 5.75%, 8/15/2003 12,672,800
--------------------------------------------------------------------------------
21,000,000 STRIP, 2/15/2006 8,792,280
-------------------------------------------------------------------------------- ---------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $74,047,293) 69,305,248
-------------------------------------------------------------------------------- ---------------
MUTUAL FUND SHARES--0.8%
- ------------------------------------------------------------------------------------------------
662,022 Fidelity U.S. Treasury Income Portfolio 662,022
--------------------------------------------------------------------------------
660,652 Goldman, Sachs I.L.A. Treasury Portfolio 660,652
-------------------------------------------------------------------------------- ---------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 1,322,674
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--1.2%
- ------------------------------------------------------------------------------------------------
$ 2,027,504 HSBC Securities, Inc., 4.25%, dated 5/31/94, due 6/1/94
(AT AMORTIZED COST) (NOTE 2B) 2,027,504
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $186,583,603) $ 176,926,386\
-------------------------------------------------------------------------------- ---------------
</TABLE>
(a) Restricted security--Investment in a security not registered under the
Securities Act of 1933. At the end of the period, this security amounted to
2.2% of net assets (Note 2G).
* Current rate shown.
** Repurchase agreement is fully collateralized by U.S. government and/or
agency obligations, based on market prices at the date of the portfolio.
\ The cost of investments for federal tax purposes amount to $186,583,603. The
net unrealized depreciation on a federal income tax basis amounts to
$9,657,217 which is comprised of $286,663 appreciation and $9,943,880
depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($175,949,310) at May 31, 1994.
The following abbreviation was used in this portfolio:
STRIP--Separate Trading of Registered Interest and Principal
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--80.2%
- ------------------------------------------------------------------------------------------------
AUTOMOBILES--2.0%
--------------------------------------------------------------------------------
60,000 General Motors Corp. $ 3,225,000
-------------------------------------------------------------------------------- ---------------
BEVERAGES--2.7%
--------------------------------------------------------------------------------
80,000 Anheuser Busch Company, Inc. 4,350,000
-------------------------------------------------------------------------------- ---------------
BROADCASTING/ENTERTAINMENT/PUBLISHING--7.7%
--------------------------------------------------------------------------------
6,000 Capital Cities ABC 4,438,500
--------------------------------------------------------------------------------
40,000 McGraw Hill, Inc. 2,640,000
--------------------------------------------------------------------------------
160,000 Times Mirror Corp. 5,180,000
-------------------------------------------------------------------------------- ---------------
Total 12,258,500
-------------------------------------------------------------------------------- ---------------
CAPITAL GOODS--3.8%
--------------------------------------------------------------------------------
120,000 General Electric Co. 5,955,000
-------------------------------------------------------------------------------- ---------------
CHEMICALS--2.9%
--------------------------------------------------------------------------------
100,000 Betz Laboratories 4,512,500
-------------------------------------------------------------------------------- ---------------
CREDIT-CYCLICAL--2.1%
--------------------------------------------------------------------------------
120,000 Masco Corp. 3,315,000
-------------------------------------------------------------------------------- ---------------
ELECTRONICS--4.7%
--------------------------------------------------------------------------------
120,000 Raytheon Co. 7,470,000
-------------------------------------------------------------------------------- ---------------
ENERGY--1.8%
--------------------------------------------------------------------------------
50,000 Schlumberger, Ltd. 2,862,500
-------------------------------------------------------------------------------- ---------------
FINANCE-RENTAL & LEASING--3.5%
--------------------------------------------------------------------------------
140,000 GATX Corp. 5,600,000
-------------------------------------------------------------------------------- ---------------
HEALTHCARE--3.3%
--------------------------------------------------------------------------------
100,000 American Cyanamid 5,212,500
-------------------------------------------------------------------------------- ---------------
HOSPITAL SUPPLIES--1.4%
--------------------------------------------------------------------------------
50,000 Johnson & Johnson 2,212,500
-------------------------------------------------------------------------------- ---------------
</TABLE>
FIRST PRIORITY EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
INSURANCE--2.9 %
--------------------------------------------------------------------------------
160,000 Liberty Corp. $ 4,560,000
-------------------------------------------------------------------------------- ---------------
MANUFACTURING--3.2%
--------------------------------------------------------------------------------
100,000 Minnesota Mining & Manufacturing Co. 5,100,000
-------------------------------------------------------------------------------- ---------------
OIL--3.7%
--------------------------------------------------------------------------------
