LOGO
111 Corcoran
Bond Fund
Semi-Annual Report
November 30, 1997
FED LOGO
Cusip 682365200
2122401 (1/98)
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present your Semi-Annual Report to Shareholders for 111 Corcoran
Bond Fund. This report covers the first half of the fund's fiscal year, which is
the six-month period from June 1, 1997 through November 30, 1997.
Inside, you will find complete information about the fund's operation during
that reporting period, including an investment review by the fund's portfolio
manager, a list of the fund's quality bond holdings, and the fund's financial
statements.
To help your investment earn income, the fund invests primarily in U.S.
government bonds and corporate bonds rated A or better by a nationally
recognized rating agency. At the end of the reporting period, the fund's net
assets were primarily composed of government obligations (81.8%), followed by
corporate bonds (17.4%) and a money market fund (2.1%).
In an improved environment for bonds during the six-month reporting period, the
fund's high quality portfolio produced a total return, based on net asset value,
of 5.54%, through income totaling $0.32 per share, and a 2% increase in net
asset value. The fund's net assets totaled $84 million at the end of the
reporting period.*
Thank you for keeping your money at work through the professional management,
diversification and convenience of 111 Corcoran Bond Fund. We'll continue to
update you on your fund's progress.
Sincerely,
[SIGNATURE APPEARS HERE]
Edward C. Gonzales
President
January 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. Total return for the reporting period, adjusted for the fund's
sales charge, was 0.77%.
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The bond market rally continued into the six-month reporting period ended
November 30, 1997. Five-year U.S. Treasuries declined by 0.67% to 5.85% and the
ten-year U.S. Treasury yield fell under 6% for the first time this year.
The six-month reporting period total return for the fund based on net asset
value was 5.54%,* which trailed the Lehman Brothers Aggregate Bond Index
("Aggregate Index").** Our average maturity is less than five years, which is
shorter than the Aggregate Index, causing the fund to underperform as rates
dropped sharply.
Going forward we feel the best value will be in the five-year area. There is
only a 0.02% pickup between five- and ten-year U.S. Treasuries. We plan to
maintain the high quality of the portfolio as there is not enough yield reward
to downgrade at this point.
* 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. Total return for the reporting period, adjusted for the fund's
sales charge, was 0.77%.
** The Lehman Brothers Aggregate Bond Index is an unmanaged index measuring both
the capital price changes and income provided by the underlying universe of
securities, comprised of U.S. Treasury obligations, U.S. agency obligations,
foreign obligations, U.S. investment grade corporate debt and mortgage-backed
obligations. Investments cannot be made in an index.
<PAGE>
111 CORCORAN BOND FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--17.4%
- ------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--0.6%
-----------------------------------------------------------------
$ 500,000 Discover Card Trust 1996-3, Class B, 6.25%, 8/18/2008 $ 485,245
----------------------------------------------------------------- -----------
CONSUMER DURABLES--1.3%
-----------------------------------------------------------------
1,000,000 Ford Motor Co., Deb., 9.00%, 9/15/2001 1,088,320
----------------------------------------------------------------- -----------
CONSUMER NON-DURABLES--2.5%
-----------------------------------------------------------------
1,000,000 Philip Morris Cos., Inc., Note, 7.125%, 8/15/2002 1,018,280
-----------------------------------------------------------------
1,000,000 Philip Morris Cos., Inc., Note, 9.00%, 1/1/2001 1,065,360
----------------------------------------------------------------- -----------
Total 2,083,640
----------------------------------------------------------------- -----------
FINANCE--5.8%
-----------------------------------------------------------------
500,000 CIGNA Corp., Sr. Note, 7.40%, 1/15/2003 517,885
-----------------------------------------------------------------
1,000,000 Continental Corp., Note, 7.25%, 3/1/2003 1,025,880
-----------------------------------------------------------------
250,000 Ford Motor Credit Corp., Note, 7.50%, 4/25/2011 260,553
-----------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., Medium Term Note, 7.20%, 10/15/2012 1,024,060
-----------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., Note, Series MTNB, 7.19%, 8/7/2012 1,019,230
-----------------------------------------------------------------
1,000,000 Salomon, Inc., Sr. Note, 6.875%, 12/15/2003 1,014,170
----------------------------------------------------------------- -----------
Total 4,861,778
----------------------------------------------------------------- -----------
NON-ENERGY MINERALS--0.7%
-----------------------------------------------------------------
500,000 Reynolds Metals Co., Deb., 9.00%, 8/15/2003 558,820
----------------------------------------------------------------- -----------
PRODUCER MANUFACTURING--1.0%
-----------------------------------------------------------------
750,000 Loews Corp., Deb., 8.875%, 4/15/2011 871,605
----------------------------------------------------------------- -----------
UTILITIES--5.5%
-----------------------------------------------------------------
1,000,000 Gulf States Utilities, 1st Mtg. Bond, Series 2005B, 6.77%,
8/1/2005 999,120
-----------------------------------------------------------------
1,000,000 Pacific Gas & Electric Co., Unsecd. Note, Series B, 7.75%,
6/30/2004 1,072,670
-----------------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-----------------------------------------------------------------
$ 1,500,000 Southwestern Bell Telephone Co., Deb., 7.375%, 5/1/2012 $ 1,505,250
-----------------------------------------------------------------
1,000,000 West Penn Power Co., 1st Mtg. Bond, 7.875%, 12/1/2004 1,057,770
----------------------------------------------------------------- -----------
Total 4,634,810
----------------------------------------------------------------- -----------
TOTAL CORPORATE BOND (IDENTIFIED COST $14,379,957) 14,584,218
----------------------------------------------------------------- -----------
GOVERNMENT OBLIGATIONS--81.2%
- ------------------------------------------------------------------------------------
FARM CREDIT SYSTEM FINANCIAL ASSISTANCE CORP.--0.6%
-----------------------------------------------------------------
500,000 9.20%, 9/27/2005 539,500
----------------------------------------------------------------- -----------
FEDERAL HOME LOAN BANK--14.3%
-----------------------------------------------------------------
1,000,000 (a) 6.25% Step-Up, 5/11/1998 1,003,500
-----------------------------------------------------------------
750,000 3.78%, 6/2/1998 742,427
-----------------------------------------------------------------
1,000,000 3.532%, 8/25/1998 989,176
-----------------------------------------------------------------
1,250,000 4.914%, Structured Note, 12/2/1998 1,234,730
-----------------------------------------------------------------
1,000,000 5.613%, Structured Note, 2/23/1999 1,000,400
-----------------------------------------------------------------
500,000 5.05%, Structured Note, 3/29/2000 495,770
-----------------------------------------------------------------
1,550,000 (a) 5.20% Step-Up, 10/20/2000 1,538,639
-----------------------------------------------------------------
1,000,000 6.48%, Structured Note, 3/27/2001 999,436
-----------------------------------------------------------------
1,000,000 6.335%, 10/22/2002 999,127
