<PAGE>
[LOGO OF SOUTHTRUST VULCAN FUNDS]
Treasury Obligations
Money Market Fund
Bond Fund
Stock Fund
Income Fund
Semi-Annual
Report
(Dated October 31, 1996)
<PAGE>
PRESIDENT'S MESSAGE
- -------------------------------------------------------------------------------
Dear Investor:
I am pleased to present the Semi-Annual Report of the SouthTrust Vulcan Funds
for the six-month period ending October 31, 1996. This report begins with a
discussion by fund portfolio managers about the economy, the financial
markets, and fund strategies over the period. Next, you'll find a complete
list of investments and financial statements for the funds.
Please note the following highlights for each SouthTrust Vulcan 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 $0.02
per share in dividends over the reporting period. Total net assets in the fund
stood at $420.2 million at the end of the period.*
SOUTHTRUST VULCAN STOCK FUND
The fund's diversified portfolio of high-quality stocks--which at the end of
the period included household names like Bristol-Myers Squibb, Disney, Exxon,
Intel, and Wal-Mart--delivered a total return of 6.97% based on net asset
value during the period (2.15% adjusted for the fund's sales charge).**
Contributing to the total return were $0.12 per share in income and a 6%
increase in net asset value. Total net assets were $230.3 million at the end
of the period.
SOUTHTRUST VULCAN BOND FUND
This fund's diversified portfolio of corporate and government bonds paid
dividends totaling $0.31 per share. Amid a relatively volatile bond market,
the fund's net asset value remained relatively stable, increasing 1%. The
dividends and modest net asset value increase resulted in a total return of
4.79% based on net asset value during the period (1.15% adjusted for the
fund's sales charge).** The fund's total net assets stood at $91.2 million at
the end of the period.
SOUTHTRUST VULCAN INCOME FUND
This fund's diversified portfolio of income-producing investments paid
dividends totaling $0.28 per share. In a relatively volatile bond market, the
fund's net asset value rose modestly from $9.77 on the first day of the period
to $9.84 on the last day of the period. Through dividends and net asset value
increase, the fund achieved a total return of 3.59% based on net asset value
during the period (0.01% adjusted for the fund's sales charge).** The fund
ended the period with $41.5 million in total net assets.
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, 1996
* Although money market mutual funds seek to maintain a stable net asset
value of $1.00 per share, there is no assurance that they will do so. An
investment in the funds is neither insured nor guaranteed by the U.S.
government.
** Performance quoted represents past performance. 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.
1
<PAGE>
INVESTMENT REVIEW
- -------------------------------------------------------------------------------
MARKET REVIEW
"Let the good times roll" and "the beat goes on" are just some of the
expressions heard from equity investors so far this year. Major large
capitalization stock indices have continued to hit record high after record
high. Even bond investors have most recently been able to enjoy an improved
market as the Federal Reserve Board (the "Fed") has not raised interest rates
since earlier in the year.
It appears from the recent mix of positive and negative economic reports that
we are near a turning point in the direction of the U.S. economy. Recent
moderation from the stronger than expected economic growth and employment
gains has increased confidence that the Fed may leave interest rates unchanged
in the near future. Reports of flat retail sales and weakness in both factory
and durable orders have some economists predicting a significant slowdown in
1997.
ECONOMIC PERSPECTIVE
It has been a very difficult year for investors to get a firm grasp on the
direction of the U.S. economy. Given 1995's weakness in leading indicators,
most economists had expected 1996 to be a year of very slow growth. However,
that changed during the first half of this year when the economy proved
stronger than even the most optimistic expectation. Just when economists began
to accept the renewed strength, the consumer stopped spending in the third
quarter and economic growth would have come to a standstill if not for
inventory build up. The surprise in 1996 has been the consumers' willingness
to continue to borrow and spend. The job market has proven to be very strong,
resulting in solid gains in personal income. This, coupled with improved
consumer balance sheets that have been boosted by the strong stock market, has
helped feed a high level of consumer confidence. The economy has made a habit
of stops and starts, and the current slow down is unlikely to dampen the
Christmas spending spirit. But, given high debt loads, neither the consumer
nor the U.S. government seems positioned to fuel strong economic growth in
1997. The most probable forecast is that the economy will slow in 1997, with
the question being "by how much?"
FIXED INCOME MARKET
The strong bond market of 1995 resulted in a level of bullishness among
investors that in hindsight was unsustainable, especially with economists
correctly calling for a mild shift toward higher inflation in 1996. However,
what really shocked bond investors were the strong job reports, with each
report tending to push interest rates higher.
Higher interest rates meant one thing for bond investors -- a very difficult
year for investment returns. Since mid-year, though, signs of economic slowing
have been plentiful and serious inflationary pressures are hard to find. If
the recent record of a bad year for bonds followed by a good year holds true,
1997 could be much more favorable for bond investors than 1996. Both economic
gains and inflation trends look favorable for bonds, and most quantitatively
driven models now show bonds to either be attractive relative to stocks or at
worst fairly valued relative to stocks.
It is important to remember that a balanced portfolio including both bonds and
stocks can tend to provide an important defensive hedge during periods of
stock market volatility. The SouthTrust Vulcan Funds family offers investors a
variety of fixed-income investment options as well as our core equity fund.
2
<PAGE>
- -------------------------------------------------------------------------------
The investment objective of the 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 holdings will generally be between
five and ten years. The Fund's average maturity may be adjusted based upon
anticipated market conditions.
The investment objective of the Income Fund is to provide current income. The
Fund will pursue this objective while attempting to minimize principal
volatility. The Fund is invested in a portfolio of high-quality debt
securities with a weighted average maturity of between one and one half and
five years.
The Treasury Obligations Money Market Fund's investment objective is to
provide as high a level of current interest 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.
EQUITY REVIEW
The equity market continued its winning performance, with the Standard &
Poor's 500 Index* (the "S&P 500") returning 9.1% for the six months ending
October 31, 1996. Stock indices have most recently been hitting record highs
after a rocky mid-year. Most equity indices peaked in May, then retreated
roughly 8% by mid-July. Just as it began to look like the market was headed
for a serious decline, it reversed course and rose through the end of October.
The July market decline seemed to be caused by rising interest rates, fear of
earnings disappointments (some of which materialized, especially in the
technology sector), and a retracement of the sharp price increase that many of
the better performing stocks had experienced.
As stocks resumed their upward trend in late July, several themes emerged.
Large capitalization stocks in more defensive businesses were among the best
performers. The rotation into less-cyclical stocks seems to have resulted
from: fears of an economic slowdown; a belief that the Fed might tighten; and
a sudden realization that stock markets can decline after all. The technology
sector has performed very well as it rebounded from the heavy selling pressure
after earnings disappointments turned out to be less widespread than was
feared. The finance sector also has outperformed, benefiting from the lack of
an interest rate increase, attractive valuations, and continued industry
consolidation.
