FIRST PRIORITY
FAMILY OF FUNDS
COMBINED SEMI-ANNUAL REPORT
DATED MAY 31, 1997
DIVERSIFIED PORTFOLIOS OF THE FIRST PRIORITY FUNDS, AN OPEN-END, MANAGEMENT
INVESTMENT COMPANY
[FIRST PRIORITY FAMILY OF FUNDS LOGO]
NOTICE TO TRUST CUSTOMERS CONCERNING
FIRST PRIORITY MUTUAL FUNDS
Regions Bank serves as investment adviser and securities custodian for the First
Priority Family of Funds (the "Funds"). Six funds currently are comprising the
Funds:
FIRST PRIORITY TREASURY MONEY MARKET FUND
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
FIRST PRIORITY FIXED INCOME FUND
FIRST PRIORITY BALANCED FUND
FIRST PRIORITY VALUE FUND
FIRST PRIORITY GROWTH FUND
The Funds are available for purchase by individuals and trust accounts.
Your account owns shares in one or more of the Funds. Please notice in this
semi-annual report that Regions Bank receives a fee for serving as investment
adviser. The amount of the investment advisory fee varies from Fund to Fund and
may be waived in whole or in part. Regions Bank may offset the expense of
incurring an investment advisory fee by reimbursing certain fees for certain
accounts.
For serving as securities custodian, Regions Bank receives a fee of .025% or
less of the Funds' daily net assets.
The Funds are not deposits or obligations of Regions Bank, are not guaranteed by
Regions Bank, and are not insured or otherwise protected by the FDIC, the
Federal Reserve, or any other government agency. Investments in mutual funds
involve risk, including the potential loss of principal.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for First
Priority Funds. This report covers activity in the funds for the six-month
period from December 1, 1996 through May 31, 1997.
Whether your financial goals are as close as tomorrow or decades away, First
Priority Funds offer you a range of choices to put your money to work toward
virtually any type of goal. You can pursue daily income on your ready cash, or
help your money grow for very long-term goals like a child's college education
or your retirement. Whatever priority you have, there's a First Priority Fund
that may be right for you.
What follows is a fund-by-fund performance summary over the six-month period
covered by this report. The past year continued to be an extremely favorable,
though volatile, investment environment for stocks. Bonds continued to be
negatively impacted by rising interest rates, which caused prices-- and total
returns--to decline.
FIRST PRIORITY TREASURY MONEY MARKET FUND
This fund is a convenient, highly conservative way for shareholders to pursue
daily income on their ready cash, with daily access to their money. The fund's
portfolio of U.S. Treasury money market securities paid dividends of $0.02 per
share for Trust Shares and $0.02 per share for Investment Shares during the
six-month period. The fund's assets reached $189 million at the end of the
reporting period.*
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
The fund's diversified portfolio of limited maturity U.S. Treasury Notes, U.S.
government agency securities and investment-grade corporate bonds rewarded
shareholders with an income stream totaling $0.24 per share over the six-month
period. In a volatile interest rate environment, the fund's share price declined
modestly, from $9.96 on the first day of the period to $9.86 on the last day.
The fund produced a total return of 1.45%, or (2.09%) adjusted for the fund's
sales charge.** The fund's net assets totaled more than $80 million at the end
of the reporting period.
FIRST PRIORITY FIXED INCOME FUND
The fund's portfolio of U.S. government bonds and investment-grade corporate
bonds produced a monthly income stream totaling $0.29 per share over the
six-month period. Due to bond market volatility caused by rising rates, the
fund's net asset value declined modestly from $10.36 on the first day of the
period to $10.13 on the last day. As a result, the fund produced a total return
of 0.62%, or (4.19%) adjusted for the fund's sales charge.** The fund ended the
period with $178.3 million in 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 and is not indicative of
future results. 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.
During the six-month reporting period ended May 31, 1997, shares of the Funds
were sold at net asset value plus a front-end sales charge of 3.50% for
Limited Maturity Government Fund and 4.75% for Fixed Income Fund, Balanced
Fund, Value Fund and Growth Fund. Effective June 1, 1997, First Priority
Funds eliminated the front-end sales charge imposed by the Funds and replaced
it with a contingent deferred sales charge that would be imposed for all
shares redeemed within 3 years of their purchase.
FIRST PRIORITY BALANCED FUND
The fund's balanced approach--investing in a combination of high-quality stocks
and investment-grade corporate bonds and government bonds--produced a relatively
strong total return of 7.39% for the period, or 2.32% adjusted for the fund's
sales charge.* Contributing to the total return was the fund's $0.39 rise in net
asset value from the first day to the last day of the period, dividends totaling
$0.19 per share, and capital gains totaling $0.31 per share. Fund assets reached
$73.8 million at the end of the reporting period.
FIRST PRIORITY VALUE FUND
Consistent with a continued strong stock market environment, the fund's
diversified portfolio of high-quality stocks selected for their dividend
potential delivered a solid total return of 10.42%, or 5.20% adjusted for the
fund's sales charge.* Contributing to the total return was a 4% increase in net
asset value, dividends totaling $0.12 per share and capital gains totaling
$0.64. Fund assets reached $103.8 million at the end of the reporting period.
FIRST PRIORITY GROWTH FUND
The fund's diversified portfolio of high-quality growth stocks delivered a
strong total return of 12.59%, or 7.24% adjusted for the fund's sales charge.*
Contributing to this total return was a 6% rise in share price from the first
day of the period to the last day, dividends totaling $0.04 per share, and
capital gains amounting to $0.76 per share. At the end of the reporting period,
fund assets reached $248 million.
Thank you for joining with other shareholders who have entrusted more than $870
million in First Priority Funds. Adding to your account on a regular basis and
reinvesting your dividends in additional shares are convenient, painless ways to
"pay yourself first" and enjoy the benefit of compounding.+
We look forward to keeping you up-to-date on your progress.
Sincerely,
/s/ Edward C Gonzales
Edward C. Gonzales
President
July 15, 1997
* 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.
During the six-month reporting period ended May 31, 1997, shares of the Funds
were sold at net asset value plus a front-end sales charge of 3.50% for
Limited Maturity Government Fund and 4.75% for Fixed Income Fund, Balanced
Fund, Value Fund and Growth Fund. Effective June 1, 1997, First Priority Funds
eliminated the front-end sales charge imposed by the Funds and replaced it
with a contingent deferred sales charge that would be imposed for all shares
redeemed within 3 years of their purchase.
+ Systematic investing does not ensure a profit or protect against loss in
declining markets.
FIRST PRIORITY TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ------------ --------------------------------------------------------------- ------------
<C> <C> <S> <C>
UNITED STATES TREASURY OBLIGATIONS--90.5%
- -----------------------------------------------------------------------------------
U.S. TREASURY BILLS
---------------------------------------------------------------
$148,000,000 6/5/1997--10/16/1997 $146,323,488
--------------------------------------------------------------- ------------
U.S. TREASURY NOTES
---------------------------------------------------------------
25,000,000 5.50%-6.50%, 6/30/1997--10/31/1997 25,024,301
--------------------------------------------------------------- ------------
TOTAL UNITED STATES TREASURY OBLIGATIONS (AT AMORTIZED COST) 171,347,789
--------------------------------------------------------------- ------------
MUTUAL FUND SHARES--9.7%
- -----------------------------------------------------------------------------------
6,145,583 Dreyfus Treasury Prime Cash Management 6,145,583
---------------------------------------------------------------
6,050,363 Franklin U.S. Treasury Money Market Portfolio 6,050,363
---------------------------------------------------------------
6,144,763 Goldman Sachs I.L.A. Treasury Portfolio 6,144,763
--------------------------------------------------------------- ------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 18,340,709
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST AND VALUE)(A) $189,688,498
--------------------------------------------------------------- ------------
</TABLE>
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($189,315,490) at May 31, 1997.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--21.2%
- ------------------------------------------------------------------------------------ -----------
BANKING--1.2%
------------------------------------------------------------------
$1,000,000 Wachovia Bank of NC, NA, Winston-Salem, 6.00%, 3/15/1999 $ 993,780
------------------------------------------------------------------ -----------
BEVERAGES--3.7%
------------------------------------------------------------------
2,000,000 Anheuser-Busch Cos., Inc., 6.75%, 8/1/2003 1,986,860
------------------------------------------------------------------
500,000 PepsiCo, Inc., 6.80%, 5/15/2000 501,610
------------------------------------------------------------------
500,000 PepsiCo, Inc., 7.48%, 4/27/2002 502,515
------------------------------------------------------------------ -----------
Total 2,990,985
------------------------------------------------------------------ -----------
FINANCE-AUTOMOTIVE--2.5%
------------------------------------------------------------------
2,000,000 Ford Motor Credit Corporation, 6.375%, 10/6/2000 1,977,800
------------------------------------------------------------------ -----------
FINANCE-COMMERCIAL--4.3%
------------------------------------------------------------------
500,000 American Express Credit Corp., 6.75%, 6/1/2001 499,000
------------------------------------------------------------------
1,000,000 CIT Group Holdings, Inc., 6.35%, 7/31/1998 1,003,130
------------------------------------------------------------------
2,000,000 Morgan Stanley Group, Inc., 6.125%, 1/5/1999 1,993,500
------------------------------------------------------------------ -----------
Total 3,495,630
------------------------------------------------------------------ -----------
PRODUCER MANUFACTURING--2.7%
------------------------------------------------------------------
2,150,000 Eaton Corp., 6.375%, 4/1/1999 2,148,538
------------------------------------------------------------------ -----------
RETAIL--1.9%
------------------------------------------------------------------
500,000 Penney (J.C.) Co., Inc., 6.375%, 9/15/2000 494,040
------------------------------------------------------------------
1,000,000 Pitney Bowes Credit Corp., 6.25%, 6/1/1998 1,002,750
------------------------------------------------------------------ -----------
Total 1,496,790
------------------------------------------------------------------ -----------
UTILITIES--4.9%
------------------------------------------------------------------
2,000,000 Florida Power & Light Co., 5.70%, 3/5/1998 1,996,280
------------------------------------------------------------------
2,000,000 Georgia Power Co., 6.00%, 3/1/2000 1,967,980
------------------------------------------------------------------ -----------
Total 3,964,260
------------------------------------------------------------------ -----------
TOTAL CORPORATE BOND (IDENTIFIED COST $18,136,092) 17,067,783
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--6.5%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--0.3%
------------------------------------------------------------------
$ 250,000 6.96%, 6/6/2000 $ 250,165
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN BANK--1.8%
------------------------------------------------------------------
500,000 5.75%, 2/6/2001 485,835
------------------------------------------------------------------
500,000 6.375%, 6/22/2000 496,640
------------------------------------------------------------------
500,000 6.54%, 7/10/2000 498,175
------------------------------------------------------------------ -----------
Total 1,480,650
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--2.5%
------------------------------------------------------------------
1,000,000 5.70%, 2/2/1999 991,110
------------------------------------------------------------------
1,000,000 8.28%, 3/15/2005 1,014,070
------------------------------------------------------------------ -----------
Total 2,005,180
------------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.9%
------------------------------------------------------------------
500,000 6.80%, 9/30/2002 490,415
------------------------------------------------------------------
500,000 7.30%, 4/17/2000 504,510
------------------------------------------------------------------
500,000 8.32%, 3/2/2005 506,985
------------------------------------------------------------------ -----------
Total 1,501,910
------------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $4,248,594) 5,237,905
------------------------------------------------------------------ -----------
U.S. TREASURY NOTES--67.8%
- ------------------------------------------------------------------------------------
2,000,000 5.00%, 1/31/1999 1,965,600
------------------------------------------------------------------
1,000,000 5.00%, 2/15/1999 982,130
------------------------------------------------------------------
1,000,000 5.125%, 11/30/1998 987,120
------------------------------------------------------------------
