CCB FUNDS LOGO
Central Carolina Bank
CCB
North Carolina
Municipal
Securities Fund
Semi-Annual Report
November 30, 1998
Federated Securities Corp. is the distributor of the fund.
Cusip 12500E109
2122401 (1/99) Recycled Paper Logo
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report for CCB 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, 1998 through November 30, 1998.
Inside, you will find complete information about the fund's operation during
that period, including an investment review by the fund's portfolio manager, a
list of the fund's quality municipal bond holdings, and the financial
statements.
To help tax-sensitive North Carolina residents earn double-tax-free
income--exempt from federal and 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 period, CCB North Carolina Municipal Securities Fund
achieved a total return of 3.38% through double-tax-free income totaling $0.24
per share, and a $0.13 increase in net asset value.+ The fund's net assets
totaled $41.4 million at the end of the period.
Thank you for joining other tax-sensitive North Carolina investors in pursuing
tax-free income through the diversification, professional management and
convenience of this fund. We'll continue to update you on your fund's progress.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
January 15, 1999
* 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 period adjusted for the fund's sales
charge was (1.24%).
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The municipal market continued to rally through the six months ended
November 30, 1998. Ten year AAA tax free yields dropped from 4.45% to 4.16%. It
should be pointed out that yields on treasuries dropped much more rapidly than
on municipals during this period. As a result municipals are much cheaper at
this time and we feel represent good value.
The six month non-annualized return for the CCB North Carolina Municipal
Securities Fund for the period ended November 30, 1998 was 3.38%.* The average
quality is AA and the average maturity is 7.73 years. As of November 30, 1998,
the 7-day distribution rate at net asset value was 4.30%. We feel this
combination of yield, maturity and quality represents excellent value. As of
November 30, 1998, the 30-day SEC yield based on offering price was 3.83%.
Going forward into 1999 we will look to extend maturities where we can do so
advantageously.
* 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 period adjusted for the Fund's
sales charge was (1.24%). The 7-day distribution rate based on offering
price was 4.10%.
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--97.1%
- --------------------------------------------------------------------------
NORTH CAROLINA--97.1%
--------------------------------------------------------
$ 500,000 Buncombe County, NC, Certificate Participation Refunding
Bonds, 4.75% (AMBAC INS), 12/1/2011 AAA $ 507,090
--------------------------------------------------------
500,000 Cabarrus County, NC, GO UT, 5.30% (MBIA INS), 2/1/2010 AAA 539,840
--------------------------------------------------------
250,000 Catawba County, NC, GO UT Bonds, 5.70%, 6/1/2003 AA- 269,650
--------------------------------------------------------
500,000 Catawba County, NC, GO UT Bonds, 5.75%, 6/1/2007 AA- 547,180
--------------------------------------------------------
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 542,555
--------------------------------------------------------
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 542,970
--------------------------------------------------------
500,000 Catawba County, NC, Revenue Bonds, 6.20% (Catawba
Memorial Hospital)/(AMBAC INS)/(Original Issue Yield:
6.25%), 10/1/2009 AAA 550,330
--------------------------------------------------------
500,000 Charlotte, NC, GO UT Public Improvement Bonds, 4.75%
(Original Issue Yield: 4.83%), 2/1/2013 AAA 507,975
--------------------------------------------------------
500,000 Charlotte, NC, GO UT Public Improvement Bonds, 5.30%,
4/1/2008 AAA 539,100
--------------------------------------------------------
1,000,000 Charlotte, NC, GO UT 4.75%, 2/1/2011 AAA 1,032,170
--------------------------------------------------------
500,000 Chatham County, NC, GO UT Bonds, 5.40%, 4/1/2007 A+ 544,470
--------------------------------------------------------
500,000 Chatham County, NC, GO UT Bonds, 5.40%, 4/1/2010 A+ 540,885
--------------------------------------------------------
465,000 Chatham County, NC, GO UT Refunding Bonds, 5.25%
(Original Issue Yield: 5.35%), 5/1/2010 A+ 498,192
--------------------------------------------------------
500,000 Chatham County, NC, GO UT, 5.40% (Original Issue Yield:
5.50%), 4/1/2012 A+ 535,520
--------------------------------------------------------
1,000,000 Concord, NC, Utility System Revenue Refunding Bonds
(Series B), 4.60% (MBIA INS), 12/1/2010 AAA 1,019,900
--------------------------------------------------------
</TABLE>
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$1,000,000 Craven County, NC, GO UT Bonds, 5.50% (MBIA INS),
6/1/2010 AAA $ 1,090,460
--------------------------------------------------------
500,000 Cumberland County, NC, GO UT Refunding Bonds, 5.00%
(FGIC LOC), 2/1/2013 AAA 519,300
--------------------------------------------------------
480,000 Cumberland County, NC, GO UT, 5.00% (MBIA INS)/
(Original Issue Yield: 5.15%), 3/1/2015 AAA 493,176
--------------------------------------------------------
470,000 Duplin County, NC, GO UT Bonds, 5.30% (MBIA INS)/
(Original Issue Yield: 5.40%), 4/1/2007 AAA 501,119
--------------------------------------------------------
500,000 Durham & Wake Counties Special Airport District, NC, GO
UT Refunding Bonds, 5.75% (Original Issue Yield: 5.80%),
4/1/2002 AAA 532,590
--------------------------------------------------------
250,000 Fayetteville, NC Public Works Commission, Revenue Bonds
(Series B), 5.90% (FSA LOC)/(Original Issue Yield:
6.00%), 3/1/2007 AAA 269,665
--------------------------------------------------------
500,000 Fayetteville, NC Public Works Commission, Revenue Bonds,
5.40% (AMBAC INS)/(Original Issue Yield: 5.50%),
3/1/2009 AAA 535,540
--------------------------------------------------------
500,000 Forsyth County, NC Certificates of Partnership,
Refunding Public Improvement Bonds, 4.60% (Original
Issue Yield: 4.78%), 10/1/2011 AA 501,015
--------------------------------------------------------
500,000 Forsyth County, NC, GO UT, 4.75% (Original Issue Yield:
5.00%), 2/1/2013 AAA 507,975
--------------------------------------------------------
1,000,000 Gaston County, NC, GO UT, 5.70% (MBIA INS), 3/1/2004 AAA 814,808
--------------------------------------------------------
500,000 Gastonia, NC, GO UT, 5.50% (MBIA INS)/(Original Issue
Yield: 5.55%), 5/1/2013 AAA 540,660
--------------------------------------------------------
500,000 Guilford County, NC, GO UT Bonds, 5.30% (Original Issue
Yield: 5.40%), 5/1/2010 AA+ 539,380
--------------------------------------------------------
500,000 Guilford County, NC, GO UT Bonds, 5.30%, 5/1/2009 AA+ 540,410
--------------------------------------------------------
