SOUTHTRUST INVESTMENTS
Built on Service
TREASURY OBLIGATIONS
MONEY MARKET FUND
BOND FUND
STOCK FUND
SEMI-ANNUAL REPORT
(Dated October 31, 1993)
[Logo]
SOUTH TRUST VULCAN FUNDS
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present you with the Semi-Annual Report of the SouthTrust
Vulcan family of funds for the six-month period ended October 31, 1993. This
Report contains complete financial information--including the Investment Review
and Portfolio of Investments--for the SouthTrust Vulcan Treasury Obligations
Money Market Fund, the SouthTrust Vulcan Stock Fund, and the SouthTrust Vulcan
Bond Fund.
Total assets in all three Funds have grown during the reporting period. As of
October 31, 1993, net assets in the SouthTrust Vulcan Treasury Obligations
Money Market Fund totaled $233.8 million and dividends paid to shareholders
amounted to $2.9 million; net assets in the SouthTrust Vulcan Stock Fund
climbed to $36.6 million, and dividends totaled more than $323,000; and net
assets in the SouthTrust Vulcan Bond Fund reached $30 million, with dividends
of more than $757,000.
We appreciate your confidence in the SouthTrust Vulcan Funds, and thank you for
pursuing your financial goal with us. We will continue to keep you informed
about your investment on a regular basis. As always, we welcome your questions,
comments, or suggestions.
Sincerely,
[LOGO]
Edward C. Gonzales
President
December 15, 1993
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The transition from an extended recession (or "recessionary period") to an
economic recovery continues. As usual, the recovery is being led by personal
consumption expenditures (in contradiction to the gloomy surveys) and supported
by capital equipment spending. In addition to this improvement in the
underlying economy, investors have been presented with good news on inflation
and corporate earnings. In sum, a very favorable mix of events.
Although few expect an economic boom anytime soon, our view is that positive
economic surprises are likely to continue well into next year. Thus, we expect
the real growth of the economy to accelerate, inflation to stay low, and
interest rates to remain at reasonable levels.
However, this favorable near term outlook could be a sharp contrast to the
longer term character of the domestic economy. After the initial recovery
cycle, the structure of the economy should be expected to adapt to its many
restraining influences and quickly move into a slow-growth phase.
We believe the challenge to the investment manager, in these times, is not to
anticipate and react to these economic shifts but, rather, to seek investments
that will do well in both periods or, failing that, will do no harm short term
and give favorable returns long term.
For the six months ended October 31, 1993, the SouthTrust Vulcan Treasury Money
Market Fund had a seven day net yield of 2.75%, with an average maturity of 48
days. This is consistent with the Federal Reserve's Fed Funds target of 3%
since September 1992. Looking forward, if economic activity and growth rates
are maintained during the first half of 1994, the Federal Reserve can be
expected to firm the 3% Fed Funds target by 1/4% to 1/2% during the first six
months of next year. This could result in an increased yield on the SouhTrust
Vulcan Treasury Obligations Money Market Fund by approximately the same amount.
The SouthTrust Vulcan Stock Fund is managed for long term capital appreciation.
Emphasis is placed on holding a diversified portfolio of well-managed
companies. We believe that this approach has a solid foundation and is
theoretically superior to short term oriented strategies. However, in a given
period, any strategy is subject to the possibility of underperformance. It is
impossible to determine when these periods will begin and end, and any attempts
to act on them has the potential to permanently damage a portfolio's value. In
the first nine months of 1993, the equity portfolio experienced relative
underperformance, due mainly to two reasons: (1) large cap growth stocks
underperformed, and (2) high quality stocks, based on S&P bond ratings, also
underperformed. The Vulcan Stock Fund emphasizes buying securities of good
companies and remaining disciplined during periods of underperformance. During
the third quarter, the main structural changes have been: (1) a lower exposure
to consumer durables; (2) a larger overweighting in consumer non-durables; and
(3) a larger overweighting in energy. In the aggregate, the companies in the
portfolio measure up to the most demanding tests of quality.
The SouthTrust Vulcan Bond Fund is invested in laddered maturities with a
weighted average maturity of 9.1 years. Investments continue to be in the
highest quality issues with U.S. Treasury securities comprising 65% of the
Fund. Cash flows into the Fund have been invested in corporate bonds and
mortgage-backed securities, enabling the Fund to take advantage of yield spread
differences between issuers and different security types.
- --------------------------------------------------------------------------------
Over the six month period ended October 31, 1993, yields on the 30-year
Treasury bond declined by about 100 basis points, moving from 6.92% to 5.96%,
reaching a low of 5.79% on October 15, 1993. As longer term yields declined,
short-term rates remained almost unchanged, moving up by only 15 basis points
from 2.95% to 3.10%. The decline in yields reflected weak economic performance
and low inflation.
During the period ended October 31, 1993, net assets rose from $25 million to
$30 million while the net asset value rose from $10.71 to $10.92.