2,500,000 5.125%, 12/31/1998 2,465,800
------------------------------------------------------------------
1,500,000 5.25%, 1/31/2001 1,445,115
------------------------------------------------------------------
500,000 5.375%, 11/30/1997 499,535
------------------------------------------------------------------
4,000,000 5.375%, 5/31/1998 3,982,720
------------------------------------------------------------------
2,000,000 5.50%, 11/15/1998 1,985,060
------------------------------------------------------------------
500,000 5.50%, 12/31/2000 485,440
------------------------------------------------------------------
2,000,000 5.50%, 2/28/1999 1,979,500
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. TREASURY NOTES--CONTINUED
- ------------------------------------------------------------------------------------
$ 500,000 5.50%, 4/15/2000 $ 489,275
------------------------------------------------------------------
500,000 5.625%, 11/30/2000 487,875
------------------------------------------------------------------
1,500,000 5.625%, 2/28/2001 1,460,370
------------------------------------------------------------------
5,000,000 5.75%, 12/31/1998 4,977,650
------------------------------------------------------------------
500,000 5.75%, 10/31/2000 490,320
------------------------------------------------------------------
2,000,000 5.875%, 8/15/1998 1,997,920
------------------------------------------------------------------
2,000,000 5.875%, 10/31/1998 1,995,880
------------------------------------------------------------------
2,000,000 5.875%, 3/31/1999 1,991,320
------------------------------------------------------------------
1,000,000 5.875%, 6/30/2000 986,880
------------------------------------------------------------------
2,000,000 6.00%, 5/31/1998 2,002,820
------------------------------------------------------------------
2,000,000 6.00%, 8/15/1999 1,990,440
------------------------------------------------------------------
4,000,000 6.00%, 9/30/1998 4,001,160
------------------------------------------------------------------
1,000,000 6.125%, 5/15/1998 1,002,730
------------------------------------------------------------------
3,000,000 6.125%, 8/31/1998 3,005,940
------------------------------------------------------------------
1,500,000 6.125%, 7/31/2000 1,489,950
------------------------------------------------------------------
500,000 6.125%, 9/30/2000 495,975
------------------------------------------------------------------
2,000,000 6.25%, 7/31/1998 2,007,380
------------------------------------------------------------------
500,000 6.25%, 8/31/2000 498,090
------------------------------------------------------------------
5,000,000 6.375%, 5/15/1999 5,017,000
------------------------------------------------------------------
500,000 6.75%, 4/30/2000 505,265
------------------------------------------------------------------
1,000,000 6.875%, 3/31/2000 1,013,720
------------------------------------------------------------------ -----------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $54,882,029) 54,685,980
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
(A)REPURCHASE AGREEMENT--3.4%
- ------------------------------------------------------------------------------------
$2,782,383 Wachovia Bank of NC, NA, Winston-Salem, 5.550%, dated 5/30/1997,
due 6/2/1997 (AT AMORTIZED COST) $ 2,782,383
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $80,049,098)(B) $79,774,051
------------------------------------------------------------------ -----------
</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 $80,049,098. The
net unrealized depreciation of investments on a federal tax basis amounts to
$275,047 which is comprised of $86,804 appreciation and $361,851
depreciation at May 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($80,659,707) at May 31, 1997.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--11.4%
- -----------------------------------------------------------------------------------
CONSUMER CYCLICAL--0.5%
----------------------------------------------------------------
RETAIL--SPECIALTY
----------------------------------------------------------------
$ 880,000 Limited, Inc., 9.125%, 2/1/2001 $ 935,114
---------------------------------------------------------------- ------------
CONSUMER STAPLES--0.5%
----------------------------------------------------------------
TOBACCO
----------------------------------------------------------------
880,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 932,351
---------------------------------------------------------------- ------------
ELECTRICAL EQUIPMENT--0.9%
----------------------------------------------------------------
1,750,000 General Electric Capital Corp., 5.50%, 11/1/2001 1,663,288
---------------------------------------------------------------- ------------
ELECTRICAL POWER--1.1%
----------------------------------------------------------------
880,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 937,270
----------------------------------------------------------------
880,000 Virginia Electric Power, 8.875%, 6/1/1999 918,553
---------------------------------------------------------------- ------------
Total Electrical Power 1,855,823
---------------------------------------------------------------- ------------
FINANCIAL--6.2%
----------------------------------------------------------------
FINANCE--AUTOMOTIVE
----------------------------------------------------------------
1,000,000 General Motors Acceptance Corp., 7.75%, 1/15/1999 1,021,770
----------------------------------------------------------------
2,000,000 General Motors Acceptance Corp., 8.00%, 10/1/1999 2,060,100
---------------------------------------------------------------- ------------
Total 3,081,870
---------------------------------------------------------------- ------------
FINANCE--BANKING
----------------------------------------------------------------
1,000,000 SouthTrust Bank of Alabama, Birmingham, 7.00%, 11/15/2008 973,700
---------------------------------------------------------------- ------------
FINANCE--COMMERCIAL
----------------------------------------------------------------
1,000,000 Associates Corp. of North America, 6.875%, 8/1/2003 993,700
----------------------------------------------------------------
4,000,000 Xerox Credit Corp., 7.40%, 11/21/2011 3,958,952
---------------------------------------------------------------- ------------
Total 4,952,652
---------------------------------------------------------------- ------------
SECURITIES
----------------------------------------------------------------
2,000,000 Lehman Brothers Holdings, Inc., 7.375%, 1/15/2007 1,977,720
---------------------------------------------------------------- ------------
Total Financial 10,985,942
---------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
TECHNOLOGY--1.6%
----------------------------------------------------------------
$ 3,000,000 Lucent Technologies, Inc., 7.00%, 3/12/2012 $ 2,900,370
---------------------------------------------------------------- ------------
TRANSPORTATION--0.6%
----------------------------------------------------------------
880,000 Ford Motor Co., 8.875%, 4/1/2006 975,022
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $20,041,167) 20,247,910
---------------------------------------------------------------- ------------
U.S. GOVERNMENT AGENCIES--64.7%
- -----------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.2%
----------------------------------------------------------------
2,200,000 6.625%, 3/25/2002 2,193,136
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK--7.0%
----------------------------------------------------------------
5,000,000 7.035%, 5/7/2002 5,022,900
----------------------------------------------------------------
1,750,000 6.75%, 10/24/2003 1,757,928
----------------------------------------------------------------
5,850,000 6.063% Floating Rate Note*, 11/5/2003 5,694,215
---------------------------------------------------------------- ------------
Total 12,475,043
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORP.--20.3%
----------------------------------------------------------------
2,000,000 6.70%, 9/3/2003 1,959,080
----------------------------------------------------------------
2,280,000 7.03%, 11/17/2005 2,233,488
----------------------------------------------------------------
2,00,000 6.625%, 11/28/2005 1,923,640
----------------------------------------------------------------
1,000,000 7.01%, 3/15/2006 974,520
----------------------------------------------------------------
2,000,000 7.53%, 8/7/2006 2,015,020
----------------------------------------------------------------
2,040,833 PC, 1386C, 6.80%, Floating Rate Note*, 10/15/2007 2,071,711
----------------------------------------------------------------
314,132 PC, 1414F, 6.85%, Floating Rate Note*, 11/15/2007 317,207
----------------------------------------------------------------
1,075,000 7.55%, 11/27/2007 1,073,828
----------------------------------------------------------------
2,392,013 PC, 1475O, 7.00%, 2/15/2008 2,337,164
----------------------------------------------------------------
6,189,728 PC, 1544L, 6.63%, Floating Rate Note*, 7/15/2008 6,004,593
----------------------------------------------------------------
4,400,000 PC, 1604FC, 6.24%, Floating Rate Note*, 11/15/2008 4,279,220
----------------------------------------------------------------
5,000,000 PC, 1712C, 6.00%, 3/15/2009 4,545,450
----------------------------------------------------------------
2,671,763 PC, 31K, 6.50%, 10/25/2014 2,488,026
----------------------------------------------------------------
4,250,000 PC, 1403M, 6.50%, 12/15/2021 3,947,995
---------------------------------------------------------------- ------------
Total 36,170,942
---------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- -----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--32.7%
----------------------------------------------------------------
$ 1,250,000 REMIC, 1992-G34/EC, 8.25%, 7/25/2005 $ 1,290,063
----------------------------------------------------------------
2,000,000 7.25%, 9/26/2005 Series MTN 1,973,100
----------------------------------------------------------------
4,500,000 7.34%, 9/29/2005 Series MTN 4,455,540
----------------------------------------------------------------
1,900,000 7.125%, 11/7/2005 Series MTN 1,864,869
----------------------------------------------------------------
3,000,000 7.11%, 3/20/2006 Series MTN 2,954,070
----------------------------------------------------------------
2,820,000 7.02%, 4/10/2006 2,763,826
----------------------------------------------------------------
2,000,000 7.07%, 10/24/2006 Series MTN 1,975,600
----------------------------------------------------------------
3,000,000 7.54%, 11/2/2006 Series MTN 2,989,320
----------------------------------------------------------------
1,500,000 6.82%, 12/13/2006 1,465,245
----------------------------------------------------------------
5,000,000 7.27%, 2/14/2007 4,963,900
----------------------------------------------------------------
5,000,000 7.09%, 3/13/2007 4,964,000
----------------------------------------------------------------
10,000,000 7.55%, 3/27/2007 10,033,800
----------------------------------------------------------------
2,000,000 7.74%, 5/15/2007 Series MTN 2,004,120
----------------------------------------------------------------
1,250,000 REMIC, 1992-209/F, 6.98%, Floating Rate Note*, 11/25/2007 1,277,413
----------------------------------------------------------------
3,716,165 REMIC, 1993-G32/J, 6.75%, 5/25/2009 3,656,966
----------------------------------------------------------------
3,541,125 REMIC, 1994-10/KC, 6.50%, 10/25/2010 3,321,681
----------------------------------------------------------------
1,000,000 REMIC, 1992-137/DA, 7.75%, 1/25/2017 1,010,200
----------------------------------------------------------------
5,601,615 REMIC, 1993-202/PH, 6.50%, 2/25/2022 5,404,662
---------------------------------------------------------------- ------------
Total 58,368,375
---------------------------------------------------------------- ------------
TENNESSEE VALLEY AUTHORITY--3.5%
----------------------------------------------------------------
2,000,000 7.875%, 9/15/2001 2,000,000
----------------------------------------------------------------
4,400,000 6.125%, 7/15/2003 4,247,848
---------------------------------------------------------------- ------------
Total 6,247,848
---------------------------------------------------------------- ------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $117,072,297) 115,455,344
---------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--20.5%
- -----------------------------------------------------------------------------------
U.S. TREASURY NOTES
----------------------------------------------------------------
$ 6,000,000 7.50%, 11/15/2001 $ 6,230,040
----------------------------------------------------------------
7,000,000 7.50%, 5/15/2002 7,294,490
----------------------------------------------------------------
17,250,000 STRIPS, IO, 2/15/2006 9,649,650
----------------------------------------------------------------
7,000,000 7.00%, 7/15/2006 7,148,190
----------------------------------------------------------------
17,000,000 STRIPS, IO, 11/15/2011 6,256,340
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $36,490,521) 36,578,710
---------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--3.1%
- -----------------------------------------------------------------------------------
5,509,185 Wachovia Bank of NC, 5.55%, dated 5/30/1997, due 6/2/1997 (AT
AMORTIZED COST) 5,509,185
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $179,113,170)(B) $177,791,149
---------------------------------------------------------------- ------------
</TABLE>
* Current rate shown.
(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 $179,113,170.