Strong flows of money into equity mutual funds have continued to drive the
demand for stocks higher. Most companies are operating at historically high
profit margins, as would be expected late in the business cycle. Strong
economic growth and improved profitability have often resulted in many
companies reporting earnings above Wall Street's expectations. Strong
corporate earnings, low inflation, and increasing money flows are a
combination equity investors can normally only dream of. The question now is
"how long will the dream last?" We are being very selective and price
sensitive in stocks owned with an emphasis on high quality, liquid companies,
which are relatively less cyclical, and reasonably valued. We believe
diversification and selectivity are of utmost importance in the current
environment.
The Stock Fund seeks long-term capital appreciation by investing primarily in
common stocks with attractive growth prospects that, in the opinion of
SouthTrust Bank of Alabama, N.A. (the "Adviser"), are not fully reflected in
the stocks' prices.
* The S&P 500 is an unmanaged index comprised of common stocks in industry,
transportation, and financial and public utility companies. Investments
cannot be made in an index.
3
<PAGE>
TREASURY OBLIGATIONS MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
----------- ------------------------------------------------ ------------
<C> <S> <C>
U.S. TREASURY BILLS--40.1%
- ----------------------------------------------------------------------------
$10,000,000 11/14/1996 $ 9,982,522
------------------------------------------------
20,000,000 11/21/1996 19,941,944
------------------------------------------------
15,000,000 12/5/1996 14,926,404
------------------------------------------------
20,000,000 12/12/1996 19,879,506
------------------------------------------------
20,000,000 1/9/1997 19,796,833
------------------------------------------------
10,000,000 1/16/1997 9,895,289
------------------------------------------------
25,000,000 1/23/1997 24,701,719
------------------------------------------------
25,000,000 2/6/1997 24,653,765
------------------------------------------------
25,000,000 3/6/1997 24,547,309
------------------------------------------------ ------------
TOTAL U.S. TREASURY BILLS 168,325,291
------------------------------------------------ ------------
U.S. TREASURY--8.2%
- ----------------------------------------------------------------------------
10,000,000 STRIP, 2/15/97 9,845,801
------------------------------------------------
25,000,000 STRIP, 2/15/97 24,617,269
------------------------------------------------ ------------
TOTAL U.S. TREASURY 34,463,070
------------------------------------------------ ------------
(A) REPURCHASE AGREEMENTS--52.1%
- ----------------------------------------------------------------------------
CS First Boston, Inc., 5.700%, dated 10/31/1996, 28,978,000
28,978,000 due 11/1/1996
------------------------------------------------
Dresdner Securities (USA), Inc., 5.630%, dated 80,000,000
80,000,000 10/31/1996, due 11/1/1996
------------------------------------------------
Lehman Brothers, Inc., 5.630%, dated 10/31/1996, 40,000,000
40,000,000 due 11/1/1996
------------------------------------------------
Nikko Securities, 5.625%, dated 10/31/1996, due 35,000,000
35,000,000 11/1/1996
------------------------------------------------
35,000,000 Nomura Securities International, Inc., 5.600%,
dated 10/31/1996, due 11/1/1996 35,000,000
------------------------------------------------ ------------
TOTAL REPURCHASE AGREEMENTS 218,978,000
------------------------------------------------ ------------
TOTAL INVESTMENTS, AT AMORTIZED COST(B) $421,766,361
------------------------------------------------ ------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($420,210,009) at October 31, 1996.
The following acronym is used throughout this portfolio:
STRIP--Separate Trading of Registered Interest & Principal of Securities
(See Notes which are an integral part of the Financial Statements)
4
<PAGE>
STOCK FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--87.3%
- -----------------------------------------------------------------
BEVERAGE & TOBACCO--0.4%
-------------------------------------
73,300 (a)Imperial Tobacco Group PLC, ADR $ 852,113
------------------------------------- ------------
CHEMICALS--1.4%
-------------------------------------
161,042 (a)Millennium Chemicals, Inc. 3,261,100
------------------------------------- ------------
CONSUMER DURABLES--1.4%
-------------------------------------
101,400 Echlin, Inc. 3,308,175
------------------------------------- ------------
CONSUMER NON-DURABLES--8.0%
-------------------------------------
43,000 CPC International, Inc. 3,391,625
-------------------------------------
111,000 Hudson Foods, Inc., Class A 1,845,375
-------------------------------------
168,800 IBP, Inc. 4,220,000
-------------------------------------
59,300 Philip Morris Cos., Inc. 5,492,662
-------------------------------------
94,700 Sara Lee Corp. 3,361,850
------------------------------------- ------------
Total 18,311,512
------------------------------------- ------------
CONSUMER SERVICES--1.1%
-------------------------------------
39,300 Disney (Walt) Co. 2,588,888
------------------------------------- ------------
ELECTRONIC TECHNOLOGY--14.5%
-------------------------------------
123,600 Hewlett-Packard Co. 5,453,850
-------------------------------------
62,900 Intel Corp. 6,911,137
-------------------------------------
37,000 International Business Machines Corp. 4,773,000
-------------------------------------
57,300 (a)Litton Industries, Inc. 2,571,337
-------------------------------------
60,000 Motorola, Inc. 2,760,000
-------------------------------------
56,100 Rockwell International Corp. 3,085,500
-------------------------------------
63,600 (a)Seagate Technology, Inc. 4,245,300
-------------------------------------
58,800 (a)Sun Microsystems, Inc. 3,586,800
------------------------------------- ------------
Total 33,386,924
------------------------------------- ------------
ENERGY MINERALS--4.3%
-------------------------------------
51,900 Amoco Corp. 3,931,425
-------------------------------------
24,800 Exxon Corp. 2,197,900
-------------------------------------
</TABLE>
5
<PAGE>
STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
----------- ------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------
ENERGY MINERALS--CONTINUED