SOUTHTRUST VULCAN TREASURY OBLIGATIONS
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- -------------------------------------------------- ------------
<C> <S> <C>
U.S. TREASURY BILLS--55.2%
- -------------------------------------------------------------------------------
$10,000,000 11/04/93 $ 9,997,392
--------------------------------------------------
15,000,000 11/12/93 14,985,998
--------------------------------------------------
10,000,000 11/18/93 9,985,031
--------------------------------------------------
10,000,000 12/02/93 9,971,755
--------------------------------------------------
5,000,000 12/16/93 4,980,219
--------------------------------------------------
10,000,000 01/06/94 9,943,258
--------------------------------------------------
10,000,000 01/20/94 9,930,272
--------------------------------------------------
15,000,000 02/10/94 14,869,752
--------------------------------------------------
10,000,000 03/10/94 9,887,842
--------------------------------------------------
10,000,000 03/17/94 9,885,155
--------------------------------------------------
5,000,000 03/24/94 4,939,721
--------------------------------------------------
10,000,000 04/07/94 9,865,896
--------------------------------------------------
10,000,000 04/21/94 9,851,325
-------------------------------------------------- ------------
TOTAL U.S. TREASURY BILLS 129,093,616
-------------------------------------------------- ------------
U.S. TREASURY STRIP--4.3%
- -------------------------------------------------------------------------------
10,000,000 3.21%, 11/15/93 9,987,921
-------------------------------------------------- ------------
*REPURCHASE AGREEMENTS--40.7%
- -------------------------------------------------------------------------------
20,000,000 Donaldson, Lufkin & Jenrette Securities Corp.,
2.95%, dated 10/29/93,
due 11/01/93 20,000,000
--------------------------------------------------
35,206,664 Goldman Sachs & Co., 2.95%, dated 10/29/93, due
11/01/93 35,206,664
--------------------------------------------------
40,000,000 Kidder Peabody & Co., Inc., 2.95%, dated 10/29/93,
due 11/01/93 40,000,000
-------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 95,206,664
-------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $234,288,201+
-------------------------------------------------- ------------
</TABLE>
+ Also represents cost for federal tax purposes.
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($233,805,490) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN STOCK FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------- -------------------------------------------------------- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS--0.7%
- -------------------------------------------------------------------------------
MUTUAL FUND SHARES
--------------------------------------------------------
257,255 Smith Barney Money Fund, Inc. (AT NET ASSET VALUE) (NOTE
2A) $ 257,255
-------------------------------------------------------- -----------
COMMON STOCKS--98.4%
- -------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES--4.3%
--------------------------------------------------------
16,100 Automatic Data Processing 859,337
--------------------------------------------------------
10,700 Dun & Bradstreet Corp. 716,900
-------------------------------------------------------- -----------
Total 1,576,237
-------------------------------------------------------- -----------
CAPITAL GOODS--5.2%
--------------------------------------------------------
13,900 Emerson Electric Co. 797,513
--------------------------------------------------------
14,500 Illinois Tool Works, Inc. 541,937
--------------------------------------------------------
27,100 Pall Corp. 562,325
-------------------------------------------------------- -----------
Total 1,901,775
-------------------------------------------------------- -----------
CONSUMER NON-DURABLES--13.0%
--------------------------------------------------------
26,600 Coca-Cola Co. 1,153,775
--------------------------------------------------------
11,400 General Mills, Inc. 729,600
--------------------------------------------------------
4,800 International Flavors & Fragrances, Inc. 520,800
--------------------------------------------------------
22,100 Procter & Gamble Co. 1,198,925
--------------------------------------------------------
15,300 Sara Lee Corp. 405,450
--------------------------------------------------------
28,400 UST, Inc. 749,050
-------------------------------------------------------- -----------
Total 4,757,600
-------------------------------------------------------- -----------
CONSUMER SERVICES--8.0%
--------------------------------------------------------
15,900 Block, H&R, Inc. 634,013
--------------------------------------------------------
28,300 Disney, Walt Co. 1,209,825
--------------------------------------------------------
26,700 Reader's Digest Assoc., Inc. 1,111,388
-------------------------------------------------------- -----------
Total 2,955,226
-------------------------------------------------------- -----------
</TABLE>
SOUTHTRUST VULCAN STOCK FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ ------------------------------------ -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------
ENERGY--14.3%
------------------------------------
10,400 Amoco Corp. $ 581,100
------------------------------------
4,400 Atlantic Richfield Co. 485,100
------------------------------------
9,500 Chevron Corp. 921,500
------------------------------------
18,100 Exxon Corp. 1,183,287
------------------------------------
17,900 Mobil Corp. 1,458,850
------------------------------------
9,500 Schlumberger, Ltd. 602,062
------------------------------------ -----------
Total 5,231,899
------------------------------------ -----------
FINANCIAL SERVICES--6.5%
------------------------------------
10,350 American International Group 931,500
------------------------------------
4,900 Marsh & McLennan Co. 399,350
------------------------------------
22,300 Marshall & Isley Corp. 507,325
------------------------------------
14,600 Wachovia Corp. 558,450
------------------------------------ -----------
Total 2,396,625
