First Priority
Family of Funds
Combined
Annual Report
Dated November 30, 1995
Diversified Portfolios of the First Priority Funds,
an Open-End Management Investment Company
PRESIDENT'S MESSAGE
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Dear Shareholder:
I am pleased to present the Annual Report to Shareholders for the First Priority
Funds. This report covers activity in the First Priority Treasury Money Market
Fund, the First Priority Limited Maturity Government Fund, the First Priority
Fixed Income Fund, the First Priority Equity Fund, the First Priority Equity
Income Fund, and the First Priority Balanced Fund over the twelve-month period
ended November 30, 1995.
In the investment review, each Fund's portfolio manager describes economic and
market conditions and their impact on Fund strategy. Following the investment
review are a complete list of each Fund's investments and the financial
statements.
The past year proved to be a very favorable investment environment, as the
following highlights show:
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 $0.05 per share during the twelve-month period. The Fund's net
assets grew by approximately 28% to reach $138.3 million.+
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
Managed to pursue income with relatively low volatility, the Fund invests in a
diversified portfolio of limited maturity U.S. Treasury notes, U.S. government
agency securities and investment-grade corporate bonds. This investment
combination rewarded shareholders with $0.51 per share in income over the
twelve-month period, and a share price that grew from $9.60 to $10.04. The Fund
delivered a total return of 10.12%*, or 7.87%* reflecting the sales charge, for
the year ended November 30, 1995. The Fund's net assets stood at $63.1 million
at the end of the period.
FIRST PRIORITY FIXED INCOME FUND
The Fund's portfolio of U.S. government bonds and investment-grade corporate
bonds produced $0.52 per share in income over the twelve-month period, while its
share price grew from $9.46 to $10.34. This income and growth combined to
deliver a total return of 15.37%*, or 13.10%* reflecting the Fund's sales charge
for the year ended November 30, 1995. The Fund ended the period with $160.3
million in net assets.
+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 the Fund is neither insured
nor guaranteed by the U.S. government.
*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.
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FIRST PRIORITY EQUITY FUND
The Fund's diversified portfolio of high-quality stocks delivered a strong total
return of 23.01%*, or 20.57%* taking into account the Fund's sales charge. The
Fund's share price rose $1.74 from the first day to the last day of the period.
For the year ended November 30, 1995 dividends paid to shareholders were $0.21
per share while capital gains amounted to $0.33 per share. At the end of the
period, Fund net assets stood at $154.3 million.
FIRST PRIORITY EQUITY INCOME FUND
The Fund's diversified portfolio consists of high-quality stocks selected for
their potential to pay regular dividends. Since the Fund began operation on
December 19, 1994 through November 30, 1995, it delivered a strong total return
of 24.14%*, or 21.71%* taking into account the sales charge. The Fund's share
price rose more than 20% from the first day to the last day of the period.
Shareholders received $0.34 per share in dividends. Fund net assets reached
$45.4 million.
FIRST PRIORITY BALANCED FUND
For a balanced investment approach, the Fund invests in a combination of
high-quality stocks and investment-grade corporate bonds and government bonds.
This approach produced a total return of 18.50%* since the Fund began operation
on December 19, 1994 through November 30, 1995, or 16.18%* taking into account
the sales charge. The Fund's share price rose $1.46 from the first day to the
last day of the period. Shareholders received $0.36 per share in dividends. Fund
net assets grew to $51.2 million.
Thank you for pursuing your financial goals through the First Priority Funds. We
hope you are pleased with your progress. As we begin a new year, we look forward
to keeping you up to date on your investment, and we renew our commitment to
bring you the highest level of service possible.
Sincerely,
Edward C. Gonzales
President
January 15, 1996
*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.
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
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ANNUAL REPORT FOR FISCAL YEAR ENDED NOVEMBER 30, 1995
MANAGEMENT DISCUSSION AND ANALYSIS
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During the fiscal year ended November 30, 1995, the First Priority
Limited Maturity Government Fund (the "Fund") produced a total return of
10.12%*, on a net asset value basis. The Fund's return is measured against
the Lipper Short U.S. Government Index** which returned 10.88%. We compare
our performance to this index because the Fund will normally invest at
least 65% of the value of total assets in U.S. government securities which
should closely track the U.S. government allocation in the Lipper index.
The balance of the Fund assets may comprise corporate bonds,
mortgage-backed securities, asset-backed securities, bank instruments,
repurchase agreements, and securities of other investment companies. The
Fund's dollar-weighted average portfolio maturing will normally fluctuate
between 2-5 years.
During the year, the Fund was positively impacted by the purchase of
high yielding government and corporate notes which subsequently appreciated
in price due to gradual decrease in interest rates. Continued sluggish
economic growth coupled with low inflation reports have provided the
impetus for a steady decrease in interest rates this year enhancing fixed
income values.
We believe that rate decreases by the Federal Reserve Board in 1996
are a distinct possibility thus providing a positive influence to fixed
income instruments.
The Fund's policy will be to monitor yield levels and use any upticks
in interest rates as purchase opportunities.
* 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.
** The Lipper Short U.S. Government Index Average is a compilation of a
specified category of mutual fund returns reported to Lipper Analytical
Services Inc. Actual investments may not be made in an index.
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
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GROWTH OF $10,000 INVESTED IN FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
The graph below illustrates the hypothetical investment of $10,000 in the
First Priority Limited Maturity Government Fund (the "Fund") from December 12,
1993 (start of performance) to November 30, 1995, compared to the Merrill Lynch
1-5 Year Government/Corporate Indexand the Lipper Short U.S. Government Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 2% ($10,000 investment minus $200 sales charge =
$9,800). The Fund's performance assumes the reinvestment of all dividends and
distributions. The Merrill Lynch 1-5 Year Government/Corporate Index and the
Lipper Short U.S. Government Index have been adjusted to reflect reinvestment
of dividends on securities in the index. The current maximum sales charge is
3.50%.
Note: The Merrill Lynch 1-5 Year Government/Corporate Index is not adjusted to
reflect sales loads, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance.
+The Lipper Short U.S. Government Index Average is a compilation of a specified
category of mutual fund total returns reported to Lipper Analytical Services,
Inc. Each fund is reported net of sales loads, expenses, or other fees that the
SEC requires to be reflected in a fund's performance.
FIRST PRIORITY FIXED INCOME FUND
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ANNUAL REPORT FOR FISCAL YEAR ENDED NOVEMBER 30, 1995
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
For the twelve months ended November 30, 1995, the First Priority
Fixed Income Fund (the "Fund") returned 15.37%* on a net asset value basis.
This compares to the performance of the Lipper Intermediate U.S. Government
Index of 13.88%** and also compares to the Merrill Lynch 1 to 10 Year
Treasury Index*** return of 13.87%. We compare our performance to these
indices because we typically use a high proportion of U.S. Treasury and
agency issues in our portfolios with approximately 20% high quality
corporate bonds. We defined ourselves as intermediate fixed income
managers, since we typically do not buy bonds with a maturity in excess of
15 years. We currently use a different benchmark than we did in 1994, the
Lipper Intermediate U.S. Government Index (the "Lipper Index"). The Lipper
Index represents managed funds so that we are comparing ourselves with
other managers that are also making investment decisions in the same risk
and reward environment, with tangible fees and expenses. Historically, our
returns have had a strong correlation with the Lipper Index in different
market environments.
It is important to recognize that we have adopted conservative
accounting policies which call for the amortization of premiums.
Historically, in a declining interest rate environment, many securities
available to us for purchase have been priced above par value or at a
premium. We have chosen to amortize this premium which reduces current
yield for the Fund. Investors who purchase a fund primarily based on
current yield should examine the quality and maturity of the securities
held and the accounting treatment for amortization of premium. The effect
of not amortizing premium is to increase the current yield by, in effect,
increasing current distributions to investors by returning a portion of
their investment or principal.
During the year, the Fund benefited from a declining interest rate
environment, on a total return basis. Economic growth rate for the first
half of 1995 was much slower than the last six months of 1994. The result
of the slower economy is lower inflation expectations, and certainly
inflation has been benign. With the slower economy, demand for credit
appears to have peaked in spite of lower interest rates. The Federal
Reserve Board (the "Fed") has reversed the tightening policy and begun to
ease. The Fed reduced short term rates .25% in July 1995 and another .25%
in December 1995. Economic liquidity has improved with a faster growth rate
of various measures of money supply.
Our strategic positioning of the Fund going into the new year is one
of cautious optimism. We believe the strong trend of lower interest rates
is justifiable with basic economic fundamentals. However, the bond market
may be over estimating the good news to continue. We intend to become more
aggressive on market set backs, provided current trends stay intact in
vital economic areas.
*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.
**This performance is the median for a group of managed funds that are
historically similar with respect to risk and return characteristics.
***This index is unmanaged and represents a composite of all outstanding
Treasury issues with remaining maturities from 1 year to 10 years (ex.
Flower bonds). Actual investments may not be made in an index.
FIRST PRIORITY FIXED INCOME FUND
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GROWTH OF $10,000 INVESTED IN FIRST PRIORITY FIXED INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
First Priority Fixed Income Fund (the "Fund") from April 20, 1992 (start of
performance) to November 30, 1995, compared to the Merrill Lynch 1-10 Year
Treasury Index and the Lipper Intermediate U.S. Government Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 2% ($10,000 investment minus $200 sales charge =
$9,800). The Fund's performance assumes the reinvestment of all dividends and
distributions. The Merrill Lynch 1-10 Year Treasury Index and the Lipper
Intermediate U.S. Government Index have been adjusted to reflect reinvestment
of dividends on securities in the index. The current maximum sales charge is
4.75%.
Note: The Merrill Lynch 1-10 Year Treasury Index is not adjusted to reflect
sales loads, expenses, or other fees that the SEC requires to be reflected
in the Fund's performance.
+The Lipper Intermediate U.S. Government Index Average is a compilation of a
specified category of mutual fund total returns reported to Lipper Analytical
Services, Inc. Each fund is reported net of sales loads, expenses, or other
fees that the SEC requires to be reflected in a fund's performance.
FIRST PRIORITY EQUITY FUND
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ANNUAL REPORT FOR FISCAL YEAR ENDED NOVEMBER 30, 1995
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The First Priority Equity Fund experienced a successful total return
of 23.01%* during the fiscal year ended November 30, 1995. The Standard &
Poor's (S&P) 500** had a more successful year, returning 36.93%. As a
calendar year, 1995 will likely go down as one of the top ten years in
stock market history. With this equity backdrop, it was relatively easy to
have positive performance, but we had hoped for a higher return.
The economic landscape for 1995 showed a number of factors, all of
which have been favorable for equity prices. First, interest rates resumed
their decline which was interrupted during 1994. Historically, the greatest
correlation among economic variables was that of rising stock prices and
declining interest rates. Inflation continued to remain under control as
well. Corporate profits, in the macro-environment, continued to show solid,
but not spectacular, gains. Finally, investors continued to pour billions
of dollars into mutual funds.
Fiscal 1995 proved to be a difficult year for portfolio managers in
general, but a good year for investors, meaning that stock returns will be
very high by historical standards, but mostly below market returns. The
primary reason for this shortfall was due to the narrow focus of the market
this year. Of the twelve S&P economic sectors, only three, Consumer
Staples, Capital Goods-Technology, and Financials, showed meaningful gains
greater than the S&P 500. Two other sectors exceeded the S&P, but are very
small parts of the market. This "narrow" focus of the market this year made
it difficult to achieve higher returns.
Looking into 1996, the inflation and interest rate backdrop should
continue to be favorable. However, the recent softness of the economy,
coupled with the high consumer debt levels could lead to potential
disappointments in selected industry profits. Successful investments in
1996 could well be found in companies with more predictable earnings growth
and higher yields.
*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.
**Standard & Poor's Daily Stock Price Index of 500 Common Stocks is a
composite index of common stocks in industry, transportation, and
financial and public utility companies. The S&P 500 is unmanaged and
investments may not be made in an index.
FIRST PRIORITY EQUITY FUND
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GROWTH OF $10,000 INVESTED IN FIRST PRIORITY EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in the
First Priority Equity Fund (the "Fund") from April 20, 1992 (start of
performance) to November 30, 1995, compared to the Standard & Poor's 500 Index
(S&P 500).
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 2% ($10,000 investment minus $200 sales charge =
$9,800). The fund's performance assumes the reinvestment of all dividends and
distributions. The S&P 500 has been adjusted to reflect reinvestment of
dividends on securities in the index. The current maximum sales charge is
4.75%.
Note: The S&P 500 is not adjusted to reflect sales loads, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance.
FIRST PRIORITY EQUITY INCOME FUND
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ANNUAL REPORT FOR FISCAL YEAR ENDED NOVEMBER 30, 1995
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The Equity Income Fund had a total return of 24.14%* from its
inception on December 19, 1994 until November 30, 1995. The Lipper Equity
Income Index** returned 27.62% for the twelve months ended November 30,
1995. This index is made up of other funds which attempt to provide growth
through exposure to the stock market while also pursuing a higher level of
current yield than a regular stock fund.
The Fund attempts to offer a higher yield than the market by investing
a portion of the Fund's assets (currently about 31%) in convertible
securities. Convertible securities are corporate bonds or preferred stocks
which are convertible into the common stock of the issuing corporation.
While the bond or preferred stock will typically pay slightly less current
yield than a regular bond or preferred issued by the same corporation, the
chance to convert that bond or preferred stock into the common stock of the
issuer provides some upside potential. This combination of features gives a
convertible security most of the upside potential of a stock while
providing some protection against downside risk.
The Fund's holdings benefited from a very strong stock market during
this period. The Standard & Poor's 500 returned 36.93% for the twelve
months ended November 30, 1995. Financial stocks and technology stocks have
been the best performing equities for this period. The Fund has benefited
from its holdings in these industries. The bond market has also been very
strong during this period. This has helped the Fund's convertible holdings
to have very good returns.
Going forward, we plan to lower the percentage of the Fund's holdings
which is invested in convertible securities. We believe that the stock and
bond markets will not be as favorable towards convertibles in the coming
twelve months as they have been in the past twelve months. We hope to
maintain the Fund's current yield at a higher-than-average level by holding
stocks which pay dividends which are above the market's average.
*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.
**The Lipper Equity Income Index Average is a compilation of a specified
category of mutual fund total returns reported to Lipper Analytical
Services, Inc. Actual investments may not be made in an index.