-------------------------------------------
32,000 Mobil Corp. $ 3,736,000
------------------------------------------- ------------
Total 9,865,325
------------------------------------------- ------------
FINANCE--12.1%
-------------------------------------------
92,200 Bank of New York Co., Inc. 3,054,125
-------------------------------------------
79,600 Chubb Corp. 3,980,000
-------------------------------------------
113,700 Federal National Mortgage Association 4,448,513
-------------------------------------------
120,400 KeyCorp 5,613,650
-------------------------------------------
54,200 NationsBank Corp. 5,108,350
-------------------------------------------
58,300 Providian Corp. 2,740,100
-------------------------------------------
77,500 SunAmerica, Inc. 2,906,250
------------------------------------------- ------------
Total 27,850,988
------------------------------------------- ------------
HEALTH SERVICES--7.4%
-------------------------------------------
112,950 Columbia/HCA Healthcare Corp. 4,037,963
-------------------------------------------
35,200 (a)FHP International Corp. 1,201,200
-------------------------------------------
126,700 Integrated Health Services, Inc. 3,119,987
-------------------------------------------
101,900 Mallinckrodt, Inc. 4,432,650
-------------------------------------------
82,400 (a)Ornda Healthcorp 2,245,400
-------------------------------------------
28,500 (a)PacifiCare Health Systems, Inc., Class B 2,002,125
------------------------------------------- ------------
Total 17,039,325
------------------------------------------- ------------
HEALTH TECHNOLOGY--5.1%
-------------------------------------------
57,700 Bristol-Myers Squibb Co. 6,101,775
-------------------------------------------
69,400 Pfizer, Inc. 5,742,850
------------------------------------------- ------------
Total 11,844,625
------------------------------------------- ------------
INSURANCE--1.5%
-------------------------------------------
139,650 Old Republic International Corp. 3,456,337
------------------------------------------- ------------
PROCESS INDUSTRIES--5.2%
-------------------------------------------
105,600 International Paper Co. 4,514,400
-------------------------------------------
46,400 Praxair, Inc. 2,053,200
-------------------------------------------
59,400 Sherwin-Williams Co. 2,977,425
-------------------------------------------
</TABLE>
6
<PAGE>
STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
----------- --------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------
PROCESS INDUSTRIES--CONTINUED
---------------------------------------------------
56,000 Union Carbide Corp. $ 2,387,000
--------------------------------------------------- ------------
Total 11,932,025
--------------------------------------------------- ------------
PRODUCER MANUFACTURING--8.0%
---------------------------------------------------
33,500 Caterpillar, Inc. 2,298,938
---------------------------------------------------
41,900 General Electric Co. 4,053,825
---------------------------------------------------
293,200 Hanson PLC, ADR 1,869,150
---------------------------------------------------
53,700 Illinois Tool Works, Inc. 3,772,425
---------------------------------------------------
53,500 Tenneco, Inc. 2,648,250
---------------------------------------------------
91,600 (a)Wolverine Tube, Inc. 3,652,550
--------------------------------------------------- ------------
Total 18,295,138
--------------------------------------------------- ------------
RETAIL TRADE--3.6%
---------------------------------------------------
33,800 (a)Carson Pirie Scott & Co. 840,775
---------------------------------------------------
124,900 Dillard Department Stores, Inc., Class A 3,965,575
---------------------------------------------------
130,000 Wal-Mart Stores, Inc. 3,461,250
--------------------------------------------------- ------------
Total 8,267,600
--------------------------------------------------- ------------
TRANSPORTATION--1.0%
---------------------------------------------------
52,900 CSX Corp. 2,281,313
--------------------------------------------------- ------------
UTILITIES--12.3%
---------------------------------------------------
128,100 Coastal Corp. 5,508,300
---------------------------------------------------
76,200 Consolidated Edison Co. 2,228,850
---------------------------------------------------
106,300 GTE Corp. 4,477,888
---------------------------------------------------
102,600 Houston Industries, Inc. 2,346,975
---------------------------------------------------
220,900 MCI Communications Corp. 5,550,112
---------------------------------------------------
42,600 Northern States Power Co. 2,002,200
---------------------------------------------------
94,800 Sprint Corp. 3,720,900
---------------------------------------------------
156,100 Westcoast Energy, Inc. 2,575,650
--------------------------------------------------- ------------
Total 28,410,875
--------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $153,559,737) 200,952,263
--------------------------------------------------- ------------
</TABLE>
7
<PAGE>
STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
----------- ------------------------------------------------ ------------
<C> <S> <C>
PREFERRED STOCKS--0.6%
- ----------------------------------------------------------------------------
HEALTH SERVICES--0.6%
------------------------------------------------
51,000 FHP International Corp., Cumulative Conv. Pfd.,
Series A, $1.25
(IDENTIFIED COST $1,230,375) $ 1,466,250
------------------------------------------------ ------------
MUTUAL FUNDS--2.1%
- ----------------------------------------------------------------------------
Seven Seas Series Government Fund (at net asset 4,840,784
4,840,784 value)
------------------------------------------------ ------------
(B) REPURCHASE AGREEMENT--10.4%
- ----------------------------------------------------------------------------
$24,000,000 Morgan Stanley Group, Inc., 5.28%, dated
10/30/1996, due 11/6/1996
(at amortized cost) 24,000,000
------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST $183,630,896 $231,259,297
)(C)
------------------------------------------------ ------------
</TABLE>
(a) Non-income producing security.
(b) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on the market prices at the date of the portfolio.
(c) The cost of investments for federal tax purposes amounts to $183,630,896.
