REGIONS
FAMILY OF FUNDS
COMBINED SEMI-ANNUAL REPORT
DATED MAY 31, 1998
FIRST PRIORITY FUNDS BECAME REGIONS FUNDS
EFFECTIVE MAY 15, 1998
DIVERSIFIED PORTFOLIOS OF THE REGIONS FUNDS, AN OPEN-END, MANAGEMENT
INVESTMENT COMPANY
[REGIONS FUNDS LOGO]
<PAGE>
NOTICE TO TRUST CUSTOMERS CONCERNING
REGIONS MUTUAL FUNDS
(FORMERLY, FIRST PRIORITY MUTUAL FUNDS)
Regions Bank serves as investment adviser and securities custodian for the
Regions Family of Funds (the "Funds"). Six funds currently are comprising the
Funds:
REGIONS TREASURY MONEY MARKET FUND ("TREASURY MONEY MARKET FUND")
REGIONS LIMITED MATURITY GOVERNMENT FUND ("LIMITED MATURITY GOVERNMENT FUND")
REGIONS FIXED INCOME FUND ("FIXED INCOME FUND")
REGIONS BALANCED FUND ("BALANCED FUND")
REGIONS VALUE FUND ("VALUE FUND")
REGIONS GROWTH FUND ("GROWTH FUND")
The Funds are available for purchase by individuals and trust accounts.
Your account owns shares in one or more of the Funds. Please notice in this
Semi-Annual Report that Regions Bank receives a fee for serving as investment
adviser. The amount of the investment advisory fee varies from Fund to Fund and
may be waived in whole or in part. Regions Bank may offset the expense of
incurring an investment advisory fee by reimbursing certain fees for certain
accounts.
For serving as securities custodian, Regions Bank receives a fee of .025% or
less of the Funds' daily net assets.
The Funds are not deposits or obligations of Regions Bank, are not guaranteed by
Regions Bank, and are not insured or otherwise protected by the FDIC, the
Federal Reserve, or any other government agency. Investments in mutual funds
involve risk, including the potential loss of principal.
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for the Regions
Funds, which were previously known as the First Priority Funds. This report
covers activity in the funds for the six-month period from December 1, 1997
through May 31, 1998.
The Regions Funds offer you a range of investment objectives to keep your money
working toward your financial goals--from daily income on your ready cash, to
income on a regular basis, to growth for very long-term goals like a child's
college education or your retirement--there's a Regions fund that may be right
for you.
The following is a fund-by-fund performance summary over the six-month period
covered by this report.
REGIONS TREASURY MONEY MARKET FUND
This fund is a convenient, highly conservative way for shareholders to pursue
daily income on their ready cash, with daily access to their money. The fund's
portfolio of U.S. Treasury money market securities paid dividends of $0.02 per
share for Trust Shares and for Investment Shares during the six-month reporting
period. The fund's assets reached $277.8 million at the end of the reporting
period.*
REGIONS LIMITED MATURITY GOVERNMENT FUND
The fund's diversified portfolio consists of limited maturity U.S. Treasury
Notes, U.S. government agency securities and investment-grade corporate bonds.
Investment Shares produced an income stream totaling $0.24 per share over the
six-month reporting period. The share price of Investment Shares rose minimally,
from $9.94 on the first day of the reporting period to $9.97 on the last day of
the reporting period. The Investment Shares of the fund produced a total return
of 2.76%, or -0.32% adjusted for the contingent deferred sales charge.** The
fund's net assets totaled more than $89 million at the end of the reporting
period. This report also contains financial information for the fund's Trust
Shares, a new share class that began operation on May 20, 1998.
REGIONS FIXED INCOME FUND
For Investment Shares, the fund's portfolio of U.S. government bonds and
investment-grade corporate bonds produced a monthly income stream totaling $0.28
per share over the six-month reporting period. The net asset value of Investment
Shares increased modestly from $10.37 on the first day of the reporting period
to $10.42 on the last day of the reporting period. As a result, Investment
Shares produced a total return of 3.20%, or 0.15% adjusted for the contingent
deferred sales charge.** The fund's net assets rose to $235.1 million. This
report also contains financial information for the fund's Trust Shares, a new
share class that began operation on May 20, 1998.
* 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. An investment
in the fund is neither insured nor guaranteed by the U.S. government.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. A contingent deferred sales charge is applicable to shares
redeemed within three years of their purchase.
<PAGE>
REGIONS BALANCED FUND
The fund's combination of high-quality stocks and investment-grade corporate
bonds and government bonds produced a total return for Investment Shares of
9.34% for the reporting period, or 6.23% adjusted for the contingent deferred
sales charge.** Contributing to the total return for Investment Shares was a
$0.64 rise in net asset value from the first day to the last day of the
reporting period, dividends totaling $0.19 per share and capital gains totaling
$0.41. Fund net assets reached $101.1 million at the end of the reporting
period. This report also contains financial information for the fund's Trust
Shares, a new share class that began operation on May 20, 1998.
REGIONS VALUE FUND
As the stock market marched on, accompanied by periods of high daily volatility,
the fund's Investment Shares delivered a total return of 9.53%, or 6.40%
adjusted for the contingent deferred sales charge.** Contributing to the total
return for Investment Shares was a $0.96 increase in net asset value, dividends
totaling $0.11 per share and capital gains totaling $0.42 per share. Fund net
assets reached $191.8 million at the end of the reporting period. This report
also contains financial information for the fund's Trust Shares, a new share
class that began operation on May 20, 1998.
REGIONS GROWTH FUND
The fund's diversified portfolio of high-quality growth stocks delivered a
strong total return for Investment Shares of 16.15%, or 12.75% adjusted for the
contingent deferred sales charge.** Contributing to this total return for
Investment Shares was a $0.54 rise in share price from the first day of the
reporting period to the last day of the reporting period, dividends totaling
$0.03 per share, and capital gains amounting to $1.80 per share. At the end of
the reporting period, fund net assets reached $317.7 million. This report also
contains financial information for the fund's Trust Shares, a new share class
that began operation on May 20, 1998.
Thank you for joining with other shareholders who have entrusted more than $1.2
billion to the Regions Funds. Adding to your account on a regular basis and
reinvesting your dividends in additional shares are convenient, painless ways to
"pay yourself first" and enjoy the benefit of compounding.+
We look forward to keeping you up-to-date on your progress.
Sincerely,
LOGO
Edward C. Gonzales
President
July 15, 1998
** 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. A contingent deferred sales charge is applicable to shares
redeemed within three years of their purchase.
+ Systematic investing does not ensure a profit or protect against loss in
declining markets.
<PAGE>
TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ------------ ------------------------------------------------------------ ------------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--93.4%
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS
------------------------------------------------------------
$246,000,000 6/4/1998-10/15/98 $243,369,716
------------------------------------------------------------ ------------
U.S. TREASURY NOTE
------------------------------------------------------------
16,000,000 5.875%, 10/31/1998 16,024,547
------------------------------------------------------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS (AT AMORTIZED COST) 259,394,263
------------------------------------------------------------ ------------
MUTUAL FUND SHARES--7.0%
- --------------------------------------------------------------------------------
2,373 Dreyfus Treasury Cash Management 2,373
------------------------------------------------------------
5,643,992 Federated U.S. Treasury Cash Reserves Fund/Institutional
Shares 5,634,992
------------------------------------------------------------
1,876 Franklin U.S. Treasury Money Market Portfolio Fund 1,876
------------------------------------------------------------
13,874,250 Goldman Sachs Fund Square Trust 13,874,250
------------------------------------------------------------ ------------
TOTAL MUTUAL FUNDS (AT NET ASSET VALUE) 19,513,491
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (AT AMORTIZED COST AND VALUE)(A) $278,907,754
------------------------------------------------------------ ------------
</TABLE>
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($277,849,240) at May 31, 1998.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--32.3%
- ------------------------------------------------------------------------------
BANKING--1.1%
------------------------------------------------------------
$1,000,000 Wachovia Bank of NC, NA, Winston-Salem, 6.000%, 3/15/1999 $ 1,003,160
------------------------------------------------------------ -----------
COMMERCIAL SERVICES--3.4%
------------------------------------------------------------
2,000,000 Donnelley (R.R.) & Sons Co., 6.340%, 6/21/2000 2,018,620
------------------------------------------------------------
1,000,000 Dow Jones & Co., 5.750%, 12/1/2000 998,830
------------------------------------------------------------ -----------
Total 3,017,450
------------------------------------------------------------ -----------
CONSUMER NON-DURABLES--2.9%
------------------------------------------------------------
2,000,000 Anheuser-Busch Cos., Inc., 6.750%, 8/1/2003 2,064,100
------------------------------------------------------------
500,000 PepsiCo, Inc., 6.800%, 5/15/2000 508,285
------------------------------------------------------------ -----------
Total 2,572,385
------------------------------------------------------------ -----------
CONSUMER SERVICES--6.7%
------------------------------------------------------------
2,000,000 Carnival Corp., 5.650%, 10/15/2000 1,991,180
------------------------------------------------------------
2,000,000 Disney (Walt) Co., 5.600%, 4/17/2000 1,995,400
------------------------------------------------------------
2,000,000 Tribune Co., 5.300%, 4/17/2000 1,979,920
------------------------------------------------------------ -----------
Total 5,966,500
------------------------------------------------------------ -----------
FINANCE--AUTOMOTIVE--2.3%
------------------------------------------------------------
2,000,000 Ford Motor Credit Corp., 6.375%, 10/6/2000 2,019,500
------------------------------------------------------------ -----------
FINANCE--COMMERCIAL--6.1%
------------------------------------------------------------
500,000 American Express Credit Corp., 6.750%, 6/1/2001 511,800
------------------------------------------------------------
2,000,000 General Electric Capital Corp., 5.625%, 4/10/2000 1,994,260
------------------------------------------------------------
1,000,000 John Deere Capital Corp., 6.150%, 8/1/2000 1,006,070
------------------------------------------------------------
2,000,000 John Deere Capital Corp., 5.500%, 1/14/2000 1,991,140
------------------------------------------------------------ -----------
Total 5,503,270
------------------------------------------------------------ -----------
</TABLE>
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------
PRODUCER MANUFACTURING--4.7%
------------------------------------------------------------
$2,000,000 Cooper Industries, Inc., 5.620%, 2/15/2001 $ 1,987,840
------------------------------------------------------------
2,150,000 Eaton Corp., 6.375%, 4/1/1999 2,159,761
------------------------------------------------------------ -----------
Total 4,147,601
------------------------------------------------------------ -----------
RETAIL TRADE--0.6%
------------------------------------------------------------
500,000 Penney (J.C.) Co., Inc., 6.375%, 9/15/2000 505,505
------------------------------------------------------------ -----------
UTILITIES--4.5%
------------------------------------------------------------
2,000,000 Georgia Power Co., 6.000%, 3/1/2000 2,005,400
------------------------------------------------------------
2,000,000 Southern California Edison Co., 5.875%, 1/15/2001 1,999,480
------------------------------------------------------------ -----------
Total 4,004,880
------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $28,571,300) 28,740,251
------------------------------------------------------------ -----------
U.S. GOVERNMENT AGENCIES--28.8%
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--16.0%
------------------------------------------------------------
3,325,000 5.345%, 2/16/2001 3,297,070
------------------------------------------------------------
2,000,000 5.580%, 4/9/2001 1,992,420
------------------------------------------------------------
3,000,000 5.590%, 3/27/2000 2,996,760
------------------------------------------------------------
2,000,000 5.610%, 3/1/2001 1,995,240
------------------------------------------------------------
2,000,000 5.620%, 1/12/2001 1,997,020
------------------------------------------------------------
1,000,000 5.950%, 10/6/2000 1,005,640
------------------------------------------------------------
1,000,000 6.100%, 10/9/2002 1,013,717
------------------------------------------------------------ -----------
Total 14,297,867
------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--1.1%
------------------------------------------------------------
1,000,000 5.960%, 10/20/2000 1,005,960
------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--11.7%
------------------------------------------------------------
2,000,000 5.360%, 2/16/2001 1,983,940
------------------------------------------------------------
4,000,000 5.600%, 1/12/2000 3,999,680
------------------------------------------------------------
</TABLE>
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
------------------------------------------------------------
$4,000,000 5.860%, 11/7/2000 $ 4,015,360
------------------------------------------------------------
500,000 Discount Note, 4/8/2003 379,235
------------------------------------------------------------ -----------
Total 10,378,215
------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $25,663,761) 25,682,042
------------------------------------------------------------ -----------
U.S. TREASURY NOTES--35.7%
- ------------------------------------------------------------------------------
2,000,000 5.00%, 1/31/1999 1,993,880
------------------------------------------------------------
1,000,000 5.00%, 2/15/1999 996,630
------------------------------------------------------------
1,000,000 5.125%, 11/30/1998 998,900
------------------------------------------------------------
1,500,000 5.250%, 1/31/2001 1,489,245
------------------------------------------------------------
2,000,000 5.375%, 1/31/2000 1,994,400
------------------------------------------------------------
500,000 5.50%, 12/31/2000 499,535
------------------------------------------------------------
2,000,000 5.50%, 2/28/1999 2,000,600
------------------------------------------------------------
3,750,000 5.50%, 4/15/2000 3,748,875
------------------------------------------------------------
500,000 5.625%, 11/30/2000 501,040
------------------------------------------------------------
