<PAGE>
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December 31, 1997
SEMI-ANNUAL REPORT TO SHAREHOLDERS
of
-----
FIRST
FUNDS
-----
[PHOTO]
[LOGO] FIRST TENNESSEE
HERE FOR YOU
Investment Adviser
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<PAGE>
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LETTER FROM THE PRESIDENT
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Dear Shareholder:
This is First Funds' Semi-Annual Report for the six-months ending December
31, 1997. The following pages will provide you with a comprehensive group of
financial statements for each Portfolio, including the Portfolio of Investments,
which describes the holdings in each Portfolio as of the end of the period. In
addition, each Portfolio Manager outlines the moves made in their particular
market during the last six months, then discusses how they responded within
their respective Portfolios.
As you read through the Portfolio information, we'd like you to reflect on
the difficult investment environment facing each Manager these past two
quarters. Markets were volatile, and while the economic outlook remains quite
positive, much of the good news has long been reflected in asset price levels.
We are particularly proud of the performance of our Growth & Income Portfolio,
as it once again outperformed the S&P 500 Index (please see page iv).
The First Funds family grew during the last six months, as many of you
know. We added the Capital Appreciation Portfolio last fall, commencing retail
sales in this smaller-cap portfolio in October. We are particularly pleased
with this new addition, believing it gives our shareholders an additional
quality equity choice and fits in very well with the current Portfolios. In that
same vein, we are adding a high-quality Intermediate Bond Portfolio to our list
of fixed income offerings, which will be available in early 1998. In keeping
with the high investment standards we know you expect, both Portfolios are
structured to conscientiously reflect First Funds' credo, "Discipline,
Consistency, Patience." We believe they provide our shareholders with genuine
diversification alternatives, and hope each of you takes time to consider
whether either of these new Portfolios would be of assistance in achieving your
personal financial goals.
We hope you are pleased with the results of your investment
in First Funds. As a shareholder, your thoughts and opinions are important to us
and we encourage you to call or write us with any questions you may have. Our
toll-free line is (800) 442-1941, option 1. You may write to us at 370 17th
Street, Suite 3100, Denver, CO 80202, or via the world wide web at
www.firstfunds.com. Thank you for choosing First Funds as your investment
choice.
Sincerely,
/s/ Richard Rantzow
Richard C. Rantzow
President
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IMPORTANT NOTICE
FIRST FUNDS SHARES
* are NOT insured by the FDIC, the Federal Reserve Board or any other
governmental agency.
* are NOT bank deposits or other obligations of or guaranteed by First Tennessee
Bank National Association or any of its affiliates.
* involve investment risks, including the possible loss of the principal amount
invested.
First Funds are managed by First Tennessee Bank National Association, (First
Tennessee), Highland Capital Management Corp. (Highland), Investment Advisers,
Inc. (IAI) and PNC Institutional Management Corp. (PNC). First Tennessee and
Highland are subsidiaries of First Tennessee National Corporation. The Funds
are sponsored and distributed by ALPS Mutual Funds Services, Inc., member NASD.
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<PAGE>
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FIRST FUNDS GROWTH & INCOME PORTFOLIO
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[PHOTO]
GROWTH & INCOME PORTFOLIO MANAGERS
EDWARD GOLDSTEIN, MBA AND DAVID THOMPSON, CFA
Mr. Goldstein is a Director and President of Highland Capital Management
Corp., sub-adviser to the Portfolio. A 1971 graduate of Boston University, he
went on to receive his MBA from Columbia University in 1976. Joining Goldman,
Sachs & Co. in New York in 1976, he became a vice president in the international
department with responsibility for Japan, the Middle East and Latin America. Mr.
Goldstein joined Highland Capital in 1989, and has been portfolio manager for
the Portfolio since July 1994.
Mr. Thompson, is a Senior Vice President with Highland Capital Management
Corp. and a Certified Financial Analyst. After graduating from the University of
Mississippi in 1981, he worked as an analyst for Gulf Oil for three years, then
went on to receive his MBA from the University of North Carolina at Chapel Hill
in 1986. With nine years of experience managing both individual and
institutional investment portfolios at major regional banks, Mr. Thompson joined
Highland Capital's equity team in 1995.