FIRST PRIORITY EQUITY INCOME FUND
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GROWTH OF $10,000 INVESTED IN FIRST PRIORITY EQUITY INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
First Priority Equity Income Fund (the "Fund") from December 19, 1994 (start of
performance) to November 30, 1995, compared to the Standard & Poor's--BARRA
Value Index (S&P--Barra Value Index) and the Lipper Equity Income Index.+
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 2% ($10,000 investment minus $200 sales charge =
$9,800). The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P-BARRA Value Index and the Lipper Equity Income Index
have been adjusted to reflect reinvestment of dividends on securities in the
index. The current maximum sales charge is 4.75%.
Note: The S&P-BARRA Value Index is not adjusted to reflect sales loads,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance.
+The Lipper Equity Income Index Average is a compilation of a specified category
of mutual fund total returns reported to Lipper Analytical Services, Inc. Each
fund is reported net of sales loads, expenses, or other fees that the SEC
requires to be reflected in a fund's performance.
FIRST PRIORITY BALANCED FUND
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ANNUAL REPORT FOR FISCAL YEAR ENDED NOVEMBER 30, 1995
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The First Priority Balanced Fund had a total return of 18.50%* since
inception compared to 23.94% for the Lipper Balanced Index. The Fund was
favorably impacted by rising stock and bond prices, which represents the
best of both worlds for investors who employ a balanced approach in their
portfolios. The primary reasons for rising stock and bond prices were low
inflation, steady economic growth, rising corporate profits and a reduction
in interest rates by the Federal Reserve Board (The "Fed").
While stocks and bonds rose during the year, stocks delivered a much
higher return to investors. The Standard & Poor's 500 (the "S&P 500 ") had
a return of 36.93%, while intermediate term high quality bonds, as
represented by the Merrill Lynch 1-10 Year Treasury Index**, returned
13.87%.
While the past year was an excellent one for stocks in general, the
36.93% return for the S&P 500 is somewhat misleading because the advance
was relatively narrow in focus. Three of the twelve S&P 500 industry
groups--consumer staples, finance and capital goods/technology
significantly outperformed the broader market. Four other sectors--consumer
cyclicals, capital goods, energy and basic industries significantly
underperformed the broader market.
The bond market reversed its course after a poor 1994 and rewarded
investors all along the maturity range. Low inflation and Fed actions led
to price appreciation and longer maturity bonds outperformed shorter
maturity notes and bills.
Looking forward we expect 1996 to be a rewarding year for investors.
We expect inflation to remain low, the economy should continue to expand,
although at a slower rate than 1995, corporate profits should continue to
rise and interest rates should be flat to down.
*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.
**The Merrill Lynch 1-10 Year Treasury Index is comprised of the most
recently issued 2-year U.S. Treasury notes. The Merrill Lynch Index is
unmanaged and investments may not be made in an index.
FIRST PRIORITY BALANCED FUND
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GROWTH OF $10,000 INVESTED IN FIRST PRIORITY BALANCED FUND
The graph below illustrates the hypothetical investment of $10,000 in the
First Priority Balanced Fund (the "Fund") from December 19, 1994 (start of
performance) to November 30, 1995, compared to the Standard & Poor's 500 (S&P
500)/Lehman Brothers Government/Corporate Index+ and the Lipper Balanced Index..
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting the
maximum sales charge of 2% ($10,000 investment minus $200 sales charge =
$9,800). The Fund's performance assumes the reinvestment of all dividends and
distributions. The S&P Lehman Government/Corporate Index and the Lipper
Balanced Index have been adjusted to reflect reinvestment of dividends on
securities in the indices. The current maximum sales charge is 4.75%.
Note: The S&P 500/Lehman Government/Corporate Index is not adjusted to reflect
sales loads, expenses, or other fees that the SEC requires to be reflected
in the Fund's performance.
The S&P 500/Lehman Brothers Government/Corporate Index (the "Index") is a
weighted index that combines components of the S&P 500 and the Lehman Brothers
Government/Corporate Indices. Figures shown for the Index assume a constant
weighting of 50% S&P 500 Index and 50% Lehman Brothers Government/Corporate
Index throughout the period. Although the Fund's allocation between equity and
debt instruments will vary, the Fund's allocation on November 30, 1995, as
indicated in the Fund's financial statements, was 44.2% in equities, 51.7% in
debt instruments and the remainder in short-term liquid investments.
The Lipper Balanced Index Average is a compilation of a specified category of
mutual fund total returns reported to Lipper Analytical Services, Inc. Each fund
is reported net of sales loads, expenses, or other fees that the SEC requires
to be reflected in a fund's performance.
THIS PAGE INTENTIONALLY LEFT BLANK
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
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(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET REALIZED DISTRIBUTIONS
AND DISTRIBUTIONS TO SHAREHOLDERS DISTRIBUTIONS
NET ASSET UNREALIZED TO SHAREHOLDERS FROM NET TO SHAREHOLDERS
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET REALIZED GAIN IN EXCESS OF
YEAR ENDED NOVEMBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT NET INVESTMENT
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) -- --
<CAPTION>
TREASURY MONEY MARKET FUND
INVESTMENT SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
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) -- --
<CAPTION>
LIMITED MATURITY GOVERNMENT FUND
<S> <C> <C> <C> <C> <C> <C> <C>
1994(b) 10.00 0.42 (0.40) 0.02 (0.42) -- --
1995 9.60 0.51 0.44 0.95 (0.51) -- --
<CAPTION>
FIXED INCOME FUND
TRUST SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
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)(h)
1995(d) 9.46 0.09 0.11 0.20 (0.09) -- --
<CAPTION>
FIXED INCOME FUND
INVESTMENT SHARES
<S> <C> <C> <C> <C> <C> <C> <C>
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)(h)
1995 9.46 0.52 0.90 1.42 (0.54) -- --
</TABLE>
(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 12, 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, Fixed Income Fund and Equity Fund were offered in two
classes of shares: Trust Shares and Investment Shares. On February 1, 1995,
all outstanding Trust Shares of Fixed Income Fund and Equity Fund were
converted to Investment Shares and these Funds no longer offer 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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(h) 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS NET ASSETS,
NET ASSET NET END OF
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE PERIOD (000 PORTFOLIO
DISTRIBUTIONS OF PERIOD RETURN (E) EXPENSES INCOME WAIVER (G) OMITTED) TURNOVER RATE
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <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 --
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(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 --
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(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%
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(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) -- --
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(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%
</TABLE>
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
NET REALIZED DISTRIBUTIONS
AND DISTRIBUTIONS TO SHAREHOLDERS
NET ASSET UNREALIZED TO SHAREHOLDERS FROM NET
VALUE, NET GAIN/(LOSS) TOTAL FROM FROM NET REALIZED GAIN
YEAR ENDED NOVEMBER BEGINNING INVESTMENT ON INVESTMENT INVESTMENT ON INVESTMENT
30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
EQUITY 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)
<CAPTION>
EQUITY FUND
INVESTMENT SHARES
<S> <C> <C> <C> <C> <C> <C>
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)
<CAPTION>
EQUITY INCOME FUND
<S> <C> <C> <C> <C> <C> <C>
1995(c) 10.00 0.40 1.98 2.38 (0.34) --
<CAPTION>
BALANCED FUND
<S> <C> <C> <C> <C> <C> <C>
1995(c) 10.00 0.44 1.38 1.82 (0.36) --
</TABLE>
(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, Fixed Income Fund and Equity Fund were offered in two
classes of shares: Trust Shares and Investment Shares. On February 1, 1995,
all outstanding Trust Shares of Fixed Income Fund and Equity Fund were
converted to Investment Shares and these Funds no longer offer 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 ASSETS,
NET ASSET NET END OF
TOTAL VALUE, END TOTAL INVESTMENT EXPENSE PERIOD (000 PORTFOLIO
DISTRIBUTIONS OF PERIOD RETURN (D) EXPENSES INCOME WAIVER (F) OMITTED) TURNOVER RATE
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(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) -- --
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(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%
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
(0.34) 12.04 24.14% 0.69%(e) 3.93%(e) 0.55%(e) $ 45,424 76%
<CAPTION>
<S> <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%
</TABLE>
FIRST PRIORITY TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
UNITED STATES TREASURY OBLIGATIONS--90.9%
- -------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS--76.5%
---------------------------------------------------------------------------------
$ 107,000,000 12/7/1995-5/2/1996 $ 105,785,905
---------------------------------------------------------------------------------
U.S. TREASURY NOTES--14.4%
---------------------------------------------------------------------------------
20,000,000 4.00%-9.25%, 1/15/1996-2/29/1996 19,990,684
--------------------------------------------------------------------------------- --------------
TOTAL UNITED STATES TREASURY OBLIGATIONS (AT AMORTIZED COST) 125,776,589
--------------------------------------------------------------------------------- --------------
MUTUAL FUND SHARES--9.1%
- -------------------------------------------------------------------------------------------------
4,492,268 Dreyfus Treasury Prime Cash Management 4,492,268
---------------------------------------------------------------------------------
4,277,630 Franklin U.S. Treasury Money Market Portfolio 4,277,630
---------------------------------------------------------------------------------
3,793,975 Goldman Sachs I.L.A. Treasury Portfolio 3,793,975
--------------------------------------------------------------------------------- --------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 12,563,873
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST AND VALUE)(A) $ 138,340,462
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($138,297,573) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
CORPORATE BONDS--17.0%
- ---------------------------------------------------------------------------------------------------
BANKING--1.6%
-------------------------------------------------------------------------------------
$ 500,000 BankAmerica Corporation, 7.125%, 5/12/2005 $ 523,050
-------------------------------------------------------------------------------------
500,000 Barnett Banks, Inc., 6.25%, 7/28/1998 504,670
------------------------------------------------------------------------------------- -------------
Total 1,027,720
------------------------------------------------------------------------------------- -------------
BASIC INDUSTRY--0.8%
-------------------------------------------------------------------------------------
500,000 WMX Technologies, 4.875%, 6/15/1996 497,990
------------------------------------------------------------------------------------- -------------
BEVERAGES--1.7%
-------------------------------------------------------------------------------------
500,000 PepsiCo, Inc., 6.80%, 5/15/2000 518,620
-------------------------------------------------------------------------------------
500,000 PepsiCo, Inc., 7.48%, 4/27/2002 529,170
------------------------------------------------------------------------------------- -------------
Total 1,047,790
------------------------------------------------------------------------------------- -------------
FINANCE-AUTOMOTIVE--1.6%
-------------------------------------------------------------------------------------
500,000 Ford Motor Credit Corporation, 5.15%, 3/15/1996 500,135
-------------------------------------------------------------------------------------
500,000 Ford Motor Credit Corporation, 5.625%, 1/15/1999 496,070
------------------------------------------------------------------------------------- -------------
Total 996,205
------------------------------------------------------------------------------------- -------------
FINANCE-COMMERCIAL--2.4%
-------------------------------------------------------------------------------------
500,000 American Express Credit Corporation, 6.75%, 6/1/2001 517,280
-------------------------------------------------------------------------------------
500,000 Associates Corp. of North America, 4.50%, 2/15/1996 498,970
-------------------------------------------------------------------------------------
500,000 Norwest Corporation, 7.68%, 5/10/2002 519,920
------------------------------------------------------------------------------------- -------------
Total 1,536,170
------------------------------------------------------------------------------------- -------------
NATURAL GAS--0.9%
-------------------------------------------------------------------------------------
500,000 Consolidated Natural Gas Co., 7.375%, 4/1/2005 538,390
------------------------------------------------------------------------------------- -------------
PHARMACEUTICAL--1.6%
-------------------------------------------------------------------------------------
500,000 SmithKline Beecham PLC, 5.25%, 1/26/1996 499,800
-------------------------------------------------------------------------------------
500,000 SmithKline Beecham Corp., 7.125%, 5/1/2002 527,755
------------------------------------------------------------------------------------- -------------
Total 1,027,555
------------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
CORPORATE BONDS--CONTINUED
- ---------------------------------------------------------------------------------------------------
RETAIL--2.4%
-------------------------------------------------------------------------------------
$ 500,000 Dayton Hudson Corp., 4.65%, 3/11/1996 $ 498,720
-------------------------------------------------------------------------------------
500,000 J.C. Penney, Inc., 6.375%, 9/15/2000 505,440
-------------------------------------------------------------------------------------
500,000 Wal-Mart Stores, 6.75%, 5/15/2002 519,040
------------------------------------------------------------------------------------- -------------
Total 1,523,200
------------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--4.0%
-------------------------------------------------------------------------------------
500,000 AT&T Corp., 4.50%, 2/15/1996 498,920
-------------------------------------------------------------------------------------
1,000,000 AT&T Corp., 8.20%, 2/15/2005 1,077,490
-------------------------------------------------------------------------------------
1,000,000 Illinois Bell Telephone Co., 5.80%, 2/1/2004 977,750
------------------------------------------------------------------------------------- -------------
Total 2,554,160
------------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $10,491,850) 10,749,180
------------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT AGENCIES--22.0%
- ---------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.6%
-------------------------------------------------------------------------------------
500,000 6.25%, 7/15/1997 500,435
-------------------------------------------------------------------------------------
500,000 6.96%, 6/6/2000 502,625
------------------------------------------------------------------------------------- -------------
Total 1,003,060
------------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN BANK--6.3%
-------------------------------------------------------------------------------------
1,000,000 6.16%, 1/21/2004 977,150
-------------------------------------------------------------------------------------
500,000 6.375%, 6/22/2000 506,640
-------------------------------------------------------------------------------------
500,000 6.375%, 12/4/2002 500,000
-------------------------------------------------------------------------------------
500,000 6.54%, 7/10/2000 503,475
-------------------------------------------------------------------------------------
500,000 6.75%, 11/17/2005 502,345
-------------------------------------------------------------------------------------
500,000 6.83%, 6/8/1998 500,625
-------------------------------------------------------------------------------------
500,000 8.42%, 3/1/2002 503,020
------------------------------------------------------------------------------------- -------------
Total 3,993,255
------------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORP.--5.6%
-------------------------------------------------------------------------------------
1,000,000 4.75%, 2/2/1999 990,950
-------------------------------------------------------------------------------------
1,000,000 6.27%, 1/27/2004 983,240
-------------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT AGENCIES--CONTINUED
- ---------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.--CONTINUED
-------------------------------------------------------------------------------------
$ 500,000 7.60%, 5/12/2005 $ 516,050
-------------------------------------------------------------------------------------
1,000,000 8.28%, 3/15/2005 1,047,650
------------------------------------------------------------------------------------- -------------
Total 3,537,890
------------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--6.9%
-------------------------------------------------------------------------------------
500,000 5.12%, 1/22/1999 490,320
-------------------------------------------------------------------------------------
1,000,000 6.28%, 2/3/2004 986,350
-------------------------------------------------------------------------------------
500,000 6.40%, 1/13/2004 494,475
-------------------------------------------------------------------------------------
500,000 6.80%, 9/30/2002 503,615
-------------------------------------------------------------------------------------
300,000 7.02%, 11/3/2005 302,445
-------------------------------------------------------------------------------------
500,000 7.05%, 10/20/2005 500,990
-------------------------------------------------------------------------------------
500,000 7.30%, 4/17/2000 515,830
-------------------------------------------------------------------------------------
500,000 8.32%, 3/2/2005 524,480
