First Priority Family of Funds
Combined Annual Report
Dated: November 30, 1997
Diversified Portfolios of the First Priority Funds, an Open-End, Management
Investment Company
[LOGO]
PRESIDENT'S MESSAGE
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Dear Shareholder:
I am pleased to present the Annual Report for First Priority Funds. This report
covers activity in First Priority Treasury Money Market Fund ("Treasury Money
Market Fund"), First Priority Limited Maturity Government Fund ("Limited
Maturity Government Fund"), First Priority Fixed Income Fund ("Fixed Income
Fund"), First Priority Balanced Fund ("Balanced Fund"), First Priority Value
Fund ("Value Fund"), and First Priority Growth Fund ("Growth Fund") over the
12-month fiscal year period from December 1, 1996 through November 30, 1997.
The Report begins with an investment review by the portfolio manager of each
fund with a fluctuating asset value. This review describes economic and market
conditions and their impact on fund strategy. Following the investment review
are a complete list of fund holdings and the financial statements.
Fund-by-fund highlights over the reporting period are as follows:
TREASURY MONEY MARKET FUND
This fund continued to give shareholders a convenient, highly conservative way
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
$0.05 per share for Trust Shares and $0.04 per share for Investment Shares
during the 12-month period. The fund's net assets continued to grow, reaching
$212 million at the period's end.*
LIMITED MATURITY GOVERNMENT FUND
Shareholders of this diversified portfolio of limited maturity U.S. Treasury
Notes, U.S. government agency securities and investment-grade corporate bonds
received an income stream totaling $0.49 per share over the 12-month period. The
fund produced a total return of 4.81%, based on net asset value.** The fund's
net assets exceeded $79 million at the end of the period.
FIXED INCOME FUND
In an improved bond market environment, the fund's portfolio of U.S. government
bonds and investment-grade corporate bonds produced a strong income stream
totaling $0.58 per share over the 12-month period. The fund's share price grew
modestly from $10.36 on the first day of the period to $10.37 on the last day.
This income and growth combined to produce a total return of 5.99%, based on net
asset value.** The fund ended the period with $184 million in assets.
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* Although money market mutual funds pursue a stable $1.00 net asset value,
there is no guarantee that a stable net asset value will be maintained.
Investments in money market mutual funds are 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. The total returns taking into account the maximum contingent
deferred sales charge of 3.00% as of November 30, 1997 were as follows: 1.66%
--Limited Maturity Government Fund; 2.84% --Fixed Income Fund; 12.88%
--Balanced Fund; 20.32% --Value Fund; and 18.68% --Growth Fund.
<PAGE>
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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 strong
total return of 16.34%, based on net asset value*, for the period. Contributing
to the total return was the fund's 10% rise in share price, dividends totaling
$0.37 per share, and capital gains totaling $0.31 per share. Fund net assets
reached $83 million.
VALUE FUND
In a strong yet volatile stock market environment, the fund's diversified
portfolio of high-quality stocks selected for their dividend potential delivered
a strong total return of 24.08%, based on net asset value.* Contributing to the
total return were a rise in share price from $13.89 to $16.18, dividends
totaling $0.21 per share and capital gains totaling $0.66 per share. Fund assets
rose significantly, from $83 million to $152 million.
GROWTH FUND
The fund's diversified portfolio of high-quality growth stocks delivered a
strong total return of 22.37%, based on net asset value.* Contributing to this
total return was a rise in share price from $14.64 to $16.89, dividends totaling
$0.07 per share, and capital gains amounting to $0.76 per share. At the end of
the period, fund assets totaled $275 million, representing a $100 million rise
over the year.
Thank you for participating in key financial markets through the diversification
and professional management of the First Priority Funds. As we begin a new year,
we renew our commitment to bring you the highest level of service possible.
Sincerely,
LOGO
Edward C. Gonzales
President
January 15, 1998
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* 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. The total returns taking into account the maximum contingent
deferred sales charge of 3.00% as of November 30, 1997 were as follows: 1.66%
--Limited Maturity Government Fund; 2.84% --Fixed Income Fund; 12.88%
--Balanced Fund; 20.32% --Value Fund; and 18.68% --Growth Fund.
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
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MANAGEMENT DISCUSSION AND ANALYSIS
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During the fiscal year ended November 30, 1997, Limited Maturity
Government Fund produced a total return of 4.81%, based on net asset
value*. The fund's return is measured against the Merrill Lynch 1-3 year
Government/Corporate Index ("Merrill Lynch Index")**, which returned 5.97%.
We compare our performance to this index because the fund will normally
invest at least 65% of the value of its total assets in U.S. government
securities, which should closely track the U.S. government allocation in
the Merrill Lynch Index. The balance of the fund assets may be comprised of
corporate bonds, mortgage-backed securities, asset-backed securities, bank
instruments, repurchase agreements, and securities of other investment
companies. The fund's dollar-weighted average portfolio maturity will
normally fluctuate between 1.5-3.0 years.
During the year, the fund was under pressure in December 1996 and
March 1997 due to accelerating economic growth resulting in fears of
inflation. At this time, market participants anticipated a monetary policy
change by the Federal Reserve (the "Fed") resulting in an increase in
short-term interest rates to help control inflation. The Fed did increase
the funds rate 25 basis points in early 1997 and this caused an upward
movement in interest rates during the first quarter of this year.
Subsequently, rates peaked as economic growth slowed and the Fed has
maintained a steady policy. Since March 1997 the fund has recovered in net
asset value. The fund has benefited from a 16 basis point to 32 basis point
decrease in rates since February 1997.
Our strategy for 1997 has been to bring the portfolio duration in line
with the duration of the Merrill Lynch Index and increase the overall
portfolio convexity. We believe that going forward, the threat of inflation
should diminish, providing opportunities for the fund to increase its
performance.
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* 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.
** Merrill Lynch 1-3 Year Government/Corporate Index is an unmanaged index
comprised of publicly placed, non-convertible coupon-bearing domestic debt
with maturities between 1 and 2.99 years. Investments cannot be made in an
index.
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
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GROWTH OF $10,000 INVESTED IN LIMITED MATURITY GOVERNMENT FUND
The graph below illustrates the hypothetical investment of $10,000 in
Limited Maturity Government Fund (the "Fund") from December 12, 1993 (start of
performance) to November 30, 1997, compared to the Merrill Lynch 1-3 Year
Government/Corporate Index.
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX A
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
1 Year............................................................ 1.66%**
Start of Performance (12/12/93)................................... 4.86%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 2% at the Fund's inception ($10,000 investment
minus $200 sales charge = $9,800). The Fund's performance assumes the
reinvestment of all dividends and distributions. The Merrill Lynch 1-3 Year
Government/Corporate Index has been adjusted to reflect reinvestment of
dividends on securities in the index. Effective June 1, 1997 the Fund
eliminated the sales charge and replaced it with a maximum contingent
deferred sales charge of 3.00%.
** Total return quoted reflects the maximum 3.00% contingent deferred sales
charge imposed on any redemption less than one year from the purchase date.
Note: The Merrill Lynch 1-3 Year Government/Corporate Index is not adjusted to
reflect sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. This index is unmanaged.
<PAGE>
FIXED INCOME FUND
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MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
During the fiscal year ended November 30, 1997, Fixed Income Fund
returned 5.99% based on net asset value.* This compares to the performance
of the Merrill Lynch 1-10 Year Government/ Corporate Index of 6.39%.** We
compare our performance to this index because we typically use a high
proportion of U.S. Treasury and agency securities in our portfolios with
approximately 20% in high quality corporate bonds. We define ourselves as
intermediate fixed income managers, since we typically do not buy bonds
with a maturity in excess of 15 years, and maintain a weighted average life
of less than 10 years for the portfolio.
It is important to recognize that we utilize conservative accounting
policies which call for the amortization of premiums. Historically, in a
declining interest rate environment, many securities available to us for
purchase have been priced above par value or at a premium. We have chosen
to amortize this premium which reduces current yield for the fund.
Investors who purchase a fund primarily based on current yield should
examine the quality and maturity of the securities held and the accounting
treatment for amortization of premium. The effect of not amortizing premium
is to increase the current yield by, in effect, increasing current
distributions to investors by returning a portion of their investment or
principal.
During the year, the fund suffered a setback in net asset value from
January 1997 to March 1997, due to accelerating economic growth rate which
resulted in fears of inflation. It was also widely expected, during this
time, that the Fed would respond by tightening monetary policy therefore
pushing short-term interest rates higher to help control inflation. The Fed
did increase the funds rate by 25 basis points in early 1997 and this
caused a run up in rates in the first three months of this year. Since then
rates peaked as economic growth has slowed somewhat, and consequently, the
Fed has maintained a steady policy. As the year progressed, the fund
recovered in net asset value from March 1997 through November 1997. The
performance of the fund has benefited from the decrease in rates.
Our strategic positioning of the fund has been to extend maturities
from a defensive posture at the beginning of the year. Going forward, we
would anticipate the threat of inflation to diminish further which could
provide for further improvement in performance of the fund.
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* 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.
** Merrill Lynch 1-10 Year Government/Corporate Index is an unmanaged index
comprised of publicly placed, non-convertible, coupon-bearing domestic debt
with maturities between 1 and 9.99 years. Investments cannot be made in an
index
<PAGE>
FIXED INCOME FUND
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GROWTH OF $10,000 INVESTED IN FIXED INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in Fixed
Income Fund (the "Fund") from April 20, 1992 (start of performance) to November
30, 1997, compared to the Merrill Lynch 1-10 Year Government/Corporate Index.
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX B
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
5 Year.............................................................. 6.19%
1 Year.............................................................. 2.84%**
Start of Performance (4/20/92)...................................... 6.86%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 2% at the Fund's inception ($10,000 investment
minus $200 sales charge = $9,800). The Fund's performance assumes the
reinvestment of all dividends and distributions. The Merrill Lynch 1-10 Year
Government/Corporate Index has been adjusted to reflect reinvestment of
dividends on securities in the index. Effective June 1, 1997 the Fund
eliminated the sales charge and replaced it with a maximum contingent
deferred sales charge of 3.00%.
** Total return reflects the maximum 3.00% contingent deferred sales charge
imposed on any redemption less than one year from the purchase date.
Note: The Merrill Lynch 1-10 Year Government/Corporate Index is not adjusted to
reflect sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. This index is unmanaged.
<PAGE>
BALANCED FUND
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MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
During the fiscal year ended November 30, 1997, Balanced Fund produced
a total return of 16.34%, based on net asset value.* Equities substantially
outperformed fixed income instruments with the Standard & Poor's 500
Composite Stock Index ("S & P 500")** posting a 28.52% return while the
Merrill Lynch 1-10 Year Government/Corporate Index returned 6.39%.
The stock market was influenced by stronger than expected corporate
profits, strong mutual fund inflows and low inflation. The best performing
stocks were the large capitalization issues and the best performing sectors
were Consumer Staples, Capital Goods and Financials. The worst performing
sectors were Basic Industries, Credit Cyclicals and Transportation.
The stronger than expected corporate profits was not as well received
in the bond market as it was in the equity market. The perception that
increased economic activity would lead to future inflation and possible Fed
action weighed heavily on the bond market for most of the year.
During 1998 we expect corporate profits to grow but at a slower rate
than the past few years. We also expect inflation to remain low. We
continue to focus on large cap issues in the equity portion of the fund and
high quality intermediate-term securities in the fixed income portion of
the fund.
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* 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.
** Standard & Poor's 500 Composite Stock Index is an unmanaged index comprised
of common stocks in industry, transportation, and financial and public
utility companies. Investments cannot be made in an index.
<PAGE>
BALANCED FUND
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GROWTH OF $10,000 INVESTED IN BALANCED FUND
The graph below illustrates the hypothetical investment of $10,000 in
Balanced Fund (the "Fund") from December 19, 1994 (start of performance) to
November 30, 1997, compared to the S&P 500/Lehman Brothers Government/ Corporate
Index.
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX C
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
1 Year................................................................. 12.88%**
Start of Performance (12/19/94)........................................ 16.60%***
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 2% at the Fund's inception ($10,000 investment
minus $200 sales charge = $9,800). The Fund's performance assumes the
reinvestment of all dividends and distributions. The S&P 500/Lehman Brothers
Government/Corporate Index has been adjusted to reflect reinvestment of
dividends on securities in the index. Effective June 1, 1997 the Fund
eliminated the sales charge and replaced it with a maximum contingent
deferred sales charge of 3.00%.
** Total return quoted reflects the maximum 3.00% contingent deferred sales
charge imposed on any redemption less than one year from the purchase date.
*** Total return quoted reflects the 1.00% contingent deferred sales charge
imposed on any redemption less than three years from the purchase date.