SIX-MONTHS IN REVIEW -----------------------------------------------------------
PERFORMANCE
For the six-month period ended December 31, 1997, the First Funds Growth &
Income Portfolio, Class I, II and III, returned 18.06%, 11.14%, and 17.41%,
respectively, net of fees and sales charges versus 10.57% for the S&P 500.
MARKET REVIEW
The second half of calendar 1997 started on a positive note as the S&P 500
gained ground in July. Unfortunately, the market reversed in August, with
rising interest rates precipitating a drop of over 5% in the market. Large
capitalization stocks such as Coca Cola and Gillette took the brunt of the fall,
as investors began to worry that valuations awarded to the "Nifty Fifty" were
finally becoming excessive. Subsequently, focus shifted to the more attractively
valued stocks in the smaller and mid- capitalization sectors of the market. By
the end of the third quarter, more positive news on the inflation front allowed
the large capitalization stocks to rally, and the S&P 500 ended the quarter with
a gain of 7.48%. For the third
COMPARISON OF CHANGE IN VALUE OF A $100,000 INVESTMENT IN THE FIRST FUNDS GROWTH
& INCOME PORTFOLIO (CLASS I) AND THE S&P 500.
[GRAPH]
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<PAGE>
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FIRST FUNDS GROWTH & INCOME PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $100,000 INVESTMENT IN THE FIRST FUNDS GROWTH
& INCOME PORTFOLIO (CLASS II) AND THE S&P 500.
[GRAPH]
calendar quarter, First Funds Growth & Income Class I shares gained 12.2%. The
strong outperformance was due to strong gains in a number of portfolio holdings,
most notably Input Output, EMC, and Intel, which rose 63.4%, 49.6%, and 30.2%,
respectively.
The last three months of 1997 again demonstrated that volatility had returned to
the financial markets in a big way. The currency crisis that started in
Southeast Asia threatened to spread to Latin America, causing a number of major
market indices around the world to substantially drop. While the U.S. market was
certainly not immune from the Asian contagion, it still represented the market
of safest harbor for most participants. The S&P 500 managed to gain 2.84% in
the fourth quarter, bringing the full year return for the S&P 500 to 33.3%.
PORTFOLIO UPDATE
The Portfolio continues to focus on larger capitalization stocks as we continue
to believe that these companies offer the greatest opportunity for consistent,
stable growth over time. While other parts of the world experience economic
distress due to currency devaluations, a number of large multinational companies
will be able to use this weakness to their advantage, purchasing or building new
operations in these countries that will likely flourish as those economies begin
to recover. We continue to be overweighted in the Financial and Healthcare
sectors, as we expect these groups to produce earnings superior to those groups
that are more economically sensitive, e.g., Basic Materials, Consumer Cyclicals,
and Technology. The largest positions in the Portfolio as of December 31, 1997
were GTE Corp., Sysco Corp., Norwest Corp., Airtouch Communications, Inc., and
BankBoston Corp.
CURRENT STRATEGY AND OUTLOOK
Looking ahead into 1998, we expect it to be a much more difficult year than
1997. As always, our primary focus is on companies that can grow their earnings
per share at a rate
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Growth & Income Portfolio
Asset Type Profile as of December 31, 1997
[CHART]
<TABLE>
<S> <C>
REPURCHASE AGREEMENTS 1.4%
COMMERCIAL PAPER 7.5%
CONSUMER STAPLES 11.6%
CAPITAL GOODS 5.3%
FINANCE & INSURANCE 16.3%
TECHNOLOGY 12.4%
COMMUNICATION SERVICES 11.9%
ENERGY 9.5%
BASIC MATERIALS 3.3%
CONSUMER CYCLICALS 6.4%
HEALTHCARE 14.4%
REPURCHASE AGREEMENTS 1.4%
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</TABLE>
iii ---------------------------------------------------------------------------
<PAGE>
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FIRST FUNDS GROWTH & INCOME PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS GROWTH
& INCOME PORTFOLIO (CLASS III) AND THE S&P 500.