------------------------------------ -----------
HEALTH CARE--7.7%
------------------------------------
9,700 Bristol Myers Co. 569,875
------------------------------------
21,100 Johnson & Johnson 888,838
------------------------------------
16,500 Merck & Company, Inc. 530,062
------------------------------------
13,400 Pfizer, Inc. 834,150
------------------------------------ -----------
Total 2,822,925
------------------------------------ -----------
MULTI-INDUSTRY--2.3%
------------------------------------
8,300 Minnesota Mining & Manufacturing Co. 861,125
------------------------------------ -----------
RAW MATERIALS--7.0%
------------------------------------
16,800 Air Products & Chemicals, Inc. 701,400
------------------------------------
7,000 Aluminum Company of America 476,000
------------------------------------
13,100 Rohm & Haas 658,275
------------------------------------
19,800 Sherwin Williams Co. 722,700
------------------------------------ -----------
Total 2,558,375
------------------------------------ -----------
RETAIL--11.0%
------------------------------------
19,600 Dillard Department Stores 720,300
------------------------------------
</TABLE>
SOUTHTRUST VULCAN STOCK FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------ ---------------------------------------------------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------
RETAIL--CONTINUED
----------------------------------------------------
30,500 Home Depot, Inc. $ 1,208,563
----------------------------------------------------
20,300 Toys R Us 814,538(a)
----------------------------------------------------
48,700 Wal-Mart Stores 1,284,462
---------------------------------------------------- -----------
Total 4,027,863
---------------------------------------------------- -----------
SHELTER, FOREST PRODUCT & PAPER--1.5%
----------------------------------------------------
11,800 Shaw Industries 533,950
---------------------------------------------------- -----------
TECHNOLOGY--14.4%
----------------------------------------------------
9,000 AMP, Inc. 561,375
----------------------------------------------------
20,700 American Telephone & Telegraph Co. 1,192,837
----------------------------------------------------
12,500 Echlin, Inc. 406,250
----------------------------------------------------
6,300 Hewlett Packard Co. 463,838
----------------------------------------------------
15,800 Intel Corp. 999,350
----------------------------------------------------
15,300 MCI Communications 436,050
----------------------------------------------------
7,300 Microsoft Corp. 584,912(a)
----------------------------------------------------
3,600 Motorola, Inc. 377,100
----------------------------------------------------
11,700 Novell, Inc. 251,550(a)
---------------------------------------------------- -----------
Total 5,273,262
---------------------------------------------------- -----------
TRANSPORTATION--1.7%
----------------------------------------------------
9,300 Norfolk Southern Corp. 616,125
---------------------------------------------------- -----------
UTILITIES--1.5%
----------------------------------------------------
11,600 Consolidated Natural Gas 561,150
---------------------------------------------------- -----------
TOTAL COMMON STOCKS (IDENTIFIED COST, $34,344,406) 36,074,137
---------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $34,601,661) $36,331,392+
---------------------------------------------------- -----------
</TABLE>
(a)Non-income producing.
+ The cost of investments for federal tax purposes amounts to $34,601,661. The
net unrealized appreciation on a federal tax basis amounts to $1,729,731,
which is comprised of $2,606,653 appreciation and $876,922 depreciation at
October 31, 1993.
Note:The categories of investments are shown as a percentage of net assets
($36,659,453) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN BOND FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1993 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
---------- --------------------------------------------------- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS--1.6%
- -----------------------------------------------------------------------------
MUTUAL FUND SHARES
---------------------------------------------------
487,073 Smith Barney Money Fund, Inc. (AT NET ASSET VALUE)
(NOTE 2A) $ 487,073
--------------------------------------------------- -----------
LONG-TERM INVESTMENTS--96.7%
- -----------------------------------------------------------------------------
CORPORATE BONDS--23.0%
---------------------------------------------------
BANKING--5.1%
---------------------------------------------------
$ 500,000 State Street Boston Corp., 5.95%, 9/15/2003 499,575
---------------------------------------------------
1,000,000 Wachovia Corp., 6.375%, 4/15/2003 1,035,460
--------------------------------------------------- -----------
Total 1,535,035
--------------------------------------------------- -----------
FINANCE--3.4%
---------------------------------------------------
765,000 Associates Corp. of North America, 5.25%, 3/30/2000 751,559
---------------------------------------------------
275,000 International Lease Financing Corp., 5.75%, 1/15/96 280,005
--------------------------------------------------- -----------
Total 1,031,564
--------------------------------------------------- -----------
ELECTRICAL--4.6%
---------------------------------------------------
1,300,000 Motorola, Inc., 6.50%, 3/1/2008 1,370,746
--------------------------------------------------- -----------
OIL & OIL FINANCE--3.2%
---------------------------------------------------
900,000 Amoco CDA Pete Co., 6.75%, 2/15/2005 973,503
--------------------------------------------------- -----------
RETAIL--0.8%
---------------------------------------------------
250,000 Walmart Stores, Inc., 6.75%, 10/15/2023 248,408
--------------------------------------------------- -----------
TELEPHONES--3.5%
---------------------------------------------------
1,000,000 New England Telephone & Telegraph Co., 6.25%,
12/15/97 1,050,230
--------------------------------------------------- -----------
UTILITIES--2.4%
---------------------------------------------------
