LOGO
TREASURY OBLIGATIONS
MONEY MARKET FUND
BOND FUND
STOCK FUND
SEMI-ANNUAL
REPORT
(DATED OCTOBER 31, 1995)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of the SouthTrust Vulcan Funds
(collectively referred to as the "Funds" or individually as the "Fund") for the
six-month period ended October 31, 1995. This report begins with an Investment
Review that discusses the economy and developments in the financial markets over
the period. Next, you'll find the Portfolio of Investments and Financial
Statements for the SouthTrust Vulcan Treasury Obligations Money Market Fund, the
Vulcan Stock Fund, and the Vulcan Bond Fund.
Please note the following highlights for each fund over the six-month reporting
period.
SOUTHTRUST VULCAN TREASURY OBLIGATIONS MONEY MARKET FUND
This portfolio of U.S. Treasury money market securities paid a total of $0.03
per share in dividends over the reporting period. Total net assets in the fund
stood at $283.7 million at the end of the period.
SOUTHTRUST VULCAN STOCK FUND
The Fund's diversified portfolio of high-quality stocks delivered a total return
of 13.80% based on net asset value (8.70% taking into account the fund's 4.5%
sales charge)*. Its net asset value increased to $12.99 on the last day of the
period, compared to $11.50 on the first day of the period. The fund paid $0.10
per share in dividends. Total net assets reached $164.9 million.
SOUTHTRUST VULCAN BOND FUND
The Fund's diversified portfolio of corporate and government bonds paid
dividends totaling $0.30 per share. Its net asset value rose from $9.93 on the
first day of the period to $10.33 on the last day of the period. The fund
achieved a total return of 6.95% based on net asset value (2.72% taking into
account the fund's 4% sales charge)*. Total net assets in the fund stood at
$82.2 million at the end of the period.
Thank you for pursuing your financial goals through the SouthTrust Vulcan Funds.
We look forward to keeping you up to date on your progress.
Sincerely,
LOGO
Edward C. Gonzales
President
December 15, 1995
* 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.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
MARKET REVIEW
Like an automobile on cruise control, the financial markets continued their
consistent upward trend which began last December. Calendar year 1995's
performance is turning out to be one of the best in history for both the bond
and stock markets. This bullish euphoria has resulted from the ideal combination
of moderate economic growth and flat-to-declining inflation.
ECONOMIC PERSPECTIVE
The Federal Reserve Board's ("Fed") July cut in the Fed funds rate shifted
monetary policy from a restrictive bias toward neutrality. No Fed easing cycle
in the postwar era has ended with just one 25 basis point reduction. However,
Fed rate cuts tend to be much less frequent when the economy is healthy and
growing.
Inflationary pressures continued to lessen during the latest calendar quarter.
The Consumer Price Index (CPI), was up only 2.5% from a year ago and the
Producer Price Index (PPI) was up just 1.8% over the same time period. The price
component of the National Association of Purchasing Managers Index has fallen
steadily since the beginning of the year. This component eased further in
September after plunging in August, a sign that inflationary pressures continue
to abate. The positive trend in inflation has proven to be a major factor
supporting bonds and stocks, as the consensus forecast for the CPI was 3.5% at
the start of the year.
Our greatest concern regarding the domestic economy is the sustainability of
consumer spending. Income growth this year has not kept pace with spending.
Consumer debt as a percentage of income is near record levels, and the savings
rate remains near historic lows.
FIXED INCOME MARKET
In late December 1994, the U.S. Treasury yield curve briefly inverted.
Historically, yield inversions have often preceded economic recessions. Although
the economy never entered a recession, it slowed materially, allowing the Fed to
stop raising rates in February 1995. The result was that bond prices sharply
rallied this year as the focus of fixed income investors shifted toward possible
interest rate reductions. Following the 25 basis point reduction in early July,
many economists looked for continued rate cuts by the Fed.
The current environment for bonds is constructive. Moderate economic growth and
low inflation are conducive to stable interest rates. Further signs of a
sluggish economy would likely encourage the Fed to ease prior to the important
Christmas selling season. The focus of the market, meanwhile, will shift back to
Washington, as Congress and the Administration attempt to resolve budget, tax
and deficit negotiations. Any action to significantly reduce the deficit would
likely result in lower interest rates and a stronger U.S. dollar. In the Vulcan
Bond Fund we continue to find high quality intermediate maturity corporate bonds
and collateralized mortgage obligations to be attractive.
The investment objective of the Vulcan Bond Fund is to provide a level of total
return consistent with a portfolio of high-quality debt securities. The weighted
average maturity of the Fund's portfolio securities will generally be between
five and ten years; however, the Fund's weighted average maturity may be
adjusted based on anticipated market conditions.
The Vulcan Treasury Obligations Money Market Fund's investment objective is to
provide as high a level of current income as is consistent with maintaining
liquidity and stability of principal. The Fund invests
- --------------------------------------------------------------------------------
solely in direct obligations of the U.S. Treasury, consisting of Treasury bills
and notes and repurchase agreements collateralized by direct Treasury
obligations. All securities acquired will have remaining maturities of thirteen
months or less, and the dollar-weighted average portfolio maturity of the Fund
will not exceed 90 days. The yield of the Fund is affected by changes in short
term interest rates. Most recently, yields have trended lower.
EQUITY MARKET
The stock market advanced again in the calendar third quarter, building on its
gains generated during the first half of the year. As investors continued
purchasing mutual funds, portfolio managers bought more stock than was funded by
net cash inflows. This resulted in low cash positions by many mutual funds,
which could restrain future demand for stock. The favorable supply/demand
scenario for stocks was aided by continued mergers, acquisitions, and stock
repurchases.
