FIRST PRIORITY
FAMILY OF FUNDS
[LOGO]
COMBINED
SEMI-ANNUAL REPORT
DATED MAY 31, 1996
Diversified Portfolios of the First Priority Funds,
an Open-End, Management Investment Company
[LOGO]
[LOGO] FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the Funds
and is a subsidiary of Federated Investors
Cusip 335931887
Cusip 335931101
Cusip 335931804
Cusip 335931309
Cusip 335931705
Cusip 335931606
Cusip 335931507
G01186-03 (7/96)
[LOGO]
FIRST PRIORITY
FAMILY OF FUNDS
NOTICE TO TRUST CUSTOMERS CONCERNING
FIRST PRIORITY MUTUAL FUNDS
First Alabama Bank serves as investment adviser and securities custodian for the
First Priority Family of Funds (the "Funds"). Six funds currently are comprising
the Funds:
FIRST PRIORITY TREASURY MONEY MARKET FUND
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
FIRST PRIORITY FIXED INCOME FUND
FIRST PRIORITY BALANCED FUND
FIRST PRIORITY VALUE FUND
FIRST PRIORITY GROWTH FUND
The Funds are available for purchase by individuals and trust accounts.
Your account owns shares in one or more of the Funds. Please notice in this
semi-annual report that First Alabama receives a fee for serving as investment
adviser. The amount of the investment advisory fee varies from Fund to Fund and
may be waived in whole or in part. The Bank may offset the expense of incurring
an investment advisory fee by reimbursing certain fees for certain accounts.
For serving as securities custodian, First Alabama Bank receives a fee of .025%
or less of the Funds' daily net assets.
The Funds are not deposits or obligations of First Alabama Bank or Regions Bank,
are not guaranteed by First Alabama Bank or Regions Bank, and are not insured or
otherwise protected by the FDIC, the Federal Reserve, or any other government
agency. Investments in mutual funds involve risk, including the potential loss
of principal.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for First
Priority Funds. This report covers activity in the funds for the six-month
period from December 1, 1995 through May 31, 1996.
First Priority Funds offer a range of choices to help you to invest for
virtually any financial goal--whether it is as close as tomorrow or decades
away. First Priority Funds can help you earn daily income on your ready cash or
help your money grow for long-term goals like a child's college education or
your retirement. Whatever priority you have, First Priority Funds can help you
invest for it. With that in mind, the following is a summary of each fund's
performance over the six-month period ended May 31, 1996.
FIRST PRIORITY TREASURY MONEY MARKET FUND
As a convenient, conservative way that investors can earn daily income on their
ready cash,** this Fund's portfolio of U.S. Treasury money market securities
paid dividends of $0.02 per share for both Trust Shares and Investment Shares
during the six-month period ended May 31, 1996. The Fund's assets grew by
approximately 7% to reach $148.2 million.
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
First Priority Limited Maturity Government Fund's approach of pursuing income
with relatively low share price volatility was tested as rising interest rates
caused bond prices to fall. In this environment, the Fund's limited-maturity
holdings were not impacted as greatly as longer-term bonds. However, this
environment still adversely affected the Fund's total return, which was 0.17%,
or (3.30%) reflecting the 3.50% sales charge,* over the six-month period. The
return resulted from $0.25 per share in income that somewhat offset a decline in
share price. The Fund ended the period with $64.3 million in assets that were
diversified among U.S. Treasury notes (54.5%), U.S. government agency bonds
(19.3%), corporate bonds (13.7%), and a repurchase agreement (11.4%).
FIRST PRIORITY FIXED INCOME FUND
After a very favorable market in 1995, the U.S. bond market was adversely
impacted by rising interest rates in 1996. In an environment of falling bond
prices, the Fund's portfolio of U.S. government bonds and investment-grade
corporate bonds produced $0.26 per share in income that somewhat offset a
decline in share price. Over the six-month period, the Fund's total return was
(0.66%), or (5.42%) reflecting the 4.75% sales charge.* The Fund ended the
period with $148.5 million in assets that were diversified among U.S. government
agency bonds (62.1%), U.S. Treasury obligations (24.2%), corporate bonds
(10.4%), and a repurchase agreement (3%).
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
** Although money market funds seek to maintain a share value of $1.00, there is
no guarantee that they will do so. An investment in First Priority Treasury
Money Market Fund is neither insured nor guaranteed by the U.S. government.
FIRST PRIORITY BALANCED FUND
First Priority Balanced Fund invests in a combination of high-quality stocks and
investment-grade corporate bonds and government bonds. At the end of the period,
the Fund's stock holdings included companies like Dow Chemical, DuPont, General
Electric, Intel, IBM, Microsoft, General Motors, Wal-Mart, Disney, McDonald's,
PepsiCo, Merck, Colgate-Palmolive, Texaco, and AT&T. Bond holdings consisted of
corporate bonds, U.S. government agency bonds, and U.S. Treasury notes. The
Fund's holdings, which were impacted by rising interest rates that caused bond
prices to fall, produced a six-month total return of 4.10%, or (0.83%)
reflecting the 4.75% sales charge.* Dividends of $0.22 per share and capital
gains of $0.21 per share had the greatest impact on the Fund's total return; the
Fund's share price remained relatively stable during the period. Fund assets
grew to $53.9 million.
FIRST PRIORITY VALUE FUND (FORMERLY, FIRST PRIORITY EQUITY INCOME FUND)
First Priority Value Fund's holdings focus particularly on quality stocks that
appear to be undervalued and have shown their ability to pay regular dividends.
At the end of the period, the Fund's $71.1 million in assets were invested in a
diversified portfolio of stocks that included DuPont, Aluminum Company of
America, Goodyear, Ford, J.C. Penney, Bristol-Myers Squibb, Exxon, and GTE. In a
continued favorable stock market environment, the Fund produced a total return
of 9.23%, or 4.04% reflecting the Fund's 4.75% sales charge.* Contributing to
this total return was a 4% increase in share price from $12.04 to $12.60,
dividends totaling $0.16 per share and capital gains totaling $0.35 per share.
At the end of the period, Fund assets stood at $71.1 million--a 56% increase
from the first day of the period.
FIRST PRIORITY GROWTH FUND (FORMERLY, FIRST PRIORITY EQUITY FUND)
First Priority Growth Fund invests in a diversified portfolio of high-quality
stocks selected for their strong growth potential. At the end of the period, the
Fund's portfolio included such household names and industry leaders as Dow
Chemical, Kimberly Clark, General Electric, Wal-Mart, McDonald's, Disney, Merck,
Pfizer, Coca-Cola, NationsBank, Intel, Microsoft, and AT&T, to name just a few.
In a continued favorable environment for stocks, the Fund delivered a strong
total return of 11.66%, or 6.39% reflecting the Fund's 4.75% sales charge.*
Contributing to the Fund's total return was a 5% increase in share price, from
$12.10 to $12.80, dividends totaling $0.10 per share and capital gains totaling
$0.55 per share. At the end of the period, Fund assets stood at $154.7 million.
Thank you for pursuing your financial goals through First Priority Funds. We
hope you are pleased with your progress.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
July 15, 1996
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so than an investor's shares, when redeemed,
may be worth more or less than their original cost.
[THIS PAGE INTENTIONALLY LEFT BLANK]
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET TO DISTRIBUTIONS
REALIZED DISTRIBUTIONS SHAREHOLDERS TO
AND TO FROM NET SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS REALIZED IN EXCESS
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME
- ------------------------------ ---------- ----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY MONEY MARKET FUND--
TRUST SHARES
1992(a) 1.00 0.02 -- 0.02 (0.02) -- --
1993 1.00 0.03 -- 0.03 (0.03) -- --
1994 1.00 0.04 -- 0.04 (0.04) -- --
1995 1.00 0.05 -- 0.05 (0.05) -- --
1996* 1.00 0.02 -- 0.02 (0.02) -- --
TREASURY MONEY MARKET FUND--
INVESTMENT SHARES
1992(a) 1.00 0.01 -- 0.01 (0.01) -- --
1993 1.00 0.02 -- 0.02 (0.02) -- --
1994 1.00 0.03 -- 0.03 (0.03) -- --
1995 1.00 0.04 -- 0.04 (0.04) -- --
1996* 1.00 0.02 -- 0.02 (0.02) -- --
LIMITED MATURITY GOVERNMENT
FUND
1994(b) 10.00 0.42 (0.40) 0.02 (0.42) -- --
1995 9.60 0.51 0.44 0.95 (0.51) -- --
1996* 10.04 0.25 (0.24) 0.01 (0.25) -- --
FIXED INCOME FUND--
TRUST SHARES
1992(c) 9.90 0.38 0.37 0.75 (0.38) -- --
1993 10.27 0.51 0.50 1.01 (0.51) (0.10) --
1994 10.67 0.54 (1.01) (0.47) (0.53) (0.20) (0.01)(g)
1995(d) 9.46 0.09 0.11 0.20 (0.09) -- --
FIXED INCOME FUND--
INVESTMENT SHARES
1992(c) 9.90 0.37 0.37 0.74 (0.37) -- --
1993 10.27 0.48 0.50 0.98 (0.48) (0.10) --
1994 10.67 0.51 (1.01) (0.50) (0.50) (0.20) (0.01)(g)
1995 9.46 0.52 0.90 1.42 (0.54) -- --
1996* 10.34 0.27 (0.33) (0.06) (0.27) -- --
</TABLE>
* Six Months Ended May 31, 1996.
(a) Reflects operations for the period from April 14, 1992 (date of initial
public investment) to November 30, 1992.
(b) Reflects operations for the period from December 13, 1993 (date of initial
public investment) to November 30, 1994.
(c) Reflects operations for the period from April 20, 1992 (date of initial
public investment) to November 30, 1992.
(d) Reflects operations for the two month period ended January 31, 1995. Prior
to February 1, 1995 the Fund offered two classes of shares: Investment
Shares and Trust Shares. On February 1, 1995, all outstanding Trust Shares
were converted to Investment Shares and the Fund no longer offers Trust
Shares.
(e) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(f) Computed on an annualized basis.
(g) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
(h) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
--------------------------------------
NET ASSET NET ASSETS,
VALUE, NET END OF AVERAGE PORTFOLIO
TOTAL END OF TOTAL INVESTMENT EXPENSE PERIOD (000 COMMISSION TURNOVER
DISTRIBUTIONS PERIOD RETURN(e) EXPENSES INCOME WAIVER(H) OMITTED) RATE PAID RATE
- ----------- -------- --------- -------- --------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(0.02) 1.00 2.06% 0.29%(f) 3.20%(f) 0.53%(f) $ 86,616 -- --
(0.03) 1.00 2.75% 0.38% 2.72% 0.46% $ 88,510 -- --
(0.04) 1.00 3.59% 0.32% 3.49% 0.50% $ 91,008 -- --
(0.05) 1.00 5.48% 0.33% 5.35% 0.50% $ 109,368 -- --
(0.02) 1.00 2.41% 0.47%(f) 4.76%(f) 0.33%(f) $ 110,854 -- --
(0.01) 1.00 1.83% 0.74%(f) 2.58%(f) 0.53%(f) $ 23,578 -- --
(0.02) 1.00 2.34% 0.78% 2.33% 0.46% $ 23,795 -- --
(0.03) 1.00 3.18% 0.72% 3.09% 0.50% $ 16,571 -- --
(0.04) 1.00 5.06% 0.73% 4.98% 0.50% $ 28,930 -- --
(0.02) 1.00 2.21% 0.87%(f) 4.36%(f) 0.33%(f) $ 37,445 -- --
(0.42) 9.60 0.19% 0.38%(f) 4.45%(f) 0.70%(f) $ 48,526 -- 3%
(0.51) 10.04 10.12% 0.61% 5.26% 0.49% $ 63,078 -- 26%
(0.25) 9.80 0.17% 0.93%(f) 5.10%(f) 0.15%(f) $ 64,308 -- 12%
(0.38) 10.27 7.66% 0.77%(f) 6.02%(f) 0.29%(f) $ 96,354 -- 44%
(0.61) 10.67 10.14% 0.84% 4.80% 0.25% $ 169,881 -- 83%
(0.74) 9.46 (4.55%) 0.79% 5.44% 0.25% $ 153,289 -- 24%
(0.09) 9.57 2.11% 0.82%(f) 5.79%(f) 0.25%(f) -- -- --
(0.37) 10.27 7.48% 1.07%(f) 5.33%(f) 0.29%(f) $ 5,457 -- 44%
(0.58) 10.67 9.81% 1.14% 4.40% 0.25% $ 12,519 -- 83%
(0.71) 9.46 (4.83%) 1.09% 5.14% 0.25% $ 9,645 -- 24%
(0.54) 10.34 15.37% 1.02% 5.25% -- $ 160,286 -- 45%
(0.27) 10.01 (0.66%) 1.01%(f) 5.20%(f) -- $ 148,593 -- 18%
</TABLE>
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET TO DISTRIBUTIONS
REALIZED DISTRIBUTIONS SHAREHOLDERS TO
AND TO FROM NET SHAREHOLDERS
NET ASSET UNREALIZED TOTAL SHAREHOLDERS REALIZED IN EXCESS
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME
- ------------------------------ ---------- ----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED FUND
1995(c) 10.00 0.44 1.38 1.82 (0.36) -- --
1996* 11.46 0.22 0.24 0.46 (0.22) (0.21) --
VALUE FUND
1995(c) 10.00 0.40 1.98 2.38 (0.34) -- --
1996* 12.04 0.15 0.92 1.07 (0.16) (0.35) --
GROWTH FUND--
TRUST SHARES
1992(a) 9.86 0.14 0.77 0.91 (0.11) -- --
1993 10.66 0.18 (0.03) 0.15 (0.18) (0.12) --
1994 10.51 0.25 (0.10) 0.15 (0.23) (0.07) --
1995(b) 10.36 0.08 0.02 0.10 (0.08) (0.33) --
GROWTH FUND--
INVESTMENT SHARES
1992(a) 9.86 0.10 0.79 0.89 (0.09) -- --
1993 10.66 0.16 (0.04) 0.12 (0.15) (0.12) --
1994 10.51 0.21 (0.09) 0.12 (0.20) (0.07) --
1995 10.36 0.18 2.10 2.28 (0.21) (0.33) --
1996* 12.10 0.08 1.27 1.35 (0.10) (0.55) --
</TABLE>
* Six Months Ended May 31, 1996.