500,000 Guilford County, NC, GO UT Bonds, 5.40% (Original Issue
Yield: 5.55%), 4/1/2009 AA+ 531,780
--------------------------------------------------------
</TABLE>
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$ 500,000 Guilford County, NC, GO UT, 5.40% (Original Issue Yield:
5.55%), 5/1/2012 AA+ $ 537,885
--------------------------------------------------------
575,000 High Point, NC, Revenue Bonds, 5.60% (Original Issue
Yield: 5.85%), 3/1/2014 AA 617,510
--------------------------------------------------------
500,000 Iredell County, NC, Certificates of Participation, 5.50%
(FGIC INS)/(Original Issue Yield: 5.60%), 6/1/2001 AAA 522,115
--------------------------------------------------------
350,000 Iredell County, NC, Certificates of Participation,
6.125% (FGIC INS)/(Original Issue Yield: 6.23%),
6/1/2007 AAA 381,500
--------------------------------------------------------
500,000 Johnston County, NC, GO UT, 5.00% (FGIC INS), 5/1/2010 AAA 528,090
--------------------------------------------------------
500,000 Mecklenburg County, NC, GO UT Refunding Bonds, 5.90%
(Original Issue Yield: 6.05%), 3/1/2004 AAA 536,505
--------------------------------------------------------
350,000 Mecklenburg County, NC, GO UT Bonds, 5.50% (Original
Issue Yield: 5.60%), 4/1/2011 AAA 378,273
--------------------------------------------------------
1,250,000 Moore County, NC, GO UT Bonds, 4.90% (MBIA INS),
6/1/2013 AAA 1,283,900
--------------------------------------------------------
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 552,095
--------------------------------------------------------
500,000 Morganton, NC, GO UT Revenue Bonds, 5.60% (FGIC INS),
6/1/2007 AAA 547,920
--------------------------------------------------------
500,000 Morganton, NC, Water & Sewer GO UT Revenue Bonds, 5.60%
(FGIC INS), 6/1/2008 AAA 546,540
--------------------------------------------------------
1,000,000 New Hanover County, NC, (Project R-5) GO UT Bonds, 5.40%
(Original Issue Yield: 5.45%), 3/1/2009 AA- 1,077,580
--------------------------------------------------------
500,000 New Hanover County, NC, GO UT Bonds, 5.30% (Original
Issue Yield: 5.50%), 5/1/2014 AA- 526,995
--------------------------------------------------------
500,000 New Hanover County, NC, GO UT Bonds, 5.50% (Original
Issue Yield: 5.70%), 3/1/2012 AA- 536,080
--------------------------------------------------------
750,000 North Carolina Educational Facilities Finance Agency,
Revenue Bonds, 6.625% (Duke University), 10/1/2008 AA+ 818,933
--------------------------------------------------------
</TABLE>
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$ 200,000 North Carolina Medical Care Commission, Revenue Bonds,
5.95% (Presbyterian Health Services Corp)/(Original
Issue Yield: 6.00%), 10/1/2007 AA $ 219,306
--------------------------------------------------------
250,000 North Carolina Medical Care Commission, Revenue
Refunding Bonds, 5.00% (Duke University Health
Systems)/(Original Issue Yield: 5.15%), 6/1/2018 AA 248,308
--------------------------------------------------------
1,850,000 North Carolina Municipal Power Agency No. 1, Revenue
Bonds, 10.50% (Catawba Electric)/(United States Treasury
COL), 1/1/2010 AAA 2,545,582
--------------------------------------------------------
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 535,590
--------------------------------------------------------
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 528,495
--------------------------------------------------------
1,000,000 North Carolina State, GO UT, 4.75%, (Original Issue
Yield: 4.88%), 4/1/2013 AAA 1,019,250
--------------------------------------------------------
500,000 North Carolina State, GO UT, 5.00%, 6/1/2004 AAA 529,670
--------------------------------------------------------
500,000 North Carolina State, GO UT, 5.10%, 3/1/2008 AAA 537,735
--------------------------------------------------------
1,000,000 Pitt County, NC, GO UT, 5.10% (Original Issue Yield:
5.20%) 2/1/2006 AA- 1,053,930
--------------------------------------------------------
500,000 Randolph County, NC, GO UT Bonds, 6.20%, 5/1/2005 A+ 546,150
--------------------------------------------------------
750,000 Rocky Mountain, NC, GO UT Refunding Bonds, 5.00% (MBIA
INS), 2/1/2009 AAA 799,523
--------------------------------------------------------
500,000 Rowan County, NC, GO UT Bonds, 5.60% (MBIA INS),
4/1/2009 AAA 544,635
--------------------------------------------------------
250,000 Stokes County, NC, GO UT Bonds, 4.90% (FGIC INS),
6/1/2012 AAA 260,010
--------------------------------------------------------
1,000,000 Surry County, NC, GO UT Refunding Bonds, 5.00% (FGIC
INS), 4/1/2010 AAA 1,063,620
--------------------------------------------------------
</TABLE>
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ---------- -------------------------------------------------------- -------- -----------
<C> <C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- --------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
--------------------------------------------------------
$1,000,000 Transylvania County, NC, GO UT Bonds, 4.75% (MBIA INS),
2/1/2011 AAA $ 1,026,480
--------------------------------------------------------
500,000 Union County, NC, (Series B) GO UT, 5.20% (MBIA INS)/
(Original Issue Yield: 5.35%), 6/1/2012 AAA 526,245
--------------------------------------------------------
600,000 Wake County, NC Industrial Facilities & PCFA, Revenue
Bonds, 6.90% (Carolina Power & Light Co.)(Fuji Bank,
Ltd., Tokyo LOC), 4/1/2009 A 634,404
--------------------------------------------------------
500,000 Winston-Salem, NC Water & Sewer System, Revenue Bonds,
4.80% (Original Issue Yield: 4.90%), 6/1/2013 AA+ 507,650
--------------------------------------------------------
500,000 Winston-Salem, NC, GO UT Bonds, 5.40% (Original Issue
Yield: 5.30%), 6/1/2009 AAA 541,315
--------------------------------------------------------
500,000 Winston-Salem, NC, GO UT Bonds, 5.40% (Original Issue
Yield: 5.50%), 6/1/2011 AAA 536,930
-------------------------------------------------------- -----------
TOTAL MUNICIPAL SECURITIES (IDENTIFIED COST $38,421,871) 40,232,454
-------------------------------------------------------- -----------
MUTUAL FUNDS--1.7%
- --------------------------------------------------------------------------
716,525 Blackrock Municipal Money Market Fund 716,525
--------------------------------------------------------
5,000 North Carolina Daily Municipal Fund 5,000
-------------------------------------------------------- -----------
TOTAL MUTUAL FUNDS (AT NET ASSET VALUE) 721,525
-------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $39,143,396)(A) $40,953,979
-------------------------------------------------------- -----------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings.
(a) The cost of investments for federal tax purposes amounts to $39,143,396. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,810,583 which is comprised of $1,812,276 appreciation and $1,693
depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($41,434,006) at November 30, 1998.