During the quarter, the U.S. dollar strengthened versus other hard currencies.
This introduced the possibility of foreign investment in U.S. stocks. A strong
dollar hurts large multinational companies because it gives foreign competitors
a pricing advantage, and profits of foreign subsidiaries translate back into
fewer U.S. dollars. During the quarter, investors became more interested in
smaller companies due to their limited foreign exposure.
The best performing sectors during the third quarter included financial services
and utilities. The continuing outperformance of the financial services sector
was fueled by attractive valuations, declining interest rates, and strong merger
activity. The utility sector benefited from declining interest rates, and a move
toward more defensive investments.
Earnings expectations declined during the quarter, as some companies guided
estimates lower. Several potential negatives exist for the market, including:
declining profit outlooks, current high growth expectations, and increasingly
difficult earnings comparisons. Earnings disappointments are possible, given
top-down S&P 500 growth estimates of 16% in 1995, versus bottom-up growth
estimates of 25%. Even the 16% increase may prove hard to attain, given the
economic environment.
Stocks continue to be supported by a number of positive factors, including:
lessening inflationary pressures, a declining interest rate environment, a
strengthening dollar, continued cash flows into mutual funds, potential foreign
stock purchases, and corporate share buybacks. Potential negatives include:
extremely low dividend yields, high price-to-book ratios, low mutual fund cash
positions, decelerating earnings growth, high earnings expectations, and high
investor confidence that the market will continue to provide superior returns.
The SouthTrust Vulcan Stock Fund seeks long-term capital appreciation by
investing in securities, primarily common stocks, that have attractive growth
prospects that, in the opinion of SouthTrust Bank of Alabama, N.A. (the
"Adviser"), are not fully reflected in the stocks' prices. Under normal
circumstances, the Funds' level of cash and cash equivalents will fluctuate
between 0% and 15% of total assets, with 85% to 100% of assets invested in
equities.
Everything considered, the positives should be able to keep the market from
undergoing a significant decline. However, the market is entering a late cycle
stage where volatility should increase, and sharp corrections are likely in
companies and industries that do not meet expectations.
SOUTHTRUST VULCAN TREASURY OBLIGATIONS
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ ------------
<C> <S> <C>
U.S. TREASURY BILLS--48.7%
- ---------------------------------------------------------------------------------
$15,000,000 11/2/1995 $ 14,997,775
------------------------------------------------------------------
10,000,000 12/7/1995 9,945,500
------------------------------------------------------------------
15,000,000 12/7/1995 14,919,225
------------------------------------------------------------------
10,000,000 12/14/1995 9,935,978
------------------------------------------------------------------
5,000,000 1/4/1996 4,952,445
------------------------------------------------------------------
10,000,000 1/18/1996 9,882,675
------------------------------------------------------------------
15,000,000 2/1/1996 14,789,933
------------------------------------------------------------------
10,000,000 2/8/1996 9,851,225
------------------------------------------------------------------
10,000,000 2/15/1996 9,844,533
------------------------------------------------------------------
10,000,000 3/7/1996 9,812,322
------------------------------------------------------------------
15,000,000 3/14/1996 14,703,246
------------------------------------------------------------------
15,000,000 4/4/1996 14,658,031
------------------------------------------------------------------ ------------
TOTAL U.S. TREASURY BILLS 138,292,888
------------------------------------------------------------------ ------------
U.S. TREASURY STRIP--5.3%
- ---------------------------------------------------------------------------------
15,000,000 5.56%, 11/15/1995 14,968,853
------------------------------------------------------------------ ------------
</TABLE>
SOUTHTRUST VULCAN TREASURY OBLIGATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ ------------
<C> <S> <C>
*REPURCHASE AGREEMENTS--46.4%
- ---------------------------------------------------------------------------------
$25,000,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.875%, dated
10/31/1995, due 11/1/1995 $ 25,000,000
------------------------------------------------------------------
40,000,000 Goldman, Sachs & Co., 5.83%, dated 10/31/1995, due 11/1/1995 40,000,000
------------------------------------------------------------------
21,722,000 Lehman Brothers, Inc., 5.875%, dated 10/31/1995, due 11/1/1995 21,722,000
------------------------------------------------------------------
45,000,000 Sanwa Bank-BGK Securities Inc., 5.80%, dated 10/31/1995, due
11/1/1995 45,000,000
------------------------------------------------------------------ ------------
TOTAL REPURCHASE AGREEMENTS 131,722,000
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $284,983,741+
------------------------------------------------------------------ ------------
</TABLE>
+ Also represents the 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
($283,796,646) at October 31, 1995.