Note: The S&P 500/Lehman Brothers Government/Corporate Index is not adjusted to
reflect sales charges, expenses, or other fees that the SEC requires to be
reflected in the Fund's performance. This index is unmanaged.
+ The S&P 500/Lehman Brothers Government/Corporate Index (the "Index") is a
weighted index that combines components of the S&P 500 and the Lehman Brothers
Government/Corporate Index. Figures shown for the Index assume a constant
weighting of 50% S&P 500 and 50% Lehman Brothers Government/Corporate Index
throughout the period. Although the Fund's allocation between equity and debt
instruments will vary, the Fund's allocation on November 30, 1997, as
indicated in the Fund's financial statements, was 50.0% in equities, 45.7% in
debt instruments and the remainder in short-term liquid investments.
<PAGE>
VALUE FUND
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MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
During the fiscal year ended November 30, 1997, Value Fund produced a
total return of 24.08%, based on net asset value.* The S&P/Barra Value
Index** had a return of 25.11% for the same period. This index represents
the lower half of a price-to-book ranking of the S&P 500. The members of
the S&P 500 are ranked from highest to lowest by price-to-book ratio. The
top one-half of this ranking (by market capitalization) becomes the
S&P/Barra Growth Index and the lower one-half becomes the S&P/Barra Value
Index. The S&P/Barra Value Index currently contains approximately 365
stocks.
The fund's holdings benefited from a very strong stock market during
the reporting period. The S&P 500 returned 28.52%, including reinvested
dividends, during this period. Corporate earnings continued to grow this
year. There was also a lot of money coming into the stock market through
mutual funds, and these two factors have driven the stock market to several
record highs. Financial stocks continued to do well, and the fund benefited
from its holdings of bank and insurance stocks. The fund has several
holdings in the oil and natural gas industries, and these have done well.
We plan to remain fully invested in the stock market. Although stocks
have had three excellent years in a row, we are more cautious about the
year ahead. We foresee steady interest rates and corporate earnings growth
of 5% to 8%, and these factors, combined with a continued inflow of cash
from mutual funds, should hold the stock market steady, although we expect
volatility to be higher over the next 12 months than over the past 12
months. We hope to hold the fund's dividend at a higher-than-average level
by holding stocks which pay dividends that are above the market's level.
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* 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.
** S&P/Barra Value Index is an unmanaged sub-index of the S&P 500 representing
50% of the S&P 500 market capitalization and is comprised of those companies
with lower price-to-book ratios. Investments cannot be made in an index.
<PAGE>
VALUE FUND
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GROWTH OF $10,000 INVESTED IN VALUE FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Value Fund (the "Fund") from December 19, 1994 (start of performance) to
November 30, 1997, compared to the S&P/Barra Value Index.
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX D
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
1 Year.......................................................... 20.32%**
Start of Performance (12/19/94)................................. 23.30%***
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 2% at the Fund's inception ($10,000 investment
minus $200 sales charge = $9,800). The Fund's performance assumes the
reinvestment of all dividends and distributions. The S&P/Barra Value Index
has been adjusted to reflect reinvestment of dividends on securities in the
index. Effective June 1, 1997, the Fund eliminated the sales charge and
replaced it with a maximum contingent deferred sales charge of 3.00%.
** Total return quoted reflects the maximum 3.00% contingent deferred sales
charge imposed on any redemption less than one year from the purchase date.
*** Total return quoted reflects the 1.00% contingent deferred sales charge
imposed on any redemption less than three years from the purchase date.
Note: The S&P/Barra Value Index is not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the
Fund's performance. This index is unmanaged.
<PAGE>
GROWTH FUND
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MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
1997 was a difficult year for managers to outperform the stock market
indices. During the fiscal year ended November 30, 1997, the fund returned
22.37%, based on net asset value*, trailing both the S&P 500 return of
28.52% and the S&P/Barra Growth Index** return of 31.74%. The Lipper Growth
Fund Index, which is comprised of the returns of mutual funds with growth
as their investment objective, returned 23.56%.***
Growth Fund lost significant ground to the S&P/Barra Growth Index in
two periods in fiscal 1997. The first one occurred in early January when
the fund received a significant inflow of cash. Influenced by Alan
Greenspan's "irrational exuberance" comments in mid to late December 1996,
the stock market outlook at the beginning of the year was cautious.
Contrary to expectations, the stock market proceeded to rise dramatically
starting in the second week of January. The investment of the cash was
moved forward but the fund's performance was impacted. The second instance
happened during the summer's market correction. Growth Fund was heavily
tilted toward large capitalization stocks which had helped performance in
the first six months of 1997 but whose valuations had reached lofty levels.
After a couple of earnings shortfall preannouncements in late July and
early August, doubt surfaced about the ability of those highly valued large
capitalization stocks to meet third quarter earnings expectations. The
summer's correction hit the large capitalization stocks and consequently
Growth Fund underperformed. Currently, Growth Fund has somewhat of a large
capitalization bias but is more in line with the capitalization of the
S&P/Barra Growth Index.
Looking ahead to 1998, the current positive environment for
equities--moderating economic growth, low inflation, stable to declining
interest rates and rising earnings--appears to be sustainable. Resolving
the problems with the Asian and to a much lesser degree the South American
economies, currencies and markets probably will take longer than initially
expected. This should cause economic growth in the first half of the year
to be slower than the second half. If the economy can remain on a modest
growth path enabling corporate profits to rise moderately, the stock market
should be able to have a fourth consecutive year of positive returns albeit
with a rate of return closer to the long-term historical average than the
outstanding rate of growth experienced in the past three years.
- ---------------
* 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.
** S&P/Barra Growth Index is an unmanaged sub-index of the S&P 500 representing
50% of the S&P 500 market capitalization and is comprised of those companies
with higher price-to-book ratios. Investments cannot be made in an index.
*** Lipper Growth Fund Index is an average of the net asset valuated total
returns for the top 30 growth funds tracked by Lipper Analytical Services,
Inc., an independent mutual fund ratings service.
<PAGE>
GROWTH FUND
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GROWTH OF $10,000 INVESTED IN GROWTH FUND
The graph below illustrates the hypothetical investment of $10,000 in
Growth Fund (the "Fund") from April 20, 1992 (start of performance) to November
30, 1997, compared to the S&P 500.
GRAPHIC REPRESENTATION OMITTED. SEE APPENDIX E
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED NOVEMBER 30, 1997
<TABLE>
<S> <C>
5 Year....................................................... 14.57%
1 Year....................................................... 18.68%**
Start of Performance (4/20/92)............................... 14.65%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 2% at the Fund's inception ($10,000 investment
minus $200 sales charge = $9,800). The Fund's performance assumes the
reinvestment of all dividends and distributions. The S&P 500 has been
adjusted to reflect reinvestment of dividends on securities in the index.
Effective June 1, 1997 the Fund eliminated the sales charge and replaced it
with a maximum contingent deferred sales charge of 3.00%.
** Total return quoted reflects the maximum 3.00% contingent deferred sales
charge imposed on any redemption less than one year from the purchase date.
Note: The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. This
index is unmanaged.
<PAGE>
FIRST PRIORITY FUNDS--FINANCIAL HIGHLIGHTS
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FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS FROM DISTRIBUTIONS
NET ASSET NET REALIZED DISTRIBUTIONS NET REALIZED IN EXCESS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME ON 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 0.05 -- 0.05 (0.05) -- --
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 0.04 -- 0.04 (0.04) -- --
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 0.49 (0.02) 0.47 (0.49) -- --
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 0.58 0.02 0.60 (0.59) -- --
</TABLE>
(a) Reflects operations for the period from April 14, 1992 (date of initial
public investment) to November 30, 1992.
(b) Reflects operations for the period from December 12, 1993 (date of initial
public investment) to November 30, 1994.
(c) Reflects operations for the period from April 20, 1992 (date of initial
public investment) to November 30, 1992.
(d) Reflects operations for the two month period ended January 31, 1995. Prior
to February 1, 1995 the Fund offered two classes of shares: Investment
Shares and Trust Shares. On February 1, 1995, all outstanding Trust Shares
were converted to Investment Shares, and the Fund temporarily ceased
offering Trust Shares. The Fund resumed offering Trust Shares as of January
31, 1998.
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
---------------------------------------------
NET ASSET NET EXPENSE NET ASSETS, AVERAGE
TOTAL VALUE, END TOTAL INVESTMENT WAIVER/ END OF PERIODCOMMISSION
DISTRIBUTIONS OF PERIOD RETURN(E) EXPENSES INCOME REIMBURSEMENT(H) (000 OMITTED) RATE PAID
- ----------------------------------------------------------------------------------------------------------------------------------
<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 --
(0.05) $ 1.00 4.81% 0.52% 4.71% 0.25% $166,035 --
(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 --
(0.04) $ 1.00 4.39% 0.92% 4.31% 0.25% $ 45,960 --
(0.42) $ 9.60 0.19% 0.38%(f) 4.45%(f) 0.70%(f) $ 48,526 --
(0.51) $ 10.04 10.12% 0.61% 5.26% 0.49% $ 63,078 --
(0.50) $ 9.96 4.37% 1.01% 5.09% 0.08% $ 63,732 --
(0.49) $ 9.94 4.81% 0.99% 4.91% -- $ 79,621 --
(0.38) $ 10.27 7.66% 0.77%(f) 6.02%(f) 0.29%(f) $ 96,354 --
(0.61) $ 10.67 10.14% 0.84% 4.80% 0.25% $169,881 --
(0.74) $ 9.46 (4.55%) 0.79% 5.44% 0.25% $153,289 --
(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 --
(0.58) $ 10.67 9.81% 1.14% 4.40% 0.25% $ 12,519 --
(0.71) $ 9.46 (4.83%) 1.09% 5.14% 0.25% $ 9,645 --
(0.54) $ 10.34 15.37% 1.02% 5.25% -- $160,286 --
(0.54) $ 10.36 5.66% 1.02% 5.38% -- $152,940 --
(0.59) $ 10.37 5.99% 0.97% 5.73% -- $184,064 --
<CAPTION>
TOTAL PORTFOLIO
DISTRIBUTIONS TURNOVER
- --------------------------
<S> <C>
(0.02) --
(0.03) --
(0.04) --
(0.05) --
(0.05) --
(0.05) --
(0.01) --
(0.02) --
(0.03) --
(0.04) --
(0.04) --
(0.04) --
(0.42) 3%
(0.51) 26%
(0.50) 48%
(0.49) 40%
(0.38) 44%
(0.61) 83%
(0.74) 24%
(0.09) --
(0.37) 44%
(0.58) 83%
(0.71) 24%
(0.54) 45%
(0.54) 52%
(0.59) 37%
</TABLE>
(e) Based on net asset value, which does not 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.
<PAGE>
FIRST PRIORITY FUNDS--FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
DISTRIBUTIONS FROM DISTRIBUTIONS
NET ASSET NET REALIZED DISTRIBUTIONS NET REALIZED IN EXCESS
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME ON 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 0.36 1.60 1.96 (0.37) (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 0.22 2.94 3.16 (0.21) (0.66) --
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 0.07 3.01 3.08 (0.07) (0.76) --
</TABLE>
(a) Reflects operations for the period from April 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Reflects operations for the two month period ended January 31, 1995. Prior
to February 1, 1995 the Fund offered two classes of shares: Investment
Shares and Trust Shares. On February 1, 1995, all outstanding Trust Shares
were converted to Investment Shares, and the Fund temporarily ceased
offering Trust Shares. The Fund resumed offering Trust Shares as of January
31, 1998.
(c) Reflects operations for the period from December 19, 1994 (date of initial
public investment) to November 30, 1995.
<PAGE>
<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
(0.68) $ 13.79 16.34% 1.11% 2.73% -- $ 83,073 0.09
(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
(0.87) $ 16.18 24.08% 1.04% 1.50% -- $152,531 0.09
(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
(0.83) $ 16.89 22.37% 1.01% 0.45% -- $275,006 0.09
<CAPTION>
TOTAL PORTFOLIO
DISTRIBUTIONS TURNOVER
- --------------------------
<S> <C>
(0.36) 49%
(0.63) 41%
(0.68) 34%
(0.34) 76%
(0.64) 58%
(0.87) 31%
(0.11) 30%
(0.30) 74%
(0.30) 66%
(0.41) --
(0.09) 30%
(0.27) 74%
(0.27) 66%
(0.54) 110%
(0.70) 56%
(0.83) 40%
</TABLE>
(d) Based on net asset value, which does not 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. This
disclosure is required for fiscal years beginning on or after September 1,
1995.