[GRAPH]
superior to the market as a whole. We believe the coming year will see many
companies finding earnings growth to be more difficult to generate than in
recent years. While the currency crisis in Southeast Asia may have reached
bottom, it is nonetheless likely to place a damper on economic growth in the
U.S., possibly as much as 1%. While many U.S. companies will find demand in this
part of the world falling substantially, the sector of our market most likely to
be impacted by the slowdown in Southeast Asia will be the technology sector. On
a more positive note, the currency devaluations around the world place a further
lid on inflation. We expect inflation numbers in the U.S. to remain benign in
1998.
As usual, market performance will hinge on the ability of companies to grow
their earnings. We expect the S&P 500 to record a slowdown in earnings growth in
1998, and only to post growth in earnings per share in the range of 4 - 5%.
Should the market fail to deliver earnings growth at that level, we could
experience a weak stock market environment in 1998.
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
Cumulative Average Annual
Total Return* Total Return*
Since 1 Year Since
Inception Inception
- -------------------------------------------------
<S> <C> <C> <C>
CLASS I 150.62% 36.16% 23.06%
CLASS II 134.95% 28.05% 21.28%
CLASS III 138.96% 34.68% 21.74%
S&P 500 140.72% 33.35% 22.01%
</TABLE>
*TOTAL RETURNS ARE FOR THE PERIOD ENDED DECEMBER 31, 1997 AND REFLECT
REINVESTMENT OF ALL DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, ALL FEE WAIVERS
IN EFFECT, AND ANY EXPENSE REIMBURSEMENTS. WITHOUT THE FEE WAIVERS AND
EXPENSE REIMBURSEMENTS, THE TOTAL RETURN FIGURES WOULD HAVE BEEN LOWER. FUND
INCEPTION DATE IS AUGUST 2, 1993. ON DECEMBER 9, 1993, THE PORTFOLIO
COMMENCED SALES OF CLASS III SHARES, WHICH INCLUDE A HIGHER TRANSFER AGENCY
FEE, A .75% DISTRIBUTION FEE AND A .25% SHAREHOLDER SERVICES FEE.
PERFORMANCE INFORMATION PRIOR TO DECEMBER 9, 1993 FOR CLASS III IS BASED ON
THE PERFORMANCE OF CLASS I SHARES AND DOES NOT REFLECT THE EFFECTS OF THESE
FEES, WHICH, IF INCLUDED, WOULD LOWER CLASS III PERFORMANCE. THE PORTFOLIO
COMMENCED SALES OF CLASS II SHARES ON DECEMBER 20, 1995, WHICH INCLUDE A
HIGHER TRANSFER AGENCY FEE AND A .25% SHAREHOLDER SERVICES FEE. PERFORMANCE
INFORMATION FOR CLASS II SHARES PRIOR TO THEIR INCEPTION DATE IS BASED ON THE
PERFORMANCE OF CLASS I SHARES AND DOES NOT REFLECT THE EFFECTS OF THESE FEES
WHICH, IF INCLUDED, WOULD LOWER CLASS II PERFORMANCE. PAST PERFORMANCE IS
NOT PREDICTIVE OF FUTURE RESULTS.
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<PAGE>
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FIRST FUNDS CAPITAL APPRECIATION PORTFOLIO
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[PHOTO]
CAPITAL APPRECIATION PORTFOLIO MANAGER
MARTIN J. CALIHAN, CFA
Martin J. Calihan is a Vice President with Investment Advisers Inc. (IAI)
in Minneapolis, Minnesota, co-adviser to the Portfolio. Marty received his
bachelor's degree from Amherst College in 1986, and earned his MBA in 1990 from
Dartmouth College where he was a Tuck Scholar. A Chartered Financial Analyst,
Marty's investment career began in 1986 as a Research Analyst for Aetna Life &
Casualty. In 1990, he became an Equity Research Analyst for State Street
Research & Management Co., then moved to Morgan Stanley in 1991 where he
researched and analyzed emerging growth stocks. Marty joined IAI in 1992, and
has served as Portfolio Manager to the Capital Appreciation Portfolio since its
inception in 1997.
SIX-MONTHS IN REVIEW -----------------------------------------------------------
PERFORMANCE
The Capital Appreciation Portfolio started on September 2, 1997. For the period
from inception through December 31, 1997, Classes I, II, and III of the
Portfolio returned (1.00)%, (6.88)%, and (1.40)%, respectively, net of fees and
sales charges. The Russell 2500 Growth Index, a measure of small capitalization
growth stock performance, lost (1.5)% during the period from September 2, 1997
through December 31, 1997.