(a) Reflects operations for the period from April 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Reflects operations for the two month period ended January 31, 1995. Prior
to February 1, 1995 the Fund offered two classes of shares: Investment
Shares and Trust Shares. On February 1, 1995, all outstanding Trust Shares
were converted to Investment Shares and the Fund no longer offers Trust
Shares.
(c) Reflects operations for the period from December 19, 1994 (date of initial
public investment) to November 30, 1995.
(d) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(e) Computed on an annualized basis.
(f) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
--------------------------------------
NET ASSET NET ASSETS,
VALUE, NET END OF AVERAGE PORTFOLIO
TOTAL END OF TOTAL INVESTMENT EXPENSE PERIOD (000 COMMISSION TURNOVER
DISTRIBUTIONS PERIOD RETURN(D) EXPENSES INCOME WAIVER(F) OMITTED) RATE PAID RATE
- ----------- --------- --------- -------- --------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(0.36) 11.46 18.50% 0.61%(e) 4.34%(e) 0.56%(e) $ 51,197 -- 49%
(0.43) 11.49 4.10% 1.01%(e) 3.81%(e) 0.18%(e) $ 53,992 $0.0670 24%
(0.34) 12.04 24.14% 0.69%(e) 3.93%(e) 0.55%(e) $ 45,424 -- 76%
(0.51) 12.60 9.23% 1.06%(e) 2.67%(e) 0.15%(e) $ 71,173 $0.0676 36%
(0.11) 10.66 9.28% 0.76%(e) 2.28%(e) 0.35%(e) $ 102,822 -- 30%
(0.30) 10.51 1.43% 0.84% 1.85% 0.30% $ 154,185 -- 74%
(0.30) 10.36 1.42% 0.79% 2.32% 0.30% $ 143,876 -- 66%
(0.41) 10.05 1.00% 0.83%(e) 2.76%(e) 0.30%(e) -- -- --
(0.09) 10.66 9.14% 1.07%(e) 1.85%(e) 0.35%(e) $ 3,132 -- 30%
(0.27) 10.51 1.13% 1.14% 1.59% 0.30% $ 7,004 -- 74%
(0.27) 10.36 1.11% 1.09% 2.02% 0.30% $ 6,131 -- 66%
(0.54) 12.10 23.01% 1.03% 1.61% 0.05% $ 154,297 -- 110%
(0.65) 12.80 11.66% 1.05%(e) 1.24%(e) 0.02%(e) $ 154,787 $0.0604 42%
</TABLE>
FIRST PRIORITY TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ------------ ------------------------------------------------------------------------ ------------
<C> <C> <S> <C>
UNITED STATES TREASURY OBLIGATIONS--91.1%
- --------------------------------------------------------------------------------------------
U.S. TREASURY BILLS--76.3%
------------------------------------------------------------------------
$114,000,000 6/13/1996--9/19/1996 $113,138,706
------------------------------------------------------------------------ ------------
U.S. TREASURY NOTES--14.8%
------------------------------------------------------------------------
22,000,000 6.00%--6.25%, 6/30/1996--8/31/1996 22,036,156
------------------------------------------------------------------------ ------------
TOTAL UNITED STATES TREASURY OBLIGATIONS (AT AMORTIZED COST) 135,174,862
------------------------------------------------------------------------ ------------
MUTUAL FUNDS SHARES--8.8%
- --------------------------------------------------------------------------------------------
4,680,550 Dreyfus Treasury Prime Cash Management 4,680,550
------------------------------------------------------------------------
4,074,166 Franklin U.S. Treasury Money Market Portfolio 4,074,166
------------------------------------------------------------------------
4,279,408 Goldman Sachs I.L.A. Treasury Portfolio 4,279,408
------------------------------------------------------------------------ ------------
TOTAL MUTUAL FUNDS SHARES (AT NET ASSET VALUE) 13,034,124
------------------------------------------------------------------------ ------------
TOTAL INVESTMENTS (AT AMORTIZED COST AND VALUE)(A) $148,208,986
------------------------------------------------------------------------ ------------
</TABLE>
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($148,299,210) at May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--13.7%
- ------------------------------------------------------------------------------------
BANKING--1.5%
------------------------------------------------------------------
$ 500,000 BankAmerica Corporation, 7.125%, 5/12/2005 $ 490,275
------------------------------------------------------------------
500,000 Barnett Banks, Inc., 6.25%, 7/28/1998 496,095
------------------------------------------------------------------ -----------
Total 986,370
------------------------------------------------------------------ -----------
BASIC INDUSTRY--0.8%
------------------------------------------------------------------
500,000 WMX Technologies, 4.875%, 6/15/1996 500,220
------------------------------------------------------------------ -----------
BEVERAGES--1.6%
------------------------------------------------------------------
500,000 Pepsico, Inc., 6.80%, 5/15/2000 498,655
------------------------------------------------------------------
500,000 Pepsico, Inc., 7.48%, 4/27/2002 502,625
------------------------------------------------------------------ -----------
Total 1,001,280
------------------------------------------------------------------ -----------
FINANCE-AUTOMOTIVE--0.7%
------------------------------------------------------------------
500,000 Ford Motor Credit Corporation, 5.625%, 1/15/1999 486,245
------------------------------------------------------------------ -----------
FINANCE-COMMERCIAL--3.0%
------------------------------------------------------------------
500,000 American Express Credit Corporation, 6.75%, 6/1/2001 495,165
------------------------------------------------------------------
500,000 Associates Corp. of North America, 6.00%, 12/01/2002 470,015
------------------------------------------------------------------
500,000 Merrill Lynch & Co. Inc., 6.00%, 1/15/2001 478,730
------------------------------------------------------------------
500,000 Norwest Corporation, 7.68%, 5/10/2002 503,340
------------------------------------------------------------------ -----------
Total 1,947,250
------------------------------------------------------------------ -----------
NATURAL GAS--0.8%
------------------------------------------------------------------
500,000 Consolidated Natural Gas Co., 7.375%, 4/1/2005 501,285
------------------------------------------------------------------ -----------
PHARMACEUTICAL--0.8%
------------------------------------------------------------------
500,000 SmithKline Beecham Corp., 7.125%, 5/1/2002 498,375
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
RETAIL--1.5%
------------------------------------------------------------------
$ 500,000 J.C. Penney, Inc., 6.375%, 9/15/2000 $ 488,785
------------------------------------------------------------------
500,000 Wal-Mart Stores, 6.75%, 5/15/2002 491,505
------------------------------------------------------------------ -----------
Total 980,290
------------------------------------------------------------------ -----------
TELECOMMUNICATIONS--3.0%
------------------------------------------------------------------
1,000,000 AT&T Corp., 8.20%, 2/15/2005 1,029,607
------------------------------------------------------------------
1,000,000 Illinois Bell Telephone Co., 5.80%, 2/1/2004 916,000
------------------------------------------------------------------ -----------
Total 1,945,607
------------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $8,981,475) 8,846,922
------------------------------------------------------------------ -----------
U.S. GOVERNMENT AGENCIES--19.3%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--0.8%
------------------------------------------------------------------
500,000 6.96%, 6/6/2000 497,240
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN BANK--5.2%
------------------------------------------------------------------
500,000 6.375%, 6/22/2000 491,560
------------------------------------------------------------------
500,000 6.375%, 12/4/2002 479,250
------------------------------------------------------------------
500,000 6.54%, 7/10/2000 489,760
------------------------------------------------------------------
500,000 6.75%, 11/17/2005 475,165
------------------------------------------------------------------
500,000 5.75%, 2/6/2001 477,140
------------------------------------------------------------------
1,000,000 6.16%, 1/21/2004 928,850
------------------------------------------------------------------ -----------
Total 3,341,725
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORP.--5.3%
------------------------------------------------------------------
1,000,000 5.70%, 2/2/1999 972,800
------------------------------------------------------------------
1,000,000 6.27%, 1/27/2004 932,170
------------------------------------------------------------------
500,000 7.60%, 5/12/2005 495,335
------------------------------------------------------------------
1,000,000 8.28%, 3/15/2005 1,014,250
------------------------------------------------------------------ -----------
Total 3,414,555
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--6.5%
------------------------------------------------------------------
$ 500,000 5.12%, 1/22/1999 $ 481,395
------------------------------------------------------------------
1,000,000 6.28%, 2/3/2004 939,850
------------------------------------------------------------------
500,000 6.40%, 1/13/2004 472,070
------------------------------------------------------------------
500,000 6.80%, 9/30/2002 484,820
------------------------------------------------------------------
300,000 7.02%, 11/3/2005 286,749
------------------------------------------------------------------
500,000 7.05%, 10/20/2005 478,865
------------------------------------------------------------------
500,000 7.30%, 4/17/2000 503,420
------------------------------------------------------------------
500,000 8.32%, 3/2/2005 507,610
------------------------------------------------------------------ -----------
Total 4,154,779
------------------------------------------------------------------ -----------
STUDENT LOAN MARKETING ASSOCIATION--1.5%
------------------------------------------------------------------
500,000 7.00%, 6/21/2000 496,580
------------------------------------------------------------------
500,000 7.67%, 3/8/2000 503,915
------------------------------------------------------------------ -----------
Total 1,000,495
------------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT SECURITIES (IDENTIFIED COST $12,781,953) 12,408,794
------------------------------------------------------------------ -----------
U.S. TREASURY NOTES--54.5%
- ------------------------------------------------------------------------------------
1,000,000 6.00%, 6/30/1996 1,000,880
------------------------------------------------------------------
1,500,000 6.125%, 7/31/1996 1,502,460
------------------------------------------------------------------
1,000,000 4.375%, 8/15/1996 998,540
------------------------------------------------------------------
1,000,000 6.25%, 8/31/1996 1,002,020
------------------------------------------------------------------
1,500,000 6.50%, 9/30/1996 1,506,120
------------------------------------------------------------------
1,500,000 6.875%, 10/31/1996 1,509,150
------------------------------------------------------------------
1,500,000 4.375%, 11/15/1996 1,493,625
------------------------------------------------------------------
500,000 7.25%, 11/30/1996 504,380
------------------------------------------------------------------
500,000 7.50%, 12/31/1996 505,695
------------------------------------------------------------------
500,000 7.50%, 1/31/1997 506,210
------------------------------------------------------------------
500,000 5.625%, 6/30/1997 498,800
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. TREASURY NOTES--CONTINUED
- ------------------------------------------------------------------------------------
$ 500,000 5.875%, 7/31/1997 $ 499,695
------------------------------------------------------------------
1,000,000 6.5%, 8/15/1997 1,006,250
------------------------------------------------------------------
500,000 6.00%, 8/31/1997 499,970
------------------------------------------------------------------
500,000 5.75%, 9/30/1997 498,320
------------------------------------------------------------------
500,000 5.625%, 10/31/1997 497,175
------------------------------------------------------------------
2,000,000 7.375%, 11/15/1997 2,034,800
------------------------------------------------------------------
500,000 5.375%, 11/30/1997 494,940
------------------------------------------------------------------
500,000 7.25%, 2/15/1998 508,390
------------------------------------------------------------------
500,000 5.125%, 2/28/1998 491,395