<PAGE>
TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ------------ --------------------------------------------------------------- ------------
<C> <C> <S> <C>
UNITED STATES TREASURY OBLIGATIONS--99.9%
- -----------------------------------------------------------------------------------
U.S. TREASURY BILLS
---------------------------------------------------------------
$214,000,000 12/4/1997-4/9/1998 (AT AMORTIZED COST) $211,904,686
--------------------------------------------------------------- ------------
MUTUAL FUND SHARES--0.3%
- -----------------------------------------------------------------------------------
677,378 Dreyfus Treasury Cash Management 677,378
---------------------------------------------------------------
9,207 Franklin U.S. Treasury Money Market Portfolio 9,207
---------------------------------------------------------------
291 Goldman Sachs I.L.A. Treasury Portfolio 291
--------------------------------------------------------------- ------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 686,876
--------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST AND VALUE)(A) $212,591,562
--------------------------------------------------------------- ------------
</TABLE>
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($211,995,215) at November 30, 1997.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--24.8%
- ------------------------------------------------------------------------------------
BANKING--1.3%
------------------------------------------------------------------
$1,000,000 Wachovia Bank of NC, 6.000%, 3/15/1999 $ 1,000,820
------------------------------------------------------------------ -----------
BEVERAGES--3.2%
------------------------------------------------------------------
2,000,000 Anheuser-Busch Cos., Inc., 6.750%, 8/1/2003 2,048,340
------------------------------------------------------------------
500,000 PepsiCo, Inc., 6.800%, 5/15/2000 507,505
------------------------------------------------------------------ -----------
Total 2,555,845
------------------------------------------------------------------ -----------
COMMERCIAL SERVICES--3.8%
------------------------------------------------------------------
2,000,000 Donnelley (R.R.) & Sons Co., 6.340%, 6/21/2000 2,011,080
------------------------------------------------------------------
1,000,000 Dow Jones & Co., Inc., 5.750%, 12/1/2000 991,580
------------------------------------------------------------------ -----------
Total 3,002,660
------------------------------------------------------------------ -----------
FINANCE--2.5%
------------------------------------------------------------------
1,000,000 American General Finance Corp., 5.730%, 2/28/2001 982,670
------------------------------------------------------------------
1,000,000 John Deere Capital Corp., 6.150%, 8/1/2000 1,000,380
------------------------------------------------------------------ -----------
Total 1,983,050
------------------------------------------------------------------ -----------
FINANCE--AUTOMOTIVE--2.5%
------------------------------------------------------------------
2,000,000 Ford Motor Credit Corp., 6.375%, 10/6/2000 2,006,940
------------------------------------------------------------------ -----------
FINANCE--COMMERCIAL--3.2%
------------------------------------------------------------------
500,000 American Express Credit Corp., 6.750%, 6/1/2001 508,130
------------------------------------------------------------------
2,000,000 Morgan Stanley Group, Inc., 6.125%, 1/5/1999 2,004,880
------------------------------------------------------------------ -----------
Total 2,513,010
------------------------------------------------------------------ -----------
PRODUCER MANUFACTURING--2.7%
------------------------------------------------------------------
2,150,000 Eaton Corp., 6.375%, 4/1/1999 2,158,858
------------------------------------------------------------------ -----------
RETAIL--0.6%
------------------------------------------------------------------
500,000 J.C. Penney Co., Inc., 6.375%, 9/15/2000 501,345
------------------------------------------------------------------ -----------
</TABLE>
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--5.0%
------------------------------------------------------------------
$2,000,000 Florida Power & Light Co., 5.700%, 3/5/1998 $ 2,001,820
------------------------------------------------------------------
2,000,000 Georgia Power Co., 6.000%, 3/1/2000 1,995,660
------------------------------------------------------------------ -----------
Total 3,997,480
------------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $19,607,972) 19,720,008
------------------------------------------------------------------ -----------
U.S. GOVERNMENT AGENCIES--10.6%
- ------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--5.6%
------------------------------------------------------------------
2,000,000 5.61%, 3/1/2001 1,980,320
------------------------------------------------------------------
500,000 5.75%, 2/6/2001 496,565
------------------------------------------------------------------
1,000,000 6.10%, 10/9/2002 1,002,816
------------------------------------------------------------------
500,000 6.375%, 6/22/2000 501,355
------------------------------------------------------------------
500,000 6.54%, 7/10/2000 500,730
------------------------------------------------------------------ -----------
Total 4,481,786
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--2.5%
------------------------------------------------------------------
1,000,000 5.70%, 2/2/1999(c) 999,170
------------------------------------------------------------------
1,000,000 5.96%, 10/20/2000 999,830
------------------------------------------------------------------ -----------
Total 1,999,000
------------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--2.5%
------------------------------------------------------------------
2,000,000 5.36%, 2/16/2001 1,966,220
------------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $8,429,270) 8,447,006
------------------------------------------------------------------ -----------
U.S. TREASURY--61.0%
- ------------------------------------------------------------------------------------
2,000,000 5.00%, 1/31/1999 1,983,940
------------------------------------------------------------------
1,000,000 5.00%, 2/15/1999 991,690
------------------------------------------------------------------
1,000,000 5.125%, 11/30/1998 994,690
------------------------------------------------------------------
2,500,000 5.125%, 12/31/1998 2,485,500
------------------------------------------------------------------
1,500,000 5.25%, 1/31/2001 1,476,660
------------------------------------------------------------------
4,000,000 5.375%, 5/31/1998 3,997,360
------------------------------------------------------------------
2,000,000 5.50%, 2/28/1999 1,994,700
------------------------------------------------------------------
</TABLE>
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. TREASURY--CONTINUED
- ------------------------------------------------------------------------------------
$ 500,000 5.50%, 4/15/2000 $ 497,045
------------------------------------------------------------------
500,000 5.50%, 12/31/2000 495,660
------------------------------------------------------------------
500,000 5.625%, 11/30/2000 497,530
------------------------------------------------------------------
1,500,000 5.625%, 2/28/2001 1,491,285
------------------------------------------------------------------
5,000,000 5.75%, 12/31/1998 5,003,150
------------------------------------------------------------------
500,000 5.75%, 10/31/2000 499,445
------------------------------------------------------------------
2,000,000 5.875%, 8/15/1998 2,002,920
------------------------------------------------------------------
2,000,000 5.875%, 10/31/1998 2,003,160
------------------------------------------------------------------
2,000,000 5.875%, 3/31/1999 2,003,800
------------------------------------------------------------------
1,000,000 5.875%, 6/30/2000 1,002,540
------------------------------------------------------------------
3,000,000 6.00%, 8/15/1999 3,010,440
------------------------------------------------------------------
4,000,000 6.00%, 9/30/1998 4,011,360
------------------------------------------------------------------
3,000,000 6.125%, 8/31/1998 3,010,530
------------------------------------------------------------------
1,500,000 6.125%, 8/31/2000 1,512,405
------------------------------------------------------------------
500,000 6.125%, 9/30/2000 504,265
------------------------------------------------------------------
500,000 6.25%, 8/31/2000 505,665
------------------------------------------------------------------
5,000,000 6.375%, 5/15/1999 5,042,500
------------------------------------------------------------------
500,000 6.75%, 4/30/2000 510,665
------------------------------------------------------------------
1,000,000 6.875%, 3/31/2000 1,023,480
------------------------------------------------------------------ -----------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $48,376,106) 48,552,385
------------------------------------------------------------------ -----------
</TABLE>
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
(A)REPURCHASE AGREEMENT--0.6%
- ------------------------------------------------------------------------------------
$ 490,719 Wachovia Bank of NC, 5.650%, dated 11/28/1997, due 12/1/1997 (AT
AMORTIZED COST) $ 490,719
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $76,904,067)(B) $77,210,118
------------------------------------------------------------------ -----------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $76,904,067. The
net unrealized appreciation of investments on a federal tax basis amounts to
$306,051 which is comprised of $358,799 appreciation and $52,748
depreciation at November 30, 1997.
(c) Current rate and next reset date shown.
Note: The categories of investments are shown as a percentage of net assets
($79,621,271) at November 30, 1997.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--8.3%
- -----------------------------------------------------------------------------------
CONSUMER STAPLES--0.5%
----------------------------------------------------------------
TOBACCO
----------------------------------------------------------------
$ 880,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 $ 937,517
---------------------------------------------------------------- ------------
ELECTRICAL POWER--1.0%
----------------------------------------------------------------
880,000 Orange & Rockland Utilities, Inc., 9.375%, 3/15/2000 938,634
----------------------------------------------------------------
880,000 Virginia Electric Power, 8.875%, 6/1/1999 916,626
---------------------------------------------------------------- ------------
Total Electrical Power 1,855,260
---------------------------------------------------------------- ------------
FINANCIAL--6.2%
----------------------------------------------------------------
COMMERCIAL SERVICES
----------------------------------------------------------------
1,650,000 Dow Jones & Co., 5.75%, 12/1/2000 1,636,107
---------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE
----------------------------------------------------------------
1,000,000 General Motors Acceptance Corp., 7.75%, 1/15/1999 1,018,940
----------------------------------------------------------------
2,000,000 General Motors Acceptance Corp., 8.00%, 10/1/1999 2,062,900
---------------------------------------------------------------- ------------
Total 3,081,840
---------------------------------------------------------------- ------------
FINANCE--COMMERCIAL
----------------------------------------------------------------
2,000,000 Commercial Credit Co., 5.90%, 9/1/2003 1,948,860
----------------------------------------------------------------
1,750,000 General Electric Financial Services, Inc., 5.50%, 11/1/2001 1,709,453
----------------------------------------------------------------
1,000,000 SouthTrust Bank of Alabama, Birmingham, 7.00%, 11/15/2008 1,020,420
---------------------------------------------------------------- ------------
Total 4,678,733
---------------------------------------------------------------- ------------
SECURITIES
----------------------------------------------------------------
2,000,000 Lehman Brothers, Inc., 7.375%, 1/15/2007 2,059,280
---------------------------------------------------------------- ------------
Total Financial 11,455,960
---------------------------------------------------------------- ------------
TRANSPORTATION--0.6%
----------------------------------------------------------------
880,000 Ford Motor Co., 8.875%, 4/1/2006 1,009,114
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $14,924,533) 15,257,851
---------------------------------------------------------------- ------------
</TABLE>
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE NOTES--7.0%
- -----------------------------------------------------------------------------------
CAPITAL GOODS--2.1%
----------------------------------------------------------------
TECHNOLOGY
----------------------------------------------------------------
$ 4,000,000 International Business Machines Corp., 6.037%, 8/7/2000 $ 3,986,200
---------------------------------------------------------------- ------------
FINANCIAL--4.9%
----------------------------------------------------------------
2,000,000 American General Finance Corp., 5.73%, 2/28/2001 1,965,340
----------------------------------------------------------------
2,000,000 Associates Corp. of North America, 6.50%, 7/15/2002 2,010,040
----------------------------------------------------------------
1,000,000 Associates Corp. of North America, 6.875%, 8/1/2003 1,020,520
----------------------------------------------------------------
2,000,000 Morgan Stanley, Dean Witter, Discover & Co., 6.25%, 3/15/2000 2,002,660
----------------------------------------------------------------
2,000,000 Paccar Financial Corp., 6.02%, 3/15/2000 1,995,120
---------------------------------------------------------------- ------------
Total Financial 8,993,680
---------------------------------------------------------------- ------------
TOTAL CORPORATE NOTES (IDENTIFIED COST $12,969,111) 12,979,880
---------------------------------------------------------------- ------------
U.S. GOVERNMENT AGENCIES--68.0%
- -----------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK
----------------------------------------------------------------
2,200,000 6.625%, 3/25/2002 2,209,636
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK
----------------------------------------------------------------
5,200,000 5.375%, 2/13/2001 5,114,668
----------------------------------------------------------------
5,000,000 7.035%, 5/7/2002 5,083,150
----------------------------------------------------------------
2,500,000 6.93%, 9/26/2002 2,530,400
----------------------------------------------------------------
1,750,000 6.75%, 10/24/2003 1,812,475
----------------------------------------------------------------
5,850,000 5.76%, Floating Rate Note*, 11/5/2003 5,712,993
---------------------------------------------------------------- ------------
Total 20,253,686
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORP.