<PAGE>
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>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ----------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost
$39,143,396) $40,953,979
- ----------------------------------------------------------------------
Cash 710
- ----------------------------------------------------------------------
Income receivable 627,718
- ---------------------------------------------------------------------- -----------
Total assets 41,582,407
- ----------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------
Income distribution payable $145,237
- ------------------------------------------------------------
Accrued expenses 3,164
- ------------------------------------------------------------ --------
Total liabilities 148,401
- ---------------------------------------------------------------------- -----------
Net Assets for 3,758,243 shares outstanding $41,434,006
- ---------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ----------------------------------------------------------------------
Paid in capital $39,256,753
- ----------------------------------------------------------------------
Net unrealized appreciation of investments 1,810,583
- ----------------------------------------------------------------------
Accumulated net realized gain on investments 366,670
- ---------------------------------------------------------------------- -----------
Total Net Assets $41,434,006
- ---------------------------------------------------------------------- -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------
Net Asset Value and Redemption Proceeds Per Share ($41,434,006 /
3,758,243 shares outstanding) $11.02
- ---------------------------------------------------------------------- -----------
Offering Price Per Share (100/95.50 of $11.02)* $11.54
- ---------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------
Interest $ 954,613
- -----------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------
Investment advisory fee $ 148,755
- ------------------------------------------------------------
Administrative personnel and services fee 28,421
- ------------------------------------------------------------
Custodian fees 5,052
- ------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,802
- ------------------------------------------------------------
Directors'/Trustees' fees 2,058
- ------------------------------------------------------------
Auditing fees 6,626
- ------------------------------------------------------------
Legal fees 838
- ------------------------------------------------------------
Portfolio accounting fees 27,334
- ------------------------------------------------------------
Share registration costs 6,973
- ------------------------------------------------------------
Printing and postage 4,210
- ------------------------------------------------------------
Insurance premiums 1,203
- ------------------------------------------------------------
Miscellaneous 268
- ------------------------------------------------------------ ---------
Total expenses 252,540
- ------------------------------------------------------------ ---------
Waiver of investment advisory fee (148,775)
- ------------------------------------------------------------ ---------
Net expenses 103,765
- ----------------------------------------------------------------------- ----------
Net investment income 850,848
- ----------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------
Net realized gain on investments 124,495
- -----------------------------------------------------------------------
Net change in unrealized appreciation of investments 390,903
- ----------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 515,398
- ----------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,366,246
- ----------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, MAY 31,
1998 1998
------------ ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 850,848 $1,656,571
- ------------------------------------------------------------
Net realized gain (loss) on investments ($124,495 and
$562,076 net gains, respectively, as computed for federal
tax purposes) 124,495 562,076
- ------------------------------------------------------------
Net change in unrealized appreciation/depreciation 390,903 543,069
- ------------------------------------------------------------ ----------- ---------
Change in net assets resulting from operations 1,366,246 2,761,716
- ------------------------------------------------------------ ----------- ---------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------
Distributions from net investment income (850,848) (1,656,571)
- ------------------------------------------------------------ ----------- ---------
SHARE TRANSACTIONS--
- ------------------------------------------------------------
Proceeds from sale of shares 7,500,065 5,401,737
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 64,454 169,069
- ------------------------------------------------------------
Cost of shares redeemed (2,658,604) (6,554,865)
- ------------------------------------------------------------ ----------- ---------
Change in net assets resulting from share transactions 4,905,915 (984,059)
- ------------------------------------------------------------ ----------- ---------
Change in net assets 5,421,313 121,086
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 36,012,693 35,891,607
- ------------------------------------------------------------ ----------- ---------
End of period $41,434,006 $36,012,693
- ------------------------------------------------------------ ----------- ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB 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, -----------------------------------------------
1998 1998 1997 1996 1995 1994
---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.89 $10.57 $10.34 $10.44 $10.17 $10.36
- ------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------
Net investment income 0.24 0.45 0.49 0.49 0.48 0.47
- ------------------------------------
Net realized and unrealized gain
(loss) on investments 0.13 0.32 0.23 (0.10) 0.27 (0.18)
- ------------------------------------ --------- ------ ------ ------ ------ -------
Total from investment operations 0.37 0.77 0.72 0.39 0.75 0.29
- ------------------------------------ --------- ------ ------ ------ ------ -------
LESS DISTRIBUTIONS
- ------------------------------------
Distributions from net investment
income (0.24) (0.45) (0.49) (0.49) (0.48) (0.47)
- ------------------------------------
Distributions from net realized
gain on investments -- -- -- -- -- (0.01)
- ------------------------------------ --------- ------ ------ ------ ------ -------
Total distributions (0.24) (0.45) (0.49) (0.49) (0.48) (0.48)
- ------------------------------------ --------- ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $11.02 $10.89 $10.57 $10.34 $10.44 $10.17
- ------------------------------------ --------- ------ ------ ------ ------ -------
TOTAL RETURN(A) 3.38% 7.77% 7.13% 3.72% 7.71% 2.68%
- ------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------
Expenses 0.52%* 0.51% 0.63% 0.52% 0.57% 0.69%
- ------------------------------------
Net investment income 4.29%* 4.50% 4.60% 4.73% 4.82% 4.42%
- ------------------------------------
Expense waiver/reimbursement(b) 0.75%* 0.75% 0.75% 0.75% 0.75% 0.75%
- ------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------
Net assets, end of period (000
omitted) $41,434 $36,013 $35,892 $36,872 $39,803 $45,864
- ------------------------------------
Portfolio turnover 9% 41% 30% 61% 47% 24%
- ------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) 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>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
CCB 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 CCB 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.
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
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
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,
1998 1998
- ------------------------------------------------------------ --------------- ----------
<S> <C> <C>
Shares sold 688,741 501,030
- ------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 5,874 15,643
- ------------------------------------------------------------
Shares redeemed (243,595) (605,325)
- ------------------------------------------------------------ ------------ ----------
Net change resulting from share transactions 451,020 (88,652)
- ------------------------------------------------------------ ------------ ----------
</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.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with FAS, the Fund will pay FAS up to 0.25% of average daily net assets of the
Fund for the period. The fee paid to FAS 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, 1998.
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.
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.
<PAGE>
CCB NORTH CAROLINA MUNICIPAL SECURITIES FUND
- --------------------------------------------------------------------------------
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
(5) YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
(6) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
- ------------------------------------------------------------
Purchases $8,693,799
- ------------------------------------------------------------ ----------
Sales $3,422,325
- ------------------------------------------------------------ ----------
</TABLE>
(7) 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, 1998, 52.0% 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 20.2% 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.
<PAGE>
CCB FUNDS LOGO
Central Carolina Bank
CCB
Bond Fund
Semi-Annual Report
November 30, 1998
Federated Securities Corp. is the distributor of the fund.
Cusip 12500E208
2122402 (1/99) Recycled Paper Logo
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for CCB Bond
Fund. This report covers the first half of the fund's fiscal year, which is the
six-month period from June 1, 1998 through November 30, 1998.
Inside, you will find complete information about the fund's operation during
that period, including an investment review by the fund's portfolio manager, a
list of the fund's quality bond holdings, and the financial statements.
To help your investment earn income, CCB Bond 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 report period, the fund's portfolio
was primarily composed of government obligations (74.5%), followed by corporate
bonds (23.3%). The remaining assets were invested in a money market fund (1.5%)
and a U.S. Treasury Note (0.3%).
During the six-month period, CCB Bond Fund's high-quality portfolio produced a
total return of 3.89% through income totaling $0.31 per share, and an $0.08
increase in net asset value.* The fund's net assets totaled $85 million at the
end of the period.
Thank you for helping your money pursue income through the diversification,
professional management and convenience of CCB Bond Fund. We'll continue to
update you on your fund's progress.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
January 15, 1999
* 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 period adjusted for the fund's sales
charge was (0.78%).
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Interest rates continued to fall during the six month period ended November 30,
1998. Intermediate treasuries were especially strong. It should be pointed out
that treasuries performed considerably better than almost all of the various
bond sectors including government agencies. As large amounts of capital flowed
into the United States from Asia, our treasury market was the vehicle of choice.
The non-annualized total return for the fund was 3.89% for the six month
period.* The average maturity on the fund is approximately 4.10 years and the
average bond rating is AA+. As of November 30, 1998, the 7-day distribution rate
at net asset value was 6.21%. We feel the Fund represents good value at these
levels. As of November 30, 1998, the 30-day SEC yield based on offering price
was 5.83%.