------------------------------------------------------------------
500,000 6.125%, 3/31/1998 499,410
------------------------------------------------------------------
500,000 5.875%, 8/15/1998 495,670
------------------------------------------------------------------
500,000 5.50%, 11/15/1998 490,395
------------------------------------------------------------------
1,000,000 5.125%, 11/30/1998 971,970
------------------------------------------------------------------
1,500,000 5.125%, 12/31/1998 1,456,425
------------------------------------------------------------------
1,000,000 5.00%, 1/31/1999 966,500
------------------------------------------------------------------
1,000,000 5.00%, 2/15/1999 965,930
------------------------------------------------------------------
1,000,000 6.875%, 3/31/2000 1,010,210
------------------------------------------------------------------
500,000 5.50%, 4/15/2000 482,495
------------------------------------------------------------------
500,000 6.75%, 4/30/2000 502,905
------------------------------------------------------------------
500,000 6.25%, 5/31/2000 494,240
------------------------------------------------------------------
1,000,000 5.875%, 6/30/2000 975,130
------------------------------------------------------------------
1,500,000 6.125%, 7/31/2000 1,474,605
------------------------------------------------------------------
500,000 6.25%, 8/31/2000 493,475
------------------------------------------------------------------
500,000 6.125%, 9/30/2000 491,150
------------------------------------------------------------------
500,000 5.75%, 10/31/2000 483,800
------------------------------------------------------------------
500,000 5.625%, 11/30/2000 481,065
------------------------------------------------------------------
500,000 5.50%, 12/31/2000 478,390
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. TREASURY NOTES--CONTINUED
- ------------------------------------------------------------------------------------
$1,500,000 5.25%, 1/31/2001 $ 1,422,045
------------------------------------------------------------------
1,500,000 5.625%, 2/28/2001 1,439,430
------------------------------------------------------------------
1,000,000 5.75%, 8/15/2003 941,240
------------------------------------------------------------------
500,000 6.50%, 8/15/2005 487,260
------------------------------------------------------------------ -----------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $35,398,978) 35,062,555
------------------------------------------------------------------ -----------
(a)REPURCHASE AGREEMENT--11.4%
- ------------------------------------------------------------------------------------
7,312,083 HSBC Securities, Inc., 5.27%, dated 5/31/1996, due 6/3/1996
(AT AMORTIZED COST) 7,312,083
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $64,474,489)(b) $63,630,354
------------------------------------------------------------------ -----------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $64,474,489. The
net unrealized depreciation of investments on a federal tax basis amounts to
$844,135 which is comprised of $203,239 appreciation and $1,047,374
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($64,307,907) at May 31, 1996.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--10.4%
- ----------------------------------------------------------------------------------
CONSUMER CYCLICAL--0.6%
---------------------------------------------------------------
RETAIL--SPECIALTY
---------------------------------------------------------------
$ 880,000 Limited, Inc., 9.125%, 2/1/2001 $ 928,699
--------------------------------------------------------------- ------------
CONSUMER STAPLES--0.6%
---------------------------------------------------------------
TOBACCO
---------------------------------------------------------------
880,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 944,082
--------------------------------------------------------------- ------------
ELECTRICAL EQUIPMENT--1.1%
---------------------------------------------------------------
1,750,000 General Electric Capital Corp., 5.50%, 11/1/2001 1,632,593
--------------------------------------------------------------- ------------
ELECTRICAL POWER--1.3%
---------------------------------------------------------------
880,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 941,468
---------------------------------------------------------------
880,000 Virginia Electric & Power, 8.875%, 6/1/1999 925,857
--------------------------------------------------------------- ------------
Total 1,867,325
--------------------------------------------------------------- ------------
FINANCIAL--6.1%
---------------------------------------------------------------
FINANCE--AUTOMOTIVE
---------------------------------------------------------------
675,000 Ford Motor Credit Corporation, 6.35%, 2/11/1998 672,758
---------------------------------------------------------------
1,000,000 General Motors Acceptance Corporation, 7.75%, 1/15/1999 1,022,510
---------------------------------------------------------------
2,000,000 General Motors Acceptance Corporation, 8.00%, 10/1/1999 2,063,400
--------------------------------------------------------------- ------------
Total 3,758,668
--------------------------------------------------------------- ------------
INSURANCE
---------------------------------------------------------------
1,760,000 U.S. Life Corp., 6.75%, 1/15/1998 1,765,914
--------------------------------------------------------------- ------------
SECURITIES
---------------------------------------------------------------
3,500,000 Goldman Sachs Group, 7.80%, 7/15/2002 3,577,000**
--------------------------------------------------------------- ------------
Total Financial 9,101,582
--------------------------------------------------------------- ------------
TRANSPORTATION--0.7%
---------------------------------------------------------------
880,000 Ford Motor Co., 8.875%, 4/1/2006 967,419
--------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $15,337,806) 15,441,700
--------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--62.0%
- ----------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--8.4%
---------------------------------------------------------------
$ 3,000,000 5.00%, 12/28/1998 $ 2,894,220
---------------------------------------------------------------
5,850,000 5.75%, Floating Rate Note*, 11/5/2003 5,671,400
---------------------------------------------------------------
1,000,000 6.00%, 4/14/2004 994,960
---------------------------------------------------------------
3,000,000 6.50%, Floating Rate Note*, 4/11/2011 2,892,900
--------------------------------------------------------------- ------------
Total 12,453,480
--------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORP.--24.2%
---------------------------------------------------------------
2,640,000 Step-up, 0/5.70%, 2/2/1999 2,568,192
---------------------------------------------------------------
2,000,000 4.90%, Floating Rate Note*, 9/3/2003 1,913,100
---------------------------------------------------------------
2,000,000 6.375%, 12/23/2003 1,883,520
---------------------------------------------------------------
1,695,000 8.335%, 3/14/2005 1,722,052
---------------------------------------------------------------
1,000,000 7.01%, 3/15/2006 953,400
---------------------------------------------------------------
2,040,833 PC, 1386C, 6.46%, Floating Rate Note*, 10/15/2007 2,081,670
---------------------------------------------------------------
314,132 PC, 1414F, 6.51%, Floating Rate Note*, 11/15/2007 320,320
---------------------------------------------------------------
1,075,000 7.55%, 11/27/2007 1,058,294
---------------------------------------------------------------
2,626,287 PC, 1475O, 7.00%, 2/15/2008 2,510,783
---------------------------------------------------------------
6,189,728 PC, 1544L, 6.11%, Floating Rate Note*, 7/15/2008 5,990,295
---------------------------------------------------------------
4,400,000 PC, 1604FC, 5.87% Floating Rate Note*, 11/15/2008 4,215,244
---------------------------------------------------------------
5,000,000 PC, 1712C, 6.00%, 3/15/2009 4,483,200
---------------------------------------------------------------
2,743,299 PC, 31K, 6.50%, 10/25/2014 2,493,083
---------------------------------------------------------------
4,250,000 PC, 1403M, 6.50%, 12/15/2021 3,848,715
--------------------------------------------------------------- ------------
Total 36,041,868
--------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--26.6%
---------------------------------------------------------------
2,200,000 REMIC, 1993-G6/J, 7.00%, 12/25/1999 2,204,708
---------------------------------------------------------------
2,703,000 STRIPS, PO, 8.04%, 10/10/2001 2,651,859
---------------------------------------------------------------
4,400,000 STRIPS, PO, 0/7.56%, 12/20/2001 4,248,420
---------------------------------------------------------------
1,750,000 STRIPS, PO, 0/7.89%, 3/9/2002 1,671,634
---------------------------------------------------------------
1,750,000 REMIC, 1992-G40/K, 7.00%, 6/25/2002 1,740,900
---------------------------------------------------------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
---------------------------------------------------------------
$ 3,500,000 5.82%, 11/4/2003 $ 3,194,240
---------------------------------------------------------------
1,250,000 REMIC, 1992-G35/EC, 8.25%, 7/25/2005 1,286,400
---------------------------------------------------------------
2,000,000 7.25%, 9/26/2005 1,936,380
---------------------------------------------------------------
4,500,000 7.34%, 9/29/2005 4,375,575
---------------------------------------------------------------
1,900,000 7.125%, 11/7/2005 1,826,717
---------------------------------------------------------------
1,250,000 1992-209/F, 6.70%, 11/25/2007 1,287,338
---------------------------------------------------------------
3,716,165 REMIC, 1993-G32/J, 6.75%, 5/25/2009 3,586,099
---------------------------------------------------------------
3,541,125 REMIC, 1994-10/KC, 6.50%, 10/25/2010 3,212,048
---------------------------------------------------------------
1,000,000 REMIC, 1992-137/DA, 7.75%, 1/25/2017 1,011,840
---------------------------------------------------------------
5,601,615 REMIC, 1993-202/PH, 6.50%, 2/25/2022 5,276,885
--------------------------------------------------------------- ------------
Total 39,511,043
--------------------------------------------------------------- ------------
TENNESSEE VALLEY AUTHORITY--2.8%
---------------------------------------------------------------
4,400,000 6.125%, 7/15/2003 4,159,276
--------------------------------------------------------------- ------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $95,529,077) 92,165,667
--------------------------------------------------------------- ------------
U.S. TREASURY OBLIGATIONS--24.2%
- ----------------------------------------------------------------------------------
U.S. TREASURY NOTES
---------------------------------------------------------------
7,000,000 6.50%, 4/30/1997 7,045,710
---------------------------------------------------------------
7,000,000 5.50%, 4/15/2000 6,754,930
---------------------------------------------------------------
7,000,000 7.50%, 11/15/2001 7,256,480
---------------------------------------------------------------
7,000,000 7.50%, 5/15/2002 7,274,820
---------------------------------------------------------------
15,000,000 STRIPS, IO, 2/15/2006 7,665,150
--------------------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $36,464,998) 35,997,090
--------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------------------------------------------------------- ------------
<C> <C> <S> <C>
(a)REPURCHASE AGREEMENT--3.0%
- ----------------------------------------------------------------------------------
$ 4,462,037 HSBC Securities, Inc., 5.27%, dated 5/31/1996, due 6/3/1996
(at amortized cost) $ 4,462,037
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $151,793,918)(b) $148,066,494
--------------------------------------------------------------- ------------
</TABLE>
* Current rate shown
** Restricted Security--Investments in securities not registered under the
Securities Act of 1933. At the end of the period, this security amounted to
2.4% of net assets.
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $151,793,918.