The net unrealized appreciation of investments on a federal tax basis
amounts to $47,628,401 which is comprised of $49,563,032 appreciation and
$1,934,631 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($230,259,498) at October 31, 1996.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
8
<PAGE>
BOND FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--98.2%
- -----------------------------------------------------------------------------
CORPORATE BONDS--46.4%
- -----------------------------------------------------------------------------
COMMERCIAL SERVICES--2.2%
---------------------------------------------------
$2,000,000 Equifax, Inc., Sr. Note, 6.50%, 6/15/2003 $ 1,960,242
--------------------------------------------------- -----------
CONSUMER NON-DURABLES--2.8%
---------------------------------------------------
Philip Morris Cos., Inc., Unsecd. Note, 7.125%, 1,505,763
1,500,000 10/1/2004
---------------------------------------------------
Philip Morris Cos., Inc., Unsecd. Note, 7.125%, 1,019,991
1,000,000 12/1/1999
--------------------------------------------------- -----------
Total 2,525,754
--------------------------------------------------- -----------
CONSUMER SERVICES--2.2%
---------------------------------------------------
2,000,000 Gannett Co., Inc., Unsecd. Note, 5.85%, 5/1/2000 1,972,128
--------------------------------------------------- -----------
ELECTRONIC TECHNOLOGY--5.8%
---------------------------------------------------
3,000,000 Beckman Instruments, Inc., Deb., 7.05%, 6/1/2026 3,068,850
---------------------------------------------------
2,300,000 Motorola, Inc., Unsecd. Note, 6.50%, 3/1/2008 2,246,661
--------------------------------------------------- -----------
Total 5,315,511
--------------------------------------------------- -----------
FINANCE--20.1%
---------------------------------------------------
Associates Corp. of North America, Sr. Note, 6.00%, 1,977,060
2,000,000 6/15/2000
---------------------------------------------------
Bank of New York Co., Inc., Sub. Note, 8.50%, 2,743,192
2,500,000 12/15/2004
---------------------------------------------------
Ford Motor Credit Corp., Unsecd. Note, 7.75%, 2,598,627
2,500,000 10/1/1999
---------------------------------------------------
General Motors Acceptance Corp., Note, 6.65%, 2,934,150
3,000,000 11/15/2005
---------------------------------------------------
National Rural Utilities Cooperative Finance Corp., 2,033,446
2,000,000 Sr. Note, 6.75%, 9/1/2001
---------------------------------------------------
3,500,000 Northern Trust Corp., Sub. Note, 6.70%, 9/15/2005 3,457,839
---------------------------------------------------
Standard Credit Card Master Trust 1991-6, Class A, 2,583,623
2,500,000 7.875%, 1/7/2000
--------------------------------------------------- -----------
Total 18,327,937
--------------------------------------------------- -----------
HEALTH TECHNOLOGY--0.8%
---------------------------------------------------
750,000 Merck & Co., Inc., Deb., 6.00%, 1/15/1997 750,524
--------------------------------------------------- -----------
PROCESS INDUSTRIES--1.2%
---------------------------------------------------
Du Pont (E.I.) de Nemours & Co., Note, 8.125%, 1,086,466
1,000,000 3/15/2004
--------------------------------------------------- -----------
</TABLE>
9
<PAGE>
BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ---------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------
RETAIL TRADE--3.6%
----------------------------------------------------
$3,500,000 Wal-Mart Stores, Inc., Note, 5.875%, 10/15/2005 $ 3,297,620
---------------------------------------------------- -----------
TRANSPORTATION--2.8%
----------------------------------------------------
Norfolk Southern Corp., Equip. Trust, Series C, 1,074,877
1,000,000 7.75%, 8/15/2006
----------------------------------------------------
Union Pacific Railroad Co., Equip. Trust, Series 87, 1,509,704
1,500,000 6.44%, 1/15/1998
---------------------------------------------------- -----------
Total 2,584,581
---------------------------------------------------- -----------
UTILITIES--4.9%
----------------------------------------------------
3,500,000 Georgia Power Co., 1st Mtg. Bond, 6.625%, 4/1/2003 3,468,332
----------------------------------------------------
New England Telephone & Telegraph, Unsecd. Note, 1,004,396
1,000,000 6.25%, 12/15/1997
---------------------------------------------------- -----------
Total 4,472,728
---------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $40,830,705) 42,293,491
---------------------------------------------------- -----------
GOVERNMENT AGENCIES--25.2%
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--2.2%
----------------------------------------------------
2,000,000 7.50%, 9/30/2003 2,029,216
---------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORP.--9.1%
----------------------------------------------------
3,000,000 7.41%, 8/3/2005 3,012,999
----------------------------------------------------
2,500,516 7.50%, 5/1/2011 2,551,399
----------------------------------------------------
2,692,840 8.00%, 3/1/2000 2,762,366
---------------------------------------------------- -----------
Total 8,326,764
---------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--4.8%
----------------------------------------------------
2,500,000 8.25%, 10/12/2004 2,612,822
----------------------------------------------------
1,641,314 10.00%, 1/1/2020 1,796,213
---------------------------------------------------- -----------
Total 4,409,035
---------------------------------------------------- -----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--9.1%
----------------------------------------------------
1,512,720 7.00%, 8/15/2008 1,521,220
----------------------------------------------------
769,532 8.00%, 5/15/2022 787,808
----------------------------------------------------
1,890,899 8.50%, 10/15/2009 1,976,580
----------------------------------------------------
989,182 8.50%, 5/15/2024 1,028,439
----------------------------------------------------
</TABLE>
10
<PAGE>
BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- -------------------------------------------------- -----------
<C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- ----------------------------------------------------------------------------
GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------
$1,049,767 9.50%, 4/15/2020 $ 1,133,420
--------------------------------------------------
1,686,875 9.50%, 11/15/2024 1,821,297
-------------------------------------------------- -----------
Total 8,268,764
-------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 23,033,779
$22,516,762)
-------------------------------------------------- -----------
U.S. TREASURY--26.6%
- ----------------------------------------------------------------------------
U.S. TREASURY SECURITIES--8.3%
--------------------------------------------------
2,350,000 STRIP, 2/15/2006 1,299,651
--------------------------------------------------
5,000,000 STRIP, 5/15/2006 2,718,965
--------------------------------------------------
8,050,000 STRIP, 5/15/2009 3,528,959
-------------------------------------------------- -----------
Total 7,547,575
-------------------------------------------------- -----------
U.S. TREASURY BONDS--12.6%
--------------------------------------------------
3,500,000 6.00%, 2/15/2026 3,195,938
--------------------------------------------------
2,000,000 6.875%, 8/15/2025 2,045,000
--------------------------------------------------
2,750,000 7.25%, 5/15/2016 2,902,105
--------------------------------------------------
1,000,000 7.50%, 11/15/2016 1,081,875
--------------------------------------------------
1,000,000 7.875%, 2/15/2021 1,129,375
--------------------------------------------------
1,000,000 8.00%, 11/15/2021 1,146,250
-------------------------------------------------- -----------
Total 11,500,543
-------------------------------------------------- -----------
U.S. TREASURY NOTES--5.7%
--------------------------------------------------
1,000,000 7.00%, 4/15/1999 1,026,250
--------------------------------------------------
1,000,000 7.125%, 10/15/1998 1,025,000
--------------------------------------------------
1,000,000 8.00%, 8/15/1999 1,053,125
--------------------------------------------------
1,000,000 8.00%, 5/15/2001 1,075,311
--------------------------------------------------
1,000,000 8.125%, 2/15/1998 1,030,936
-------------------------------------------------- -----------
Total 5,210,622
-------------------------------------------------- -----------
TOTAL U.S. TREASURY (IDENTIFIED COST $23,946,875) 24,258,740
-------------------------------------------------- -----------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST 89,586,010
$87,294,342)
-------------------------------------------------- -----------
</TABLE>
11
<PAGE>
BOND FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------------------------------------------- -----------
<C> <S> <C>
SHORT-TERM INVESTMENTS--0.5%
- -----------------------------------------------------------------------------
MUTUAL FUNDS--0.5%
---------------------------------------------------
Seven Seas Series Government Fund (at net asset $ 478,122
$ 478,122 value)
--------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $87,772,464)(A) $90,064,132
--------------------------------------------------- -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $87,772,464.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,291,668 which is comprised of $2,699,767 appreciation and
$408,099 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($91,240,770) at October 31, 1996.