MARKET REVIEW
The last few months of 1997 brought a continuation of good news regarding the
domestic economy. GDP growth was approximately 3.5% during the fourth quarter,
and almost 3.8% for the year, both much higher than the consensus forecasts made
at the start of the year. Inflation was subdued, finishing the year under 2%,
lower than expectations. The dollar strengthened against most foreign
currencies, and long term bond yields dropped to their lowest level in four
years. Had investors been told of this better-than-expected economic scenario,
most would have guessed that domestically-oriented small cap growth stocks would
be big winners. Unfortunately for small cap investors, this was not the case--as
small cap growth stocks were the worst performing domestic asset class for both
the fourth quarter and the year.
COMPARISON OF CHANGE IN VALUE OF A $100,000 INVESTMENT IN THE FIRST FUNDS
CAPITAL APPRECIATION PORTFOLIO (CLASS I) AND THE S&P 500.
[GRAPH]
v -----------------------------------------------------------------------------
<PAGE>
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FIRST FUNDS CAPITAL APPRECIATION PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS
CAPITAL APPRECIATION PORTFOLIO (CLASS II) AND THE S&P 500.
[GRAPH]
The overriding story during the final quarter was the financial turmoil
surrounding the developing countries of Southeast Asia. The Asian economic
crisis resulted in a "flight to quality" as investors sold off small stocks,
favoring instead the perceived safety of larger capitalization stocks.
Technology stocks were hit hard during the last few months, as investors feared
reduced demand would combine with increased competition from emerging countries
to dampen profits. The energy sector also performed poorly, partly due to the
negative impact that slower economic growth in Asia would have on energy
consumption. Within the small-cap universe, financial stocks performed well
mainly due to the fall in interest rates.
PORTFOLIO UPDATE
Although the technology stocks in the Portfolio were down sharply, they
performed slightly better than the technology component in the Russell 2500
Growth Index. Because the companies in our Portfolio were fairly small,
generally their primary market is domestic; thus our holdings were relatively
immune to the effects of the Asian crisis. The Portfolio was also helped by our
underweighting of energy stocks, a sector we reduced even further during the
fourth quarter. Stocks within the consumer staples sector, including Valassis
Communications and G&K Services, were the biggest positive contributors to
performance. The largest drag on performance relative to the Russell 2500 Growth
Index were our capital goods stocks; we had overweighted that sector, and our
stocks lagged the Russell 2500 Growth Index return for capital goods.
We added several new stocks to the Portfolio during the fourth quarter. Within
the technology sector, we bought UBICS, a provider of contract software
programming to companies in the U.S. In the healthcare area, we purchased
Mentor, a developer and manufacturer of products used in plastic surgery,
urology, and ophthalmology. Three companies were added in the capital goods
sector: Danka Business Systems, a supplier of photocopiers, Flanders
Corporation, a maker of air filtration products, and Miller Industries, a
producer of towing and recovery equipment.
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Capital Appreciation Portfolio
Asset Type Portfolio as of December 31, 1997
[CHART]
<TABLE>
<S> <C>
MUTUAL FUNDS 5.3%
BASICE MATERIALS 5.4%
CAPITAL GOODS 5.0%
COMMERCIAL SERVICES 10.1%
CONSUMER NON-DURABLES 4.7%
CONSUMER SERVICES 15.0%
FINANCE 2.7%
INSURANCE 7.1%
ENERGY 2.8%
PROCESS INDUSTRIES 2.6%
TECHNOLOGY 37.1%
INDUSTRIAL SERVICES 1.9%
TRANSPORTATION 0.3%
</TABLE>
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<PAGE>
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FIRST FUNDS CAPITAL APPRECIATION PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS
CAPITAL APPRECIATION PORTFOLIO (CLASS III) AND THE S&P 500.
[GRAPH]
CURRENT STRATEGY AND OUTLOOK
Although we are not ones to bet on the market's direction, we are approaching
1998 cautiously. While the economic backdrop provided by both GDP growth and
inflation should remain favorable, the outlook for corporate profits is
decidedly mixed. Potentially, the less favorable terms of trade with Asia could
hurt revenues and prices materially in some of the big industries, such as
electronics and capital goods. Further, the cost structures in these industries
may be more fixed than many investors expect, so weak revenues could lead to
abysmal profits. If the "weak corporate profits" scenario does occur, the stock
market will probably stumble.