The net unrealized depreciation of investments on a federal tax basis
amounts to $3,727,424 which is comprised of $599,699 appreciation and
$4,327,123 depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($148,593,412) at May 31, 1996.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
IO -- Interest Only
PC -- Participation Certificate
REMIC -- Real Estate Mortgage Investment Conduit
STRIPS -- Separate Trading of Registered Interest & Principal of Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY BALANCED FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--43.7%
- -----------------------------------------------------------------------------------
BASIC INDUSTRIES--2.2%
-----------------------------------------------------------------
CHEMICALS/PAPER
-----------------------------------------------------------------
4,200 Air Products & Chemicals, Inc. $ 249,900
-----------------------------------------------------------------
3,000 Dow Chemical Co. 250,875
-----------------------------------------------------------------
3,000 Du Pont (E.I.) de Nemours & Co. 239,250
-----------------------------------------------------------------
6,500 Kimberly-Clark Corp. 473,688
----------------------------------------------------------------- -----------
Total Basic Industries 1,213,713
----------------------------------------------------------------- -----------
CAPITAL GOODS--8.7%
-----------------------------------------------------------------
ELECTRICAL
-----------------------------------------------------------------
14,000 General Electric Co. 1,158,500
----------------------------------------------------------------- -----------
POLLUTION CONTROL
-----------------------------------------------------------------
10,000 Browning-Ferris Industries, Inc. 305,000
----------------------------------------------------------------- -----------
TECHNOLOGY
-----------------------------------------------------------------
8,000 BMC Software, Inc. 504,000
-----------------------------------------------------------------
4,000 Boeing Co. 341,000
-----------------------------------------------------------------
3,700 Intel Corp. 279,350
-----------------------------------------------------------------
5,000 International Business Machines Corp. 533,750
-----------------------------------------------------------------
8,000 Microsoft Corp. 950,000
-----------------------------------------------------------------
3,500 Motorola, Inc. 233,625
-----------------------------------------------------------------
11,250 Oracle Corp. 372,656
----------------------------------------------------------------- -----------
Total 3,214,381
----------------------------------------------------------------- -----------
Total Capital Goods 4,677,881
----------------------------------------------------------------- -----------
CONSUMER CYCLICAL--3.5%
-----------------------------------------------------------------
AUTOMOTIVE
-----------------------------------------------------------------
9,000 General Motors Corp. 496,125
----------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
-----------------------------------------------------------------
MERCHANDISE/APPAREL
-----------------------------------------------------------------
9,000 Home Depot, Inc. $ 460,125
-----------------------------------------------------------------
6,000 VF Corp. 365,250
-----------------------------------------------------------------
22,000 Wal-Mart Stores, Inc. 569,250
----------------------------------------------------------------- -----------
Total 1,394,625
----------------------------------------------------------------- -----------
Total Consumer Cyclical 1,890,750
----------------------------------------------------------------- -----------
CONSUMER SERVICES--2.1%
-----------------------------------------------------------------
ENTERTAINMENT
-----------------------------------------------------------------
8,000 Walt Disney Co. 486,000
----------------------------------------------------------------- -----------
PUBLISHING
-----------------------------------------------------------------
3,300 Eastman Kodak Co. 245,438
----------------------------------------------------------------- -----------
RETAIL--RESTAURANTS
-----------------------------------------------------------------
8,000 McDonald's Corp. 385,000
----------------------------------------------------------------- -----------
Total Consumer Services 1,116,438
----------------------------------------------------------------- -----------
CONSUMER STAPLE--11.8%
-----------------------------------------------------------------
FOOD & BEVERAGE
-----------------------------------------------------------------
8,500 General Mills, Inc. 487,688
-----------------------------------------------------------------
20,000 PepsiCo, Inc. 665,000
-----------------------------------------------------------------
12,000 Sara Lee Corp. 400,500
----------------------------------------------------------------- -----------
Total 1,553,188
----------------------------------------------------------------- -----------
HEALTH CARE
-----------------------------------------------------------------
4,800 American Home Products Corp. 256,800
-----------------------------------------------------------------
10,500 Bard (C.R.), Inc. 345,188
-----------------------------------------------------------------
20,000 Merck & Co., Inc. 1,292,500
-----------------------------------------------------------------
10,000 Pfizer, Inc. 707,500
-----------------------------------------------------------------
8,000 Schering-Plough Corp. 469,000
----------------------------------------------------------------- -----------
Total 3,070,988
----------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CONSUMER STAPLE--CONTINUED
-----------------------------------------------------------------
HOUSEHOLD PRODUCTS
-----------------------------------------------------------------
5,500 Colgate-Palmolive Co. $ 433,125
----------------------------------------------------------------- -----------
TOBACCO
-----------------------------------------------------------------
10,000 Philip Morris Cos., Inc. 993,750
-----------------------------------------------------------------
10,000 UST, Inc. 330,000
----------------------------------------------------------------- -----------
Total 1,323,750
----------------------------------------------------------------- -----------
Total Consumer Staple 6,381,051
----------------------------------------------------------------- -----------
ENERGY--4.0%
-----------------------------------------------------------------
OIL SERVICES
-----------------------------------------------------------------
8,000 Amoco Corp. 580,000
-----------------------------------------------------------------
8,000 Chevron Corp. 478,000
-----------------------------------------------------------------
8,000 Halliburton Co. 445,000
-----------------------------------------------------------------
8,000 Texaco, Inc. 670,000
----------------------------------------------------------------- -----------
Total Energy 2,173,000
----------------------------------------------------------------- -----------
FINANCIAL--6.4%
-----------------------------------------------------------------
BANKING
-----------------------------------------------------------------
11,000 American Express Co. 503,250
-----------------------------------------------------------------
7,000 BankAmerica Corp. 526,750
-----------------------------------------------------------------
7,000 Citicorp 588,000
-----------------------------------------------------------------
10,000 Federal National Mortgage Association 308,750
-----------------------------------------------------------------
2,000 NationsBank Corp. 162,250
-----------------------------------------------------------------
2,000 Wells Fargo & Co. 482,000
----------------------------------------------------------------- -----------
Total 2,571,000
----------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
FINANCIAL--CONTINUED
-----------------------------------------------------------------
INSURANCE
-----------------------------------------------------------------
6,000 American International Group, Inc. $ 565,500
-----------------------------------------------------------------
2,000 General RE Corp. 292,000
----------------------------------------------------------------- -----------
Total 857,500
----------------------------------------------------------------- -----------
Total Financial 3,428,500
----------------------------------------------------------------- -----------
TRANSPORTATION--0.4%
-----------------------------------------------------------------
2,531 AMR Corp. 238,924
----------------------------------------------------------------- -----------
UTILITIES--4.6%
-----------------------------------------------------------------
8,000 AT&T Corp. 499,000
-----------------------------------------------------------------
6,000 Ameritech Corp. 339,000
-----------------------------------------------------------------
10,000 Central & SouthWest Corp. 276,250
-----------------------------------------------------------------
5,000 Duke Power Co. 241,250
-----------------------------------------------------------------
10,000 Florida Progress Corp. 330,000
-----------------------------------------------------------------
9,000 SBC Communications, Inc. 444,375
-----------------------------------------------------------------
15,000 Southern Co. 346,875
----------------------------------------------------------------- -----------
Total Utilities 2,476,750
----------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $19,070,052) 23,597,007
----------------------------------------------------------------- -----------
PREFERRED STOCKS--0.9%
- -----------------------------------------------------------------------------------
CONSUMER CYCLICAL--0.9%
-----------------------------------------------------------------
AUTOMOTIVE
-----------------------------------------------------------------
4,000 Ford Motor Co., Conv. Pfd., Series A 474,000
----------------------------------------------------------------- -----------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $344,000) 474,000
----------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--7.2%
- -----------------------------------------------------------------------------------
CONSUMER CYCLICAL--1.4%
-----------------------------------------------------------------
AUTOMOTIVE
-----------------------------------------------------------------
$ 120,000 Ford Motor Co., Delaware, 8.875%, 4/1/2006 $ 131,921
----------------------------------------------------------------- -----------
RETAIL--SPECIALTY
-----------------------------------------------------------------
120,000 Limited, Inc., 9.125%, 2/1/2001 126,641
-----------------------------------------------------------------
500,000 J.C. Penney Co., Inc., 6.375%, 9/15/2000 488,785
----------------------------------------------------------------- -----------
Total 615,426
----------------------------------------------------------------- -----------
Total Consumer Cyclical 747,347
----------------------------------------------------------------- -----------
CONSUMER STAPLE--0.2%
-----------------------------------------------------------------
TOBACCO
-----------------------------------------------------------------
120,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 128,738
----------------------------------------------------------------- -----------
FINANCIAL--5.1%
-----------------------------------------------------------------
FINANCE--AUTOMOTIVE
-----------------------------------------------------------------
325,000 Ford Motor Credit Corporation, 6.35%, 2/11/1998 323,921
----------------------------------------------------------------- -----------
FINANCE--EQUIPMENT
-----------------------------------------------------------------
250,000 General Electric Capital Corp., 5.50%, 11/1/2001 233,228
----------------------------------------------------------------- -----------
INSURANCE
-----------------------------------------------------------------
500,000 Merrill Lynch & Co., Inc., 6.00%, 1/15/2001 478,730
-----------------------------------------------------------------
240,000 U.S. Life Corp., 6.75%, 1/15/1998 240,806
----------------------------------------------------------------- -----------
Total 719,536
----------------------------------------------------------------- -----------
SECURITIES
-----------------------------------------------------------------
500,000 Goldman Sachs Group, 7.80%, 7/15/2002 511,000**
----------------------------------------------------------------- -----------
LEASING
-----------------------------------------------------------------
1,000,000 International Lease Finance Corp., 5.05%, 3/24/1999 975,560
----------------------------------------------------------------- -----------
Total Financial 2,763,245
----------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
UTILITIES--0.5%
-----------------------------------------------------------------
$ 120,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 $ 128,382
-----------------------------------------------------------------
120,000 Virginia Electric Power, 8.875%, 6/1/1999 126,253
----------------------------------------------------------------- -----------
Total 254,635
----------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $3,848,371) 3,893,965
----------------------------------------------------------------- -----------
U.S. GOVERNMENT AGENCIES--23.0%
- -----------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--3.6%
-----------------------------------------------------------------
1,000,000 6.50%*, 4/14/2004 994,960
-----------------------------------------------------------------
1,000,000 6.50%*, 4/11/2011 964,300
----------------------------------------------------------------- -----------
Total 1,959,260
----------------------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORP.--5.9%
-----------------------------------------------------------------
360,000 Step-up, 0/5.70%, 2/2/1999 350,208
-----------------------------------------------------------------
500,000 6.57%, 9/18/2000 490,810
-----------------------------------------------------------------
1,000,000 6.67%, 12/14/2005 941,050
-----------------------------------------------------------------
150,000 7.55%, 11/27/2007 147,669
-----------------------------------------------------------------
600,000 PC, 1604FC, 5.71%, Floating Rate Note*, 11/15/2008 574,806
-----------------------------------------------------------------
750,000 PC, 1403M, 6.50%, 12/15/2021 679,185
----------------------------------------------------------------- -----------
Total 3,183,728
----------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--12.4%
-----------------------------------------------------------------
800,000 REMIC, 1993-G06/J, 7.00%, 12/25/1999 801,712
-----------------------------------------------------------------
600,000 STRIPS, PO, 0/7.56%, 12/20/2001 579,330
-----------------------------------------------------------------
250,000 STRIPS, PO, 0/7.89%, 3/9/2002 238,805
-----------------------------------------------------------------
250,000 REMIC, 1992-G40/K, 7.00%, 6/25/2002 248,700
-----------------------------------------------------------------
500,000 5.82%, 11/4/2003 456,320
-----------------------------------------------------------------
1,000,000 REMIC, 1992-G34/EC, 8.25%, 7/25/2005 1,029,120
-----------------------------------------------------------------
500,000 7.05%, 10/20/2005 478,865
-----------------------------------------------------------------
500,000 REMIC, 1993-G32 CL-J, 6.75%, 5/25/2009 482,500
-----------------------------------------------------------------
500,000 REMIC, 1994-10/KC, 6.50%, 10/25/2010 453,535
-----------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- -----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
-----------------------------------------------------------------
$1,000,000 REMIC, 1992-137/DA, 7.75%, 1/25/2017 $ 1,011,840
-----------------------------------------------------------------
1,000,000 REMIC, 1993-202/PH, 6.50%, 2/25/2022 942,029
----------------------------------------------------------------- -----------
Total 6,722,756
----------------------------------------------------------------- -----------
TENNESSEE VALLEY AUTHORITY--1.1%
-----------------------------------------------------------------
600,000 6.125%, 7/15/2003 567,174
----------------------------------------------------------------- -----------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $12,072,573) 12,432,918
----------------------------------------------------------------- -----------
U.S. TREASURY OBLIGATIONS--23.3%
- -----------------------------------------------------------------------------------
U.S. TREASURY NOTES
-----------------------------------------------------------------
1,000,000 STRIPS, PO, 11/15/1996 976,450
-----------------------------------------------------------------
500,000 6.00%, 8/31/1997 499,970
-----------------------------------------------------------------
1,000,000 5.75%, 9/30/1997 996,640
-----------------------------------------------------------------
750,000 5.125%, 3/31/1998 736,350
-----------------------------------------------------------------
1,000,000 5.875%, 8/15/1998 991,340
-----------------------------------------------------------------
500,000 6.375%, 7/15/1999 498,850
-----------------------------------------------------------------
1,000,000 5.50%, 4/15/2000 964,990
-----------------------------------------------------------------
500,000 6.25%, 8/31/2000 493,475
-----------------------------------------------------------------
1,000,000 5.625%, 2/28/2001 959,620
-----------------------------------------------------------------
1,000,000 7.50%, 11/15/2001 1,036,640
-----------------------------------------------------------------
1,000,000 7.50%, 5/15/2002 1,039,260
-----------------------------------------------------------------
1,000,000 6.25%, 2/15/2003 972,900
-----------------------------------------------------------------
1,000,000 6.50%, 5/15/2005 975,840
-----------------------------------------------------------------
2,800,000 STRIPS, IO, 2/15/2006 1,430,827
----------------------------------------------------------------- -----------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $12,452,279) 12,573,152
----------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
(a)REPURCHASE AGREEMENT--1.2%
- -----------------------------------------------------------------------------------
$ 673,992 HSBC Securities, Inc., 5.27%, dated 5/31/1996, due 6/3/1996
(at amortized cost) $ 673,992
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $48,461,267)(b) $53,645,034
----------------------------------------------------------------- -----------
</TABLE>
* Current rate shown.