The following acronym is used throughout this portfolio:
STRIP--Separate Trading of Registered Interest & Principal of Securities
(See Notes which are an integral part of the Financial Statements)
12
<PAGE>
INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ---------------------------------------------------- -----------
<C> <S> <C>
ASSET-BACKED SECURITIES--4.1%
- ------------------------------------------------------------------------------
AUTO LOANS--4.1%
----------------------------------------------------
$1,674,954 Banc One Auto Trust 1996-A, Class A, 6.10%,
10/15/2002
(IDENTIFIED COST $1,674,169) $ 1,683,462
---------------------------------------------------- -----------
CORPORATE BONDS--28.3%
- ------------------------------------------------------------------------------
AUTOMOTIVE--5.0%
----------------------------------------------------
1,000,000 Ford Motor Credit Corp., 8.20%, 2/15/2002 1,068,230
----------------------------------------------------
1,000,000 General Motors Acceptance Corp., 6.625%, 10/1/2002 996,587
---------------------------------------------------- -----------
Total 2,064,817
---------------------------------------------------- -----------
BANKING--2.4%
----------------------------------------------------
1,000,000 NationsBank Corp., 5.125%, 9/15/1998 983,839
---------------------------------------------------- -----------
COMMERCIAL--2.5%
----------------------------------------------------
1,000,000 International Lease Finance Corp., 7.00%, 6/1/1998 1,014,982
---------------------------------------------------- -----------
CONSUMER NON-DURABLES--1.3%
----------------------------------------------------
500,000 Procter & Gamble Co., Deb., 8.70%, 8/1/2001 547,677
---------------------------------------------------- -----------
DIVERSIFIED--2.5%
----------------------------------------------------
1,000,000 Philip Morris Cos., Inc., Note, 7.625%, 5/15/2002 1,036,128
---------------------------------------------------- -----------
ENTERTAINMENT--4.8%
----------------------------------------------------
2,000,000 Disney (Walt) Co., 6.375%, 3/30/2001 1,997,596
---------------------------------------------------- -----------
FINANCIAL SERVICES--2.6%
----------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., 8.375%, 2/9/2000 1,057,914
---------------------------------------------------- -----------
RETAIL--1.2%
----------------------------------------------------
500,000 Dillard Department Stores, Inc., 7.375%, 6/15/1999 514,993
---------------------------------------------------- -----------
TRANSPORTATION--1.2%
----------------------------------------------------
Norfolk & Western Railroad Co., Equip. Trust, 8.75%, 517,077
500,000 2/1/1998
---------------------------------------------------- -----------
UTILITIES--4.8%
----------------------------------------------------
1,000,000 Consolidated Edison Co., Deb., 6.50%, 2/1/2001 1,000,773
----------------------------------------------------
</TABLE>
13
<PAGE>
INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- ---------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------
UTILITIES--CONTINUED
- ------------------------------------------------------------------------------
$1,000,000 Southwestern Bell Telephone Co., 6.125%, 3/1/2000 $ 996,792
---------------------------------------------------- -----------
Total 1,997,565
---------------------------------------------------- -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST $11,509,879) 11,732,588
---------------------------------------------------- -----------
GOVERNMENT AGENCIES--7.3%
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--2.4%
----------------------------------------------------
1,000,000 7.08%, 3/17/2000 1,000,639
---------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--4.9%
----------------------------------------------------
2,000,000 7.055%, 6/7/2001 2,047,416
---------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST 3,048,055
$2,999,688)
---------------------------------------------------- -----------
MORTGAGE BACKED SECURITIES--20.3%
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--4.5%
----------------------------------------------------
1,908,006 5.50%, 12/1/2000 1,873,583
---------------------------------------------------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--11.6%
----------------------------------------------------
998,504 8.00%, 8/1/2003 1,027,519
----------------------------------------------------
1,768,705 7.00%, 4/1/1999 1,793,943
----------------------------------------------------
1,974,043 7.00%, 5/1/2003 1,991,316
---------------------------------------------------- -----------
Total 4,812,778
---------------------------------------------------- -----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--4.2%
----------------------------------------------------
795,955 8.50%, 7/15/2024 830,084
----------------------------------------------------
861,806 8.00%, 10/15/2009 892,821
---------------------------------------------------- -----------
Total 1,722,905
---------------------------------------------------- -----------
TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED COST 8,409,266
$8,352,882)
---------------------------------------------------- -----------
U.S. TREASURY NOTES--34.2%
- ------------------------------------------------------------------------------
1,000,000 7.125%, 10/15/1998 1,025,000
----------------------------------------------------
1,000,000 7.125%, 2/29/2000 1,034,061
----------------------------------------------------
1,000,000 7.00%, 4/15/1999 1,026,250
----------------------------------------------------
1,000,000 6.75%, 5/31/1997 1,007,186
----------------------------------------------------
1,000,000 6.375%, 1/15/1999 1,011,875
----------------------------------------------------
2,500,000 6.375%, 5/15/1999 2,530,173
----------------------------------------------------
</TABLE>
14
<PAGE>
INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
---------- --------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES--CONTINUED
- -----------------------------------------------------------------------------
$2,500,000 6.375%, 3/31/2001 $ 2,529,688
---------------------------------------------------
1,000,000 6.25%, 8/31/2000 1,007,500
---------------------------------------------------
1,000,000 6.125%, 12/31/1996 1,001,522
---------------------------------------------------
1,000,000 6.125%, 3/31/1998 1,006,718
---------------------------------------------------
1,000,000 5.625%, 1/31/1998 1,000,115
--------------------------------------------------- -----------
TOTAL U.S. TREASURY NOTES (IDENTIFIED COST 14,180,088
$14,061,406)
--------------------------------------------------- -----------
MUTUAL FUNDS--4.6%
- -----------------------------------------------------------------------------
Seven Seas Series Government Fund (at net asset 1,909,712
1,909,712 value)
--------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $40,507,736)(A) $40,963,171
--------------------------------------------------- -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $40,507,736.
The net unrealized appreciation of investments on a federal tax basis
amounts to $455,435 which is comprised of $532,366 appreciation and
$76,931 depreciation at October 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($41,463,856) at October 31, 1996.