1,500,000 5.625%, 2/28/2001 1,503,030
------------------------------------------------------------
500,000 5.750%, 10/31/2000 502,310
------------------------------------------------------------
2,000,000 5.875%, 3/31/1999 2,005,940
------------------------------------------------------------
1,000,000 5.875%, 6/30/2000 1,006,730
------------------------------------------------------------
3,000,000 6.00%, 8/15/1999 3,016,500
------------------------------------------------------------
1,500,000 6.125%, 7/31/2000 1,517,910
------------------------------------------------------------
500,000 6.125%, 9/30/2000 506,370
------------------------------------------------------------
500,000 6.250%, 8/31/2000 507,465
------------------------------------------------------------
5,000,000 6.375%, 5/15/1999 5,039,050
------------------------------------------------------------
500,000 6.750%, 4/30/2000 510,845
------------------------------------------------------------
1,000,000 6.875%, 3/31/2000 1,023,090
------------------------------------------------------------
500,000 IO STRIP, 5/15/2001 425,465
------------------------------------------------------------ -----------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST $31,594,031) 31,787,810
------------------------------------------------------------ -----------
</TABLE>
<PAGE>
LIMITED MATURITY GOVERNMENT FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
(A)REPURCHASE AGREEMENT--2.4%
- ------------------------------------------------------------------------------
$2,125,185 Wachovia Bank of NC, NA, Winston-Salem, 5.440%, dated
5/29/1998, due 6/1/1998 (AT AMORTIZED COST) $ 2,125,185
------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $87,954,277)(B) $88,335,288
------------------------------------------------------------ -----------
</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 $87,954,277. The
net unrealized appreciation of investments on a federal tax basis amounts to
$381,011 which is comprised of $457,707 appreciation and $76,696
depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($89,040,483) at May 31, 1998.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C> <C>
IO -- Interest Only
STRIP -- Separate Trading of Registered Interest and Principal
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
CORPORATE BONDS--29.8%
- -------------------------------------------------------------------------------
CAPITAL GOODS--2.2%
------------------------------------------------------------
TECHNOLOGY
------------------------------------------------------------
$ 5,000,000 International Business Machines Corp., 6.45%, 8/1/2007 $ 5,138,650
------------------------------------------------------------ ------------
CONSUMER STAPLES--7.4%
------------------------------------------------------------
CONSUMER NON-DURABLES
------------------------------------------------------------
5,000,000 CPC International, Inc., 6.15%, 1/15/2006 5,022,000
------------------------------------------------------------
2,500,000 Campbell Soup Co., 6.15%, 12/1/2002 2,530,900
------------------------------------------------------------
5,000,000 PepsiCo, Inc., 5.75%, 1/2/2003 4,949,500
------------------------------------------------------------
5,000,000 Sara Lee Corp., 5.95%, 1/20/2005 4,981,800
------------------------------------------------------------ ------------
Total Consumer Staples 17,484,200
------------------------------------------------------------ ------------
FINANCIAL--10.1%
------------------------------------------------------------
COMMERCIAL SERVICES
------------------------------------------------------------
1,650,000 Dow Jones & Co., 5.75%, 12/1/2000 1,648,070
------------------------------------------------------------ ------------
FINANCE
------------------------------------------------------------
5,000,000 Merrill Lynch & Co., Inc., 6.00%, 2/12/2003 4,986,200
------------------------------------------------------------
5,000,000 Sears Roebuck Acceptance Corp., 6.00%, 3/20/2003 4,972,315
------------------------------------------------------------ ------------
Total 9,958,515
------------------------------------------------------------ ------------
FINANCE--AUTOMOTIVE
------------------------------------------------------------
5,000,000 General Motors Acceptance Corp., 5.875%, 1/22/2003 4,949,800
------------------------------------------------------------
2,000,000 General Motors Acceptance Corp., 7.75%, 10/1/1999 2,056,480
------------------------------------------------------------ ------------
Total 7,006,280
------------------------------------------------------------ ------------
FINANCE--COMMERCIAL
------------------------------------------------------------
2,000,000 Commercial Credit Co., 5.90%, 9/1/2003 1,980,420
------------------------------------------------------------
1,000,000 SouthTrust Bank of Alabama, Birmingham, 7.00%, 11/15/2008 1,048,880
------------------------------------------------------------ ------------
Total 3,029,300
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
FINANCIAL--CONTINUED
------------------------------------------------------------
SECURITIES
------------------------------------------------------------
$ 2,000,000 Lehman Brothers, Inc., 7.375%, 1/15/2007 $ 2,122,280
------------------------------------------------------------ ------------
Total Financial 23,764,445
------------------------------------------------------------ ------------
HEALTH TECHNOLOGY--2.1%
------------------------------------------------------------
5,000,000 Fokker Vliegtuigen, 6.125%, 2/1/2004 4,983,350
------------------------------------------------------------ ------------
NON-ENERGY MINERALS--1.7%
------------------------------------------------------------
4,000,000 Aluminum Co. of America, 5.75%, 2/1/2001 3,984,720
------------------------------------------------------------ ------------
PROCESS INDUSTRIES--1.6%
------------------------------------------------------------
2,750,000 Air Products & Chemicals, Inc., 6.25%, 6/15/2003 2,774,558
------------------------------------------------------------
1,000,000 Cargill, Inc., 6.15%, 2/25/2008 1,012,340
------------------------------------------------------------ ------------
Total Process Industries 3,786,898
------------------------------------------------------------ ------------
TRANSPORTATION--0.4%
------------------------------------------------------------
880,000 Ford Motor Co., 8.875%, 4/1/2006 1,023,079
------------------------------------------------------------ ------------
UTILITIES--4.3%
------------------------------------------------------------
2,000,000 Bell Atlantic Corp., 5.875%, 9/1/2003 1,987,920
------------------------------------------------------------
5,000,000 National Rural Utilities Cooperative Finance Corp., 6.046%,
4/15/2003 5,002,200
------------------------------------------------------------
3,000,000 Southern California Edison Co., 5.875%, 1/15/2001 2,999,220
------------------------------------------------------------ ------------
Total Utilities 9,989,340
------------------------------------------------------------ ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $69,952,304) 70,154,682
------------------------------------------------------------ ------------
CORPORATE NOTES--12.0%
- -------------------------------------------------------------------------------
CAPITAL GOODS--1.7%
------------------------------------------------------------
TECHNOLOGY
------------------------------------------------------------
4,000,000 International Business Machines Corp., 6.037%, 8/7/2000 4,020,760
------------------------------------------------------------ ------------
CONSUMER SERVICES--1.7%
------------------------------------------------------------
4,000,000 Carnival Corp., 5.65%, 10/15/2000 3,982,360
------------------------------------------------------------ ------------
FINANCIAL--6.4%
------------------------------------------------------------
2,000,000 American General Finance Corp., 6.05%, 4/9/2003 1,992,920
------------------------------------------------------------
5,000,000 Ford Motor Credit Corp., 6.00%, 1/14/2003 4,972,900
------------------------------------------------------------
1,000,000 Associates Corp. of North America, 5.75%, 10/15/2003 983,050
------------------------------------------------------------
</TABLE>
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
CORPORATE NOTES--CONTINUED
- -------------------------------------------------------------------------------
FINANCIAL--CONTINUED
------------------------------------------------------------
$ 2,000,000 Associates Corp. of North America, 6.50%, 7/15/2002 $ 2,033,040
------------------------------------------------------------
1,000,000 Associates Corp. of North America, 6.875%, 8/1/2003 1,033,500
------------------------------------------------------------
2,000,000 Morgan Stanley, Dean Witter & Co., 6.25%, 3/15/2000 2,010,260
------------------------------------------------------------
2,000,000 Paccar Financial Corp., 6.02%, 3/15/2000 2,003,340
------------------------------------------------------------ ------------
Total Financial 15,029,010
------------------------------------------------------------ ------------
HEALTH TECHNOLOGY--0.4%
------------------------------------------------------------
1,000,000 Warner-Lambert Co., 5.75%, 1/15/2003 989,790
------------------------------------------------------------ ------------
UTILITIES--1.8%
------------------------------------------------------------
4,200,000 Northern States Power Co., 5.875%, 3/1/2003 4,194,162
------------------------------------------------------------ ------------
TOTAL CORPORATE NOTES (IDENTIFIED COST $28,154,980) 28,216,082
------------------------------------------------------------ ------------
U.S. GOVERNMENT AGENCIES--39.5%
- -------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK
------------------------------------------------------------
1,000,000 5.92%, 12/18/2002 1,007,160
------------------------------------------------------------ ------------
FEDERAL HOME LOAN BANK
------------------------------------------------------------
5,850,000 5.28%, 11/5/2003 5,721,944
------------------------------------------------------------
2,000,000 5.345%, 2/16/2001 1,983,200
------------------------------------------------------------
5,200,000 5.375%, 2/13/2001 5,160,324
------------------------------------------------------------
3,000,000 5.52%, 1/22/2001 2,985,930
------------------------------------------------------------
3,000,000 5.62%, 1/12/2001 2,995,530
------------------------------------------------------------
1,000,000 5.72%, 3/6/2003 998,230
------------------------------------------------------------
4,925,000 5.76%, 4/9/2003 4,922,193
------------------------------------------------------------
1,000,000 5.86%, 12/30/2002 1,004,780
------------------------------------------------------------
3,000,000 6.14%, 12/10/2004 3,057,312
------------------------------------------------------------
2,500,000 6.93%, 9/26/2002 2,525,700
------------------------------------------------------------
5,000,000 7.035%, 5/7/2002 5,066,350
------------------------------------------------------------ ------------
Total 36,421,493
------------------------------------------------------------ ------------
FEDERAL HOME LOAN MORTGAGE CORP.
------------------------------------------------------------
4,250,000 6.50%, 12/15/2021 4,263,898
------------------------------------------------------------
2,000,000 6.625%, 11/28/2005 2,011,360
------------------------------------------------------------
</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
------------------------------------------------------------
$ 314,132 6.85%, 11/15/2007 $ 324,897
------------------------------------------------------------
1,734,211 7.00%, 2/15/2008 1,754,761
------------------------------------------------------------
1,000,000 7.01%, 3/15/2006 1,008,960
------------------------------------------------------------
2,000,000 7.53%, 8/7/2006 2,084,440
------------------------------------------------------------
1,250,000 8.25%, 7/25/2005 1,288,625
------------------------------------------------------------ ------------
Total 12,736,941
------------------------------------------------------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
------------------------------------------------------------
2,500,000 Discount Note, 10/8/2004 1,734,525
------------------------------------------------------------
3,500,000 Discount Note, 4/8/2003 2,654,645
------------------------------------------------------------
1,000,000 5.36%, 2/16/2001 991,970
------------------------------------------------------------
2,000,000 6.09%, 8/21/2000 2,016,940
------------------------------------------------------------
1,100,000 6.31%, 11/1/2004 1,128,226
------------------------------------------------------------
3,716,165 6.75%, 5/25/2009 3,802,378
------------------------------------------------------------
1,500,000 6.82%, 12/13/2006 1,520,640
------------------------------------------------------------
2,820,000 7.02%, 4/10/2006 2,878,994
------------------------------------------------------------
5,000,000 7.09%, 3/13/2007 5,163,200
------------------------------------------------------------
5,000,000 7.27%, 2/14/2007 5,088,950
------------------------------------------------------------
10,000,000 7.55%, 3/27/2007 10,248,800
------------------------------------------------------------
283,209 7.75%, 1/25/2017 283,359
------------------------------------------------------------
2,000,000 7.07%, 10/24/2006 Series MTN 2,063,160
------------------------------------------------------------
3,000,000 7.11%, 3/20/2006 Series MTN 3,069,750
------------------------------------------------------------ ------------
Total 42,645,537
------------------------------------------------------------ ------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $91,526,986) 92,811,131
------------------------------------------------------------ ------------
U.S. TREASURY OBLIGATIONS--12.0%
- -------------------------------------------------------------------------------
U.S. TREASURY BONDS
------------------------------------------------------------
7,000,000 7.50%, 5/15/2002 7,467,180
------------------------------------------------------------
17,250,000 STRIP, IO, 2/15/2006 11,190,938
------------------------------------------------------------ ------------
Total 18,658,118
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--CONTINUED
- -------------------------------------------------------------------------------
U.S. TREASURY NOTES
------------------------------------------------------------
$ 3,300,000 5.50%, 1/31/2003 $ 3,289,770
------------------------------------------------------------
6,000,000 7.50%, 11/15/2001 6,357,060
------------------------------------------------------------ ------------
Total 9,646,830
------------------------------------------------------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST
$26,832,535) 28,304,948
------------------------------------------------------------ ------------
(A)REPURCHASE AGREEMENT--5.9%
- -------------------------------------------------------------------------------
13,793,116 Wachovia Bank of NC, NA, Winston-Salem, 5.44%, dated
5/29/1998, due 6/1/1998 (AT AMORTIZED COST) 13,793,116
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $230,259,921)(B) $233,279,959
------------------------------------------------------------ ------------
</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 $230,259,921.