** Restricted Security--Investments in securities not registered under the
Securities Act of 1933. At the end of the period, this security amounted to
0.9% of net assets.
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $48,461,267. The
net unrealized appreciation of investments on a federal tax basis amounts to
$5,183,767 which is comprised of $5,694,746 appreciation and $510,979
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($53,992,187) at May 31, 1996.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
IO -- Interest Only
PC -- Participation Certificate
PO -- Principal Only
REMIC -- Real Estate Mortgage Investment Conduit
STRIPS -- Separate Trading of Registered Interest & Principal of Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY VALUE FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--84.6%
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--7.0%
-------------------------------------------------------------------
CHEMICALS/PAPER
-------------------------------------------------------------------
10,000 Dow Chemical Co. $ 836,250
-------------------------------------------------------------------
17,000 Du Pont (E.I.) de Nemours & Co. 1,355,750
-------------------------------------------------------------------
20,000 Nalco Chemical Co. 635,000
-------------------------------------------------------------------
25,000 PPG Industries, Inc. 1,293,750
-------------------------------------------------------------------
13,000 Weyerhaeuser Co. 589,875
------------------------------------------------------------------- -----------
Total 4,710,625
------------------------------------------------------------------- -----------
METALS & MINING
-------------------------------------------------------------------
5,000 Aluminum Co. of America 308,125
------------------------------------------------------------------- -----------
Total Basic Industry 5,018,750
------------------------------------------------------------------- -----------
CAPITAL GOODS--22.4%
-------------------------------------------------------------------
ELECTRICAL
-------------------------------------------------------------------
16,000 General Electric Co. 1,324,000
-------------------------------------------------------------------
40,000 SCANA Corp. 1,045,000
------------------------------------------------------------------- -----------
Total 2,369,000
------------------------------------------------------------------- -----------
INDUSTRIAL
-------------------------------------------------------------------
20,000 Goodyear Tire & Rubber Co. 1,010,000
-------------------------------------------------------------------
40,000 TECO Energy, Inc. 945,000
------------------------------------------------------------------- -----------
Total 1,955,000
------------------------------------------------------------------- -----------
MACHINE
-------------------------------------------------------------------
22,000 Ingersoll-Rand Co. 926,750
------------------------------------------------------------------- -----------
TECHNOLOGY
-------------------------------------------------------------------
35,000 AMP, Inc. 1,474,375
-------------------------------------------------------------------
8,000 Boeing Co. 682,000
-------------------------------------------------------------------
22,000 General Motors Corp., Class E 1,240,250
-------------------------------------------------------------------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
-------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-------------------------------------------------------------------
14,000 Hewlett-Packard Co. $ 1,494,500
-------------------------------------------------------------------
15,000 Intel Corp. 1,132,500
-------------------------------------------------------------------
6,000 International Business Machines Corp. 640,500
-------------------------------------------------------------------
20,000 Minnesota Mining & Manufacturing Co. 1,365,000
-------------------------------------------------------------------
20,000 Motorola, Inc. 1,335,000
-------------------------------------------------------------------
14,000 TRW, Inc. 1,319,500
------------------------------------------------------------------- -----------
Total 10,683,625
------------------------------------------------------------------- -----------
Total Capital Goods 15,934,375
------------------------------------------------------------------- -----------
CONSUMER CYCLICAL--4.2%
-------------------------------------------------------------------
AUTOMOTIVE
-------------------------------------------------------------------
39,000 Ford Motor Co. 1,423,500
------------------------------------------------------------------- -----------
RETAIL--SPECIALTY
-------------------------------------------------------------------
30,000 J. C. Penney Co., Inc. 1,556,250
------------------------------------------------------------------- -----------
Total Consumer Cyclical 2,979,750
------------------------------------------------------------------- -----------
CONSUMER SERVICES--5.0%
-------------------------------------------------------------------
PUBLISHING
-------------------------------------------------------------------
17,000 Eastman Kodak Co. 1,264,375
------------------------------------------------------------------- -----------
MERCHANDISING
-------------------------------------------------------------------
15,000 Dayton-Hudson Corp. 1,530,000
------------------------------------------------------------------- -----------
RETAIL-RESTAURANTS
-------------------------------------------------------------------
65,000 Darden Restaurants, Inc. 771,875
------------------------------------------------------------------- -----------
Total Consumer Services 3,566,250
------------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER STAPLES--5.1%
-------------------------------------------------------------------
HEALTH CARE
-------------------------------------------------------------------
12,000 American Home Products Corp. $ 642,000
-------------------------------------------------------------------
7,000 Bristol-Myers Squibb Co. 597,625
------------------------------------------------------------------- -----------
Total 1,239,625
------------------------------------------------------------------- -----------
MISCELLANEOUS
-------------------------------------------------------------------
30,000 Tambrands, Inc. 1,383,750
------------------------------------------------------------------- -----------
TOBACCO
-------------------------------------------------------------------
30,000 UST, Inc. 990,000
------------------------------------------------------------------- -----------
Total Consumer Staples 3,613,375
------------------------------------------------------------------- -----------
ENERGY-OIL--15.2%
-------------------------------------------------------------------
22,000 Amoco Corp. 1,595,000
-------------------------------------------------------------------
36,500 Burlington Resources, Inc. 1,387,000
-------------------------------------------------------------------
30,000 Exxon Corp. 2,542,500
-------------------------------------------------------------------
15,000 Royal Dutch Petroleum Co., ADR 2,250,000
-------------------------------------------------------------------
18,000 Schlumberger Ltd. 1,500,750
-------------------------------------------------------------------
18,000 Texaco, Inc. 1,507,500
------------------------------------------------------------------- -----------
Total Energy-Oil 10,782,750
------------------------------------------------------------------- -----------
FINANCIAL--17.9%
-------------------------------------------------------------------
BANKING
-------------------------------------------------------------------
35,000 Banc One Corp. 1,295,000
-------------------------------------------------------------------
15,000 BankAmerica Corp. 1,128,750
-------------------------------------------------------------------
20,000 Bankers Trust New York Corp. 1,502,500
-------------------------------------------------------------------
35,000 Federal National Mortgage Association 1,080,625
-------------------------------------------------------------------
15,000 J.P. Morgan & Co., Inc. 1,303,125
-------------------------------------------------------------------
20,000 NationsBank Corp. 1,622,500
------------------------------------------------------------------- -----------
Total 7,932,500
------------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
FINANCIAL--CONTINUED
-------------------------------------------------------------------
INSURANCE
-------------------------------------------------------------------
10,000 American International Group, Inc. $ 942,500
-------------------------------------------------------------------
20,000 Chubb Corp. 932,500
-------------------------------------------------------------------
10,000 General RE Corp. 1,460,000
-------------------------------------------------------------------
16,000 Marsh & McLennan Cos., Inc. 1,498,000
------------------------------------------------------------------- -----------
Total 4,833,000
------------------------------------------------------------------- -----------
Total Financial 12,765,500
------------------------------------------------------------------- -----------
TRANSPORTATION--0.8%
-------------------------------------------------------------------
6,329 AMR Corp. 597,310
------------------------------------------------------------------- -----------
UTILITIES--7.0%
-------------------------------------------------------------------
20,000 AT&T Corp. 1,247,500
-------------------------------------------------------------------
35,000 BellSouth Corp. 1,421,875
-------------------------------------------------------------------
30,000 GTE Corp. 1,282,500
-------------------------------------------------------------------
45,000 Southern Co. 1,040,625
------------------------------------------------------------------- -----------
Total Utilities 4,992,500
------------------------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $54,260,534) 60,250,560
------------------------------------------------------------------- -----------
PREFERRED STOCKS--8.4%
- --------------------------------------------------------------------------------------
BASIC INDUSTRY--1.0%
-------------------------------------------------------------------
CHEMICAL/PAPER
-------------------------------------------------------------------
15,000 Atlantic Richfield Co., Conv. Pfd., $2.23 378,750
------------------------------------------------------------------- -----------
METALS & MINING
-------------------------------------------------------------------
10,000 Freeport-McMoRan Copper & Gold, Inc., $1.75 Cum Conv. Pfd. 332,500
------------------------------------------------------------------- -----------
Total Basic Industry 711,250
------------------------------------------------------------------- -----------
CONSUMER CYCLICAL--0.6%
-------------------------------------------------------------------
OTHER
-------------------------------------------------------------------
7,000 Federal-Mogul Corp., Series D, $3.88 Cum Conv. Pfd. 406,000
------------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
PREFERRED STOCKS--CONTINUED
- --------------------------------------------------------------------------------------
CONSUMER SERVICES--1.3%
-------------------------------------------------------------------
ENTERTAINMENT
-------------------------------------------------------------------
10,000 Time Warner Financing, $1.24 PERCS $ 380,000
------------------------------------------------------------------- -----------
HOSPITAL MANAGEMENT
-------------------------------------------------------------------
20,000 FHP International Corp., Series A, $1.25 Cum Conv. Pfd. 530,000
------------------------------------------------------------------- -----------
Total Consumer Services 910,000
------------------------------------------------------------------- -----------
ENERGY-OIL--1.8%
-------------------------------------------------------------------
10,000 Ashland, Inc., $3.13 Cum Conv. Pfd. 671,250
-------------------------------------------------------------------
7,425 Williams Cos., Inc. $3.50 Conv. Pfd. 603,281
------------------------------------------------------------------- -----------
Total Energy--Oil 1,274,531
------------------------------------------------------------------- -----------
FINANCIAL--3.7%
-------------------------------------------------------------------
BANKING
-------------------------------------------------------------------
10,000 First Commerce Corp., 7.25% Pfd. 411,250
-------------------------------------------------------------------
10,000 H.F. Ahmanson & Co., Series D, $3.00 Cum Conv. Pfd. 587,500
-------------------------------------------------------------------
15,000 RCSB Financial, Inc., 7.00% Conv. Pfd. 555,000
-------------------------------------------------------------------
14,000 Union Planters Corp., Cum Conv. Pfd. 542,500
------------------------------------------------------------------- -----------
Total 2,096,250
------------------------------------------------------------------- -----------
INSURANCE
-------------------------------------------------------------------
10,000 Merrill Lynch & Co., Inc., STRYPES, Series MGIC 550,000
------------------------------------------------------------------- -----------
Total Financial 2,646,250
------------------------------------------------------------------- -----------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $5,000,095) 5,948,031
------------------------------------------------------------------- -----------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--1.3%
- --------------------------------------------------------------------------------------
CONSUMER CYCLICAL-RETAIL-SPECIALTY--1.3%
-------------------------------------------------------------------
$ 700,000 Guilford Mills, Inc., 6.00%, 9/15/2012 $ 689,500
-------------------------------------------------------------------
300,000 J. Baker, Inc., 7.00%, 6/1/2002 250,500
------------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $992,488) 940,000
------------------------------------------------------------------- -----------
(a)REPURCHASE AGREEMENT--7.0%
- --------------------------------------------------------------------------------------
4,960,044 HSBC Securities, Inc., 5.27%, dated 5/31/1996, due 6/3/1996
(at amortized cost) 4,960,044
------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $65,213,161)(b) $72,098,635
------------------------------------------------------------------- -----------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $65,213,161. The
net unrealized appreciation of investments on a federal tax basis amounts to
$6,885,474 which is comprised of $7,210,900 appreciation and $325,426
depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($71,173,067) at May 31, 1996.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
ADR -- American Depositary Receipt
LTD -- Limited
PERCS -- Preferred Equity Redemption Cumulative Stock
STRYPES -- Structured Yield Enhanced Product Exchangeable for Stock
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--95.7%
- -------------------------------------------------------------------------------------
BASIC INDUSTRY--3.4%
------------------------------------------------------------------
CHEMICALS/METALS
------------------------------------------------------------------
45,500 Barrick Gold Corp. $ 1,433,250