-----------------------------------------------------------------
2,000,000 6.385%, 11/5/2002 1,996,040
-----------------------------------------------------------------
1,000,000 7.00%, 12/15/2009 995,950
----------------------------------------------------------------- -----------
Total 11,995,195
----------------------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--27.5%
-----------------------------------------------------------------
3,000,000 5.00%, Structured Note, 3/10/2000 2,969,550
-----------------------------------------------------------------
1,000,000 5.90%, 4/21/2000 997,480
-----------------------------------------------------------------
1,000,000 5.50%, Structured Note, 9/20/2000 996,880
-----------------------------------------------------------------
1,000,000 5.69%, 11/29/2000 989,510
-----------------------------------------------------------------
500,000 6.80%, 9/18/2002 500,715
-----------------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
GOVERNMENT OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--CONTINUED
-----------------------------------------------------------------
$ 1,000,000 8.19%, 10/6/2004 $ 1,033,720
-----------------------------------------------------------------
69,054 5.00%, Series 1194F, 11/15/2005 68,277
-----------------------------------------------------------------
1,000,000 8.00%, Series 1033G, 1/15/2006 1,035,010
-----------------------------------------------------------------
1,000,000 6.00%, Series 1366G, 5/15/2006 985,730
-----------------------------------------------------------------
4,000,000 8.00%, Series 1171G, 11/15/2006 4,184,480
-----------------------------------------------------------------
1,000,000 7.00%, Series 1187H, 12/15/2006 1,014,590
-----------------------------------------------------------------
1,490,000 6.00%, Series 1337C, 12/15/2006 1,467,635
-----------------------------------------------------------------
1,000,000 7.00%, Series 1338J, 2/15/2007 1,012,370
-----------------------------------------------------------------
84,445 6.50%, REMIC, Series 1422E, 2/15/2007 83,471
-----------------------------------------------------------------
1,000,000 7.00%, Series 1341K, 8/15/2007 1,013,540
-----------------------------------------------------------------
1,000,000 7.00%, Series 1458J, 8/15/2007 1,016,180
-----------------------------------------------------------------
176,459 6.50%, Series 1452C, 12/15/2007 173,143
-----------------------------------------------------------------
400,000 7.00%, Series 1224VE, 8/15/2008 404,160
-----------------------------------------------------------------
1,000,000 7.00%, Series 1477ID, 11/15/2009 1,030,570
-----------------------------------------------------------------
1,000,000 6.85%, Series 1808VB, 10/15/2010 992,157
-----------------------------------------------------------------
595,000 7.00%, Series 1468M, 1/15/2010 610,214
-----------------------------------------------------------------
500,000 7.00%, Series 1228H, 2/15/2022 506,345
----------------------------------------------------------------- -----------
Total 23,085,727
----------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--12.9%
-----------------------------------------------------------------
2,000,000 6.625%, 4/10/2003 1,997,060
-----------------------------------------------------------------
1,000,000 7.00%, 9/3/2003 1,014,740
-----------------------------------------------------------------
1,000,000 6.48%, 2/18/2004 991,600
-----------------------------------------------------------------
2,000,000 8.25%, 10/12/2004 2,070,240
-----------------------------------------------------------------
2,775,000 8.50%, 2/1/2005 2,902,456
-----------------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
GOVERNMENT OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
-----------------------------------------------------------------
$ 1,500,000 Principal STRIPS, 4/12/2006 (Callable 4/12/1999 @ 100) $ 1,385,535
-----------------------------------------------------------------
1,500,000 0%, 7/9/2012 (Callable 7/9/1999) 491,550
----------------------------------------------------------------- -----------
Total 10,853,181
----------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-REMIC--22.1%
-----------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 199479G, 11/25/2004 1,019,730
-----------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 199270H, 4/25/2006 1,009,530
-----------------------------------------------------------------
1,000,000 8.00%, REMIC, Series 199336J, 5/25/2006 1,035,000
-----------------------------------------------------------------
2,000,000 7.00%, REMIC, Series 1993139KD, 7/25/2006 2,018,990
-----------------------------------------------------------------
1,000,000 8.00%, REMIC, Series 1991150G, 11/25/2006 1,037,260
-----------------------------------------------------------------
1,000,000 7.25%, REMIC, Series 199250J, 12/25/2006 1,023,920
-----------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 199253G, 4/25/2007 1,009,520
-----------------------------------------------------------------
996,078 6.00%, REMIC, Series 199376B, 6/25/2008 949,392
-----------------------------------------------------------------
1,500,000 6.50%, REMIC, Series 1993181O, 9/25/2008 1,465,035
-----------------------------------------------------------------
1,000,000 6.75%, REMIC, Series 199333H, 9/25/2008 1,009,760
-----------------------------------------------------------------
2,500,000 6.50%, REMIC, Series 199427CB, 9/25/2008 2,484,618
-----------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 1992124J, 4/25/2010 1,018,090
-----------------------------------------------------------------
1,000,000 6.50%, REMIC, Series 199668VC, 9/18/2010 992,100
-----------------------------------------------------------------
1,500,000 6.50%, REMIC, Series 199726AC, 3/25/2012 1,486,875
-----------------------------------------------------------------
1,000,000 7.00%, REMIC, Series G9331H, 2/25/2013 1,017,040
----------------------------------------------------------------- -----------
Total 18,576,860
----------------------------------------------------------------- -----------
MORTGAGE BACKED SECURITIES--1.4%
-----------------------------------------------------------------
1,250,000 CMC CMO, 5.91%, Series 1994CA14, 3/25/2024 1,197,837
----------------------------------------------------------------- -----------
STUDENT LOAN MARKETING ASSOCIATION--2.4%
-----------------------------------------------------------------
2,000,000 6.38%, 12/11/2001 1,992,501
----------------------------------------------------------------- -----------
TOTAL GOVERNMENT OBLIGATIONS (IDENTIFIED COST $67,124,948) 68,240,801
----------------------------------------------------------------- -----------
</TABLE>
<PAGE>
111 CORCORAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. TREASURY--0.6%
- ------------------------------------------------------------------------------------
$ 500,000 United States Treasury Note, 5.75%, 8/15/2003 (IDENTIFIED COST
$478,672) $ 497,310
----------------------------------------------------------------- -----------
MUTUAL FUND--2.1%
- ------------------------------------------------------------------------------------
1,775,347 Goldman Sachs Money Market Fund (AT NET ASSET VALUE) 1,775,347
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $83,758,924)(B) $85,097,676
----------------------------------------------------------------- -----------
</TABLE>
(a) Current rate and next reset date shown.
(b) The cost of investments for federal tax purposes amounts to $83,758,924. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,338,752 which is comprised of $1,852,225 appreciation and $513,473
depreciation at November 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($84,024,062) at November 30, 1997.