Going forward into 1999 we will look to extend maturities where we can do so
advantageously.
* 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 period adjusted for the fund's sales
charge was (0.78%). The 7-day distribution rate based on offering price was
5.94%.
<PAGE>
CCB BOND FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--23.3%
- -------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--0.6%
------------------------------------------------------------
$ 500,000 Discover Card Trust, 6.25%, Series 1996-3B, 8/18/2008 $ 511,895
------------------------------------------------------------ -----------
COMMERCIAL SERVICES--0.6%
------------------------------------------------------------
500,000 Olsten Corp., 7.00%, 3/15/2006 495,440
------------------------------------------------------------ -----------
CONSUMER PRODUCTS--2.5%
------------------------------------------------------------
1,000,000 Philip Morris Cos., Inc., 7.125%, 8/15/2002 1,046,730
------------------------------------------------------------
1,000,000 Philip Morris Cos., Inc., 9.00%, 1/1/2001 1,065,530
------------------------------------------------------------ -----------
Total 2,112,260
------------------------------------------------------------ -----------
FINANCE-INSURANCE--3.9%
------------------------------------------------------------
500,000 CIGNA Corp., 7.40%, 1/15/2003 522,090
------------------------------------------------------------
1,000,000 Continental Corp., 7.25%, 3/1/2003 1,044,080
------------------------------------------------------------
1,500,000 Ford Motor Credit Corp., 5.375%, 10/15/2002 1,497,405
------------------------------------------------------------
250,000 Ford Motor Credit Corp., 7.50%, 4/25/2011 263,178
------------------------------------------------------------ -----------
Total 3,326,753
------------------------------------------------------------ -----------
FINANCIAL SECURITIES--9.9%
------------------------------------------------------------
1,000,000 Chase Manhattan Corp., 6.375%, 2/15/2008 1,039,860
------------------------------------------------------------
1,000,000 Donaldson, Lufkin and Jenrette Securities Corp., 6.50%,
6/1/2008 999,490
------------------------------------------------------------
1,000,000 J.P. Morgan & Co., Inc., 6.70%, 11/1/2007 1,053,600
------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., 7.20%, MTN, 10/15/2012 1,045,880
------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., 7.19%, Series MTN, 8/7/2012 1,058,230
------------------------------------------------------------
1,000,000 PaineWebber Group, Inc., 6.55%, 4/15/2008 1,003,500
------------------------------------------------------------
2,000,000 Salomon Smith Barney Holdings, Inc., 7.375%, 5/15/2007 2,150,540
------------------------------------------------------------ -----------
Total 8,351,100
------------------------------------------------------------ -----------
MULTI-INDUSTRY--1.0%
------------------------------------------------------------
750,000 Loews Corp., 8.875%, 4/15/2011 884,633
------------------------------------------------------------ -----------
</TABLE>
<PAGE>
CCB BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------
PROCESS INDUSTRIES--1.0%
------------------------------------------------------------
$ 750,000 Westvaco Corp., 7.75%, 2/15/2023 $ 831,135
------------------------------------------------------------ -----------
UTILITIES--3.8%
------------------------------------------------------------
1,000,000 Gulf States Utilities Co., 6.77%, 8/1/2005 1,048,470
------------------------------------------------------------
1,000,000 Pacific Gas & Electric Co., MTN, 7.75%, 6/30/2004 1,101,520
------------------------------------------------------------
1,000,000 West Penn Power Co., 7.875%, 12/1/2004 1,024,680
------------------------------------------------------------ -----------
Total 3,174,670
------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $19,300,051) 19,687,886
------------------------------------------------------------ -----------
GOVERNMENT OBLIGATIONS--74.5%
- -------------------------------------------------------------------------------
FARM CREDIT SYSTEM FINANCIAL ASSISTANCE CORP.--3.1%
------------------------------------------------------------
2,000,000 5.875%, 1/21/2005 2,039,120
------------------------------------------------------------
500,000 9.20%, 9/27/2005 533,870
------------------------------------------------------------ -----------
Total 2,572,990
------------------------------------------------------------ -----------
FEDERAL HOME LOAN BANK--20.0%
------------------------------------------------------------
1,250,000 4.914%, Structured Note, 12/2/1998 1,250,000
------------------------------------------------------------
500,000 5.05%, Structured Note, 3/29/2000 504,310
------------------------------------------------------------
1,000,000 4.975%, Structured Note, 2/23/1999 1,001,130
------------------------------------------------------------
2,000,000 6.06%, 4/27/2004 2,008,320
------------------------------------------------------------
1,000,000 6.10%, 4/7/2003 1,012,380
------------------------------------------------------------
1,000,000 6.105%, 4/17/2003 1,012,790
------------------------------------------------------------
1,000,000 5.30%, 11/17/2003 996,620
------------------------------------------------------------
1,000,000 6.11%, 5/15/2003 1,013,510
------------------------------------------------------------
1,000,000 6.00%, 7/7/2004 1,009,970
------------------------------------------------------------
</TABLE>
<PAGE>
CCB BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
GOVERNMENT OBLIGATIONS--CONTINUED
- -------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--CONTINUED
------------------------------------------------------------
$ 1,000,000 6.14%, 5/11/2005 $ 1,015,530
------------------------------------------------------------
2,000,000 6.23%, 6/1/2005 2,034,060
------------------------------------------------------------
3,000,000 6.25%, 5/19/2004 3,041,910
------------------------------------------------------------
1,000,000 7.00%, 12/15/2009 1,015,180
------------------------------------------------------------ -----------
Total 16,915,710
------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--22.8%
------------------------------------------------------------
3,000,000 5.00%, Structured Note, 3/10/2000 3,021,660
------------------------------------------------------------
2,500,000 6.35%, 7/17/2008 2,537,200
------------------------------------------------------------
935,035 8.00%, Series 1033G, 1/15/2006 964,854
------------------------------------------------------------
4,000,000 8.00%, Series 1171G, 11/15/2006 4,155,960
------------------------------------------------------------
1,000,000 7.00%, Series 1187H, 12/15/2006 1,020,000
------------------------------------------------------------
1,333,000 7.00%, Series 1228H, 2/15/2022 1,383,427
------------------------------------------------------------
400,000 7.00%, Series 1324VE, 8/15/2008 408,452
------------------------------------------------------------
1,000,000 7.00%, Series 1341K, 8/15/2007 1,022,510
------------------------------------------------------------
49,863 6.50%, REMIC, Series 1422, 2/15/2007 49,790
------------------------------------------------------------
176,459 6.50%, Series 1452C, 12/15/2007 176,340
------------------------------------------------------------
1,470,000 7.00%, Series 1468M, 1/15/2010 1,521,068
------------------------------------------------------------
1,000,000 7.00%, Series 1477ID, 11/15/2009 1,036,580
------------------------------------------------------------
1,000,000 6.85%, Series 1808VB, 10/15/2010 997,771
------------------------------------------------------------
1,000,000 6.50%, Series 24VB, 7/25/2010 1,013,680
------------------------------------------------------------ -----------
Total 19,309,292
------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--27.2%
------------------------------------------------------------
1,500,000 Principal STRIPS, 7.10%, 4/12/2006 (Callable 4/12/1999 @
100) 1,474,650
------------------------------------------------------------
1,500,000 Federal National Mortgage Association, MTN, Series B, 0%,
7/9/2012 519,660
------------------------------------------------------------
752,052 8.00%, REMIC, Series 1991150G, 11/25/2006 781,389
------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 1992124D, 4/25/2010 1,027,760
------------------------------------------------------------
</TABLE>
<PAGE>
CCB BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ----------- ------------------------------------------------------------ -----------
<C> <C> <S> <C>
GOVERNMENT OBLIGATIONS--CONTINUED
- -------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
------------------------------------------------------------
$ 1,000,000 7.25%, REMIC, Series 199250J, 12/25/2006 $ 1,021,510
------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 199253G, 4/25/2007 1,018,000
------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 199270H, 4/25/2006 1,003,780
------------------------------------------------------------
2,000,000 7.00%, REMIC, Series 1993139KD, 7/25/2006 2,031,316
------------------------------------------------------------
1,500,000 6.50%, REMIC, Series 1993181O, 9/25/2008 1,499,955
------------------------------------------------------------
1,000,000 6.75%, REMIC, Series 199333H, 9/25/2008 1,039,890
------------------------------------------------------------
1,000,000 7.50%, REMIC, Series 199336J, 5/25/2006 1,036,870
------------------------------------------------------------
996,078 6.00%, REMIC, Series 199376B, 6/25/2008 992,582
------------------------------------------------------------
2,500,000 6.50%, REMIC, Series 199427CB, 9/25/2008 2,529,308
------------------------------------------------------------
1,000,000 7.00%, REMIC, Series 199479G, 11/25/2004 1,022,300
------------------------------------------------------------
1,000,000 6.50%, REMIC, Series 199668VC, 9/18/2010 1,025,349
------------------------------------------------------------