700,000 Baltimore Gas & Electric Co., 5.50%, 7/15/2000 704,347
--------------------------------------------------- -----------
TOTAL CORPORATE BONDS 6,913,833
--------------------------------------------------- -----------
</TABLE>
SOUTH TRUST VULCAN BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -------------------------------------------- ----------
<C> <S> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC TRUST--4.2%
- ---------------------------------------------------------------------
$ 200,000 6.50%, 10/25/2012 $ 203,610
--------------------------------------------
1,000,000 7.50%, 7/25/2020 1,058,800
-------------------------------------------- ----------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION 1,262,410
-------------------------------------------- ----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--4.8%
- ---------------------------------------------------------------------
1,371,047 8.00%, 5/15/2022 1,445,591
-------------------------------------------- ----------
U.S. TREASURY BONDS--15.9%
- ---------------------------------------------------------------------
600,000 6.25%, 8/15/2023 623,244
--------------------------------------------
1,500,000 7.25%, 5/15/2016 1,684,680
--------------------------------------------
1,000,000 7.875%, 2/15/2021 1,209,990
--------------------------------------------
1,000,000 8.00%, 11/15/2021 1,231,870
-------------------------------------------- ----------
TOTAL U.S. TREASURY BONDS 4,749,784
-------------------------------------------- ----------
U.S. TREASURY NOTES--48.8%
- ---------------------------------------------------------------------
400,000 4.625%, 2/15/96 404,624
--------------------------------------------
1,000,000 5.50%, 7/31/97 1,033,120
--------------------------------------------
1,000,000 6.00%, 11/15/94 1,024,680
--------------------------------------------
200,000 6.25%, 2/15/2003 211,436
--------------------------------------------
1,000,000 6.50%, 11/30/96 1,061,560
--------------------------------------------
500,000 6.75%, 2/28/97 535,780
--------------------------------------------
1,000,000 7.00%, 4/15/99 1,097,180
--------------------------------------------
1,000,000 7.125%, 10/15/98 1,099,310
--------------------------------------------
2,000,000 7.50%, 1/31/96-11/15/2001 2,213,730
--------------------------------------------
1,000,000 7.75%, 2/15/95 1,050,310
--------------------------------------------
2,800,000 8.00%, 10/15/96-5/15/2001 3,198,792
--------------------------------------------
1,000,000 8.125%, 2/15/98 1,131,240
--------------------------------------------
</TABLE>
SOUTH TRUST VULCAN BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES--CONTINUED
- -----------------------------------------------------------------------------
$ 550,000 8.625%, 8/15/94 $ 571,824
-------------------------------------------------- -----------
TOTAL U.S. TREASURY NOTES 14,633,586
-------------------------------------------------- -----------
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST,
$27,141,528) 29,005,204
-------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $27,628,601) $29,492,277+
-------------------------------------------------- -----------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $27,628,601. The
net unrealized appreciation on a federal tax basis amounts to $1,863,676,
which is comprised of $1,896,506 appreciation and $32,830 depreciation at
October 31, 1993.
The following abbreviation is used in this portfolio:
REMIC--Real Estate Mortgage Investment Conduit
Note:The categories of investments are shown as a percentage of net assets
($30,003,724) at October 31, 1993.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1993 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS STOCK BOND
MONEY MARKET FUND FUND FUND
-------------------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
- -----------------------------
Investments in repurchase
agreements (Note 2B ) $ 95,206,664 $ -- $ --
- -----------------------------
Investments, in securities 139,081,537 36,331,392 29,492,277
(Note 2A) ------------- ----------- -----------
- -----------------------------
Total investments, at 234,288,201 36,331,392 29,492,277
amortized cost and value ------------- ----------- -----------
- -----------------------------
Cash 721 -- --
- -----------------------------
Interest receivable 23,405 1,778 449,707
- -----------------------------
Receivable for Fund shares
sold -- 273,653 116,806
- -----------------------------
Dividends receivable -- 46,693 --
- -----------------------------
Prepaid/deferred expenses
(Note 2F) 82,306 12,355 10,216
- -----------------------------
Receivable from Adviser (Note 1,013 -- --
5) ------------- ----------- -----------
- -----------------------------
Total assets 234,395,646 36,665,871 30,069,006
- ----------------------------- ------------- ----------- -----------
LIABILITIES:
- -----------------------------
Payable for Fund shares
repurchased -- 271 56,051
- -----------------------------
Dividends payable 496,677 -- --
- -----------------------------
Accrued expenses and other 93,479 6,147 9,231
liabilities ------------- ----------- -----------
- -----------------------------
Total liabilities 590,156 6,418 65,282
- ----------------------------- ------------- ----------- -----------
TOTAL NET ASSETS 233,805,490 36,659,453 30,003,724
- ----------------------------- ------------- ----------- -----------
NET ASSETS CONSIST OF:
- -----------------------------
Paid-in capital $233,805,490 $35,070,776 $28,038,220
- -----------------------------
Unrealized appreciation of
investments -- 1,729,731 1,863,676
- -----------------------------
Accumulated undistributed net
realized
gain (loss) on investments -- (156,991) 22,779
- -----------------------------
Undistributed net investment -- 15,937 79,049
income ------------- ----------- -----------
- -----------------------------
Net assets $ 233,805,490 $36,659,453 $30,003,724
- ----------------------------- ------------- ----------- -----------
NET ASSET VALUE, and
Redemption Price Per Share:
(Net Assets/Shares $ 1.00 $ 10.60 $ 10.92
outstanding) ------------- ----------- -----------
- -----------------------------