The following acronyms are used throughout this portfolio:
CMO -- Collateralized Mortgage Obligation
REMIC -- Real Estate Mortgage Investment Conduit
STRIPS -- Separate Trading of Registered Interest and Principal of Securities
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $83,758,924) $85,097,676
- ---------------------------------------------------------------------------------
Income receivable 928,742
- --------------------------------------------------------------------------------- -----------
Total assets 86,026,418
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for investments purchased $1,495,148
- --------------------------------------------------------------------
Income distribution payable 477,217
- --------------------------------------------------------------------
Payable to Bank 4,645
- --------------------------------------------------------------------
Accrued expenses 25,346
- -------------------------------------------------------------------- ----------
Total liabilities 2,002,356
- --------------------------------------------------------------------------------- -----------
Net Assets for 8,286,443 shares outstanding $84,024,062
- --------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid in capital $86,519,849
- ---------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,338,752
- ---------------------------------------------------------------------------------
Accumulated net realized loss on investments (3,834,539)
- --------------------------------------------------------------------------------- -----------
Total Net Assets $84,024,062
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ---------------------------------------------------------------------------------
Net Asset Value Per Share ($84,024,062 / 8,286,443 shares outstanding) $10.14
- --------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $10.14)* $10.62
- --------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest $2,871,008
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $ 317,858
- ---------------------------------------------------------------------
Administrative personnel and services fee 61,368
- ---------------------------------------------------------------------
Custodian fees 4,152
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,499
- ---------------------------------------------------------------------
Trustees' fees 2,428
- ---------------------------------------------------------------------
Auditing fees 6,508
- ---------------------------------------------------------------------
Legal fees 1,425
- ---------------------------------------------------------------------
Portfolio accounting fees 22,589
- ---------------------------------------------------------------------
Share registration costs 6,551
- ---------------------------------------------------------------------
Printing and postage 5,932
- ---------------------------------------------------------------------
Insurance premiums 2,056
- ---------------------------------------------------------------------
Miscellaneous 3,787
- --------------------------------------------------------------------- ---------
Total expenses 450,153
- ---------------------------------------------------------------------
Waiver of investment advisory fee (317,858)
- --------------------------------------------------------------------- ---------
Net expenses 132,295
- --------------------------------------------------------------------------------- ----------
Net investment income 2,738,713
- --------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain on investments 212,735
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,692,635
- --------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 1,905,370
- --------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $4,644,083
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, MAY 31,
1997 1997
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $2,738,713 $ 5,742,174
- --------------------------------------------------------------
Net realized gain (loss) on investments ($212,735 net gain and $85,572 net gain,
respectively, as computed for federal tax
purposes) 212,735 116,265
- --------------------------------------------------------------
Net change in unrealized appreciation 1,692,635 1,114,464
- -------------------------------------------------------------- ----------- -----------
Change in net assets resulting from operations 4,644,083 6,972,903
- -------------------------------------------------------------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Distributions from net investment income (2,738,713) (5,742,174)
- -------------------------------------------------------------- ----------- -----------
SHARE TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 5,289,132 11,643,600
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 83,957 214,362
- --------------------------------------------------------------
Cost of shares redeemed (9,006,015) (15,220,474)
- -------------------------------------------------------------- ----------- -----------
Change in net assets resulting from share transactions (3,632,926) (3,362,512)
- -------------------------------------------------------------- ----------- -----------
Change in net assets (1,727,556) (2,131,783)
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 85,751,618 87,883,401
- -------------------------------------------------------------- ----------- -----------
End of period $84,024,062 $85,751,618
- -------------------------------------------------------------- ----------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED NOVEMBER 30,
NOVEMBER 30, -------------------------------------------------------
1997 1997 1996 1995 1994 1993(A)
------------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 9.92 $ 9.78 $10.00 $ 9.63 $10.13 $10.00
- -------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------
Net investment income 0.32 0.66 0.66 0.66 0.63 0.49
- -------------------------------
Net realized and unrealized
gain (loss) on investments 0.22 0.14 (0.22) 0.37 (0.50) 0.13
- ------------------------------- --------- ------ ------ ------ ------ -------
Total from investment
operations 0.54 0.80 0.44 1.03 0.13 0.62
- ------------------------------- --------- ------ ------ ------ ------ -------
LESS DISTRIBUTIONS
- -------------------------------
Distributions from net
investment income (0.32) (0.66) (0.66) (0.66) (0.63) (0.49)
- ------------------------------- --------- ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $10.14 $ 9.92 $ 9.78 $10.00 $ 9.63 $10.13
- ------------------------------- --------- ------ ------ ------ ------ -------
TOTAL RETURN(B) 5.54% 8.37% 4.41% 11.32% 1.21% 6.28%
- -------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------
Expenses 0.31%* 0.37% 0.32% 0.34% 0.50% 0.70% *
- -------------------------------
Net investment income 6.47%* 6.51% 6.65% 6.98% 6.32% 6.00% *
- -------------------------------
Expense waiver/
reimbursement(c) 0.75%* 0.75% 0.75% 0.75% 0.75% 0.78% *
- -------------------------------
SUPPLEMENTAL DATA
- -------------------------------
Net assets, end of period
(000 omitted) $84,024 $85,752 $87,883 $87,115 $97,823 $31,928
- -------------------------------
Portfolio turnover 13% 11% 32% 37% 76% 59%
- -------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 15, 1992 (date of initial
public investment) to May 31, 1993.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
111 Corcoran 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 three portfolios. The financial statements included herein
are only those of 111 Corcoran Bond Fund (the "Fund"), a diversified portfolio.
The investment objective of the Fund is to achieve income. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio 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 Fund in the preparation of its 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.
Short-term securities are valued at the prices provided by an independent
pricing service. However, short-term securities with remaining maturities
of sixty days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value.
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").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. At May 31, 1997, the Fund, for
federal tax purposes, had a capital loss carryforward of $3,999,487, which
will reduce the Fund's 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 Fund of any liability for federal
tax. Pursuant to the Code, such capital loss carryforward of $2,812,421
will expire in 2003 and $1,187,066 will expire in 2004. Additionally, net
capital losses of $47,672 attributable to security transactions incurred
after October 31, 1996, are treated as arising on June 1, 1997, the first
day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and
<PAGE>
111 CORCORAN BOND FUND
- --------------------------------------------------------------------------------
maintains 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.
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.
(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).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
1997 1997
- ------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Shares sold 525,271 1,173,277
- -------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 8,331 21,600
- -------------------------------------------------------------
Shares redeemed (895,500) (1,535,150)
- ------------------------------------------------------------- ----------- ----------
Net change resulting from share transactions (361,898) (340,273)
- ------------------------------------------------------------- ----------- ----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Central Carolina Bank and Trust Company, the Fund's
investment adviser, (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.75% of the Fund's average daily net asset.
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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
<PAGE>
111 CORCORAN BOND FUND
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1997, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
Purchases $10,466,977
- ------------------------------------------------------------------------------- -----------
Sales $11,169,859
- ------------------------------------------------------------------------------- -----------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
John E. Murray, Jr. Vice President
Wesley W. Posvar Joseph S. Machi
Marjorie P. Smuts Vice President and Assistant Treasurer
C. Grant Anderson
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.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
<PAGE>
LOGO
111 Corcoran
Equity Fund
Semi-Annual Report
November 30, 1997
FED LOGO
Cusip 682365309
G00926-01 (1/98)
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present your Semi-Annual Report for 111 Corcoran Equity Fund.
This report covers the first half of the fund's fiscal year, which is the
six-month period from June 1, 1997 through November 30, 1997.
This report contains complete information that includes an investment review by
the fund's portfolio manager, a listing of the fund's stock holdings, and the
fund's financial statements.
To help your money grow in value over the long term, this fund invests in a
diversified portfolio of high-quality stocks. As you can see from the list of
holdings, many of these stocks are issued by industry leaders whose products and
services you may use every day. The fund's portfolio holdings at the end of the
reporting period included American Express, Disney, DuPont, General Electric,
Intel, Mobil, Pfizer, and Xerox.
During the six-month reporting period, the U.S. economy continued to offer an
extremely favorable environment for stocks, and a high degree of day-to-day
volatility. In this environment, the fund delivered a strong total return, based
on net asset value, of 11.23% for the reporting period, through income totaling
$0.04 per share, and an 11% increase in net asset value. The fund's net assets
continued to grow, reaching $198 million at the end of the reporting period.*
Thank you for participating in the long-term growth opportunities of stocks
through 111 Corcoran Equity Fund. We hope you are pleased with your investment
progress.
Sincerely,
[SIGNATURE APPEARS HERE]
Edward C. Gonzales
President
January 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. Total return for the reporting period, adjusted for the fund's
sales charge, was 6.21%.
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The U.S. stock market continued to generate exceptional returns for the
reporting period ended November 30, 1997. Steady but moderate economic growth,
stable corporate profits and a generally favorable interest-rate environment
propelled share prices higher.
111 Corcoran Equity Fund delivered a total return of 11.23% based on net asset
value for the six-month reporting period ended November 30, 1997,* as compared
to 11.92% for the average growth and income fund as reported by Lipper
Analytical Services, Inc.** The fund's investments in the financial services,
communication and technology sectors contributed positively to performance
relative to Standard & Poor's Index of 500 Common Stocks ("S&P 500").+ Relative
performance was hindered by the fund's holdings in the consumer cyclical sector
and by modest cash balances.
As of November 30, 1997, total fund net assets were approximately $198 million.
The portfolio was 99.5% invested in stocks and had a cash position of 2.3%. The
fund's ten largest holdings were:
<TABLE>
<S> <C>
Jefferson-Pilot Corp. ........................... 3.26%
General Electric Co. ............................ 3.08%
American Express Co. ............................ 3.07%
Federal National Mortgage Association............ 2.74%
DuPont (E.I.) de Nemours & Co. .................. 2.70%
EMC Corp. Mass. ................................. 2.55%
Pitney Bowes, Inc. .............................. 2.50%
Mobil Corp. ..................................... 2.49%
American International Group, Inc. .............. 2.44%
Disney (Walt) Co. ............................... 2.35%
</TABLE>
Favorable economic conditions, widespread optimism and large inflows in mutual
funds have lifted stock prices to near historic highs in relation to such
measures as earnings, dividends and book values. In addition, recent weakness in
the Asian economies and the accompanying currency devaluations has clouded the
outlook for corporate profit growth. The deflationary pressures coming from Asia
will likely intensify in the coming months. With stock market valuations at high
levels, shareholders have reason to be mindful of the heightened risks of owning
stocks. However, since it is impossible to accurately predict market changes,
management's focus will remain on identifying stocks of companies in good
businesses that are available at attractive valuations.