------------------------------------------------------------------
20,000 Dow Chemical Co. 1,672,500
------------------------------------------------------------------ ------------
Total 3,105,750
------------------------------------------------------------------ ------------
PAPER
------------------------------------------------------------------
29,000 Kimberly-Clark Corp. 2,113,375
------------------------------------------------------------------ ------------
Total Basic Industry 5,219,125
------------------------------------------------------------------ ------------
CAPITAL GOODS--7.3%
------------------------------------------------------------------
POLLUTION CONTROL
------------------------------------------------------------------
60,000 Browning-Ferris Industries, Inc. 1,830,000
------------------------------------------------------------------
ELECTRIC EQUIPMENT--MAJOR
------------------------------------------------------------------
95,000 General Electric Co. 7,861,250
------------------------------------------------------------------
INDUSTRIAL MACHINERY
------------------------------------------------------------------
40,000 Parker-Hannifin Corp. 1,630,000
------------------------------------------------------------------ ------------
Total Capital Goods 11,321,250
------------------------------------------------------------------ ------------
CONSUMER CYCLICAL--5.3%
------------------------------------------------------------------
MANUFACTURE HOUSING
------------------------------------------------------------------
40,000 Fleetwood Enterprises, Inc. 1,205,000
------------------------------------------------------------------
MERCHANDISE-SPECIALTY
------------------------------------------------------------------
50,000 Home Depot, Inc. 2,556,250
------------------------------------------------------------------
AUTOMOTIVE
------------------------------------------------------------------
31,000 Pep Boys-Manny Moe & Jack 1,023,000
------------------------------------------------------------------
MERCHANDISE/APPAREL
------------------------------------------------------------------
130,000 Wal-Mart Stores, Inc. 3,363,750
------------------------------------------------------------------ ------------
Total Consumer Cyclical 8,148,000
------------------------------------------------------------------ ------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
CONSUMER SERVICES--9.3%
------------------------------------------------------------------
RETAIL--RESTAURANTS
------------------------------------------------------------------
40,000 McDonald's Corp. $ 1,925,000
------------------------------------------------------------------
32,500 Brinker International, Inc. 544,375
------------------------------------------------------------------
68,500 Cracker Barrel Old Country Store 1,815,250
------------------------------------------------------------------
54,400 Columbia/HCA Healthcare Corp. 2,930,800
------------------------------------------------------------------ ------------
Total 7,215,425
------------------------------------------------------------------ ------------
ENTERTAINMENT
------------------------------------------------------------------
58,300 Disney (Walt) Co. 3,541,725
------------------------------------------------------------------
PUBLISHING
------------------------------------------------------------------
14,600 McGraw-Hill Cos., Inc. 684,374
------------------------------------------------------------------
41,900 Time Warner Inc 1,691,712
------------------------------------------------------------------ ------------
Total 5,917,811
------------------------------------------------------------------ ------------
BROADCASTING
------------------------------------------------------------------
31,250 Viacom, Inc., Class B 1,324,219
------------------------------------------------------------------ ------------
Total Consumer Services 14,457,455
------------------------------------------------------------------ ------------
CONSUMER STAPLES--33.1%
------------------------------------------------------------------
PHARMACEUTICAL
------------------------------------------------------------------
23,000 Amgen, Inc. 1,368,500
------------------------------------------------------------------
65,000 American Home Products Corp. 3,477,500
------------------------------------------------------------------
95,000 Merck & Co., Inc. 6,139,375
------------------------------------------------------------------
60,000 Schering Plough Corp. 3,517,500
------------------------------------------------------------------
85,000 Pfizer, Inc. 6,013,750
------------------------------------------------------------------ ------------
Total 20,516,625
------------------------------------------------------------------ ------------
HOSPITAL SUPPLIES
------------------------------------------------------------------
20,500 Johnson & Johnson 1,996,188
------------------------------------------------------------------
50,000 Abbott Laboratories 2,156,250
------------------------------------------------------------------ ------------
Total 4,152,438
------------------------------------------------------------------ ------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
CONSUMER STAPLES--CONTINUED
------------------------------------------------------------------
BEVERAGE/TOBACCO/MISCELLANEOUS
------------------------------------------------------------------
30,000 Gillette Co. $ 1,773,750
------------------------------------------------------------------
40,000 Colgate-Palmolive Co. 3,150,000
------------------------------------------------------------------
120,000 PepsiCo, Inc. 3,990,000
------------------------------------------------------------------
94,000 Coca-Cola Co. 4,324,000
------------------------------------------------------------------
65,000 Philip Morris Cos., Inc. 6,459,375
------------------------------------------------------------------
40,000 Procter & Gamble Co. 3,515,000
------------------------------------------------------------------
100,000 UST, Inc. 3,300,000
------------------------------------------------------------------ ------------
Total 26,512,125
------------------------------------------------------------------ ------------
Total Consumer Staples 51,181,188
------------------------------------------------------------------ ------------
ENERGY--3.5%
------------------------------------------------------------------
OIL SERVICES
------------------------------------------------------------------
14,500 Atlantic Richfield Co. 1,734,563
------------------------------------------------------------------
23,200 Schlumberger Ltd. 1,934,300
------------------------------------------------------------------
20,600 Texaco, Inc. 1,725,250
------------------------------------------------------------------ ------------
Total Energy 5,394,113
------------------------------------------------------------------ ------------
FINANCIAL SERVICES--5.3%
------------------------------------------------------------------
BANKING/INSURANCE/MISCELLANEOUS
------------------------------------------------------------------
28,000 American International Group, Inc. 2,639,000
------------------------------------------------------------------
32,000 Federal National Mortgage Association 988,000
------------------------------------------------------------------
30,000 Jefferson-Pilot Corp. 1,541,250
------------------------------------------------------------------
20,000 NationsBank Corp. 1,622,500
------------------------------------------------------------------
6,000 Wells Fargo & Co. 1,446,000
------------------------------------------------------------------ ------------
Total Financial Services 8,236,750
------------------------------------------------------------------ ------------
TECHNOLOGY SERVICES--20.7%
------------------------------------------------------------------
TECHNOLOGY
------------------------------------------------------------------
45,000 Airtouch Communications, Inc. 1,434,375
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
TECHNOLOGY SERVICES--CONTINUED
------------------------------------------------------------------
42,000 Automatic Data Processing, Inc. $ 1,611,750
------------------------------------------------------------------
20,000 BMC Software, Inc. 1,260,000
------------------------------------------------------------------
66,000 Cisco Systems, Inc. 3,613,500
------------------------------------------------------------------
20,000 Eastman Kodak Co. 1,487,500
------------------------------------------------------------------
35,000 Hewlett-Packard Co. 3,736,250
------------------------------------------------------------------
50,000 Intel Corp. 3,775,000
------------------------------------------------------------------
25,000 International Business Machines Corp. 2,668,750
------------------------------------------------------------------
35,000 Microsoft Corp. 4,156,250
------------------------------------------------------------------
21,000 Minnesota Mining & Manufacturing Co. 1,433,250
------------------------------------------------------------------
46,000 Motorola, Inc. 3,070,500
------------------------------------------------------------------
117,000 Oracle Corp. 3,875,625
------------------------------------------------------------------ ------------
Total Technology 32,122,750
------------------------------------------------------------------ ------------
TRANSPORTATION--0.7%
------------------------------------------------------------------
AIR TRANSPORTATION
------------------------------------------------------------------
40,000 Atlantic Southeast Airlines, Inc. 1,060,000
------------------------------------------------------------------ ------------
UTILITIES--7.1%
------------------------------------------------------------------
COMMUNICATIONS
------------------------------------------------------------------
81,800 AT&T Corp. 5,102,275
------------------------------------------------------------------
25,000 Ameritech Corp. 1,412,500
------------------------------------------------------------------ ------------
Total 6,514,775
------------------------------------------------------------------ ------------
UTILITIES/ELECTRICAL
------------------------------------------------------------------
80,000 Central & SouthWest Corp. 2,210,000
------------------------------------------------------------------
80,000 Wisconsin Energy Corp. 2,240,000
------------------------------------------------------------------ ------------
Total 4,450,000
------------------------------------------------------------------ ------------
Total Utilities 10,964,775
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $118,906,151) 148,105,406
------------------------------------------------------------------ ------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
REPURCHASE AGREEMENT-3.7%
- -------------------------------------------------------------------------------------
$5,742,581 HSBC Securities, Inc., 5.27%, dated 5/31/1996, due 6/3/1996
(at amortized cost) $ 5,742,581
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $124,648,732)(b) $153,847,987
------------------------------------------------------------------ ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $124,648,732.
The net unrealized appreciation of investments on a federal tax basis
amounts to $29,199,255, which is comprised of $29,811,987 appreciation and
$612,732 depreciation at May 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($154,786,691) at May 31, 1996.
The following acronym is used throughout this portfolio:
LTD--Limited
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED
TREASURY MATURITY
MONEY GOVERNMENT FIXED INCOME
MARKET FUND FUND FUND
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS:
- ----------------------------------------------------------------------
Investments in securities, at value $148,208,986 $56,318,271 $143,604,457
- ----------------------------------------------------------------------
Investments in repurchase agreements, at amortized cost -- 7,312,083 4,462,037
- ----------------------------------------------------------------------
Income receivable 470,801 867,827 1,214,125
- ----------------------------------------------------------------------
Receivable for shares sold 2,870 1,069 160
- ----------------------------------------------------------------------
Deferred expenses 5,663 13,371 5,242
- ---------------------------------------------------------------------- ------------ ----------- ------------
Total assets 148,688,320 64,512,621 149,286,021
- ----------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------
Payable for shares redeemed 6,357 1,028 4,896
- ----------------------------------------------------------------------
Income distribution payable 329,305 143,400 574,602
- ----------------------------------------------------------------------
Accrued expenses 53,448 60,286 113,111
- ---------------------------------------------------------------------- ------------ ----------- ------------
Total liabilities 389,110 204,714 692,609
- ---------------------------------------------------------------------- ------------ ----------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------
Paid in capital $148,299,210 $65,273,475 $155,895,540
- ----------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments -- (844,135) (3,727,424)
- ----------------------------------------------------------------------
Accumulated net realized gain (loss) on investments -- (121,433) (3,577,447)
- ----------------------------------------------------------------------
Undistributed net investment income -- -- 2,743
- ---------------------------------------------------------------------- ------------ ----------- ------------
Total Net Assets $148,299,210 $64,307,907 $148,593,412
- ---------------------------------------------------------------------- ------------ ----------- ------------
NET ASSET VALUE, and Redemption Proceeds Per Share:
(net assets / shares outstanding)
- ----------------------------------------------------------------------
Trust Shares $1.00 -- --
- ---------------------------------------------------------------------- ------------ ----------- ------------
Investment Shares $1.00 $9.80 $10.01
- ---------------------------------------------------------------------- ------------ ----------- ------------
Offering Price Per Share+
- ----------------------------------------------------------------------
Investment Shares -- $10.16* $10.51**
- ---------------------------------------------------------------------- ------------ ----------- ------------
Shares Outstanding
- ----------------------------------------------------------------------
Trust Shares 110,854,437 -- --
- ----------------------------------------------------------------------
Investment Shares 37,444,773 6,564,020 14,845,258
- ---------------------------------------------------------------------- ------------ ----------- ------------
TOTAL SHARES OUTSTANDING 148,299,210 6,564,020 14,845,258
- ---------------------------------------------------------------------- ------------ ----------- ------------
Investments at identified cost $148,208,986 $64,474,489 $151,793,918
- ---------------------------------------------------------------------- ------------ ----------- ------------
Investments, at tax cost $148,208,986 $64,474,489 $151,793,918
- ---------------------------------------------------------------------- ------------ ----------- ------------
</TABLE>
+ See 'What Shares Cost' in the Prospectus.
* Computation of offering price: 100/96.5 of net asset value.