The net unrealized appreciation of investments on a federal tax basis
amounts to $3,020,038 which is comprised of $3,529,562 appreciation and
$509,524 depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($235,105,899) at May 31, 1998.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
IO -- Interest Only
MTN -- Medium Term Note
-- Separate Trading of Registered Interest and Principal of
STRIPS Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
BALANCED FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--51.5%
- ------------------------------------------------------------------------------
BASIC INDUSTRIES--1.8%
------------------------------------------------------------
ALUMINUM
------------------------------------------------------------
5,500 Aluminum Co. of America $ 381,563
------------------------------------------------------------ ------------
CHEMICALS/PAPER
------------------------------------------------------------
16,000 Kimberly-Clark Corp. 793,000
------------------------------------------------------------ ------------
COMMERCIAL SERVICES
------------------------------------------------------------
24,000 Sysco Corp. 559,500
------------------------------------------------------------ ------------
METALS-COPPER
------------------------------------------------------------
1,000 Phelps Dodge Corp. 61,000
------------------------------------------------------------ ------------
Total Basic Industries 1,795,063
------------------------------------------------------------ ------------
CAPITAL GOODS--11.3%
------------------------------------------------------------
ELECTRICAL
------------------------------------------------------------
30,600 General Electric Co. 2,551,275
------------------------------------------------------------ ------------
TECHNOLOGY
------------------------------------------------------------
10,000 AMP, Inc. 380,000
------------------------------------------------------------
8,000 (c) BMC Software, Inc. 368,500
------------------------------------------------------------
10,400 Boeing Co. 495,300
------------------------------------------------------------
9,750 (c) Cisco Systems, Inc. 737,344
------------------------------------------------------------
4,500 Computer Associates International, Inc. 236,250
------------------------------------------------------------
4,000 Eastman Kodak Co. 285,500
------------------------------------------------------------
6,000 (c) Gateway 2000, Inc. 270,375
------------------------------------------------------------
7,000 Hewlett-Packard Co. 434,875
------------------------------------------------------------
10,700 Intel Corp. 764,381
------------------------------------------------------------
7,000 International Business Machines Corp. 821,625
------------------------------------------------------------
2,500 Lockheed Martin Corp. 280,625
------------------------------------------------------------
21,998 Lucent Technologies, Inc. 1,560,483
------------------------------------------------------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
------------------------------------------------------------
TECHNOLOGY--CONTINUED
------------------------------------------------------------
16,000 (c) Microsoft Corp. $ 1,357,000
------------------------------------------------------------
7,500 Motorola, Inc. 397,031
------------------------------------------------------------
2,500 Newell Co. 120,625
------------------------------------------------------------
6,000 TRW, Inc. 321,375
------------------------------------------------------------ ------------
Total 8,831,289
------------------------------------------------------------ ------------
Total Capital Goods 11,382,564
------------------------------------------------------------ ------------
CONSUMER CYCLICAL--3.0%
------------------------------------------------------------
MERCHANDISE/APPAREL
------------------------------------------------------------
3,500 Albertsons, Inc. 162,094
------------------------------------------------------------
7,500 Home Depot, Inc. 589,219
------------------------------------------------------------
2,000 Penney (J.C.) Co., Inc. 143,625
------------------------------------------------------------
6,000 Sears, Roebuck & Co. 370,875
------------------------------------------------------------
26,500 Wal-Mart Stores, Inc. 1,462,469
------------------------------------------------------------
7,800 Walgreen Co. 274,463
------------------------------------------------------------ ------------
Total Consumer Cyclical 3,002,745
------------------------------------------------------------ ------------
CONSUMER NON-DURABLES--0.3%
------------------------------------------------------------
6,000 Nike, Inc., Class B 276,000
------------------------------------------------------------ ------------
CONSUMER SERVICES--1.8%
------------------------------------------------------------
ENTERTAINMENT
------------------------------------------------------------
8,000 Disney (Walt) Co. 905,000
------------------------------------------------------------ ------------
RETAIL--RESTAURANTS
------------------------------------------------------------
6,500 Cracker Barrel Old Country Store 209,625
------------------------------------------------------------
11,000 McDonald's Corp. 721,875
------------------------------------------------------------ ------------
Total 931,500
------------------------------------------------------------ ------------
Total Consumer Services 1,836,500
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
CONSUMER STAPLES--13.4%
------------------------------------------------------------
FOOD & BEVERAGE
------------------------------------------------------------
16,000 Coca-Cola Co. $ 1,254,000
------------------------------------------------------------
5,000 Food Lion, Inc., Class B 48,438
------------------------------------------------------------
8,500 General Mills, Inc. 580,125
------------------------------------------------------------
27,000 PepsiCo, Inc. 1,101,938
------------------------------------------------------------
12,000 Sara Lee Corp. 706,500
------------------------------------------------------------ ------------
Total 3,691,001
------------------------------------------------------------ ------------
HEALTH CARE/DRUG
------------------------------------------------------------
24,800 American Home Products Corp. 1,198,150
------------------------------------------------------------
2,500 Bristol-Myers Squibb Co. 268,750
------------------------------------------------------------
14,000 Merck & Co., Inc. 1,638,875
------------------------------------------------------------
20,000 Pfizer, Inc. 2,096,250
------------------------------------------------------------
9,000 Schering Plough Corp. 753,188
------------------------------------------------------------ ------------
Total 5,955,213
------------------------------------------------------------ ------------
HOSPITAL SUPPLIES
------------------------------------------------------------
11,200 Johnson & Johnson 773,500
------------------------------------------------------------ ------------
HOUSEHOLD PRODUCTS
------------------------------------------------------------
5,000 Avon Products, Inc. 409,063
------------------------------------------------------------
11,000 Colgate-Palmolive Co. 957,000
------------------------------------------------------------
13,000 Dial Corp. 322,563
------------------------------------------------------------
10,000 Procter & Gamble Co. 839,375
------------------------------------------------------------ ------------
Total 2,528,001
------------------------------------------------------------ ------------
TOBACCO
------------------------------------------------------------
16,000 Philip Morris Cos., Inc. 598,000
------------------------------------------------------------ ------------
Total Consumer Staples 13,545,715
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
ENERGY--3.8%
------------------------------------------------------------
OIL SERVICES
------------------------------------------------------------
10,000 Amoco Corp. $ 418,125
------------------------------------------------------------
7,000 Chevron Corp. 559,125
------------------------------------------------------------
19,200 Exxon Corp. 1,353,600
------------------------------------------------------------
5,000 Halliburton Co. 236,875
------------------------------------------------------------
6,000 Mobil Corp. 468,000
------------------------------------------------------------
3,000 Schlumberger Ltd. 234,188
------------------------------------------------------------
10,000 Texaco, Inc. 577,500
------------------------------------------------------------ ------------
Total Energy 3,847,413
------------------------------------------------------------ ------------
FINANCIAL--12.0%
------------------------------------------------------------
BANKING
------------------------------------------------------------
11,000 American Express Co. 1,128,875
------------------------------------------------------------
7,500 American General Corp. 503,438
------------------------------------------------------------
9,000 BankAmerica Corp. 744,188
------------------------------------------------------------
17,000 Federal National Mortgage Association 1,017,875
------------------------------------------------------------
5,000 First Union Corp. 276,563
------------------------------------------------------------
11,000 NationsBank Corp. 833,250
------------------------------------------------------------
35,000 S&P Depositary Receipts Trust, ADR 3,823,750
------------------------------------------------------------
22,000 Torchmark Corp. 943,250
------------------------------------------------------------
2,700 Wells Fargo & Co. 976,050
------------------------------------------------------------ ------------
Total 10,247,239
------------------------------------------------------------ ------------
INSURANCE
------------------------------------------------------------
9,200 American International Group, Inc. 1,139,075
------------------------------------------------------------
3,300 General RE Corp. 725,588
------------------------------------------------------------ ------------
Total 1,864,663
------------------------------------------------------------ ------------
Total Financial 12,111,902
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
UTILITIES--4.1%
------------------------------------------------------------
COMMUNICATIONS
------------------------------------------------------------
18,600 Ameritech Corp. $ 789,338
------------------------------------------------------------
13,000 BellSouth Corp. 838,500
------------------------------------------------------------
10,200 (c) WorldCom, Inc. 464,100
------------------------------------------------------------ -----------
Total 2,091,938
------------------------------------------------------------ -----------
UTILITIES/ELECTRIC
------------------------------------------------------------
5,000 Duke Energy Corp. 288,125
------------------------------------------------------------
10,000 Florida Progress Corp. 412,500
------------------------------------------------------------
18,000 SBC Communications, Inc. 699,750
------------------------------------------------------------
9,000 SCANA Corp. 259,313
------------------------------------------------------------
15,000 Southern Co. 398,438
------------------------------------------------------------ -----------
Total 2,058,126
------------------------------------------------------------ -----------
Total Utilities 4,150,064
------------------------------------------------------------ -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $31,963,309) 51,947,966
------------------------------------------------------------ -----------
COLLATERALIZED MORTGAGE OBLIGATIONS--2.5%
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
------------------------------------------------------------
$ 750,000 Series 1403, Class M, 6.50%, 12/15/2021 752,453
------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
------------------------------------------------------------
283,209 Series 1992/137, Class DA, 7.75%, 1/25/2017 283,359
------------------------------------------------------------
1,000,000 Series G92-34, Class EC, 8.25%, 7/25/2005 1,030,900
------------------------------------------------------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
------------------------------------------------------------
$ 500,000 Series G93-32, Class J, 6.75%, 5/25/2009 $ 511,600
------------------------------------------------------------ ------------
Total 1,825,859
------------------------------------------------------------ ------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST
$2,336,712) 2,578,312
------------------------------------------------------------ ------------
CORPORATE BONDS--10.5%
- ------------------------------------------------------------------------------
BASIC INDUSTRY--1.0%
------------------------------------------------------------
CHEMICALS
------------------------------------------------------------
1,000,000 Air Products & Chemicals, Inc., 6.25%, 6/15/2003 1,008,930
------------------------------------------------------------ ------------
CONSUMER CYCLICAL--1.6%
------------------------------------------------------------
AUTOMOTIVE
------------------------------------------------------------
120,000 Ford Motor Co., 8.875%, 4/1/2006 139,511
------------------------------------------------------------ ------------
RETAIL SPECIALTY
------------------------------------------------------------
500,000 Penney (J.C.) Co., Inc., 6.375%, 9/15/2000 505,505
------------------------------------------------------------
1,000,000 Sears Roebuck Acceptance Corp., 6.00%, 3/20/2003 994,463
------------------------------------------------------------ ------------
Total 1,499,968
------------------------------------------------------------ ------------
Total Consumer Cyclical 1,639,479
------------------------------------------------------------ ------------
CONSUMER STAPLES--1.0%
------------------------------------------------------------
FOOD & BEVERAGE
------------------------------------------------------------
1,000,000 Cargill, Inc., 6.15%, 2/25/2008 1,012,340
------------------------------------------------------------ ------------
FINANCIAL--5.9%
------------------------------------------------------------
FINANCE
------------------------------------------------------------
425,000 National Rural Utilities Cooperative Finance Corp., 6.046%,
4/15/2002 425,187
------------------------------------------------------------ ------------
FINANCE--COMMERCIAL
------------------------------------------------------------
2,000,00 Commercial Credit Co., 5.90%, 9/1/2003 1,980,420
------------------------------------------------------------
1,000,000 Dow Jones & Co., 5.75%, 12/1/2000 998,830
------------------------------------------------------------ ------------
Total 2,979,250
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------
FINANCIAL--CONTINUED
------------------------------------------------------------
INSURANCE
------------------------------------------------------------
$ 500,000 Merrill Lynch & Co., Inc., 6.00%, 1/15/2001 $ 500,480
------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., 6.00%, 2/12/2003 997,240
------------------------------------------------------------ ------------
Total 1,497,720
------------------------------------------------------------ ------------
SECURITIES
------------------------------------------------------------
1,000,000 Lehman Brothers, Inc., 7.375%, 1/15/2007 1,061,140
------------------------------------------------------------ ------------
Total Financial 5,963,297
------------------------------------------------------------ ------------
UTILITIES--1.0%
------------------------------------------------------------
GAS & ELECTRIC
------------------------------------------------------------
1,000,000 Pacific Gas & Electric Co., 1st Ref. Mtg., 5.875%, 10/1/2005 988,970
------------------------------------------------------------ ------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $10,500,749) 10,613,016
------------------------------------------------------------ ------------
CORPORATE NOTES--7.3%
- ------------------------------------------------------------------------------
CONSUMER SERVICES
------------------------------------------------------------
1,000,000 Carnival Corp., 5.65%, 10/15/2000 995,590
------------------------------------------------------------ ------------
FINANCE
------------------------------------------------------------
1,000,000 American General Finance Corp., 6.05%, 4/9/2003 996,460
------------------------------------------------------------ ------------
FINANCE--COMMERCIAL
------------------------------------------------------------
600,000 Associates Corp. of North America, 6.50%, 7/15/2002 609,912
------------------------------------------------------------
500,000 Associates Corp. of North America, 6.875%, 8/1/2003 516,750
------------------------------------------------------------
2,850,000 NationsBank Corp., 5.80%, 1/31/2001 2,842,134
------------------------------------------------------------
1,000,000 Paccar Financial Corp., 6.02%, 3/15/2000 1,001,670
------------------------------------------------------------ ------------
Total 4,970,466
------------------------------------------------------------ ------------
HEALTH TECHNOLOGY
------------------------------------------------------------
400,000 Warner-Lambert Co., 5.75%, 1/15/2003 395,916