Offering Price Per Share:*** $ -- $ 11.10* $ 11.38**
- ----------------------------- ------------- ----------- -----------
Shares Outstanding 233,805,490 3,457,389 2,747,253
- ----------------------------- ------------- ----------- -----------
Investments, at identified $ -- $34,601,661 $27,628,601
cost ------------- ----------- -----------
- -----------------------------
</TABLE>
* Computation of offering price: 100/95.5 of net asset value
** Computation of offering price: 100/96 of net asset value
*** See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1993 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS STOCK BOND
MONEY MARKET FUND FUND FUND
-------------------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------
Interest income (Note 2C) $3,397,940 $ 9,307 $ 903,714
- -----------------------------------
Dividend income -- 389,591 --
- ----------------------------------- ---------- ---------- ----------
Total income (Note 2C) 3,397,940 398,898 903,714
- ----------------------------------- ---------- ---------- ----------
EXPENSES:
- -----------------------------------
Investment advisory fee (Note 5) 540,792 127,985 83,862
- -----------------------------------
Trustees' fees 2,783 333 124
- -----------------------------------
Administrative personnel and
service fees (Note 5) 161,638 25,168 25,205
- -----------------------------------
Custodian fees (Note 5) 20,896 5,684 4,276
- -----------------------------------
Transfer and dividend disbursing
agent fees (Note 5) 1,054 3,755 3,512
- -----------------------------------
Recordkeeping fees (Note 5) 8,422 5,684 10,276
- -----------------------------------
Registration fees 6,812 7,928 6,634
- -----------------------------------
Auditing fees 2,197 2,334 2,280
- -----------------------------------
Legal fees 4,075 2,217 619
- -----------------------------------
Printing and postage 1,873 5,137 2,983
- -----------------------------------
Insurance premiums 1,600 1,153 1,368
- -----------------------------------
Miscellaneous 4,967 404 946
- ----------------------------------- ---------- ---------- ----------
Total expenses 757,109 187,782 142,085
- ----------------------------------- ---------- ---------- ----------
Deduct--
- -----------------------------------
Waiver of investment advisory fee
(Note 5) 324,475 105,801 65,692
- -----------------------------------
Waiver of administrative personnel -- 3,663 8,040
and services (Note 5) ---------- ---------- ----------
- -----------------------------------
Net expenses 432,634 78,318 68,353
- ----------------------------------- ---------- ---------- ----------
Net investment income 2,965,306 320,580 835,361
- ----------------------------------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
- -----------------------------------
Net realized gain on investments
(identified cost basis) -- 262,835 22,822
- -----------------------------------
Net change in unrealized
appreciation (depreciation) on -- 523,110 595,407
investments ---------- ---------- ----------
- -----------------------------------
Net realized and unrealized gain -- 785,945 618,229
on investments ---------- ---------- ----------
- -----------------------------------
Change in net assets resulting $2,965,306 $1,106,525 $1,453,590
from operations ---------- ---------- ----------
- -----------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS STOCK BOND
MONEY MARKET FUND FUND FUND
---------------------------- ------------------------- ------------------------
YEAR ENDED APRIL 30, YEAR ENDED APRIL 30, YEAR ENDED APRIL 30,
---------------------------- ------------------------- ------------------------
1994* 1993** 1994* 1993** 1994* 1993**
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
- ------------------------
OPERATIONS--
- ------------------------
Net investment income $ 2,965,306 $ 6,702,969 $ 320,580 $ 482,999 $ 835,361 $ 1,391,277
- ------------------------
Net realized gain/(loss)
on investment
transactions -- -- 262,835 (419,827) 22,822 193,851
- ------------------------
Change in unrealized
appreciation of
investments -- -- 523,110 1,206,621 680,472 1,183,204
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
Change in net assets
resulting from
operations 2,965,306 6,702,969 1,106,525 1,269,793 1,538,655 2,768,332
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS
(NOTE 3)--
- ------------------------
Dividends to
shareholders from net
investment income (2,965,306) (6,702,969) (323,669) (463,973) (843,709) (1,303,880)
- ------------------------
Distributions to
shareholders from net
realized gain on
investment transactions -- -- -- -- (161,339) (32,555)
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
Change in net assets
from distributions to
shareholders (2,965,306) (6,702,969) (323,669) (463,973) (1,005,048) (1,336,435)
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
FUND SHARE (PRINCIPAL)
TRANSACTIONS (NOTE 4)--
- ------------------------
Net proceeds from sale
of shares 229,096,876 660,872,816 6,653,940 30,835,352 4,239,139 24,851,326
- ------------------------
Net asset value of
shares issued to
shareholders electing to
receive payment of
dividends in Fund shares 10,382 115,587 46,635 31,471 58,856 40,604
- ------------------------
Cost of shares redeemed (190,072,590) (466,217,581) (1,758,736) (737,885) (816,431) (335,274)
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
Change in net assets
from Fund share
transactions 39,034,668 194,770,822 4,941,839 30,128,938 3,481,564 24,556,656
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
Change in net assets 39,034,668 194,770,822 5,724,695 30,934,758 4,015,171 25,988,553
- ------------------------
NET ASSETS:
- ------------------------
Beginning of period 194,770,822 -- 30,934,758 -- 25,988,553 --
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
End of period 233,805,490 194,770,822 36,659,453 30,934,758 30,003,724 25,988,553
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
Undistributed net
investment income
included in net assets
at end of period $ -- $ -- $ 15,937 $ 19,026 $ 79,049 $ 87,397
- ------------------------ ------------- ------------- ------------ ----------- ----------- -----------
</TABLE>
*Six months ended October 31, 1993 (unaudited).