** Computation of offering price: 100/95.25 of net asset value.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
----------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
- --------------------------------------------------------------------------
Investments in securities, at value $52,971,042 $67,138,591 $148,105,406
- --------------------------------------------------------------------------
Investments in repurchase agreements, at amortized cost 673,992 4,960,044 5,742,581
- --------------------------------------------------------------------------
Income receivable 354,952 307,582 247,563
- --------------------------------------------------------------------------
Receivable for investments sold -- -- 700,027
- --------------------------------------------------------------------------
Receivable for shares sold 31,338 10,145 127,377
- --------------------------------------------------------------------------
Deferred expenses 11,693 9,876 5,257
- -------------------------------------------------------------------------- ---------- ---------- -----------
Total assets 54,043,017 72,426,238 154,928,211
- --------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------
Payable for investments purchased -- 1,180,125 --
- --------------------------------------------------------------------------
Payable for shares redeemed -- -- 1,820
- --------------------------------------------------------------------------
Accrued expenses 50,830 73,046 139,700
- -------------------------------------------------------------------------- ---------- ---------- -----------
Total liabilities 50,830 1,253,171 141,520
- -------------------------------------------------------------------------- ---------- ---------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------
Paid in capital $47,589,066 $61,907,744 $119,430,821
- --------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 5,183,767 6,885,474 29,199,255
- --------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 872,676 2,072,949 6,016,802
- --------------------------------------------------------------------------
Undistributed net investment income 346,678 306,900 139,813
- -------------------------------------------------------------------------- ---------- ---------- -----------
Total Net Assets $53,992,187 $71,173,067 $154,786,691
- -------------------------------------------------------------------------- ----------- ----------- ------------
NET ASSET VALUE, and Redemption Proceeds Per Share:
(net assets / shares outstanding) $11.49 $12.60 $12.80
- -------------------------------------------------------------------------- ---------- ---------- -----------
Offering Price Per Share+ $12.06* $13.23* $13.44*
- -------------------------------------------------------------------------- ---------- ---------- -----------
Shares Outstanding 4,698,753 5,650,188 12,095,367
- -------------------------------------------------------------------------- ---------- ---------- -----------
Investments at identified cost $48,461,267 $65,213,161 $124,648,732
- -------------------------------------------------------------------------- ---------- ---------- -----------
Investments, at tax cost $48,461,267 $65,213,161 $124,648,732
- -------------------------------------------------------------------------- ---------- ---------- -----------
</TABLE>
+ See 'What Shares Cost' in the Prospectus.
* Computation of offering price: 100/95.25 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, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED
TREASURY MATURITY
MONEY GOVERNMENT FIXED INCOME
MARKET FUND FUND FUND
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------
Interest $3,846,373 $1,942,908 $ 4,814,096
- ----------------------------------------------------------- ----------- ---------- ------------
EXPENSES:
- -----------------------------------------------------------
Investment advisory fee 367,383 224,728 579,328
- -----------------------------------------------------------
Administrative personnel and services fee 95,572 41,774 100,532
- -----------------------------------------------------------
Custodian fees 15,945 7,671 16,699
- -----------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 42,896 13,921 21,138
- -----------------------------------------------------------
Directors'/Trustees' fees 752 699 739
- -----------------------------------------------------------
Auditing fees 11,000 8,023 8,001
- -----------------------------------------------------------
Legal fees 1,978 500 1,777
- -----------------------------------------------------------
Portfolio accounting fees 27,917 30,400 31,306
- -----------------------------------------------------------
Distribution services fee 77,069 -- --
- -----------------------------------------------------------
Share registration costs 13,505 10,423 10,671
- -----------------------------------------------------------
Printing and postage 5,896 5,499 5,488
- -----------------------------------------------------------
Insurance premiums 3,250 2,500 2,750
- -----------------------------------------------------------
Miscellaneous 8,760 2,743 6,670
- ----------------------------------------------------------- ----------- ---------- ------------
Total expenses 671,923 348,881 785,099
- -----------------------------------------------------------
Waiver of investment advisory fee (243,743) (48,135) --
- ----------------------------------------------------------- ----------- ---------- ------------
Net expenses 428,180 300,746 785,099
- ----------------------------------------------------------- ----------- ---------- ------------
Net investment income 3,418,193 1,642,162 4,028,997
- ----------------------------------------------------------- ----------- ---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------
Net realized gain on investments -- 10,542 16,670
- -----------------------------------------------------------
Change in unrealized depreciation of investments -- (1,630,295) (4,899,629)
- ----------------------------------------------------------- ----------- ---------- ------------
Net realized and unrealized gain (loss) on investments -- (1,619,753) (4,882,959)
- ----------------------------------------------------------- ----------- ---------- ------------
Change in net assets resulting from operations $3,418,193 $ 22,409 $ (853,962)
- ----------------------------------------------------------- ----------- ---------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
---------- ---------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------
Interest $1,014,589 $ 205,881 $ 1,568,028
- ------------------------------------------------------------------
Dividends 282,245 874,802 174,988
- ------------------------------------------------------------------ ---------- ---------- -----------
Total income 1,296,834 1,080,683 1,743,016
- ------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------
Investment advisory fee 215,025 232,030 608,930
- ------------------------------------------------------------------
Administrative personnel and services fee 35,013 37,718 99,157
- ------------------------------------------------------------------
Custodian fees 6,626 7,013 16,489
- ------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,408 14,219 25,000
- ------------------------------------------------------------------
Directors'/Trustees' fees 999 999 2,000
- ------------------------------------------------------------------
Auditing fees 8,001 8,001 11,000
- ------------------------------------------------------------------
Legal fees 1,250 750 1,749
- ------------------------------------------------------------------
Portfolio accounting fees 25,433 28,500 21,739
- ------------------------------------------------------------------
Share registration costs 4,915 9,350 9,922
- ------------------------------------------------------------------
Printing and postage 4,800 5,499 6,249
- ------------------------------------------------------------------
Insurance premiums 2,251 2,251 2,600
- ------------------------------------------------------------------
Miscellaneous 1,737 2,289 8,001
- ------------------------------------------------------------------ ---------- ---------- -----------
Total expenses 320,458 348,619 812,836
- ------------------------------------------------------------------
Waiver of investment advisory fee (48,034) (42,522) (12,959)
- ------------------------------------------------------------------ ---------- ---------- -----------
Net expenses 272,424 306,097 799,877
- ------------------------------------------------------------------ ---------- ---------- -----------
Net investment income 1,024,410 774,586 943,139
- ------------------------------------------------------------------ ---------- ---------- -----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
- ------------------------------------------------------------------
Net realized gain on investments 875,819 2,073,718 6,028,816
- ------------------------------------------------------------------
Change in unrealized appreciation of investments 232,014 2,092,671 10,085,903
- ------------------------------------------------------------------ ---------- ---------- -----------
Net realized and unrealized gain on investments 1,107,833 4,166,389 16,114,719
- ------------------------------------------------------------------ ---------- ---------- -----------
Change in net assets resulting from operations $2,132,243 $4,940,975 $17,057,858
- ------------------------------------------------------------------ ---------- ---------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND
----------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1996 1995 MAY 31, 1996 1995
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 3,418,193 $ 6,800,164 $ 1,642,162 $ 3,054,367
- -----------------------------------------------------
Net realized gain (loss) on investments -- -- 10,542 (69,260)
- -----------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments -- -- (1,630,295) 2,687,975
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets resulting from operations $ 3,418,193 6,800,164 22,409 5,673,082
- ----------------------------------------------------- ------------- ------------- ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Share (2,578,998) (5,503,465) -- --
- -----------------------------------------------------
Investment Shares (839,195) (1,296,699) (1,642,162) (3,054,367)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets resulting from distributions
to shareholders (3,418,193) (6,800,164) (1,642,162) (3,054,367)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 244,356,678 417,980,476 9,829,335 23,448,679
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 977,104 1,247,132 274,997 21,355
- -----------------------------------------------------
Cost of shares redeemed (235,332,145) (388,508,575) (7,254,511) (11,536,971)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets resulting from share
transactions 10,001,637 30,719,033 2,849,821 11,933,063
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets 10,001,637 30,719,033 1,230,068 14,551,778
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 138,297,573 107,578,540 63,077,839 48,526,061
- ----------------------------------------------------- ------------- ------------- ----------- ------------
End of period $148,299,210 $138,297,573 $64,307,907 $63,077,839
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Net gain (loss) as computed for federal tax purposes -- -- $ 10,542 $ (69,260)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME FUND BALANCED FUND
--------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED PERIOD ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1996 1995 MAY 31, 1996 1995*
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 4,028,997 $ 8,305,409 $ 1,024,410 $ 1,897,919
- -----------------------------------------------------
Net realized gain (loss) on investments 16,670 (2,505,522) 875,819 931,781
- -----------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments (4,899,629) 16,376,572 232,014 4,951,753
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets resulting from operations (853,962) 22,176,459 2,132,243 7,781,453
- ----------------------------------------------------- ------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Share -- (1,365,718) -- --
- -----------------------------------------------------
Investment Shares (4,026,254) (7,052,406) (1,013,644) (1,562,007)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions -- -- (934,924) --
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets resulting from distributions
to shareholders (4,026,254) (8,418,124) (1,948,568) (1,562,007)
- ----------------------------------------------------- ------------ ------------ ----------- -----------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 7,709,657 37,892,010 8,518,568 51,155,036
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 220,748 413,172 16,502 348
- -----------------------------------------------------
Cost of shares redeemed (14,742,808) (54,711,747) (5,923,166) (6,178,222)
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets resulting from share
transactions (6,812,403) (16,406,565) 2,611,904 44,977,162
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets (11,692,619) (2,648,230) 2,795,579 51,196,608
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 160,286,031 162,934,261 51,196,608 --
- ----------------------------------------------------- ------------ ------------ ----------- -----------
End of period 148,593,412 160,286,031 53,992,187 51,196,608
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Undistributed net investment income included in net
assets at end of period $ 2,743 -- $ 346,678 $ 335,912
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Net gain (loss) as computed for federal tax purposes $ 16,670 $(2,618,115) $ 875,819 $ 934,788
- ----------------------------------------------------- ------------ ------------ ----------- -----------
</TABLE>
* For the period from December 19, 1994 (date of initial public investment) to
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
--------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED PERIOD ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1996 1995* MAY 31, 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 774,586 $ 1,284,315 $ 943,139 $ 2,563,024
- -----------------------------------------------------
Net realized gain on investments 2,073,718 1,327,013 6,028,816 7,215,306
- -----------------------------------------------------
Net realized loss on written options -- -- -- (236,735)
- -----------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments 2,092,671 4,792,803 10,085,903 20,298,337
- ----------------------------------------------------- ----------- ----------- ------------ ------------
Change in net assets resulting from operations 4,940,975 7,404,131 17,057,858 29,839,932
- ----------------------------------------------------- ----------- ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Share -- -- -- (899,259)
- -----------------------------------------------------
Investment Shares (698,058) (1,053,943) (1,254,863) (1,859,046)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- (3,996,308)
- -----------------------------------------------------
Investment Shares (1,327,782) -- (6,989,404) (195,892)
- ----------------------------------------------------- ----------- ----------- ------------ ------------
Change in net assets resulting from distributions
to shareholders (2,025,840) (1,053,943) (8,244,267) (6,950,505)
- ----------------------------------------------------- ----------- ----------- ------------ ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 26,327,237 42,607,764 16,530,877 25,926,206
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 7,733 968 360,815 306,176
- -----------------------------------------------------
Cost of shares redeemed (3,500,714) (3,535,244) (25,216,025) (44,831,583)
- ----------------------------------------------------- ----------- ----------- ------------ ------------
Change in net assets resulting from share
transactions 22,834,256 39,073,488 (8,324,333) (18,599,201)
- ----------------------------------------------------- ----------- ----------- ------------ ------------
Change in net assets 25,749,391 45,423,676 489,258 4,290,226
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 45,423,676 -- 154,297,433 150,007,207
- ----------------------------------------------------- ----------- ----------- ------------ ------------
End of period 71,173,067 $45,423,676 $154,786,691 $154,297,433
- ----------------------------------------------------- ----------- ----------- ------------ ------------
Undistributed net investment income included in net
assets at end of period $ 306,900 $ 230,372 $ 139,813 $ 451,537
- ----------------------------------------------------- ----------- ----------- ------------ ------------
Net gain as computed for federal tax purposes $ 2,073,718 $ 1,327,835 $ 6,028,816 $ 6,990,071
- ----------------------------------------------------- ----------- ----------- ------------ ------------
</TABLE>
* For the period from December 19, 1994 (date of initial public investment) to
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
43
FIRST PRIORITY FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996 (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 six portfolios (individually referred to as the
"Fund", or collectively as the "Funds") at May 31, 1996, which are presented
herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT APPROACH
- ---------------------------------------------- ----------------------------------------------
<S> <C>
First Priority Treasury Money Market Fund Current income consistent with stability of
("Treasury Money Market Fund") principal and liquidity by investing primarily
in a diversified portfolio limited to
short-term U.S. treasury obligations.