(See Notes which are an integral part of the Financial Statements)
15
<PAGE>
SOUTHTRUST VULCAN FUNDS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
OBLIGATIONS
MONEY BOND STOCK INCOME
MARKET FUND FUND FUND FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
ASSETS:
- ----------------------------------------
Investments in repurchase agreements $218,978,000 $ -- $ 24,000,000 $ --
- ----------------------------------------
Investments in securities 202,788,361 90,064,132 207,259,297 40,963,171
- ---------------------------------------- ------------ ----------- ------------ -----------
Total investments in securities, at
value $421,766,361 $90,064,132 $231,259,297 $40,963,171
- ----------------------------------------
Income receivable 34,277 1,202,048 146,396 512,518
- ----------------------------------------
Prepaid expenses 1,584 -- -- --
- ----------------------------------------
Deferred expenses 10,637 3,596 3,631 --
- ---------------------------------------- ------------ ----------- ------------ -----------
Total assets 421,812,859 91,269,776 231,409,324 41,475,689
- ---------------------------------------- ------------ ----------- ------------ -----------
LIABILITIES:
- ----------------------------------------
Payable for investments purchased -- -- 1,136,800 --
- ----------------------------------------
Payable for shares redeemed -- -- 3,000 --
- ----------------------------------------
Income distribution payable 1,602,850 -- -- --
- ----------------------------------------
Accrued expenses -- 29,006 10,026 11,833
- ---------------------------------------- ------------ ----------- ------------ -----------
Total liabilities 1,602,850 29,006 1,149,826 11,833
- ---------------------------------------- ------------ ----------- ------------ -----------
NET ASSETS CONSIST OF:
- ----------------------------------------
Paid in capital 420,210,009 89,569,971 164,866,575 42,509,641
- ----------------------------------------
Net unrealized appreciation of
investments -- 2,291,668 47,628,401 455,435
- ----------------------------------------
Accumulated net realized gain(loss) on
investments -- (981,612) 17,627,630 (1,571,075)
- ----------------------------------------
Undistributed net investment income -- 360,743 136,892 69,855
- ---------------------------------------- ------------ ----------- ------------ -----------
Total Net Assets $420,210,009 $91,240,770 $230,259,498 $41,463,856
- ---------------------------------------- ------------ ----------- ------------ -----------
Shares Outstanding 420,210,009 8,971,842 15,069,770 4,212,514
- ---------------------------------------- ------------ ----------- ------------ -----------
NET ASSET VALUE PER SHARE: $ 1.00 $ 10.17 $ 15.28 $ 9.84
(Net Assets / Shares Outstanding) ------------ ----------- ------------ -----------
- ----------------------------------------
Offering Price Per Share(a) $ 1.00 $ 10.54(b) $ 16.00(c) $ 10.20(b)
- ---------------------------------------- ------------ ----------- ------------ -----------
Redemption Proceeds Per Share(a) $ 1.00 $ 10.07(d) $ 15.13(d) $ 9.74(d)
- ---------------------------------------- ------------ ----------- ------------ -----------
Investments, at identified cost $421,766,361 $87,772,464 $183,630,896 $40,507,736
- ---------------------------------------- ------------ ----------- ------------ -----------
Investments, at tax cost $421,766,361 $87,772,464 $183,630,896 $40,507,736
- ---------------------------------------- ------------ ----------- ------------ -----------
</TABLE>
(a) See "How to Purchase, Exchange and Redeem Shares" in the prospectus.
(b) Computation of offering price: 100/96.5 of net asset value.
(c) Computation of offering price: 100/95.5 of net asset value.
(d) Computation of redemption proceeds: 99/100 of net asset value.
(See Notes which are an integral part of the Financial Statements)
16
<PAGE>
SOUTHTRUST VULCAN FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
OBLIGATIONS
MONEY MARKET BOND STOCK INCOME
FUND FUND FUND FUND
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------
Dividends $ -- $ -- $ 1,906,813 $ --
- -------------------------
Interest 10,749,290 3,052,130 758,764 1,402,186
- ------------------------- ---------- ---------- ----------- ------------
Total income 10,749,290 3,052,130 2,665,577 1,402,186
- ------------------------- ---------- ---------- ----------- ------------
EXPENSES:
- -------------------------
Investment advisory fee 1,022,282 258,993 805,131 130,203
- -------------------------
Administrative personnel
and services fee 253,888 53,664 133,475 50,410
- -------------------------
Custodian fees 32,167 13,282 15,741 11,352
- -------------------------
Transfer and dividend
disbursing agent fees and
expenses 27,251 17,666 16,045 10,316
- -------------------------
Directors'/Trustees' fees 13,331 2,380 4,846 1,052
- -------------------------
Auditing fees 6,079 4,941 4,930 3,118
- -------------------------
Legal fees 3,055 1,440 2,751 2,281
- -------------------------
Portfolio accounting fees 60,737 30,584 29,621 25,216
- -------------------------
Share registration costs 41,961 10,921 12,463 19,916
- -------------------------
Printing and postage 2,517 800 1,659 3,314
- -------------------------
Insurance premiums 3,395 1,200 2,504 985
- -------------------------
Miscellaneous 4,273 1,200 1,838 1,381
- ------------------------- ---------- ---------- ----------- ------------
Total expenses 1,470,936 397,071 1,031,004 259,544
- -------------------------
Waivers--
- -------------------------
Waiver of investment (408,913) (21,583) (32,205) (54,621)
advisory fee ---------- ---------- ----------- ------------
- -------------------------
Net expenses 1,062,023 375,488 998,799 204,923
- ------------------------- ---------- ---------- ----------- ------------
Net investment income 9,687,267 2,676,642 1,666,778 1,197,263
- ------------------------- ---------- ---------- ----------- ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
- -------------------------
Net realized gain (loss)
on investments -- 505 5,912,270 (1,470,328)
- -------------------------
Net change in unrealized
appreciation of -- 1,434,016 7,319,995 1,624,443
investments ---------- ---------- ----------- ------------
- -------------------------
Net realized and
unrealized gain on -- 1,434,521 13,232,265 154,115
investments ---------- ---------- ----------- ------------
- -------------------------
Change in net assets $9,687,267 $4,111,163 $14,899,043 $ 1,351,378
resulting from operations ---------- ---------- ----------- ------------
- -------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
17
<PAGE>
SOUTHTRUST VULCAN FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY OBLIGATIONS BOND
MONEY MARKET FUND FUND
------------------------------ --------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
(UNAUDITED) YEAR ENDED (UNAUDITED) YEAR ENDED
OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30,