----------------------------------------------------------------
2,040,833 PC, 1386C, 6.80%, 10/15/2007 2,083,384
----------------------------------------------------------------
4,250,000 PC, 1403M, 6.50%, 12/15/2021 4,146,428
----------------------------------------------------------------
314,132 PC, 1414F, 6.85%, 11/15/2007 320,015
----------------------------------------------------------------
2,187,261 PC, 1475O, 7.00%, 2/15/2008 2,221,908
----------------------------------------------------------------
6,189,728 PC, 1544L, 5.93%, 7/15/2008 6,083,326
----------------------------------------------------------------
4,400,000 PC, 1604FC, 5.44%, 11/15/2008 4,244,196
----------------------------------------------------------------
</TABLE>
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- -----------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.--CONTINUED
----------------------------------------------------------------
$ 5,000,000 PC, 1712C, 6.00%, 3/15/2009 $ 4,745,650
----------------------------------------------------------------
2,633,799 PC, 31K, 6.50%, 10/25/2014 2,554,126
----------------------------------------------------------------
2,000,000 6.70%, 9/3/2003 2,001,320
----------------------------------------------------------------
1,000,000 7.01%, 3/15/2006 1,009,030
----------------------------------------------------------------
1,075,000 7.55%, 11/27/2007 1,077,204
----------------------------------------------------------------
2,000,000 6.625%, 11/28/2005 1,994,740
----------------------------------------------------------------
2,280,000 7.03%, 11/17/2005 2,290,123
----------------------------------------------------------------
2,000,000 7.53%, 8/7/2006 2,074,760
---------------------------------------------------------------- ------------
Total 36,846,210
---------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
----------------------------------------------------------------
1,250,000 REMIC, 1992-209/F, 6.98%, 11/25/2007 1,276,000
----------------------------------------------------------------
801,145 REMIC, 1992-137/DA, 7.75%, 1/25/2017 808,203
----------------------------------------------------------------
5,601,615 REMIC, 1993-202/PH, 6.50%, 2/25/2022 5,608,393
----------------------------------------------------------------
3,541,125 REMIC, 1994-10/KC, 6.50%, 10/25/2010 3,515,912
----------------------------------------------------------------
1,250,000 REMIC, 1992-G34/EC, 8.25%, 7/25/2005 1,297,800
----------------------------------------------------------------
3,716,165 REMIC, 1993-G32/J, 6.75%, 5/25/2009 3,759,332
----------------------------------------------------------------
1,900,000 7.125%, 11/7/2005 Series MTN 1,902,470
----------------------------------------------------------------
10,000,000 7.55%, 3/27/2007 10,267,100
----------------------------------------------------------------
1,000,000 5.36%, 2/16/2001 Series MTN 983,110
----------------------------------------------------------------
1,100,000 6.31%, 11/1/2004 Series MTN 1,110,637
----------------------------------------------------------------
2,000,000 6.09%, 8/21/2000 Series MTN 2,006,360
----------------------------------------------------------------
1,500,000 6.82%, 12/13/2006 1,514,220
----------------------------------------------------------------
2,820,000 7.02%, 4/10/2006 2,860,185
----------------------------------------------------------------
5,000,000 7.09%, 3/13/2007 5,155,800
----------------------------------------------------------------
5,000,000 7.27%, 2/14/2007 5,093,750
----------------------------------------------------------------
3,000,000 7.54%, 11/2/2006 Series MTN 3,037,080
----------------------------------------------------------------
2,000,000 7.74%, 5/15/2007 Series MTN 2,017,800
----------------------------------------------------------------
</TABLE>
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- -----------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
----------------------------------------------------------------
$ 4,100,000 8.04%, 7/17/2006 $ 4,154,079
----------------------------------------------------------------
3,000,000 7.11%, 3/20/2006 Series MTN 3,052,590
----------------------------------------------------------------
2,000,000 7.07%, 10/24/2006 Series MTN 2,048,300
---------------------------------------------------------------- ------------
Total 61,469,121
---------------------------------------------------------------- ------------
TENNESSEE VALLEY AUTHORITY
----------------------------------------------------------------
4,400,000 6.125%, 7/15/2003 4,403,564
---------------------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $123,938,725) 125,182,217
---------------------------------------------------------------- ------------
U.S. TREASURY OBLIGATIONS--13.3%
- -----------------------------------------------------------------------------------
U.S. TREASURY NOTES
----------------------------------------------------------------
6,000,000 7.50%, 11/15/2001 6,343,440
----------------------------------------------------------------
7,000,000 7.50%, 5/15/2002 7,447,090
----------------------------------------------------------------
17,250,000 STRIPS, IO, 2/15/2006 10,628,415
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $23,299,348) 24,418,945
---------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--1.5%
- -----------------------------------------------------------------------------------
2,726,103 Wachovia Bank of NC, 5.65%, dated 11/28/1997, due 12/1/1997 (AT
AMORTIZED COST) 2,726,103
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $177,857,820)(B) $180,564,996
---------------------------------------------------------------- ------------
</TABLE>
* Current rate and next reset date shown.
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $177,857,820.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,707,176 which is comprised of $3,341,599 appreciation and
$634,423 depreciation at November 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($184,063,833) at November 30, 1997.
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
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 and Principal of Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
BALANCED FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--53.7%
- ------------------------------------------------------------------------------------
BASIC INDUSTRIES--2.4%
------------------------------------------------------------------
ALUMINUM
------------------------------------------------------------------
5,500 Aluminum Co. of America $ 369,875
------------------------------------------------------------------ -----------
CHEMICALS/PAPER
------------------------------------------------------------------
16,000 Kimberly-Clark Corp. 833,000
------------------------------------------------------------------ -----------
COMMERCIAL SERVICES
------------------------------------------------------------------
12,000 Sysco Corp. 534,750
------------------------------------------------------------------ -----------
PRODUCER MANUFACTURING
------------------------------------------------------------------
5,200 Deere & Co. 285,025
------------------------------------------------------------------ -----------
Total Basic Industries 2,022,650
------------------------------------------------------------------ -----------
CAPITAL GOODS--12.8%
------------------------------------------------------------------
ELECTRICAL
------------------------------------------------------------------
30,600 General Electric Co. 2,256,750
------------------------------------------------------------------ -----------
TECHNOLOGY
------------------------------------------------------------------
9,000 (c) 3Com Corp. 326,250
------------------------------------------------------------------
10,000 AMP, Inc. 434,375
------------------------------------------------------------------
8,000 (c) BMC Software, Inc. 519,000
------------------------------------------------------------------
10,400 Boeing Co. 552,500
------------------------------------------------------------------
6,500 (c) Cisco Systems, Inc. 560,625
------------------------------------------------------------------
4,500 Computer Associates International, Inc. 234,281
------------------------------------------------------------------
4,000 Eastman Kodak Co. 242,500
------------------------------------------------------------------
6,000 Hewlett-Packard Co. 366,375
------------------------------------------------------------------
10,700 Intel Corp. 830,587
------------------------------------------------------------------
7,000 International Business Machines Corp. 766,937
------------------------------------------------------------------
2,500 Lockheed Martin Corp. 243,906
------------------------------------------------------------------
10,999 Lucent Technologies, Inc. 881,295
------------------------------------------------------------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
------------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------------
12,000 (c) Microsoft Corp. $ 1,698,000
------------------------------------------------------------------
7,500 Motorola, Inc. 471,563
------------------------------------------------------------------
4,000 TRW, Inc. 227,000
------------------------------------------------------------------ -----------
Total 8,355,194
------------------------------------------------------------------ -----------
Total Capital Goods 10,611,944
------------------------------------------------------------------ -----------
CONSUMER CYCLICAL--2.9%
------------------------------------------------------------------
AUTOMOTIVE
------------------------------------------------------------------
10,000 Pep Boys-Manny Moe & Jack 251,250
------------------------------------------------------------------ -----------
MERCHANDISE/APPAREL
------------------------------------------------------------------
3,500 Albertsons, Inc. 155,312
------------------------------------------------------------------
7,500 Home Depot, Inc. 419,531
------------------------------------------------------------------
2,000 Penney (J.C.) Co., Inc. 128,500
------------------------------------------------------------------
6,000 Sears, Roebuck & Co. 274,875
------------------------------------------------------------------
4,800 Walgreen Co. 154,500
------------------------------------------------------------------
26,500 Wal-Mart Stores, Inc. 1,058,344
------------------------------------------------------------------ -----------
Total 2,191,062
------------------------------------------------------------------ -----------
Total Consumer Cyclical 2,442,312
------------------------------------------------------------------ -----------
CONSUMER NON-DURABLES--0.4%
------------------------------------------------------------------
6,000 Nike, Inc., Class B 292,125
------------------------------------------------------------------ -----------
CONSUMER SERVICES--1.6%
------------------------------------------------------------------
ENTERTAINMENT
------------------------------------------------------------------
8,000 Walt Disney Co. 759,500
------------------------------------------------------------------ -----------
RETAIL--RESTAURANTS
------------------------------------------------------------------
11,000 McDonald's Corp. 533,500
------------------------------------------------------------------ -----------
Total Consumer Services 1,293,000
------------------------------------------------------------------ -----------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER STAPLE--13.9%
------------------------------------------------------------------
FOOD & BEVERAGE
------------------------------------------------------------------
12,000 Coca-Cola Co. $ 750,000
------------------------------------------------------------------
8,500 General Mills, Inc. 629,000
------------------------------------------------------------------
27,000 PepsiCo, Inc. 995,625
------------------------------------------------------------------
12,000 Sara Lee Corp. 634,500
------------------------------------------------------------------ -----------
Total 3,009,125
------------------------------------------------------------------ -----------
HEALTH CARE/DRUG
------------------------------------------------------------------
12,400 American Home Products Corp. 866,450
------------------------------------------------------------------
2,500 Bristol-Myers Squibb Co. 234,062
------------------------------------------------------------------
14,000 Merck & Co., Inc. 1,323,875
------------------------------------------------------------------
20,000 Pfizer, Inc. 1,455,000
------------------------------------------------------------------
9,000 Schering Plough Corp. 564,188
------------------------------------------------------------------ -----------
Total 4,443,575
------------------------------------------------------------------ -----------
HOSPITAL SUPPLIES
------------------------------------------------------------------
11,200 Johnson & Johnson 704,900
------------------------------------------------------------------ -----------
HOUSEHOLD PRODUCTS
------------------------------------------------------------------
5,000 Avon Products, Inc. 289,062
------------------------------------------------------------------
11,000 Colgate-Palmolive Co. 734,937
------------------------------------------------------------------
10,000 Dial Corp. 193,750
------------------------------------------------------------------
10,000 Procter & Gamble Co. 763,125
------------------------------------------------------------------ -----------
Total 1,980,874
------------------------------------------------------------------ -----------
TOBACCO
------------------------------------------------------------------
32,300 Philip Morris Cos., Inc. 1,405,050
------------------------------------------------------------------ -----------
Total Consumer Staple 11,543,524
------------------------------------------------------------------ -----------
ENERGY--5.9%
------------------------------------------------------------------
OIL SERVICES
------------------------------------------------------------------
9,400 Amoco Corp. 846,000
------------------------------------------------------------------
12,100 Chevron Corp. 970,269
------------------------------------------------------------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
ENERGY--CONTINUED
------------------------------------------------------------------
OIL SERVICES--CONTINUED
------------------------------------------------------------------
19,200 Exxon Corp. $ 1,171,200
------------------------------------------------------------------
10,000 Halliburton Co. 539,375
------------------------------------------------------------------
6,000 Schlumberger Ltd. 493,875
------------------------------------------------------------------
16,000 Texaco, Inc. 904,000
------------------------------------------------------------------ -----------
Total Energy 4,924,719
------------------------------------------------------------------ -----------
FINANCIAL--9.4%
------------------------------------------------------------------
BANKING
------------------------------------------------------------------
11,000 American Express Co. 867,625
------------------------------------------------------------------
7,500 American General Corp. 404,062
------------------------------------------------------------------
9,000 BankAmerica Corp. 657,000
------------------------------------------------------------------
4,600 Chase Manhattan Corp. 499,675
------------------------------------------------------------------
4,500 Citicorp 539,719
------------------------------------------------------------------
17,000 Federal National Mortgage Association 897,813
------------------------------------------------------------------
11,000 NationsBank Corp. 660,688
------------------------------------------------------------------
22,000 Torchmark Corp. 897,875
------------------------------------------------------------------
2,700 Wells Fargo & Co. 829,575
------------------------------------------------------------------ -----------
Total 6,254,032
------------------------------------------------------------------ -----------
INSURANCE
------------------------------------------------------------------
9,200 American International Group, Inc. 927,475
------------------------------------------------------------------
3,300 General RE Corp. 655,050
------------------------------------------------------------------ -----------
Total 1,582,525
------------------------------------------------------------------ -----------
Total Financial 7,836,557
------------------------------------------------------------------ -----------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
------------------------------------------------------------------
UTILITIES--4.4%
------------------------------------------------------------------
COMMUNICATION
------------------------------------------------------------------
9,300 Ameritech Corp. $ 716,681
------------------------------------------------------------------
13,000 BellSouth Corp. 711,750
------------------------------------------------------------------
10,200 (c) WorldCom, Inc. 326,400
------------------------------------------------------------------ -----------
Total 1,754,831