The net unrealized depreciation of investments on a federal tax basis
amounts to $1,322,021 which is comprised of $747,187 appreciation and
$2,069,208 depreciation at May 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($178,345,287) at May 31, 1997.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
IO -- Interest Only
MTN -- Medium Term Note
PC -- Participation Certificate
REMIC -- Real Estate Mortgage Investment Conduit
STRIPS -- Separate Trading of Registered Interest & Principal of Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY BALANCED FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--56.8%
- ------------------------------------------------------------------------------------
BASIC INDUSTRIES--2.7%
------------------------------------------------------------------
CHEMICALS/PAPER--2.0%
------------------------------------------------------------------
3,000 Du Pont (E.I.) de Nemours & Co. $ 326,625
------------------------------------------------------------------
10,000 IMC Global, Inc. 391,250
------------------------------------------------------------------
16,000 Kimberly-Clark Corp. 802,000
------------------------------------------------------------------ -----------
Total 1,519,875
------------------------------------------------------------------ -----------
METALS & MINING--0.4%
------------------------------------------------------------------
4,500 Aluminum Co. of America 331,312
------------------------------------------------------------------ -----------
PRODUCER MANUFACTURING--0.3%
------------------------------------------------------------------
4,200 Deere & Co. 214,725
------------------------------------------------------------------ -----------
Total Basic Industries 2,065,912
------------------------------------------------------------------ -----------
CAPITAL GOODS--13.4%
------------------------------------------------------------------
ELECTRICAL--2.5%
------------------------------------------------------------------
30,600 General Electric Co. 1,847,475
------------------------------------------------------------------ -----------
TECHNOLOGY--10.9%
------------------------------------------------------------------
5,000 3Com Corp. 242,500
------------------------------------------------------------------
10,000 AMP, Inc. 411,250
------------------------------------------------------------------
8,000 (a) BMC Software, Inc. 433,000
------------------------------------------------------------------
6,200 Boeing Co. 652,550
------------------------------------------------------------------
6,500 (a) Cisco Systems, Inc. 440,375
------------------------------------------------------------------
6,000 Eastman Kodak Co. 497,250
------------------------------------------------------------------
9,500 Hewlett-Packard Co. 489,250
------------------------------------------------------------------
6,700 Intel Corp. 1,015,050
------------------------------------------------------------------
10,999 Lucent Technologies, Inc. 699,811
------------------------------------------------------------------
7,000 Micron Technology, Inc. 297,500
------------------------------------------------------------------
16,000 (a) Microsoft Corp. 1,984,000
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
7,500 Motorola, Inc. $ 497,813
------------------------------------------------------------------
8,000 TRW, Inc. 428,000
------------------------------------------------------------------ -----------
Total 8,088,349
------------------------------------------------------------------ -----------
Total Capital Goods 9,935,824
------------------------------------------------------------------ -----------
CONSUMER CYCLICAL--3.6%
------------------------------------------------------------------
AUTOMOTIVE--0.4%
------------------------------------------------------------------
10,000 Pep Boys-Manny Moe & Jack 312,500
------------------------------------------------------------------ -----------
MERCHANDISE/APPAREL--3.2%
------------------------------------------------------------------
5,000 Home Depot, Inc. 315,000
------------------------------------------------------------------
4,000 Nike, Inc., Class B 228,000
------------------------------------------------------------------
6,000 Sears, Roebuck & Co. 294,750
------------------------------------------------------------------
12,400 Toys "R" Us, Inc. 385,950
------------------------------------------------------------------
6,000 V.F. Corp. 468,750
------------------------------------------------------------------
22,000 Wal-Mart Stores, Inc. 654,500
------------------------------------------------------------------ -----------
Total 2,346,950
------------------------------------------------------------------ -----------
Total Consumer Cyclical 2,659,450
------------------------------------------------------------------ -----------
CONSUMER SERVICES--2.7%
------------------------------------------------------------------
ENTERTAINMENT--0.9%
------------------------------------------------------------------
8,000 Walt Disney Co. 655,000
------------------------------------------------------------------ -----------
HOSPITAL MANAGEMENT--0.8%
------------------------------------------------------------------
16,000 Columbia/HCA Healthcare Corp. 586,000
------------------------------------------------------------------ -----------
RETAIL--RESTAURANTS--1.0%
------------------------------------------------------------------
7,000 Cracker Barrel Old Country Store 203,000
------------------------------------------------------------------
11,000 McDonald's Corp. 552,750
------------------------------------------------------------------ -----------
Total 755,750
------------------------------------------------------------------ -----------
Total Consumer Services 1,996,750
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER STAPLE--13.1%
------------------------------------------------------------------
FOOD & BEVERAGE--3.6%
------------------------------------------------------------------
10,000 Coca-Cola Co. $ 682,500
------------------------------------------------------------------
8,500 General Mills, Inc. 537,625
------------------------------------------------------------------
2,500 Heinz (H.J.) Co. 107,500
------------------------------------------------------------------
23,000 PepsiCo, Inc. 845,250
------------------------------------------------------------------
12,000 Sara Lee Corp. 490,500
------------------------------------------------------------------ -----------
Total 2,663,375
------------------------------------------------------------------ -----------
HEALTH CARE/DRUG--4.9%
------------------------------------------------------------------
12,400 American Home Products Corp. 945,500
------------------------------------------------------------------
14,000 Merck & Co., Inc. 1,258,250
------------------------------------------------------------------
10,000 Pfizer, Inc. 1,028,750
------------------------------------------------------------------
4,000 Schering Plough Corp. 363,000
------------------------------------------------------------------ -----------
Total 3,595,500
------------------------------------------------------------------ -----------
HOSPITAL SUPPLIES--0.9%
------------------------------------------------------------------
11,200 Johnson & Johnson 670,600
------------------------------------------------------------------ -----------
HOUSEHOLD PRODUCTS--1.9%
------------------------------------------------------------------
11,000 Colgate-Palmolive Co. 682,000
------------------------------------------------------------------
5,000 Procter & Gamble Co. 689,375
------------------------------------------------------------------ -----------
Total 1,371,375
------------------------------------------------------------------ -----------
TOBACCO--1.8%
------------------------------------------------------------------
30,000 Philip Morris Cos., Inc. 1,320,000
------------------------------------------------------------------ -----------
Total Consumer Staple 9,620,850
------------------------------------------------------------------ -----------
ENERGY--6.6%
------------------------------------------------------------------
OIL SERVICES--6.6%
------------------------------------------------------------------
9,400 Amoco Corp. 840,125
------------------------------------------------------------------
12,100 Chevron Corp. 847,000
------------------------------------------------------------------
19,200 Exxon Corp. 1,137,600
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
ENERGY--CONTINUED
------------------------------------------------------------------
OIL SERVICES--CONTINUED
------------------------------------------------------------------
8,000 Halliburton Co. $ 619,000
------------------------------------------------------------------
4,700 Schlumberger Ltd. 559,888
------------------------------------------------------------------
8,000 Texaco, Inc. 873,000
------------------------------------------------------------------ -----------
Total Energy 4,876,613
------------------------------------------------------------------ -----------
FINANCIAL--10.9%
------------------------------------------------------------------
BANKING--5.9%
------------------------------------------------------------------
4,700 Aflac, Inc. 239,700
------------------------------------------------------------------
11,000 American Express Co. 764,500
------------------------------------------------------------------
7,500 American General Corp. 331,875
------------------------------------------------------------------
4,500 BankAmerica Corp. 525,937
------------------------------------------------------------------
4,500 Citicorp 514,687
------------------------------------------------------------------
14,700 Federal National Mortgage Association 641,287
------------------------------------------------------------------
11,000 NationsBank Corp. 647,625
------------------------------------------------------------------
2,700 Wells Fargo & Co. 711,450
------------------------------------------------------------------ -----------
Total 4,377,061
------------------------------------------------------------------ -----------
INSURANCE--2.7%
------------------------------------------------------------------
5,000 American International Group, Inc. 676,875
------------------------------------------------------------------
3,300 General RE Corp. 578,325
------------------------------------------------------------------
11,000 Torchmark Corp. 721,875
------------------------------------------------------------------ -----------
Total 1,977,075
------------------------------------------------------------------ -----------
SECURITIES--2.3%
------------------------------------------------------------------
20,000 S&P Depositary Receipts Trust, ADR 1,706,250
------------------------------------------------------------------ -----------
Total Financial 8,060,386
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--3.8%
------------------------------------------------------------------
COMMUNICATION--1.6%
------------------------------------------------------------------
9,300 Ameritech Corp. $ 609,150
------------------------------------------------------------------
13,000 BellSouth Corp. 589,875
------------------------------------------------------------------ -----------
Total 1,199,025
------------------------------------------------------------------ -----------
UTILITIES/ELECTRICAL--2.2%
------------------------------------------------------------------
5,000 Duke Power Co. 225,000
------------------------------------------------------------------
10,000 Florida Progress Corp. 293,750
------------------------------------------------------------------
9,000 SBC Communications, Inc. 526,500
------------------------------------------------------------------
15,000 Southern Co. 318,750
------------------------------------------------------------------
8,500 WorldCom, Inc. 251,813
------------------------------------------------------------------ -----------
Total 1,615,813
------------------------------------------------------------------ -----------
Total Utilities 2,814,838
------------------------------------------------------------------ -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $29,909,603) 42,030,623
------------------------------------------------------------------ -----------
CORPORATE BONDS--6.5%
- ------------------------------------------------------------------------------------
CONSUMER CYCLICAL--1.0%
------------------------------------------------------------------
AUTOMOTIVE--0.2%
------------------------------------------------------------------
$ 120,000 Ford Motor Co., Delaware, 8.875%, 4/1/2006 132,958
------------------------------------------------------------------ -----------
RETAIL SPECIALTY--0.8%
------------------------------------------------------------------
500,000 J.C. Penney Co., Inc., 6.375%, 9/15/2000 494,040
------------------------------------------------------------------
120,000 Limited, Inc., Note, 9.125%, 2/1/2001 127,516
------------------------------------------------------------------ -----------
Total 621,556
------------------------------------------------------------------ -----------
Total Consumer Cyclical 754,514
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER STAPLE--0.9%
------------------------------------------------------------------
TECHNOLOGY SERVICES--0.7%
------------------------------------------------------------------
$ 500,000 Lucent Technologies, Inc., 7.00%, 3/12/2012 $ 483,395
------------------------------------------------------------------ -----------
TOBACCO--0.2%
------------------------------------------------------------------
120,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 127,139
------------------------------------------------------------------ -----------
Total Consumer Staple 610,534
------------------------------------------------------------------ -----------
ELECTRICAL POWER--0.3%
------------------------------------------------------------------
UTILITIES--0.3%
------------------------------------------------------------------
120,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 127,810
------------------------------------------------------------------
120,000 Virginia Electric Power Co., 8.875%, 6/1/1999 125,257
------------------------------------------------------------------ -----------
Total Electrical Power 253,067
------------------------------------------------------------------ -----------
FINANCIAL--4.3%
------------------------------------------------------------------
FINANCE--COMMERCIAL--2.0%
------------------------------------------------------------------
500,000 Associates Corp. of North America, 6.875%, 8/1/2003 496,850
------------------------------------------------------------------
1,000,000 Xerox Credit Corp., 7.40%, 11/21/2011 989,738
------------------------------------------------------------------ -----------
Total 1,486,588
------------------------------------------------------------------ -----------
FINANCE--EQUIPMENT--0.3%
------------------------------------------------------------------
250,000 General Electric Capital Corp., 5.50%, 11/1/2001 237,613
------------------------------------------------------------------ -----------
INSURANCE--0.7%
------------------------------------------------------------------
500,000 Merrill Lynch & Co., Inc., 6.00%, 1/15/2001 487,680
------------------------------------------------------------------ -----------
SECURITIES--1.3%
------------------------------------------------------------------
1,000,000 Lehman Brothers, Holdings, Inc., 7.375%, 1/15/2007 988,860
------------------------------------------------------------------ -----------
Total Financial 3,200,741
------------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $4,806,012) 4,818,856
------------------------------------------------------------------ -----------
U.S. GOVERNMENT AGENCIES--14.2%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.8%
------------------------------------------------------------------
800,000 6.625%, 3/25/2002 797,500
------------------------------------------------------------------
500,000 7.18%, 3/20/2007 496,225
------------------------------------------------------------------ -----------
Total 1,293,725
------------------------------------------------------------------ -----------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--0.3%
------------------------------------------------------------------
$ 250,000 6.75%, 10/24/2003 $ 251,132
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--3.9%
------------------------------------------------------------------
500,000 6.57%, 9/18/2000 498,285
------------------------------------------------------------------
1,000,000 6.67%, 12/14/2005 962,320
------------------------------------------------------------------
150,000 7.55%, 11/27/2007 149,836
------------------------------------------------------------------
750,000 PC, 1403M, 6.50%, 12/15/2021 696,705
------------------------------------------------------------------
600,000 PC, 1604FC, 6.24%, Floating Rate Note*, 11/15/2008 583,530
------------------------------------------------------------------ -----------
Total 2,890,676
------------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--7.4%
------------------------------------------------------------------
500,000 6.82%, 12/13/2006 488,415
------------------------------------------------------------------
500,000 7.05%, 10/20/2005 489,255
------------------------------------------------------------------
510,000 7.54%, 11/2/2006 508,184
------------------------------------------------------------------
1,000,000 REMIC, 1992-G34/EC, 8.25%, 7/25/2005 1,032,050
------------------------------------------------------------------
1,000,000 REMIC, 1992/137/DA, 7.75%, 1/25/2017 1,010,200
------------------------------------------------------------------
1,000,000 REMIC, 1993-202/PH, 6.50%, 2/25/2022 964,840
------------------------------------------------------------------
500,000 REMIC, 1993-G32, CL-J, 6.75%, 5/25/2009 492,035
------------------------------------------------------------------
500,000 REMIC, 1994-10/KC, 6.50%, 10/25/2010 469,015
------------------------------------------------------------------ -----------
Total 5,453,994
------------------------------------------------------------------ -----------
TENNESSEE VALLEY AUTHORITY--0.8%
------------------------------------------------------------------
600,000 6.125%, 7/15/2003 579,252
------------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $10,126,146) 10,468,779
------------------------------------------------------------------ -----------
U.S. TREASURY OBLIGATIONS--13.4%
- ------------------------------------------------------------------------------------
U.S. TREASURY NOTES--13.4%
------------------------------------------------------------------
1,000,000 5.875%, 8/15/1998 998,960
------------------------------------------------------------------
500,000 6.25%, 8/31/2000 498,090
------------------------------------------------------------------
1,000,000 5.625%, 2/28/2001 973,580
------------------------------------------------------------------
1,000,000 7.50%, 11/15/2001 1,038,340
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
------------------------------------------------------------------
$1,000,000 7.50%, 5/15/2002 $ 1,042,070
------------------------------------------------------------------
1,000,000 6.25%, 2/15/2003 986,560
------------------------------------------------------------------
1,000,000 6.50%, 5/15/2005 991,000
------------------------------------------------------------------
2,800,000 STRIPS, IO, 2/15/2006 1,566,320
------------------------------------------------------------------
1,250,000 7.00%, 7/15/2006 1,276,463
------------------------------------------------------------------
1,500,000 STRIPS, IO, 11/15/2011 552,030
------------------------------------------------------------------ -----------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $9,806,793) 9,923,413
------------------------------------------------------------------ -----------
(B)REPURCHASE AGREEMENT--7.1%
- ------------------------------------------------------------------------------------
5,225,150 Wachovia Bank of NC, NA, 5.55%, dated 5/30/1997, due 6/2/1997 (AT
AMORTIZED COST) 5,225,150
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $59,873,704)(C) $72,466,821
------------------------------------------------------------------ -----------
</TABLE>
* Current rate shown.