1,500,000 6.50%, REMIC, Series 199726AC, 3/25/2012 1,505,475
------------------------------------------------------------
2,500,000 6.50%, REMIC, Series 199767PL, 10/18/2012 2,511,736
------------------------------------------------------------
1,000,000 7.00%, REMIC, Series G9331H, 2/25/2013 1,022,020
------------------------------------------------------------ -----------
Total 23,063,550
------------------------------------------------------------ -----------
MORTGAGE BACKED SECURITIES--1.4%
------------------------------------------------------------
1,250,000 CMC Securities Corp. III Series 1994-C, Class A14, 4.39%,
3/25/2024 1,206,943
------------------------------------------------------------ -----------
TOTAL GOVERNMENT OBLIGATIONS (IDENTIFIED COST $61,800,858) 63,068,485
------------------------------------------------------------ -----------
U.S. TREASURY SECURITIES--0.3%
- -------------------------------------------------------------------------------
UNITED STATES TREASURY NOTE--0.3%
------------------------------------------------------------
250,000 5.75%, 8/15/2003 (IDENTIFIED COST $239,336) 261,545
------------------------------------------------------------ -----------
MUTUAL FUND--1.5%
- -------------------------------------------------------------------------------
1,265,022 Goldman Sachs Government Income Fund (AT NET ASSET VALUE) 1,265,022
------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $82,605,267)(A) $84,282,938
------------------------------------------------------------ -----------
</TABLE>
<PAGE>
CCB BOND FUND
- --------------------------------------------------------------------------------
(a) The cost of investments for federal tax purposes amounts to $82,605,267. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,677,671 which is comprised of $1,901,667 appreciation and $223,996
depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($84,688,653) at November 30, 1998.
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
MTN -- Medium Term Note
REMIC -- Real Estate Mortgage Investment Conduit
STRIPS -- Separate Trading of Registered Interest and Principal Securities
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost
$82,605,267) $84,282,938
- ------------------------------------------------------------------------
Cash 1,118
- ------------------------------------------------------------------------
Income receivable 862,629
- ------------------------------------------------------------------------ -----------
Total assets 85,146,685
- ------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------
Income distribution payable $ 430,673
- ------------------------------------------------------------
Accrued expenses 27,359
- ------------------------------------------------------------ ----------
Total liabilities 458,032
- ------------------------------------------------------------------------ -----------
Net Assets for 8,239,908 shares outstanding $84,688,653
- ------------------------------------------------------------------------ -----------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------
Paid in capital $86,068,290
- ------------------------------------------------------------------------
Net unrealized appreciation of investments 1,677,671
- ------------------------------------------------------------------------
Accumulated net realized loss on investments (3,240,332)
- ------------------------------------------------------------------------
Undistributed net investment income 183,024
- ------------------------------------------------------------------------ -----------
Total Net Assets $84,688,653
- ------------------------------------------------------------------------ -----------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------------------------
Net Asset Value and Redemption Proceeds Per Share ($84,688,653 /
8,239,908 shares outstanding) $10.28
- ------------------------------------------------------------------------ -----------
Offering Price Per Share (100/95.50 of $10.28)* $10.76
- ------------------------------------------------------------------------ -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------
Interest $2,737,828
- -----------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------
Investment advisory fee $ 320,115
- ------------------------------------------------------------
Administrative personnel and services fee 61,149
- ------------------------------------------------------------
Custodian fees 10,255
- ------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 23,010
- ------------------------------------------------------------
Directors'/Trustees' fees 472
- ------------------------------------------------------------
Auditing fees 7,385
- ------------------------------------------------------------
Legal fees 791
- ------------------------------------------------------------
Portfolio accounting fees 24,890
- ------------------------------------------------------------
Share registration costs 7,725
- ------------------------------------------------------------
Printing and postage 2,359
- ------------------------------------------------------------
Insurance premiums 1,071
- ------------------------------------------------------------
Miscellaneous 1,111
- ------------------------------------------------------------ ---------
Total expenses 460,333
- ------------------------------------------------------------
Waiver--
- ------------------------------------------------------------
Waiver of investment advisory fee (320,115)
- ------------------------------------------------------------ ---------
Net expenses 140,218
- ----------------------------------------------------------------------- ----------
Net investment income 2,597,610
- ----------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------
Net realized gain on investments 475,436
- -----------------------------------------------------------------------
Net change in unrealized appreciation of investments 112,312
- ----------------------------------------------------------------------- ----------
Net realized and unrealized gain on investments 587,748
- ----------------------------------------------------------------------- ----------
Change in net assets resulting from operations $3,185,358
- ----------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, MAY 31,
1998 1998
------------ -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $2,597,610 $ 5,544,410
- ------------------------------------------------------------
Net realized gain (loss) on investments ($475,436 and
$277,835, net gains, respectively, as computed for federal
tax purposes) 475,436 331,506
- ------------------------------------------------------------
Net change in unrealized appreciation 112,312 1,919,242
- ------------------------------------------------------------ ----------- -----------
Change in net assets resulting from operations 3,185,358 7,795,158
- ------------------------------------------------------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------------------------------
Distributions from net investment income (2,597,610) (5,361,386)
- ------------------------------------------------------------ ----------- -----------
SHARE TRANSACTIONS--
- ------------------------------------------------------------
Proceeds from sale of shares 7,020,873 11,759,299
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of distributions declared 313,566 261,237
- ------------------------------------------------------------
Cost of shares redeemed (7,869,791) (15,569,669)
- ------------------------------------------------------------ ----------- -----------
Change in net assets resulting from share transactions (535,352) (3,549,133)
- ------------------------------------------------------------ ----------- -----------
Change in net assets 52,396 (1,115,361)
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 84,636,257 85,751,618
- ------------------------------------------------------------ ----------- -----------
End of period (including undistributed net investment income
of $183,024 and $183,024, respectively) $84,688,653 $84,636,257
- ------------------------------------------------------------ ----------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED MAY 31,
NOVEMBER 30, -----------------------------------------------
1998 1998 1997 1996 1995 1994
------------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $10.20 $ 9.92 $ 9.78 $10.00 $ 9.63 $10.13
- -------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- -------------------------------
Net investment income 0.31 0.66 0.66 0.66 0.66 0.63
- -------------------------------
Net realized and unrealized
gain (loss) on investments 0.08 0.26 0.14 (0.22) 0.37 (0.50)
- ------------------------------- --------- ------ ------ ------ ------ -------
Total from investment
operations 0.39 0.92 0.80 0.44 1.03 0.13
- ------------------------------- --------- ------ ------ ------ ------ -------
LESS DISTRIBUTIONS
- -------------------------------
Distributions from net
investment income (0.31) (0.64) (0.66) (0.66) (0.66) (0.63)
- ------------------------------- --------- ------ ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $10.28 $10.20 $ 9.92 $ 9.78 $10.00 $ 9.63
- ------------------------------- --------- ------ ------ ------ ------ -------
TOTAL RETURN(A) 3.89% 9.52% 8.37% 4.41% 11.32% 1.21%
- -------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------
Expenses 0.33%* 0.31% 0.37% 0.32% 0.34% 0.50%
- -------------------------------
Net investment income 6.09%* 6.55% 6.51% 6.65% 6.98% 6.32%
- -------------------------------
Expense waiver/
reimbursement(b) 0.75%* 0.75% 0.75% 0.75% 0.75% 0.75%
- -------------------------------
SUPPLEMENTAL DATA
- -------------------------------
Net assets, end of period
(000 omitted) $84,689 $84,636 $85,752 $87,883 $87,115 $97,823
- -------------------------------
Portfolio turnover 15% 43% 11% 32% 37% 76%
- -------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(b) 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>
CCB BOND FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
CCB 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 CCB Bond 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
achieve income.