100,000 Amoco Corp. 5,887,500
-------------------------------------------------------------------------------- ---------------
PHARMACEUTICAL--10.0%
--------------------------------------------------------------------------------
60,000 Bristol Myers Squibb Co. 3,277,500
--------------------------------------------------------------------------------
160,000 Merck & Co. Inc. 4,880,000
--------------------------------------------------------------------------------
80,000 Pfizer Corp. 5,100,000
--------------------------------------------------------------------------------
40,000 Schering-Plough Corp. 2,610,000
-------------------------------------------------------------------------------- ---------------
Total 15,867,500
-------------------------------------------------------------------------------- ---------------
RAILROADS--2.2%
--------------------------------------------------------------------------------
60,000 Union Pacific Corp. 3,540,000
-------------------------------------------------------------------------------- ---------------
RESTAURANTS--2.5%
--------------------------------------------------------------------------------
220,000 International Dairy Queen, Class A 3,905,000
-------------------------------------------------------------------------------- ---------------
RETAIL--10.7%
--------------------------------------------------------------------------------
60,000 J.C. Penney, Inc. 3,067,500
--------------------------------------------------------------------------------
160,000 The Limited, Inc. 2,820,000
--------------------------------------------------------------------------------
120,000 Melville Corp. 4,875,000
--------------------------------------------------------------------------------
80,000 Nordstrom, Inc. 3,530,000
--------------------------------------------------------------------------------
200,000 Stride Rite Corp. 2,725,000
-------------------------------------------------------------------------------- ---------------
Total 17,017,500
-------------------------------------------------------------------------------- ---------------
TEXTILE/APPAREL--4.1%
--------------------------------------------------------------------------------
60,000 Gap, Inc. 2,602,500
--------------------------------------------------------------------------------
180 000 Liz Claiborne 3,937,500
-------------------------------------------------------------------------------- ---------------
Total 6,540,000
-------------------------------------------------------------------------------- ---------------
</TABLE>
FIRST PRIORITY EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TOBACCO--1.9%
--------------------------------------------------------------------------------
120,000 UST, Inc. $ 3,030,000
-------------------------------------------------------------------------------- ---------------
UTILITIES-ELECTRIC--3.1%
--------------------------------------------------------------------------------
80,000 Duke Power Co. 2,880,000
--------------------------------------------------------------------------------
100,000 TECO Energy, Inc. 1,975,000
-------------------------------------------------------------------------------- ---------------
Total 4,855,000
-------------------------------------------------------------------------------- ---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $130,891,564) 127,276,000
-------------------------------------------------------------------------------- ---------------
PREFERRED STOCKS--6.0%
- ------------------------------------------------------------------------------------------------
HEALTH SERVICES--3.0%
--------------------------------------------------------------------------------
80,000 Beverly Enterprises 4,750,000
-------------------------------------------------------------------------------- ---------------
TRANSPORTATION--3.0%
--------------------------------------------------------------------------------
50,000 Ford Motor Co. 4,762,500
-------------------------------------------------------------------------------- ---------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $8,329,539) 9,512,500
-------------------------------------------------------------------------------- ---------------
CORPORATE BOND--0.6%
- ------------------------------------------------------------------------------------------------
HEALTH SERVICES--0.6%
--------------------------------------------------------------------------------
$ 1,000,000 Novacare, Inc., 5.5%, 1/15/2000
(IDENTIFIED COST $945,000) 935,000
-------------------------------------------------------------------------------- ---------------
MUTUAL FUND SHARES--0.2%
- ------------------------------------------------------------------------------------------------
14,548 Fidelity U.S. Treasury Income Portfolio 14,548
--------------------------------------------------------------------------------
319,203 Goldman Sachs I.L.A. Treasury Portfolio 319,203
-------------------------------------------------------------------------------- ---------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 333,751
-------------------------------------------------------------------------------- ---------------
</TABLE>
FIRST PRIORITY EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
*REPURCHASE AGREEMENT--10.8%
- ------------------------------------------------------------------------------------------------
$ 17,082,818 HSBC Securities, Inc., 4.25%, dated 5/31/94, due 6/1/94
(AT AMORTIZED COST) (NOTE 2B) $ 17,082,818
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $157,582,672) $ 155,140,069\
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Repurchase agreement is fully collateralized by U.S. government and/or agency
obligations based on market prices at May 31, 1994.