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $59,873,704. The
net unrealized appreciation of investments on a federal tax basis amounts to
$12,593,117 which is comprised of $12,922,687 appreciation and $329,570
depreciation at May 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($73,890,115) at May 31, 1997.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
IO -- Interest Only
PC -- Participation Certificate
ADR -- American Depository Receipt
REMIC -- Real Estate Mortgage Investment Conduit
STRIPS -- Separate Trading of Registered Interest & Principal of Securities
</TABLE>
(See notes which are an integral part of the Financial Statements.)
FIRST PRIORITY VALUE FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--96.7%
- -----------------------------------------------------------------------------------
BANKING--13.5%
-----------------------------------------------------------------
45,000 Banc One Corp. $ 1,946,250
-----------------------------------------------------------------
17,000 BankAmerica Corp. 1,986,875
-----------------------------------------------------------------
22,000 Bankers Trust New York Corp. 1,861,750
-----------------------------------------------------------------
21,000 Chase Manhattan Corp. 1,984,500
-----------------------------------------------------------------
20,000 Citicorp 2,287,500
-----------------------------------------------------------------
15,000 J.P. Morgan & Co., Inc. 1,612,500
-----------------------------------------------------------------
40,000 NationsBank Corp. 2,355,000
----------------------------------------------------------------- ------------
Total Banking 14,034,375
----------------------------------------------------------------- ------------
BASIC INDUSTRY--9.4%
-----------------------------------------------------------------
ALUMINUM
-----------------------------------------------------------------
25,000 Aluminum Co. of America 1,840,625
----------------------------------------------------------------- ------------
CHEMICALS
-----------------------------------------------------------------
10,000 Du Pont (E.I.) de Nemours & Co. 1,088,750
-----------------------------------------------------------------
25,000 Nalco Chemical Co. 928,125
----------------------------------------------------------------- ------------
Total 2,016,875
----------------------------------------------------------------- ------------
PAPER
-----------------------------------------------------------------
30,000 Weyerhaeuser Co. 1,496,250
----------------------------------------------------------------- ------------
PROCESS INDUSTRIES
-----------------------------------------------------------------
55,000 IMC Global, Inc. 2,151,875
-----------------------------------------------------------------
35,000 Mead Corp. 2,231,250
----------------------------------------------------------------- ------------
Total 4,383,125
----------------------------------------------------------------- ------------
Total Basic Industry 9,736,875
----------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CAPITAL GOODS--5.4%
-----------------------------------------------------------------
ELECTRICAL EQUIPMENT/MACHINERY
-----------------------------------------------------------------
32,000 General Electric Co. $ 1,932,000
-----------------------------------------------------------------
35,000 Ingersoll-Rand Co. 1,907,500
----------------------------------------------------------------- ------------
Total 3,839,500
----------------------------------------------------------------- ------------
INDUSTRIAL
-----------------------------------------------------------------
80,000 Cooper Tire & Rubber Co. 1,790,000
----------------------------------------------------------------- ------------
Total Capital Goods 5,629,500
----------------------------------------------------------------- ------------
CONSUMER CYCLICAL--7.3%
-----------------------------------------------------------------
AUTOS/LODGING/OTHER
-----------------------------------------------------------------
45,000 Corning, Inc. 2,266,875
-----------------------------------------------------------------
15,000 General Motors Corp. 858,750
-----------------------------------------------------------------
25,000 Ford Motor Co. 937,500
----------------------------------------------------------------- ------------
Total 4,063,125
----------------------------------------------------------------- ------------
MERCHANDISING/MASS MERCHANDISING
-----------------------------------------------------------------
35,000 Dayton-Hudson Corp. 1,684,375
----------------------------------------------------------------- ------------
RETAIL SPECIALITY/MERCHANDISING
-----------------------------------------------------------------
20,000 Nordstrom, Inc. 960,000
-----------------------------------------------------------------
30,000 Toys -R- Us, Inc. 933,750
----------------------------------------------------------------- ------------
Total 1,893,750
----------------------------------------------------------------- ------------
Total Consumer Cyclical 7,641,250
----------------------------------------------------------------- ------------
CONSUMER SERVICES--2.1%
-----------------------------------------------------------------
PUBLISHING
-----------------------------------------------------------------
40,000 McGraw-Hill Cos., Inc. 2,185,000
----------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CONSUMER STAPLES--3.5%
-----------------------------------------------------------------
HEALTH CARE/DRUG
-----------------------------------------------------------------
14,000 Bristol-Myers Squibb Co. $ 1,027,250
----------------------------------------------------------------- ------------
CONSUMER NON-DURABLES
-----------------------------------------------------------------
25,000 Heinz (H.J.) Co. 1,075,000
-----------------------------------------------------------------
50,000 RJR Nabisco Holdings Corp. 1,618,750
----------------------------------------------------------------- ------------
Total 2,693,750
----------------------------------------------------------------- ------------
Total Consumer Staples 3,721,000
----------------------------------------------------------------- ------------
ENERGY--16.6%
-----------------------------------------------------------------
OIL SERVICES
-----------------------------------------------------------------
20,000 Amerada-Hess Corp. 1,070,000
-----------------------------------------------------------------
18,000 Amoco Corp. 1,608,750
-----------------------------------------------------------------
35,000 Burlington Resources, Inc. 1,627,500
-----------------------------------------------------------------
20,000 Chevron Corp. 1,400,000
-----------------------------------------------------------------
74,000 Exxon Corp. 4,384,500
-----------------------------------------------------------------
10,000 Mobil Corp. 1,398,750
-----------------------------------------------------------------
15,000 Royal Dutch Petroleum Co., ADR 2,928,750
-----------------------------------------------------------------
10,000 Schlumberger Ltd. 1,191,250
-----------------------------------------------------------------
15,000 Texaco, Inc. 1,636,875
----------------------------------------------------------------- ------------
Total Energy 17,246,375
----------------------------------------------------------------- ------------
INSURANCE/MISCELLANEOUS--15.5%
-----------------------------------------------------------------
15,000 American Express Co. 1,042,500
-----------------------------------------------------------------
17,000 American International Group, Inc. 2,301,375
-----------------------------------------------------------------
7,000 CIGNA Corp. 1,216,250
-----------------------------------------------------------------
35,000 Chubb Corp. 2,135,000
-----------------------------------------------------------------
55,000 Federal National Mortgage Association 2,399,375
-----------------------------------------------------------------
25,000 Jefferson-Pilot Corp. 1,590,625
-----------------------------------------------------------------
16,000 Marsh & McLennan Cos., Inc. 2,108,000
-----------------------------------------------------------------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
INSURANCE/MISCELLANEOUS--CONTINUED
-----------------------------------------------------------------
25,000 S&P Depositary Receipts Trust, ADR $ 2,132,813
-----------------------------------------------------------------
20,000 Travelers Group, Inc. 1,097,500
----------------------------------------------------------------- ------------
Total Insurance/Miscellaneous 16,023,438
----------------------------------------------------------------- ------------
TECHNOLOGY--9.2%
-----------------------------------------------------------------
25,000 AMP, Inc. 1,028,125
-----------------------------------------------------------------
10,000 Boeing Co. 1,052,500
-----------------------------------------------------------------
30,000 Hewlett-Packard Co. 1,545,000
-----------------------------------------------------------------
12,000 International Business Machines Corp. 1,038,000
-----------------------------------------------------------------
20,000 Lockheed Martin Corp. 1,872,500
-----------------------------------------------------------------
23,000 Motorola, Inc. 1,526,625
-----------------------------------------------------------------
28,000 TRW, Inc. 1,498,000
----------------------------------------------------------------- ------------
Total Technology 9,560,750
----------------------------------------------------------------- ------------
TRANSPORTATION--1.2%
-----------------------------------------------------------------
50,000 USFreightways Corp. 1,212,500
----------------------------------------------------------------- ------------
UTILITIES--13.0%
-----------------------------------------------------------------
COMMUNICATIONS
-----------------------------------------------------------------
20,000 Ameritech Corp. 1,310,000
-----------------------------------------------------------------
30,000 Bell Atlantic Corp. 2,100,000
-----------------------------------------------------------------
50,000 BellSouth Corp. 2,268,750
-----------------------------------------------------------------
90,000 WorldCom, Inc. 2,666,250
----------------------------------------------------------------- ------------
Total 8,345,000
----------------------------------------------------------------- ------------
</TABLE>
FIRST PRIORITY VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------------
ELECTRICAL
------------------------------------------------------------------
65,000 SCANA Corp. $ 1,625,000
------------------------------------------------------------------
90,000 Southern Co. 1,912,500
------------------------------------------------------------------
65,000 TECO Energy, Inc. 1,616,875
------------------------------------------------------------------ ------------
Total 5,154,375
------------------------------------------------------------------ ------------
Total Utilities 13,499,375
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $81,230,917) 100,490,438
------------------------------------------------------------------ ------------
PREFERRED STOCKS--0.9%
- -------------------------------------------------------------------------------------
INSURANCE--0.9%
------------------------------------------------------------------
10,000 Aetna, Inc., Conv. Pfd., $4.76 (IDENTIFIED COST $690,800) 925,000
------------------------------------------------------------------ ------------
(A)REPURCHASE AGREEMENT--2.4%
- -------------------------------------------------------------------------------------
$2,469,950 Wachovia Bank of NC, 5.55%, dated 5/30/1997, due 6/2/1997 (AT
AMORTIZED COST) 2,469,950
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $84,391,667(B) $103,885,388
------------------------------------------------------------------ ------------
</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 $84,391,667. The
net unrealized appreciation of investments on a federal tax basis amounts to
$19,493,721 which is comprised of $19,881,995 appreciation and $388,274
depreciation at May 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($103,853,027) at May 31, 1997.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--98.3%
- -------------------------------------------------------------------------------------
BANKING--1.7%
------------------------------------------------------------------
40,000 NationsBank Corp. $ 2,355,000
------------------------------------------------------------------
7,000 Wells Fargo & Co. 1,844,500
------------------------------------------------------------------ ------------
Total Banking 4,199,500
------------------------------------------------------------------ ------------
BASIC INDUSTRIES--4.7%
------------------------------------------------------------------
CHEMICALS/METALS/STEEL/GOLD
------------------------------------------------------------------
73,000 Avery Dennison Corp. 2,746,625
------------------------------------------------------------------
50,000 Barrick Gold Corp. 1,262,500
------------------------------------------------------------------
75,000 Monsanto Co. 3,300,000
------------------------------------------------------------------ ------------
Total 7,309,125
------------------------------------------------------------------ ------------
PAPER
------------------------------------------------------------------
86,000 Kimberly-Clark Corp. 4,310,750
------------------------------------------------------------------ ------------
Total Basic Industries 11,619,875
------------------------------------------------------------------ ------------
CAPITAL GOODS--6.6%
------------------------------------------------------------------
EQUIPMENT-MACHINERY
------------------------------------------------------------------
230,000 General Electric Co. 13,886,250
------------------------------------------------------------------ ------------
SPECIALTY MACHINERY
------------------------------------------------------------------
50,000 Parker-Hannifin Corp. 2,631,250