------------------------------------------------------------ ------------
TOTAL CORPORATE NOTES (IDENTIFIED COST $7,298,154) 7,358,432
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCIES--11.1%
- ------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK
------------------------------------------------------------
$1,000,000 5.92%, 12/18/2002 $ 1,007,160
------------------------------------------------------------
500,000 7.18%, 3/20/2007 509,865
------------------------------------------------------------ ------------
Total 1,517,025
------------------------------------------------------------ ------------
FEDERAL HOME LOAN BANK
------------------------------------------------------------
1,000,000 6.10%, 10/9/2002 1,013,717
------------------------------------------------------------
1,000,000 6.93%, 9/26/2002 1,010,280
------------------------------------------------------------
1,550,000 5.52%, 1/22/2001 1,542,731
------------------------------------------------------------ ------------
Total 3,566,728
------------------------------------------------------------ ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
------------------------------------------------------------
1,000,000 Deb., 6.67%, 12/14/2005 1,000,600
------------------------------------------------------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
------------------------------------------------------------
1,500,000 Discount Note, 10/8/2004 1,040,715
------------------------------------------------------------
1,000,000 6.09%, 8/21/2000 1,008,470
------------------------------------------------------------
1,000,000 6.70%, 12/12/2006 1,021,950
------------------------------------------------------------
500,000 6.82%, 12/13/2006 506,880
------------------------------------------------------------
510,000 7.54%, 11/2/2006 514,636
------------------------------------------------------------ ------------
Total 4,092,651
------------------------------------------------------------ ------------
TENNESSEE VALLEY AUTHORITY
------------------------------------------------------------
1,000,000 6.00%, 11/1/2000 1,006,920
------------------------------------------------------------ ------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $11,084,881) 11,183,924
------------------------------------------------------------ ------------
U.S. TREASURY OBLIGATIONS--11.5%
- ------------------------------------------------------------------------------
U.S. TREASURY BONDS
------------------------------------------------------------
1,000,000 7.50%, 5/15/2002 1,066,740
------------------------------------------------------------ ------------
U.S. TREASURY NOTES
------------------------------------------------------------
2,800,000 Receipt IO, 02/15/2006 1,816,500
------------------------------------------------------------
2,500,000 STRIPS, IO, 05/15/2001 2,127,325
------------------------------------------------------------
2,000,000 5.00%, 1/31/1999 1,993,880
------------------------------------------------------------
</TABLE>
<PAGE>
BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
------------------------------------------------------------
$1,000,000 5.625%, 2/28/2001 $ 1,002,020
------------------------------------------------------------
1,000,000 5.875%, 8/15/1998 1,001,450
------------------------------------------------------------
1,000,000 6.25%, 2/15/2003 1,026,710
------------------------------------------------------------
500,000 6.25%, 8/31/2000 507,465
------------------------------------------------------------
1,000,000 7.50%, 11/15/2001 1,059,501
------------------------------------------------------------ ------------
Total 10,534,851
------------------------------------------------------------ ------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST
$11,178,289) 11,601,591
------------------------------------------------------------ ------------
(A)REPURCHASE AGREEMENT--5.0%
- ------------------------------------------------------------------------------
5,041,077 Wachovia Bank of NC, NA, Winston-Salem, 5.44%, dated
5/29/1998, due 6/1/1998 (AT AMORTIZED COST) 5,041,077
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $79,403,171)(B) $100,324,318
------------------------------------------------------------ ------------
</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 $79,403,171. The
net unrealized appreciation of investments on a federal tax basis amounts to
$20,921,147 which is comprised of $21,201,875 appreciation and $280,728
depreciation at May 31, 1998.
(c) Non-income producing security.
Note: The categories of investments are shown as a percentage of net assets
($101,116,991) at May 31, 1998.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C> <C>
ADR -- American Depository Receipt
IO -- Interest Only
Separate Trading of Registered Interest & Principal of
STRIP -- Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
VALUE FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--96.5%
- ------------------------------------------------------------------------------
BANKING--14.8%
------------------------------------------------------------
75,000 American General Corp. $ 5,034,375
------------------------------------------------------------
60,000 Banc One Corp. 3,307,500
------------------------------------------------------------
17,000 Bank of New York Co., Inc. 1,039,125
------------------------------------------------------------
35,000 BankAmerica Corp. 2,894,063
------------------------------------------------------------
15,000 Bankers Trust New York Corp. 1,852,500
------------------------------------------------------------
18,000 Citicorp 2,684,250
------------------------------------------------------------
13,000 First Chicago NBD Corp. 1,136,688
------------------------------------------------------------
50,000 First Union Corp. 2,765,625
------------------------------------------------------------
12,000 Fleet Financial Group, Inc. 984,000
------------------------------------------------------------
8,000 J.P. Morgan & Co., Inc. 993,500
------------------------------------------------------------
15,000 Merrill Lynch & Co., Inc. 1,342,500
------------------------------------------------------------
40,000 NationsBank Corp. 3,030,000
------------------------------------------------------------
3,900 Wells Fargo & Co. 1,409,850
------------------------------------------------------------ ------------
Total Banking 28,473,976
------------------------------------------------------------ ------------
BASIC INDUSTRY--6.1%
------------------------------------------------------------
ALUMINUM
------------------------------------------------------------
40,000 Aluminum Co. of America 2,775,000
------------------------------------------------------------ ------------
CHEMICALS
------------------------------------------------------------
75,000 Nalco Chemical Co. 2,812,500
------------------------------------------------------------ ------------
PAPER
------------------------------------------------------------
55,000 Weyerhaeuser Co. 2,794,688
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
BASIC INDUSTRY--CONTINUED
------------------------------------------------------------
PROCESS INDUSTRIES
------------------------------------------------------------
10,000 Dow Chemical Co. $ 968,750
------------------------------------------------------------
75,000 Mead Corp. 2,334,375
------------------------------------------------------------ ------------
Total 3,303,125
------------------------------------------------------------ ------------
Total Basic Industry 11,685,313
------------------------------------------------------------ ------------
CAPITAL GOODS--7.7%
------------------------------------------------------------
ELECTRICAL EQUIPMENT/MACHINERY
------------------------------------------------------------
30,000 Allied-Signal, Inc. 1,282,500
------------------------------------------------------------
17,000 Caterpillar, Inc. 933,938
------------------------------------------------------------
25,000 Emerson Electric Co. 1,518,750
------------------------------------------------------------
75,000 Ingersoll-Rand Co. 3,379,688
------------------------------------------------------------
40,000 TRW, Inc. 2,142,500
------------------------------------------------------------ ------------
Total 9,257,376
------------------------------------------------------------ ------------
INDUSTRIAL
------------------------------------------------------------
170,000 Cooper Tire & Rubber Co. 4,026,875
------------------------------------------------------------
20,000 Goodyear Tire & Rubber Co. 1,437,500
------------------------------------------------------------ ------------
Total 5,464,375
------------------------------------------------------------ ------------
Total Capital Goods 14,721,751
------------------------------------------------------------ ------------
CONSUMER CYCLICAL--6.7%
------------------------------------------------------------
AUTOS/LODGING/OTHER
------------------------------------------------------------
28,000 Chrysler Corp. 1,557,500
------------------------------------------------------------
60,000 Ford Motor Co. 3,112,500
------------------------------------------------------------
35,000 General Motors Corp. 2,517,813
------------------------------------------------------------ ------------
Total 7,187,813
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
------------------------------------------------------------
RETAIL SPECIALITY/MERCHANDISING
------------------------------------------------------------
60,000 Penney (J.C.) Co., Inc. $ 4,308,750
------------------------------------------------------------
20,000 Sears, Roebuck & Co. 1,236,250
------------------------------------------------------------ ------------
Total 5,545,000
------------------------------------------------------------ ------------
Total Consumer Cyclical 12,732,813
------------------------------------------------------------ ------------
CONSUMER SERVICES--5.2%
------------------------------------------------------------
FOOD PROCESSING
------------------------------------------------------------
90,000 Sysco Corp. 2,098,125
------------------------------------------------------------
30,000 McDonald's Corp. 1,968,750
------------------------------------------------------------ ------------
Total 4,066,875
------------------------------------------------------------ ------------
ENTERTAINMENT
------------------------------------------------------------
33,000 Disney (Walt) Co. 3,733,125
------------------------------------------------------------
28,000 Time Warner, Inc. 2,178,750
------------------------------------------------------------ ------------
Total 5,911,875
------------------------------------------------------------ ------------
Total Consumer Services 9,978,750
------------------------------------------------------------ ------------
CONSUMER STAPLES--5.1%
------------------------------------------------------------
HEALTH CARE/DRUG
------------------------------------------------------------
35,000 Bristol-Myers Squibb Co. 3,762,500
------------------------------------------------------------
29,000 Columbia/HCA Healthcare Corp. 947,938
------------------------------------------------------------
22,000 Pharmacia & Upjohn, Inc. 972,125
------------------------------------------------------------ ------------
Total 5,682,563
------------------------------------------------------------ ------------
CONSUMER DURABLES
------------------------------------------------------------
18,000 Eastman Kodak Co. 1,284,750
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
CONSUMER STAPLES--CONTINUED
------------------------------------------------------------
CONSUMER NON-DURABLES
------------------------------------------------------------
25,000 PepsiCo, Inc. $ 1,020,313
------------------------------------------------------------
60,000 RJR Nabisco Holdings Corp. 1,691,250
------------------------------------------------------------ ------------
Total 2,711,563
------------------------------------------------------------ ------------
Total Consumer Staples 9,678,876
------------------------------------------------------------ ------------
ENERGY--15.0%
------------------------------------------------------------
OIL SERVICES
------------------------------------------------------------
60,000 Amoco Corp. 2,508,750
------------------------------------------------------------
35,000 Atlantic Richfield Co. 2,760,625
------------------------------------------------------------
35,000 Chevron Corp. 2,795,625
------------------------------------------------------------
120,000 Exxon Corp. 8,460,000
------------------------------------------------------------
45,000 Mobil Corp. 3,510,000
------------------------------------------------------------
105,000 Royal Dutch Petroleum Co., ADR 5,886,563
------------------------------------------------------------
50,000 Texaco, Inc. 2,887,500
------------------------------------------------------------ ------------
Total Energy 28,809,063
------------------------------------------------------------ ------------
INSURANCE/MISCELLANEOUS--10.3%
------------------------------------------------------------
30,000 Allstate Corp. 2,823,750
------------------------------------------------------------
15,000 Associates First Capital Corp., Class A 1,122,188
------------------------------------------------------------
35,000 Chubb Corp. 2,784,688
------------------------------------------------------------
31,000 Federal Home Loan Mortgage Corp. 1,410,500
------------------------------------------------------------
30,000 First Data Corp., Class 997,500
------------------------------------------------------------
80,000 Jefferson-Pilot Corp. 4,580,000
------------------------------------------------------------
15,000 National City Corp. 1,016,250
------------------------------------------------------------
34,000 Norwest Corp. 1,321,750
------------------------------------------------------------
60,000 Travelers Group, Inc. 3,660,000
------------------------------------------------------------ ------------
Total Insurance/Miscellaneous 19,716,626
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
TECHNOLOGY--9.7%
------------------------------------------------------------
75,000 AMP, Inc. $ 2,850,000
------------------------------------------------------------
60,000 Boeing Co. 2,857,500
------------------------------------------------------------
47,000 International Business Machines Corp. 5,516,625
------------------------------------------------------------
27,000 Lockheed Martin Corp. 3,030,750
------------------------------------------------------------
40,000 Motorola, Inc. 2,117,500
------------------------------------------------------------
20,000 Raytheon Co., Class B 1,093,750
------------------------------------------------------------
12,000 United Technologies Corp. 1,128,000
------------------------------------------------------------ ------------
Total Technology 18,594,125
------------------------------------------------------------ ------------
TRANSPORTATION--2.3%
------------------------------------------------------------
40,000 USFreightways Corp. 1,260,000
------------------------------------------------------------
65,000 Union Pacific Corp. 3,144,375
------------------------------------------------------------ ------------
Total Transportation 4,404,375
------------------------------------------------------------ ------------
UTILITIES--13.6%
------------------------------------------------------------
COMMUNICATIONS
------------------------------------------------------------
75,000 AT&T Corp. 4,565,625
------------------------------------------------------------
60,000 BellSouth Corp. 3,870,000
------------------------------------------------------------
35,000 CBS Corp. 1,111,250
------------------------------------------------------------
19,000 Sprint Corp. 1,363,250
------------------------------------------------------------
85,000 (c) WorldCom, Inc. 3,867,500
------------------------------------------------------------ ------------
Total 14,777,625
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
VALUE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
UTILITIES--CONTINUED
------------------------------------------------------------
ELECTRICAL
------------------------------------------------------------
30,000 Duke Energy Corp. $ 1,728,750
------------------------------------------------------------
105,000 SCANA Corp. 3,025,313
------------------------------------------------------------
150,000 Southern Co. 3,984,375
------------------------------------------------------------
60,000 TECO Energy, Inc. 1,571,250
------------------------------------------------------------
21,000 U.S. West, Inc. 1,065,750
------------------------------------------------------------ ------------
Total 11,375,438
------------------------------------------------------------ ------------
Total Utilities 26,153,063
------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $159,356,263) 184,948,731
------------------------------------------------------------ ------------
(A)REPURCHASE AGREEMENT--3.3%
- ------------------------------------------------------------------------------
$6,352,473 Wachovia Bank of NC, 5.44%, dated 5/29/1998, due 6/1/1998
(AT AMORTIZED COST) 6,352,473
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $165,708,736)(B) $191,301,204
------------------------------------------------------------ ------------
</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 $165,708,736.