The following acronymn is used throughout this portfolio:
STRIPs -- Separate Trading of Registered Interest & Principal of Securities
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN STOCK FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- ------------
<C> <S> <C>
SHORT-TERM INVESTMENTS--9.8%
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER--7.2%
-------------------------------------------------------------------
ENERGY--3.0%
-------------------------------------------------------------------
5,000,000 Exxon Group, 5.69%, 11/1/1995 $ 5,000,000
------------------------------------------------------------------- ------------
FINANCIAL SERVICES--4.2%
-------------------------------------------------------------------
2,000,000 Ford Motor Credit Corp., 5.77%, 11/1/1995 2,000,000
-------------------------------------------------------------------
5,000,000 General Electric Capital Corp., 5.76%, 11/1/1995 5,000,000
------------------------------------------------------------------- ------------
Total 7,000,000
------------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER (AT AMORTIZED COST) 12,000,000
------------------------------------------------------------------- ------------
MUTUAL FUNDS--2.6%
-------------------------------------------------------------------
4,220,826 Seven Seas Government Money Market Fund (at net asset value) 4,220,826
------------------------------------------------------------------- ------------
TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 16,220,826
------------------------------------------------------------------- ------------
COMMON STOCKS--90.1%
- ---------------------------------------------------------------------------------
CAPITAL GOODS--10.3%
-------------------------------------------------------------------
27,800 Caterpillar, Inc. 1,560,275
-------------------------------------------------------------------
41,900 General Electric Co. 2,650,175
-------------------------------------------------------------------
53,700 Illinois Tool Works, Inc. 3,121,313
-------------------------------------------------------------------
37,900 Loral Corp. 2,245,575
-------------------------------------------------------------------
41,900 PACCAR, Inc. 1,749,325
-------------------------------------------------------------------
89,500 Pall Corp. 2,181,563
-------------------------------------------------------------------
79,800 Rockwell International Corp. 3,551,100
------------------------------------------------------------------- ------------
Total 17,059,326
------------------------------------------------------------------- ------------
CONSUMER DURABLES--2.5%
-------------------------------------------------------------------
42,400 Chrysler Corp. 2,188,900
-------------------------------------------------------------------
52,400 Echlin, Inc. 1,873,300
------------------------------------------------------------------- ------------
Total 4,062,200
------------------------------------------------------------------- ------------
</TABLE>
SOUTHTRUST VULCAN STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------
CONSUMER NON-DURABLES--8.6%
-------------------------------------------------------------------
82,000 Hudson Foods, Inc. $ 1,158,250
-------------------------------------------------------------------
36,500 IBP, Inc. 2,185,437
-------------------------------------------------------------------
59,300 Philip Morris Cos., Inc. 5,010,850
-------------------------------------------------------------------
49,000 Procter & Gamble Co. 3,969,000
-------------------------------------------------------------------
62,300 Sara Lee Corp. 1,830,063
------------------------------------------------------------------- ------------
Total 14,153,600
------------------------------------------------------------------- ------------
CONSUMER SERVICES--2.4%
-------------------------------------------------------------------
67,600 Disney, Walt Co. 3,895,450
------------------------------------------------------------------- ------------
ENERGY--8.0%
-------------------------------------------------------------------
33,200 Amoco Corp. 2,120,650
-------------------------------------------------------------------
51,800 Ashland, Inc. 1,638,175
-------------------------------------------------------------------
102,300 Coastal Corp. 3,311,962
-------------------------------------------------------------------
38,100 Exxon Corp. 2,909,887
-------------------------------------------------------------------
32,000 Mobil Corp. 3,224,000
------------------------------------------------------------------- ------------
Total 13,204,674
------------------------------------------------------------------- ------------
FINANCIAL SERVICES--12.3%
-------------------------------------------------------------------
40,800 American International Group 3,442,500
-------------------------------------------------------------------
46,100 Bank of New York Company, Inc. 1,936,200
-------------------------------------------------------------------
29,200 Chubb Corp. 2,624,350
-------------------------------------------------------------------
22,400 Federal National Mortgage Association 2,349,200
-------------------------------------------------------------------
120,400 Keycorp 4,063,500
-------------------------------------------------------------------
54,200 NationsBank Corp. 3,563,650
-------------------------------------------------------------------
36,300 Sunamerica, Inc. 2,259,675
------------------------------------------------------------------- ------------
Total 20,239,075
------------------------------------------------------------------- ------------
HEALTH CARE--8.4%
-------------------------------------------------------------------
33,700 Bristol Myers Squibb Co. 2,569,625
-------------------------------------------------------------------
55,300 Columbia/HCA Healthcare Corp. 2,716,612
-------------------------------------------------------------------
</TABLE>
SOUTHTRUST VULCAN STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
-------------------------------------------------------------------
98,000 FHP International Corp. $ 2,376,500
-------------------------------------------------------------------
63,200 Mallinckrodt Group, Inc. 2,196,200
-------------------------------------------------------------------
69,400 Pfizer, Inc. 3,981,825
------------------------------------------------------------------- ------------
Total 13,840,762
------------------------------------------------------------------- ------------
MULTI-INDUSTRY--1.4%
-------------------------------------------------------------------
53,500 Tenneco, Inc. 2,347,313
------------------------------------------------------------------- ------------
RAW MATERIALS--7.4%
-------------------------------------------------------------------
58,000 International Paper Co. 2,146,000
-------------------------------------------------------------------
94,600 Praxair, Inc. 2,554,200
-------------------------------------------------------------------
17,700 Rohm & Haas 977,925
-------------------------------------------------------------------
76,900 Sherwin-Williams Co. 2,893,363