------------------------------------------------------------------ -----------
UTILITIES/ELECTRICAL
------------------------------------------------------------------
5,000 Duke Power Corp. 260,000
------------------------------------------------------------------
10,000 Florida Progress Corp. 354,375
------------------------------------------------------------------
9,000 SBC Communications, Inc. 655,313
------------------------------------------------------------------
9,000 SCANA Corp. 248,625
------------------------------------------------------------------
15,000 Southern Co. 360,000
------------------------------------------------------------------ -----------
Total 1,878,313
------------------------------------------------------------------ -----------
Total Utilities 3,633,144
------------------------------------------------------------------ -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $29,545,094) 44,599,975
------------------------------------------------------------------ -----------
CORPORATE BONDS--12.8%
- ------------------------------------------------------------------------------------
CONSUMER CYCLICAL--0.8%
------------------------------------------------------------------
AUTOMOTIVE
------------------------------------------------------------------
$ 120,000 Ford Motor Co., Note, 8.875%, 4/1/2006 137,606
------------------------------------------------------------------ -----------
RETAIL SPECIALTY
------------------------------------------------------------------
500,000 Penney (J.C.) Co., Inc., Sr. Note, Series A, 6.375%, 9/15/2000 501,345
------------------------------------------------------------------ -----------
Total Consumer Cyclical 638,951
------------------------------------------------------------------ -----------
CONSUMER STAPLE--0.1%
------------------------------------------------------------------
TOBACCO
------------------------------------------------------------------
120,000 Philip Morris Cos., Inc., Unsecd. Note, 9.00%, 1/1/2001 127,843
------------------------------------------------------------------ -----------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -----------------------------------------------------------------------------------
ELECTRICAL POWER--0.3%
-----------------------------------------------------------------
$ 120,000 Orange & Rockland Utilities, Inc., Deb., 9.375%, 3/15/2000 $ 127,996
-----------------------------------------------------------------
120,000 Virginia Electric Power Co., 1st Ref. Mtg., Series B, 8.875%,
6/1/1999 124,994
----------------------------------------------------------------- ------------
Total Electrical Power 252,990
----------------------------------------------------------------- ------------
FINANCIAL--11.6%
-----------------------------------------------------------------
SECURITIES
-----------------------------------------------------------------
1,000,000 Lehman Brothers, Inc., Sr. Sub. Note, 7.375%, 1/15/2007 1,029,640
----------------------------------------------------------------- ------------
FINANCE--COMMERCIAL
-----------------------------------------------------------------
600,000 Associates Corp. of North America, Sr. Note, 6.50%, 7/15/2002 603,012
-----------------------------------------------------------------
500,000 Associates Corp. of North America, Sr. Note, 6.875%, 8/1/2003 510,260
-----------------------------------------------------------------
2,000,000 Commercial Credit Co., Note, 5.90%, 9/1/2003 1,948,860
-----------------------------------------------------------------
1,000,000 Dow Jones & Co., Note, 5.75%, 12/1/2000 991,580
-----------------------------------------------------------------
2,850,000 NationsBank Corp., Sr. Note, 5.80%, 1/31/2001 2,815,715
-----------------------------------------------------------------
1,000,000 Paccar Financial Corp., Note, 6.02%, 3/15/2000 997,560
----------------------------------------------------------------- ------------
Total 7,866,987
----------------------------------------------------------------- ------------
FINANCE--EQUIPMENT
-----------------------------------------------------------------
250,000 General Electric Financial Services, Inc., Deb., 5.50%, 11/1/2001 244,208
----------------------------------------------------------------- ------------
INSURANCE
-----------------------------------------------------------------
500,000 Merrill Lynch & Co., Inc., Note, 6.00%, 1/15/2001 496,260
----------------------------------------------------------------- ------------
Total Financial 9,637,095
----------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $10,578,326) 10,656,879
----------------------------------------------------------------- ------------
U.S. GOVERNMENT AGENCIES--18.7%
- -----------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK
-----------------------------------------------------------------
800,000 6.625%, 3/25/2002 803,504
-----------------------------------------------------------------
500,000 7.18%, 3/20/2007 509,925
----------------------------------------------------------------- ------------
Total 1,313,429
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- -----------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK
-----------------------------------------------------------------
$1,000,000 6.93%, 9/26/2002 $ 1,012,160
-----------------------------------------------------------------
1,000,000 6.10%, 10/9/2002 1,002,816
-----------------------------------------------------------------
250,000 6.75%, 10/24/2003 258,925
----------------------------------------------------------------- ------------
Total 2,273,901
----------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
-----------------------------------------------------------------
1,000,000 6.67%, 12/14/2005 994,110
-----------------------------------------------------------------
150,000 7.55%, 11/27/2007 150,308
-----------------------------------------------------------------
600,000 PC, 1604FC, 5.44%, Floating Rate Note*, 11/15/2008 578,754
-----------------------------------------------------------------
750,000 PC, 1403M, 6.50%, 12/15/2021 731,723
----------------------------------------------------------------- ------------
Total 2,454,895
----------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
-----------------------------------------------------------------
1,000,000 6.09%, 8/21/2000 1,003,180
-----------------------------------------------------------------
1,000,000 REMIC, 1992-G34/EC, 8.25%, 7/25/2005 1,038,240
-----------------------------------------------------------------
500,000 7.05%, 10/20/2005 500,750
-----------------------------------------------------------------
500,000 8.04%, 7/17/2006 506,595
-----------------------------------------------------------------
510,000 7.54%, 11/2/2006 516,304
-----------------------------------------------------------------
1,000,000 6.70%, 12/12/2006 1,012,180
-----------------------------------------------------------------
500,000 6.82%, 12/13/2006 504,740
-----------------------------------------------------------------
500,000 REMIC, 1993-G32 CL-J, 6.75%, 5/25/2009 505,808
-----------------------------------------------------------------
500,000 REMIC, 1994-10/KC, 6.50%, 10/25/2010 496,440
-----------------------------------------------------------------
801,145 REMIC, 1992-137/DA, 7.75%, 1/25/2017 808,203
-----------------------------------------------------------------
1,000,000 REMIC, 1993-202/PH, 6.50%, 2/25/2022 1,001,210
----------------------------------------------------------------- ------------
Total 7,893,650
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- -----------------------------------------------------------------------------------
TENNESSEE VALLEY AUTHORITY
-----------------------------------------------------------------
$1,000,000 6.00%, 11/1/2000 $ 1,000,870
-----------------------------------------------------------------
600,000 6.125%, 7/15/2003 600,486
----------------------------------------------------------------- ------------
Total 1,601,356
----------------------------------------------------------------- ------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $14,919,261) 15,537,231
----------------------------------------------------------------- ------------
U.S. TREASURY OBLIGATIONS--11.2%
- -----------------------------------------------------------------------------------
U.S. TREASURY NOTES
-----------------------------------------------------------------
1,000,000 5.875%, 8/15/1998 1,001,460
-----------------------------------------------------------------
2,000,000 5.00%, 1/31/1999 1,983,940
-----------------------------------------------------------------
500,000 6.25%, 8/31/2000 505,665
-----------------------------------------------------------------
1,000,000 5.625%, 2/28/2001 994,190
-----------------------------------------------------------------
1,000,000 7.50%, 11/15/2001 1,057,240
-----------------------------------------------------------------
1,000,000 7.50%, 5/15/2002 1,063,870
-----------------------------------------------------------------
1,000,000 6.25%, 2/15/2003 1,017,490
-----------------------------------------------------------------
2,800,000 STRIPS, IO, 2/15/2006 1,725,192
----------------------------------------------------------------- ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $9,002,199) 9,349,047
----------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--1.6%
- -----------------------------------------------------------------------------------
1,297,097 Wachovia Bank of NC, 5.65%, dated 11/28/1997, due 12/1/1997 (AT
AMORTIZED COST) 1,297,097
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $65,341,977)(B) $ 81,440,229
----------------------------------------------------------------- ------------
</TABLE>
* Current rate shown.
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $65,341,977. The
net unrealized appreciation of investments on a federal tax basis amounts to
$16,098,252 which is comprised of $16,552,086 appreciation and $453,834
depreciation at November 30, 1997.
(c) Non-income producing security.
Note: The categories of investments are shown as a percentage of net assets
($83,073,214) at November 30, 1997.
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
The following acronym is used throughout this portfolio:
<TABLE>
<S> <C>
IO -- Interest Only
STRIPS -- Separate Trading of Registered Interest and Principal of Securities
PC -- Participating Certificate
REMIC -- Real Estate Mortgage Investment Conduit
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
VALUE FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--95.8%
- -----------------------------------------------------------------------------------
BANKING--12.6%
-----------------------------------------------------------------
60,000 American General Corp. $ 3,232,500
-----------------------------------------------------------------
50,000 Banc One Corp. 2,568,750
-----------------------------------------------------------------
34,000 BankAmerica Corp. 2,482,000
-----------------------------------------------------------------
22,000 Bankers Trust New York Corp. 2,608,375
-----------------------------------------------------------------
20,000 Chase Manhattan Corp. 2,172,500
-----------------------------------------------------------------
18,000 Citicorp 2,158,875
-----------------------------------------------------------------
15,000 J.P. Morgan & Co., Inc. 1,712,813
-----------------------------------------------------------------
38,000 NationsBank Corp. 2,282,375
----------------------------------------------------------------- ------------
Total Banking 19,218,188
----------------------------------------------------------------- ------------
BASIC INDUSTRY--7.2%
-----------------------------------------------------------------
ALUMINUM
-----------------------------------------------------------------
45,000 Aluminum Co. of America 3,026,250
----------------------------------------------------------------- ------------
CHEMICALS
-----------------------------------------------------------------
40,000 Nalco Chemical Co. 1,552,500
----------------------------------------------------------------- ------------
PAPER
-----------------------------------------------------------------
55,000 Weyerhaeuser Co. 2,904,688
----------------------------------------------------------------- ------------
PROCESS INDUSTRIES
-----------------------------------------------------------------
55,000 Mead Corp. 3,550,938
----------------------------------------------------------------- ------------
Total Basic Industry 11,034,376
----------------------------------------------------------------- ------------
CAPITAL GOODS--7.3%
-----------------------------------------------------------------
ELECTRICAL EQUIPMENT/MACHINERY
-----------------------------------------------------------------
32,000 General Electric Co. 2,360,000
-----------------------------------------------------------------
65,000 Ingersoll-Rand Co. 2,656,875
-----------------------------------------------------------------
50,000 TRW, Inc. 2,837,500
----------------------------------------------------------------- ------------
Total 7,854,375
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
-----------------------------------------------------------------
INDUSTRIAL
-----------------------------------------------------------------
145,000 Cooper Tire & Rubber Co. $ 3,244,375
----------------------------------------------------------------- ------------
Total Capital Goods 11,098,750
----------------------------------------------------------------- ------------
CONSUMER CYCLICAL--8.0%
-----------------------------------------------------------------
AUTOS/LODGING/OTHER
-----------------------------------------------------------------
65,000 Corning, Inc. 2,758,437
-----------------------------------------------------------------
30,000 Ford Motor Co. 1,290,000
-----------------------------------------------------------------
20,000 General Motors Corp. 1,220,000
----------------------------------------------------------------- ------------
Total 5,268,437
----------------------------------------------------------------- ------------
MERCHANDISING/MASS MERCHANDISING
-----------------------------------------------------------------
45,000 Dayton-Hudson Corp. 2,989,687
----------------------------------------------------------------- ------------
RETAIL SPECIALITY/MERCHANDISING
-----------------------------------------------------------------
60,000 Penney (J.C.) Co., Inc. 3,855,000
----------------------------------------------------------------- ------------
Total Consumer Cyclical 12,113,124
----------------------------------------------------------------- ------------
CONSUMER SERVICES--4.5%
-----------------------------------------------------------------
FOOD PROCESSING
-----------------------------------------------------------------
85,000 Sysco Corp. 3,787,813
----------------------------------------------------------------- ------------
PUBLISHING
-----------------------------------------------------------------
45,000 McGraw-Hill Cos., Inc. 3,079,688
----------------------------------------------------------------- ------------
Total Consumer Services 6,867,501
----------------------------------------------------------------- ------------
CONSUMER STAPLES--6.3%
-----------------------------------------------------------------
HEALTH CARE/DRUG
-----------------------------------------------------------------
30,000 Bristol-Myers Squibb Co. 2,808,750
----------------------------------------------------------------- ------------
CONSUMER NON-DURABLES
-----------------------------------------------------------------
85,000 PepsiCo, Inc. 3,134,375
-----------------------------------------------------------------
100,000 RJR Nabisco Holdings Corp. 3,643,750
----------------------------------------------------------------- ------------
Total 6,778,125
----------------------------------------------------------------- ------------
Total Consumer Staples 9,586,875
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
ENERGY--17.3%
-----------------------------------------------------------------
OIL SERVICES
-----------------------------------------------------------------
40,000 Amerada-Hess Corp. $ 2,240,000
-----------------------------------------------------------------
25,000 Amoco Corp. 2,250,000
-----------------------------------------------------------------
45,000 Burlington Resources, Inc. 2,002,500
-----------------------------------------------------------------
30,000 Chevron Corp. 2,405,625
-----------------------------------------------------------------
105,000 Exxon Corp. 6,405,000
-----------------------------------------------------------------
35,000 Mobil Corp. 2,517,813
-----------------------------------------------------------------
90,000 Royal Dutch Petroleum Co., ADR 4,741,875
-----------------------------------------------------------------
20,000 Schlumberger Ltd. 1,646,250
-----------------------------------------------------------------
38,000 Texaco, Inc. 2,147,000
----------------------------------------------------------------- ------------
Total Energy 26,356,063
----------------------------------------------------------------- ------------
INSURANCE/MISCELLANEOUS--11.0%
-----------------------------------------------------------------
20,000 American Express Co. 1,577,500
-----------------------------------------------------------------