------------------------------------------------------------------------------------- -------------
Total 4,318,505
------------------------------------------------------------------------------------- -------------
STUDENT LOAN MARKETING ASSOCIATION--1.6%
-------------------------------------------------------------------------------------
500,000 7.00%, 6/21/2000 502,975
-------------------------------------------------------------------------------------
500,000 7.67%, 3/8/2000 511,240
------------------------------------------------------------------------------------- -------------
Total 1,014,215
------------------------------------------------------------------------------------- -------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $13,781,954) 13,866,925
------------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--56.9%
- ---------------------------------------------------------------------------------------------------
1,000,000 5.125%, 3/31/1996 998,990
-------------------------------------------------------------------------------------
2,500,000 5.50%, 4/30/1996 2,500,975
-------------------------------------------------------------------------------------
1,000,000 4.25%, 5/15/1996 994,720
-------------------------------------------------------------------------------------
1,000,000 5.875%, 5/31/1996 1,002,050
-------------------------------------------------------------------------------------
1,000,000 6.00%, 6/30/1996 1,003,300
-------------------------------------------------------------------------------------
1,500,000 6.125%, 7/31/1996 1,506,630
-------------------------------------------------------------------------------------
1,000,000 4.375%, 8/15/1996 992,820
-------------------------------------------------------------------------------------
1,000,000 6.25%, 8/31/1996 1,005,550
-------------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--CONTINUED
- ---------------------------------------------------------------------------------------------------
$ 1,500,000 6.50%, 9/30/1996 $ 1,512,885
-------------------------------------------------------------------------------------
1,500,000 6.875%, 10/31/1996 1,519,305
-------------------------------------------------------------------------------------
1,500,000 4.375%, 11/15/1996 1,486,260
-------------------------------------------------------------------------------------
500,000 7.25%, 11/30/1996 508,855
-------------------------------------------------------------------------------------
500,000 7.50%, 12/31/1996 511,110
-------------------------------------------------------------------------------------
500,000 7.50%, 1/31/1997 511,765
-------------------------------------------------------------------------------------
500,000 5.625%, 6/30/1997 501,875
-------------------------------------------------------------------------------------
500,000 5.875%, 7/31/1997 503,900
-------------------------------------------------------------------------------------
1,000,000 6.5%, 8/15/1997 1,017,990
-------------------------------------------------------------------------------------
500,000 6.00%, 8/31/1997 504,955
-------------------------------------------------------------------------------------
500,000 5.75%, 9/30/1997 503,355
-------------------------------------------------------------------------------------
500,000 5.625%, 10/31/1997 502,500
-------------------------------------------------------------------------------------
2,000,000 7.375%, 11/15/1997 2,072,680
-------------------------------------------------------------------------------------
500,000 5.375%, 11/30/1997 500,390
-------------------------------------------------------------------------------------
500,000 7.25%, 2/15/1998 518,895
-------------------------------------------------------------------------------------
500,000 5.875%, 8/15/1998 505,860
-------------------------------------------------------------------------------------
500,000 5.50%, 11/15/1998 501,415
-------------------------------------------------------------------------------------
1,000,000 5.125%, 11/30/1998 991,690
-------------------------------------------------------------------------------------
1,500,000 5.125%, 12/31/1998 1,486,710
-------------------------------------------------------------------------------------
1,000,000 5.00%, 1/31/1999 986,810
-------------------------------------------------------------------------------------
1,000,000 6.875%, 3/31/2000 1,051,480
-------------------------------------------------------------------------------------
500,000 5.50%, 4/15/2000 500,560
-------------------------------------------------------------------------------------
500,000 6.75%, 4/30/2000 523,505
-------------------------------------------------------------------------------------
500,000 6.25%, 5/31/2000 514,210
-------------------------------------------------------------------------------------
1,000,000 5.875%, 6/30/2000 1,014,250
-------------------------------------------------------------------------------------
1,500,000 6.125%, 7/31/2000 1,535,310
-------------------------------------------------------------------------------------
500,000 6.25%, 8/31/2000 514,380
-------------------------------------------------------------------------------------
500,000 6.125%, 9/30/2000 511,985
-------------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
U.S. TREASURY NOTES--CONTINUED
- ---------------------------------------------------------------------------------------------------
$ 500,000 5.75%, 10/31/2000 $ 504,505
-------------------------------------------------------------------------------------
500,000 5.625%, 11/30/2000 502,030
-------------------------------------------------------------------------------------
1,000,000 5.75%, 8/15/2003 1,002,600
-------------------------------------------------------------------------------------
500,000 6.50%, 8/15/2005 526,470
------------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $35,411,666) 35,855,525
------------------------------------------------------------------------------------- -------------
MUTUAL FUND SHARES--2.1%
- ---------------------------------------------------------------------------------------------------
477,623 Franklin U.S. Treasury Money Market Portfolio 477,623
-------------------------------------------------------------------------------------
876,896 Goldman Sachs I.L.A. Treasury Portfolio 876,896
------------------------------------------------------------------------------------- -------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 1,354,519
------------------------------------------------------------------------------------- -------------
(A) REPURCHASE AGREEMENT--1.9%
- ---------------------------------------------------------------------------------------------------
$ 1,227,893 HSBC Securities, Inc., 5.87%, dated 11/30/95, due 12/1/1995
(AT AMORTIZED COST) 1,227,893
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $62,267,882)(B) $ 63,054,042
------------------------------------------------------------------------------------- -------------
</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 $62,267,882. The
net unrealized appreciation of investments on a federal tax basis amounts to
$786,160 which is comprised of $935,094 appreciation and $148,934
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($63,077,839) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--11.8%
- ------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL--0.6%
---------------------------------------------------------------------------------
RETAIL-SPECIALTY
---------------------------------------------------------------------------------
$ 880,000 Limited, Inc., 9.125%, 2/1/2001 $ 982,617
--------------------------------------------------------------------------------- --------------
CONSUMER STAPLE--0.6%
---------------------------------------------------------------------------------
TOBACCO
---------------------------------------------------------------------------------
880,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 986,894
--------------------------------------------------------------------------------- --------------
DIVERSIFIED--0.6%
---------------------------------------------------------------------------------
880,000 United Technologies Corp., 9.625%, 5/15/1999 894,071
--------------------------------------------------------------------------------- --------------
ELECTRICAL EQUIPMENT--1.1%
---------------------------------------------------------------------------------
1,750,000 General Electric Capital Corp., 5.50%, 11/1/2001 1,703,800
--------------------------------------------------------------------------------- --------------
ELECTRICAL POWER--1.2%
---------------------------------------------------------------------------------
880,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 984,245
---------------------------------------------------------------------------------
880,000 Virginia Electric & Power, 8.875%, 6/1/1999 959,482
--------------------------------------------------------------------------------- --------------
Total 1,943,727
--------------------------------------------------------------------------------- --------------
FINANCIAL--7.1%
---------------------------------------------------------------------------------
FINANCE-AUTOMOTIVE
---------------------------------------------------------------------------------
675,000 Ford Motor Credit Corporation, 6.35%, 2/11/1998 681,939
---------------------------------------------------------------------------------
2,000,000 General Motors Acceptance Corporation, 8.00%, 10/1/1999 2,130,400
---------------------------------------------------------------------------------
1,000,000 General Motors Acceptance Corporation, 7.75%, 1/15/1999 1,048,510
--------------------------------------------------------------------------------- --------------
Total 3,860,849
--------------------------------------------------------------------------------- --------------
INSURANCE
---------------------------------------------------------------------------------
1,760,000 U.S. Life Corp., 6.75%, 1/15/1998 1,786,365
--------------------------------------------------------------------------------- --------------
SECURITIES
---------------------------------------------------------------------------------
2,000,000 Merrill Lynch & Co., Step-up, 0/8.50%, 1/26/2000 2,001,360
---------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCIAL--CONTINUED
---------------------------------------------------------------------------------
SECURITIES--CONTINUED
---------------------------------------------------------------------------------
$ 3,500,000 Goldman Sachs Group, 7.80%, 7/15/2002 $ 3,718,050**
--------------------------------------------------------------------------------- --------------
Total 5,719,410
--------------------------------------------------------------------------------- --------------
Total Financial 11,366,624
--------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.6%
---------------------------------------------------------------------------------
880,000 Ford Motor Co., 8.875%, 4/1/2006 1,036,174
--------------------------------------------------------------------------------- --------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $18,246,871) 18,913,907
--------------------------------------------------------------------------------- --------------
U.S. GOVERNMENT AGENCIES--56.9%
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--6.6%
---------------------------------------------------------------------------------
3,000,000 5.00%, 12/28/1998 2,943,450
---------------------------------------------------------------------------------
5,850,000 5.80% Floating Rate Note*, 11/5/2003 5,616,527
---------------------------------------------------------------------------------
1,000,000 6.00%, 4/14/2004 999,750
---------------------------------------------------------------------------------
1,000,000 6.50%, 6/7/2004 1,005,890
--------------------------------------------------------------------------------- --------------
Total 10,565,617
--------------------------------------------------------------------------------- --------------
FEDERAL HOME LOAN MORTGAGE CORP.--20.9%
---------------------------------------------------------------------------------
2,640,000 Step-up, 0/5.70%, 2/2/1999 2,616,108
---------------------------------------------------------------------------------
2,000,000 4.90% Floating Rate Note*, 9/1/2003 1,971,580
---------------------------------------------------------------------------------
2,000,000 6.58% Floating Rate Note*, 4/6/2004 2,004,020
---------------------------------------------------------------------------------
1,695,000 8.335%, 3/14/2005 1,777,784
---------------------------------------------------------------------------------
2,040,833 PC, 1386C, 6.82% Floating Rate Note*, 10/15/2007 2,087,344
---------------------------------------------------------------------------------
314,132 PC, 1414F, 6.87% Floating Rate Note*, 11/15/2007 320,329
---------------------------------------------------------------------------------
1,075,000 7.55%, 11/27/2007 1,106,143
---------------------------------------------------------------------------------
6,189,728 PC, 1544L, 5.74% Floating Rate Note*, 7/15/2008 5,926,107
---------------------------------------------------------------------------------
4,400,000 PC, 1604FC, 5.34% Floating Rate Note*, 11/15/2008 4,107,796
---------------------------------------------------------------------------------
5,000,000 6.0%, 3/15/2009 4,755,000
---------------------------------------------------------------------------------
2,776,984 Ser. G031, 6.50%, 10/25/2014 2,703,450
---------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.--CONTINUED
---------------------------------------------------------------------------------
$ 4,250,000 PC, 1403M, 6.50%, 12/15/2021 $ 4,139,883
--------------------------------------------------------------------------------- --------------
Total 33,515,544
--------------------------------------------------------------------------------- --------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--26.7%
---------------------------------------------------------------------------------
2,000,000 7.3%, 3/25/1998 2,010,060
---------------------------------------------------------------------------------
2,200,000 REMIC, 1993-G06/J, 7.00%, 12/25/1999 2,262,392
---------------------------------------------------------------------------------
2,703,000 STRIP, PO, 0/8.04%, 10/10/2001 2,577,635
---------------------------------------------------------------------------------
4,400,000 STRIP, PO, 0/7.56%, 12/20/2001 4,151,268
---------------------------------------------------------------------------------
1,750,000 STRIP, PO, 0/7.89%, 3/9/2002 1,633,835
---------------------------------------------------------------------------------
1,750,000 REMIC, 1992-G40/K, 7.00%, 6/25/2002 1,795,220
---------------------------------------------------------------------------------
3,500,000 5.82%, 11/4/2003 3,386,950
---------------------------------------------------------------------------------
1,250,000 REMIC, 1992-G35/EC, 8.25%, 7/25/2005 1,351,725
---------------------------------------------------------------------------------
2,000,000 7.25%, 9/26/2005 2,025,240
---------------------------------------------------------------------------------
4,500,000 7.34%, 9/29/2005 4,569,210
---------------------------------------------------------------------------------
1,900,000 7.125%, 11/7/2005 1,925,232
---------------------------------------------------------------------------------
1,250,000 1992-209/F, 6.98%, 11/25/2007 1,278,925
---------------------------------------------------------------------------------
3,716,165 REMIC, 1993-G32/J, 6.75%, 5/25/2009 3,758,269
---------------------------------------------------------------------------------
3,541,125 REMIC, 1994-10/KC, 6.50%, 10/25/2010 3,538,398
---------------------------------------------------------------------------------
1,000,000 REMIC, 1992-137, 7.75%, 1/25/2017 1,022,590
---------------------------------------------------------------------------------
5,601,615 REMIC, 1993-202/PH, 6.50%, 2/25/2022 5,564,700
--------------------------------------------------------------------------------- --------------
Total 42,851,649
--------------------------------------------------------------------------------- --------------
TENNESSEE VALLEY AUTHORITY--2.7%
---------------------------------------------------------------------------------
4,400,000 6.125%, 7/15/2003 4,377,340
--------------------------------------------------------------------------------- --------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $91,781,053) 91,310,150
--------------------------------------------------------------------------------- --------------
U.S. TREASURY OBLIGATIONS--29.9%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES
---------------------------------------------------------------------------------
6,800,000 STRIP, PO, 11/15/1996 6,466,391
---------------------------------------------------------------------------------
7,000,000 6.50%, 4/30/1997 7,106,539
---------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
U.S. TREASURY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
---------------------------------------------------------------------------------
$ 3,500,000 6.375%, 7/15/1999 $ 3,600,520
---------------------------------------------------------------------------------
7,000,000 5.50%, 4/15/2000 7,007,840
---------------------------------------------------------------------------------
7,000,000 7.50%, 11/15/2001 7,667,800
---------------------------------------------------------------------------------
7,000,000 7.50%, 5/15/2002 7,707,840
---------------------------------------------------------------------------------
15,000,000 STRIP, IO, 11/15/2005 8,378,550
--------------------------------------------------------------------------------- --------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $46,959,409) 47,935,480
--------------------------------------------------------------------------------- --------------
MUTUAL FUND SHARES--0.0%
- ------------------------------------------------------------------------------------------------
20,933 Franklin U.S. Treasury Money Market Portfolio 20,933
---------------------------------------------------------------------------------
22,755 Goldman Sachs I.L.A. Treasury Portfolio 22,755
--------------------------------------------------------------------------------- --------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 43,688
--------------------------------------------------------------------------------- --------------
(A)REPURCHASE AGREEMENT--0.9%
- ------------------------------------------------------------------------------------------------
$ 1,364,057 HSBC Securities, Inc., 5.87%, dated 11/30/1995, due 12/1/1995 (at amortized cost) 1,364,057
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $158,395,078)(B) $ 159,567,282
--------------------------------------------------------------------------------- --------------
</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
2.3% 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 $158,395,078.