**For the period from April 29, 1992 (start of business) to April 30, 1993.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------------------------------------------
1994*** 1993*
-------------------------------- --------------------------------
TREASURY TREASURY
OBLIGATIONS OBLIGATIONS
MONEY MARKET STOCK BOND MONEY MARKET STOCK BOND
FUND FUND FUND FUND FUND FUND
- ------------------------ ------------ ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $10.36 $10.71 $ 1.00 $10.00 $10.00
- ------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------
Net investment income 0.01 0.10 0.36 0.03 0.19 0.66
- ------------------------
Net realized and
unrealized gain (loss)
on investments -- 0.24 0.25 -- 0.35 0.69
- ------------------------ ------- ------- ------- ------- ------- -------
Total from investment
operations 0.01 0.34 0.61 0.03 0.54 1.35
- ------------------------ ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
- ------------------------
Dividends to
shareholders from net
investment income (0.01) (0.10) (0.33) (0.03) (0.18) (0.62)
- ------------------------
Dividends to
shareholders from net
realized gain on
investment
transactions -- -- (0.07) -- -- (0.02)
- ------------------------ ------- ------- ------- ------- ------- -------
TOTAL DISTRIBUTIONS (0.01) (0.10) (0.40) (0.03) (0.18) (0.64)
- ------------------------ ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 1.00 $10.60 $10.92 $ 1.00 $10.36 $10.71
- ------------------------ ------- ------- ------- ------- ------- -------
TOTAL RETURN** 1.39% 3.31% 5.75% 2.93% 5.54% 13.44%
- ------------------------
RATIOS TO AVERAGE NET
ASSETS
- ------------------------
Expenses 0.40%(a) 0.46%(a) 0.49%(a) 0.39%(a) 0.39%(a) 0.39%(a)
- ------------------------
Net investment income 2.74%(a) 1.88%(a) 5.98%(a) 2.93%(a) 1.91%(a) 6.53%(a)
- ------------------------
Expense adjustment (b) 0.30% 0.64% 0.53% 0.36% 0.74% 0.59%
- ------------------------
SUPPLEMENTAL DATA
- ------------------------
Portfolio turnover rate -- 28% 4.0% -- 34% 19%
- ------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of the
period
(000 omitted) $233,805 $36,659 $30,004 $194,771 $30,935 $25,989
- ---------------------------------------
</TABLE>
* Reflects operations for the period from May 8, 1992 (date of initial public
investment) to April 30, 1993.
** Based on net asset value, which does not reflect the sales load or
redemption fee, if applicable.
*** Six months ended October 31, 1993 (unaudited).
(a) Computed on an annualized basis.
(b) Increase/decrease in above expense/income ratios due to waivers or
reimbursements of expenses (Note 5).
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1993 (UNAUDITED)
- -------------------------------------------------------------------------------
(1) ORGANIZATION
SouthTrust Vulcan Funds (the "Company") (formerly the "Vulcan Funds") is
registered under the Investment Company Act of 1940, as amended, as an open-
end management investment company. The Company consists of three separate
investment portfolios (hereinafter, each individually referred to as a "Fund"
or collectively as, the "Funds") for the six months ended October 31, 1993, as
follows:
Treasury Obligations Money Market Fund Bond Fund Stock Fund
The assets of each Fund of the Company are segregated, and a shareholder's
interest is limited to the Fund in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Listed equity securities, held by the Stock Fund,
are valued at the last sale price reported on national securities exchanges
or, if there has been no sale on the day, at the mean between bid and asked
prices. Unlisted equity securities are valued at the latest bid prices.
Short-term obligations are ordinarily valued at the mean between bid and
asked prices as furnished by an independent pricing service. However,
short-term obligations with maturities of 60 days or less are valued at am-
ortized cost, which approximates market value.
U.S. government obligations, held by the Bond Fund, are valued at the mean
between the over-the-counter bid and asked prices as furnished by an
independent pricing service. Corporate bonds, held by the Bond Fund, are
valued at the last sale price on a national securities exchange, if
available. Otherwise, they are valued at the mean between the bid and asked
prices provided by independent pricing services. Short-term obligations are
valued at the mean between bid and asked prices as furnished by an
independent pricing service; however, such issues with maturities of 60
days or less are valued at amortized cost, which approximates market value.