The net unrealized appreciation of investments on a federal tax basis
amounts to $25,592,468 which is comprised of $28,582,381 appreciation and
$2,989,913 depreciation at May 31, 1998.
(c) Non-income producing security.
Note: The categories of investments are shown as a percentage of net assets
($191,751,405) at May 31, 1998.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
<PAGE>
GROWTH FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--99.3%
- ------------------------------------------------------------------------------
BASIC INDUSTRIES--3.2%
------------------------------------------------------------
CHEMICALS/METALS
------------------------------------------------------------
96,000 Du Pont (E.I.) de Nemours & Co. $ 7,392,000
------------------------------------------------------------
51,000 Monsanto Co. 2,824,125
------------------------------------------------------------ ------------
Total Basic Industries 10,216,125
------------------------------------------------------------ ------------
CAPITAL GOODS--7.1%
------------------------------------------------------------
EQUIPMENT--MACHINERY
------------------------------------------------------------
233,000 General Electric Co. 19,426,375
------------------------------------------------------------
24,000 Illinois Tool Works, Inc. 1,584,000
------------------------------------------------------------
33,000 Pitney Bowes, Inc. 1,551,000
------------------------------------------------------------ ------------
Total Capital Goods 22,561,375
------------------------------------------------------------ ------------
CONSUMER CYCLICAL--7.5%
------------------------------------------------------------
ENTERTAINMENT
------------------------------------------------------------
41,000 Mattel, Inc. 1,552,875
------------------------------------------------------------ ------------
MERCHANDISE/MASS MERCHANDISING
------------------------------------------------------------
30,000 (a) Costco Cos., Inc. 1,736,250
------------------------------------------------------------
37,000 Dayton-Hudson Corp. 1,715,875
------------------------------------------------------------
192,000 Wal-Mart Stores, Inc. 10,596,000
------------------------------------------------------------ ------------
Total 14,048,125
------------------------------------------------------------ ------------
MERCHANDISE/SPECIALTY
------------------------------------------------------------
31,000 Gap (The), Inc. 1,674,000
------------------------------------------------------------
62,000 Home Depot, Inc. 4,870,875
------------------------------------------------------------
47,000 Walgreen Co. 1,653,813
------------------------------------------------------------ ------------
Total 8,198,688
------------------------------------------------------------ ------------
Total Consumer Cyclical 23,799,688
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL--9.6%
------------------------------------------------------------
TOBACCO/COSMETICS/HOUSEHOLD
------------------------------------------------------------
25,000 Colgate-Palmolive Co. $ 2,175,000
------------------------------------------------------------
47,000 Gillette Co. 5,504,875
------------------------------------------------------------
47,000 Kimberly-Clark Corp. 2,329,438
------------------------------------------------------------
174,000 Philip Morris Cos., Inc. 6,503,250
------------------------------------------------------------
114,000 Procter & Gamble Co. 9,568,875
------------------------------------------------------------
54,000 Unilever N.V., ADR 4,262,625
------------------------------------------------------------ ------------
Total Consumer Non-Cyclical 30,344,063
------------------------------------------------------------ ------------
CONSUMER SERVICES--1.0%
------------------------------------------------------------
74,000 (a) Cendant Corp. 1,604,875
------------------------------------------------------------
24,000 Gannett Co., Inc. 1,582,500
------------------------------------------------------------ ------------
Total Consumer Services 3,187,375
------------------------------------------------------------ ------------
FOOD & BEVERAGE--10.3%
------------------------------------------------------------
40,000 Anheuser-Busch Cos., Inc. 1,837,500
------------------------------------------------------------
29,000 BestFoods 1,636,688
------------------------------------------------------------
39,000 Campbell Soup Co. 2,125,500
------------------------------------------------------------
190,000 Coca-Cola Co. 14,891,250
------------------------------------------------------------
55,000 ConAgra, Inc. 1,608,750
------------------------------------------------------------
29,000 Heinz (H.J.) Co. 1,538,813
------------------------------------------------------------
39,000 Kellogg Co. 1,611,188
------------------------------------------------------------
129,000 PepsiCo, Inc. 5,264,813
------------------------------------------------------------
40,000 Sara Lee Corp. 2,355,000
------------------------------------------------------------ ------------
Total Food & Beverage 32,869,502
------------------------------------------------------------ ------------
HEALTHCARE/DRUG--15.9%
------------------------------------------------------------
92,000 American Home Products Corp. 4,444,750
------------------------------------------------------------
84,000 Bristol-Myers Squibb Co. 9,030,000
------------------------------------------------------------
76,000 Lilly (Eli) & Co. 4,669,250
------------------------------------------------------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
HEALTHCARE/DRUG--CONTINUED
------------------------------------------------------------
102,000 Merck & Co., Inc. $ 11,940,375
------------------------------------------------------------
110,000 Pfizer, Inc. 11,529,375
------------------------------------------------------------
62,000 Schering Plough Corp. 5,188,625
------------------------------------------------------------
57,000 Warner-Lambert Co. 3,637,313
------------------------------------------------------------ ------------
Total Healthcare/Drug 50,439,688
------------------------------------------------------------ ------------
HOSPITAL SUPPLIES--3.9%
------------------------------------------------------------
54,000 Abbott Laboratories 4,006,125
------------------------------------------------------------
95,000 Johnson & Johnson 6,560,938
------------------------------------------------------------
33,000 Medtronic, Inc. 1,835,625
------------------------------------------------------------ ------------
Total Hospital Supplies 12,402,688
------------------------------------------------------------ ------------
ENERGY--1.5%
------------------------------------------------------------
OIL SERVICES
------------------------------------------------------------
33,000 Halliburton Co. 1,563,375
------------------------------------------------------------
42,000 Schlumberger Ltd. 3,278,625
------------------------------------------------------------ ------------
Total Energy 4,842,000
------------------------------------------------------------ ------------
INSURANCE/MISCELLANEOUS--7.5%
------------------------------------------------------------
39,000 American Express Co. 4,002,375
------------------------------------------------------------
60,000 American International Group, Inc. 7,428,750
------------------------------------------------------------
90,000 Federal National Mortgage Association 5,388,750
------------------------------------------------------------
32,000 Franklin Resources, Inc. 1,564,000
------------------------------------------------------------
18,000 Marsh & McLennan Cos., Inc. 1,576,125
------------------------------------------------------------
51,000 Morgan Stanley, Dean Witter & Co. 3,981,188
------------------------------------------------------------ ------------
Total Insurance/Miscellaneous 23,941,188
------------------------------------------------------------ ------------
BANKING--2.3%
------------------------------------------------------------
36,000 Chase Manhattan Corp. 4,893,750
------------------------------------------------------------
63,000 U.S. Bancorp, Inc. 2,464,875
------------------------------------------------------------ ------------
Total Banking 7,358,625
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
TECHNOLOGY--22.8%
------------------------------------------------------------
87,000 (a) Cisco Systems, Inc. $ 6,579,375
------------------------------------------------------------
129,000 Compaq Computer Corp. 3,523,313
------------------------------------------------------------
46,000 Computer Associates International, Inc. 2,415,000
------------------------------------------------------------
55,000 (a) Dell Computer Corp. 4,532,344
------------------------------------------------------------
88,000 Hewlett-Packard Co. 5,467,000
------------------------------------------------------------
139,000 Intel Corp. 9,929,813
------------------------------------------------------------
111,000 Lucent Technologies, Inc. 7,874,063
------------------------------------------------------------
208,000 (a) Microsoft Corp. 17,641,000
------------------------------------------------------------
29,000 Minnesota Mining & Manufacturing Co. 2,686,125
------------------------------------------------------------
45,000 Northern Telecom Ltd. 2,880,000
------------------------------------------------------------
84,000 (a) Oracle Corp. 1,984,500
------------------------------------------------------------
27,000 Texas Instruments, Inc. 1,387,125
------------------------------------------------------------
49,000 Tyco International, Ltd. 2,713,375
------------------------------------------------------------
28,000 Xerox Corp. 2,877,000
------------------------------------------------------------ ------------
Total Technology 72,490,033
------------------------------------------------------------ ------------
UTILITIES--6.1%
------------------------------------------------------------
COMMUNICATIONS
------------------------------------------------------------
40,000 (a) Airtouch Communications, Inc. 1,905,000
------------------------------------------------------------
77,000 Ameritech Corp. 3,267,688
------------------------------------------------------------
55,000 Bell Atlantic Corp. 5,039,375
------------------------------------------------------------
131,000 SBC Communications, Inc. 5,092,625
------------------------------------------------------------ ------------
Total 15,304,688
------------------------------------------------------------ ------------
ELECTRICAL
------------------------------------------------------------
68,000 GTE Corp. 3,965,243
------------------------------------------------------------ ------------
Total Utilities 19,269,931
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
TRANSPORTATION--0.5%
------------------------------------------------------------
54,000 Southwest Airlines Co. $ 1,441,126
------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $228,455,483) 315,163,407
------------------------------------------------------------ ------------
(B)REPURCHASE AGREEMENTS--1.1%
- ------------------------------------------------------------------------------
3,431,105 Wachovia Bank of NC, NA, Winston-Salem, 5.44%, dated
5/29/1998, due 6/1/1998 (AT AMORTIZED COST) 3,431,105
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $231,886,588)(C) $318,594,512
------------------------------------------------------------ ------------
</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 $231,886,588.
The net unrealized appreciation of investments on a federal tax basis
amounts to $86,707,924 which is comprised of $90,229,489 appreciation and
$3,521,565 depreciation at May 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($317,684,984) at May 31, 1998.