------------------------------------------------------------------ ------------
Total Capital Goods 16,517,500
------------------------------------------------------------------ ------------
CONSUMER CYCLICAL--5.7%
------------------------------------------------------------------
AUTO/LODGING/OTHER
------------------------------------------------------------------
102,000 Corning, Inc. 5,138,250
------------------------------------------------------------------
88,000 Pep Boys-Manny Moe & Jack 2,750,000
------------------------------------------------------------------ ------------
Total 7,888,250
------------------------------------------------------------------ ------------
MERCHANDISE/MASS MERCHANDISING
------------------------------------------------------------------
100,000 Wal-Mart Stores, Inc. 2,975,000
------------------------------------------------------------------ ------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
------------------------------------------------------------------
MERCHANDISE/SPECIALTY
------------------------------------------------------------------
53,000 Home Depot, Inc. $ 3,339,000
------------------------------------------------------------------ ------------
Total Consumer Cyclical 14,202,250
------------------------------------------------------------------ ------------
CONSUMER NON-CYCLICAL--12.6%
------------------------------------------------------------------
TOBACCO/COSMETICS/HOUSEHOLD
------------------------------------------------------------------
108,000 Colgate-Palmolive Co. 6,696,000
------------------------------------------------------------------
68,000 Gillette Co. 6,043,500
------------------------------------------------------------------
90,000 Newell Co. 3,442,500
------------------------------------------------------------------
171,000 Philip Morris Cos., Inc. 7,524,000
------------------------------------------------------------------
55,000 Procter & Gamble Co. 7,583,125
------------------------------------------------------------------ ------------
Total Consumer Non-Cyclical 31,289,125
------------------------------------------------------------------ ------------
CONSUMER SERVICES--7.6%
------------------------------------------------------------------
ENTERTAINMENT
------------------------------------------------------------------
73,000 Disney (Walt) Co. 5,976,875
------------------------------------------------------------------ ------------
HOSPITAL MANAGEMENT
------------------------------------------------------------------
120,000 Columbia/HCA Healthcare Corp. 4,395,000
------------------------------------------------------------------ ------------
PUBLISHING
------------------------------------------------------------------
53,000 McGraw-Hill Cos., Inc. 2,895,125
------------------------------------------------------------------
20,000 Time Warner, Inc. 930,000
------------------------------------------------------------------ ------------
Total 3,825,125
------------------------------------------------------------------ ------------
RETAIL-RESTAURANTS
------------------------------------------------------------------
100,000 Cracker Barrel Old Country Store 2,900,000
------------------------------------------------------------------
35,000 McDonald's Corp. 1,758,750
------------------------------------------------------------------ ------------
Total 4,658,750
------------------------------------------------------------------ ------------
Total Consumer Services 18,855,750
------------------------------------------------------------------ ------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
CONSUMER STAPLE--22.1%
------------------------------------------------------------------
BEVERAGE
------------------------------------------------------------------
120,000 Coca-Cola Co. $ 8,190,000
------------------------------------------------------------------
120,000 PepsiCo, Inc. 4,410,000
------------------------------------------------------------------ ------------
Total 12,600,000
------------------------------------------------------------------ ------------
HEALTHCARE/DRUG
------------------------------------------------------------------
73,000 American Home Products Corp. 5,566,250
------------------------------------------------------------------
75,000 (a)Amgen, Inc. 5,015,625
------------------------------------------------------------------
17,500 (a)Covance, Inc. 325,938
------------------------------------------------------------------
84,000 Merck & Co., Inc. 7,549,500
------------------------------------------------------------------
84,000 Pfizer, Inc. 8,641,500
------------------------------------------------------------------
70,000 Schering Plough Corp. 6,352,500
------------------------------------------------------------------ ------------
Total 33,451,313
------------------------------------------------------------------ ------------
HOSPITAL SUPPLIES
------------------------------------------------------------------
37,000 Abbott Laboratories 2,331,000
------------------------------------------------------------------
110,000 Johnson & Johnson 6,586,250
------------------------------------------------------------------ ------------
Total 8,917,250
------------------------------------------------------------------ ------------
Total Consumer Staple 54,968,563
------------------------------------------------------------------ ------------
ENERGY--4.3%
------------------------------------------------------------------
OIL SERVICES
------------------------------------------------------------------
37,000 Amerada-Hess Corp. 1,979,500
------------------------------------------------------------------
14,500 Atlantic Richfield Co. 2,109,750
------------------------------------------------------------------
33,000 Schlumberger Ltd. 3,931,125
------------------------------------------------------------------
25,000 Texaco, Inc. 2,728,125
------------------------------------------------------------------ ------------
Total Energy 10,748,500
------------------------------------------------------------------ ------------
INSURANCE/MISCELLANEOUS--8.2%
------------------------------------------------------------------
31,000 American International Group, Inc. 4,196,625
------------------------------------------------------------------
70,000 Federal National Mortgage Association 3,053,750
------------------------------------------------------------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------
INSURANCE/MISCELLANEOUS--CONTINUED
------------------------------------------------------------------
40,000 ASA Holdings Ltd. $ 1,045,000
------------------------------------------------------------------
140,000 S&P Depositary Receipts Trust, ADR 11,943,750
------------------------------------------------------------------ ------------
Total Insurance/Miscellaneous 20,239,125
------------------------------------------------------------------ ------------
TECHNOLOGY--21.6%
------------------------------------------------------------------
45,000 (a)Airtouch Communications, Inc. 1,254,375
------------------------------------------------------------------
48,000 Automatic Data Processing, Inc. 2,358,000
------------------------------------------------------------------
44,000 (a)BMC Software, Inc. 2,381,500
------------------------------------------------------------------
95,000 (a)Cisco Systems, Inc. 6,436,250
------------------------------------------------------------------
24,000 Eastman Kodak Co. 1,989,000
------------------------------------------------------------------
77,000 Hewlett-Packard Co. 3,965,500
------------------------------------------------------------------
60,000 Intel Corp. 9,090,000
------------------------------------------------------------------
73,000 Lucent Technologies, Inc. 4,644,625
------------------------------------------------------------------
78,000 (a)Microsoft Corp. 9,672,000
------------------------------------------------------------------
25,000 Minnesota Mining & Manufacturing Co. 2,293,750
------------------------------------------------------------------
48,000 Motorola, Inc. 3,186,000
------------------------------------------------------------------
135,000 (a)Oracle Corp. 6,294,375
------------------------------------------------------------------ ------------
Total Technology 53,565,375
------------------------------------------------------------------ ------------
UTILITIES--3.2%
------------------------------------------------------------------
COMMUNICATIONS
------------------------------------------------------------------
44,000 Ameritech Corp. 2,882,000
------------------------------------------------------------------
40,000 SBC Communications, Inc. 2,340,000
------------------------------------------------------------------
90,000 (a)WorldCom, Inc. 2,666,250
------------------------------------------------------------------ ------------
Total Utilities 7,888,250
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $167,107,233) 244,093,813
------------------------------------------------------------------ ------------
</TABLE>
FIRST PRIORITY GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B)REPURCHASE AGREEMENT--1.7%
- -----------------------------------------------------------------------------------
$4,110,276 Wachovia Bank of NC, 5.55%, dated 5/30/1997, due 6/2/1997 (AT
AMORTIZED COST) $ 4,110,276
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $171,217,509)(C) $248,204,089
----------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $171,217,509.
The net unrealized appreciation of investments on a federal tax basis
amounts to $76,986,580 which is comprised of $77,360,674 appreciation and
$374,094 depreciation at May 31, 1997.
Note: The categories of investments are shown as a percentage of net assets
($248,283,360) at May 31, 1997.
The following acronym is used throughout this portfolio:
ADR--American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED
TREASURY MATURITY
MONEY GOVERNMENT FIXED INCOME
MARKET FUND FUND FUND
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS:
- ----------------------------------------------------------------------
Investments in securities, at value $189,688,498 $76,991,668 $172,281,964
- ----------------------------------------------------------------------
Investments in repurchase agreements, at amortized cost -- 2,782,383 5,509,185
- ----------------------------------------------------------------------
Cash -- 48,063 --
- ----------------------------------------------------------------------
Income receivable 383,652 1,245,556 1,634,000
- ----------------------------------------------------------------------
Receivable for investments sold -- -- --
- ----------------------------------------------------------------------
Receivables for shares sold -- -- --
- ----------------------------------------------------------------------
Deferred expenses 687 10,697 1,748
- ---------------------------------------------------------------------- ------------ ----------- ------------
Total assets 190,072,837 81,078,367 179,426,897
- ----------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------
Payable for investments purchased -- -- --
- ----------------------------------------------------------------------
Payable for shares redeemed -- -- 23,018
- ----------------------------------------------------------------------
Income distribution payable 683,628 339,330 914,929
- ----------------------------------------------------------------------
Accrued expenses 73,719 79,330 143,663
- ---------------------------------------------------------------------- ------------ ----------- ------------
Total liabilities 757,347 418,660 1,081,610
- ---------------------------------------------------------------------- ------------ ----------- ------------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------
Paid in capital $189,315,490 $81,295,900 $183,640,465
- ----------------------------------------------------------------------
Net unrealized appreciation of investments -- (275,047) (1,322,021)
- ----------------------------------------------------------------------
Accumulated net realized gain (loss) on investments -- (380,092) (3,976,942)
- ----------------------------------------------------------------------
Undistributed net investment income -- 18,946 3,785
- ---------------------------------------------------------------------- ------------ ----------- ------------
Total Net Assets $189,315,490 $80,659,707 $178,345,287
- ---------------------------------------------------------------------- ------------ ----------- ------------
NET ASSET VALUE, and Redemption Proceeds Per Share:
(net assets / shares outstanding)
- ----------------------------------------------------------------------
Trust Shares $1.00 -- --
- ---------------------------------------------------------------------- ------------ ----------- ------------
Investment Shares $1.00 $9.86 $10.13
- ---------------------------------------------------------------------- ------------ ----------- ------------
Offering Price Per Share(a)
- ----------------------------------------------------------------------
Investment Shares -- $10.22 (b) $10.64 (c)
- ---------------------------------------------------------------------- ------------ ----------- ------------
Shares Outstanding
- ----------------------------------------------------------------------
Trust Shares 144,827,828 -- --
- ----------------------------------------------------------------------
Investment Shares 44,487,662 8,179,141 17,612,130
- ---------------------------------------------------------------------- ------------ ----------- ------------
TOTAL SHARES OUTSTANDING 189,315,490 8,179,141 17,612,130
- ---------------------------------------------------------------------- ------------ ----------- ------------
Investments, at identified cost $189,688,498 $80,049,098 $179,113,170
- ---------------------------------------------------------------------- ------------ ----------- ------------
Investments, at tax cost $189,688,498 $80,049,098 $179,113,170
- ---------------------------------------------------------------------- ------------ ----------- ------------
</TABLE>
(a) See 'What Shares Cost' in the Prospectus.