Investments in other regulated investment companies are valued at net asset
value.
Securities held by the Treasury Obligations Money Market Fund are valued at
amortized cost. The Fund's use of the amortized cost method to value its
portfolio securities is conditioned on its compliance with Rule 2a-7 under
the Investment Company Act of 1940.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the custo-
dian bank to take possession, to have legally segregated in the Federal Re-
serve Book Entry System, or to have segregated within the custodian bank
vault, all collateral held in support of repurchase agreement investments.
Additionally,
procedures have been established by the Funds to monitor, on a daily basis,
the market value of each repurchase agreement's underlying securities to en-
sure the existence of a proper level of collateral.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines established
by the Trustees. Risks may arise from the potential inability of
counterparties to honor the terms of the repurchase agreement. Accordingly,
the Funds could receive less than the repurchase price on the sale of
collateral securities.
C. INCOME--Dividend income for the Stock Fund is recorded on the ex-dividend
date. Interest income is recorded on the accrual basis. Interest income
includes interest and discount earned (net of premium) on short-term
obligations, and interest earned on all other debt securities, including
original issue discount, as required by the Internal Revenue Code, as
amended, (the "Code"). Dividends to shareholders and capital gain
distributions, if any, are recorded on the ex-dividend date.
Interest income for the Bond Fund is recorded on the accrual basis.
Interest income includes interest and discount earned (net of premium) on
short-term obligations, and interest earned on all other debt securities
including discount (net of premium) and original issue discount as required
by the Code.
Interest income for the Treasury Obligations Money Market Fund is recorded
on the accrual basis. Interest income includes interest and discount earned
(net of premium), including original issue discount as required by the
Code, plus realized net gains, if any, on portfolio securities.
D. FEDERAL TAXES--It is the policy of the Funds to comply with the provisions
of the Code applicable to investment companies and to distribute to share-
holders each year all of their net income, including any net realized gain
on investments. Accordingly, no provision for federal tax is necessary. At
April 30, 1993, the Stock Fund, for federal tax purposes, had a capital loss
carryforward of $112,348, which will reduce the Fund's taxable income aris-
ing from a 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 in 2001. Additionally, net capital losses of
$304,480, attributable to security transactions incurred after November 1,
1992, were treated as arising on May 1, 1993, the first day of the Fund's
next taxable year.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in when-
issued or delayed delivery transactions. To the extent the Funds engage in
such transactions, they will do so for the purpose of acquiring portfolio
securities consistent with their investment objectives and policies and not
for the purpose of investment leverage. The Funds will record a when-issued
security and the related liability on the trade date. Until the securities
are received and paid for, the Funds will maintain security positions such
that sufficient liquid assets will be available to make payment for the se-
curities purchased. Securities purchased on a when-issued or delayed deliv-
ery basis are marked to market daily and begin earning interest on the set-
tlement date.
F. DEFERRED EXPENSES--The costs incurred by the Funds with respect to registra-
tion of their shares in their first year, excluding the initial expense of
registering the shares, have been deferred and are being amortized using the
straight-line method over a period of five years from the Funds' commence-
ment date.
G. OTHER--Investment transactions are accounted for on the date of the transac-
tion.
(3) DIVIDENDS
Dividends and distributions are declared and paid quarterly to all shareholders
invested in the Stock Fund on the record date. Dividends and distributions are
declared and paid monthly to all shareholders invested in the Bond Fund on the
record date. The Treasury Obligations Money Market Fund computes its net income
daily and, immediately prior to the calculation of its net asset value at the
close of business, declares and records dividends to shareholders of record at
the time of the previous computation of the Fund's net asset value. Payment of
dividends is made monthly in cash, or in additional shares at the net asset
value on the
payable date. Capital gains realized by the Stock Fund and the Bond Fund, if
any, are distributed at least once every twelve months.
(4) SHARES OF BENEFICIAL INTEREST
The Master Trust Agreement permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest ($.001 par value). Transac-
tions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
----------------------------------------------------------------------
1994* 1993**
---------------------------------- ----------------------------------
TREASURY TREASURY
OBLIGATIONS OBLIGATIONS
MONEY MARKET STOCK BOND MONEY MARKET STOCK BOND
FUND FUND FUND FUND FUND FUND
- ------------------------ ------------ --------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Shares outstanding,
beginning of period 194,770,822 2,985,836 2,426,679 -- -- --
- ------------------------
Shares sold 229,096,876 635,045 390,333 660,872,816 3,053,039 2,454,460
- ------------------------
Shares issued to
shareholders electing to
receive payment of
dividends in Fund shares 10,382 4,525 5,464 115,587 3,003 3,838
- ------------------------
Shares redeemed (190,072,590) (168,017) (75,223) (466,217,581) (70,206) (31,619)
- ------------------------ ------------ --------- --------- ------------ --------- ---------
Shares outstanding, end
of period 233,805,490 3,457,389 2,747,253 194,770,822 2,985,836 2,426,679
- ------------------------ ------------ --------- --------- ------------ --------- ---------
</TABLE>
*Six months ended October 31, 1993.