(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, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $3,721,652, 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 will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION YEAR EXPIRATION AMOUNT
- --------------- -----------------
<S> <C>
2003 $2,534,586
2004 $1,187,066
</TABLE>
<PAGE>
CCB BOND 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,
1998 1998
- ------------------------------------------------------------ --------------- ----------
<S> <C> <C>
Shares sold 684,090 1,160,087
- ------------------------------------------------------------
Shares issued to shareholders in payment of distributions
declared 30,440 25,735
- ------------------------------------------------------------
Shares redeemed (769,013) (1,539,772)
- ------------------------------------------------------------ ------------ ----------
Net change resulting from share transactions (54,483) (353,950)
- ------------------------------------------------------------ ------------ ----------
</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.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with FAS, the Fund will pay FAS up to 0.25% of average daily net assets of the
Fund for the period. The fee paid to
<PAGE>
CCB BOND FUND
- --------------------------------------------------------------------------------
FAS 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, 1998.
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.
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) YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
(6) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
- ------------------------------------------------------------
Purchases $12,371,107
- ------------------------------------------------------------ -----------
Sales $13,719,299
- ------------------------------------------------------------ -----------
</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>
CCB FUNDS LOGO
Central Carolina Bank
CCB
Equity Fund
Semi-Annual Report
November 30, 1998
Federated Securities Corp. is the distributor of the fund.
Cusip 12500E307
G00926-01 (1/99) Recycled Paper Logo
<PAGE>
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report for CCB Equity Fund. This report
covers the first half of the fund's fiscal year, which is the six-month period
from June 1, 1998 through November 30, 1998.
This report contains complete information that includes an investment review by
the fund's portfolio manager, a complete list of the fund's stock holdings, and
the 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 use every day. Portfolio holdings at the end of the period included
such well-respected names as American Express, Compaq, Disney, DuPont, General
Electric, Intel, Mattel, Merck, Wal-Mart, and Xerox.
The six-month period saw an extremely volatile yet favorable environment for
stocks, in which CCB Equity Fund delivered a strong total return of 7.65%.*
Contributing to the total return were income dividends totaling $0.05 per share
and a $1.49 increase in net asset value. The fund's net assets continued to
grow, reaching $231.7 million at the end of the period.
Thank you for participating in the long-term growth opportunities of stocks
through the diversification, professional management and convenience of CCB
Equity Fund. We hope you are pleased with your investment progress.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
January 15, 1999
* 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 period adjusted for the fund's sales
charge was 2.82%.
<PAGE>
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The recent period has been marked by a substantial increase in the volatility of
global capital markets. During the first six months of the year, steady but
moderate economic growth, stable corporate profits and a generally favorable
interest-rate environment propelled share prices higher. However, in late summer
the markets turned down sharply, precipitated by the Russian currency
devaluation and subsequent debt crisis. Investors' confidence was restored
somewhat after three successive interest rate cuts by the Federal Reserve.
We are pleased with your Fund's performance during this period of heightened
uncertainty. CCB Equity Fund returned 7.65% on net asset value for the six month
period ended November 30, 1998.* The average growth and income fund posted a
return of 0.22% for the same period, as reported by Lipper Analytical Services,
Inc., a mutual fund rating company.** A number of the Fund's larger holdings
posted strong gains during the period, including technology holdings EMC Corp.,
Texas Instruments, Inc., Cisco Systems, Inc., Intel Corp. and retailers Walgreen
Co. and Wal-Mart Stores Inc.
As of November 30, 1998, total fund assets were approximately $232 million. The
portfolio was 97.3% invested in common and preferred stocks with a cash position
of 2.7%. The Fund's ten largest holdings were:
<TABLE>
<S> <C>
Texas Instruments, Inc. ................................... 3.96%
Johnson & Johnson ......................................... 3.85%
Federal National Mortgage Association ..................... 3.30%
General Electric Co. ...................................... 3.30%
Citigroup, Inc. ........................................... 3.25%
Walgreen Co. .............................................. 3.25%
Jefferson Pilot Corp. ..................................... 3.10%
MCI Worldcom, Inc. ........................................ 3.08%
American International Group, Inc. ........................ 2.98%
Watson Pharmaceuticals, Inc. .............................. 2.79%
</TABLE>
Looking ahead, we anticipate a slowdown in economic growth, but we do not
believe a recession is in the near future. While the U.S. market will likely
continue to exhibit higher levels of volatility, the underlying macro-economic
factors are still favorable for equities. Inflation and interest rates are low
and stable. The U.S. employment rate is high and consumer spending remains quite
strong. Technological advances are making companies more efficient and improving
asset utilization. Most importantly, however, the Federal Reserve's interest
rate reductions signal to the markets the Federal Reserve's willingness to take
whatever measures necessary to confront a global financial crisis.
Thank you for your continued investment in the CCB Equity Fund.