* 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. Total return for the reporting period, adjusted for the fund's
sales charge, was 6.21%.
** Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
+ The S&P 500 is an unmanaged index of common stocks in industry,
transportation, and financial and public utility companies. Investments
cannot be made in an index.
<PAGE>
111 CORCORAN EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--99.5%
- -----------------------------------------------------------------------------------
AEROSPACE--3.7%
-----------------------------------------------------------------
120,000 Allied-Signal, Inc. $ 4,455,000
-----------------------------------------------------------------
96,000 Gulfstream Aerospace Corp. 2,820,000
----------------------------------------------------------------- ------------
Total 7,275,000
----------------------------------------------------------------- ------------
CHEMICALS--2.7%
-----------------------------------------------------------------
90,000 DuPont (E.I.) de Nemours & Co. 5,450,625
----------------------------------------------------------------- ------------
CONSUMER GOODS--4.8%
-----------------------------------------------------------------
60,000 Emerson Electric Co. 3,300,000
-----------------------------------------------------------------
84,400 General Electric Co. 6,224,500
----------------------------------------------------------------- ------------
Total 9,524,500
----------------------------------------------------------------- ------------
CONSUMER SERVICES--1.0%
-----------------------------------------------------------------
70,000 CUC International, Inc. 2,012,500
----------------------------------------------------------------- ------------
ELECTRONICS--17.2%
-----------------------------------------------------------------
75,000 Boeing Co. 3,984,375
-----------------------------------------------------------------
30,000 (a) Cisco Systems, Inc. 2,587,500
-----------------------------------------------------------------
62,500 (a) Compaq Computer Corp. 3,902,344
-----------------------------------------------------------------
90,000 (a) Data General Corp. 1,614,375
-----------------------------------------------------------------
170,000 (a) EMC Corp. Mass 5,153,125
-----------------------------------------------------------------
60,000 Hewlett-Packard Co. 3,663,750
-----------------------------------------------------------------
50,000 Intel Corp. 3,881,250
-----------------------------------------------------------------
40,000 International Business Machines Corp. 4,382,500
-----------------------------------------------------------------
40,000 Parametric Technology Corp. 2,022,500
-----------------------------------------------------------------
60,000 Texas Instruments, Inc. 2,955,000
----------------------------------------------------------------- ------------
Total 34,146,719
----------------------------------------------------------------- ------------
ENTERTAINMENT--2.4%
-----------------------------------------------------------------
50,000 Disney (Walt) Co. 4,746,875
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
111 CORCORAN EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
FINANCE--9.6%
-----------------------------------------------------------------
78,700 American Express Co. $ 6,207,463
-----------------------------------------------------------------
49,000 American International Group, Inc. 4,939,813
-----------------------------------------------------------------
60,000 MGIC Investment Corp. 3,506,250
-----------------------------------------------------------------
50,000 Pennsylvania Real Estate Investment Trust 1,196,875
-----------------------------------------------------------------
50,000 S&P Depositary Receipts Trust, ADR 3,153,906
----------------------------------------------------------------- ------------
Total 19,004,307
----------------------------------------------------------------- ------------
FOOD & BEVERAGE--1.9%
-----------------------------------------------------------------
100,000 PepsiCo, Inc. 3,687,500
----------------------------------------------------------------- ------------
HEALTH TECHNOLOGY--16.9%
-----------------------------------------------------------------
40,000 Abbott Laboratories 2,600,000
-----------------------------------------------------------------
40,000 American Home Products Corp. 2,795,000
-----------------------------------------------------------------
75,000 Biogen, Inc. 2,625,000
-----------------------------------------------------------------
100,000 Biomet, Inc. 2,387,500
-----------------------------------------------------------------
50,000 Bristol-Myers Squibb Co. 4,681,250
-----------------------------------------------------------------
52,000 Johnson & Johnson 3,272,750
-----------------------------------------------------------------
35,000 Merck & Co., Inc. 3,309,688
-----------------------------------------------------------------
50,000 Novartis AG, ADR 3,994,560
-----------------------------------------------------------------
60,000 Pfizer, Inc. 4,365,000
-----------------------------------------------------------------
110,000 (a) Tenet Healthcare Corp. 3,485,625
----------------------------------------------------------------- ------------
Total 33,516,373
----------------------------------------------------------------- ------------
INDUSTRIAL SERVICES--1.9%
-----------------------------------------------------------------
90,000 Baker Hughes, Inc. 3,768,750
----------------------------------------------------------------- ------------
INSURANCE--4.3%
-----------------------------------------------------------------
53,400 Everest Re Holdings, Inc. 2,025,863
-----------------------------------------------------------------
86,250 Jefferson-Pilot Corp. 6,581,953
----------------------------------------------------------------- ------------
Total 8,607,816
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
111 CORCORAN EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
METALS--1.6%
-----------------------------------------------------------------
48,000 Aluminum Co. of America $ 3,228,000
----------------------------------------------------------------- ------------
MORTGAGE--4.5%
-----------------------------------------------------------------
80,000 Federal Home Loan Mortgage Corp. 3,300,000
-----------------------------------------------------------------
105,000 Federal National Mortgage Association 5,545,313
----------------------------------------------------------------- ------------
Total 8,845,313
----------------------------------------------------------------- ------------
OFFICE EQUIPMENT--4.2%
-----------------------------------------------------------------
60,000 Pitney Bowes, Inc. 5,043,750
-----------------------------------------------------------------
42,000 Xerox Corp. 3,262,875
----------------------------------------------------------------- ------------
Total 8,306,625
----------------------------------------------------------------- ------------
OIL--8.1%
-----------------------------------------------------------------
50,000 British Petroleum Co. PLC, ADR 4,150,000
-----------------------------------------------------------------
30,000 Chevron Corp. 2,405,625
-----------------------------------------------------------------
34,000 Exxon Corp. 2,074,000
-----------------------------------------------------------------
46,400 Halliburton Co. 2,502,700
-----------------------------------------------------------------
70,000 Mobil Corp. 5,035,625
----------------------------------------------------------------- ------------
Total 16,167,950
----------------------------------------------------------------- ------------
PERSONAL CARE PRODUCTS--1.2%
-----------------------------------------------------------------
25,876 Gillette Co. 2,388,676
----------------------------------------------------------------- ------------
PHARMACEUTICALS--2.2%
-----------------------------------------------------------------
150,000 (a) Watson Pharmaceuticals, Inc. 4,462,500
----------------------------------------------------------------- ------------
RAILROADS--0.9%
-----------------------------------------------------------------
28,000 (a) North Carolina Railroad Co. 1,778,000
----------------------------------------------------------------- ------------
</TABLE>
<PAGE>
111 CORCORAN EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
RETAIL--9.1%
-----------------------------------------------------------------
90,000 (a) Federated Department Stores, Inc. $ 4,100,625
-----------------------------------------------------------------
80,000 General Nutrition Cos., Inc. 2,730,000
-----------------------------------------------------------------
312,000 (a) K Mart Corp. 3,919,500
-----------------------------------------------------------------
70,000 Wal-Mart Stores, Inc. 2,795,625
-----------------------------------------------------------------
140,000 Walgreen Co. 4,506,250
----------------------------------------------------------------- ------------
Total 18,052,000
----------------------------------------------------------------- ------------
UTILITIES--1.3%
-----------------------------------------------------------------
120,000 Union Texas Petroleum Holdings, Inc. 2,617,500
----------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $156,091,974) 197,587,529
----------------------------------------------------------------- ------------
MUTUAL FUND SHARES--2.3%
- -----------------------------------------------------------------------------------
$4,483,324 Goldman Sachs Money Market Fund (AT NET ASSET VALUE) 4,483,324
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $160,575,298)(B) $202,070,853
----------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The cost of investments for federal tax purposes amounts to $160,575,298.