(b) Computation of offering price: 100/96.5 of net asset value.
(c) Computation of offering price: 100/95.25 of net asset value.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
- ----------------------------------------------------------------------
Investments in securities, at value $67,241,671 $101,415,438 $244,093,813
- ----------------------------------------------------------------------
Investments in repurchase agreements, at amortized cost 5,225,150 2,469,950 4,110,276
- ----------------------------------------------------------------------
Cash -- -- --
- ----------------------------------------------------------------------
Income receivable 366,788 278,015 273,477
- ----------------------------------------------------------------------
Receivable for investments sold 1,251,150 845,662 135
- ----------------------------------------------------------------------
Receivable for shares sold 2,460 -- --
- ----------------------------------------------------------------------
Deferred expenses 8,353 7,054 --
- ---------------------------------------------------------------------- ---------- ---------- -----------
Total assets 74,095,572 105,016,119 248,477,701
- ----------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------
Payable for investments purchased 125,994 1,072,653 --
- ----------------------------------------------------------------------
Payable for shares redeemed -- 251 1,378
- ----------------------------------------------------------------------
Income distribution payable -- -- --
- ----------------------------------------------------------------------
Accrued expenses 79,463 90,188 192,963
- ---------------------------------------------------------------------- ---------- ---------- -----------
Total liabilities 205,457 1,163,092 194,341
- ---------------------------------------------------------------------- ---------- ---------- -----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------
Paid in capital $60,228,472 $ 81,945,392 $172,474,738
- ----------------------------------------------------------------------
Net unrealized appreciation of investments 12,593,117 19,493,721 76,986,580
- ----------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 761,483 2,145,087 (1,397,029)
- ----------------------------------------------------------------------
Undistributed net investment income 307,043 268,827 219,071
- ---------------------------------------------------------------------- ---------- ---------- -----------
Total Net Assets $73,890,115 $103,853,027 $248,283,360
- ---------------------------------------------------------------------- ---------- ---------- -----------
NET ASSET VALUE, and Redemption Proceeds Per Share:
(net assets / shares outstanding)
- ----------------------------------------------------------------------
Trust Shares -- -- --
- ---------------------------------------------------------------------- ---------- ---------- -----------
Investment Shares $12.90 $14.50 $15.57
- ---------------------------------------------------------------------- ---------- ---------- -----------
Offering Price Per Share(a)
- ----------------------------------------------------------------------
Investment Shares $13.54(b) $15.22(b) $16.35(b)
- ---------------------------------------------------------------------- ---------- ---------- -----------
Shares Outstanding
- ----------------------------------------------------------------------
Trust Shares -- -- --
- ----------------------------------------------------------------------
Investment Shares 5,729,916 7,164,130 15,948,858
- ---------------------------------------------------------------------- ---------- ---------- -----------
TOTAL SHARES OUTSTANDING 5,729,916 7,164,130 15,948,858
- ---------------------------------------------------------------------- ---------- ---------- -----------
Investments, at identified cost $59,873,704 $ 84,391,667 $171,217,509
- ---------------------------------------------------------------------- ---------- ---------- -----------
Investments, at tax cost $59,873,704 $ 84,391,667 $171,217,509
- ---------------------------------------------------------------------- ---------- ---------- -----------
</TABLE>
(a) See 'What Shares Cost' in the Prospectus.
(b) Computation of offering price: 100/95.25 of net asset value.
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED
TREASURY MATURITY
MONEY GOVERNMENT FIXED INCOME
MARKET FUND FUND FUND
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------
Interest $4,278,598 $2,312,898 $ 5,274,424
- -----------------------------------------------------------
Dividends -- -- --
- ----------------------------------------------------------- ----------- ---------- ------------
Total income 4,278,598 2,312,898 5,274,424
- -----------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------
Investment advisory fee 410,706 271,600 585,532
- -----------------------------------------------------------
Administrative personnel and services fee 101,304 47,893 96,382
- -----------------------------------------------------------
Custodian fees 17,675 2,995 16,861
- -----------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 55,950 15,905 21,205
- -----------------------------------------------------------
Directors'/Trustees' fees 467 759 1,255
- -----------------------------------------------------------
Auditing fees 8,301 8,024 7,905
- -----------------------------------------------------------
Legal fees 929 723 1,222
- -----------------------------------------------------------
Portfolio accounting fees 31,195 31,822 24,546
- -----------------------------------------------------------
Distribution services fee 91,316 -- --
- -----------------------------------------------------------
Share registration costs 10,989 5,896 7,339
- -----------------------------------------------------------
Printing and postage 4,316 5,067 2,259
- -----------------------------------------------------------
Insurance premiums 2,595 907 2,889
- -----------------------------------------------------------
Miscellaneous 4,097 3,939 6,458
- ----------------------------------------------------------- ----------- ---------- ------------
Total expenses 739,840 395,530 773,853
- -----------------------------------------------------------
Waiver of investment advisory fee (205,353) -- --
- ----------------------------------------------------------- ----------- ---------- ------------
Net expenses 534,487 395,530 773,853
- ----------------------------------------------------------- ----------- ---------- ------------
Net investment income 3,744,111 1,917,368 4,500,571
- ----------------------------------------------------------- ----------- ---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------
Net realized gain (loss) on investments -- (81,527) (367,521)
- -----------------------------------------------------------
Change in unrealized appreciation/depreciation of
investments -- (628,039) (2,692,036)
- ----------------------------------------------------------- ----------- ---------- ------------
Net realized and unrealized gain (loss) on investments -- (709,566) (3,059,557)
- ----------------------------------------------------------- ----------- ---------- ------------
Change in net assets resulting from operations $3,744,111 $1,207,802 $ 1,441,014
- ----------------------------------------------------------- ----------- ---------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
---------- ---------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------
Interest $ 974,688 $ 105,051 $ 399,742
- ---------------------------------------------------------------
Dividends 315,621 1,120,653 1,348,668
- --------------------------------------------------------------- ---------- ---------- -----------
Total income 1,290,309 1,225,704 1,748,410
- ---------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------
Investment advisory fee 257,973 359,229 851,976
- ---------------------------------------------------------------
Administrative personnel and services fee 39,793 55,424 131,359
- ---------------------------------------------------------------
Custodian fees 7,696 10,227 22,077
- ---------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,586 15,975 23,023
- ---------------------------------------------------------------
Directors'/Trustees' fees 925 1,063 1,551
- ---------------------------------------------------------------
Auditing fees 7,977 6,449 9,210
- ---------------------------------------------------------------
Legal fees 896 1,600 991
- ---------------------------------------------------------------
Portfolio accounting fees 23,691 20,217 22,919
- ---------------------------------------------------------------
Distribution services fee -- -- --
- ---------------------------------------------------------------
Share registration costs 8,140 7,565 3,765
- ---------------------------------------------------------------
Printing and postage 3,140 2,635 2,876
- ---------------------------------------------------------------
Insurance premiums 973 -- 1,260
- ---------------------------------------------------------------
Miscellaneous 6,881 2,024 3,284
- --------------------------------------------------------------- ---------- ---------- -----------
Total expenses 378,671 482,408 1,074,291
- ---------------------------------------------------------------
Waiver of investment advisory fee -- -- --
- --------------------------------------------------------------- ---------- ---------- -----------
Net expenses 378,671 482,408 1,074,291
- --------------------------------------------------------------- ---------- ---------- -----------
Net investment income 911,638 743,296 674,119
- --------------------------------------------------------------- ---------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------
Net realized gain (loss) on investments 762,431 2,145,055 (1,397,169)
- ---------------------------------------------------------------
Change in unrealized appreciation/depreciation of investments 3,136,551 6,623,580 28,959,450
- --------------------------------------------------------------- ---------- ---------- -----------
Net realized and unrealized gain (loss) on investments 3,898,982 8,768,635 27,562,281
- --------------------------------------------------------------- ---------- ---------- -----------
Change in net assets resulting from operations $4,810,620 $9,511,931 $28,236,400
- --------------------------------------------------------------- ---------- ---------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND
----------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1997 1996 MAY 31, 1997 1996
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 3,744,111 $ 6,763,289 $ 1,917,368 $ 3,253,368
- -----------------------------------------------------
Net realized gain (loss) on investments -- -- (81,527) (166,590)
- -----------------------------------------------------
Net change in unrealized appreciation/depreciation
of investments -- -- (628,039) (433,168)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets resulting from operations $ 3,744,111 6,763,289 1,207,802 2,653,610
- ----------------------------------------------------- ------------- ------------- ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Shares (2,773,201) (5,005,887) -- --
- -----------------------------------------------------
Investment Shares (970,910) (1,757,402) (1,917,368) (3,234,422)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares -- -- -- --
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets resulting from distributions
to shareholders (3,744,111) (6,763,289) (1,917,368) (3,234,422)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 313,951,860 493,986,271 26,834,403 13,504,225
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 1,172,505 2,249,107 612,153 1,034,092
- -----------------------------------------------------
Cost of shares redeemed (268,213,922) (492,127,904) (9,808,802) (13,303,825)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets resulting from share
transactions 46,910,443 4,107,474 17,637,754 1,234,492
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Change in net assets 46,910,443 4,107,474 16,928,188 653,680
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 142,405,047 138,297,573 63,731,519 63,077,839
- ----------------------------------------------------- ------------- ------------- ----------- ------------
End of period $189,315,490 $142,405,047 $80,659,707 $63,731,519
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Undistributed net investment income included in net
assets at end of period -- -- $ 18,946 $ 18,946
- ----------------------------------------------------- ------------- ------------- ----------- ------------
Net gain (loss) as computed for federal tax purposes -- -- $ (81,527) $ (166,590)