The following acronym is used throughout this portfolio:
ADR -- American Depository Receipt
(See Notes which are an integral part of the Financial Statements)
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY LIMITED
MONEY MATURITY FIXED
MARKET GOVERNMENT INCOME
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
ASSETS:
- ------------------------------------------------------------
Investments in securities, at value $278,907,754 $88,335,288 $233,279,959
- ------------------------------------------------------------
Cash -- 1,545 --
- ------------------------------------------------------------
Income receivable 182,173 1,080,539 3,029,636
- ------------------------------------------------------------
Receivables for shares sold -- -- --
- ------------------------------------------------------------
Other assets -- 2,677 --
- ------------------------------------------------------------ ------------ ----------- ------------
Total assets 279,089,927 89,420,049 236,309,595
- ------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------
Payable for investments purchased -- -- --
- ------------------------------------------------------------
Payable for shares redeemed -- -- --
- ------------------------------------------------------------
Income distribution payable 1,127,166 358,183 1,029,867
- ------------------------------------------------------------
Payable to Bank 65,367 -- --
- ------------------------------------------------------------
Accrued expenses 48,154 21,383 173,829
- ------------------------------------------------------------ ------------ ----------- ------------
Total liabilities 1,240,687 379,566 1,203,696
- ------------------------------------------------------------ ------------ ----------- ------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------
Paid in capital $277,849,240 $88,876,166 $235,348,769
- ------------------------------------------------------------
Net unrealized appreciation of investments -- 381,011 3,020,038
- ------------------------------------------------------------
Accumulated net realized gain (loss) on investments -- (235,640) (3,266,692)
- ------------------------------------------------------------
Undistributed net investment income -- 18,946 3,784
- ------------------------------------------------------------ ------------ ----------- ------------
Total Net Assets $277,849,240 $89,040,483 $235,105,899
- ------------------------------------------------------------ ------------ ----------- ------------
NET ASSET VALUE:*
(net assets / shares outstanding)
- ------------------------------------------------------------
Trust Shares $1.00 $9.97 $10.42
Investment Shares $1.00 $9.97 $10.42
- ------------------------------------------------------------ ------------ ----------- ------------
REDEMPTION PROCEEDS PER SHARE*
- ------------------------------------------------------------
Trust Shares $1.00 $9.97 $10.42
Investment Shares $1.00 $9.67** $10.11**
- ------------------------------------------------------------ ------------ ----------- ------------
NET ASSETS:
- ------------------------------------------------------------
Trust Shares $232,608,210 $57,555,627 $215,689,976
Investment Shares $45,241,030 $31,484,856 $ 19,415,923
- ------------------------------------------------------------ ------------ ----------- ------------
SHARES OUTSTANDING:
- ------------------------------------------------------------
Trust Shares 232,608,210 5,775,163 20,696,169
Investment Shares 45,241,030 3,159,296 1,863,027
- ------------------------------------------------------------ ------------ ----------- ------------
TOTAL SHARES OUTSTANDING 277,849,240 8,934,459 22,559,196
- ------------------------------------------------------------ ------------ ----------- ------------
Investments, at identified cost $278,907,754 $87,954,277 $230,259,921
- ------------------------------------------------------------ ------------ ----------- ------------
Investments, at tax cost $278,907,754 $87,954,277 $230,259,921
- ------------------------------------------------------------ ------------ ----------- ------------
</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>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF ASSETS AND LIABILITIES
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
ASSETS:
- ------------------------------------------------------------
Investments in securities, at value $100,324,318 $191,301,204 $318,594,512
- ------------------------------------------------------------
Cash -- 79,850 --
- ------------------------------------------------------------
Income receivable 709,953 545,387 309,787
- ------------------------------------------------------------
Receivable for shares sold 156,395 37,644 37,644
- ------------------------------------------------------------
Deferred expenses 5,012 4,232 --
- ------------------------------------------------------------ ---------- ---------- -----------
Total assets 101,195,678 191,968,317 318,941,943
- ------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------
Payable for investments purchased -- -- 848,155
- ------------------------------------------------------------
Payable for shares redeemed -- 81,000 92,000
- ------------------------------------------------------------
Income distribution payable -- 399 3,633
- ------------------------------------------------------------
Capital gain distribution payable -- 3,018 --
- ------------------------------------------------------------
Payable to Bank 13,436 -- 8,067
- ------------------------------------------------------------
Accrued expenses 65,251 132,495 305,104
- ------------------------------------------------------------ ----------- ----------- -----------
Total liabilities 78,687 216,912 1,256,959
- ------------------------------------------------------------ ----------- ----------- -----------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------
Paid in capital $ 77,842,047 $147,317,083 $209,042,456
- ------------------------------------------------------------
Net unrealized appreciation of investments 20,921,147 25,592,468 86,707,924
- ------------------------------------------------------------
Accumulated net realized gain (loss) on investments 2,003,917 18,489,880 21,932,179
- ------------------------------------------------------------
Undistributed net investment income 349,880 351,974 2,425
- ------------------------------------------------------------ ----------- ----------- -----------
Total Net Assets $101,116,991 $191,751,405 $317,684,984
- ------------------------------------------------------------ ----------- ----------- -----------
NET ASSET VALUE:*
(net assets / shares outstanding)
- ------------------------------------------------------------
Trust Shares $14.43 $17.14 $17.43
Investment Shares $14.43 $17.14 $17.43
- ------------------------------------------------------------ ----------- ----------- -----------
REDEMPTION PROCEEDS PER SHARE*
- ------------------------------------------------------------
Trust Shares $14.43 $17.14 $17.43
Investment Shares $14.00** $16.63** $16.91**
- ------------------------------------------------------------ ----------- ----------- -----------
NET ASSETS:
- ------------------------------------------------------------
Trust Shares $ 8,018,569 $154,480,159 $215,416,617
Investment Shares $ 93,098,422 $ 37,271,246 $102,268,367
- ------------------------------------------------------------ ----------- ---------- -----------
SHARES OUTSTANDING:
- ------------------------------------------------------------
Trust Shares 555,621 9,014,929 12,361,509
Investment Shares 6,451,151 2,175,021 5,868,745
- ------------------------------------------------------------ ----------- ----------- -----------
TOTAL SHARES OUTSTANDING 7,006,772 11,189,950 18,230,254
- ------------------------------------------------------------ ----------- ----------- -----------
Investments, at identified cost $ 79,403,171 $165,708,736 $231,886,588
- ------------------------------------------------------------ ----------- ----------- -----------
Investments, at tax cost $ 79,403,171 $165,708,736 $231,886,588
- ------------------------------------------------------------ ----------- ----------- -----------
</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>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIMITED
TREASURY MATURITY
MONEY GOVERNMENT FIXED INCOME
MARKET FUND FUND FUND
----------- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------
Interest $6,775,811 $2,483,921 $6,804,931
- -----------------------------------------------------------
Dividends -- -- --
- ----------------------------------------------------------- ----------- --------- ------------
Total income 6,775,811 2,483,921 6,804,931
- -----------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------
Investment advisory fee 649,588 300,799 806,289
- -----------------------------------------------------------
Administrative personnel and services fee 140,710 46,616 116,499
- -----------------------------------------------------------
Custodian fees 25,718 9,841 22,278
- -----------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 38,375 3,537 13,040
- -----------------------------------------------------------
Trustees' fees 872 235 350
- -----------------------------------------------------------
Auditing fees 12,554 4,706 10,328
- -----------------------------------------------------------
Legal fees 2,300 550 1,300
- -----------------------------------------------------------
Portfolio accounting fees 28,558 4,800 18,872
- -----------------------------------------------------------
Distribution services fee 101,227 -- --
- -----------------------------------------------------------
Shareholder services fee--Investment Shares -- 2,420 1,461
- -----------------------------------------------------------
Share registration costs 26,920 5,482 11,590
- -----------------------------------------------------------
Printing and postage 5,604 1,640 4,861
- -----------------------------------------------------------
Insurance premiums 2,458 -- --
- -----------------------------------------------------------
Miscellaneous -- 935 --
- ----------------------------------------------------------- ----------- --------- ------------
Total expenses 1,034,884 381,561 1,006,868
- -----------------------------------------------------------
Waiver of investment advisory fee (324,794) -- --
- ----------------------------------------------------------- ----------- --------- ------------
Net expenses 710,090 381,561 1,006,868
- ----------------------------------------------------------- ----------- --------- ------------
Net investment income 6,065,721 2,102,360 5,798,063
- ----------------------------------------------------------- ----------- --------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------
Net realized gain (loss) on investments -- 102,055 424,490
- -----------------------------------------------------------
Change in unrealized appreciation (depreciation) of
investments -- 74,960 312,862
- ----------------------------------------------------------- ----------- --------- ------------
Net realized and unrealized gain (loss) on investments -- 177,015 737,352
- ----------------------------------------------------------- ----------- --------- ------------
Change in net assets resulting from operations $6,065,721 $2,279,375 $6,535,415
- ----------------------------------------------------------- ----------- --------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED VALUE GROWTH
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------
Interest $1,368,356 $ 187,203 $ 104,134
- -----------------------------------------------------------
Dividends 363,452 1,862,220 1,694,211
- ----------------------------------------------------------- ----------- ---------- ------------
Total income 1,731,808 2,049,423 1,798,345
- -----------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------
Investment advisory fee 369,586 697,921 1,173,387
- -----------------------------------------------------------
Administrative personnel and services fee 50,068 94,506 158,957
- -----------------------------------------------------------
Custodian fees 10,486 18,695 38,043
- -----------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 5,926 22,085 29,133
- -----------------------------------------------------------
Trustees' fees 560 -- 1,176
- -----------------------------------------------------------
Auditing fees 6,466 5,940 8,745
- -----------------------------------------------------------
Legal fees 400 300 1,695
- -----------------------------------------------------------
Portfolio accounting fees 11,691 23,461 42,811
- -----------------------------------------------------------
Distribution services fee -- -- --
- -----------------------------------------------------------
Shareholder services fee--Investment Shares 7,025 2,823 7,829
- -----------------------------------------------------------
Share registration costs 9,693 14,033 17,394
- -----------------------------------------------------------
Printing and postage 4,000 -- 3,157
- -----------------------------------------------------------
Insurance premiums -- -- --
- -----------------------------------------------------------
Miscellaneous 1,300 703 --
- ----------------------------------------------------------- ----------- ---------- ------------
Total expenses 477,201 880,467 1,482,327
- -----------------------------------------------------------
Waiver of investment advisory fee -- -- --
- ----------------------------------------------------------- ----------- ---------- ------------
Net expenses 477,201 880,467 1,482,327
- ----------------------------------------------------------- ----------- ---------- ------------
Net investment income 1,254,607 1,168,956 316,018
- ----------------------------------------------------------- ----------- ---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------
Net realized gain (loss) on investments 2,003,858 18,489,475 22,022,138
- -----------------------------------------------------------
Change in unrealized appreciation (depreciation) of
investments 4,822,895 (4,036,018) 19,192,686
- ----------------------------------------------------------- ----------- ---------- ------------
Net realized and unrealized gain (loss) on investments 6,826,753 14,453,457 41,214,824
- ----------------------------------------------------------- ----------- ---------- ------------
Change in net assets resulting from operations $8,081,360 $15,622,413 $41,530,842
- ----------------------------------------------------------- ----------- ---------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND
----------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1998 1997 MAY 31, 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 6,065,721 $ 8,513,843 $ 2,102,360 $ 3,890,075
- -----------------------------------------------------
Net realized gain (loss) on investments -- -- 102,055 (39,130)
- -----------------------------------------------------
Net change in unrealized appreciation/depreciation
of investments -- -- 74,960 (46,941)