The net unrealized appreciation of investments on a federal tax basis
amounts to $41,495,555 which is comprised of $42,320,711 appreciation and
$825,156 depreciation at November 30, 1997.
Note: The categories of investments are shown as a percentage of net assets
($198,536,298) at November 30, 1997.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
PLC-- Public Limited Company
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $160,575,298) $202,070,853
- --------------------------------------------------------------------------------
Income receivable 355,926
- --------------------------------------------------------------------------------
Receivable for shares sold 391
- --------------------------------------------------------------------------------
Deferred expenses 3,256
- -------------------------------------------------------------------------------- ------------
Total assets 202,430,426
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $3,571,237
- -------------------------------------------------------------------
Accrued expenses 322,891
- ------------------------------------------------------------------- ----------
Total liabilities 3,894,128
- -------------------------------------------------------------------------------- ------------
Net Assets for 10,322,890 shares outstanding $198,536,298
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $144,591,007
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments 41,495,555
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments and options 12,334,853
- --------------------------------------------------------------------------------
Undistributed net investment income 114,883
- -------------------------------------------------------------------------------- ------------
Total Net Assets $198,536,298
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------
Net Asset Value Per Share ($198,536,298 / 10,322,890 shares outstanding) $19.23
- -------------------------------------------------------------------------------- ------------
Offering Price Per Share (100/95.50 of $19.23)* $20.14
- -------------------------------------------------------------------------------- ------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------
Dividends $ 1,152,130
- ----------------------------------------------------------------------------------------
Interest 105,011
- ---------------------------------------------------------------------------------------- -----------
Total income 1,257,141
- ----------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee $ 807,748
- --------------------------------------------------------------------------
Administrative personnel and services fee 137,645
- --------------------------------------------------------------------------
Custodian fees 5,003
- --------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 12,397
- --------------------------------------------------------------------------
Trustees' fees 2,308
- --------------------------------------------------------------------------
Auditing fees 6,059
- --------------------------------------------------------------------------
Legal fees 1,204
- --------------------------------------------------------------------------
Portfolio accounting fees 20,855
- --------------------------------------------------------------------------
Share registration costs 13,333
- --------------------------------------------------------------------------
Printing and postage 5,863
- --------------------------------------------------------------------------
Insurance premiums 1,352
- --------------------------------------------------------------------------
Miscellaneous 3,045
- -------------------------------------------------------------------------- ----------
Total expenses 1,016,812
- --------------------------------------------------------------------------
Waivers--
- --------------------------------------------------------------------------
Waiver of investment advisory fee (66,521)
- -------------------------------------------------------------------------- ----------
Net expenses 950,291
- ---------------------------------------------------------------------------------------- -----------
Net investment income 306,850
- ---------------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND OPTIONS:
- ----------------------------------------------------------------------------------------
Net realized gain on investments and options 6,491,303
- ----------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 12,256,522
- ---------------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments and options 18,747,825
- ---------------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $19,054,675
- ---------------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, 1997 MAY 31, 1997
----------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------
Net investment income $ 306,850 $ 872,046
- --------------------------------------------------------
Net realized gain on investments and options ($6,491,303
and $6,774,291, respectively, as computed for federal
tax purposes) 6,491,303 6,209,703
- --------------------------------------------------------
Net change in unrealized appreciation/depreciation 12,256,522 24,565,580
- -------------------------------------------------------- --------------- -----------
Change in net assets resulting from operations 19,054,675 31,647,329
- -------------------------------------------------------- --------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------
Distributions from net investment income (434,194) (676,030)
- --------------------------------------------------------
Distributions from net realized gains -- (1,900,075)
- -------------------------------------------------------- --------------- -----------
Change in net assets resulting from distributions
to shareholders (434,194) (2,576,105)
- -------------------------------------------------------- --------------- -----------
SHARE TRANSACTIONS--
- --------------------------------------------------------
Proceeds from sale of shares 14,851,470 119,180,895
- --------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 375,039 311,240
- --------------------------------------------------------
Cost of shares redeemed (2,813,925) (10,254,522)
- -------------------------------------------------------- --------------- -----------
Change in net assets resulting from share
transactions 12,412,584 109,237,613
- -------------------------------------------------------- --------------- -----------
Change in net assets 31,033,065 138,308,837
- --------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------
Beginning of period 167,503,233 29,194,396
- -------------------------------------------------------- --------------- -----------
End of period (including undistributed net investment
income of $114,883 and $242,227, respectively) $ 198,536,298 $167,503,233
- -------------------------------------------------------- --------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED)
NOVEMBER 30, YEAR ENDED MAY 31,
----------- -------------------------------
1997 1997 1996 1995(A)
----------- ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 17.33 $13.80 $11.48 $10.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
Net investment income 0.03 0.13 0.14 0.11
- -----------------------------------------------------
Net realized and unrealized gain (loss) on
investments and options 1.91 3.72 2.57 1.44
- ----------------------------------------------------- -------- ------ ------ -------
Total from investment operations 1.94 3.85 2.71 1.55
- ----------------------------------------------------- -------- ------ ------ -------
LESS DISTRIBUTIONS
- -----------------------------------------------------
Distributions from net investment income (0.04) (0.13) (0.16) (0.07)
- -----------------------------------------------------
Distributions from net realized gain on investments
and options -- (0.19) (0.23) --
- ----------------------------------------------------- -------- ------ ------ -------
Total distributions (0.04) (0.32) (0.39) (0.07)
- ----------------------------------------------------- -------- ------ ------ -------
NET ASSET VALUE, END OF PERIOD $ 19.23 $17.33 $13.80 $11.48
- ----------------------------------------------------- -------- ------ ------ -------
TOTAL RETURN(B) 11.23% 28.25% 23.91% 15.55%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
Expenses 1.00%* 1.03% 1.25% 1.25% *
- -----------------------------------------------------
Net investment income 0.32%* 0.81% 1.08% 3.00% *
- -----------------------------------------------------
Expense waiver/reimbursement(c) 0.07%* 0.16% 0.20% 1.42% *
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
Net assets, end of period (000 omitted) $198,536 $167,503 $29,194 $24,581
- -----------------------------------------------------
Average commission rate paid(d) $0.0582 $0.0598
- -----------------------------------------------------
Portfolio turnover 31% 55% 69% 4 %
- -----------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 5, 1994 (date of initial
public investment) to May 31, 1995.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
111 Corcoran 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 three portfolios. The financial statements included herein
are only those of 111 Corcoran Equity Fund (the "Fund"), a diversified
portfolio. The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held. The investment
objective of the Fund is to provide high total return over longer periods of
time through appreciation of capital and current income provided by dividends
and interest payments.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on a national securities exchange. Unlisted equity
securities are generally valued at the mean of the latest bid and asked
price as furnished by an independent pricing service. Short-term securities
are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of sixty days or
less at the time of purchase may be valued at amortized cost, which
approximates fair market value. Investments in other open-end regulated
investment companies are valued at net asset value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains 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.
<PAGE>
111 CORCORAN EQUITY FUND
- --------------------------------------------------------------------------------
DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized over a period not to exceed five years from the Fund's
commencement date.
OPTIONS CONTRACTS--The Fund may write option contracts. A written option
obligates the Fund to deliver (a call), or to receive (a put), the contract
amount upon exercise by the holder of the option. The principal reason for
writing call or put options is to obtain, through receipt of premiums, a
greater current return that would be realized on underlying securities
alone. By writing call options, the Fund may forego potential gains on the
underlying security. By writing a put option, the Fund risks becoming
obligated to purchase the underlying security for more than its current
market price upon exercise. Premiums received from writing options are
recorded as a liability and an unrealized gain or loss is measured by the
difference between the current value and the premium received. For the
period ended November 30, 1997, the Fund had a realized gain of $74,440 on
written options. At November 30, 1997, the Fund had no outstanding options.