25,500 American International Group, Inc. 2,570,719
-----------------------------------------------------------------
35,000 Chubb Corp. 2,482,812
-----------------------------------------------------------------
50,000 Federal National Mortgage Association 2,640,625
-----------------------------------------------------------------
40,000 Jefferson-Pilot Corp. 3,052,500
-----------------------------------------------------------------
35,000 Marsh & McLennan Cos., Inc. 2,605,312
-----------------------------------------------------------------
37,500 Travelers Group, Inc. 1,893,750
----------------------------------------------------------------- ------------
Total Insurance/Miscellaneous 16,823,218
----------------------------------------------------------------- ------------
TECHNOLOGY--9.2%
-----------------------------------------------------------------
45,000 AMP, Inc. 1,954,687
-----------------------------------------------------------------
55,000 Boeing Co. 2,921,875
-----------------------------------------------------------------
42,000 Hewlett-Packard Co. 2,564,625
-----------------------------------------------------------------
23,000 International Business Machines Corp. 2,519,937
-----------------------------------------------------------------
25,000 Lockheed Martin Corp. 2,439,062
-----------------------------------------------------------------
25,000 Motorola, Inc. 1,571,875
----------------------------------------------------------------- ------------
Total Technology 13,972,061
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
TRANSPORTATION--1.6%
-----------------------------------------------------------------
80,000 USFreightways Corp. $ 2,460,000
----------------------------------------------------------------- ------------
UTILITIES--10.8%
-----------------------------------------------------------------
COMMUNICATIONS
-----------------------------------------------------------------
40,000 Ameritech Corp. 3,082,500
-----------------------------------------------------------------
30,000 Bell Atlantic Corp. 2,677,500
-----------------------------------------------------------------
55,000 BellSouth Corp. 3,011,250
-----------------------------------------------------------------
70,000 (c) WorldCom, Inc. 2,240,000
----------------------------------------------------------------- ------------
Total 11,011,250
----------------------------------------------------------------- ------------
ELECTRICAL
-----------------------------------------------------------------
65,000 SCANA Corp. 1,795,625
-----------------------------------------------------------------
90,000 Southern Co. 2,160,000
-----------------------------------------------------------------
65,000 TECO Energy, Inc. 1,665,625
----------------------------------------------------------------- ------------
Total 5,621,250
----------------------------------------------------------------- ------------
Total Utilities 16,632,500
----------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $116,591,495) 146,162,656
----------------------------------------------------------------- ------------
PREFERRED STOCKS--0.5%
- -----------------------------------------------------------------------------------
INSURANCE--0.5%
-----------------------------------------------------------------
10,000 Aetna, Inc., Conv. Pfd., $4.76 (IDENTIFIED COST $690,800) 748,125
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
(A)REPURCHASE AGREEMENT--3.5%
- -----------------------------------------------------------------------------------
$5,276,018 Wachovia Bank of NC, 5.65%, dated 11/28/1997, due 12/1/1997 (AT
AMORTIZED COST) $ 5,276,018
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $122,558,313)(B) $152,186,799
----------------------------------------------------------------- ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $122,558,313.
The net unrealized appreciation of investments on a federal tax basis
amounts to $29,628,486 which is comprised of $29,799,284 appreciation and
$170,798 depreciation at November 30, 1997.
(c) Non-income producing.
Note: The categories of investments are shown as a percentage of net assets
($152,531,289) at November 30, 1997.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
GROWTH FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--97.4%
- -----------------------------------------------------------------------------------
BASIC INDUSTRIES--5.1%
-----------------------------------------------------------------
CHEMICALS/METALS
-----------------------------------------------------------------
40,000 Avery Dennison Corp. $ 1,675,000
-----------------------------------------------------------------
89,000 Du Pont (E.I.) de Nemours & Co. 5,390,062
-----------------------------------------------------------------
40,000 Mead Corp. 2,582,500
-----------------------------------------------------------------
55,000 Monsanto Co. 2,402,813
----------------------------------------------------------------- ------------
Total 12,050,375
----------------------------------------------------------------- ------------
PAPER
-----------------------------------------------------------------
38,000 Kimberly-Clark Corp. 1,978,375
----------------------------------------------------------------- ------------
Total Basic Industries 14,028,750
----------------------------------------------------------------- ------------
CAPITAL GOODS--7.5%
-----------------------------------------------------------------
EQUIPMENT-MACHINERY
-----------------------------------------------------------------
245,000 General Electric Co. 18,068,750
----------------------------------------------------------------- ------------
INDUSTRY
-----------------------------------------------------------------
59,000 Parker-Hannifin Corp. 2,625,500
----------------------------------------------------------------- ------------
Total Capital Goods 20,694,250
----------------------------------------------------------------- ------------
CONSUMER CYCLICAL--6.0%
-----------------------------------------------------------------
AUTO/LODGING/OTHER
-----------------------------------------------------------------
60,000 Corning, Inc. 2,546,250
-----------------------------------------------------------------
MERCHANDISE/MASS MERCHANDISING
-----------------------------------------------------------------
48,000 Walgreen Co. 1,545,000
-----------------------------------------------------------------
171,000 Wal-Mart Stores, Inc. 6,829,313
----------------------------------------------------------------- ------------
Total 8,374,313
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
-----------------------------------------------------------------
MERCHANDISE/SPECIALTY
-----------------------------------------------------------------
33,000 Gap (The), Inc. $ 1,771,687
-----------------------------------------------------------------
70,000 Home Depot, Inc. 3,915,625
----------------------------------------------------------------- ------------
Total 5,687,312
----------------------------------------------------------------- ------------
Total Consumer Cyclical 16,607,875
----------------------------------------------------------------- ------------
CONSUMER NON-CYCLICAL--9.8%
-----------------------------------------------------------------
TOBACCO/COSMETICS/HOUSEHOLD
-----------------------------------------------------------------
20,000 Avon Products, Inc. 1,156,250
-----------------------------------------------------------------
24,000 Colgate-Palmolive Co. 1,603,500
-----------------------------------------------------------------
43,000 Gillette Co. 3,969,437
-----------------------------------------------------------------
34,000 Newell Co. 1,387,625
-----------------------------------------------------------------
189,000 Philip Morris Cos., Inc. 8,221,500
-----------------------------------------------------------------
102,000 Procter & Gamble Co. 7,783,875
-----------------------------------------------------------------
48,000 Unilever N.V., ADR 2,787,000
----------------------------------------------------------------- ------------
Total Consumer Non-Cyclical 26,909,187
----------------------------------------------------------------- ------------
CONSUMER SERVICES--3.0%
-----------------------------------------------------------------
ENTERTAINMENT
-----------------------------------------------------------------
18,000 Walt Disney Co. 1,708,875
----------------------------------------------------------------- ------------
PUBLISHING
-----------------------------------------------------------------
44,000 Time Warner, Inc. 2,563,000
----------------------------------------------------------------- ------------
RETAIL-RESTAURANTS
-----------------------------------------------------------------
40,000 Cracker Barrel Old Country Store 1,280,000
-----------------------------------------------------------------
57,000 McDonald's Corp. 2,764,500
----------------------------------------------------------------- ------------
Total 4,044,500
----------------------------------------------------------------- ------------
Total Consumer Services 8,316,375
----------------------------------------------------------------- ------------
FOOD & BEVERAGE--9.6%
-----------------------------------------------------------------
38,000 Anheuser-Busch Cos., Inc. 1,641,125
-----------------------------------------------------------------
13,000 CPC International, Inc. 1,343,875
-----------------------------------------------------------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
FOOD & BEVERAGE--CONTINUED
-----------------------------------------------------------------
178,000 Coca-Cola Co. $ 11,125,000
-----------------------------------------------------------------
42,000 ConAgra, Inc. 1,509,375
-----------------------------------------------------------------
19,000 General Mills, Inc. 1,406,000
-----------------------------------------------------------------
30,000 Heinz (H.J.) Co. 1,501,875
-----------------------------------------------------------------
30,000 Kellogg Co. 1,391,250
-----------------------------------------------------------------
123,000 PepsiCo, Inc. 4,535,625
-----------------------------------------------------------------
36,000 Sara Lee Corp. 1,903,500
----------------------------------------------------------------- ------------
Total Food & Beverage 26,357,625
----------------------------------------------------------------- ------------
HEALTHCARE/DRUG--14.6%
-----------------------------------------------------------------
52,000 American Home Products Corp. 3,633,500
-----------------------------------------------------------------
28,000 (a) Amgen, Inc. 1,431,500
-----------------------------------------------------------------
78,000 Bristol-Myers Squibb Co. 7,302,750
-----------------------------------------------------------------
85,000 Lilly (Eli) & Co. 5,360,312
-----------------------------------------------------------------
93,000 Merck & Co., Inc. 8,794,312
-----------------------------------------------------------------
101,000 Pfizer, Inc. 7,347,750
-----------------------------------------------------------------
55,000 Schering Plough Corp. 3,447,813
-----------------------------------------------------------------
20,000 Warner-Lambert Co. 2,797,500
----------------------------------------------------------------- ------------
Total Healthcare/Drug 40,115,437
----------------------------------------------------------------- ------------
HOSPITAL SUPPLIES--4.5%
-----------------------------------------------------------------
61,000 Abbott Laboratories 3,965,000
-----------------------------------------------------------------
106,000 Johnson & Johnson 6,671,375
-----------------------------------------------------------------
34,000 Medtronic, Inc. 1,623,500
----------------------------------------------------------------- ------------
Total Hospital Supplies 12,259,875
----------------------------------------------------------------- ------------
ENERGY--2.0%
-----------------------------------------------------------------
OIL SERVICES
-----------------------------------------------------------------
45,000 Schlumberger Ltd. 3,704,063
-----------------------------------------------------------------
30,000 Texaco, Inc. 1,695,000
----------------------------------------------------------------- ------------
Total Energy 5,399,063
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
INSURANCE/MISCELLANEOUS--3.7%
-----------------------------------------------------------------
56,000 American International Group, Inc. $ 5,645,500
-----------------------------------------------------------------
86,000 Federal National Mortgage Association 4,541,875
----------------------------------------------------------------- ------------
Total Insurance/Miscellaneous 10,187,375
----------------------------------------------------------------- ------------
BANKING--3.7%
-----------------------------------------------------------------
37,000 American Express Co. 2,918,375
-----------------------------------------------------------------
34,000 Chase Manhattan Corp. 3,693,250
-----------------------------------------------------------------
18,000 Marsh & McLennan Cos., Inc. 1,339,875
-----------------------------------------------------------------
21,000 U.S. Bancorp, Inc. 2,258,813
----------------------------------------------------------------- ------------
Total Banking 10,210,313
----------------------------------------------------------------- ------------
TECHNOLOGY--23.6%
-----------------------------------------------------------------
37,000 Allied-Signal, Inc. 1,373,625
-----------------------------------------------------------------
40,000 Automatic Data Processing, Inc. 2,250,000
-----------------------------------------------------------------
39,000 (a) BMC Software, Inc. 2,530,125
-----------------------------------------------------------------
26,000 (a) 3Com Corp. 942,500
-----------------------------------------------------------------
50,000 (a) Cisco Systems, Inc. 4,312,500
-----------------------------------------------------------------
57,000 Compaq Computer Corp. 3,558,937
-----------------------------------------------------------------
37,500 Computer Associates International, Inc. 1,952,344
-----------------------------------------------------------------
25,000 (a) Dell Computer Corp. 2,104,687
-----------------------------------------------------------------
21,000 Eastman Kodak Co. 1,273,125
-----------------------------------------------------------------
40,000 First Data Corp., Class 1,132,500
-----------------------------------------------------------------
40,000 Hewlett-Packard Co. 2,442,500
-----------------------------------------------------------------
122,000 Intel Corp. 9,470,250
-----------------------------------------------------------------
48,000 Lucent Technologies, Inc. 3,846,000
-----------------------------------------------------------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------
88,000 (a) Microsoft Corp. $ 12,452,000
-----------------------------------------------------------------
27,000 Minnesota Mining & Manufacturing Co. 2,630,812
-----------------------------------------------------------------
20,000 Motorola, Inc. 1,257,500
-----------------------------------------------------------------
18,000 Northern Telecom Ltd. 1,616,625
-----------------------------------------------------------------
74,000 (a) Oracle Corp. 2,465,125
-----------------------------------------------------------------
34,000 (a) Sun Microsystems, Inc. 1,224,000
-----------------------------------------------------------------
32,000 Texas Instruments, Inc. 1,576,000
-----------------------------------------------------------------
34,000 Tyco International, Ltd. 1,334,500
-----------------------------------------------------------------
17,000 United Technologies Corp. 1,273,938
-----------------------------------------------------------------
25,000 Xerox Corp. 1,942,188
----------------------------------------------------------------- ------------
Total Technology 64,961,781
----------------------------------------------------------------- ------------
UTILITIES--4.3%
-----------------------------------------------------------------
COMMUNICATIONS
-----------------------------------------------------------------
36,000 Ameritech Corp. 2,774,250
-----------------------------------------------------------------
65,000 SBC Communications, Inc. 4,732,813
-----------------------------------------------------------------
36,000 (a) WorldCom, Inc. 1,152,000
----------------------------------------------------------------- ------------
Total 8,659,063
----------------------------------------------------------------- ------------
ELECTRICAL
-----------------------------------------------------------------
64,000 GTE Corp. 3,236,000
----------------------------------------------------------------- ------------
Total Utilities 11,895,063
----------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $200,427,731) 267,942,969
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
(B)REPURCHASE AGREEMENT--2.5%
- -----------------------------------------------------------------------------------
$6,854,614 Wachovia Bank of NC, 5.65%, dated 11/28/1997, due 12/1/1997 $ 6,854,614
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $207,282,345)(C) $274,797,583
----------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $207,374,970.