\ The cost of investments for federal income tax purposes amounts to
$157,582,672. The net unrealized depreciation of investments on a federal
income tax basis amounts to $2,442,603, which is comprised of $6,545,826
appreciation and $8,988,429 depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($158,643,687) at
May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
MONEY FIXED
MARKET INCOME EQUITY
FUND FUND FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value (Note 2A) $ 120,794,446 $ 176,926,386 $ 138,057,251
Investments in repurchase agreements, at amortized cost (Note 2B) -- -- 17,082,818
Cash -- 1,871,301 --
Interest and dividends receivable -- 82,356 518,712
Receivable for Fund shares sold 171,311 -- 13,250
Receivable for investments sold -- -- 3,182,606
Prepaid/deferred expenses (Note 2F) 20,763 19,221 19,274
- -----------------------------------------------------------------------------------------------------------------
Total assets 120,986,520 178,899,264 158,873,911
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased -- 2,000,000 --
Payable for Fund shares redeemed -- 57,863 128,518
Dividends payable 261,470 776,536 --
Payable to transfer and dividend disbursing agent (Note 4) -- -- 18,413
Accrued expenses 15,734 115,555 83,293
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 277,204 2,949,954 230,224
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in-capital 120,709,316 186,347,397 155,106,838
Net unrealized depreciation of investments -- (9,657,217) (2,442,603)
Accumulated net realized gain (loss) on investments -- (740,870) 5,314,831
Undistributed net investment income -- -- 664,621
- -----------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 120,709,316 $ 175,949,310 $ 158,643 687
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, and redemption price per share:
(net assets/shares outstanding)
Trust Shares $1.00 $9.78 $10.37
Investment Shares $1.00 $9.78 $10.37
- -----------------------------------------------------------------------------------------------------------------
Offering price per share:\
Trust Shares $1.00 $9.78 $10.37
Investment Shares $1.00 $9.98* $10.58*
- -----------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares 98,960,461 16,894,895 14,667,588
Investment Shares 21,748,855 1,094,740 623,517
- -----------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING 120,709,316 17,989,635 15,291,105
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Investments at identified cost $ -- $ 186,583,603 $ 157,582,672
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
\ See "What Shares Cost" in the prospectus.