The following is a summary of the Fund's written options activity:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS CONTRACTS PROCEEDS
-------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Outstanding at May 31, 1997 250 $ 185,889
Contracts open 6,560 1,703,691
Contracts expired (1,250) (307,675)
Contracts closed (4,770) (1,410,451)
Contracts exercised (790) (171,454)
---------- -----------
Outstanding at November 30, 1997 0 $ 0
-------- -----------
</TABLE>
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(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).
<PAGE>
111 CORCORAN EQUITY FUND
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1997 MAY 31, 1997
- ------------------------------------------------------- ------------------ -------------
<S> <C> <C>
Shares sold 786,318 8,209,160
- -------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 20,527 19,662
- -------------------------------------------------------
Shares redeemed (149,986) (678,535)
- ------------------------------------------------------- -------------- ------------
Net change resulting from share transactions 656,859 7,550,287
- ------------------------------------------------------- -------------- ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Central Carolina Bank and Trust Company, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.85% of the Fund's average daily net assets.
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.
Under the terms of an investment sub-advisory agreement between the Adviser and
Franklin Street Advisors, Inc., (the "Sub-Adviser"), the Sub-Adviser receives an
annual fee from the Adviser equal to 0.65% of the Fund's advisory fee. The
Sub-Adviser may voluntarily choose to waive any portion of its fee.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period. FAS
may voluntarily choose to waive any portion of its fee.
DISTRIBUTION SERVICES FEE--The Fund has adopted a Distribution Plan (the "Plan")
pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund shares. The Plan provides that the Fund may incur distribution
expenses up to 0.35% of the average daily net assets of the Fund shares,
annually, to compensate FSC. The Fund did not pay or accrue distribution
expenses during the period ended November 30, 1997.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with FAS, the Fund will pay FSS up to 0.25% of average daily net assets of the
Fund for the period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts. The Fund did not pay or
accrue shareholder services expenses during the period ended November 30, 1997.
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 Fund. The fee
paid to FSSC is based on the size, type, and number of accounts and transactions
made by shareholders.
<PAGE>
111 CORCORAN EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $35,000 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five-year period following December 2, 1994 (the date the Fund became
effective). For the period ended November 30, 1997, the Fund paid $2,637
pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1997, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
Purchases $72,331,203
- ------------------------------------------------------------------------------- -----------
Sales $58,018,806
- ------------------------------------------------------------------------------- -----------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
John E. Murray, Jr. Vice President
Wesley W. Posvar Joseph S. Machi
Marjorie P. Smuts Vice President and Assistant Treasurer
C. Grant Anderson
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.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
LOGO
111 Corcoran
North Carolina
Municipal
Securities Fund
Semi-Annual Report
November 30, 1997
FED LOGO
Cusip 682365101
2122402 (1/98)
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present your Semi-Annual Report to Shareholders for 111 Corcoran
North Carolina Municipal Securities Fund. This report covers the first half of
the fund's fiscal year, which is the six-month period from June 1, 1997 through
November 30, 1997.
Inside, you will find complete information about the fund's operation during
that reporting period, including an investment review by the fund's portfolio
manager, a list of the fund's quality municipal bond holdings, and the fund's
financial statements.
To help your money earn double-tax-free income--exempt from federal and North
Carolina state income taxes--the fund invests primarily in a portfolio of
high-quality bonds issued by North Carolina municipalities.* All bonds in the
fund's portfolio are rated A or higher by nationally recognized rating agencies.
During the six-month reporting period, the fund achieved a total return, based
on net asset value, of 4.23%, through double-tax-free income totaling $0.24 per
share, and a 1.9% increase in net asset value. The fund's net assets totaled $37
million at the end of the reporting period.**
Thank you for selecting 111 Corcoran North Carolina Municipal Securities Fund as
a way to keep more of your investment earnings. We'll continue to update you on
your fund's progress.
Sincerely,
[SIGNATURE APPEARS HERE]
Edward C. Gonzales
President
January 15, 1998
* Income may be subject to the federal alternative minimum tax.
** 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. Total return for the reporting period, adjusted for the fund's
sales charge, was -0.48%.
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Interest rates continued to fall during the six month reporting period ended
November 30, 1997. The economic problems in Asia have led to a flight to quality
during the last two months, and vast sums of Asian money have flowed into the
U.S. Treasury market. This has led to a decline in all interest rates, including
North Carolina municipals.
The total return for the fund based on net asset value was 4.23% for the six
month reporting period.* The fund's average maturity is approximately eight
years, which is somewhat shorter than the most popular municipal indices and
caused the fund to slightly underperform the indices.
Going forward into 1998 we will look to extend maturities where we can
advantageously do so. We will seek to continue to keep the quality high and
emphasize current return.
* 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. Total return for the reporting period, adjusted for the fund's
sales charge, was -0.48%.
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
MUNICIPAL SECURITIES--97.8%
- --------------------------------------------------------------------------
NORTH CAROLINA--97.8%
--------------------------------------------------------
$ 250,000 Alamance County, NC, GO UT Bonds, 5.90%, 5/1/2006 AA- $ 268,415
--------------------------------------------------------
500,000 Cabarrus County, NC, GO UT Bonds, 5.30% (MBIA INS),
2/1/2010 AAA 519,630
--------------------------------------------------------
250,000 Catawba County, NC, GO UT Bonds, 5.70%, 6/1/2003 AA- 267,003
--------------------------------------------------------
500,000 Catawba County, NC, GO UT Bonds, 5.75%, 6/1/2007 AA- 539,065
--------------------------------------------------------
500,000 Catawba County, NC, Hospital Refunding Revenue Bond,
5.85% (Catawba Memorial Hospital)/(AMBAC INS)/ (Original
Issue Yield: 5.90%), 10/1/2004 AAA 539,690
--------------------------------------------------------
500,000 Catawba County, NC, Hospital Refunding Revenue Bonds,
5.95% (Catawba Memorial Hospital)/(AMBAC INS)/ (Original
Issue Yield: 6.00%), 10/1/2005 AAA 540,345
--------------------------------------------------------
500,000 Catawba County, NC, Revenue Bonds, 6.20% (Catawba
Memorial Hospital)/(AMBAC LOC)/(Original Issue Yield:
6.25%), 10/1/2009 AAA 542,355
--------------------------------------------------------
500,000 Charlotte, NC, GO UT Bonds, 5.30%, 4/1/2008 AAA 527,260
--------------------------------------------------------
1,000,000 Charlotte, NC, GO UT Public Improvement Bonds, 5.30%,
4/1/2008 AAA 1,054,520
--------------------------------------------------------
500,000 Charlotte, NC, GO UT Refunding Bonds (Series A), 5.50%,
7/1/2004 AAA 529,065
--------------------------------------------------------
500,000 Chatham County, NC, GO UT Bonds, 5.40%, 4/1/2007 A+ 529,845
--------------------------------------------------------
500,000 Chatham County, NC, GO UT Bonds, 5.40%, 4/1/2010 A+ 525,280
--------------------------------------------------------
465,000 Chatham County, NC, GO UT Refunding Bonds, 5.25%
(Original Issue Yield: 5.35%), 5/1/2010 A+ 480,870
--------------------------------------------------------
1,000,000 Craven County, NC, GO UT Bonds, 5.50% (MBIA INS),
6/1/2010 AAA 1,058,170
--------------------------------------------------------
600,000 Cumberland County, NC, GO UT Bonds, 5.80% (MBIA INS),
2/1/2007 AAA 642,840
--------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$ 500,000 Cumberland County, NC, GO UT Bonds, 4.90% (MBIA INS),
3/1/2010 $ 503,355
--------------------------------------------------------
500,000 Cumberland County, NC, GO UT Bonds, 4.90%, 3/1/2009 AAA 505,750
--------------------------------------------------------
470,000 Duplin County, NC, GO UT Bonds, 5.30% (MBIA INS)/
(Original Issue Yield: 5.40%), 4/1/2007 AAA 493,223
--------------------------------------------------------
500,000 Durham & Wake Counties Special Airport District, NC, GO
UT Refunding Bonds, 5.75% (Original Issue Yield: 5.80%),
4/1/2002 AAA 531,660