- ----------------------------------------------------- ------------- ------------- ------------ ------------
Change in net assets resulting from operations $ 6,065,721 8,513,843 2,279,375 3,804,004
- ----------------------------------------------------- ------------- ------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Shares (4,973,738) (6,495,920) (89,722) --
- -----------------------------------------------------
Investment Shares (1,091,983) (2,017,923) (2,012,638) (3,890,075)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares -- -- -- --
- ----------------------------------------------------- ------------- ------------- ------------ ------------
Change in net assets resulting from distributions
to shareholders (6,065,721) (8,513,843) (2,102,360) (3,890,075)
- ----------------------------------------------------- ------------- ------------- ------------ ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 410,975,393 713,612,216 79,997,999 36,443,415
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 1,469,006 3,161,478 588,066 1,467,180
- -----------------------------------------------------
Cost of shares redeemed (346,590,374) (647,183,526) (71,343,868) (21,934,772)
- ----------------------------------------------------- ------------- ------------- ------------ ------------
Change in net assets resulting from share
transactions 65,854,025 69,590,168 9,242,197 15,975,823
- ----------------------------------------------------- ------------- ------------- ------------ ------------
Change in net assets 65,854,025 69,590,168 9,419,212 15,889,752
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 211,995,215 142,405,047 79,621,271 63,731,519
- ----------------------------------------------------- ------------- ------------- ------------ ------------
End of period $277,849,240 $211,995,215 $89,040,483 $ 79,621,271
- ----------------------------------------------------- ------------- ------------- ------------ ------------
Undistributed net investment income included in net
assets at end of period -- -- $ 18,946 $ 18,946
- ----------------------------------------------------- ------------- ------------- ------------ ------------
Net gain (loss) as computed for federal tax purposes -- -- $ 102,055 $ (39,130)
- ----------------------------------------------------- ------------- ------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME FUND BALANCED FUND
---------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1998 1997 MAY 31, 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 5,798,063 $ 9,718,987 $ 1,254,607 $ 1,966,484
- -----------------------------------------------------
Net realized gain (loss) on investments 424,490 (81,761) 2,003,858 2,450,885
- -----------------------------------------------------
Net change in unrealized appreciation/depreciation of
investments 312,862 1,337,161 4,822,895 6,641,686
- ----------------------------------------------------- ------------- ------------ ------------ ------------
Change in net assets resulting from operations 6,535,415 10,974,387 8,081,360 11,059,055
- ----------------------------------------------------- ------------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Shares (366,816) -- -- --
- -----------------------------------------------------
Investment Shares (5,431,247) (9,764,674) (1,219,060) (1,975,632)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares -- -- (2,449,878) (1,475,295)
- ----------------------------------------------------- ------------- ------------ ------------ ------------
Change in net assets resulting from distributions
to shareholders (5,798,063) (9,764,674) (3,668,938) (3,450,927)
- ----------------------------------------------------- ------------- ------------ ------------ ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 280,025,070 66,831,851 24,409,076 23,156,324
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 263,630 548,710 3,283,940 3,266,797
- -----------------------------------------------------
Cost of shares redeemed (229,983,986) (37,466,806) (14,061,661) (10,278,832)
- ----------------------------------------------------- ------------- ------------ ------------ ------------
Change in net assets resulting from share
transactions 50,304,714 29,913,755 13,631,355 16,144,289
- ----------------------------------------------------- ------------- ------------ ------------ ------------
Change in net assets 51,042,066 31,123,468 18,043,777 23,752,417
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 184,063,833 152,940,365 83,073,214 59,320,797
- ----------------------------------------------------- ------------- ------------ ------------ ------------
End of period $235,105,899 $184,063,833 $101,116,991 $ 83,073,214
- ----------------------------------------------------- ------------- ------------ ------------ ------------
Undistributed net investment income included in net
assets at end of period $ 3,784 $ 3,784 $ 349,880 $ 314,333
- ----------------------------------------------------- ------------- ------------ ------------ ------------
Net gain (loss) as computed for federal tax purposes $ 424,490 $ (81,761) $ 2,003,858 $ 2,450,652
- ----------------------------------------------------- ------------- ------------ ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
---------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) NOVEMBER 30, (UNAUDITED) NOVEMBER 30,
MAY 31, 1998 1997 MAY 31, 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 1,168,956 $ 1,635,685 $ 316,018 $ 1,088,123
- -----------------------------------------------------
Net realized gain (loss) on investments 18,489,475 3,981,222 22,022,138 29,067,961
- -----------------------------------------------------
Net change in unrealized appreciation/depreciation of
investments (4,036,018) 16,758,345 19,192,686 19,488,108
- ----------------------------------------------------- ------------- ------------ ------------- ------------
Change in net assets resulting from operations 15,622,413 22,375,252 41,530,842 49,644,192
- ----------------------------------------------------- ------------- ------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares (1,116,473) (1,593,979) (421,625) (1,080,251)
- -----------------------------------------------------
Distributions from net realized gain on investment
transactions:
- -----------------------------------------------------
Trust Shares -- -- -- --
- -----------------------------------------------------
Investment Shares (3,980,849) (3,888,698) (29,158,060) (9,157,167)
- ----------------------------------------------------- ------------- ------------ ------------- ------------
Change in net assets resulting from distributions
to shareholders (5,097,322) (5,482,677) (29,579,685) (10,237,418)
- ----------------------------------------------------- ------------- ------------ ------------- ------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 199,539,911 64,485,140 272,412,069 102,214,322
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 699,255 415,500 7,454,858 2,218,235
- -----------------------------------------------------
Cost of shares redeemed (171,544,141) (12,833,896) (249,139,568) (44,353,846)
- ----------------------------------------------------- ------------- ------------ ------------- ------------
Change in net assets resulting from share
transactions 28,695,025 52,066,744 30,727,359 60,078,711
- ----------------------------------------------------- ------------- ------------ ------------- ------------
Change in net assets 39,220,116 68,959,319 42,678,516 99,485,485
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 152,531,289 83,571,970 275,006,468 175,520,983
- ----------------------------------------------------- ------------- ------------ ------------- ------------
End of period $191,751,405 $152,531,289 $317,684,984 $275,006,468
- ----------------------------------------------------- ------------- ------------ ------------- ------------
Undistributed net investment income included in net
assets at end of period $ 351,974 $ 299,491 $ 2,425 $ 108,032
- ----------------------------------------------------- ------------- ------------ ------------- ------------
Net gain (loss) as computed for federal tax purposes $ 18,489,475 $ 3,980,619 $ 22,022,138 $ 29,067,961
- ----------------------------------------------------- ------------- ------------ ------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
REALIZED DISTRIBUTIONS
AND FROM NET DISTRIBUTIONS
NET ASSET UNREALIZED TOTAL DISTRIBUTIONS REALIZED IN EXCESS
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON OF NET
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME
- ------------------------------ --------- ------ ----------- ---------- ------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY MONEY MARKET FUND--TRUST SHARES
1992(a) $ 1.00 0.02 -- 0.02 (0.02) -- --
1993 $ 1.00 0.03 -- 0.03 (0.03) -- --
1994 $ 1.00 0.04 -- 0.04 (0.04) -- --
1995 $ 1.00 0.05 -- 0.05 (0.05) -- --
1996 $ 1.00 0.05 -- 0.05 (0.05) -- --
1997 $ 1.00 0.05 -- 0.05 (0.05) -- --
1998(j) $ 1.00 0.02 -- 0.02 (0.02) -- --
TREASURY MONEY MARKET FUND--INVESTMENT
SHARES
1992(a) $ 1.00 0.01 -- 0.01 (0.01) -- --
1993 $ 1.00 0.02 -- 0.02 (0.02) -- --
1994 $ 1.00 0.03 -- 0.03 (0.03) -- --
1995 $ 1.00 0.04 -- 0.04 (0.04) -- --
1996 $ 1.00 0.04 -- 0.04 (0.04) -- --
1997 $ 1.00 0.04 -- 0.04 (0.04) -- --
1998(j) $ 1.00 0.02 -- 0.02 (0.02) -- --
LIMITED MATURITY GOVERNMENT FUND--TRUST SHARES
1998(e) $ 9.96 0.02 0.01 0.03 (0.02) -- --
LIMITED MATURITY GOVERNMENT FUND--INVESTMENT SHARES
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) -- --
1998(j) $ 9.94 0.24 0.03 0.27 (0.24) -- --
FIXED INCOME FUND--TRUST
SHARES
1992(c) $ 9.90 0.38 0.37 0.75 (0.38) -- --
1993 $10.27 0.51 0.50 1.01 (0.51) (0.10) --
1994 $10.67 0.54 (1.01) (0.47) (0.53) (0.20) (0.01)(h)
1995(d) $ 9.46 0.09 0.11 0.20 (0.09) -- --
1998(e) $10.41 0.02 0.01 0.03 (0.02) -- --
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)(h)
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) -- --
1998(j) $10.37 0.28 0.05 0.33 (0.28) -- --
</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 on January 31,
1998.
(e) Reflects operations for the period from May 20, 1998 to May 31, 1998
(unaudited).
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
----------------------------------------
NET ASSET NET EXPENSE NET ASSETS, END
TOTAL VALUE, END TOTAL INVESTMENT WAIVER/ OF PERIOD PORTFOLIO
DISTRIBUTIONS OF PERIOD RETURN(F) EXPENSES INCOME REIMBURSEMENT(I) (000 OMITTED) TURNOVER
------------- --------- --------- -------- ------ ---------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(0.02) $ 1.00 2.06% 0.29%(g) 3.20%(g) 0.53%(g) $ 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 --
(0.02) $ 1.00 2.39% 0.47%(g) 4.75%(g) 0.25%(g) $232,608 --
(0.01) $ 1.00 1.83% 0.74%(g) 2.58%(g) 0.53%(g) $ 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 --
(0.02) $ 1.00 2.18% 0.87%(g) 4.34%(g) 0.25%(g) $ 45,241 --
(0.02) $ 9.97 0.26% 0.96%(g) 5.27%(g) -- $ 57,556 37%
(0.42) $ 9.60 0.19% 0.38%(g) 4.45%(g) 0.70%(g) $ 48,526 3%
(0.51) $10.04 10.12% 0.61% 5.26% 0.49% $ 63,078 26%
(0.50) $ 9.96 4.37% 1.01% 5.09% 0.08% $ 63,732 48%
(0.49) $ 9.94 4.81% 0.99% 4.91% -- $ 79,621 40%
(0.24) $ 9.97 2.76% 0.89%(g) 4.88%(g) -- $ 31,485 37%
(0.38) $10.27 7.66% 0.77%(g) 6.02%(g) 0.29%(g) $ 96,354 44%
(0.61) $10.67 10.14% 0.84% 4.80% 0.25% $169,881 83%
(0.74) $ 9.46 (4.55%) 0.79% 5.44% 0.25% $153,289 24%
(0.09) $ 9.57 2.11% 0.82%(g) 5.79%(g) 0.25%(g) -- --
(0.02) $10.42 0.46% 1.01%(g) 5.67%(g) -- $215,690 31%
(0.37) $10.27 7.48% 1.07%(g) 5.33%(g) 0.29%(g) $ 5,457 44%
(0.58) $10.67 9.81% 1.14% 4.40% 0.25% $ 12,519 83%
(0.71) $ 9.46 (4.83%) 1.09% 5.14% 0.25% $ 9,645 24%
(0.54) $10.34 15.37% 1.02% 5.25% -- $160,286 45%
(0.54) $10.36 5.66% 1.02% 5.38% -- $152,940 52%
(0.59) $10.37 5.99% 0.97% 5.73% -- $184,064 37%
(0.28) $10.42 3.20% 0.93%(g) 5.38%(g) -- $ 19,416 31%
</TABLE>
(f) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(g) Computed on an annualized basis.
(h) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
(i) This voluntary expense decrease is reflected in both the expense and net
investment income ratios.
(j) For the six-month period ended May 31, 1998 (unaudited).
<PAGE>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET
REALIZED DISTRIBUTIONS
AND FROM NET
NET ASSET UNREALIZED TOTAL DISTRIBUTIONS REALIZED
VALUE, NET GAIN/(LOSS) FROM FROM NET GAIN ON
YEAR ENDED BEGINNING INVESTMENT ON INVESTMENT INVESTMENT INVESTMENT
NOVEMBER 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS
- ---------------------------- --------- ------ ----------- ---------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCED FUND--TRUST SHARES
1998(b) $14.59 0.01 (0.17) (0.16) -- --
BALANCED FUND--INVESTMENT
SHARES
1995(e) $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)
1998(a) $13.79 0.19 1.05 1.24 (0.19) (0.41)
VALUE FUND--TRUST SHARES
1998(b) $17.47 -- (0.33) (0.33) -- --
VALUE FUND--INVESTMENT
SHARES
1995(e) $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)
1998(a) $16.18 0.24 1.25 1.49 (0.11) (0.42)
GROWTH FUND--TRUST SHARES
1992(c) $ 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(d) $10.36 0.08 0.02 0.10 (0.08) (0.33)
1998(b) $17.97 -- (0.54) (0.54) -- --
GROWTH FUND--INVESTMENT
SHARES
1992(c) $ 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)
1998(a) $16.89 0.03 2.34 2.37 (0.03) (1.80)
</TABLE>
(a) For the six-month period ended May 31, 1998 (unaudited).
(b) Reflects operations for the period from May 20, 1998 to May 31, 1998
(unaudited).
(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 on January 31,
1998.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
--------------------------------------------
NET ASSET EXPENSE NET ASSETS, END AVERAGE
TOTAL VALUE, END TOTAL NET INVESTMENT WAIVER/ OF PERIOD COMMISSION
DISTRIBUTIONS OF PERIOD RETURN(F) EXPENSES INCOME/(LOSS) REIMBURSEMENT(H) (000 OMITTED) RATE PAID(I)
------------- --------- --------- -------- ------------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
-- $14.43 (0.62%) 1.10%(g) 2.37%(g) -- $ 8,019 $0.0931
(0.36) $11.46 18.50% 0.61%(g) 4.34%(g) 0.56%(g) $ 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
(0.60) $14.43 9.34% 1.03%(g) 2.72%(g) -- $ 93,098 $0.0931
-- $17.14 (0.98%) 1.49%(g) 0.04%(g) -- $154,480 $0.0903
(0.34) $12.04 24.14% 0.69%(g) 3.93%(g) 0.55%(g) $ 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
(0.53) $17.14 9.53% 0.98%(g) 1.41%(g) -- $ 37,271 $0.0903
(0.11) $10.66 9.28% 0.76%(g) 2.28%(g) 0.35%(g) $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% 2.76% 0.30% -- --
-- $17.43 (2.13%) 1.18%(g) (0.13%)(g) -- $215,417 $0.0849
(0.09) $10.66 9.14% 1.07%(g) 1.85%(g) 0.35%(g) $ 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
(1.83) $17.43 16.15% 1.00%(g) 0.23%(g) -- $102,268 $0.0849
<CAPTION>
TOTAL PORTFOLIO
DISTRIBUTIONS TURNOVER
------------- --------
<S> <C>
-- 13%
(0.36) 49%
(0.63) 41%
(0.68) 34%
(0.60) 13%
-- 41%
(0.34) 76%
(0.64) 58%
(0.87) 31%
(0.53) 41%
(0.11) 30%
(0.30) 74%
(0.30) 66%
(0.41) --
-- 40%
(0.09) 30%
(0.27) 74%
(0.27) 66%
(0.54) 110%
(0.70) 56%
(0.83) 40%
(1.83) 40%
</TABLE>
(e) Reflects operations for the period from December 19, 1994 (date of initial
public investment) to November 30, 1995.