------------- --------------- ------------ ------------
1996 1996 1996 1996
- ------------------------ ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
- ------------------------
OPERATIONS--
- ------------------------
Net investment income $ 9,687,267 $ 15,808,087 $ 2,676,642 $ 5,147,356
- ------------------------
Net realized gain (loss)
on investments -- -- 505 86,918
- ------------------------
Net change in unrealized
appreciation
(depreciation)
of investments -- -- 1,434,016 63,058
- ------------------------ ------------- --------------- ------------ ------------
Change in net assets
resulting from
operations 9,687,267 15,808,087 4,111,163 5,297,332
- ------------------------ ------------- --------------- ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS--
- ------------------------
Distributions from net
investment income (9,687,267) (15,808,087) (2,659,787) (4,879,000)
- ------------------------ ------------- --------------- ------------ ------------
SHARE TRANSACTIONS--
- ------------------------
Proceeds from sale of
shares 533,433,149 1,137,724,946 16,962,881 20,766,411
- ------------------------
Net asset value of
shares issued to
shareholders in payment
of distributions
declared 238,070 162,859 13,962 31,087
- ------------------------
Cost of shares redeemed (559,190,167) (1,006,358,894) (10,444,536) (14,367,477)
- ------------------------ ------------- --------------- ------------ ------------
Change in net assets
resulting from share
transactions (25,518,948) 131,528,911 6,532,307 6,430,021
- ------------------------ ------------- --------------- ------------ ------------
Change in net assets (25,518,948) 131,528,911 7,983,683 6,848,353
- ------------------------
NET ASSETS:
- ------------------------
Beginning of period 445,728,957 314,200,046 83,257,087 76,408,734
- ------------------------ ------------- --------------- ------------ ------------
End of period $ 420,210,009 $ 445,728,957 $ 91,240,770 $ 83,257,087
- ------------------------ ------------- --------------- ------------ ------------
Undistributed net
investment income
included in net assets
at the end of the period $ -- $ -- $ 360,743 $ 343,888
- ------------------------ ------------- --------------- ------------ ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
18
<PAGE>
SOUTHTRUST VULCAN FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK INCOME
FUND FUND
----------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED
(UNAUDITED) YEAR ENDED (UNAUDITED) PERIOD ENDED
OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30,
-------------- ------------- ------------ ------------
1996 1996 1996 1996(A)
- ------------------------ -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
- ------------------------
OPERATIONS--
- ------------------------
Net investment income $ 1,666,778 $ 2,938,421 $ 1,197,263 $ 1,086,393
- ------------------------
Net realized gain (loss)
on investments 5,912,270 15,684,545 (1,470,328) (100,747)
- ------------------------
Net change in unrealized
appreciation
(depreciation)
of investments 7,319,995 27,055,507 1,624,443 (1,169,008)
- ------------------------ -------------- ------------- ------------ ------------
Change in net assets
resulting from
operations 14,899,043 45,678,473 1,351,378 (183,362)
- ------------------------ -------------- ------------- ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS--
- ------------------------
Distributions from net
investment income (1,729,179) (2,853,915) (1,185,093) (1,028,708)
- ------------------------
Distributions from net
realized gain on
investment transactions -- (5,617,636) -- --
- ------------------------ -------------- ------------- ------------ ------------
Change in net assets
from distributions to
shareholders (1,729,179) (8,471,551) (1,185,093) (1,028,708)
- ------------------------ -------------- ------------- ------------ ------------
SHARE TRANSACTIONS--
- ------------------------
Proceeds from sale of
shares 22,879,380 57,273,724 6,451,171 82,289,179
- ------------------------
Net asset value of
shares issued to
shareholders in payment
of distributions
declared 44,856 217,396 -- --
- ------------------------
Cost of shares redeemed (10,255,846) (28,557,564) (43,300,171) (2,930,538)
- ------------------------ -------------- ------------- ------------ ------------
Change in net assets
resulting from share
transactions 12,668,390 28,933,556 (36,849,000) 79,358,641
- ------------------------ -------------- ------------- ------------ ------------
Change in net assets 25,838,254 66,140,478 (36,682,715) 78,146,571
- ------------------------
NET ASSETS:
- ------------------------
Beginning of period 204,421,244 138,280,766 78,146,571 --
- ------------------------ -------------- ------------- ------------ ------------
End of period $ 230,259,498 $ 204,421,244 $ 41,463,856 $ 78,146,571
- ------------------------ -------------- ------------- ------------ ------------
Undistributed net
investment income
included in net assets
at the end of the period $ 136,892 $ 199,293 $ 69,855 $ 57,685
- ------------------------ -------------- ------------- ------------ ------------
</TABLE>
(a)For the period from January 10, 1996 (date of initial public investment) to
April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
19
<PAGE>
SOUTHTRUST VULCAN FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM NET
VALUE, NET GAIN(LOSS) TOTAL FROM FROM NET REALIZED
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT GAIN ON TOTAL
YEAR ENDED APRIL 30, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS DISTRIBUTIONS
- -------------------- --------- ---------- ----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY OBLIGATIONS
MONEY MARKET FUND
1993(a) $ 1.00 0.03 -- 0.03 (0.03) -- (0.03)
1994 $ 1.00 0.03 -- 0.03 (0.03) -- (0.03)
1995 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1996 $ 1.00 0.05 -- 0.05 (0.05) -- (0.05)
1996(b) $ 1.00 0.02 -- 0.02 (0.02) -- (0.02)
BOND FUND
1993(a) $10.00 0.66 0.69 1.35 (0.62) (0.02) (0.64)
1994 $10.71 0.63 (0.58) 0.05 (0.65) (0.07) (0.72)
1995 $10.04 0.61 (0.09) 0.52 (0.61) -- (0.61)
1996 $ 9.95 0.59 0.03 0.62 (0.56) -- (0.56)
1996(b) $10.01 0.31 0.16 0.47 (0.31) -- (0.31)
STOCK FUND
1993(a) $10.00 0.19 0.35 0.54 (0.18) -- (0.18)
1994 $10.36 0.19 (0.28) (0.09) (0.19) -- (0.19)
1995 $10.08 0.20 1.43 1.63 (0.20) -- (0.20)
1996 $11.51 0.23 3.33 3.56 (0.23) (0.44) (0.67)
1996(b) $14.40 0.12 0.88 1.00 (0.12) -- (0.12)
INCOME FUND
1996(f) $10.00 0.16 (0.25) (0.09) (0.14) -- (0.14)
1996(b) $ 9.77 0.29 0.06 0.35 (0.28) -- (0.28)
</TABLE>
(a) Reflects operations for the period from May 8, 1992 (date of initial public
investment) to April 30, 1993.
(b) Six months ended October 31, 1996 (unaudited).
(c) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(e) Computed on an annualized basis.
(f) Reflects operations for the period from January 10, 1996 (date of initial
public investment) to April 30, 1996.