The net unrealized appreciation of investments on a federal tax basis
amounts to $67,422,613 which is comprised of $72,214,195 appreciation and
$4,791,582 depreciation at November 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($275,006,468) at November 30, 1997.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY LIMITED
MONEY MATURITY FIXED
MARKET GOVERNMENT INCOME
FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value $212,591,562 $77,210,118 $180,564,996
Cash -- 505,479 --
Income receivable 52,103 1,229,980 1,834,912
Receivable for investments sold -- 2,025,972 2,494,267
Receivable for shares sold 61,116 26,855 165,705
Deferred expenses -- 5,351 --
- --------------------------------------------------------------------------------------------------------------
Total assets 212,704,781 81,003,755 185,059,880
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased -- 1,012,094 --
Payable for shares redeemed 1,309 87,071 36,948
Income distribution payable 582,906 206,761 803,324
Accrued expenses 125,351 76,558 155,775
- --------------------------------------------------------------------------------------------------------------
Total liabilities 709,566 1,382,484 996,047
- --------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $211,995,215 $79,633,969 $185,044,055
Net unrealized appreciation of investments -- 306,051 2,707,176
Accumulated net realized gain (loss) on investments -- (337,695) (3,691,182)
Undistributed net investment income -- 18,946 3,784
- --------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $211,995,215 $79,621,271 $184,063,833
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:*
(net assets / shares outstanding)
Trust Shares $1.00 -- --
Investment Shares $1.00 $9.94 $10.37
- --------------------------------------------------------------------------------------------------------------
REDEMPTION PROCEEDS PER SHARE*
Trust Shares $1.00 -- --
Investment Shares $1.00 $9.64 ** $10.06**
- --------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares 166,035,144 -- --
Investment Shares 45,960,071 8,011,911 17,750,075
- --------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING 211,995,215 8,011,911 17,750,075
- --------------------------------------------------------------------------------------------------------------
Investments, at identified cost $212,591,562 $76,904,067 $177,857,820
- --------------------------------------------------------------------------------------------------------------
Investments, at tax cost $212,591,562 $76,904,067 $177,857,820
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
** Computation of Redemption Proceeds: 97/100 of Net Asset Value.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value $ 81,440,229 $152,186,799 $274,797,583
Cash 5,662 -- --
Income receivable 580,485 345,699 341,008
Receivable for investments sold 1,018,068 -- --
Receivable for shares sold 104,607 124,547 124,384
Deferred expenses 6,682 5,643 --
- ---------------------------------------------------------------------------------------------------------------
Total assets 83,155,733 152,662,688 275,262,975
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investments purchased -- -- --
Payable for shares redeemed -- 9,398 11,704
Income distribution payable -- -- --
Accrued expenses 82,519 122,001 244,803
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 82,519 131,399 256,507
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 64,210,692 $118,622,058 $178,315,097
Net unrealized appreciation of investments 16,098,252 29,628,486 67,515,238
Accumulated net realized gain (loss) on investments 2,449,937 3,981,254 29,068,101
Undistributed net investment income 314,333 299,491 108,032
- ---------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 83,073,214 $152,531,289 $275,006,468
- ---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:*
(net assets / shares outstanding)
Trust Shares -- -- --
Investment Shares $13.79 $16.18 $16.89
- ---------------------------------------------------------------------------------------------------------------
REDEMPTION PROCEEDS PER SHARE*
Trust Shares -- -- --
Investment Shares $13.38** $15.69 ** $16.38**
- ---------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares -- -- --
Investment Shares 6,023,878 9,429,868 16,285,602
- ---------------------------------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING 6,023,878 9,429,868 16,285,602
- ---------------------------------------------------------------------------------------------------------------
Investments, at identified cost $ 65,341,977 $122,558,313 $207,282,345
- ---------------------------------------------------------------------------------------------------------------
Investments, at tax cost $ 65,341,977 $122,558,313 $207,374,970
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
** Computation of Redemption Proceeds: 97/100 of Net Asset Value.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY LIMITED
MONEY MATURITY FIXED
MARKET GOVERNMENT INCOME
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $9,663,237 $4,672,999 $11,369,147
Dividends -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total income 9,663,237 4,672,999 11,369,147
- -----------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 923,323 554,567 1,272,862
Administrative personnel and services fee 218,861 94,304 201,589
Custodian fees 39,180 12,333 36,443
Transfer and dividend disbursing agent fees and expenses 108,922 31,529 40,408
Directors'/Trustees' fees 1,123 561 1,293
Auditing fees 18,500 16,188 18,288
Legal fees 764 1,411 1,459
Portfolio accounting fees 60,921 42,512 49,886
Distribution services fee 187,392 -- --
Share registration costs 34,339 13,184 17,820
Printing and postage 7,598 8,407 3,360
Insurance premiums 5,072 1,026 2,072
Miscellaneous 5,061 6,902 4,680
- -----------------------------------------------------------------------------------------------------------------
Total expenses 1,611,056 782,924 1,650,160
Waiver of investment advisory fee (461,662) -- --
- -----------------------------------------------------------------------------------------------------------------
Net expenses 1,149,394 782,924 1,650,160
- -----------------------------------------------------------------------------------------------------------------
Net investment income 8,513,843 3,890,075 9,718,987
- -----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments -- (39,130) (81,761)
Change in unrealized appreciation (depreciation) of investments -- (46,941) 1,337,161
- -----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments -- (86,071) 1,225,400
- -----------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $8,513,843 $3,804,004 $10,974,387
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
STATEMENTS OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 2,090,165 $ 262,560 $ 554,964
Dividends 679,148 2,509,216 2,967,579
- ------------------------------------------------------------------------------------------------------------------
Total income 2,769,313 2,771,776 3,522,543
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 576,963 875,092 1,925,571
Administrative personnel and services fee 85,552 129,340 285,419
Custodian fees 16,924 24,377 48,474
Transfer and dividend disbursing agent fees and expenses 32,532 28,684 48,843
Directors'/Trustees' fees 1,124 405 482
Auditing fees 15,244 12,522 18,105
Legal fees 896 2,256 1,850
Portfolio accounting fees 39,683 37,677 64,877
Distribution services fee -- -- --
Share registration costs 15,228 14,018 32,924
Printing and postage 11,196 6,894 3,393
Insurance premiums 1,602 3,275 1,775
Miscellaneous 5,885 1,551 2,707
- ------------------------------------------------------------------------------------------------------------------
Total expenses 802,829 1,136,091 2,434,420
Waiver of investment advisory fee -- -- --
- ------------------------------------------------------------------------------------------------------------------
Net expenses 802,829 1,136,091 2,434,420
- ------------------------------------------------------------------------------------------------------------------
Net investment income 1,966,484 1,635,685 1,088,123
- ------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 2,450,885 3,981,222 29,067,961
Change in unrealized appreciation (depreciation) of investments 6,641,686 16,758,345 19,488,108
- ------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 9,092,571 20,739,567 48,556,069
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations $11,059,055 $22,375,252 $49,644,192
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED MATURITY GOVERNMENT
TREASURY MONEY MARKET FUND FUND FIXED INCOME FUND
----------------------------- --------------------------- ----------------------------
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
1997 1996 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS:
OPERATIONS--
Net investment income $ 8,513,843 $ 6,763,289 $ 3,890,075 $ 3,253,368 $ 9,718,987 $ 8,187,362
Net realized gain (loss) on
investments -- -- (39,130) (166,590) (81,761) (15,303)
Net change in unrealized
appreciation
(depreciation) of
investments -- -- (46,941) (433,168) 1,337,161 197,811
- ------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from
operations 8,513,843 6,763,289 3,804,004 2,653,610 10,974,387 8,369,870
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS--
Distributions from net investment income:
Trust Shares (6,495,920) (5,005,887) -- -- -- --
Investment Shares (2,017,923) (1,757,402) (3,890,075) (3,234,422) (9,764,674) (8,137,891)
Distributions from net realized gain on investment transactions:
Trust Shares -- -- -- -- -- --
Investment Shares -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from
distributions to
shareholders (8,513,843) (6,763,289) (3,890,075) (3,234,422) (9,764,674) (8,137,891)
- ------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 713,612,216 493,986,271 36,443,415 13,504,225 66,831,851 65,721,129
Net asset value of shares
issued to shareholders in
payment of dividends
declared 3,161,478 2,249,107 1,467,180 1,034,092 548,710 453,104
Cost of shares redeemed (647,183,526) (492,127,904) (21,934,772) (13,303,825) (37,466,806) (73,751,878)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from share
transactions 69,590,168 4,107,474 15,975,823 1,234,492 29,913,755 (7,577,645)
- ------------------------------------------------------------------------------------------------------------------
Change in net
assets 69,590,168 4,107,474 15,889,752 653,680 31,123,468 (7,345,666)
NET ASSETS:
Beginning of period 142,405,047 138,297,573 63,731,519 63,077,839 152,940,365 160,286,031
- ------------------------------------------------------------------------------------------------------------------
End of period $ 211,995,215 $ 142,405,047 $ 79,621,271 $ 63,731,519 $ 184,063,833 $152,940,365
- ------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income included in net
assets at end of period -- -- 18,946 18,946 $ 3,784 $ 49,471
- ------------------------------------------------------------------------------------------------------------------
Net gain (loss) as computed
for federal tax purposes -- -- $ (39,130) $ (166,590) $ 81,761 $ (15,503)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND VALUE FUND GROWTH FUND
------------------------- -------------------------- ---------------------------
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
1997 1996 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 1,966,484 $ 1,964,667 $ 1,635,685 $ 1,510,811 $ 1,088,123 $ 1,528,788
Net realized gain (loss) on
investments 2,450,885 1,477,490 3,981,222 3,889,499 29,067,961 9,169,321
Net change in unrealized
appreciation(depreciation) of
investments 6,641,686 4,504,813 16,758,345 8,077,338 19,488,108 28,913,778
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 11,059,055 7,946,970 22,375,252 13,477,648 49,644,192 39,611,887
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment
income:
Trust Shares -- -- -- -- -- --
Investment Shares (1,975,632) (1,977,098) (1,593,979) (1,483,398) (1,080,251) (1,880,165)
Distributions from net realized gain on investment transactions:
Trust shares -- -- -- -- -- --
Investment Shares (1,475,295) (934,924) (3,888,698) (1,327,782) (9,157,167) (6,989,405)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from
distributions to
shareholders (3,450,927) (2,912,022) (5,482,677) (2,811,180) (10,237,418) (8,869,570)
- ------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 23,156,324 11,045,572 64,485,140 33,369,808 102,214,322 27,092,197
Net asset value of shares issued
to shareholders in payment of
dividends declared 3,266,797 950,011 415,500 47,317 2,218,235 490,841
Cost of shares redeemed (10,278,832) (8,906,342) (12,833,896) (5,935,299) (44,353,846) (37,101,805)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets
resulting from share
transactions 16,144,289 3,089,241 52,066,744 27,481,826 60,078,711 (9,518,767)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets 23,752,417 8,124,189 68,959,319 38,148,294 99,485,485 21,223,550
NET ASSETS:
Beginning of period 59,320,797 51,196,608 83,571,970 45,423,676 175,520,983 154,297,433
- ------------------------------------------------------------------------------------------------------------------
End of period $83,073,214 $59,320,797 $152,531,289 $83,571,970 $275,006,468 $175,520,983
- ------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income included in net assets at
end of period $ 314,333 $ 323,481 $ 299,491 $ 257,785 $ 108,032 $ 100,160
- ------------------------------------------------------------------------------------------------------------------
Net gain (loss) as computed for
federal tax purposes $ 2,450,652 $ 1,475,251 $ 3,980,619 $ 3,888,676 $ 29,067,961 $ 9,157,822
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIRST PRIORITY FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997
- --------------------------------------------------------------------------------
(1) ORGANIZATION
First Priority Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company. The Trust consists of six portfolios (individually referred to as the
"Fund", or collectively as the "Funds") at November 30, 1997, which are
presented herein:
<TABLE>
<S> <C>
PORTFOLIO NAME INVESTMENT APPROACH
- --------------------------------------------------------------------------------------------------
First Priority Treasury Money Market Fund To provide current income consistent
with ("Treasury Money Market Fund") stability of principal and liquidity by
investing primarily in a diversified portfolio
limited to short-term U.S. treasury
obligations.