--------------------------------------------------------
250,000 Fayetteville, NC Public Works Commission, Revenue Bonds
(Series B), 5.90% (FSA INS)/(Original Issue Yield:
6.00%), 3/1/2007 AAA 266,740
--------------------------------------------------------
500,000 Fayetteville, NC Public Works Commission, Revenue Bonds,
5.40% (AMBAC INS)/(Original Issue Yield: 5.50%),
3/1/2009 AAA 523,315
--------------------------------------------------------
1,250,000 Forsyth County, NC, GO UT Bonds, 5.70%, 8/1/2010 AAA 1,316,862
--------------------------------------------------------
500,000 Forsyth County, NC, GO UT Bonds, 5.60%, 8/1/2009 AAA 526,270
--------------------------------------------------------
750,000 Gaston County, NC, GO UT Bonds, 5.70%, 3/1/2004 AAA 804,900
--------------------------------------------------------
500,000 Gastonia, NC, GO UT Bonds, 5.50% (MBIA INS)/(Original
Issue Yield: 5.55%), 5/1/2013 AAA 524,095
--------------------------------------------------------
500,000 Guilford County, NC, GO UT Bonds, 5.30% (Original Issue
Yield: 5.40%), 5/1/2010 AA+ 522,315
--------------------------------------------------------
500,000 Guilford County, NC, GO UT Bonds, 5.30%, 5/1/2009 AA+ 525,010
--------------------------------------------------------
1,000,000 Guilford County, NC, GO UT Bonds, 5.40% (Original Issue
Yield: 5.55%), 4/1/2009 AA+ 1,046,810
--------------------------------------------------------
500,000 High Point, NC, GO UT Revenue Bonds, 5.60% (Original
Issue Yield: 5.85%), 3/1/2014 AA 523,770
--------------------------------------------------------
500,000 Iredell County, NC, Certificates of Participation, 5.50%
(FGIC INS)/(Original Issue Yield: 5.60%), 6/1/2001 AAA 521,990
--------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$ 350,000 Iredell County, NC, Certificates of Participation,
6.125% (FGIC INS)/(Original Issue Yield: 6.23%),
6/1/2007 AAA $ 378,402
--------------------------------------------------------
500,000 Mecklenburg County, NC, GO UT Refunding Bonds, 5.90%
(Original Issue Yield: 6.05%), 3/1/2004 AAA 533,390
--------------------------------------------------------
350,000 Mecklenburg County, NC, GO UT Bonds, 5.50% (Original
Issue Yield: 5.60%), 4/1/2011 AAA 367,433
--------------------------------------------------------
500,000 Mooresville, NC Grade School District Facilities Corp.,
Certificates of Participation, 6.30% (AMBAC INS)/
(Original Issue Yield: 6.348%), 10/1/2009 AAA 544,960
--------------------------------------------------------
500,000 Morganton, NC, GO UT Revenue Bonds, 5.60% (FGIC INS),
6/1/2007 AAA 535,650
--------------------------------------------------------
500,000 Morganton, NC, GO UT Revenue Bonds, 5.70% (FGIC
INS)/(Original Issue Yield: 5.80%), 6/1/2012 AAA 530,205
--------------------------------------------------------
500,000 Morganton, NC, GO UT Revenue Bonds, 5.60%, 6/1/2008 AAA 534,140
--------------------------------------------------------
1,000,000 New Hanover County, NC, (Project R-5) GO UT Bonds, 5.40%
(Original Issue Yield: 5.45%), 3/1/2009 A+ 1,052,400
--------------------------------------------------------
500,000 New Hanover County, NC, GO UT Bonds, 5.30% (Original
Issue Yield: 5.50%), 5/1/2014 A+ 510,120
--------------------------------------------------------
500,000 New Hanover County, NC, GO UT Bonds, 5.50% (Original
Issue Yield: 5.70%), 3/1/2012 A+ 523,570
--------------------------------------------------------
750,000 North Carolina Educational Facilities Finance Agency,
Revenue Bonds, 6.625% (Duke University), 10/1/2008 AA+ 820,747
--------------------------------------------------------
200,000 North Carolina Medical Care Commission Hospital, Revenue
Bonds, 5.95% (Presbyterian Health Services Corp)/
(Original Issue Yield: 6.00%), 10/1/2007 AA 213,578
--------------------------------------------------------
500,000 North Carolina Medical Care Commission Hospital, Revenue
Refunding Bonds, 6.25% (Rex Hospital)/(Original Issue
Yield: 6.33%), 6/1/2017 A+ 535,385
--------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$1,750,000 North Carolina Municipal Power Agency No. 1, Revenue
Bonds, 10.50% (Catawba Electric)/(United States Treasury
COL), 1/1/2010 AAA $ 2,441,373
--------------------------------------------------------
500,000 North Carolina Municipal Power Agency No. 1, Revenue
Refunding Bonds, 5.25% (Catawba Electric)/(AMBAC INS)/
(Original Issue Yield: 5.55%), 1/1/2008 AAA 522,285
--------------------------------------------------------
500,000 North Carolina Municipal Power Agency No. 1, Revenue
Refunding Bonds, 5.75% (Catawba Electric)/(AMBAC INS)/
(Original Issue Yield: 5.80%), 1/1/2002 AAA 527,105
--------------------------------------------------------
500,000 North Carolina State, GO UT Bonds, 5.00%, 6/1/2004 AAA 519,970
--------------------------------------------------------
500,000 North Carolina State, GO UT Bonds, 5.10%, 3/1/2008 AAA 520,640
--------------------------------------------------------
250,000 Pitt County, NC, Certificate of Participation, 6.05%
(FGIC INS), 4/1/1998 AAA 251,903
--------------------------------------------------------
1,000,000 Pitt County, NC, GO UT Bonds, 5.10% (Original Issue
Yield: 5.20%), 2/1/2006 AA- 1,040,220
--------------------------------------------------------
500,000 Randolph County, NC, GO UT Bonds, 6.20%, 5/1/2005 A+ 540,530
--------------------------------------------------------
500,000 Rowan County, NC, GO UT Bonds, 5.60% (FGIC INS),
5/1/2011 AAA 526,400
--------------------------------------------------------
500,000 Rowan County, NC, GO UT Bonds, 5.60% (MBIA INS),
4/1/2009 AAA 532,490
--------------------------------------------------------
500,000 Union County, NC, (Series B) GO UT Bonds, 5.20% (MBIA
INS)/(Original Issue Yield: 5.35%), 6/1/2012 AAA 510,020
--------------------------------------------------------
500,000 Union County, NC, GO UT School Bonds, 5.80%, 3/1/2006 A+ 532,970
--------------------------------------------------------
600,000 Wake County, NC Industrial Facilities & PCFA, Revenue
Bonds, 6.90% (Carolina Power & Light Co.), 4/1/2009 A 642,985
--------------------------------------------------------
500,000 Wilmington, NC, GO UT Bonds, 6.30%, 3/1/2005 A+ 545,260
--------------------------------------------------------
1,000,000 Winston-Salem, NC Water & Sewer System, Bonds, 6.25%
(Original Issue Yield: 6.299%), 6/1/2005 AA+ 1,096,730
--------------------------------------------------------
500,000 Winston-Salem, NC, GO UT Bonds, 5.40% (Original Issue
Yield: 5.30%), 6/1/2009 AAA 528,005
--------------------------------------------------------
</TABLE>
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$ 500,000 Winston-Salem, NC, GO UT Bonds, 5.40% (Original Issue
Yield: 5.50%), 6/1/2011 AAA $ 523,785
-------------------------------------------------------- -----------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $35,244,639) 36,583,069
-------------------------------------------------------- -----------
MUTUAL FUND SHARES--1.0%
- --------------------------------------------------------------------------
69,700 North Carolina Daily Tax-Free Income Money Market Fund 69,700
--------------------------------------------------------
292,225 PNC Funds North Carolina Money Market Fund 292,225
-------------------------------------------------------- -----------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 361,925
-------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $35,606,564)(A) $36,944,994
-------------------------------------------------------- -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $35,606,564. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,338,430 which is comprised of $1,341,437 appreciation and $3,007
depreciation at November 30, 1997.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($37,387,845) at November 30, 1997.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
COL -- Collateralized
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GO -- General Obligation
INS -- Insured
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
PCFA -- Pollution Control Finance Authority
UT -- Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $35,606,564) $36,944,994
- --------------------------------------------------------------------------------
Income receivable 592,374
- -------------------------------------------------------------------------------- -----------
Total assets 37,537,368
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Income distribution payable $144,626
- ---------------------------------------------------------------------
Payable to Bank 112
- ---------------------------------------------------------------------
Accrued expenses 4,785
- --------------------------------------------------------------------- --------
Total liabilities 149,523
- -------------------------------------------------------------------------------- -----------
Net Assets for 3,471,869 shares outstanding $37,387,845
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $36,150,611
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,338,430
- --------------------------------------------------------------------------------
Accumulated net realized loss on investments (101,196)
- -------------------------------------------------------------------------------- -----------
Total Net Assets $37,387,845
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- --------------------------------------------------------------------------------