(See Notes which are an integral part of the Financial Statements)
20
<PAGE>
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
NET ASSET -------------------------------------------- NET ASSETS,
VALUE, NET END OF PORTFOLIO AVERAGE
END OF TOTAL INVESTMENT EXPENSE/REIMBURSEMENT PERIOD TURNOVER COMMISSION
PERIOD RETURN(C) EXPENSES INCOME WAIVER(D) (000 OMITTED) RATE PAID
- --------- --------- -------- ---------- --------------------- ------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1.00 2.93% 0.39%(e) 2.93%(e) 0.36%(e) $194,771 $ -- --
$ 1.00 2.83% 0.40% 2.81% 0.33% $278,924 $ -- --
$ 1.00 4.62% 0.43% 4.56% 0.30% $314,200 $ -- --
$ 1.00 5.26% 0.48% 5.11% 0.22% $445,729 $ -- --
$ 1.00 2.41% 0.52%(e) 4.74%(e) 0.20%(e) $420,210 $ -- --
$10.71 13.44% 0.39%(e) 6.53%(e) 0.59%(e) $ 25,989 19% --
$10.04 0.33% 0.51% 5.97% 0.58% $ 32,767 6% --
$ 9.95 5.41% 0.75% 6.29% 0.28% $ 76,409 48% --
$10.01 6.78% 0.87% 6.28% 0.08% $ 83,257 28% --
$10.17 4.79% 0.87%(e) 6.20%(e) 0.05%(e) $ 91,241 19% --
$10.36 5.54% 0.39%(e) 1.91%(e) 0.74%(e) $ 30,935 34% --
$10.08 (0.90%) 0.48% 1.82% 0.69% $ 37,114 46% --
$11.51 16.36% 0.74% 1.95% 0.39% $138,281 57% --
$14.40 31.51% 0.87% 1.75% 0.11% $204,421 39% $0.0747
$15.28 6.97% 0.93%(e) 1.55%(e) 0.03%(e) $230,259 9% $0.0795
$ 9.77 (0.93%) 0.85%(e) 5.30%(e) 0.05%(e) $ 78,147 61% --
$ 9.84 3.59% 0.94%(e) 5.52%(e) 0.25%(e) $ 41,464 53% --
</TABLE>
21
<PAGE>
SOUTHTRUST VULCAN FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996 (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 four diversified portfolios
(individually referred to as the "Fund", or collectively as the "Funds") which
are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------------------
<S> <C>
Treasury Obligations Money To provide as high a level of current interest
Market Fund ("Treasury Obligations") income as is consistent with maintaining liquidity
and stability of principal.
- --------------------------------------------------------------------------------------------
Bond Fund ("Bond") To provide a level of total return consistent with a
portfolio of high-quality debt securities.
- --------------------------------------------------------------------------------------------
Stock Fund ("Stock") To provide long-term capital appreciation, with
income a secondary consideration.
- --------------------------------------------------------------------------------------------
Income Fund ("Income") To provide current income.
</TABLE>
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--U.S. government securities are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Listed corporate bonds, other fixed income
and asset-backed securities, and unlisted securities and private placement
securities are generally valued at the mean of the latest bid and asked
price as furnished by an independent pricing service. Listed equity
securities are valued at the last sale price reported on a national
securities exchange. For Treasury Obligations, the use of the amortized
cost method to value its portfolio securities is in accordance with Rule
2a-7 under the Act. For fluctuating net asset value Funds within the
Company, short-term securities are valued at the prices provided by an
independent pricing service. However, short-term securities purchased with
remaining maturities of sixty days or less may be valued at amortized cost,
which approximates fair market value. Investments in other open-end
regulated investment companies are valued at net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions.
22
<PAGE>
----------------------------------------------------------------------------
Additionally, procedures have been established by the Funds to monitor, on
a daily basis, the market value of each repurchase agreement's collateral
to ensure that the value of collateral at least equals the repurchase price
to be paid under the repurchase agreement transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
At April 30, 1996, Bond for federal tax purposes, had a capital loss
carryforward of $986,973, which will reduce its taxable income arising from
future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire as follows ($252,919) in 2003 and ($734,054) in
2004.
Net capital losses of $100,747 on Income Fund attributable to security
transactions incurred after October 31, 1995 are treated as arising on May
1, 1996, the first day of the Fund's next taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
organizational expenses and registration of their shares in their first
fiscal year, excluding the initial expense of registering their shares,
have been deferred and are being amortized over a period not to exceed five
years from each Fund's commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The 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:
23
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1996 APRIL 30, 1996
----------------------------------- --------------------------------------
TREASURY TREASURY
OBLIGATIONS BOND STOCK OBLIGATIONS BOND STOCK
- ---------------------- ------------ ---------- --------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 533,433,149 1,702,786 1,574,565 1,137,724,946 2,024,389 4,334,642
- ----------------------
Shares issued to
shareholders in
payment of
distributions declared 238,070 1,401 3,045 162,859 3,035 16,554
- ----------------------
Shares redeemed (559,190,167) (1,046,851) (702,960) (1,006,358,894) (1,390,568) (2,174,617)
- ---------------------- ------------ ---------- --------- -------------- ---------- ----------
Net change resulting
from share
transactions (25,518,948) 657,336 874,650 131,528,911 636,856 2,176,579
- ---------------------- ------------ ---------- --------- -------------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED APRIL 30,
OCTOBER 31, 1996 1996(A)
---------------- ----------------------
INCOME INCOME
- --------------------------------- ---------------- ----------------------
<S> <C> <C>
Shares sold 660,505 8,293,583
- ---------------------------------
Shares redeemed (4,447,687) (293,887)
- --------------------------------- ---------- ---------
Net change resulting from share (3,787,182) 7,999,696
transactions
- --------------------------------- ---------- ---------
</TABLE>
(a) For the period from January 10, 1996 (date of initial public investment)
to April 30, 1996.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--SouthTrust Bank of Alabama, N.A., the Funds'
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee based on a percentage of each Fund's average daily net
assets as shown 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%
- --------------------
BOND 0.60%
- --------------------
STOCK 0.75%
- --------------------
INCOME 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.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the
Funds. The fee paid to FSSC is based on the size, type, and number of accounts
and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Funds' 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.
24
<PAGE>
- -------------------------------------------------------------------------------
GENERAL--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, 1996, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ------ ----------- -----------
<S> <C> <C>
BOND $26,491,164 $14,774,613
- ------ ----------- -----------
STOCK $33,092,553 $17,515,597
- ------ ----------- -----------
INCOME $22,580,985 $49,241,591
- ------ ----------- -----------
</TABLE>
25
<PAGE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
Charles G. Brown, III William O. Vann
Russell W. Chambliss Chairman
Thomas M. Grady Edward C. Gonzales
Thomas L. Merrill, Sr. President and Treasurer
William O. Vann C. Christine Thomson
Vice President and Assistant Treasurer
Peter J. Germain
Secretary
C. Todd Gibson
Assistant Secretary
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.
26
<PAGE>
Investment Adviser: 844734202
844734301
[LOGO OF SOUTHTRUST BANK OF ALABAMA, N.A.] 844734103
844734400
3110408 (12/96)