The net unrealized appreciation of investments on a federal tax basis
amounts to $1,172,204 which is comprised of $2,591,173 appreciation and
$1,418,969 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($160,286,031) at November 30, 1995.
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
The following abbreviations are used throughout this portfolio:
IO-- Interest Only
PC-- Participation Certificate
PO-- Principal Only
REMIC-- Real Estate Mortgage Investment Conduit
STRIP-- Separate Trading of Registered Interest & Principal of Securities
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--88.7%
- ------------------------------------------------------------------------------------------------
CAPITAL GOODS--21.3%
---------------------------------------------------------------------------------
ELECTRICAL
---------------------------------------------------------------------------------
100,000 General Electric Co. $ 6,725,000
--------------------------------------------------------------------------------- --------------
MACHINE/INDUSTRIAL
---------------------------------------------------------------------------------
40,000 Parker-Hannifin Corp. 1,470,000
--------------------------------------------------------------------------------- --------------
POLLUTION CONTROL
---------------------------------------------------------------------------------
60,000 Browning-Ferris Industries, Inc. 1,807,500
--------------------------------------------------------------------------------- --------------
TECHNOLOGY
---------------------------------------------------------------------------------
20,000 Apple Computer, Inc. 762,500
---------------------------------------------------------------------------------
10,000 Automatic Data Processing, Inc. 796,250
---------------------------------------------------------------------------------
20,000 BMC Software, Inc. 845,000
---------------------------------------------------------------------------------
60,000 Boeing Co. 4,372,500
---------------------------------------------------------------------------------
60,000 International Business Machines Corp. 5,797,500
---------------------------------------------------------------------------------
80,000 Measurex Corp. 2,240,000
---------------------------------------------------------------------------------
36,000 Microsoft Corp. 3,136,500
---------------------------------------------------------------------------------
20,000 Motorola, Inc. 1,225,000
---------------------------------------------------------------------------------
80,000 Oracle Corp. 3,630,000
--------------------------------------------------------------------------------- --------------
Total 22,805,250
--------------------------------------------------------------------------------- --------------
Total Capital Goods 32,807,750
--------------------------------------------------------------------------------- --------------
CONSUMER CYCLICAL--8.4%
---------------------------------------------------------------------------------
APPAREL/MERCHANDISE
---------------------------------------------------------------------------------
40,000 Home Depot, Inc. 1,775,000
---------------------------------------------------------------------------------
220,000 Stride Rite Corp. 1,925,000
---------------------------------------------------------------------------------
40,000 V.F. Corp. 2,080,000
---------------------------------------------------------------------------------
100,000 Wal-Mart Stores, Inc. 2,400,000
--------------------------------------------------------------------------------- --------------
Total 8,180,000
--------------------------------------------------------------------------------- --------------
</TABLE>
FIRST PRIORITY EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
---------------------------------------------------------------------------------
AUTOMOTIVE
---------------------------------------------------------------------------------
60,000 General Motors Corp. $ 2,910,000
--------------------------------------------------------------------------------- --------------
MANUFACTURE HOUSING
---------------------------------------------------------------------------------
17,500 Fleetwood Enterprises, Inc. 420,000
--------------------------------------------------------------------------------- --------------
RETAIL-SPECIALTY
---------------------------------------------------------------------------------
200,000 Sports & Recreation, Inc. 1,400,000
--------------------------------------------------------------------------------- --------------
Total Consumer Cyclical 12,910,000
--------------------------------------------------------------------------------- --------------
CONSUMER SERVICES--4.8%
---------------------------------------------------------------------------------
RETAIL-RESTAURANTS
---------------------------------------------------------------------------------
150,000 International Dairy Queen, Inc., Class A 3,337,500
---------------------------------------------------------------------------------
52,000 McDonald's Corp. 2,320,500
--------------------------------------------------------------------------------- --------------
Total 5,658,000
--------------------------------------------------------------------------------- --------------
ENTERTAINMENT
---------------------------------------------------------------------------------
30,000 Walt Disney Co. 1,803,750
--------------------------------------------------------------------------------- --------------
Total Consumer Services 7,461,750
--------------------------------------------------------------------------------- --------------
CONSUMER STAPLES--28.3%
---------------------------------------------------------------------------------
BEVERAGE/TOBACCO/MISCELLANEOUS
---------------------------------------------------------------------------------
40,000 Colgate-Palmolive Co. 2,930,000
---------------------------------------------------------------------------------
60,000 PepsiCo, Inc. 3,315,000
---------------------------------------------------------------------------------
80,000 Philip Morris Cos., Inc. 7,020,000
---------------------------------------------------------------------------------
40,000 Tambrands, Inc. 2,085,000
---------------------------------------------------------------------------------
140,000 UST, Inc. 4,567,500
--------------------------------------------------------------------------------- --------------
Total 19,917,500
--------------------------------------------------------------------------------- --------------
HEALTH CARE
---------------------------------------------------------------------------------
50,000 Abbott Laboratories 2,031,250
---------------------------------------------------------------------------------
30,000 American Home Products Corp. 2,737,500
---------------------------------------------------------------------------------
40,000 C. R. Bard, Inc. 1,155,000
---------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER STAPLES--CONTINUED
---------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
---------------------------------------------------------------------------------
120,000 Merck & Co., Inc. $ 7,425,000
---------------------------------------------------------------------------------
120,000 Pfizer, Inc. 6,960,000
---------------------------------------------------------------------------------
60,000 Schering Plough Corp. 3,442,500
--------------------------------------------------------------------------------- --------------
Total 23,751,250
--------------------------------------------------------------------------------- --------------
Total Consumer Staples 43,668,750
--------------------------------------------------------------------------------- --------------
FINANCIAL--18.8%
---------------------------------------------------------------------------------
BANKING
---------------------------------------------------------------------------------
80,000 KeyCorp. 2,950,000
---------------------------------------------------------------------------------
40,000 NationsBank Corp. 2,855,000
---------------------------------------------------------------------------------
20,000 Wells Fargo & Co. 4,205,000
--------------------------------------------------------------------------------- --------------
Total 10,010,000
--------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES
---------------------------------------------------------------------------------
40,000 American Express Co. 1,700,000
---------------------------------------------------------------------------------
8,000 Federal National Mortgage Association 876,000
--------------------------------------------------------------------------------- --------------
Total 2,576,000
--------------------------------------------------------------------------------- --------------
INSURANCE
---------------------------------------------------------------------------------
40,000 Aflac, Inc. 1,630,000
---------------------------------------------------------------------------------
40,000 American International Group, Inc. 3,590,000
---------------------------------------------------------------------------------
20,000 Jefferson-Pilot Corp. 1,422,500
---------------------------------------------------------------------------------
100,000 Liberty Corp. 3,312,500
---------------------------------------------------------------------------------
50,000 Protective Life Corp. 1,456,250
---------------------------------------------------------------------------------
30,000 St. Paul Companies, Inc. 1,680,000
---------------------------------------------------------------------------------
80,000 Torchmark Corp. 3,400,000
--------------------------------------------------------------------------------- --------------
Total 16,491,250
--------------------------------------------------------------------------------- --------------
Total Financial 29,077,250
--------------------------------------------------------------------------------- --------------
</TABLE>
FIRST PRIORITY EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TRANSPORTATION--0.7%
---------------------------------------------------------------------------------
40,000 Atlantic Southeast Airlines, Inc. $ 1,050,000
--------------------------------------------------------------------------------- --------------
UTILITIES--6.4%
---------------------------------------------------------------------------------
40,000 AT&T Corp. 2,640,000
---------------------------------------------------------------------------------
80,000 Central & SouthWest Corp. 2,150,000
---------------------------------------------------------------------------------
80,000 Florida Progress Corp. 2,750,000
---------------------------------------------------------------------------------
80,000 Wisconsin Energy Corp. 2,360,000
--------------------------------------------------------------------------------- --------------
Total Utilities 9,900,000
--------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $116,895,873) 136,875,500
--------------------------------------------------------------------------------- --------------
PREFERRED STOCK--2.3%
- ------------------------------------------------------------------------------------------------
CAPITAL GOODS--MACHINE/INDUSTRIAL--2.3%
---------------------------------------------------------------------------------
80,000 WHX Corp., Cumulative Conv. Pfd., Series A, $3.25
(IDENTIFIED COST $4,446,275) 3,580,000
--------------------------------------------------------------------------------- --------------
MUTUAL FUNDS SHARES--1.5%
- ------------------------------------------------------------------------------------------------
647,403 Franklin U.S. Treasury Money Market Portfolio 647,403
---------------------------------------------------------------------------------
1,713,193 Goldman Sachs I.L.A. Treasury Portfolio 1,713,193
--------------------------------------------------------------------------------- --------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 2,360,596
--------------------------------------------------------------------------------- --------------
(A) REPURCHASE AGREEMENT--9.3%
- ------------------------------------------------------------------------------------------------
$ 14,407,419 HSBC Securities, Inc., 5.87%, dated 11/30/1995, due 12/1/1995
(AT AMORTIZED COST) 14,407,419
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $138,110,163) (B) $ 157,223,515
--------------------------------------------------------------------------------- --------------
</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 $138,121,663.