- --------------------------------------------------------------------------------------------------
First Priority Limited Maturity Government To achieve current income by
investing in a Fund diversified portfolio consisting primarily of ("Limited
Maturity Government Fund") 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 To achieve current income with a secondary
("Fixed Income Fund") objective of capital appreciation by investing
primarily in a broad range of high grade debt
securities.
- --------------------------------------------------------------------------------------------------
First Priority Balanced Fund To provide total return through capital
("Balanced Fund") 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 To provide income and growth of capital by
("Value Fund") investing primarily in a diversified portfolio
of income-producing equity securities,
including convertible securities.
- --------------------------------------------------------------------------------------------------
First Priority Growth Fund To provide growth of capital and income by
("Growth Fund") investing principally in a diversified
portfolio of common stocks of companies with
market capitalization of at least $250
million.
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
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. During the reporting period ended November 30, 1997, Limited Maturity
Government Fund, Fixed Income Fund, Balanced Fund, Value Fund, and Growth Fund
offered only one class of shares. Effective January 31, 1998, all existing
shares of Limited Maturity Government Fund, Fixed Income Fund, Balanced Fund,
Value Fund, and Growth Fund were redesignated as Investment Shares. As of the
same date, a new Trust Shares class was added to those same 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's use of the
amortized cost method to value portfolio securities is in accordance with
Rule 2a-7 under the Act. For fluctuating net asset value Funds within the
Trust, short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value. The Funds'
restricted securities are valued at the price provided by an independent
pricing service, if no market prices are available, at the fair value as
determined by the Fund's pricing committee.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction, including accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
<PAGE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At November 30, 1997, the Limited Maturity Government Fund and Fixed Income
Fund, for federal tax purposes, had capital loss carryforwards, of $346,966
and $3,690,271, 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), ($15,304),
respectively and 2005 ($48,401), ($81,761), respectively.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of their shares in their first fiscal year, excluding the
initial expense of registering their shares, have been deferred and are
being amortized using the straight-line method over a period of up to five
years from each Fund's commencement date.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Funds or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Trustees. The Funds will not incur any
registration costs upon such resales. The Funds did not hold restricted
securities at November 30, 1997.
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.
<PAGE>
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 year ended November 30, 1997:
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND
----------------------------- ---------------------------
TRUST INVESTMENT INVESTMENT
SHARES SHARES SHARES DOLLARS
- ---------------------------------------------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 398,538,313 315,073,903 3,681,490 $ 36,443,415
- ----------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,205,548 1,955,930 148,261 1,467,180
- ----------------------------------------------
Shares redeemed (335,497,366) (311,686,160) (2,217,857) (21,934,772)
- ---------------------------------------------- ------------ ------------- ---------- ------------
Net change resulting from Trust/Investment
Shares transactions 64,246,495 5,343,673 1,611,894 $ 15,975,823
- ---------------------------------------------- ------------ ------------- ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND BALANCED FUND
------------------------- -------------------------
INVESTMENT INVESTMENT
SHARES DOLLARS SHARES DOLLARS
- -------------------------------------------------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 6,594,521 $66,831,851 1,822,756 $23,156,324
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 53,609 548,710 262,460 3,266,797
- --------------------------------------------------
Share redeemed (3,661,175) (37,466,806) (801,716) (10,278,832)
- -------------------------------------------------- --------- ----------- ---------- -----------
Net change resulting from Investment Shares
transactions 2,986,955 $29,913,755 1,283,500 $16,144,289
- -------------------------------------------------- --------- ----------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
-------------------------- --------------------------
INVESTMENT INVESTMENT
SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 4,248,626 $ 64,485,140 6,984,817 $102,214,322
- ------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 29,973 415,500 160,544 2,218,235
- ------------------------------------------------
Shares redeemed (866,846) (12,833,896) (2,852,310) (44,353,846)
- ------------------------------------------------ --------- ------------ --------- ------------
Net change resulting from Investment Shares
transactions 3,411,753 $ 52,066,744 4,293,051 $ 60,078,711
- ------------------------------------------------ --------- ------------ --------- ------------
</TABLE>
<PAGE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
For the year ended November 30, 1996:
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND
----------------------------- ---------------------------
TRUST INVESTMENT INVESTMENT
SHARES SHARES SHARES DOLLARS
- ---------------------------------------------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 225,453,608 268,532,663 1,356,256 $ 13,504,225
- ----------------------------------------------
Shares issued to shareholders in payment of
distributions declared 556,588 1,692,519 104,949 1,034,092
- ----------------------------------------------
Shares redeemed (233,591,379) (258,536,525) (1,340,753) (13,303,825)
- ---------------------------------------------- ------------ ------------- ---------- ------------
Net change resulting from Trust/Investment
Shares transactions (7,581,183) 11,688,657 120,452 $ 1,234,492
- ---------------------------------------------- ------------ ------------- ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
FIXED INCOME FUND BALANCED FUND
-------------------------- --------------------------
INVESTMENT INVESTMENT
SHARES DOLLARS SHARES DOLLARS
- ------------------------------------------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 6,523,751 $ 65,721,129 960,324 $ 11,045,572
- ------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 44,514 453,104 82,169 950,011
- ------------------------------------------------
Shares redeemed (7,311,945) (73,751,878) (771,226) (8,906,342)
- ------------------------------------------------ --------- ------------ ---------- ------------
Net change resulting from Investment Shares
transactions (743,680) $ (7,577,645) 271,267 $ 3,089,241
- ------------------------------------------------ --------- ------------ ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
------------------------- --------------------------
INVESTMENT INVESTMENT
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 Shares
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 and/or
<PAGE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
reimburse certain operating expenses of the Funds. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion. 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.
<TABLE>
<CAPTION>
FUND ANNUAL 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.
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 year ended November 30, 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
<PAGE>
FIRST PRIORITY FUNDS
- --------------------------------------------------------------------------------
dividend disbursing agent for the Funds. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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 year ended
November 30, 1997, the Funds paid FAS, pursuant to this agreement, as follows:
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
- --------------------------------------------------------- --------------- ---------------
<S> <C> <C>
Limited Maturity Government Fund $26,082 $ 6,955
- ---------------------------------------------------------
Balanced Fund $24,457 $ 4,891
- ---------------------------------------------------------
Value Fund $18,322 $ 3,664
- ---------------------------------------------------------
</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
year ended November 30, 1997, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ----------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Limited Maturity Government Fund $ 48,006,807 $29,963,698
- -----------------------------------------------------------------
Fixed Income Fund $ 87,338,771 $61,102,254
- -----------------------------------------------------------------
Balanced Fund $ 39,808,716 $23,010,106
- -----------------------------------------------------------------
Value Fund $ 82,073,259 $32,322,198
- -----------------------------------------------------------------
Growth Fund $169,164,390 $90,323,129
- -----------------------------------------------------------------
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees and the Shareholders of
FIRST PRIORITY FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of First Priority Funds (comprising the following
portfolios: Treasury Money Market Fund, Limited Maturity Government Fund, Fixed
Income Fund, Balanced Fund, Value Fund and Growth Fund) as of November 30, 1997,
the related statements of operations for the year then ended, the statements of
changes in net assets for the years ended November 30, 1997 and 1996, and the
financial highlights for the periods presented. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
November 30, 1997, by correspondence with the custodian and brokers; where
replies were not received, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of First Priority Funds
as of November 30, 1997, the results of their operations, the changes in their
net assets and their financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 9, 1998
<PAGE>
<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 Secretary
Peter E. Madden 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.
[LOGO]
Federated Securities Corp. is the distributor of the funds
Cusip 335931887 Cusip 335931101 Cusip 335931804 Cusip 335931309 Cusip 335931705
Cusip 335931606 Cusip 335931507 007575 (1/98)
APPENDIX FOR FIRST PRIORITY FUNDS
A. The graphic presentation here displayed consists of a line graph titled
"Growth of $10,000 Invested in Limited Maturity Government Fund (the "Fund").
The corresponding components of the line graph are listed underneath. The Fund
is represented by a solid line. The Merrill Lynch 1-3 Year Government/Corporate
Index is represented by a broken line. The line graph is a visual representation
of a comparison of change in value of a hypothetical $10,000 purchase in the
Fund and Merrill Lynch 1-3 Year Government/Corporate Index. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation periods
from the Fund's start of performance, 12/12/93 through 11/30/97. The right
margin reflects the ending value of the hypothetical investment in the Fund as
compared to the Merrill Lynch 1-3 Year Government/Corporate Index; the ending
values are $11,827 and $12,494, respectively.
B. The graphic presentation here displayed consists of a line graph titled
"Growth of $10,000 Invested in Fixed Income Fund (the "Fund"). The corresponding
components of the line graph are listed underneath. The Fund is represented by a
solid line. The Merrill Lynch 1-10 Year Government/Corporate Index is
represented by a broken line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 purchase in the Fund and
Merrill Lynch 1-10 Year Government/Corporate Index. The "y" axis reflects the
cost of the investment. The "x" axis reflects computation periods from the
Fund's start of performance, 4/30/92 through 11/30/97. The right margin reflects
the ending value of the hypothetical investment in the Fund as compared to the
Merrill Lynch 1-10 Year Government/Corporate Index; the ending values are
$14,223 and $15,086, respectively.
C. The graphic presentation here displayed consists of a line graph titled
"Growth of $10,000 Invested in Balanced Fund (the "Fund"). The corresponding
components of the line graph are listed underneath. The Fund is represented by a
solid line. The S&P 500/Lehman Brothers Government/Corporate Index is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 purchase in the Fund and
the S&P 500/Lehman Brothers Government/Corporate Index. The "y" axis reflects
the cost of the investment. The "x" axis reflects computation periods from the
Fund's start of performance, 12/19/94 through 11/30/97. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the S&P 500/Lehman Brothers Government/Corporate Index; the ending values are
$15,585 and $17,454, respectively.
D. The graphic presentation here displayed consists of a line graph titled
"Growth of $10,000 Invested in Value Fund (the "Fund"). The corresponding
components of the line graph are listed underneath. The Fund is represented by a
solid line. The S&P/Barra Value Index is represented by a dotted line. The line
graph is a visual representation of a comparison of change in value of a
hypothetical $10,000 purchase in the Fund and the S&P/Barra Value Index. The "y"
axis reflects the cost of the investment. The "x" axis reflects computation
periods from the Fund's start of performance, 12/19/94 through 11/30/97. The
right margin reflects the ending value of the hypothetical investment in the
Fund as compared to the S&P/Barra Value Index; the ending values are $18,374 and
$20,457, respectively.
E. The graphic presentation here displayed consists of a line graph titled
"Growth of $10,000 Invested in Growth Fund (the "Fund"). The corresponding
components of the line graph are listed underneath. The Fund is represented by a
solid line. The S&P 500 is represented by a dotted line. The line graph is a
visual representation of a comparison of change in value of a hypothetical
$10,000 purchase in the Fund and the S&P 500. The "y" axis reflects the cost of
the investment. The "x" axis reflects computation periods from the Fund's start
of performance, 4/20/92 through 11/30/97. The right margin reflects the ending
value of the hypothetical investment in the Fund as compared to the S&P 500; the
ending values are $21,106 and $26,490, respectively.