- ----------------------------------------------------- ------------- ------------- ----------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME FUND BALANCED FUND
--------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1997 1996 MAY 31, 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 4,500,571 $ 8,187,362 $ 911,638 $ 1,964,667
- -----------------------------------------------------
Net realized gain (loss) on investments (367,521) (15,303) 762,431 1,477,490
- -----------------------------------------------------
Net change in unrealized appreciation/depreciation of
investments (2,692,036) 197,811 3,136,551 4,504,813
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets resulting from operations 1,441,014 8,369,870 4,810,620 7,946,970
- ----------------------------------------------------- ------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares (4,546,257) (8,137,891) (928,076) (1,977,098)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares -- -- (1,475,295) (934,924)
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets resulting from distributions
to shareholders (4,546,257) (8,137,891) (2,403,371) (2,912,022)
- ----------------------------------------------------- ------------ ------------ ----------- -----------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 44,894,162 65,721,129 15,975,868 11,045,572
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 193,897 453,104 2,298,684 950,011
- -----------------------------------------------------
Cost of shares redeemed (16,577,894) (73,751,878) (6,112,483) (8,906,342)
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets resulting from share
transactions 28,510,165 (7,577,645) 12,162,069 3,089,241
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Change in net assets 25,404,922 (7,345,666) 14,569,318 8,124,189
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 152,940,365 160,286,031 59,320,797 51,196,608
- ----------------------------------------------------- ------------ ------------ ----------- -----------
End of period 178,345,287 152,940,365 73,890,115 59,320,797
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Undistributed net investment income included in net
assets at end of period $ 3,785 $ 49,471 $ 307,043 $ 323,481
- ----------------------------------------------------- ------------ ------------ ----------- -----------
Net gain (loss) as computed for federal tax purposes $ (367,521) $ (15,303) $ 762,431 $ 1,475,251
- ----------------------------------------------------- ------------ ------------ ----------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
--------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1997 1996 MAY 31, 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 743,296 $ 1,510,811 $ 674,119 $ 1,528,788
- -----------------------------------------------------
Net realized gain (loss) on investments 2,145,055 3,889,499 (1,397,169) 9,169,321
- -----------------------------------------------------
Net change in unrealized appreciation/depreciation of
investments 6,623,580 8,077,338 28,959,450 28,913,778
- ----------------------------------------------------- ------------ ----------- ------------ ------------
Change in net assets resulting from operations 9,511,931 13,477,648 28,236,400 39,611,887
- ----------------------------------------------------- ------------ ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares (732,254) (1,483,398) (555,208) (1,880,165)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares (3,888,698) (1,327,782) (9,157,167) (6,989,405)
- ----------------------------------------------------- ------------ ----------- ------------ ------------
Change in net assets resulting from distributions
to shareholders (4,620,952) (2,811,180) (9,712,375) (8,869,570)
- ----------------------------------------------------- ------------ ----------- ------------ ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 20,803,034 33,369,808 70,769,269 27,092,197
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 293,926 47,317 2,089,946 490,841
- -----------------------------------------------------
Cost of shares redeemed (5,706,882) (5,935,299) (18,620,863) (37,101,805)
- ----------------------------------------------------- ------------ ----------- ------------ ------------
Change in net assets resulting from share
transactions 15,390,078 27,481,826 54,238,352 (9,518,767)
- ----------------------------------------------------- ------------ ----------- ------------ ------------
Change in net assets 20,281,057 38,148,294 72,762,377 21,223,550
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 83,571,970 45,423,676 175,520,983 154,297,433
- ----------------------------------------------------- ------------ ----------- ------------ ------------
End of period $103,853,027 $83,571,970 $248,283,360 $175,520,983
- ----------------------------------------------------- ------------ ----------- ------------ ------------
Undistributed net investment income included in net
assets at end of period $ 268,827 $ 257,785 $ 219,071 $ 100,160
- ----------------------------------------------------- ------------ ----------- ------------ ------------
Net gain (loss) as computed for federal tax purposes $ 2,145,055 $ 3,888,676 $(1,397,169) $ 9,157,822
- ----------------------------------------------------- ------------ ----------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
[THIS PAGE INTENTIONALLY LEFT BLANK]
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
REALIZED DISTRIBUTIONS
AND FROM NET DISTRIBUTIONS
NET ASSET UNREALIZED TOTAL DISTRIBUTIONS REALIZED IN EXCESS
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME
- ----------------------------- --------- ---------- ----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY MONEY MARKET FUND--
TRUST SHARES
1992(a) 1.00 0.02 -- 0.02 (0.02) -- --
1993 1.00 0.03 -- 0.03 (0.03) -- --
1994 1.00 0.04 -- 0.04 (0.04) -- --
1995 1.00 0.05 -- 0.05 (0.05) -- --
1996 1.00 0.05 -- 0.05 (0.05) -- --
1997* 1.00 0.02 -- 0.02 (0.02) -- --
TREASURY MONEY MARKET FUND--
INVESTMENT SHARES
1992(a) 1.00 0.01 -- 0.01 (0.01) -- --
1993 1.00 0.02 -- 0.02 (0.02) -- --
1994 1.00 0.03 -- 0.03 (0.03) -- --
1995 1.00 0.04 -- 0.04 (0.04) -- --
1996 1.00 0.04 -- 0.04 (0.04) -- --
1997* 1.00 0.02 -- 0.02 (0.02) -- --
LIMITED MATURITY GOVERNMENT
FUND
1994(b) 10.00 0.42 (0.40) 0.02 (0.42) -- --
1995 9.60 0.51 0.44 0.95 (0.51) -- --
1996 10.04 0.50 (0.08) 0.42 (0.50) -- --
1997* 9.96 0.24 (0.10) 0.14 (0.24) -- --
FIXED INCOME FUND--TRUST
SHARES
1992(c) 9.90 0.38 0.37 0.75 (0.38) -- --
1993 10.27 0.51 0.50 1.01 (0.51) (0.10) --
1994 10.67 0.54 (1.01) (0.47) (0.53) (0.20) (0.01)(g)
1995(d) 9.46 0.09 0.11 0.20 (0.09) -- --
FIXED INCOME FUND--
INVESTMENT SHARES
1992(c) 9.90 0.37 0.37 0.74 (0.37) -- --
1993 10.27 0.48 0.50 0.98 (0.48) (0.10) --
1994 10.67 0.51 (1.01) (0.50) (0.50) (0.20) (0.01)(g)
1995 9.46 0.52 0.90 1.42 (0.54) -- --
1996 10.34 0.54 0.02 0.56 (0.54) -- --
1997* 10.36 0.29 (0.23) 0.06 (0.29) -- --
</TABLE>
* Six Months Ended May 31, 1997 (unaudited)
(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 the Fund offered two classes of shares: Investment
Shares and Trust Shares. On February 1, 1995, the Fund exchanged all
outstanding Trust Shares for Investment Shares and no longer offers Trust
Shares.
(e) Based on net asset value, which does no reflect the sales charge or
contingent deferred sales charge, if applicable.
(f) Computed on an annualized basis.
(g) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
(h) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
--------------------------------------------
NET ASSET NET EXPENSE NET ASSETS,
TOTAL VALUE, END TOTAL INVESTMENT WAIVER/ END OF PERIOD PORTFOLIO
DISTRIBUTIONS OF PERIOD RETURN(E) EXPENSES INCOME REIMBURSEMENT(H) (000 OMITTED) TURNOVER
- ------------- ---------- --------- -------- ---------- ---------------- ------------- ---------
<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 --
(0.05) 1.00 4.83% 0.52% 4.71% 0.29% $ 101,786 --
(0.02) 1.00 2.35% 0.54%(f) 4.68%(f) 0.25%(f) $ 144,828 --
(0.01) 1.00 1.83% 0.74%(f) 2.58%(f) 0.53%(f) $ 23,578 --
(0.02) 1.00 2.34% 0.78% 2.33% 0.46% $ 23,795 --
(0.03) 1.00 3.18% 0.72% 3.09% 0.50% $ 16,571 --
(0.04) 1.00 5.06% 0.73% 4.98% 0.50% $ 28,930 --
(0.04) 1.00 4.41% 0.92% 4.31% 0.29% $ 40,619 --
(0.02) 1.00 2.14% 0.95%(f) 4.25%(f) 0.25%(f) $ 44,488 --
(0.42) 9.60 0.19% 0.38%(f) 4.45%(f) 0.70%(f) $ 48,526 3%
(0.51) 10.04 10.12% 0.61% 5.26% 0.49% $ 63,078 26%
(0.50) 9.96 4.37% 1.01% 5.09% 0.08% $ 63,732 48%
(0.24) 9.86 1.45% 1.02%(f) 4.94%(f) -- $ 80,660 24%
(0.38) 10.27 7.66% 0.77%(f) 6.02%(f) 0.29%(f) $ 96,354 44%
(0.61) 10.67 10.14% 0.84% 4.80% 0.25% $ 169,881 83%
(0.74) 9.46 (4.55%) 0.79% 5.44% 0.25% $ 153,289 24%
(0.09) 9.57 2.11% 0.82%(f) 5.79%(f) 0.25%(f) -- --
(0.37) 10.27 7.48% 1.07%(f) 5.33%(f) 0.29%(f) $ 5,457 44%
(0.58) 10.67 9.81% 1.14% 4.40% 0.25% $ 12,519 83%
(0.71) 9.46 (4.83%) 1.09% 5.14% 0.25% $ 9,645 24%
(0.54) 10.34 15.37% 1.02% 5.25% -- $ 160,286 45%
(0.54) 10.36 5.66% 1.02% 5.38% -- $ 152,940 52%
(0.29) 10.13 0.62% 0.99%(f) 5.76%(f) -- $ 178,345 19%
</TABLE>
FIRST PRIORITY FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
REALIZED DISTRIBUTIONS
AND FROM NET DISTRIBUTIONS
NET ASSET UNREALIZED TOTAL DISTRIBUTIONS REALIZED IN EXCESS
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME
- ----------------------------- --------- ---------- ----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED FUND
1995(c) 10.00 0.44 1.38 1.82 (0.36) -- --
1996 11.46 0.41 1.27 1.68 (0.42) (0.21) --
1997* 12.51 0.18 0.71 0.89 (0.19) (0.31) --
VALUE FUND
1995(c) 10.00 0.40 1.98 2.38 (0.34) -- --
1996 12.04 0.27 2.22 2.49 (0.29) (0.35) --
1997* 13.89 0.11 1.26 1.37 (0.12) (0.64) --
GROWTH FUND--
TRUST SHARES
1992(a) 9.86 0.14 0.77 0.91 (0.11) -- --
1993 10.66 0.18 (0.03) 0.15 (0.18) (0.12) --
1994 10.51 0.25 (0.10) 0.15 (0.23) (0.07) --
1995(b) 10.36 0.08 0.02 0.10 (0.08) (0.33) --
GROWTH FUND--
INVESTMENT SHARES
1992(a) 9.86 0.10 0.79 0.89 (0.09) -- --
1993 10.66 0.16 (0.04) 0.12 (0.15) (0.12) --
1994 10.51 0.21 (0.09) 0.12 (0.20) (0.07) --
1995 10.36 0.18 2.10 2.28 (0.21) (0.33) --
1996 12.10 0.12 3.12 3.24 (0.15) (0.55) --
1997* 14.64 0.05 1.68 1.73 (0.04) (0.76) --
</TABLE>
* Six Months Ended May 31, 1997 (unaudited)
(a) Reflects operations for the period from April 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Reflects operations for the two month period ended January 31, 1995. Prior
to February 1, 1995 the Fund offered two classes of shares: Investment
Shares and Trust Shares. On February 1, 1995, the Fund exchanged all
outstanding Trust Shares for Investment Shares and no longer offers Trust
Shares.
(c) Reflects operations for the period from December 19, 1994 (date of initial
public investment) to November 30, 1995.
(d) Based on net asset value, which does no reflect the sales charge 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.
(g) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
-------------------------------------------- AVERAGE
NET ASSET NET EXPENSE NET ASSETS, COMMISSION
TOTAL VALUE, END TOTAL INVESTMENT WAIVER/ END OF PERIOD RATE
DISTRIBUTIONS OF PERIOD RETURN(D) EXPENSES INCOME REIMBURSEMENT(F) (000 OMITTED) PAID(G)
- ------------- ---------- --------- -------- ---------- ---------------- ------------- ----------
<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 --
(0.63) 12.51 15.35% 1.13% 3.60% 0.09% $ 59,321 0.0701
(0.50) 12.90 7.39% 1.17%(e) 2.83%(e) -- $ 73,890 0.0859
(0.34) 12.04 24.14% 0.69%(e) 3.93%(e) 0.55%(e) $ 45,424 --
(0.64) 13.89 21.72% 1.11% 2.29% 0.06% $ 83,572 0.0532
(0.76) 14.50 10.42% 1.07%(e) 1.66%(e) -- $ 103,853 0.0779
(0.11) 10.66 9.28% 0.76%(e) 2.28%(e) 0.35%(e) $ 102,822 --
(0.30) 10.51 1.43% 0.84% 1.85% 0.30% $ 154,185 --
(0.30) 10.36 1.42% 0.79% 2.32% 0.30% $ 143,876 --
(0.41) 10.05 1.00% 0.83%(e) 2.76%(e) 0.30%(e) -- --
(0.09) 10.66 9.14% 1.07%(e) 1.85%(e) 0.35%(e) $ 3,132 --
(0.27) 10.51 1.13% 1.14% 1.59% 0.30% $ 7,004 --
(0.27) 10.36 1.11% 1.09% 2.02% 0.30% $ 6,131 --
(0.54) 12.10 23.01% 1.03% 1.61% 0.05% $ 154,297 --
(0.70) 14.64 28.22% 1.05% 0.98% 0.01% $ 175,521 0.0713
(0.80) 15.57 12.59% 1.01%(e) 0.63%(e) -- $ 248,283 0.0810
<CAPTION>
PORTFOLIO
TURNOVER
- ---------
<C>
49%
41%
19%
76%
58%
20%
30%
74%
66%
--
30%
74%
66%
110%
56%
7%
</TABLE>
FIRST PRIORITY FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
First Priority Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company. The Trust consists of six portfolios (individually referred to as the
"Fund", or collectively as the "Funds") at May 31, 1997, which are presented
herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT APPROACH
- ---------------------------------------------- ----------------------------------------------
<S> <C>
First Priority Treasury Money Market Fund Current income consistent with stability of
("Treasury Money Market Fund") principal and liquidity by investing primarily
in a diversified portfolio limited to
short-term U.S. treasury obligations.