-------------------------------------------------------------------
56,000 Union Carbide Corp. 2,121,000
-------------------------------------------------------------------
43,900 Wolverine Tube, Inc. 1,563,938(a)
------------------------------------------------------------------- ------------
Total 12,256,426
------------------------------------------------------------------- ------------
RETAIL--5.1%
-------------------------------------------------------------------
36,000 Dillard Department Stores 976,500
-------------------------------------------------------------------
69,200 J.C. Penney Company, Inc. 2,915,050
-------------------------------------------------------------------
43,600 May Department Stores Co. 1,711,300
-------------------------------------------------------------------
130,000 Wal-Mart Stores, Inc. 2,811,250
------------------------------------------------------------------- ------------
Total 8,414,100
------------------------------------------------------------------- ------------
TECHNOLOGY--17.0%
-------------------------------------------------------------------
50,100 Hewlett-Packard Co. 4,640,512
-------------------------------------------------------------------
82,800 Intel Corp. 5,785,650
-------------------------------------------------------------------
160,400 MCI Communications 3,999,975
-------------------------------------------------------------------
</TABLE>
SOUTHTRUST VULCAN STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-------------------------------------------------------------------
61,800 Motorola, Inc. $ 4,055,625
-------------------------------------------------------------------
72,600 Sprint Corp. 2,795,100
-------------------------------------------------------------------
87,800 Sun Microsystems, Inc. 6,848,400
------------------------------------------------------------------- ------------
Total 28,125,262
------------------------------------------------------------------- ------------
TRANSPORTATION--2.9%
-------------------------------------------------------------------
30,300 Norfolk Southern Corp. 2,340,675
-------------------------------------------------------------------
132,500 TNT Freightways Corp. 2,385,000
------------------------------------------------------------------- ------------
Total 4,725,675
------------------------------------------------------------------- ------------
UTILITIES--3.8%
-------------------------------------------------------------------
3,800 Commonwealth Energy System Companies 161,025
-------------------------------------------------------------------
62,500 Consolidated Edison Co. of New York, Inc. 1,898,437
-------------------------------------------------------------------
41,800 Houston Industries, Inc. 1,938,475
-------------------------------------------------------------------
156,100 Westcoast Energy, Inc. 2,302,475
------------------------------------------------------------------- ------------
Total 6,300,412
------------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $121,049,460) 148,624,275
------------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $137,270,286) $164,845,101+
------------------------------------------------------------------- ------------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $137,270,286. The
net unrealized appreciation of investments on a federal tax basis amounts to
$27,574,815, which is comprised of $29,799,671 appreciation and $2,224,856
depreciation at October 31, 1995.
(a) Non-income producing securities.
Note: The categories of investments are shown as a percentage of net assets
($164,932,784) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN BOND FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--94.8%
- ----------------------------------------------------------------------------------
CORPORATE BONDS--46.2%
- ----------------------------------------------------------------------------------
BANKING--4.6%
--------------------------------------------------------------------
$2,500,000 Bank of New York, Inc., 8.50%, 12/15/2004 $ 2,809,925
--------------------------------------------------------------------
1,000,000 Wachovia Corp., 6.375%, 4/15/2003 992,010
-------------------------------------------------------------------- -----------
Total 3,801,935
-------------------------------------------------------------------- -----------
CONSUMER NON-DURABLES--4.4%
--------------------------------------------------------------------
1,000,000 PepsiCo, Inc., 6.25%, 9/1/1999 1,005,500
--------------------------------------------------------------------
1,500,000 Philip Morris Cos., Inc., 7.125%, 10/1/2004 1,536,840
--------------------------------------------------------------------
1,000,000 Philip Morris Cos., Inc., 7.125%, 12/1/1999 1,026,690
-------------------------------------------------------------------- -----------
Total 3,569,030
-------------------------------------------------------------------- -----------
CONSUMER SERVICES--2.4%
--------------------------------------------------------------------
2,000,000 Gannett Co., 5.85%, 5/1/2000 1,973,960
-------------------------------------------------------------------- -----------
ELECTRONIC TECHNOLOGY--2.8%
--------------------------------------------------------------------
2,300,000 Motorola, Inc., 6.50%, 3/1/2008 2,292,479
-------------------------------------------------------------------- -----------
FINANCE--21.2%
--------------------------------------------------------------------
2,000,000 Associates Corp. North America 1,979,980
--------------------------------------------------------------------
2,000,000 Equifax, Inc., 6.50%, 6/15/2003 1,997,760
--------------------------------------------------------------------
2,500,000 Ford Motor Credit Corp., 7.75%, 10/1/1999 2,629,000
--------------------------------------------------------------------
1,000,000 International Business Machines Credit Corp., 5.22%, 2/16/1996 997,120
--------------------------------------------------------------------
2,000,000 International Lease Financing Corp., 5.60%, 1/17/1996 1,997,600
--------------------------------------------------------------------
275,000 International Lease Financing Corp., 5.75%, 1/15/1996 274,973
--------------------------------------------------------------------
3,500,000 Northern Trust Co., 6.70%, 9/15/2005 3,515,400
--------------------------------------------------------------------
1,500,000 Prudential Home Mtg., 7.05%, 3/25/2008 1,512,239
--------------------------------------------------------------------
2,500,000 Standard Credit Card Master Service, 7.875%, 11/7/1998 2,632,525
-------------------------------------------------------------------- -----------
Total 17,536,597
-------------------------------------------------------------------- -----------
</TABLE>
SOUTHTRUST VULCAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ----------------------------------------------------------------------------------
HEALTHCARE--2.1%
--------------------------------------------------------------------
$1,000,000 Johnson & Johnson, 8.00%, 9/1/1998 $ 1,016,960
--------------------------------------------------------------------
750,000 Merck & Co., Inc., 6.00%, 1/15/1997 751,170