* 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 period adjusted for the Fund's sales
charge was 2.82%
** 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.
<PAGE>
CCB EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--96.1%
- ------------------------------------------------------------------------------
AEROSPACE & DEFENSE--2.5%
------------------------------------------------------------
135,000 Allied-Signal, Inc. $ 5,940,000
------------------------------------------------------------ ------------
CHEMICALS--2.7%
------------------------------------------------------------
110,000 DuPont (E.I.) de Nemours & Co. 6,462,500
------------------------------------------------------------ ------------
CONSUMER BASICS--5.0%
------------------------------------------------------------
60,000 Emerson Electric Co. 3,900,000
------------------------------------------------------------
84,400 General Electric Co. 7,638,200
------------------------------------------------------------ ------------
Total 11,538,200
------------------------------------------------------------ ------------
CONSUMER DURABLES--1.9%
------------------------------------------------------------
125,000 Mattel, Inc. 4,320,313
------------------------------------------------------------ ------------
CONSUMER NON-DURABLES--2.3%
------------------------------------------------------------
70,000 Unilever N.V., ADR 5,411,875
------------------------------------------------------------ ------------
ELECTRONIC TECHNOLOGY--17.2%
------------------------------------------------------------
7,200 Beckman Coulter, Inc. 347,400
------------------------------------------------------------
60,000 (a) Cisco Systems, Inc. 4,522,500
------------------------------------------------------------
120,000 Compaq Computer Corp. 3,900,000
------------------------------------------------------------
85,000 (a) Computer Sciences Corp. 4,855,625
------------------------------------------------------------
83,900 (a) EMC Corp. Mass 6,082,750
------------------------------------------------------------
40,000 Intel Corp. 4,305,000
------------------------------------------------------------
30,000 Lucent Technologies, Inc. 2,581,875
------------------------------------------------------------
50,000 (a) Tellabs, Inc. 2,703,125
------------------------------------------------------------
120,000 Texas Instruments, Inc. 9,165,000
------------------------------------------------------------
10,000 United Technologies Corp. 1,071,875
------------------------------------------------------------ ------------
Total 39,535,150
------------------------------------------------------------ ------------
ENTERTAINMENT--2.1%
------------------------------------------------------------
150,000 Disney (Walt) Co. 4,828,125
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
CCB EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
FINANCE--13.2%
------------------------------------------------------------
60,000 American Express Co. $ 6,003,750
------------------------------------------------------------
73,500 American International Group, Inc. 6,909,000
------------------------------------------------------------
150,000 Citigroup, Inc. 7,528,125
------------------------------------------------------------
85,000 First Union Corp. 5,163,750
------------------------------------------------------------
250,000 Pennsylvania Real Estate Investment Trust 5,000,000
------------------------------------------------------------ ------------
Total 30,604,625
------------------------------------------------------------ ------------
HEALTH SERVICES--0.9%
------------------------------------------------------------
40,000 (a) Quintiles Transnational Corp. 1,995,000
------------------------------------------------------------ ------------
HEALTH TECHNOLOGY--10.4%
------------------------------------------------------------
80,300 Abbott Laboratories 3,854,400
------------------------------------------------------------
150,000 Biomet, Inc. 5,737,500
------------------------------------------------------------
110,000 Johnson & Johnson 8,937,500
------------------------------------------------------------
35,000 Merck & Co., Inc. 5,420,625
------------------------------------------------------------ ------------
Total 23,950,025
------------------------------------------------------------ ------------
INSURANCE--3.1%
------------------------------------------------------------
105,000 Jefferson-Pilot Corp. 7,166,250
------------------------------------------------------------ ------------
METALS & MINING--1.0%
------------------------------------------------------------
32,000 Aluminum Co. of America 2,372,000
------------------------------------------------------------ ------------
MORTGAGE--3.3%
------------------------------------------------------------
105,000 Federal National Mortgage Association 7,638,750
------------------------------------------------------------ ------------
OFFICE EQUIPMENT--1.4%
------------------------------------------------------------
30,000 Xerox Corp. 3,225,000
------------------------------------------------------------ ------------
OIL--8.4%
------------------------------------------------------------
50,000 British Petroleum Co. PLC, ADR 4,606,250
------------------------------------------------------------
30,000 Chevron Corp. 2,508,750
------------------------------------------------------------
34,000 Exxon Corp. 2,552,125
------------------------------------------------------------
126,600 Halliburton Co. 3,718,875
------------------------------------------------------------
</TABLE>
<PAGE>
CCB EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
OIL--CONTINUED
------------------------------------------------------------
70,000 Mobil Corp. $ 6,033,125
------------------------------------------------------------ ------------
Total 19,419,125
------------------------------------------------------------ ------------
PHARMACEUTICALS--2.8%
------------------------------------------------------------
120,000 (a) Watson Pharmaceuticals, Inc. 6,465,000
------------------------------------------------------------ ------------
PRODUCER MANUFACTURING--1.8%
------------------------------------------------------------
120,000 Dover Corp. 4,275,000
------------------------------------------------------------ ------------
RETAIL--7.1%
------------------------------------------------------------
90,000 Federated Department Stores, Inc. 3,751,875
------------------------------------------------------------
70,000 Wal-Mart Stores, Inc. 5,271,875
------------------------------------------------------------
140,000 Walgreen Co. 7,516,250
------------------------------------------------------------ ------------
Total 16,540,000
------------------------------------------------------------ ------------
RETAIL TRADE--2.8%
------------------------------------------------------------
100,000 Dayton-Hudson Corp. 4,500,000
------------------------------------------------------------
73,800 (a) Saks, Inc. 2,029,500
------------------------------------------------------------ ------------
Total 6,529,500
------------------------------------------------------------ ------------
</TABLE>
<PAGE>
CCB EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------
TECHNOLOGY SERVICES--3.1%
------------------------------------------------------------
90,000 Computer Associates International, Inc. $ 3,982,500
------------------------------------------------------------
27,000 (a) Microsoft Corp. 3,294,000
------------------------------------------------------------ ------------
Total 7,276,500
------------------------------------------------------------ ------------
UTILITIES--3.1%
------------------------------------------------------------
120,853 (a) MCI Worldcom, Inc. 7,130,327
------------------------------------------------------------ ------------
TOTAL COMMON STOCKS 222,623,265
------------------------------------------------------------ ------------
PREFERRED STOCKS--1.2%
- ------------------------------------------------------------------------------
CONSUMER SERVICES--1.2%
------------------------------------------------------------
80,000 Cendant Corp., Conv. Pfd., $.94 2,690,000
------------------------------------------------------------ ------------
TOTAL COMMON AND PREFERRED STOCKS (IDENTIFIED COST
$163,532,792) 225,313,265
------------------------------------------------------------ ------------
MUTUAL FUND--2.7%
- ------------------------------------------------------------------------------
6,156,824 Goldman Sachs Money Market Fund (AT NET ASSET VALUE) 6,156,824
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $169,689,616)(B) $231,470,089
------------------------------------------------------------ ------------
</TABLE>
(a) Non-income producing security.
(b) The cost of investments for federal tax purposes amounts to $169,689,616.
The net unrealized appreciation of investments on a federal tax basis
amounts to $61,780,473 which is comprised of $66,751,901 appreciation and
$4,971,428 depreciation at November 30, 1998.
Note: The categories of investments are shown as a percentage of net assets
($231,733,726) at November 30, 1998.