First Priority Limited Maturity Government Current income by investing in a diversified
Fund ("Limited Maturity Government Fund") portfolio consisting primarily of securities
which are guaranteed as to payment of
principal and interest by the U.S. government,
its agencies or instrumentalities.
First Priority Fixed Income Fund ("Fixed Current income with a secondary objective of
Income Fund") capital appreciation by investing primarily in
a broad range of high grade debt securities.
First Priority Balanced Fund ("Balanced Fund") Total Return through capital appreciation,
dividends, and interest by investing primarily
in a diversified portfolio of common stocks,
preferred stocks, fixed-income senior
securities, and convertible securities.
First Priority Value Fund ("Value Fund") Income and growth of capital by investing
primarily in a diversified portfolio of
income-producing equity securities, including
convertible securities.
First Priority Growth Fund ("Growth Fund") Growth of capital and income by investing
principally in a diversified portfolio of
common stocks of companies with market
capitalization of at least $250 million.
</TABLE>
Treasury Money Market Fund offers both Trust and Investment classes of shares.
Investment Shares are identical in all respects to Trust Shares, except the
Investment Shares are sold pursuant to a distribution plan adopted in accordance
with the Act's Rule 12b-1. The assets of each Fund of the Trust are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. Limited Maturity Government Fund, Fixed Income Fund, Balanced Fund, Value
Fund, and Growth Fund offer only one class of shares.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--U.S. government securities, listed corporate bonds,
(other fixed income and asset-backed securities), and unlisted securities
and private placement securities are generally valued at the mean of the
latest bid and asked price as furnished by an independent pricing service.
Listed equity securities are valued at the last sale price reported on a
national securities exchange. The Treasury Money Market Fund uses the
amortized cost method to value its portfolio securities in accordance with
Rule 2a-7 under the Act. For fluctuating net asset value Funds within the
Trust, short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value. The Funds'
restricted securities are valued at the price provided by an independent
pricing service, or, if no market prices are available, at the fair value
as determined by the Fund's pricing committee.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction, including accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
At May 31, 1997, the Limited Maturity Government Fund and Fixed Income
Fund, for federal tax purposes, had capital loss carryforwards, of $298,565
and $3,608,509, 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, and 2004 ($166,590), ($15,303),
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 over a period of up to five years from each Fund's
commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in fund shares were as follows:
For the Six Months Ended May 31, 1997:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET LIMITED MATURITY
FUND GOVERNMENT FUND FIXED INCOME FUND BALANCED FUND
------------ ---------------------- ------------------------- -------------------------
TRUST SHARES SHARES SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
- -------------------------------- ------------ -------- ----------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold 153,961,836 -- $ -- -- $ -- -- $ --
- -------------------------------
Shares issued to shareholders in
payment of distributions
declared 391,441 -- -- -- -- -- --
- -------------------------------
Shares redeemed (111,311,898) -- -- -- -- -- --
- ------------------------------- ----------- ------- ---------- --------- ----------- --------- -----------
Net change resulting from
Trust Share transactions 43,041,379 -- -- -- -- -- --
- ------------------------------- ----------- ------- ---------- --------- ----------- --------- -----------
INVESTMENT SHARES
- -------------------------------
Shares sold 159,990,024 2,713,012 26,834,403 4,465,069 44,894,162 1,293,595 15,975,868
- -------------------------------
Shares issued to shareholders in
payment of distributions
declared 781,064 62,063 612,153 19,132 193,897 190,412 2,298,684
- -------------------------------
Shares redeemed (156,902,024) (995,951) (9,808,802) (1,635,191) (16,577,894) (494,469) (6,112,483)
- ------------------------------- ----------- ------- ---------- --------- ----------- --------- -----------
Net change resulting from
Investment Share transactions 3,869,064 1,779,124 17,637,754 2,849,010 28,510,165 989,538 12,162,069
- ------------------------------- ----------- ------- ---------- --------- ----------- --------- -----------
Total net change resulting
from Fund share transactions 46,910,443 1,779,124 $17,637,754 2,849,010 $ 28,510,165 989,538 $ 12,162,069
- ------------------------------- ----------- ------- ---------- --------- ----------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
----------------------- -------------------------
INVESTMENT SHARES SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------------------------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 1,540,837 $20,803,034 5,090,759 $ 70,769,269
- --------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 22,303 293,926 152,737 2,089,946
- --------------------------------------------------------------------
Shares redeemed (417,125) (5,706,882) (1,287,189) (18,620,863)
- -------------------------------------------------------------------- -------- ---------- --------- -----------
Net change resulting from Investment Share transactions 1,146,015 15,390,078 3,956,307 54,238,352
- -------------------------------------------------------------------- -------- ---------- --------- -----------
Total net change resulting from Fund share transactions 1,146,015 $15,390,078 3,956,307 $ 54,238,352
- -------------------------------------------------------------------- -------- ---------- --------- -----------
</TABLE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
For the year ended November 30, 1996:
<TABLE>
<CAPTION>
TREASURY
MONEY
MARKET LIMITED MATURITY
FUND GOVERNMENT FUND FIXED INCOME FUND BALANCED FUND
------------ ------------------------- ------------------------- -----------------------
TRUST SHARES SHARES SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
- ------------------------------- ------------ ---------- ------------ ---------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold 225,453,608 -- $ -- -- $ -- -- $ --
- -------------------------------
Shares issued to shareholders
in payment of distributions
declared 556,588 -- -- -- -- -- --
- -------------------------------
Shares redeemed (233,591,379) -- -- -- -- -- --
- ------------------------------- ----------- --------- ----------- --------- ----------- -------- ----------
Net change resulting from
Trust Share transactions (7,581,183) -- -- -- -- -- --
- ------------------------------- ----------- --------- ----------- --------- ----------- -------- ----------
INVESTMENT SHARES
- -------------------------------
Shares sold 268,532,663 1,356,256 13,504,225 6,523,751 65,721,129 960,324 11,045,572
- -------------------------------
Shares issued to shareholders
in payment of distributions
declared 1,692,519 104,949 1,034,092 44,514 453,104 82,169 950,011
- -------------------------------
Shares redeemed (258,536,525) (1,340,753) (13,303,825) (7,311,945) (73,751,878) (771,226) (8,906,342)
- ------------------------------- ----------- --------- ----------- --------- ----------- -------- ----------
Net change resulting from
Investment Share transactions 11,688,657 120,452 1,234,492 (743,680) (7,577,645) 271,267 3,089,241
- ------------------------------- ----------- --------- ----------- --------- ----------- -------- ----------
Total net change resulting
from Fund share
transactions 4,107,474 120,452 $ 1,234,492 (743,680) $ (7,577,645) 271,267 $ 3,089,241
- ------------------------------- ----------- --------- ----------- --------- ----------- -------- ----------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
----------------------- --------------------------
INVESTMENT SHARES SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------------------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,724,418 $33,369,808 2,178,975 $ 27,092,197
- -------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 3,797 47,317 40,723 490,841
- -------------------------------------------------------------------
Shares redeemed (483,316) (5,935,299) (2,980,103) (37,101,805)
- ------------------------------------------------------------------- -------- ---------- ---------- -----------
Net change resulting from Investment Share transactions 2,244,899 27,481,826 (760,405) (9,518,767)
- ------------------------------------------------------------------- -------- ---------- ---------- -----------
Total net change resulting from Fund share transactions 2,244,899 $27,481,826 (760,405) $ (9,518,767)
- ------------------------------------------------------------------- -------- ---------- ---------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Regions 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. The Adviser can
modify or terminate this voluntary waiver at any time at its sole discretion.
Additionally, the adviser may offset the investment advisory fee by reimbursing
individual shareholder accounts. Some accounts have special fee arrangements
that provide specifically for the retention of the investment advisory fee, and
in such cases, the fee will not be reimbursed.
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%
- ---------------------------------------------------------------------------------
Balanced Fund 0.80%
- ---------------------------------------------------------------------------------
Value Fund 0.80%
- ---------------------------------------------------------------------------------
Growth Fund 0.80%
- ---------------------------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. The fee is based on the
level of average aggregate net assets of the Trust for the period. The
administrative fee received during the period of the Administrative Services
Agreement shall be at least $50,000 per Fund.
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 according to the
following schedule, annually, to compensate FSC.
<TABLE>
<CAPTION>
% OF AVERAGE
DAILY NET ASSETS
FUND NAME OF EACH FUND
- ------------------------------------------------ -----------------
<S> <C>
Treasury Money Market Fund--Investment Shares 0.40%
Limited Maturity Government Fund 0.25%
Fixed Income Fund 0.30%
Balanced Fund 0.30%
Value Fund 0.30%
Growth Fund 0.30%
</TABLE>
For the period ended May 31, 1997 Limited Maturity Government Fund, Fixed Income
Fund, Balanced Fund, Value Fund, and Growth Fund did not incur a distribution
services fee.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the Funds. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Regions 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
May 31, 1997, the Funds paid FAS, pursuant to this agreement, as follows:
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
- ------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Treasury Money Market Fund $ 50,822 $5,647
- ------------------------------------------------------------
Limited Maturity Government Fund $ 26,082 $1,739
- ------------------------------------------------------------
Fixed Income Fund $ 50,007 $5,557
- ------------------------------------------------------------
Balanced Fund $ 24,457 $1,667
- ------------------------------------------------------------
Value Fund $ 18,322 $1,667
- ------------------------------------------------------------
Growth Fund $ 49,934 $5,548
- ------------------------------------------------------------
</TABLE>
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended
May 31, 1997, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Limited Maturity Government Fund $36,106,426 $17,128,423
- ----------------------------------------------------------------
Fixed Income Fund 53,532,031 28,793,208
- ----------------------------------------------------------------
Balanced Fund 18,061,758 11,559,924
- ----------------------------------------------------------------
Value Fund 29,122,874 16,877,446
- ----------------------------------------------------------------
Growth Fund 60,413,605 13,495,673
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and
Peter E. Madden Secretary
Gregor F. Meyer Richard B. Fisher
John E. Murray, Jr. Vice President
Wesley W. Posvar Charles L. Davis, Jr.
Marjorie P. Smuts Vice President and Assistant
Treasurer
Jay S. Neuman
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
their objectives and policies, management fees, expenses and other information.
[THIS PAGE INTENTIONALLY LEFT BLANK]
[FIRST PRIORITY FAMILY OF FUNDS LOGO]
CUSIP 335931887
CUSIP 335931101
CUSIP 335931804
CUSIP 335931309
CUSIP 335931705
FEDERATED SECURITIES CORP. IS A DISTRIBUTOR OF THE FUNDS CUSIP 335931606
REGIONS BANK, ADVISER CUSIP 335931507
- ------------------------------------------------------------------------------
G01186-03 (7/97)