* Computation of offering price: 100/98 of net asset value.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
MONEY FIXED
MARKET INCOME EQUITY
FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $ 1,956,876 $ 5,423,003 $ 389,050
Dividend income -- -- 2,098,883
- ----------------------------------------------------------------------------------------------------------------
Total income (Note 2C ) 1,956,876 5,423,003 2,487,933
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee* 298,807 687,462 657,329
Trustees fee* 1,757 2,181 1,711
Administrative personnel and services fees* 81,589 125,121 112,219
Custodian fees* 13,199 19,579 17,680
Transfer and dividend disbursing agent fees and expenses* 29,681 31,944 29,932
Fund share registration costs 11,638 14,029 16,950
Auditing fees 7,532 8,213 7,881
Legal fees 3,076 5,812 5,532
Printing and postage 9,257 15,096 12,758
Portfolio accounting services* 24,421 39,530 30,022
Distribution services fee* 48,398 17,971 10,242
Miscellaneous 9,087 10,551 9,137
- ----------------------------------------------------------------------------------------------------------------
Total expenses 538,442 977,489 911,393
Deduct--
Waiver of investment advisory fee* 298,807 229,154 246,498
- ----------------------------------------------------------------------------------------------------------------
Net expenses 239,635 748,335 664,895
- ----------------------------------------------------------------------------------------------------------------
Net investment income 1,717,241 4,674,668 1,823,038
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions
(identified cost basis) -- (658,860) 5,315,922
Net changed in unrealized appreciation (depreciation)
of investments -- (11,739,094) (6,819,533)
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments -- (12,397,954) (1,503,611)
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 1,717,241 ($ 7,723,286) $ 319,427
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* See Note 4.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY FIXED
MONEY MARKET FUND INCOME FUND EQUITY FUND
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
1994* 1993 1994* 1993 1994* 1993
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS--
Net investment income $ 1,717,241 $ 3,182,055 $ 4,674,668 $ 6,729,017 $ 1,823,038 $ 2,526,579
Net realized gain (loss) on
investment transactions -- -- (658,860) 3,548,872 5,315,922 1,036,882
Change in unrealized
appreciation (depreciation)
of investments -- -- (11,739,094) 1,551,202 (6,819,533) (896,428)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from operations 1,717,241 3,182,055 (7,723,286) 11,829,091 319,427 2,667,033
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 2C)--
Dividends to shareholders from
net investment income:
Trust Shares (1,408,561) (2,637,494) (4,387,227) (6,315,368) (1,593,261) (2,250,065)
Investment Shares (308,680) (544,561) (287,441) (413,649) (59,697) (79,302)
Distributions to shareholders
from net realized gain on
investment transactions:
Trust Shares -- -- (3,376,007) (1,010,377) (991,327) (1,172,020)
Investment Shares -- -- (254,090) (58,731) (45,275) (36,056)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets from
distributions to
shareholders (1,717,241) (3,182,055) (8,304,765) (7,798,125) (2,689,560) (3,537,443)
- ------------------------------------------------------------------------------------------------------------------
FUND SHARE (PRINCIPAL)
TRANSACTIONS (NOTE 3)--
Proceeds from sale of shares 187,316,563 312,480,913 29,529,499 85,148,712 19,579,585 62,546,377
Net asset value of shares
issued to shareholders in
payment of dividends declared 304,732 533,106 472,151 426,043 101,809 112,462
Cost of shares redeemed (179,217,043) (310,902,563) (20,425,005) (9,015,917) (19,857,024) (6,552,484)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets from
Fund share transactions 8,404,252 2,111,456 9,576,645 76,558,838 (175,630) 56,106,355
- ------------------------------------------------------------------------------------------------------------------
Change in net assets 8,404,252 2,111,456 (6,451,406) 80,589,804 (2,545,763) 55,235,945
NET ASSETS:
Beginning of period 112,305,064 110,193,608 182,400,716 101,810,912 161,189,450 105,953,505
- ------------------------------------------------------------------------------------------------------------------
End of period $120,709,316 $112,305,064 $175,949,310 $182,400,716 $158,643,687 $161,189,450
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income included in net assets
at end of period $ -- $ -- $ -- $ -- $ 664,621 $ 494,541
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Six months ended May 31,1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
TRUST SHARES 1994* 1993 1992**
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01 0.03 0.02
- ----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.01) (0.03) (0.02)
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN\ 1.49% 2.75% 2.06%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.32 (a) 0.38% 0.29%(a)
Net investment income 2.95 (a) 2.72% 3.20%(a)
Expense waiver/reimbursement (b) 0.50 (a) 0.46% 0.53%(a)
- ----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $98,960 $88,510 $86,616
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
INVESTMENT SHARES 1994* 1993 1992**
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01 0.02 0.01
- ----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.01) (0.02) (0.01)
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN\ 1.28% 2.34% 1.83%
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.72 (a) 0.78% 0.74%(a)
Net investment income 2.55 (a) 2.33% 2.58%(a)
Expense waiver/reimbursement (b) 0.50 (a) 0.46% 0.53%(a)
- ----------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)
$21,749 $23,795 $23,578
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
** Reflects operations from April 14, 1992 (date of initial public investment)
to November 30, 1992.
\ Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
TRUST SHARES 1994* 1993 1992**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.67 $10.27 $ 9.90
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.26 0.51 0.38
Net realized and unrealized gain (loss) on investments (0.68) 0.50 0.37
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.42) 1.01 0.75
- ---------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.26) (0.51) (0.38)
Distributions to shareholders from net realized gain on investment transactions (0.21) (0.10) --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (0.47) (0.61) (0.38)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.78 $10.67 $10.27
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN\ (4.07%) 10.14% 7.66%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80 (a) 0.84% 0.77%(a)
Net investment income 5.12 (a) 4.80% 6.02%(a)
Expense waiver/reimbursement (b) 0.25 (a) 0.25% 0.29%(a)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $165,242 $169,881 $96,354
Portfolio turnover rate 16% 83% 44%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
INVESTMENT SHARES 1994* 1993 1992**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.67 $10.27 $ 9.90
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.25 0.48 0.37
Net realized and unrealized gain (loss) on investments (0.68) 0.50 0.37
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.43) 0.98 0.74
- ---------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.25) (0.48) (0.37)
Distributions to shareholders from net realized gain on investment transactions (0.21) (0.10) --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (0.46) (0.58) (0.37)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.78 $10.67 $10.27
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN\ (4.22%) 9.81% 7.48%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.10 (a) 1.14% 1.07%(a)
Net investment income 4.82 (a) 4.40% 5.33%(a)
Expense waiver/reimbursement (b) 0.25 (a) 0.25% 0.29%(a)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $10,707 $12,519 $5,457
Portfolio turnover rate 16% 83% 44%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
** Reflects operations from April 20, 1992 (date of initial public investment)
to November 30, 1992.
\ Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
TRUST SHARES 1994* 1993 1992**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.51 $10.66 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.12 0.18 0.14
Net realized and unrealized gain (loss) on investments (0.08) (0.03) 0.77
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.04 0.15 0.91
- ---------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.11) (0.18) (0.11)
Distributions to shareholders from net realized gain on investment transactions (0.07) (0.12) --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (0.18) (0.30) (0.11)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.37 $10.51 $10.66
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN\ 0.28% 1.43% 9.28%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80 (a) 0.84% 0.76%(a)
Net investment income 2.22 (a) 1.85% 2.28%(a)
Expense waiver/reimbursement (b) 0.30 (a) 0.30% 0.35%(a)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $152,176 $154,185 $102,822
Portfolio turnover rate 31% 74% 30%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
INVESTMENT SHARES 1994* 1993 1992**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.51 $10.66 $ 9.86
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.10 0.16 0.10
Net realized and unrealized gain (loss) on investments (0.08) (0.04) 0.79
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.02 0.12 0.89
- ---------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends to shareholders from net investment income (0.09) (0.15) (0.09)
Distributions to shareholders from net realized gain on investment transactions (0.07) (0.12) --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (0.16) (0.27) (0.09)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $10.37 $10.51 $10.66
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN\ 0.13% 1.13% 9.14%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.10 (a) 1.14% 1.07%(a)
Net investment income 1.92 (a) 1.59% 1.85%(a)
Expense waiver/reimbursement (b) 0.30 (a) 0.30% 0.35%(a)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $6,468 $7,004 $3,132
Portfolio turnover rate 31% 74% 30%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
** Reflects operations from April 20, 1992 (date of initial public investment)
to November 30, 1992.
\ Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
First Priority Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end, management investment
company. The Trust consists of four diversified portfolios (individually
referred to as the "Fund", or collectively as the "Funds") at May 31, 1994, as
follows:
First Priority Treasury Money Market Fund ("Treasury Money Market Fund")
First Priority Fixed Income Fund ("Fixed Income Fund")
First Priority Equity Fund ("Equity Fund")
First Priority Limited Maturity Government Fund ("Limited Maturity Government
Fund")*
*The semi-annual report to shareholders of the Limited Maturity Government Fund
is presented separately, and the notes presented herein do not relate to the
Limited Maturity Government Fund.
Treasury Money Market Fund, Fixed Income Fund and the Equity Fund are offered in
two classes of shares: Trust Shares and Investment Shares. Investment Shares are
identical in all respects to Trust Shares, except the Investment Shares are sold
pursuant to a distribution plan adopted in accordance with the Act's Rule 12b-1,
and (with the exception of the Treasury Money Market Fund) are sold subject to a
sales load. The assets of each Fund of the Trust are segregated and a
shareholder's interest is limited to the Fund in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Corporate bonds (and other fixed income and
asset backed securities) are valued at the last sale price reported on
national securities exchanges on that day, if available. Otherwise,
corporate bonds (and other fixed income and asset backed securities) and
short-term obligations are valued at the prices provided by an independent
pricing service. Listed equity securities are valued at the last sale price
reported on national securities exchanges. Unlisted securities and
short-term obligations (and private placement securities) are generally
valued at the prices provided by an independent price service. Short-term
securities with remaining maturities of sixty days or less may be stated at
amortized cost, which approximates value. Investments in other regulated
investment companies are valued at net asset value.
The Treasury Money Market Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase
agreements. Accordingly, the Funds could receive less than the repurchase
price on the sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
D. FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
each Fund's commencement date.
G. RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under Federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fixed Income Fund or in
connection with another registered offering of the securities. Many
restricted securities may be resold in the secondary market in transactions
exempt from registration. Such restricted securities may be determined to
be liquid under criteria established by the Trustees. The Fixed Income Fund
will not incur any registration costs upon such resales. The Fixed Income
Fund's restricted securities are valued at the price provided by an
independent
pricing service, at bid or asked prices provided by dealers in the
secondary
market or, if no market prices are available, at the fair value as
determined
by the Fixed Income Fund's pricing committee. Additional information on
each restricted security held at May 31, 1994 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Goldman Sachs & Co., 7.80%, 7/15/2002 2/23/93 $ 4,213,880
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Fund shares were as follows:
FOR THE YEAR ENDED NOVEMBER 30, 1994*:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET
FUND FIXED INCOME FUND EQUITY FUND
------------ ------------------------ ------------------------
TRUST SHARES SHARES SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Shares sold 100,648,043 2,773,693 $ 28,384,797 1,785,437 $ 18,761,047
- -----------------------------------------------
Shares issued to shareholders in payment of
dividends declared 141 -- -- -- --
- -----------------------------------------------
Shares redeemed (90,197,627) (1,803,590) (18,046,016) (1,781,982) (18,488,221)
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
Net change resulting from Trust share
transactions 10,450,557 970,103 10,338,781 3,455 272,826
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
<CAPTION>
INVESTMENT SHARES
- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold 86,668,520 108,860 1,144,702 77,530 818,538
- -----------------------------------------------
Shares issued to shareholders in payment of
dividends declared 304,591 45,732 472,151 9,607 101,809
- -----------------------------------------------
Shares redeemed (89,019,416) (233,423) (2,378,989) (129,862) (1,368,803)
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
Net change resulting from Investment share
transactions (2,046,305) (78,831) (762,136) (42,725) (448,456)
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
Total net change resulting from Fund share
transactions 8,404,252 891,272 $ 9,576,645 (39,270) $ (175,630)
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
*Six months ended May 31, 1994.