The net unrealized appreciation of investments on a federal tax basis
amounts to $19,101,852, which is comprised of $23,928,858 appreciation and
$4,827,006 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($154,297,433) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--53.8%
- -------------------------------------------------------------------------------------------------
BASIC INDUSTRY--2.6%
----------------------------------------------------------------------------------
CHEMICALS/PAPER
----------------------------------------------------------------------------------
8,000 PPG Industries, Inc. $ 363,000
----------------------------------------------------------------------------------
5,000 Union Camp Corp. 245,625
----------------------------------------------------------------------------------
7,000 Weyerhaeuser Co. 316,750
---------------------------------------------------------------------------------- -------------
Total 925,375
---------------------------------------------------------------------------------- -------------
METALS & MINING
----------------------------------------------------------------------------------
10,000 Cyprus Amax Minerals Co. 275,000
---------------------------------------------------------------------------------- -------------
Total Basic Industry 1,200,375
---------------------------------------------------------------------------------- -------------
CAPITAL GOODS--15.6%
----------------------------------------------------------------------------------
ELECTRICAL
----------------------------------------------------------------------------------
16,000 General Electric Co. 1,076,000
---------------------------------------------------------------------------------- -------------
INDUSTRIAL
----------------------------------------------------------------------------------
12,000 Goodyear Tire & Rubber Co. 508,500
----------------------------------------------------------------------------------
10,000 TECO Energy, Inc. 242,500
----------------------------------------------------------------------------------
7,000 WMX Technologies, Inc. 206,500
---------------------------------------------------------------------------------- -------------
Total 957,500
---------------------------------------------------------------------------------- -------------
MACHINE
----------------------------------------------------------------------------------
7,000 Ingersoll-Rand Co. 268,625
---------------------------------------------------------------------------------- -------------
TECHNOLOGY
----------------------------------------------------------------------------------
10,000 AMP, Inc. 401,250
----------------------------------------------------------------------------------
5,000 Hewlett-Packard Co. 414,375
----------------------------------------------------------------------------------
5,000 International Business Machines Corp. 483,125
----------------------------------------------------------------------------------
14,000 Minnesota Mining & Manufacturing Co. 917,000
----------------------------------------------------------------------------------
10,000 Motorola, Inc. 612,500
----------------------------------------------------------------------------------
4,000 Pitney Bowes, Inc. 179,000
----------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
----------------------------------------------------------------------------------
12,000 Raytheon Co. $ 534,000
----------------------------------------------------------------------------------
15,000 SCANA Corp. 405,000
----------------------------------------------------------------------------------
5,000 TRW, Inc. 374,375
----------------------------------------------------------------------------------
6,000 Thomas & Betts Corp. 440,250
---------------------------------------------------------------------------------- -------------
Total 4,760,875
---------------------------------------------------------------------------------- -------------
Total Capital Goods 7,063,000
---------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL--3.0%
----------------------------------------------------------------------------------
OTHER
----------------------------------------------------------------------------------
6,000 PACCAR, Inc. 262,500
---------------------------------------------------------------------------------- -------------
RETAIL-SPECIALTY
----------------------------------------------------------------------------------
15,000 J.C. Penney Co., Inc. 703,125
----------------------------------------------------------------------------------
15,000 Russell Corp. 399,375
---------------------------------------------------------------------------------- -------------
Total 1,102,500
---------------------------------------------------------------------------------- -------------
Total Consumer Cyclical 1,365,000
---------------------------------------------------------------------------------- -------------
CONSUMER SERVICES--3.6%
----------------------------------------------------------------------------------
PUBLISHING
----------------------------------------------------------------------------------
7,000 Dun & Bradstreet Corp. 436,625
----------------------------------------------------------------------------------
13,000 Eastman Kodak Co. 884,000
---------------------------------------------------------------------------------- -------------
Total 1,320,625
---------------------------------------------------------------------------------- -------------
RESTAURANTS
----------------------------------------------------------------------------------
20,000 Morrison Restaurants, Inc. 335,000
---------------------------------------------------------------------------------- -------------
Total Consumer Services 1,655,625
---------------------------------------------------------------------------------- -------------
CONSUMER STAPLES--15.0%
----------------------------------------------------------------------------------
FOOD & BEVERAGE
----------------------------------------------------------------------------------
5,000 Anheuser-Busch Companies, Inc. 331,250
----------------------------------------------------------------------------------
12,000 H.J. Heinz Co. 382,500
----------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
CONSUMER STAPLES--CONTINUED
----------------------------------------------------------------------------------
FOOD & BEVERAGE--CONTINUED
----------------------------------------------------------------------------------
11,000 Sara Lee Corp. $ 354,750
---------------------------------------------------------------------------------- -------------
Total 1,068,500
---------------------------------------------------------------------------------- -------------
HEALTH CARE
----------------------------------------------------------------------------------
8,000 American Home Products Corp. 730,000
----------------------------------------------------------------------------------
13,000 Baxter International, Inc. 546,000
----------------------------------------------------------------------------------
13,000 Bristol-Myers Squibb Co. 1,043,250
----------------------------------------------------------------------------------
14,000 C.R. Bard, Inc. 404,250
----------------------------------------------------------------------------------
5,000 Johnson & Johnson 433,125
----------------------------------------------------------------------------------
17,400 Pharmacia & Upjohn, Inc. 624,225
---------------------------------------------------------------------------------- -------------
Total 3,780,850
---------------------------------------------------------------------------------- -------------
MISCELLANEOUS
----------------------------------------------------------------------------------
16,000 Tambrands, Inc. 834,000
---------------------------------------------------------------------------------- -------------
TOBACCO
----------------------------------------------------------------------------------
4,000 Philip Morris Cos., Inc. 351,000
----------------------------------------------------------------------------------
24,000 UST, Inc. 783,000
---------------------------------------------------------------------------------- -------------
Total 1,134,000
---------------------------------------------------------------------------------- -------------
Total Consumer Staples 6,817,350
---------------------------------------------------------------------------------- -------------
ENERGY-OIL--4.5%
----------------------------------------------------------------------------------
4,000 Amoco Corp. 271,000
----------------------------------------------------------------------------------
10,000 Chevron Corp. 493,750
----------------------------------------------------------------------------------
6,000 Exxon Corp. 464,250
----------------------------------------------------------------------------------
11,000 Texaco, Inc. 814,000
---------------------------------------------------------------------------------- -------------
Total Energy-Oil 2,043,000
---------------------------------------------------------------------------------- -------------
FINANCIAL--5.4%
----------------------------------------------------------------------------------
BANKING
----------------------------------------------------------------------------------
14,000 Banc One Corp. 533,750
----------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCIAL--CONTINUED
----------------------------------------------------------------------------------
BANKING--CONTINUED
----------------------------------------------------------------------------------
2,500 Federal National Mortgage Association $ 273,750
----------------------------------------------------------------------------------
7,000 J.P. Morgan & Co., Inc. 549,500
----------------------------------------------------------------------------------
2,000 NationsBank Corp. 142,750
---------------------------------------------------------------------------------- -------------
Total 1,499,750
---------------------------------------------------------------------------------- -------------
INSURANCE
----------------------------------------------------------------------------------
6,000 Marsh & McLennan Cos., Inc. 520,500
----------------------------------------------------------------------------------
10,000 Torchmark Corp. 425,000
---------------------------------------------------------------------------------- -------------
Total 945,500
---------------------------------------------------------------------------------- -------------
Total Financial 2,445,250
---------------------------------------------------------------------------------- -------------
UTILITIES--4.1%
----------------------------------------------------------------------------------
16,000 AT&T Corp. 1,056,000
----------------------------------------------------------------------------------
12,000 BellSouth Corp. 466,500
----------------------------------------------------------------------------------
10,000 Questar Corp. 323,750
---------------------------------------------------------------------------------- -------------
Total Utilities 1,846,250
---------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $20,685,012) 24,435,850
---------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--17.0%
- -------------------------------------------------------------------------------------------------
BASIC INDUSTRY--1.9%
----------------------------------------------------------------------------------
CHEMICAL/PAPER
----------------------------------------------------------------------------------
15,000 Atlantic Richfield Co., 9.00%, 9/15/1997, Exch Nts 375,000
---------------------------------------------------------------------------------- -------------
METALS & MINING
----------------------------------------------------------------------------------
10,000 Freeport-McMoRan Copper & Gold, Inc., $1.75 Cum Conv. Pfd. 282,500
----------------------------------------------------------------------------------
5,000 WHX Corp., Series B, $3.75 Cum Conv. Pfd. 216,875
---------------------------------------------------------------------------------- -------------
Total 499,375
---------------------------------------------------------------------------------- -------------
Total Basic Industry 874,375
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
CAPITAL GOODS--2.0%
----------------------------------------------------------------------------------
INDUSTRIAL
----------------------------------------------------------------------------------
7,000 Corning Delaware, LP, $3.00 Cum Conv. Pfd. MIPS $ 343,000
---------------------------------------------------------------------------------- -------------
TECHNOLOGY
----------------------------------------------------------------------------------
8,000 General Motors Corp., Series C, $3.25 Conv. Pfd. 574,000
---------------------------------------------------------------------------------- -------------
Total Capital Goods 917,000
---------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL--2.5%
----------------------------------------------------------------------------------
AUTOMOTIVE
----------------------------------------------------------------------------------
25,000 Ford Motor Co., Series A, $4.20 Cum Conv. Pfd. 706,250
---------------------------------------------------------------------------------- -------------
OTHER
----------------------------------------------------------------------------------
7,000 Federal-Mogul Corp., Series D, $3.88 Cum Conv. Pfd. 402,920
---------------------------------------------------------------------------------- -------------
Total Consumer Cyclical 1,109,170
---------------------------------------------------------------------------------- -------------
CONSUMER SERVICES--1.9%
----------------------------------------------------------------------------------
HOSPITAL MANAGEMENT
----------------------------------------------------------------------------------
20,000 FHP International Corp., Series A, $1.25 Cum Conv. Pfd. 537,500
---------------------------------------------------------------------------------- -------------
ENTERTAINMENT
----------------------------------------------------------------------------------
10,000 Time Warner Financing, Series, $1.24 PERCS 326,250
---------------------------------------------------------------------------------- -------------
Total Consumer Services 863,750
---------------------------------------------------------------------------------- -------------
ENERGY-OIL--2.2%
----------------------------------------------------------------------------------
8,000 Ashland, Inc., $3.13 Cum Conv. Pfd. 469,000
----------------------------------------------------------------------------------
7,425 Williams Cos Inc., $3.50 Conv. Pfd. 536,456
---------------------------------------------------------------------------------- -------------
Total Energy-Oil 1,005,456
---------------------------------------------------------------------------------- -------------
FINANCIAL--6.5%
----------------------------------------------------------------------------------
BANKING
----------------------------------------------------------------------------------
10,000 First Commerce Corp., Series 1992, 7.25%, $1.81 Cum Conv. Pfd. 372,500
----------------------------------------------------------------------------------
10,000 H.F. Ahmanson & Co., Series D, $3.00 Conv. Pfd. 595,000
----------------------------------------------------------------------------------
15,000 RCSB Financial, Inc., Series B, $1.75 Conv. Pfd., 7.00% 568,125
----------------------------------------------------------------------------------
14,000 Union Planters Corp., Series E, $2.00 Cum Conv. Pfd. 553,000
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCIAL--CONTINUED
----------------------------------------------------------------------------------
BANKING--CONTINUED
----------------------------------------------------------------------------------
Total $ 2,088,625
---------------------------------------------------------------------------------- -------------
FINANCE
----------------------------------------------------------------------------------
6,300 American General Corp., Delaware, Series A, $3.00 332,325
---------------------------------------------------------------------------------- -------------
INSURANCE
----------------------------------------------------------------------------------
10,000 Merrill Lynch & Co., Inc., $3.12 527,500
---------------------------------------------------------------------------------- -------------
Total Financial 2,948,450
---------------------------------------------------------------------------------- -------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $6,896,810) 7,718,201
---------------------------------------------------------------------------------- -------------
CORPORATE BONDS--15.3%
- -------------------------------------------------------------------------------------------------
BASIC INDUSTRY-MINING--1.2%
----------------------------------------------------------------------------------
$ 500,000 Allegheny Ludlum Corp., 5.875%, 3/15/2002 530,625
---------------------------------------------------------------------------------- -------------
CAPITAL GOODS--2.7%
----------------------------------------------------------------------------------
ELECTRICAL
----------------------------------------------------------------------------------
500,000 AES Corp., 6.50%, 3/15/2002 505,625
---------------------------------------------------------------------------------- -------------
INDUSTRIAL
----------------------------------------------------------------------------------
400,000 Cooper Industries, Inc., 7.05%, 1/1/2015 410,000
----------------------------------------------------------------------------------
300,000 General Signal Corp., 5.75%, 6/1/2002 314,250
---------------------------------------------------------------------------------- -------------
Total 724,250
---------------------------------------------------------------------------------- -------------
Total Capital Goods 1,229,875
---------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL-RETAIL-SPECIALTY--2.3%
----------------------------------------------------------------------------------
500,000 Guilford Mills, Inc., 6.00%, 9/15/2012 489,375
----------------------------------------------------------------------------------
300,000 J. Baker, Inc., 7.00%, 6/1/2002 213,750
----------------------------------------------------------------------------------
400,000 Proffitts, Inc., 4.75%, 11/1/2003 345,000
---------------------------------------------------------------------------------- -------------
Total Consumer Cyclical-Retail-Specialty 1,048,125
---------------------------------------------------------------------------------- -------------
CONSUMER SERVICES-HOSPITAL MANAGEMENT--0.7%
----------------------------------------------------------------------------------
300,000 Beverly Enterprises, Inc., 5.50%, 8/1/2018 297,750
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.5%
----------------------------------------------------------------------------------
COSMETICS
----------------------------------------------------------------------------------
$ 600,000 McKesson Corp., 4.50%, 3/1/2004 $ 562,860
---------------------------------------------------------------------------------- -------------
HEALTH CARE
----------------------------------------------------------------------------------
1,500,000 Alza Corp., 5.25%*, 7/14/2014 592,500
----------------------------------------------------------------------------------
400,000 Fisher Scientific International, Inc., Step-up, 0/4.75%, 3/1/2003 430,000
---------------------------------------------------------------------------------- -------------
Total 1,022,500
---------------------------------------------------------------------------------- -------------
Total Consumer Staples 1,585,360
---------------------------------------------------------------------------------- -------------
CREDIT CYCLICAL-BUILDING MATERIALS--0.4%
----------------------------------------------------------------------------------
200,000 Masco Corp., 5.25%, 2/15/2012 191,500
---------------------------------------------------------------------------------- -------------
FINANCIAL--3.3%
----------------------------------------------------------------------------------
BANKING
----------------------------------------------------------------------------------
500,000 Leucadia National Corp., 5.25%, 2/1/2003 525,000
----------------------------------------------------------------------------------
800,000 USF&G Corp., 4.50%*, 3/3/2009 465,824
---------------------------------------------------------------------------------- -------------
Total 990,824
---------------------------------------------------------------------------------- -------------
INSURANCE
----------------------------------------------------------------------------------
500,000 Horace Mann Educators Corp., Step-up, 0/6.50%, 12/1/1999 516,250
---------------------------------------------------------------------------------- -------------
Total Financial 1,507,074
---------------------------------------------------------------------------------- -------------
TRANSPORTATION--1.2%
----------------------------------------------------------------------------------
500,000 AMR Corp., 6.125%, 11/1/2024 540,625
---------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $6,710,360) 6,930,934
---------------------------------------------------------------------------------- -------------
MUTUAL FUND SHARES--4.5%
- -------------------------------------------------------------------------------------------------
953,433 Franklin U.S. Treasury Money Market Portfolio 953,433
----------------------------------------------------------------------------------
1,070,901 Goldman Sachs I.L.A. Treasury Portfolio 1,070,901
---------------------------------------------------------------------------------- -------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 2,024,334
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
(A) REPURCHASE AGREEMENT--9.1%
- -------------------------------------------------------------------------------------------------
$ 4,117,631 HSBC Securities, Inc., 5.87%, dated 11/30/1995, due 12/1/1995 (AT AMORTIZED COST) $ 4,117,631
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $40,434,147)(B) $ 45,226,950
---------------------------------------------------------------------------------- -------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(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 $40,434,969. The
net unrealized appreciation of investments on a federal tax basis amounts to
$4,791,981, which is comprised of $4,964,118 appreciation and $172,137
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($45,423,676) at November 30, 1995.