Net Asset Value Per Share ($37,387,845 / 3,471,869 shares outstanding) $10.77
- -------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $10.77)* $11.28
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest $ 937,911
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $ 139,358
- ---------------------------------------------------------------------
Administrative personnel and services fee 26,918
- ---------------------------------------------------------------------
Custodian fees 3,281
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,918
- ---------------------------------------------------------------------
Trustees' fees 1,937
- ---------------------------------------------------------------------
Auditing fees 6,302
- ---------------------------------------------------------------------
Legal fees 1,302
- ---------------------------------------------------------------------
Portfolio accounting fees 23,810
- ---------------------------------------------------------------------
Share registration costs 6,277
- ---------------------------------------------------------------------
Printing and postage 4,637
- ---------------------------------------------------------------------
Insurance premiums 1,559
- ---------------------------------------------------------------------
Miscellaneous 2,725
- --------------------------------------------------------------------- ---------
Total expenses 234,024
- ---------------------------------------------------------------------
Waiver--
- ---------------------------------------------------------------------
Waiver of investment advisory fee (139,358)
- --------------------------------------------------------------------- ---------
Net expenses 94,666
- --------------------------------------------------------------------------------- ----------
Net investment income 843,245
- --------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain on investments 218,705
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 461,819
- --------------------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 680,524
- --------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,523,769
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, MAY 31,
1997 1997
------------ ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------
Net investment income $ 843,245 $1,681,826
- --------------------------------------------------------------
Net realized gain (loss) on investments ($218,705 and $8,210
net gains, respectively, as computed for federal tax purposes) 218,705 8,210
- --------------------------------------------------------------
Net change in unrealized appreciation/depreciation 461,819 816,069
- -------------------------------------------------------------- ----------- ---------
Change in net assets resulting from operations 1,523,769 2,506,105
- -------------------------------------------------------------- ----------- ---------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------
Distributions from net investment income (843,245) (1,681,826)
- -------------------------------------------------------------- ----------- ---------
SHARE TRANSACTIONS--
- --------------------------------------------------------------
Proceeds from sale of shares 3,048,137 5,209,295
- --------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 73,888 203,101
- --------------------------------------------------------------
Cost of shares redeemed (2,306,311) (7,217,065)
- -------------------------------------------------------------- ----------- ---------
Change in net assets resulting from share transactions 815,714 (1,804,669)
- -------------------------------------------------------------- ----------- ---------
Change in net assets 1,496,238 (980,390)
- --------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------
Beginning of period 35,891,607 36,871,997
- -------------------------------------------------------------- ----------- ---------
End of period $37,387,845 $35,891,607
- -------------------------------------------------------------- ----------- ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED MAY 31,
NOVEMBER 30, ---------------------------------------------------
1997 1997 1996 1995 1994 1993(a)
------------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.57 $10.34 $10.44 $10.17 $10.36 $10.00
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.24 0.49 0.49 0.48 0.47 0.37
- ------------------------------------
Net realized and unrealized gain
(loss) on investments 0.20 0.23 (0.10) 0.27 (0.18) 0.36
- ------------------------------------ --------- ------ ------ ------ ------ -------
Total from investment operations 0.44 0.72 0.39 0.75 0.29 0.73
- ------------------------------------ --------- ------ ------ ------ ------ -------
LESS DISTRIBUTIONS
- ------------------------------------
Distributions from net investment
income (0.24) (0.49) (0.49) (0.48) (0.47) (0.37)
- ------------------------------------
Distributions from net realized
gain on investments -- -- -- -- (0.01) --
- ------------------------------------ --------- ------ ------ ------ ------ -------
Total distributions (0.24) (0.49) (0.49) (0.48) (0.48) (0.37)
- ------------------------------------ --------- ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $10.77 $10.57 $10.34 $10.44 $10.17 $10.36
- ------------------------------------ --------- ------ ------ ------ ------ -------
TOTAL RETURN(B) 4.23% 7.13% 3.72% 7.71% 2.68% 7.37%
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.51%* 0.63% 0.52% 0.57% 0.69% 0.70% *
- ------------------------------------
Net investment income 4.54%* 4.60% 4.73% 4.82% 4.42% 4.51% *
- ------------------------------------
Expense waiver/reimbursement(c) 0.75%* 0.75% 0.75% 0.75% 0.75% 0.99% *
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period (000
omitted) $37,388 $35,892 $36,872 $39,803 $45,864 $28,152
- ------------------------------------
Portfolio turnover 18% 30% 61% 47% 24% 17%
- ------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from July 22, 1992 (date of initial
public investment) to May 31, 1993.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
111 Corcoran 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 three portfolios. The financial statements included herein
are only those of 111 Corcoran North Carolina Municipal Securities Fund (the
"Fund"), a non-diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to provide income which is exempt
from federal regular income tax and North Carolina state income tax.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. Short-term securities are valued at the
prices provided by an independent pricing service. However, short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be valued at amortized cost, which approximates fair market
value. Investments in other open-end regulated investment companies are
valued at net asset value.
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").
Distributions to shareholders are recorded on the ex-dividend date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At May 31, 1997, the Fund, for federal tax purposes, had a capital loss
carryforward of $319,766, which will reduce the Fund's 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 Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward of $264,785 will expire in 2003 and $54,981 will expire in
2004.
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains 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.
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.
(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).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
NOVEMBER 30, MAY 31,
1997 1997
- ------------------------------------------------------------- ------------ ----------
<S> <C> <C>
Shares sold 283,905 496,835
- -------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 6,876 19,318
- -------------------------------------------------------------
Shares redeemed (214,787) (687,147)
- ------------------------------------------------------------- ----------- ----------
Net change resulting from share transactions 75,994 (170,994)
- ------------------------------------------------------------- ----------- ----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Central Carolina Bank and Trust Company, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.75% of the Fund's average daily net assets.
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.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The fee paid to FAS is based
on the level of average aggregate net assets of the Trust for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the Fund.
The fee paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
<PAGE>
111 CORCORAN NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1997, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Purchases $8,014,218
- -------------------------------------------------------------------------------- ----------
Sales $6,602,819
- -------------------------------------------------------------------------------- ----------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
November 30, 1997, 31.2% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 12.9% of total investments.
<PAGE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Richard B. Fisher
John E. Murray, Jr. Vice President
Wesley W. Posvar Joseph S. Machi
Marjorie P. Smuts Vice President and Assistant Treasurer
C. Grant Anderson
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.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