(f) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(g) Computed on an annualized basis.
(h) This voluntary expense decrease is reflected in both the expense and net
investment income ratios.
(i) 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>
REGIONS FUNDS
(FORMERLY, FIRST PRIORITY FUNDS)
COMBINED NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Regions Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company. The
Trust consists of six portfolios (individually referred to as the "Fund", or
collectively as the "Funds") at May 31, 1998, which are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
-------------- --------------------
<S> <C>
Regions Treasury Money Market Fund ("Treasury Current income consistent with stability of
Money Market Fund") principal and liquidity by investing primarily
in a diversified portfolio limited to
short-term U.S. Treasury obligations.
Regions Limited Maturity Government Fund Current income by investing in a diversified
("Limited Maturity Government Fund") portfolio consisting primarily of securities
which are guaranteed as to payment of
principal and interest by the U.S. government,
its agencies or instrumentalities.
Regions Fixed Income Fund ("Fixed Income Current income with a secondary
objective of Fund") capital appreciation by investing primarily in
a broad range of high grade debt securities.
Regions Balanced Fund ("Balanced Fund")
Total return through capital appreciation,
dividends, and interest by investing primarily
in a diversified portfolio of common stocks,
preferred stocks, fixed-income senior
securities, and convertible securities.
Regions Value Fund ("Value Fund")
Income and growth of capital by investing
primarily in a diversified portfolio of
income-producing equity securities, including
convertible securities.
Regions Growth Fund ("Growth Fund")
Growth of capital and income by investing
principally in a diversified portfolio of
common stocks of companies with market
capitalization of at least $250 million.
</TABLE>
The Funds offer both Trust and Investment classes of shares. Investment Shares
are identical in all respects to Trust Shares, except the Investment Shares are
sold pursuant to a distribution plan adopted in accordance with the Act's Rule
12b-1 and have a Shareholders Services Agreement. The assets of
<PAGE>
REGIONS FUNDS
- --------------------------------------------------------------------------------
each Fund of the Trust are segregated and a shareholder's interest is limited to
the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--U.S. government securities, listed corporate bonds,
(other fixed income and asset-backed securities), and unlisted securities
and private placement securities are generally valued at the mean of the
latest bid and asked price as furnished by an independent pricing service.
Listed equity securities are valued at the last sale price reported on a
national securities exchange. The Treasury Money Market Fund uses the
amortized cost method to value its portfolio securities in accordance with
Rule 2a-7 under the Act. For fluctuating net asset value Funds within the
Trust, short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value. The Funds'
restricted securities are valued at the price provided by an independent
pricing service, if no market prices are available, at the fair value as
determined by the Fund's pricing committee.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement transactions. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's collateral to ensure that the value of
collateral at least equals the repurchase price to be paid under the
repurchase agreement transaction, including accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
<PAGE>
REGIONS FUNDS
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At November 30, 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; 2003
($69,260), ($2,618,115), respectively; 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 over a period of up to five years from each Funds'
commencement date.
RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Funds or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Trustees. The Funds will not incur any
registration costs upon such resales. The Funds did not hold restricted
securities at May 31, 1998.
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>
REGIONS FUNDS
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. Transactions in fund shares were as follows:
For the Six Months Ended May 31, 1998:
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND FIXED INCOME FUND
--------------------------- ---------------------- ------------------------
TRUST INVESTMENT TRUST INVESTMENT TRUST INVESTMENT
SHARES SHARES SHARES SHARES SHARES SHARES
- ------------------------------- ------------ ------------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 244,917,352 166,058,041 5,790,917 2,235,006 20,719,841 6,196,390
- ----------------------------
Shares issued to shareholders
in payment of distributions
declared 574,147 894,859 -- 58,997 -- 25,331
- ----------------------------
Shares redeemed (178,918,433) (167,671,941) (15,754) (7,146,618) (23,672) (22,108,769)
- ---------------------------- ---------- ---------- ------- ---------- -------- ---------
Net change resulting from
Trust/Investment Shares
transactions 66,573,066 (719,041) 5,775,163 (4,852,615) 20,696,169 (15,887,048)
- ---------------------------- ---------- ---------- ------- ---------- -------- ---------
<CAPTION>
BALANCED FUND
--------------------
TRUST INVESTMENT
SHARES SHARES
- ------------------------------- ------- ----------
<S> <C> <C>
Shares sold 555,956 1,159,300
- ----------------------------
Shares issued to shareholders
in payment of distributions
declared -- 245,617
- ----------------------------
Shares redeemed (335) (977,644)
- ---------------------------- ------ ----------
Net change resulting from
Trust/Investment Shares
transactions 555,621 427,273
- ---------------------------- ------ ----------
</TABLE>
<TABLE>
<CAPTION>
VALUE FUND GROWTH FUND
---------------------- ------------------------
TRUST INVESTMENT TRUST INVESTMENT
SHARES SHARES SHARES SHARES
- ------------------------------------------------------------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 9,029,376 2,645,944 12,389,346 3,197,923
- ------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared -- 44,842 -- 512,104
- ------------------------------------------------------------
Shares redeemed (14,447) (9,945,633) (27,837) (14,126,884)
- ------------------------------------------------------------ ------- ---------- -------- ---------
Net change resulting from Trust/Investment Shares
transactions 9,014,929 (7,254,847) 12,361,509 (10,416,857)
- ------------------------------------------------------------ ------- ---------- -------- ---------
</TABLE>
For the Year Ended November 30, 1997:
<TABLE>
<CAPTION>
TREASURY MONEY LIMITED MATURITY
MARKET FUND GOVERNMENT FUND FIXED INCOME FUND
--------------------------- ------------------------ ------------------------
TRUST INVESTMENT INVESTMENT INVESTMENT
SHARES SHARES SHARES DOLLARS SHARES DOLLARS
- --------------------- ------------ ------------ ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 398,538,313 315,073,903 3,681,490 $36,443,415 6,594,521 $66,831,851
- -----------------
Shares issued to
shareholders in
payment of
distributions
declared 1,205,548 1,955,930 148,261 1,467,180 53,609 548,710
- -----------------
Shares redeemed (335,497,366) (311,686,160) (2,217,857) (21,934,772) (3,661,175) (37,466,806)
- ----------------- ---------- ---------- -------- ---------- -------- ----------
Net change resulting
from Trust/Investment
Shares transactions 64,246,495 5,353,673 1,611,894 $15,975,823 2,986,955 $29,913,755
- ----------------- ---------- ---------- -------- ---------- -------- ----------
<CAPTION>
BALANCED FUND
-------------------------
INVESTMENT
SHARES DOLLARS
- --------------------- ---------- ------------
<S> <C> <C>
Shares sold 1,822,756 $ 23,156,324
- -----------------
Shares issued to
shareholders in
payment of
distributions
declared 262,460 3,266,797
- -----------------
Shares redeemed (801,716) (10,278,832)
- ----------------- -------- ----------
Net change resulting
from Trust/Investment
Shares transactions 1,283,500 $ 16,144,289
- ----------------- -------- ----------
</TABLE>
<PAGE>
REGIONS FUNDS
- --------------------------------------------------------------------------------
<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>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Capital Management Group, a unit of the Trust Division
of Regions Bank, the Trust's investment adviser (the "Adviser"), receives for
its services an annual investment advisory fee based upon a percentage of each
Fund's average daily net assets (see below). The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion. Additionally, the adviser
may offset the investment advisory fee by reimbursing individual shareholder
accounts. Some accounts have special fee arrangements that provide specifically
for the retention of the investment advisory fee, and in such cases, the fee
will not be reimbursed.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
- ------------------------------------------------------------ ------
<S> <C>
Treasury Money Market Fund 0.50%
- ------------------------------------------------------------
Limited Maturity Government Fund 0.70%
- ------------------------------------------------------------
Fixed Income Fund 0.75%
- ------------------------------------------------------------
Balanced Fund 0.80%
- ------------------------------------------------------------
Value Fund 0.80%
- ------------------------------------------------------------
Growth Fund 0.80%
- ------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
with certain administrative personnel and services. The fee is based on the
level of average aggregate net assets of the Trust for the period.
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.
<PAGE>
REGIONS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF AVERAGE
DAILY NET ASSETS
OF EACH FUND'S
INVESTMENT
FUND NAME SHARES
--------- ------
<S> <C>
Treasury Money Market Fund 0.40%
Limited Maturity Government Fund 0.25%
Fixed Income Fund 0.30%
Balanced Fund 0.30%
Value Fund 0.30%
Growth Fund 0.30%
</TABLE>
For the period ended May 31, 1998, Limited Maturity Government Fund, Fixed
Income Fund, Balanced Fund, Value Fund, and Growth Fund did not incur a
distribution services fee.
SHAREHOLDER SERVICES FEE--Beginning on May 21, 1998, the Trust adopted a
Shareholder Services Agreement. Under the terms of a Shareholder Services
Agreement with Federated Shareholder Services ("FSS"), the Funds will pay FSS
based upon a percentage of the average daily net assets of each Fund's
Investment Shares for the period (see below). The fee paid to FSS is used to
finance certain services for shareholders and to maintain shareholder accounts.
<TABLE>
<CAPTION>
% OF AVERAGE
DAILY NET ASSETS
OF EACH FUND'S
INVESTMENT
FUND NAME SHARES
--------- ------
<S> <C>
Limited Maturity Government Fund 0.25%
Fixed Income Fund 0.25%
Balanced Fund 0.25%
Value Fund 0.25%
Growth Fund 0.25%
</TABLE>
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ"), through its subsidiary, Federated Shareholder Services Company
("FSSC"), serves as transfer and dividend disbursing agent for the Funds. The
fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
<PAGE>
REGIONS FUNDS
- --------------------------------------------------------------------------------
CUSTODIAN FEES--Regions Bank is the Funds' custodian. The fee is based on the
level of each Fund's average daily net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five-year period following the Funds' effective dates. For the period ended
May 31, 1998, 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 $2,674
- -----------------------------------------------------------
Balanced Fund $24,457 $1,670
- -----------------------------------------------------------
Value Fund $18,322 $1,411
- -----------------------------------------------------------
</TABLE>
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1998, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ------------------------------------------------------------ ------------ ------------
<S> <C> <C>
Limited Maturity Government Fund $ 39,821,128 $ 30,515,860
- ------------------------------------------------------------
Fixed Income Fund $104,138,394 $ 63,604,046
- ------------------------------------------------------------
Balanced Fund $ 19,167,904 $ 10,997,051
- ------------------------------------------------------------
Value Fund $ 93,155,414 $ 69,570,921
- ------------------------------------------------------------
Growth Fund $107,669,996 $101,664,384
- ------------------------------------------------------------
</TABLE>
(6) YEAR 2000
Similar to other financial organizations, the Funds could be adversely affected
if the computer systems used by the Funds' service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Funds' Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Funds' other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Funds.
<PAGE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ----------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
Nicholas P. Constantakis President and Treasurer
William J. Copeland J. Christopher Donahue
James E. Dowd, Esq. Executive Vice President
Lawrence D. Ellis, M.D. John W. McGonigle
Edward L. Flaherty, Jr., Esq. Executive Vice President and
Edward C. Gonzales Secretary
Peter E. Madden Richard B. Fisher
John E. Murray, Jr., J.D., S.J.D. Vice President
Wesley W. Posvar Charles L. Davis, Jr.
Marjorie P. Smuts Vice President and Assistant
Treasurer
Gail Cagney
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.
<PAGE>
Federated Securities Corp., Distributor
Regions Bank, Investment Adviser
Cusip 335931887 Cusip 335931879
Cusip 335931101 Cusip 335931861
Cusip 335931804 Cusip 335931853
Cusip 335931309 Cusip 335931846
Cusip 335931705 Cusip 335931838
Cusip 335931606 Cusip 335931507
G01186-03 (7/98)
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