The following acronym(s) 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>
CCB EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost
$169,689,616) $231,470,089
- ------------------------------------------------------------------------
Cash 1,046
- ------------------------------------------------------------------------
Income receivable 549,152
- ------------------------------------------------------------------------
Deferred organizational costs 4,397
- ------------------------------------------------------------------------
Deferred Expenses 912
- ------------------------------------------------------------------------ ------------
Total assets 232,025,596
- ------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------
Accrued expenses 291,870
- ------------------------------------------------------------ ----------
Total liabilities 291,870
- ------------------------------------------------------------------------ ------------
Net Assets for 10,662,904 shares outstanding $231,733,726
- ------------------------------------------------------------------------ ------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------
Paid in capital $150,160,078
- ------------------------------------------------------------------------
Net unrealized appreciation of investments 61,780,473
- ------------------------------------------------------------------------
Accumulated net realized gain on investments 19,499,429
- ------------------------------------------------------------------------
Undistributed net investment income 293,746
- ------------------------------------------------------------------------ ------------
Total Net Assets $231,733,726
- ------------------------------------------------------------------------ ------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------------------------
Net Asset Value and Redemption Proceeds Per Share ($231,733,726 /
10,662,904 shares outstanding) $21.73
- ------------------------------------------------------------------------ ------------
Offering Price Per Share (100/95.50 of $21.73)* $22.75
- ------------------------------------------------------------------------ ------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------
Dividends $ 1,526,916
- -----------------------------------------------------------------------------------
Interest 133,965
- ----------------------------------------------------------------------------------- -----------
Total income 1,660,881
- -----------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------
Investment advisory fee $ 928,044
- ----------------------------------------------------------------------
Administrative personnel and services fee 156,488
- ----------------------------------------------------------------------
Custodian fees 7,072
- ----------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 20,384
- ----------------------------------------------------------------------
Directors'/Trustees' fees 1,829
- ----------------------------------------------------------------------
Auditing fees 6,926
- ----------------------------------------------------------------------
Legal fees 1,378
- ----------------------------------------------------------------------
Portfolio accounting fees 33,386
- ----------------------------------------------------------------------
Share registration costs 8,283
- ----------------------------------------------------------------------
Printing and postage 2,825
- ----------------------------------------------------------------------
Insurance premiums 1,740
- ----------------------------------------------------------------------
Miscellaneous 1,169
- ---------------------------------------------------------------------- ----------
Total expenses 1,169,524
- ----------------------------------------------------------------------
Waivers and reimbursements--
- ----------------------------------------------------------------------
Waiver of investment advisory fee $(76,482)
- ------------------------------------------------------------
Reimbursement of other operating expenses (1,110)
- ------------------------------------------------------------ --------
Total waivers and reimbursements (77,592)
- -----------------------------------------------------------------------------------
Net expenses 1,091,932
- ----------------------------------------------------------------------------------- -----------
Net investment income 568,949
- ----------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------
Net realized gain on investments and options 2,996,401
- -----------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 13,059,478
- ----------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 16,055,879
- ----------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $16,624,828
- ----------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
NOVEMBER 30, 1998 MAY 31, 1998
----------------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------
Net investment income $ 568,949 $ 784,199
- --------------------------------------------------------
Net realized gain (loss) on investments ($2,996,401 and
$21,100,147 net gains, respectively, as computed for
federal tax purposes) 2,996,401 21,189,873
- --------------------------------------------------------
Net change in unrealized appreciation 13,059,478 19,481,961
- -------------------------------------------------------- ---------------- -----------
Change in net assets resulting from operations 16,624,828 41,456,033
- -------------------------------------------------------- ---------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------
Distributions from net investment income (580,273) (721,356)
- --------------------------------------------------------
Distributions from net realized gains -- (10,530,395)
- -------------------------------------------------------- ---------------- -----------
Change in net assets resulting from distributions
to shareholders (580,273) (11,251,751)
- -------------------------------------------------------- ---------------- -----------
SHARE TRANSACTIONS--
- --------------------------------------------------------
Proceeds from sale of shares 2,806,485 18,796,021
- --------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 515,653 9,786,538
- --------------------------------------------------------
Cost of shares redeemed (7,326,623) (6,596,418)
- -------------------------------------------------------- ---------------- -----------
Change in net assets resulting from share
transactions (4,004,485) 21,986,141
- -------------------------------------------------------- ---------------- -----------
Change in net assets 12,040,070 52,190,423
- --------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------
Beginning of period 219,693,656 167,503,233
- -------------------------------------------------------- ---------------- -----------
End of period (including undistributed net investment
income of $293,746 and $305,070, respectively) $231,733,726 $219,693,656
- -------------------------------------------------------- ---------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED MAY 31,
NOVEMBER 30, -------------------------------------
1998 1998 1997 1996 1995(A)
---- ---- ------ ------ -------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $20.24 $17.33 $13.80 $11.48 $10.00
- --------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------
Net investment income 0.05 0.07 0.13 0.14 0.11
- --------------------------------------------
Net realized and unrealized gain (loss) on
investments 1.49 3.93 3.72 2.57 1.44
- -------------------------------------------- --------- ------ ------ ------ -------
Total from investment operations 1.54 4.00 3.85 2.71 1.55
- -------------------------------------------- --------- ------ ------ ------ -------
LESS DISTRIBUTIONS
- --------------------------------------------
Distributions from net investment income (0.05) (0.07) (0.13) (0.16) (0.07)
- --------------------------------------------
Distributions from net realized gain on
investments -- (1.02) (0.19) (0.23) --
- -------------------------------------------- --------- ------ ------ ------ -------
Total distributions (0.05) (1.09) (0.32) (0.39) (0.07)
- -------------------------------------------- --------- ------ ------ ------ -------
NET ASSET VALUE, END OF PERIOD $21.73 $20.24 $17.33 $13.80 $11.48
- -------------------------------------------- --------- ------ ------ ------ -------
TOTAL RETURN(B) 7.65% 23.86% 28.25% 23.91% 15.55%
- --------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------
Expenses 1.00%* 1.00% 1.03% 1.25% 1.25%*
- --------------------------------------------
Net investment income 0.52%* 0.39% 0.81% 1.08% 3.00%*
- --------------------------------------------
Expense waiver/reimbursement(c) 0.07%* 0.07% 0.16% 0.20% 1.42%*
- --------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------
Net assets, end of period (000 omitted) $231,734 $219,694 $167,503 $29,194 $24,581
- --------------------------------------------
Portfolio turnover 29% 69% 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.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
CCB EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
CCB 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 CCB 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. 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.
OPTION 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 value of the option
contract is recorded as a liability and unrealized gain or loss is measured
<PAGE>
CCB EQUITY FUND
- --------------------------------------------------------------------------------
by the difference between the current value and the premium received. For
the period ended November 30, 1998, the Fund had a realized gain of $98,252
on written options. At November 30, 1998, the Fund had no outstanding
options.
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, 1998 MAY 31, 1998
- ------------------------------------------------------- ------------------ -------------
<S> <C> <C>
Shares sold 135,578 986,350
- -------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 25,570 541,306
- -------------------------------------------------------
Shares redeemed (353,080) (338,851)
- ------------------------------------------------------- --------------- ------------
Net change resulting from share transactions (191,932) 1,188,805
- ------------------------------------------------------- --------------- ------------
</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 and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
Under the terms of a 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 average daily net assets. 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.
<PAGE>
CCB EQUITY FUND
- --------------------------------------------------------------------------------
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's shares. The Plan provides that the Fund may incur distribution
expenses up to 0.35% of the average daily net assets of the Fund, annually, to
compensate FSC. The Fund did not pay or accrue distribution expenses during the
period ended November 30, 1998.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with FAS, the Fund will pay FAS up to 0.25% of average daily net assets of the
Fund for the period. The fee paid to FAS 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, 1998.
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.
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 Adviser. The Fund has agreed to reimburse Adviser for these expenses during
the five year period following the Fund's effective date. For the period ended
November 30, 1998, the Fund paid $5,930 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) YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
<PAGE>
CCB EQUITY FUND
- --------------------------------------------------------------------------------
(6) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended November 30, 1998, were as follows:
<TABLE>
<S> <C>
- ------------------------------------------------------------
Purchases $61,428,328
- ------------------------------------------------------------ -----------
Sales $65,952,946
- ------------------------------------------------------------ -----------
</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.