The following acronyms are used throughout this portfolio:
LP--Limited Partnership
MIPS--Monthly Income Preferred Securities
PERCS--Preferred Equity Redemption Cumulative Stock
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY BALANCED FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--42.8%
- -------------------------------------------------------------------------------------------------
BASIC INDUSTRIES--0.8%
----------------------------------------------------------------------------------
CHEMICALS/PAPER
----------------------------------------------------------------------------------
5,000 Kimberly Clark Corp. $ 384,375
---------------------------------------------------------------------------------- -------------
CAPITAL GOODS--10.0%
----------------------------------------------------------------------------------
ELECTRICAL
----------------------------------------------------------------------------------
14,000 General Electric Co. 941,500
---------------------------------------------------------------------------------- -------------
MACHINE/INDUSTRIAL
----------------------------------------------------------------------------------
10,000 GATX Corp. 487,500
---------------------------------------------------------------------------------- -------------
POLLUTION CONTROL
----------------------------------------------------------------------------------
10,000 Browning Ferris Industries, Inc. 301,250
---------------------------------------------------------------------------------- -------------
TECHNOLOGY
----------------------------------------------------------------------------------
12,000 AMP, Inc. 481,500
----------------------------------------------------------------------------------
8,000 BMC Software, Inc. 338,000
----------------------------------------------------------------------------------
4,000 Boeing Co. 291,500
----------------------------------------------------------------------------------
10,000 International Business Machines Corp. 966,250
----------------------------------------------------------------------------------
20,000 Measurex Corp. 560,000
----------------------------------------------------------------------------------
8,000 Microsoft Corp. 697,000
----------------------------------------------------------------------------------
1,500 Motorola, Inc. 91,875
---------------------------------------------------------------------------------- -------------
Total 3,426,125
---------------------------------------------------------------------------------- -------------
Total Capital Goods 5,156,375
---------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL--4.3%
----------------------------------------------------------------------------------
AUTOMOTIVE
----------------------------------------------------------------------------------
9,000 General Motors Corp. 436,500
---------------------------------------------------------------------------------- -------------
MERCHANDISE/APPAREL
----------------------------------------------------------------------------------
15,000 Liz Claiborne, Inc. 440,625
----------------------------------------------------------------------------------
32,000 Stride Rite Corp. 280,000
----------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
----------------------------------------------------------------------------------
MERCHANDISE/APPAREL--CONTINUED
----------------------------------------------------------------------------------
6,000 VF Corp. $ 312,000
----------------------------------------------------------------------------------
22,000 Wal-Mart Stores, Inc. 528,000
---------------------------------------------------------------------------------- -------------
Total 1,560,625
---------------------------------------------------------------------------------- -------------
RETAIL-SPECIALTY
----------------------------------------------------------------------------------
30,000 Sports & Recreation, Inc. 210,000
---------------------------------------------------------------------------------- -------------
Total Consumer Cyclical 2,207,125
---------------------------------------------------------------------------------- -------------
CONSUMER SERVICES--2.6%
----------------------------------------------------------------------------------
ENTERTAINMENT
----------------------------------------------------------------------------------
8,000 Walt Disney Co. 481,000
---------------------------------------------------------------------------------- -------------
RETAIL-RESTAURANTS
----------------------------------------------------------------------------------
16,000 International Dairy Queen, Inc., Class A 356,000
----------------------------------------------------------------------------------
8,000 McDonald's Corp. 357,000
----------------------------------------------------------------------------------
8,000 Morrison Restaurants, Inc. 134,000
---------------------------------------------------------------------------------- -------------
Total 847,000
---------------------------------------------------------------------------------- -------------
Total Consumer Services 1,328,000
---------------------------------------------------------------------------------- -------------
CONSUMER STAPLE--13.7%
----------------------------------------------------------------------------------
FOOD & BEVERAGE
----------------------------------------------------------------------------------
4,500 General Mills, Inc. 248,063
----------------------------------------------------------------------------------
10,000 PepsiCo, Inc. 552,500
----------------------------------------------------------------------------------
8,000 Sara Lee Corp. 258,000
---------------------------------------------------------------------------------- -------------
Total 1,058,563
---------------------------------------------------------------------------------- -------------
HEALTH CARE
----------------------------------------------------------------------------------
20,000 Merck & Co., Inc. 1,237,500
----------------------------------------------------------------------------------
24,000 Pfizer Corp 1,392,000
----------------------------------------------------------------------------------
8,000 Schering-Plough Corp. 459,000
---------------------------------------------------------------------------------- -------------
Total 3,088,500
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
CONSUMER STAPLE--CONTINUED
----------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS
----------------------------------------------------------------------------------
3,500 Colgate-Palmolive Co. $ 256,375
---------------------------------------------------------------------------------- -------------
PERSONAL CARE
----------------------------------------------------------------------------------
12,500 Tambrands, Inc. 651,563
---------------------------------------------------------------------------------- -------------
TOBACCO
----------------------------------------------------------------------------------
15,000 Philip Morris Cos., Inc. 1,316,250
----------------------------------------------------------------------------------
20,000 UST, Inc. 652,500
---------------------------------------------------------------------------------- -------------
Total 1,968,750
---------------------------------------------------------------------------------- -------------
Total Consumer Staple 7,023,751
---------------------------------------------------------------------------------- -------------
ENERGY--3.4%
----------------------------------------------------------------------------------
OIL SERVICES
----------------------------------------------------------------------------------
8,000 Amoco Corp. 542,000
----------------------------------------------------------------------------------
5,000 Chevron Corp. 246,875
----------------------------------------------------------------------------------
8,000 Halliburton Co. 347,000
----------------------------------------------------------------------------------
8,000 Texaco, Inc. 592,000
---------------------------------------------------------------------------------- -------------
Total Energy 1,727,875
---------------------------------------------------------------------------------- -------------
FINANCIAL--6.3%
----------------------------------------------------------------------------------
BANKING
----------------------------------------------------------------------------------
8,000 KeyCorp. 295,000
----------------------------------------------------------------------------------
2,000 NationsBank Corp. 142,750
----------------------------------------------------------------------------------
4,000 Wells Fargo & Co. 841,000
---------------------------------------------------------------------------------- -------------
Total 1,278,750
---------------------------------------------------------------------------------- -------------
INSURANCE
----------------------------------------------------------------------------------
6,000 American International Group, Inc. 538,500
----------------------------------------------------------------------------------
24,000 Liberty Corp. 795,000
----------------------------------------------------------------------------------
6,000 Protective Life Corp. 174,750
----------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCIAL--CONTINUED
----------------------------------------------------------------------------------
INSURANCE--CONTINUED
----------------------------------------------------------------------------------
10,000 Torchmark Corp. $ 425,000
---------------------------------------------------------------------------------- -------------
Total 1,933,250
---------------------------------------------------------------------------------- -------------
Total Financial 3,212,000
---------------------------------------------------------------------------------- -------------
UTILITIES--1.7%
----------------------------------------------------------------------------------
4,000 AT&T Corp. 264,000
----------------------------------------------------------------------------------
10,000 Central & SouthWest Corp. 268,750
----------------------------------------------------------------------------------
10,000 Florida Progress Corp. 343,750
---------------------------------------------------------------------------------- -------------
Total Utilities 876,500
---------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $18,599,146) 21,916,001
---------------------------------------------------------------------------------- -------------
PREFERRED STOCKS--1.4%
- -------------------------------------------------------------------------------------------------
CAPITAL GOODS-TECHNOLOGY--0.7%
----------------------------------------------------------------------------------
8,300 WHX Corp., Cumulative Conv. Pfd., Series A 371,425
---------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL-AUTOMOTIVE--0.7%
----------------------------------------------------------------------------------
4,000 Ford Motor Co., Conv. Pfd., Series A 370,500
---------------------------------------------------------------------------------- -------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST $750,849) 741,925
---------------------------------------------------------------------------------- -------------
CORPORATE BONDS--6.8%
- -------------------------------------------------------------------------------------------------
CAPITAL GOODS-TECHNOLOGY--0.2%
----------------------------------------------------------------------------------
$ 120,000 United Technologies Corp., 9.625%, 5/15/1999 121,919
---------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL--1.8%
----------------------------------------------------------------------------------
AUTOMOTIVE
----------------------------------------------------------------------------------
120,000 Ford Motor Co., Delaware, 8.875%, 4/1/2006 141,296
---------------------------------------------------------------------------------- -------------
RETAIL-SPECIALTY
----------------------------------------------------------------------------------
120,000 Limited, Inc., 9.125%, 2/1/2001 133,993
----------------------------------------------------------------------------------
500,000 J. C. Penney Co., Inc., 6.375%, 9/15/2000 505,440
----------------------------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
----------------------------------------------------------------------------------
RETAIL-SPECIALTY--CONTINUED
----------------------------------------------------------------------------------
$ 200,000 Sports & Recreation, Inc., 4.25%, 11/1/2000 $ 134,500
---------------------------------------------------------------------------------- -------------
Total 773,933
---------------------------------------------------------------------------------- -------------
Total Consumer Cyclical 915,229
---------------------------------------------------------------------------------- -------------
CONSUMER STAPLE--0.3%
----------------------------------------------------------------------------------
TOBACCO
----------------------------------------------------------------------------------
120,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 134,576
---------------------------------------------------------------------------------- -------------
FINANCIAL--3.6%
----------------------------------------------------------------------------------
FINANCE-AUTOMOTIVE
----------------------------------------------------------------------------------
325,000 Ford Motor Credit Corporation, 6.35%, 2/11/1998 328,341
---------------------------------------------------------------------------------- -------------
FINANCE-EQUIPMENT
----------------------------------------------------------------------------------
250,000 General Electric Capital Corp., 5.50%, 11/1/2001 243,400
---------------------------------------------------------------------------------- -------------
INSURANCE
----------------------------------------------------------------------------------
240,000 U.S. Life Corp., 6.75%, 1/15/1998 243,595
---------------------------------------------------------------------------------- -------------
LEASING
----------------------------------------------------------------------------------
500,000 International Lease Finance Corp., 4.75%, 7/15/1996 496,850
---------------------------------------------------------------------------------- -------------
SECURITIES
----------------------------------------------------------------------------------
500,000 Goldman Sachs Group, 7.80%, 7/15/2002 531,150**
---------------------------------------------------------------------------------- -------------
Total Financial 1,843,336
---------------------------------------------------------------------------------- -------------
TRANSPORTATION--0.4%
----------------------------------------------------------------------------------
200,000 AMR Corp., 6.125%, 11/1/2024 216,250
---------------------------------------------------------------------------------- -------------
UTILITIES--0.5%
----------------------------------------------------------------------------------
120,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 134,215
----------------------------------------------------------------------------------
120,000 Virginia Electric & Power, 8.875%, 6/1/1999 130,838
---------------------------------------------------------------------------------- -------------
Total Utilities 265,053
---------------------------------------------------------------------------------- -------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $3,369,567) 3,496,363
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT AGENCIES--23.2%
- -------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--3.9%
----------------------------------------------------------------------------------
$ 1,000,000 6.00%*, 4/14/2004 $ 999,750
----------------------------------------------------------------------------------
1,000,000 6.50%, 6/7/2004 1,005,890
---------------------------------------------------------------------------------- -------------
Total 2,005,640
---------------------------------------------------------------------------------- -------------
FEDERAL HOME LOAN MORTGAGE CORP.--4.5%
----------------------------------------------------------------------------------
360,000 Step-up, 0/5.70%, 2/2/1999 356,742
----------------------------------------------------------------------------------
500,000 6.57%, 9/18/2000 507,100
----------------------------------------------------------------------------------
150,000 7.55%, 11/27/2007 154,346
----------------------------------------------------------------------------------
600,000 PC, 1604FC, 5.34% Floating Rate Note*, 11/15/2008 560,154
----------------------------------------------------------------------------------
750,000 PC, 1403M, 6.50%, 12/15/2021 730,568
---------------------------------------------------------------------------------- -------------
Total 2,308,910
---------------------------------------------------------------------------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--13.6%
----------------------------------------------------------------------------------
800,000 REMIC, 1993-G06/J, 7.00%, 12/25/1999 822,688
----------------------------------------------------------------------------------
600,000 STRIP, PO, 0/7.56%, 12/20/2001 566,082
----------------------------------------------------------------------------------
250,000 STRIP, PO, 0/7.89%, 3/9/2002 233,405
----------------------------------------------------------------------------------
250,000 REMIC, 1992-G40/K, 7.00%, 6/25/2002 256,460
----------------------------------------------------------------------------------
500,000 5.82%, 11/4/2003 483,850
----------------------------------------------------------------------------------
1,000,000 REMIC, 1992-G34/EC, 8.25%, 7/25/2005 1,081,380
----------------------------------------------------------------------------------
500,000 7.05%, 10/20/2005 500,990
----------------------------------------------------------------------------------
500,000 REMIC, 1993-G32 CL-J, 6.75%, 5/25/2009 505,665
----------------------------------------------------------------------------------
500,000 REMIC, 1994-10/KC, 6.50%, 10/25/2010 499,615
----------------------------------------------------------------------------------
1,000,000 REMIC, 1992-137/DA, 7.75%, 1/25/2017 1,022,590
----------------------------------------------------------------------------------
1,000,000 REMIC, 1993-202/PH, 6.50%, 2/25/2022 993,410
---------------------------------------------------------------------------------- -------------
Total 6,966,135
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- -------------
U.S. GOVERNMENT AGENCIES--CONTINUED
- -------------------------------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY--1.2%
----------------------------------------------------------------------------------
$ 600,000 6.125%, 7/15/2003 $ 596,910
---------------------------------------------------------------------------------- -------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $10,993,745) 11,877,595
---------------------------------------------------------------------------------- -------------
U.S. TREASURY OBLIGATIONS--21.7%
- -------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES
----------------------------------------------------------------------------------
1,000,000 STRIP, PO, 11/15/1996 950,940
----------------------------------------------------------------------------------
500,000 6.00%, 8/31/1997 504,955
----------------------------------------------------------------------------------
1,000,000 5.75%, 9/30/1997 1,006,710
----------------------------------------------------------------------------------
750,000 5.125%, 3/31/1998 745,575
----------------------------------------------------------------------------------
1,000,000 5.875%, 8/15/1998 1,011,720
----------------------------------------------------------------------------------
500,000 6.375%, 7/15/1999 514,360
----------------------------------------------------------------------------------
1,000,000 5.50%, 4/15/2000 1,001,120
----------------------------------------------------------------------------------
500,000 6.25%, 8/31/2000 514,380
----------------------------------------------------------------------------------
1,000,000 7.50%, 11/15/2001 1,095,400
----------------------------------------------------------------------------------
1,000,000 7.50%, 5/15/2002 1,101,120
----------------------------------------------------------------------------------
1,000,000 6.25%, 2/15/2003 1,034,320
----------------------------------------------------------------------------------
1,000,000 6.50%, 5/15/2005 1,053,060
----------------------------------------------------------------------------------
1,000,000 STRIP, IO, 11/15/2005 558,570
---------------------------------------------------------------------------------- -------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $10,459,054) 11,092,230
---------------------------------------------------------------------------------- -------------
MUTUAL FUND SHARES--0.9%
- -------------------------------------------------------------------------------------------------
100,593 Franklin U.S. Treasury Money Market Portfolio 100,593
----------------------------------------------------------------------------------
351,352 Goldman Sachs I.L.A. Treasury Portfolio 351,352
---------------------------------------------------------------------------------- -------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 451,945
---------------------------------------------------------------------------------- -------------
(A)REPURCHASE AGREEMENT--2.6%
- -------------------------------------------------------------------------------------------------
$ 1,318,581 HSBC Securities, Inc., 5.87%, dated 11/30/1995, due 12/1/1995 (AT AMORTIZED COST) 1,318,581
---------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $45,942,887)(B) $ 50,894,640
---------------------------------------------------------------------------------- -------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
* 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
1.0% 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 $45,945,894. The
net unrealized appreciation of investments on a federal tax basis amounts to
$4,948,746 which is comprised of $5,607,907 appreciation and $659,161
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($51,196,608) at November 30, 1995.