</TABLE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED NOVEMBER 30, 1993:
<CAPTION>
TREASURY
MONEY
MARKET
FUND FIXED INCOME FUND EQUITY FUND
------------ ------------------------ ------------------------
TRUST SHARES SHARES SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
Shares sold 127,026,078 7,229,259 $ 76,979,211 5,550,553 $ 57,774,890
- -----------------------------------------------
Shares issued to shareholders in payment of
dividends declared 1,773 -- -- -- --
- -----------------------------------------------
Shares redeemed (125,133,768) (682,677) (7,233,171) (536,183) (5,555,250)
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
Net change resulting from Trust share
transactions 1,894,083 6,546,582 69,746,040 5,014,370 52,219,640
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
<CAPTION>
INVESTMENT SHARES
- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares sold 185,454,835 769,652 8,169,501 458,429 4,771,487
- -----------------------------------------------
Shares issued to shareholders in payment of
dividends declared 531,333 40,266 426,043 10,837 112,462
- -----------------------------------------------
Shares redeemed (185,768,795) (167,502) (1,782,746) (96,936) (997,234)
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
Net change resulting from Investment share
transactions 217,373 642,416 6,812,798 372,330 3,886,715
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
Total net change resulting from Fund share
transactions 2,111,456 7,188,998 $ 76,558,838 5,386,700 $ 56,106,355
- ----------------------------------------------- ------------ ---------- ------------ ---------- ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--First Alabama Bank, the Trust's investment adviser
("Adviser"), receives for its services an annual investment advisory fee based
upon a percentage of each Fund's average daily net assets (see below). The
Adviser may voluntarily choose to waive a portion of its fee. The Adviser can
modify or terminate this voluntary waiver at any time at its sole discretion.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE*
<S> <C>
Treasury Money Market Fund 0.50%
- -------------------------------------------------------------------------------------------------------
Fixed Income Fund 0.75%
- -------------------------------------------------------------------------------------------------------
Equity Fund 0.80%
- ------------------------------------------------------------------------------------------------------- -----------
</TABLE>
* As a percentage of average daily net assets.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
DISTRIBUTION PLAN--The Funds have adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Funds
will compensate Federated Securities Corp. ("FSC"), the principal distributor,
from the net assets of the Funds to finance activities intended to result in the
sale of the Funds' Investment Shares. The Plan provides that the Funds may incur
distribution expenses of up to 0.30 of 1% of the average daily net assets of the
Investment Shares of Fixed Income Fund and Equity Fund and up to 0.40 of 1% of
the average daily net assets of the Investment Shares of Treasury Money Market
Fund annually, to compensate FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Funds. The fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of each Fund's average net assets for the period plus out-of-pocket
expenses.
First Alabama Bank is the Fund's custodian. The fee is based on the level of
each Fund's average net assets for the period plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year period following the Fund's commencement date. For the six months
ended May 31, 1994, the Funds paid FAS as follows:
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
<S> <C> <C>
Treasury Money Market Fund $50,822 $4,518
- -------------------------------------------------------------------------
Fixed Income Fund $49,934 $4,439
- -------------------------------------------------------------------------
Equity Fund $50,007 $4,445
- ------------------------------------------------------------------------- ------------------ -------------------
</TABLE>
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1994 were as follows:
<TABLE>
<CAPTION>
FIXED
INCOME EQUITY
FUND FUND
<S> <C> <C>
PURCHASES $ 40,063,980 $ 53,890,369
- --------------------------------------------------------------------------------- -------------- --------------
SALES $ 28,185,343 $ 43,720,711
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
John F. Donahue John F. Donahue
John T. Conroy, Jr. Chairman
William J. Copeland Edward C. Gonzales
James E. Dowd President and Treasurer
Lawrence D. Ellis, M.D. J. Christopher Donahue
Edward L. Flaherty, Jr. Vice President
Edward C. Gonzales Richard B. Fisher
Peter E. Madden Vice President
Gregor F. Meyer John W. McGonigle
Wesley W. Posvar Vice President and Secretary
Marjorie P. Smuts Ronald M. Petnuch
Vice President and Assistant Treasurer
David M. Taylor
Assistant Treasurer
Jay S. Neuman
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by each Fund's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and
other information.