-------------------------------------------------------------------- -----------
Total 1,768,130
-------------------------------------------------------------------- -----------
RAW MATERIALS--1.4%
--------------------------------------------------------------------
1,000,000 duPont (E.I.) de Nemours & Co., 8.125%, 3/15/2004 1,111,330
-------------------------------------------------------------------- -----------
TELECOMMUNICATIONS--1.2%
--------------------------------------------------------------------
1,000,000 New England Telephone & Telegraph Co., 6.25%, 12/15/1997 1,003,100
-------------------------------------------------------------------- -----------
TRANSPORTATION--3.1%
--------------------------------------------------------------------
1,000,000 Norfolk Southern Corp., 7.75%, 8/15/2006 1,097,420
--------------------------------------------------------------------
1,500,000 Union Pacific Corp., 6.44%, 1/15/1998 1,513,365
-------------------------------------------------------------------- -----------
Total 2,610,785
-------------------------------------------------------------------- -----------
UTILITIES--3.0%
--------------------------------------------------------------------
2,000,000 Baltimore Gas & Electric Co., 5.85%, 7/19/2000 1,959,960
--------------------------------------------------------------------
500,000 Southern Ry Co., 10.00%, 7/15/1996 513,810
-------------------------------------------------------------------- -----------
Total 2,473,770
-------------------------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $36,146,602) 38,141,116
-------------------------------------------------------------------- -----------
GOVERNMENT AGENCIES--27.0%
- ----------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--3.7%
--------------------------------------------------------------------
3,000,000 7.41%, 8/3/2005 3,042,090
-------------------------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--7.4%
--------------------------------------------------------------------
2,088,932 10.00%, 1/1/2020 2,278,858
--------------------------------------------------------------------
1,075,000 7.50%, 11/25/2004 1,123,289
--------------------------------------------------------------------
2,500,000 8.25%, 10/12/2004 2,664,450
-------------------------------------------------------------------- -----------
Total 6,066,597
-------------------------------------------------------------------- -----------
</TABLE>
SOUTHTRUST VULCAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------
UNASSIGNED--3.7%
--------------------------------------------------------------------
$3,000,000 Resolution Trust Corp., 7.50%, 10/25/2028 $ 3,028,125
--------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOC.--12.2%
--------------------------------------------------------------------
1,742,487 7.00%, 8/15/2008 1,764,790
--------------------------------------------------------------------
919,227 8.00%, 5/15/2022 948,513
--------------------------------------------------------------------
2,226,043 8.50%, 10/15/2009 2,326,883
--------------------------------------------------------------------
997,289 8.50%, 8/15/2024 1,038,098
--------------------------------------------------------------------
2,200,514 9.50%, 11/15/2024 2,350,391
--------------------------------------------------------------------
1,239,621 9/50%, 4/15/2020 1,327,931
--------------------------------------------------------------------
203,566 9.50%, 9/15/2019 218,068
-------------------------------------------------------------------- -----------
Total 9,974,674
-------------------------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST $21,423,160) 22,111,486
-------------------------------------------------------------------- -----------
U.S. TREASURY--21.6%
- ----------------------------------------------------------------------------------
TREASURY BONDS--4.2%
--------------------------------------------------------------------
1,000,000 7.25%, 5/15/2016 1,096,860
--------------------------------------------------------------------
1,000,000 7.875%, 2/15/2021 1,177,510
--------------------------------------------------------------------
1,000,000 8.00%, 11/15/2021 1,196,420
-------------------------------------------------------------------- -----------
Total 3,470,790
-------------------------------------------------------------------- -----------
TREASURY NOTES--17.4%
--------------------------------------------------------------------
1,000,000 4.375%, 11/15/1996 987,730
--------------------------------------------------------------------
1,500,000 4.75%, 2/15/1997 1,483,470
--------------------------------------------------------------------
1,000,000 5.50%, 7/31/1997 998,320
--------------------------------------------------------------------
2,000,000 6.50%, 8/15/1997 2,029,780
--------------------------------------------------------------------
500,000 6.75%, 2/28/1997 507,200
--------------------------------------------------------------------
1,000,000 7.00%, 4/15/1999 1,038,910
--------------------------------------------------------------------
1,000,000 7.125%, 10/15/1998 1,038,540
--------------------------------------------------------------------
2,000,000 7.25%, 8/15/2004 2,165,360
--------------------------------------------------------------------
</TABLE>
SOUTHTRUST VULCAN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------------
U.S. TREASURY--CONTINUED
- ----------------------------------------------------------------------------------
TREASURY NOTES--CONTINUED
--------------------------------------------------------------------
$ 800,000 8.00%, 10/15/1996 $ 817,592
--------------------------------------------------------------------
1,000,000 8.00%, 5/15/2001 1,101,130
--------------------------------------------------------------------
1,000,000 8.00%, 8/15/1999 1,075,030
--------------------------------------------------------------------
1,000,000 8.125%, 2/15/1998 1,052,060
-------------------------------------------------------------------- -----------
Total 14,295,122
-------------------------------------------------------------------- -----------
TOTAL U.S. TREASURY (IDENTIFIED COST $16,845,134) 17,765,912
-------------------------------------------------------------------- -----------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST $74,414,896)
--------------------------------------------------------------------
SHORT-TERM INVESTMENTS--3.7%
- ----------------------------------------------------------------------------------
MUTUAL FUNDS--3.7%
--------------------------------------------------------------------
3,024,847 Seven Seas Government Money Market (at net asset value) 3,024,847
-------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $77,439,743) $81,043,361
-------------------------------------------------------------------- -----------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $77,439,743. The
net unrealized appreciation of investments on a federal tax basis amounts to
$3,603,618 which is comprised of $3,674,514 appreciation and $70,896
depreciation at October 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($82,150,691) at October 31, 1995.