The following abbreviations are used throughout this portfolio:
IO-- Interest Only
PC-- Participation Certificate
PO-- Principal Only
REMIC-- Real Estate Mortgage Investment Conduit
STRIP-- Separate Trading of Registered Interest & Principal of Securities
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY LIMITED
MONEY MATURITY FIXED
MARKET GOVERNMENT INCOME
FUND FUND FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value $ 138,340,462 $61,826,149 $ 158,203,225
Investments in repurchase agreements, at amortized cost -- 1,227,893 1,364,057
Income receivable 439,544 829,739 1,294,014
Receivable for investments sold -- 505,810 --
Receivable for shares sold -- 10,091 9,571
Deferred expenses 9,437 16,045 8,737
- -----------------------------------------------------------------------------------------------------------------
Total assets 138,789,443 64,415,727 160,879,604
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased -- 1,000,308 --
Payable for shares redeemed -- -- 641
Income distribution payable 452,866 300,742 561,086
Accrued expenses 39,004 36,838 31,846
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 491,870 1,337,888 593,573
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 138,297,573 $62,423,654 $ 162,707,945
Net unrealized appreciation of investments -- 786,160 1,172,204
Accumulated net realized loss on investments -- (131,975) (3,594,118)
- -----------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 138,297,573 $63,077,839 $ 160,286,031
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, and Redemption Proceeds Per Share:
(net assets / shares outstanding)
Trust Shares $1.00 -- --
Investment Shares $1.00 $10.04 $10.34
- -----------------------------------------------------------------------------------------------------------------
Offering Price Per Share:+
Investment Shares -- $10.24 * $10.55*
- -----------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares 109,367,632 -- --
Investment Shares 28,929,941 6,279,565 15,506,800
- -----------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING 138,297,573 6,279,565 15,506,800
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Investments, at identified cost $ 138,340,462 $ 62,267,882 $ 158,395,078
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Investments, at tax cost $ 138,340,462 $ 62,267,882 $ 158,395,078
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
+ See "What Shares Cost" in the prospectus.
* Computation of offering price: 100/98 of net asset value.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
EQUITY INCOME BALANCED
FUND FUND FUND
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value $ 142,816,096 $41,109,319 $ 49,576,059
Investments in repurchase agreements, at amortized cost 14,407,419 4,117,631 1,318,581
Income receivable 298,398 211,744 325,601
Receivable for investments sold -- -- --
Receivable for shares sold 519 6,288 1,173
Deferred expenses 8,761 16,534 20,888
- -----------------------------------------------------------------------------------------------------------------
Total assets 157,531,193 45,461,516 51,242,302
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased 3,176,525 -- --
Payable for shares redeemed 14,084 -- --
Income distribution payable -- -- --
Accrued expenses 43,151 37,840 45,694
- -----------------------------------------------------------------------------------------------------------------
Total liabilities 3,233,760 37,840 45,694
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 127,755,153 $39,073,488 $ 44,977,162
Net unrealized appreciation of investments 19,113,352 4,792,803 4,951,753
Accumulated net realized gain on investments 6,977,391 1,327,013 931,781
Undistributed net investment income 451,537 230,372 335,912
- -----------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 154,297,433 $45,423,676 $ 51,196,608
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, and Redemption Proceeds Per Share:
(net assets / shares outstanding)
Trust Shares -- -- --
Investment Shares $12.10 $12.04 $11.46
- -----------------------------------------------------------------------------------------------------------------
Offering Price Per Share:+
Investment Shares $12.35* $12.29 * $11.69*
- -----------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares -- -- --
Investment Shares 12,752,956 3,773,216 4,469,111
- -----------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING 12,752,956 3,773,216 4,469,111
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Investments, at identified cost $ 138,110,163 $ 40,434,147 $ 45,942,887
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
Investments, at tax cost $ 138,121,663 $ 40,434,969 $ 45,945,894
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
+ See "What Shares Cost" in the prospectus.
* Computation of offering price: 100/98 of net asset value.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY LIMITED
MONEY MATURITY FIXED
MARKET GOVERNMENT INCOME
FUND FUND FUND
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 7,332,398 $ 3,409,755 $ 9,840,167
- ----------------------------------------------------------------------------------------------------------------
Total income 7,332,398 3,409,755 9,840,167
- ----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 644,330 406,281 1,167,748
Administrative personnel and services fee 171,752 77,297 207,570
Custodian fees 28,273 14,102 33,640
Transfer and dividend disbursing agent fees and expenses 75,124 27,800 48,266
Directors'/Trustees' fees 3,796 2,201 3,385
Auditing fees 21,802 15,800 21,300
Legal fees 3,544 968 4,333
Portfolio accounting fees 52,177 56,234 55,216
Distribution services fee 104,041 -- 4,961
Share registration costs 30,215 17,655 16,525
Printing and postage 10,256 10,050 11,638
Insurance premiums 9,677 3,797 4,110
Miscellaneous 21,577 5,360 19,083
- ----------------------------------------------------------------------------------------------------------------
Total expenses 1,176,564 637,545 1,597,775
Waiver of investment advisory fee (644,330) (282,157) (63,017)
- ----------------------------------------------------------------------------------------------------------------
Net expenses 532,234 355,388 1,534,758
- ----------------------------------------------------------------------------------------------------------------
Net investment income 6,800,164 3,054,367 8,305,409
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments -- (69,260) (2,505,522)
Change in unrealized appreciation (depreciation) of investments -- 2,687,975 16,376,572
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments -- 2,618,715 13,871,050
- ----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 6,800,164 $ 5,673,082 $ 22,176,459
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
EQUITY INCOME BALANCED
FUND FUND* FUND*
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 3,253,859 $ 623,614 $ 1,687,618
Dividends 748,245 885,623 474,888
- ------------------------------------------------------------------------------------------------------------------
Total income 4,002,104 1,509,237 2,162,506
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 1,151,393 261,156 349,457
Administrative personnel and services fee 191,841 50,126 58,065
Custodian fees 31,285 8,175 10,941
Transfer and dividend disbursing agent fees and expenses 50,037 12,248 13,003
Directors'/Trustees' fees 4,422 -- --
Auditing fees 21,500 -- --
Legal fees 3,665 2,501 2,501
Portfolio accounting fees 52,950 53,003 54,003
Distribution services fee 3,095 -- --
Share registration costs 21,678 -- --
Printing and postage 12,500 6,900 6,900
Insurance premiums 5,176 3,866 3,958
Miscellaneous 18,978 7,862 8,591
- ------------------------------------------------------------------------------------------------------------------
Total expenses 1,568,520 405,837 507,419
Waiver of investment advisory fee (129,440) (180,915) (242,832)
- ------------------------------------------------------------------------------------------------------------------
Net expenses 1,439,080 224,922 264,587
- ------------------------------------------------------------------------------------------------------------------
Net investment income 2,563,024 1,284,315 1,897,919
- ------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 7,215,306 1,327,013 931,781
Net realized loss on written options (236,735) -- --
Change in unrealized appreciation (depreciation) of investments 20,298,337 4,792,803 4,951,753
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 27,276,908 6,119,816 5,883,534
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $ 29,839,932 $ 7,404,131 $ 7,781,453
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</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>
TREASURY LIMITED MATURITY FIXED
MONEY MARKET FUND GOVERNMENT FUND INCOME FUND
YEAR ENDED NOVEMBER YEAR ENDED NOVEMBER YEAR ENDED NOVEMBER
30, 30, 30,
1995 1994 1995 1994* 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 6,800,164 $ 3,909,874 $ 3,054,367 $ 1,998,052 $ 8,305,409 $ 9,651,915
Net realized gain (loss) on
investments -- -- (69,260) (62,715) (2,505,522) (1,006,586)
Net change in unrealized appreciation
(depreciation) of investments -- -- 2,687,975 (1,901,815) 16,376,572 (17,286,245)
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 6,800,164 3,909,874 5,673,082 33,522 22,176,459 (8,640,916)
- --------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment
income:
Trust Shares (5,503,465) (3,231,014) -- -- (1,365,718) (8,976,750)
Investment Shares (1,296,699) (678,860) (3,054,367) (1,998,052) (7,052,406) (562,450)
Distributions from net realized gain
on investment transactions:
Trust Shares -- -- -- -- -- (3,299,410)
Investment Shares -- -- -- -- -- (248,677)
Distributions in excess of net
realized gain on investment
transactions:
Trust Shares -- -- -- -- -- (76,597)
Investment Shares -- -- -- -- -- (5,413)
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
distributions to shareholders (6,800,164) (3,909,874) (3,054,367) (1,998,052) (8,418,124) (13,169,297)
- --------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 417,980,476 367,941,378 23,448,679 60,428,059 37,892,010 42,878,052
Net asset value of shares issued to
shareholders in payment of dividends
declared 1,247,132 664,858 21,355 14,569 413,172 688,186
Cost of shares redeemed (388,508,575) (373,332,760) (11,536,971) (9,952,037) (54,711,747) (41,222,480)
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
share transactions 30,719,033 (4,726,524) 11,933,063 50,490,591 (16,406,565) 2,343,758
- --------------------------------------------------------------------------------------------------------------------------
Change in net assets 30,719,033 (4,726,524) 14,551,778 48,526,061 (2,648,230) (19,466,455)
NET ASSETS:
Beginning of period 107,578,540 112,305,064 48,526,061 -- 162,934,261 182,400,716
- --------------------------------------------------------------------------------------------------------------------------
End of period $138,297,573 $107,578,540 $63,077,839 $48,526,061 $160,286,031 $162,934,261
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
included in net assets at end of
period -- -- -- -- -- $ 112,715
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Net gain (loss) as computed for
federal tax purposes $ -- $ -- $ (69,260) $ (62,715) $(2,618,115) $ (975,091)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from December 12, 1993 (date of initial public investment) to
November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY
EQUITY INCOME BALANCED
FUND FUND FUND
YEAR ENDED NOVEMBER PERIOD ENDED PERIOD ENDED
30, NOVEMBER 30, NOVEMBER 30,
1995 1994 1995* 1995*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 2,563,024 $ 3,728,433 $ 1,284,315 $ 1,897,919
Net realized gain (loss) on investments 7,215,306 4,353,314 1,327,013 931,781
Net realized loss on written options (236,735) (161,204) -- --
Net change in unrealized appreciation (depreciation) of
investments 20,298,337 (5,561,915) 4,792,803 4,951,753
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 29,839,932 2,358,628 7,404,131 7,781,453
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income:
Trust Shares (899,259) (3,448,803) -- --
Investment Shares (1,859,046) (127,353) (1,053,943) (1,562,007)
Distributions from net realized gain on investment
transactions:
Trust Shares (3,996,308) (991,326) -- --
Investment Shares (195,892) (45,275) -- --
Distributions in excess of net realized gain on investment
transactions:
Trust Shares -- -- -- --
Investment Shares -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from distributions to
shareholders (6,950,505) (4,612,757) (1,053,943) (1,562,007)
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 25,926,206 34,077,964 42,607,764 51,155,036
Net asset value of shares issued to shareholders in payment
of dividends declared 306,176 167,441 968 348
Cost of shares redeemed (44,831,583) (43,173,519) (3,535,244) (6,178,222)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from share transactions (18,599,201) (8,928,114) 39,073,488 44,977,162
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets 4,290,226 (11,182,243) 45,423,676 51,196,608
NET ASSETS:
Beginning of period 150,007,207 161,189,450 -- --
- ---------------------------------------------------------------------------------------------------------------------
End of period $154,297,433 $150,007,207 $45,423,676 $51,196,608
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in net assets at
end of period $ 451,537 $ 646,818 $ 230,372 $ 335,912
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Net gain (loss) as computed for federal tax purposes $6,990,071 $ 4,192,110 $1,327,835 $ 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
COMBINED NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
- --------------------------------------------------------------------------------
(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 November 30, 1995, which are
presented herein:
PORTFOLIO NAME
- --------------
First Priority Treasury Money Market Fund ("Treasury Money Market Fund")
First Priority Limited Maturity Government Fund ("Limited Maturity Government
Fund")
First Priority Fixed Income Fund ("Fixed Income Fund")
First Priority Equity Fund ("Equity Fund")
First Priority Equity Income Fund ("Equity Income Fund")
First Priority Balanced Fund ("Balanced Fund")
Prior to February 1, 1995, Fixed Income Fund and Equity Fund were offered in two
classes of shares: Trust Shares and Investment Shares. On February 1, 1995, all
outstanding Trust Shares of Fixed Income Fund and Equity Fund were converted to
Investment Shares and these Funds no longer offer Trust Shares. Treasury Money
Market Fund continues to offer 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 Fund in which shares are held.
Limited Maturity Government Fund, Equity Income Fund, and Balanced Fund offer
only one class of shares.
Effective February 1, 1996, First Priority Equity Fund and First Priority Equity
Income Fund will change 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--The Treasury Money Market Fund's use of the
amortized cost method to value its portfolio securities is in accordance
with Rule 2a-7 under the Act. For the fluctuating net asset value Funds
within the Trust, all securities with remaining maturities of sixty days or
less at the time of purchase may be valued at amortized cost, which
approximates fair market value. All other securities are valued by prices
provided by an independent pricing service. Investments in other open-end
regulated investment companies are valued at net asset value.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
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.
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 Fund's commencement date.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
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. The Funds' restricted securities are
valued at the price provided by an independent pricing service, or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee. Additional information on each restricted security held
at November 30, 1995, 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>
OPTION CONTRACTS WRITTEN--The Equity Fund may write "covered" option
contracts. A written option contract obligates the Equity Fund to deliver
(a call), or to receive (a put), the contract amount upon exercise by the
holder of the option. The principal reason for writing call or put options
is to obtain, through receipt of premiums, a greater current return than
would be realized on the underlying securities alone. By writing a call
option, the Equity Fund may forgo potential gains on an underlying
security. By writing a put option, the Equity Fund may become obligated to
purchase an underlying security for more than its current market value. The
value of the option contract is recorded as a liability and unrealized gain
or loss is measured by the difference between the current value and the
premium received.