First Priority Limited Maturity Government Current income by investing in a diversified
Fund ("Limited Maturity Government Fund") portfolio consisting primarily of securities
which are guaranteed as to payment of
principal and interest by the U.S. government,
its agencies or instrumentalities.
First Priority Fixed Income Fund Current income with a secondary objective of
("Fixed Income Fund") capital appreciation by investing primarily in
a broad range of high grade debt securities.
First Priority Balanced Fund ("Balanced Fund") Total Return through capital appreciation,
dividends, and interest by investing primarily
in a diversified portfolio of common stocks,
preferred stocks, fixed-income senior
securities, and convertible securities.
First Priority Value Fund ("Value Fund" Income and growth of capital by investing
formerly known as First Priority Equity primarily in a diversified portfolio of
Income Fund) income-producing equity securities, including
convertible securities.
First Priority Growth Fund ("Growth Fund" Growth of capital and income by investing
formerly known as First Priority Equity Fund) principally in a diversified portfolio of
common stocks of companies with market
capitalization of at least $250 million.
</TABLE>
Treasury Money Market Fund offers both Trust and Investment classes of 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. The assets of each Fund of the Trust are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. Limited Maturity Government Fund, Fixed Income Fund, Balanced Fund, Value
Fund, and Growth Fund offer only one class of shares.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
On February 1, 1996, First Priority Equity Fund and First Priority Equity Income
Fund changed their names to First Priority Growth Fund and First Priority Value
Fund, respectively.
(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.
INVESTMENT VALUATIONS--U.S. government securities, listed corporate bonds,
(other fixed income and asset-backed securities), and unlisted securities
and private placement securities are generally valued at the mean of the
latest bid and asked price as furnished by an independent pricing service.
Listed equity securities are valued at the last sale price reported on a
national securities exchange. The Treasury Money Market Fund's use of the
amortized cost method to value portfolio securities is in accordance with
Rule 2a-7 under the Act. For fluctuating net asset value Funds within the
Trust, short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value. The Funds'
restricted securities are valued at the price provided by an independent
pricing service, if no market prices are available, at the fair value as
determined by the Fund's pricing committee.
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 transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction, 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 the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
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 income. Accordingly, no
provisions for federal tax are necessary.
At November 30, 1995, the Limited Maturity Government Fund and Fixed Income
Fund, for federal tax purposes, had capital loss carryforwards, of $131,975
and $3,593,206, respectively, which will reduce the Funds' taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Funds of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforwards of the Limited Maturity Government Fund and the Fixed Income
Fund will expire in 2002 ($62,715), ($975,091), respectively and 2003
($69,260), ($2,618,115), respectively.
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.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of their shares in their first fiscal year, excluding the
initial expense of registering their shares, have been deferred and are
being amortized using the straight-line method over a period of up to five
years from each Funds' commencement date.
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 Funds 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 Funds will not incur any
registration costs upon such resales. Additional information on each
restricted security held at May 31, 1996, is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
FUND SECURITY DATE COST
---------------------- -------------------------------------- ----------- -----------
<S> <C> <C> <C>
Fixed Income Fund Goldman Sachs Group, 7.80%, 7/15/2002 3/2/1993 $3,687,145
Balanced Fund Goldman Sachs Group, 7.80%, 7/15/2002 12/19/1994 470,395
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
(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 six months ended May 31, 1996:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET LIMITED MATURITY
FUND GOVERNMENT FUND FIXED INCOME FUND BALANCED FUND
------------- ---------------------- ------------------- -------------------------
TRUST SHARES SHARES SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
- ------------------------------- ------------- -------- ----------- ------------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold 115,993,378 -- $ -- -- $ -- -- $ --
- ------------------------------
Shares issued to shareholders
in payment of distributions
declared 160,517 -- -- -- -- -- --
- ------------------------------
Shares redeemed (114,667,090) -- -- -- -- -- --
- ------------------------------ ------------ ------- -------------- ----------- --------- -----------
Net change resulting from
Trust share transactions 1,486,805 -- -- -- -- -- --
- ------------------------------ ------------ ------- ------ ------- ----------- --------- -----------
INVESTMENT SHARES
- ------------------------------
Shares sold 128,363,300 983,578 9,829,335 752,303 7,709,657 745,731 8,518,568
- ------------------------------
Shares issued to shareholders
in payment of distributions
declared 816,587 27,976 274,997 21,616 220,748 1,444 16,502
- ------------------------------
Shares redeemed (120,665,055) (727,099) (7,254,511)(1,435,462)(14,742,808) (517,533) (5,923,166)
- ------------------------------ ------------ ------- ---------- --------- ---------------- -----------
Net change resulting from
Investment share transactions 8,514,832 284,455 2,849,821 (661,543)(6,812,403) 229,642 2,611,904
- ------------------------------ ------------ ------- ---------- --------- ---------------- -----------
Total net change resulting
from Fund share
transactions 10,001,637 284,455 $2,849,821 (661,543) $(6,812,403) 229,642 $ 2,611,904
- ------------------------------ ------------ ------- ---------- --------- ----------- --- -----------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
----------------------- -------------------------
TRUST SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------------------------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold -- $ -- -- $ --
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared -- -- -- --
- --------------------------------------------------------------------
Shares redeemed -- -- -- --
- -------------------------------------------------------------------- -------- ---------- --------- -----------
Net change resulting from share transactions -- -- -- --
- -------------------------------------------------------------------- -------- ---------- --------- -----------
INVESTMENT SHARES
- --------------------------------------------------------------------
Shares sold 2,166,148 26,327,237 1,378,256 16,530,877
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 658 7,733 30,813 360,815
- --------------------------------------------------------------------
Shares redeemed (289,834) (3,500,714) (2,066,658) (25,216,025)
- -------------------------------------------------------------------- -------- ---------- --------- ---------
Net change resulting from share transactions 1,876,972 22,834,256 (657,589) (8,324,333)
- -------------------------------------------------------------------- -------- ---------- --------- ----------
Total net change resulting from Fund share transactions 1,876,972 $22,834,256 (657,589) (8,324,333)
- -------------------------------------------------------------------- -------- ---------- --------- ----------
</TABLE>
47
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
For the year ended November 30, 1995:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET LIMITED MATURITY
FUND GOVERNMENT FUND FIXED INCOME FUND BALANCED FUND*
------------ ------------------------- --------------------------- ---------------
TRUST SHARES SHARES SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
- ----------------------------- ------------ ---------- ------------ ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold 208,253,666 -- $ -- 232,816 $ 2,202,182 -- $ --
- -----------------------------
Trust Shares exchanged for
Investment Shares -- -- -- (13,709,037) (144,699,450) -- --
- -----------------------------
Shares issued to shareholders
in payment of distributions
declared 5,585 -- -- -- -- -- --
- -----------------------------
Shares redeemed (189,899,208) -- -- (2,725,220) (25,831,235) -- --
- ----------------------------- ----------- --------- ----------- ---------- ------------ --- ----------
Net change resulting from
Trust share transactions 18,360,043 -- -- (16,201,441) (168,328,503) -- --
- ----------------------------- ----------- --------- ----------- ---------- ------------ --- ----------
INVESTMENT SHARES
- -----------------------------
Shares sold 209,726,810 2,394,876 23,448,679 3,603,637 35,689,828 5,045,851$51,155,036
- -----------------------------
Trust Shares exchanged for
Investment Shares -- -- -- 13,709,037 144,699,450 -- --
- -----------------------------
Shares issued to shareholders
in payment of distributions
declared 1,241,547 2,167 21,355 41,512 413,172 31 348
- -----------------------------
Shares redeemed (198,609,367) (1,173,524) (11,536,971) (2,873,052) (28,880,512)(576,771)(6,178,222)
- ----------------------------- ----------- --------- ----------- ----- ------------ -------- ----------
Net change resulting from
Investment share
transactions 12,358,990 1,223,519 11,933,063 14,481,134 151,921,938 4,469,111 44,977,162
- ----------------------------- ----------- --------- ----------- ---------- -------- -------- ----------
Total net change
resulting from Fund share
transactions 30,719,033 1,223,519 $11,933,063 (1,720,307) $(16,406,565)4,469,111$44,977,162
- ----------------------------- ----------- --------- ----------- ---------- ------------ ---- ----------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND* GROWTH FUND
----------------------- ----------------------------
TRUST SHARES SHARES DOLLARS SHARES DOLLARS
- ----------------------------------------------------------------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold -- $ -- 559,276 $ 5,624,181
- -----------------------------------------------------------------
Trust Shares exchanged for Investment Shares -- -- (12,292,374)(123,538,364)
- -----------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared -- -- -- --
- -----------------------------------------------------------------
Shares redeemed -- -- (2,153,028) (22,271,579)
- ----------------------------------------------------------------- -------- ---------- ----------- ------------
Net change resulting from share transactions -- -- (13,886,126)(140,185,762)
- ----------------------------------------------------------------- -------- ---------- ----------- ------------
INVESTMENT SHARES
- -----------------------------------------------------------------
Shares sold 4,087,317 $42,607,764 1,858,603 20,302,025
- -----------------------------------------------------------------
Trust Shares exchanged for Investment Shares -- -- 12,292,374 123,538,364
- -----------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 83 968 29,980 306,176
- -----------------------------------------------------------------
Shares redeemed (314,184) (3,535,244) (2,020,017) (22,560,004)
- ----------------------------------------------------------------- -------- ---------- ----------- ------------
Net change resulting from share transactions 3,773,216 39,073,488 12,160,940 121,586,561
- ----------------------------------------------------------------- --------- ---------- ----------- ------------
Total net change resulting from Fund share transactions 3,773,216 $39,073,488 (1,725,186)$(18,599,201)
- ----------------------------------------------------------------- --------- ---------- ----------- ------------
</TABLE>
* For the period from December 19, 1994 (date of initial public investment) to
November 30, 1995.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--First Alabama Bank, the Trust's investment adviser (the
"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 any portion of its fee and/or reimburse
certain operating expenses of the Funds. The Adviser can modify or terminate
this voluntary waiver and/or reimbursement at any time at its sole discretion.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
- --------------------------------------------------------------------------------- ------
<S> <C>
Treasury Money Market Fund 0.50%
- ---------------------------------------------------------------------------------
Limited Maturity Government Fund 0.70%
- ---------------------------------------------------------------------------------
Fixed Income Fund 0.75%
- ---------------------------------------------------------------------------------
Balanced Fund 0.80%
- ---------------------------------------------------------------------------------
Value Fund 0.80%
- ---------------------------------------------------------------------------------
Growth Fund 0.80%
- ---------------------------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. The 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 SERVICES FEE--The Trust has 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' Investment Shares to finance
activities intended to result in the sale of the Funds' Investment Shares. The
Plan provides that the Funds may incur distribution expenses up to .40 of 1% of
the average daily net assets of the Investment Shares of Treasury Money Market
Fund.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee
paid to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--First Alabama Bank is the Funds' custodian. The fee is based on
the level of each Fund's average daily 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
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
Funds' effective dates. For the six months ended May 31, 1996, the Funds paid
FAS, pursuant to this agreement, as follows:
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
- ------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Treasury Money Market Fund $ 50,822 $ 14,117
- ------------------------------------------------------------
Limited Maturity Government Fund $ 26,082 $ 5,707
- ------------------------------------------------------------
Fixed Income Fund $ 50,007 $ 20,559
- ------------------------------------------------------------
Balanced Fund $ 30,000 $ 3,500
- ------------------------------------------------------------
Value Fund $ 30,000 $ 3,500
- ------------------------------------------------------------
Growth Fund $ 49,934 $ 20,528
- ------------------------------------------------------------
</TABLE>
GENERAL--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, 1996, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Limited Maturity Government Fund 6,964,501 9,499,316
- ----------------------------------------------------------------
Fixed Income Fund 26,979,547 36,985,252
- ----------------------------------------------------------------
Balanced Fund 14,688,235 12,082,756
- ----------------------------------------------------------------
Value Fund 43,369,236 19,484,897
- ----------------------------------------------------------------
Growth Fund 61,950,872 70,415,685
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. Richard B. Fisher
Edward C. Gonzales Vice President
Peter E. Madden John W. McGonigle
Gregor F. Meyer Executive Vice President and
John E. Murray, Jr. Secretary
Wesley W. Posvar Charles L. Davis, Jr.
Marjorie P. Smuts Vice President and Assistant
Treasurer
Jay S. Neuman
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objective and policies, management fees, expenses and other information.