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
OBLIGATIONS
MONEY MARKET STOCK BOND
FUND FUND FUND
------------ ------------ -----------
<S> <C> <C> <C>
ASSETS:
- -----------------------------------------------------------
Investments in repurchase agreements $131,722,000 $ -- $ --
- -----------------------------------------------------------
Investments in securities 153,261,741 164,845,101 81,043,361
- ----------------------------------------------------------- ------------ ------------ -----------
Total investments in securities, at amortized cost and
value 284,983,741 164,845,101 81,043,361
- ----------------------------------------------------------- ------------ ------------ -----------
Cash 88 -- --
- -----------------------------------------------------------
Income receivable 21,353 182,360 1,122,814
- -----------------------------------------------------------
Deferred expenses 31,913 10,993 10,429
- ----------------------------------------------------------- ------------ ------------ -----------
Total assets 285,037,095 165,038,454 82,176,604
- ----------------------------------------------------------- ------------ ------------ -----------
LIABILITIES:
- -----------------------------------------------------------
Payable for shares redeemed -- 5,585 4,877
- -----------------------------------------------------------
Income distribution payable 1,222,045 -- --
- -----------------------------------------------------------
Accrued expenses 18,404 100,085 21,036
- ----------------------------------------------------------- ------------ ------------ -----------
Total liabilities 1,240,449 105,670 25,913
- ----------------------------------------------------------- ------------ ------------ -----------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------
Paid-in capital 283,796,646 $131,591,114 $79,432,993
- -----------------------------------------------------------
Net unrealized appreciation of investments -- 27,574,815 3,603,618
- -----------------------------------------------------------
Accumulated net realized gain on investments -- 5,615,298 (972,697)
- -----------------------------------------------------------
Undistributed net investment income -- 151,557 86,777
- ----------------------------------------------------------- ------------ ------------ -----------
Total Net Assets $283,796,646 $164,932,784 $82,150,691
- ----------------------------------------------------------- ------------ ------------ -----------
Shares outstanding 283,796,646 $ 12,698,388 $ 7,956,074
- ----------------------------------------------------------- ------------ ------------ -----------
Net Asset Value Per Share: (Net Assets / Shares
Outstanding) $ 1.00 $ 12.99 $ 10.33
- ----------------------------------------------------------- ------------ ------------ -----------
Offering Price Per Share:* $ -- $ 13.60 $ 10.76
- ----------------------------------------------------------- ------------ ------------ -----------
Redemption Proceeds Per Share:** $ -- $ 12.86 $ 10.33
- ----------------------------------------------------------- ------------ ------------ -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
** See "Contingent Deferred Sales Charge" 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, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS STOCK BOND
MONEY MARKET FUND FUND FUND
--------------------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------
Interest $ 8,526,840 $ 564,893 $2,763,642
Dividends -- 1,456,741 --
- ---------------------------------------------------------- -------------- ---------- ---------
Total income 8,526,840 2,021,634 2,763,642
- ---------------------------------------------------------- -------------- ---------- ---------
EXPENSES:
- ----------------------------------------------------------
Investment advisory fee 734,420 578,420 243,959
- ----------------------------------------------------------
Directors'/Trustees' fees 5,316 1,962 2,461
- ----------------------------------------------------------
Administrative personnel and services fee 198,803 104,594 55,146
- ----------------------------------------------------------
Custodian fees 15,730 9,923 11,125
- ----------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 4,503 24,293 15,715
- ----------------------------------------------------------
Share registration costs 13,686 46,174 12,369
- ----------------------------------------------------------
Auditing fees 2,225 4,925 5,915
- ----------------------------------------------------------
Legal fees 3,684 4,701 2,860
- ----------------------------------------------------------
Printing and postage 1,851 13,529 6,401
- ----------------------------------------------------------
Portfolio accounting fees 8,159 33,245 30,045
- ----------------------------------------------------------
Insurance premiums 1,763 0 2,105
- ----------------------------------------------------------
Miscellaneous 3,312 1,927 2,232
- ---------------------------------------------------------- -------------- ---------- ---------
Total expenses 993,452 823,693 390,333
- ----------------------------------------------------------
Waivers and reimbursements--
- ----------------------------------------------------------
Waiver of investment advisory fee (293,768) (77,123) (20,330)
- ----------------------------------------------------------
Waiver of administrative personnel and services fee (44,065) (38,561) (20,330)
- ---------------------------------------------------------- ------------- --------- --------
Total waivers (337,833) (115,684) (40,660)
- ---------------------------------------------------------- ------------- --------- --------
Net expenses 655,619 708,009 349,673
- ---------------------------------------------------------- ------------- --------- --------
Net investment income $ 7,871,221 1,313,625 2,413,969
- ---------------------------------------------------------- -------------- ---------- ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------
Net realized gain on investments -- 3,966,847 99,350
- ----------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments -- 14,321,916 2,809,024
- ---------------------------------------------------------- -------------- ---------- ---------
Net realized and unrealized gain on investments -- 18,288,763 2,908,374
- ---------------------------------------------------------- -------------- ---------- ---------
Change in net assets resulting from operations $ 7,871,221 $19,602,388 $5,322,343
- ---------------------------------------------------------- -------------- ---------- ---------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS
MONEY MARKET FUND STOCK FUND BOND FUND
-------------------------------- -------------------------------- --------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED
(UNAUDITED) YEAR ENDED (UNAUDITED) YEAR ENDED (UNAUDITED) YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995 OCTOBER 31, 1995 APRIL 30, 1995 OCTOBER 31, 1995 APRIL 30, 1995