Written option transactions during the period are summarized as follows:
<TABLE>
<CAPTION>
CONTRACTS CONTRACTS
OUTSTANDING AT CONTRACTS CONTRACTS CONTRACTS CONTRACTS OUTSTANDING AT
PROCEEDS* 11/30/94 OPENED EXERCISED CLOSED EXPIRED 11/30/95
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Fund $ 286,040 0 600 0 300 300 0
- ---------------------- ----------- -------------- --------- --------- --------- --------- --------------
</TABLE>
* Represents premium received less commissions paid.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in Fund shares were as follows:
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED NOVEMBER 30, 1995:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET LIMITED MATURITY
FUND GOVERNMENT FUND FIXED INCOME FUND EQUITY 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 $ 2,202,182 559,276 $ 5,624,181
- ------------------------
Trust Shares exchanged
for Investment Shares -- -- -- (13,709,037) (144,699,450) (12,292,374) (123,538,364)
- ------------------------
Shares issued to
shareholders
in payment of
distributions declared 5,585 -- -- -- -- -- --
- ------------------------
Shares redeemed (189,899,208) -- -- (2,725,220) (25,831,235) (2,153,028) (22,271,579)
- ------------------------ ----------- --------- ----------- ---------- ----------- ---------- -----------
Net change resulting
from Trust share
transactions 18,360,043 -- -- (16,201,441) (168,328,503) (13,886,126) (140,185,762)
- ------------------------ ----------- --------- ----------- ---------- ----------- ---------- -----------
INVESTMENT SHARES
- ------------------------
Shares sold 209,726,810 2,394,876 23,448,679 3,603,637 35,689,828 1,858,603 20,302,025
- ------------------------
Trust Shares exchanged
for Investment Shares -- -- -- 13,709,037 144,699,450 12,292,374 123,538,364
- ------------------------
Shares issued to
shareholders
in payment of
distributions declared 1,241,547 2,167 21,355 41,512 413,172 29,980 306,176
- ------------------------
Shares redeemed (198,609,367) (1,173,524) (11,536,971) (2,873,052) (28,880,512) (2,020,017) (22,560,004)
- ------------------------ ----------- --------- ----------- ---------- ----------- ---------- -----------
Net change resulting
from Investment share
transactions 12,358,990 1,223,519 11,933,063 14,481,134 151,921,938 12,160,940 121,586,561
- ------------------------ ----------- --------- ----------- ---------- ----------- ---------- -----------
Total net change
resulting from Fund
share transactions 30,719,033 1,223,519 $11,933,063 (1,720,307) ($16,406,565) (1,725,186) ($18,599,201)
- ------------------------ ----------- --------- ----------- ---------- ----------- ---------- -----------
</TABLE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY INCOME FUND* BALANCED FUND*
--------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------ --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold 4,087,317 $42,607,764 5,045,851 $51,155,036
- ------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 83 968 31 348
- ------------------------------------------------------------------
Shares redeemed (314,184) (3,535,244) (576,771) (6,178,222)
- ------------------------------------------------------------------ --------- ---------- --------- ----------
Net change resulting from share transactions 3,773,216 39,073,488 4,469,111 44,977,162
- ------------------------------------------------------------------ --------- ---------- --------- ----------
Total net change resulting from Fund share transactions 3,773,216 $39,073,488 4,469,111 $44,977,162
- ------------------------------------------------------------------ --------- ---------- --------- ----------
</TABLE>
*For the period from December 19, 1994 (date of initial public investment) to
November 30, 1995.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
FOR THE YEAR ENDED NOVEMBER 30, 1994:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET LIMITED MATURITY
FUND GOVERNMENT FUND* FIXED INCOME FUND EQUITY FUND
----------- --------------------- ---------------------- ---------------------
TRUST SHARES SHARES SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
- ---------------------------- ----------- --------- ---------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares redemed (180,342,712) (1,021,013) $99,952,037) (9,401,362) $(83,995,909) (4,196,018) $(92,066,716)
Shares sold 195,487,497 -- $ -- 4,076,432 $41,030,876 3,147,381 $ 32,959,822
- ----------------------------
Shares issued to
shareholders
in payment of distributions
declared 237 -- -- -- -- -- --
- ----------------------------
Shares redeemed (192,990,048) -- -- (3,797,716) (37,226,571) (3,925,388) (41,106,803)
- ---------------------------- ----------- --------- ---------- --------- ----------- --------- ----------
Net change resulting from
Trust share transactions 2,497,686 -- -- 278,716 3,804,305 (778,007) (8,146,981)
- ---------------------------- ----------- --------- ---------- --------- ----------- --------- ----------
INVESTMENT SHARES
- ----------------------------
Shares sold 172,453,881 6,075,557 60,428,059 183,230 1,847,176 105,833 1,118,142
- ----------------------------
Shares issued to
shareholders
in payment of distributions
declared 664,621 1,502 14,569 68,161 688,186 15,959 167,441
- ----------------------------
Shares redemed (180,342,712) (1,021,013) (9,952,037) (401,362) (3,995,909) (196,018) (2,066,716)
- ---------------------------- ----------- --------- ---------- --------- ----------- --------- ----------
Net change resulting from
Investment share
transactions (7,224,210) 5,056,046 50,490,591 (149,971) (1,460,547) (74,226) (781,133)
- ---------------------------- ----------- --------- ---------- --------- ----------- --------- ----------
Total net change
resulting from Fund
share transactions (4,726,524) 5,056,046 $50,490,591 128,745 $ 2,343,758 (852,233) ($8,928,114)
- ---------------------------- ----------- --------- ----------- --------- ----------- --------- ----------
</TABLE>
*For the period from December 12, 1993 (date of initial public investment) to
November 30, 1994.
(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.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
<S> <C>
Treasury Money Market Fund 0.50%
- -------------------------------------------------------------------------------------------------------
Limited Maturity Government Fund 0.70%
- -------------------------------------------------------------------------------------------------------
Fixed Income Fund 0.75%
- -------------------------------------------------------------------------------------------------------
Equity Fund 0.80%
- -------------------------------------------------------------------------------------------------------
Equity Income Fund 0.80%
- -------------------------------------------------------------------------------------------------------
Balanced Fund 0.80%
- ------------------------------------------------------------------------------------------------------- -----------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. This 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, 0.25 of 1% of the average daily net assets of Limited Maturity Government
Fund and 0.30 of 1% of the average daily net assets of Fixed Income Fund and
Equity Fund annually, to compensate FSC.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTING
FEES--Federated Services Company ("FServ") serves as transfer and dividend
disbursing agent for the Funds. This fee is based on the size, type, and number
of accounts and transactions made by shareholders.
FServ also 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 Funds' effective dates. For the period ended
November 30, 1995, the Funds paid FAS, pursuant to this agreement, as follows:
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
<S> <C> <C>
Treasury Money Market Fund $ 50,822 $ 12,988
- --------------------------------------------------------------------------
Limited Maturity Government Fund $ 26,082 $ 3,366
- --------------------------------------------------------------------------
Fixed Income Fund $ 50,007 $ 12,780
- --------------------------------------------------------------------------
Equity Fund $ 49,934 $ 12,761
- --------------------------------------------------------------------------
Equity Income Fund $ 30,000 $ 2,000
- --------------------------------------------------------------------------
Balanced Fund $ 30,000 $ 2,000
- -------------------------------------------------------------------------- ---------- ----------
</TABLE>
INTERFUND TRANSACTIONS--During the period ended November 30, 1995, the following
funds engaged in sale transactions with funds that have a common investment
advisor, common Director/ Trustees, and/or common Officers. These transactions
were made at current market value pursuant to Rule 17a-7 under the Act. The
Fixed Income Fund and Equity Fund converted assets to the Balanced Fund in the
amounts of $18,310,145 and $14,302,375, respectively.
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
period ended
November 30, 1995, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
<S> <C> <C>
Limited Maturity Government Fund $ 28,744,437 $ 12,998,594
- ---------------------------------------------------------------------------------
Fixed Income Fund $ 66,404,874 $ 84,372,527
- ---------------------------------------------------------------------------------
Equity Fund $ 145,131,665 $ 153,621,562
- ---------------------------------------------------------------------------------
Equity Income Fund $ 55,963,523 $ 23,069,450
- ---------------------------------------------------------------------------------
Balanced Fund $ 63,108,771 $ 20,106,644
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees and the Shareholders of
FIRST PRIORITY FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments of First Priority Funds (comprising the following
portfolios: Treasury Money Market Fund, Limited Maturity Government Fund, Fixed
Income Fund, Equity Fund, Equity Income Fund and Balanced Fund) as of November
30, 1995, and the related statements of operations for the year then ended, the
statements of changes in net assets for the years ended November 30, 1995 and
1994 and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
November 30, 1995 by correspondence with the custodian and broker; where replies
were not received from broker, we performed other auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of First Priority Funds
as of November 30, 1995, the results of their operations, the changes in their
net assets and their financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 12, 1996
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
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. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
Gregor F. Meyer Vice President
Wesley W. Posvar Charles L. Davis, Jr.
Marjorie P. Smuts Vice President and Assistant Treasurer
David M. Taylor
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 Trust's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
[LOGO OF FIRST PRIORITY]
[LOGO OF FEDERATED]
Cusip 335931887
Cusip 335931101
Cusip 335931804
Cusip 335931309
Cusip 335931705
Cusip 335931606
Cusip 335931507
007575 (1/96)
FPF APPENDIX
A . The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph.First PriorityLimited Maturity Government Fund is represented by a solid
line. The Merrill Lynch 1-5 Year Government/Corporate Index is represented
by an broken em-dash line and the Lipper Short U.S. Government Index Average
is represented by a broken en-dash line. The line graph is a visual
representation of a comparison of change in value of a hypothetical $10,000
purchase in the Fund, Merrill Lynch 1-5 Year Government/Corporate Index and
Lipper Short U.S. Government Index Average. The "y" axis reflects the cost of
the investment. The "x" axis reflects computation periods from December 12,
1993 throughNovember 30, 1995. The right margin reflects the ending value of
the hypothetical investment in the Fund as compared to Merrill Lynch 1-5 Year
Government/Corporate Index and Lipper Short U.S. Government Index Average; the
ending values are $10,812, $11,134, and $10,978, respectively. There is also
a legend below the the graphic presentation which indicates the Average Annual
Total Return for the 1 year period and the Average Annual Total Return from
the inception date of the Fund, December 12, 1993; the Average Annual Total
Returns are 7.87% and 4.06%, respectively.
B . The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph.First Priority Fixed Income Fund is represented by a solid line. The
Merrill Lynch 1-10 Year Treasury Index is represented by a broken em-dash
line and the Lipper Intermediate U.S. Government Index Average is represented
by a broken en-dash line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 purchase in the Fund,
Merrill Lynch 1-10 Year Treasury Index and Lipper Intermediate U.S. Government
Index Average. The "y" axis reflects the cost of the investment. The "x"
axis reflects computation periods from April 20, 1992 throughNovember 30,
1995. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to Merrill Lynch 1-10 Year Treasaury Index
and Lipper Intermediate U.S. Government Index Average; the ending values are
$12,700, $13,931, and $12.072, respectively. There is also a legend below
the the graphic presentation which indicates the Average Annual Total Return
for the 1 year period and the Average Annual Total Return from the inception
date of the Fund, April 20, 1992; the Average Annual Total Returns are 13.10%
and 6.84%, respectively.
C . The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph.First Priority Fixed Income Fund is represented by a solid line. The
Merrill Lynch 1-10 Year Treasury Index is represented by a broken em-dash
line and the Lipper Intermediate U.S. Government Index Average is represented
by a broken en-dash line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 purchase in the Fund,
Merrill Lynch 1-10 Year Treasury Index and Lipper Intermediate U.S. Government
Index Average. The "y" axis reflects the cost of the investment. The "x"
axis reflects computation periods from April 20, 1992 throughNovember 30,
1995. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to Merrill Lynch 1-10 Year Treasaury Index
and Lipper Intermediate U.S. Government Index Average; the ending values are
$12,700, $13,931, and $12.072, respectively. There is also a legend below
the the graphic presentation which indicates the Average Annual Total Return
for the 1 year period and the Average Annual Total Return from the inception
date of the Fund, April 20, 1992; the Average Annual Total Returns are 13.10%
and 6.84%, respectively.
D . The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph.First Priority Equity Fund is represented by a solid line. The Standard
and Poor's 500 Index is represented by a broken line. The line graph is a
visual representation of a comparison of change in value of a hypothetical
$10,000 purchase in the Fund and Standard and Poor's 500 Index Average. The
"y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from April 20, 1992 throughNovember 30, 1995. The right
margin reflects the ending value of the hypothetical investment in the Fund as
compared to Standard and Poor's 500 Index; the ending values are $13,452 and
$16,120, respectively. There is also a legend below the the graphic
presentation which indicates the Average Annual Total Return for the 1 year
period and the Average Annual Total Return from the inception date of the
Fund, April 20, 1992; the Average Annual Total Returns are 20.57% and 8.56%,
respectively.
E . The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph.First Priority Equity Income Fund is represented by a solid line. The
Standard and Poor's -BARRA Value Index is represented by a broken em-dash
line and the Lipper Equity Income Index Average is represented by a broken en-
dash line. The line graph is a visual representation of a comparison of
change in value of a hypothetical $10,000 purchase in the Fund, Standard and
Poor's-BARRA Value Index and Lipper Equity Income Index Average. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation
periods from December 19, 1994 throughNovember 30, 1995. The right margin
reflects the ending value of the hypothetical investment in the Fund as
compared to Standard and Poor's-BARRA Value Index and Lipper Equity Income
Index Average; the ending values are $12,166, $13,494, and $12.663,
respectively. There is also a legend below the the graphic presentation
which indicates the Cumulative Total Return from the inception date of the
Fund, December 19, 1994; the Cumulative Total Returns is 21.71%.
F . The graphic presentation here displayed consists of a legend in the
upper left quadrant indicating the components of the corresponding line
graph.First Priority Balanced Fund is represented by a solid line. The
Standard and Poor's 500/Lehman Brothers Government/Corporate Index is
represented by a broken em-dash line and the Lipper Balanced Index Average is
represented by a broken en-dash line. The line graph is a visual
representation of a comparison of change in value of a hypothetical $10,000
purchase in the Fund, Standard and Poor's 500/Lehman Brothers
Government/Corporate Index and Lipper Balanced Index Average. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation
periods from December 19, 1994 throughNovember 30, 1995. The right margin
reflects the ending value of the hypothetical investment in the Fund as
compared to Standard and Poor's 500/Lehman Brothers Government/Corporate Index
and Lipper Balanced Index Average; the ending values are $11,613, $12,737, and
$12.291, respectively. There is also a legend below the the graphic
presentation which indicates the Cumulative Total Return from the inception