**For the period from April 29, 1992 (start of business) to April 30, 1993.
(5) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
SouthTrust Bank of Alabama, N.A., the Company's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee based
upon a percentage of the Funds' average daily net assets (see below). The
Adviser may voluntarily choose to waive a portion of its fee. The Adviser
voluntarily waives its investment advisory fee on assets invested in securities
of open-end investment companies. The Adviser can terminate these voluntary
waivers at any time at its sole discretion. The Adviser has also undertaken to
reimburse the Funds for operating expenses in excess of limitations established
by certain states. For the six months ended October 31, 1993, the Adviser
earned and voluntarily waived the following fees:
<TABLE>
<CAPTION>
ADVISORY
ADVISORY FEE
FEE VOLUNTARILY
FUND RATE* EARNED WAIVED
- -------------------------------------- ----- -------- -----------
<S> <C> <C> <C>
Treasury Obligations Money Market Fund 0.50% $540,792 $324,475
- --------------------------------------
Stock Fund 0.75% 127,985 105,801
- --------------------------------------
Bond Fund 0.60% 83,862 65,692
- --------------------------------------
</TABLE>
*As a percentage of average daily net assets.
Federated Administrative Services ("FAS") provides the Funds with certain
administrative personnel and services, and receives for its services an annual
fee equal to .15 of 1% on the first $250 million of average aggregate daily net
assets of the Company; .125 of 1% on the next $250 million; .10 of 1% on the
next $250 million; and .075 of 1% on average aggregate daily net assets in
excess of $750 million. FAS may voluntarily choose to waive a portion of its
fee. For the six months ended October 31, 1993, FAS earned the following fees:
<TABLE>
<CAPTION>
ADMINISTRATIVE ADMINISTRATIVE FEE
FUND FEE EARNED VOLUNTARILY WAIVED
- -------------------------------------- -------------- ------------------
<S> <C> <C>
Treasury Obligations Money Market Fund $161,638 $ --
- --------------------------------------
Stock Fund 25,168 3,663
- --------------------------------------
Bond Fund 25,205 8,040
- --------------------------------------
</TABLE>
The Company bears all costs in connection with its organization, including the
fees and expenses of registering and qualifying shares of the Funds for
distribution under federal and state securities regulations. All organizational
expenses are being amortized on the straight-line method over a period of five
years commencing May 8, 1992. The expenses of organizing each Fund and the
amounts reimbursed by each Fund for the six months ended October 31, 1993, are
as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INITIAL ORGANIZATIONAL
ORGANIZATIONAL EXPENSES
FUND EXPENSES REIMBURSED
- -------------------------------------- -------------- --------------
<S> <C> <C>
Treasury Obligations Money Market Fund $25,255 $2,489
- --------------------------------------
Stock Fund 5,959 624
- --------------------------------------
Bond Fund 5,579 558
- --------------------------------------
</TABLE>
Federated Services Company ("FSC") is the Company's transfer agent, dividend
disbursing agent, and recordkeeper. For the six months ended October 31, 1993,
FSC earned the following fees:
<TABLE>
<CAPTION>
TRANSFER
AGENT RECORDKEEPING
FEES FEES
FUND EARNED EARNED
- -------------------------------------- -------- -------------
<S> <C> <C>
Treasury Obligations Money Market Fund $1,054 $8,422
- --------------------------------------
Stock Fund 3,755 5,684
- --------------------------------------
Bond Fund 3,512 10,276
- --------------------------------------
</TABLE>
Certain of the officers of the Company are officers and Trustees of FAS and
FSC.
On November 5, 1993, State Street Bank and Trust Company became the Company's
custodian. Prior to November 5, 1993, Provident National Bank served as the
Company's custodian, and for the six months ended October 31, 1993, earned the
following fees:
<TABLE>
<CAPTION>
CUSTODIAN
FEES
FUND EARNED
- -------------------------------------- ---------
<S> <C>
Treasury Obligations Money Market Fund $20,896
- --------------------------------------
Stock Fund 5,684
- --------------------------------------
Bond Fund 4,276
- --------------------------------------
</TABLE>
(6) INVESTMENT TRANSACTIONS
Purchases and sales of investments for the six months ended October 31, 1993,
were as follows:
<TABLE>
<CAPTION>
STOCK FUND BOND FUND
- ---------------------- ----------- ----------
<S> <C> <C>
PURCHASES-- $14,154,195 $3,981,526
- ---------------------- ----------- ----------
SALES AND MATURITIES-- $ 9,291,944 $ 955,714
- ---------------------- ----------- ----------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
William O. Vann
Charles G. Brown, III
Russell W. Chambliss Chairman
Thomas L. Merrill, Sr. Thomas L. Merrill, Sr.
D. Riley Stuart Vice Chairman
William O. Vann Edward C. Gonzales
President and Treasurer
Margaret P. Demski
Vice President and Assistant Treasurer
Peter J. Germain
Secretary
Mark A. Sheehan
Assistant Secretary
Mutual funds are not obligations of or insured by any bank nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus, which contains facts
concerning the Funds'objective and policies, management fees, expenses and
other information.
Investment Adviser
SOUTHTRUST BANK
[Logo]
of Alabama, N.A.
3110408 (12/93)