- ---------------------- ---------------- -------------- ---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
- ----------------------
OPERATIONS--
- ----------------------
Net investment
income/operating loss $ 7,871,221 $ 11,615,086 $ 1,313,625 $ 1,668,815 $ 2,413,969 $ 3,580,655
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
Net realized gain
(loss) on
investments -- -- 3,966,847 1,895,010 99,350 (1,069,134)
- ----------------------
Net change in
unrealized
appreciation
(depreciation) -- -- 14,321,916 13,350,921 2,809,024 1,563,871
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
Change in net
assets resulting
from operations 7,871,221 11,615,086 19,602,388 16,914,746 5,322,343 4,075,392
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
DISTRIBUTIONS TO
SHAREHOLDERS--
- ----------------------
Distributions from net
investment income (7,871,221) (11,615,086 ) (1,276,848) (1,569,099) (2,407,155) (3,536,738)
- ----------------------
Change in net
assets from
distributions to
shareholders (7,871,221) (11,615,086 ) (1,276,848) (1,569,099) (2,407,155) (3,536,738)
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
SHARE TRANSACTIONS--
- ----------------------
Proceeds from sale of
shares 597,618,291 906,326,760 22,186,670 99,535,036 8,537,128 58,552,670
- ----------------------
Net asset value of
shares issued to
shareholders in
payment of
distributions declared 66,270 56,458 34,213 78,162 16,247 41,423
- ----------------------
Cost of shares
redeemed (628,087,961) (871,107,428 ) (13,894,405) (13,792,151) (5,726,606) (15,491,406)
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
Change in net
assets resulting
from share
transactions (30,403,400) 35,275,790 8,326,478 85,821,047 2,826,769 43,102,687
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
Change in net
assets (30,403,400) 35,275,790 26,652,018 101,166,694 5,741,957 43,641,341
- ----------------------
NET ASSETS:
- ----------------------
Beginning of period 314,200,046 278,924,255 138,280,766 37,114,072 76,408,734 32,767,393
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
End of period $ 283,796,646 $ 314,200,046 $164,932,784 $138,280,766 $ 82,150,691 $ 76,408,734
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
Undistributed net
investment income $ -- $ -- $ 151,557 $ 114,802 $ 86,777 $ 75,532
- ---------------------- ----------- ----------- ----------- ---------- ---------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
SOUTHTRUST VULCAN TREASURY OBLIGATIONS
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED APRIL 30,
OCTOBER 31, -----------------------------
1995 1995 1994 1993(A)
----------- ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------
Net investment income 0.03 0.05 0.03 0.03
- --------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------
Distributions from net investment income (0.03) (0.05) (0.03) (0.03)
- -------------------------------------------------------- ------- ----- ----- ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------- -------- ------ ------ -------
TOTAL RETURN (B) 2.73% 4.62% 2.83% 2.93%
- --------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------
Expenses 0.45%(c) 0.43% 0.40% 0.39%(c)
- --------------------------------------------------------
Net investment income 5.36%(c) 4.56% 2.81% 2.93%(c)
- --------------------------------------------------------
Expense waiver/reimbursement (d) 0.23%(c) 0.30% 0.33% 0.36%(c)
- --------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------
Net assets, end of period (000 omitted) $283,797 $314,200 $278,924 $194,771
- --------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from May 8, 1992 (date of initial public
investment) to April 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) 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)
SOUTHTRUST VULCAN STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED APRIL 30,
OCTOBER 31, -----------------------------
1995 1995 1994 1993(A)
----------- ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.51 $10.08 $10.36 $10.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.10 0.20 0.19 0.19
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.48 1.43 (0.28) 0.35
- ------------------------------------------------------------ -------- ------ ------ -------
Total from investment operations 1.58 1.63 (0.09) 0.54
- ------------------------------------------------------------ -------- ------ ------ -------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.10) (0.20) (0.19) (0.18)
- ------------------------------------------------------------
Distributions in excess of net investment income 0.00 0.00 0.00 0.00
- ------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.10) (0.20) (0.19) (0.18)
- ------------------------------------------------------------ -------- ------ ------ -------
NET ASSET VALUE, END OF PERIOD $ 12.99 $11.51 $10.08 $10.36
- ------------------------------------------------------------ -------- ------ ------ -------
TOTAL RETURN (B) 13.80% 16.36% (0.90%) 5.54%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.92%(c) 0.74% 0.48% 0.39%(c)
- ------------------------------------------------------------
Net investment income 1.70%(c) 1.95% 1.82% 1.91%(c)
- ------------------------------------------------------------
Expense waiver/reimbursement (d) 0.15%(c) 0.39% 0.69% 0.74%(c)
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $164,933 $138,281 $37,114 $30,935
- ------------------------------------------------------------
Portfolio turnover 16% 57% 46% 34%
- ------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from May 8, 1992 (date of initial public
investment) to April 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) 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)
SOUTHTRUST VULCAN BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
(UNAUDITED) YEAR ENDED APRIL 30
OCTOBER 31, -----------------------------
1995 1995 1994 1993(A)
----------- ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.95 $10.04 $10.71 $10.00
- --------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------
Net investment income 0.30 0.61 0.63 0.66
- --------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.38 (0.09) (0.58) 0.69
- -------------------------------------------------------- -------- ------ ------ -------
Total from investment operations 0.68 0.52 0.05 1.35
- -------------------------------------------------------- -------- ------ ------ -------
LESS DISTRIBUTIONS
- --------------------------------------------------------
Distributions from net investment income (0.30) (0.61) (0.65) (0.62)
- --------------------------------------------------------
Distributions from net realized gain on investment
transactions 0.00 0.00 (0.07) (0.02)
- -------------------------------------------------------- -------- ------ ------ -------
TOTAL DISTRIBUTIONS (0.30) (0.61) (0.72) (0.64)
- -------------------------------------------------------- -------- ------ ------ -------
NET ASSET VALUE, END OF PERIOD $ 10.33 $ 9.95 $10.04 $10.71
- -------------------------------------------------------- -------- ------ ------ -------
TOTAL RETURN (B) 6.95% 5.41% 0.33% 13.44%
- --------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------
Expenses 0.86%(c) 0.75% 0.51% 0.39%(c)
- --------------------------------------------------------
Net investment income 5.92%(c) 6.29% 5.97% 6.53%(c)
- --------------------------------------------------------
Expense waiver/reimbursement (d) 0.10%(c) 0.28% 0.58% 0.59%(c)
- --------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------
Net assets, end of period (000 omitted) $82,151 $76,409 $32,767 $25,989
- --------------------------------------------------------
Portfolio turnover 11% 48% 6% 19%
- --------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from May 8, 1992 (date of initial public
investment) to April 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) 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)
SOUTHTRUST VULCAN FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
SouthTrust Vulcan Funds (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company. The Company consists of three diversified portfolios:
Treasury Obligations Money Market Fund ("Treasury Obligations"), Stock Fund
("Stock"), and Bond Fund ("Bond") (individually referred to as a "Fund," or
collectively as, the "Funds"). The assets of each Fund are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Company in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service. Treasury Obligations use
of the amortized cost method to value its portfolio securities is in
accordance with Rule 2a-7 under the Act. Investments in other open-end
investment companies are valued at net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Company to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Company to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.
The Company will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Company's adviser to be creditworthy pursuant to the guidelines
and/or standards reviewed or established by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Company could receive
less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily.
SOUTHTRUST VULCAN FUNDS
- --------------------------------------------------------------------------------
Bond premium and discount, if applicable, are amortized as required by the
Internal Revenue Code, as amended (the "Code").
FEDERAL TAXES--It is the Company'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 April 30, 1995, the Bond Fund, for federal tax purposes, had a capital
loss carryforward of $252,919, which will reduce the Bond 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 Bond Fund of any liability for federal tax. Pursuant to the Code, such
capital loss carryforward will expire in 2003.
Additionally, the Bond Fund's net capital losses of $820,719 attributable
to security transactions incurred after October 31, 1994 are treated as
arising on May 1, 1995, the first day of the Bond Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS --The Company may engage in
when-issued or delayed delivery transactions. The Company 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.
DEFERRED EXPENSES--The costs incurred by the Company with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares and organizational expenses, have been
deferred and are being amortized using the straight-line method not to
exceed a period of five years from the Company's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
SOUTHTRUST VULCAN FUNDS
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Master Trust Agreement permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (par value of $0.001).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
-------------------------------------- ----------------------------------------
TREASURY TREASURY
OBLIGATIONS STOCK BOND OBLIGATIONS STOCK BOND
- ----------------------------- ------------ ---------- -------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 597,618,291 1,780,993 837,135 906,326,761 9,649,918 5,999,668
- -----------------------------
Shares issued to shareholders
in payment of distributions
declared 66,270 2,729 1,594 56,458 7,567 4,223
- -----------------------------
Shares redeemed (628,087,961) (1,103,875) (560,305) (871,107,428) (1,319,808) (1,591,198)
- ----------------------------- ------------ ---------- -------- ------------ ---------- ----------
Net change resulting from
share transactions (30,403,400) 679,847 278,424 35,275,791 8,337,677 4,412,693
- ----------------------------- ------------ ---------- -------- ------------ ---------- ----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--SouthTrust Bank of Alabama, N.A., the Company's
investment adviser ("Adviser"), receives for its services an annual investment
advisory fee based on a percentage of each Fund's average daily net assets (see
below). The Adviser may voluntarily choose to waive all or a portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
- ----------------------------------------------------------------------------------- -------
<S> <C>
Treasury Obligations 0.50%
- -----------------------------------------------------------------------------------
Stock 0.75%
- -----------------------------------------------------------------------------------
Bond 0.60%
- -----------------------------------------------------------------------------------
</TABLE>
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Company with certain administrative personnel and services. The FAS fee is based
on the level of average aggregate net assets of the Company for the period. FAS
may voluntarily choose to waive a portion of its fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the
Company. This fee is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Company's accounting records
for which it receives a fee. The fee is based on the level of each Fund's
average net assets for the period, plus out-of-pocket expenses.
SOUTHTRUST VULCAN FUNDS
- --------------------------------------------------------------------------------
Certain of the Officers of the Company are Officers and Directors or Trustees of
the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended October 31, 1995, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Stock $33,069,034 $21,860,198
- ------------------------------------------------------------------- ----------- -----------
Bond $12,051,060 $ 8,325,241
- ------------------------------------------------------------------- ----------- -----------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------------------------------
Charles G. Brown, III William O. Vann
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
C. Christine Thomson
Assistant Treasurer
Peter J. Germain
Secretary
C. Todd Gibson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Company's prospectus, which contains facts
concerning the Funds' objectives and policies, management fees, expenses and
other information.
<TABLE>
<S> <C>
844734202
Investment Adviser: 844734301
[LOGO] 844734103
of Alabama, N.A. 3110408 (12/95)
</TABLE>