Nevertheless, we remain very confident in the relative outlook for the
Portfolio. Its highly-diversified holdings are made up of high-quality,
well-managed businesses in attractive markets. Each should deliver strong
earnings growth in most economic environments. Most importantly, we continue to
believe those merits are not yet reflected in these companies' stock valuations.
<TABLE>
<CAPTION>
CAPTIAL APPRECIATION PORTFOLIO
Cumulative Average Annual
Total Return* Total Return*
Since 1 Year Since
Inception Inception
- ---------------------------------------------------
<S> <C> <C> <C>
CLASS I (1.00%) n/a n/a
CLASS II (6.80%) n/a n/a
CLASS III (1.40%) n/a n/a
RUSSELL 2500 (1.50%) n/a n/a
GROWTH INDEX
</TABLE>
*TOTAL RETURNS ARE FOR THE PERIOD ENDED DECEMBER 31, 1997 ADN REFLECT
REINVESTMENT OF ALL DIVIDENDS, CAPTIAL GAINS DISTRIBUTIONS, ALL FEE WAIVERS
IN EFFECT AND ANY EXPENSE REIMBURSEMENTS. WITHOUT THE FEE WAIVERS AND
EXPENSE REIMBURESEMENTS, THE TOTAL RETURN FIGURES WOULD HAVE BEEN LOWER.
CLASS I INCEPTION DATE IS SEPTEMBER 2, 1997. THE PORTFOLIO COMMENCED SALES
OF CLASS II SHARES ON OCTOBER 2, 1997. THESE SHARES INCLUDE A HIGHER
TRANSFER AGENCY FEE AND A .25% SHAREHOLDER SERVICES FEE. ON OCTOBER 2,1997,
THE PORTFOLIO COMMENCED SALES OF CLASS III SHARES, WHICH INCLUDE A HIGHER
TRANSFER AGENCY FEE, A .75% DISTRIBUTION FEE AND A .25% SHAREHOLDER SERVICES
FEE. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
vii ---------------------------------------------------------------------------
<PAGE>
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FIRST FUNDS BOND PORTFOLIO
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[PHOTO]
BOND PORTFOLIO MANAGERS
JAMES TURNER AND STEVEN WISHNIA
Mr. Turner, CFA, is a Senior Vice President with Highland Capital
Management Corp. A 1959 graduate of the U.S. Military Academy, he received a MS
degree from Stanford University in 1964. Mr. Turner was a vice president in the
Trust Investment Department of FirsTier Bank, N.A. in Omaha, Nebraska from 1979
through 1986. Joining First Tennessee Investment Management in 1986, he was part
of that group's merger with Highland Capital in 1994. He has managed the
Portfolio since its inception.
Mr. Wishnia is a Director and Chairman of the Board of Highland Capital
Management Corp. A 1972 graduate of Pace University, Mr. Wishnia was Treasurer
of S.G. Securities, a closed-end mutual fund in Boston, MA from 1973 to 1975,
prior to joining Highland Investment Corporation, the predecessor firm to
Highland Capital. Mr. Wishnia was a co-founder of Highland Capital in 1987; he
has managed the Portfolio since its inception.
SIX-MONTHS IN REVIEW -----------------------------------------------------------
PERFORMANCE
For the six-month period ended December 31, 1997, the First Funds Bond
Portfolio, Class I, II, and III, returned 6.44%, 2.44%, and 5.84% respectively,
net of fees and sales charges, versus a return of 6.83% for the Lehman Brothers
Government/Corporate Bond Index.
MARKET REVIEW
Good inflation news was the key element propelling the bond market's positive
performance during this period.
On an annual percentage change basis, wholesale prices ended the year down 1.2%,
the biggest decline since 1986. Consumer prices also were moderate, rising only
1.7% - again the lowest since 1986. Several factors were instrumental in
constraining inflation: global competition, tamer healthcare costs, declining
energy prices, and the Asian financial crisis. The last had the most noticeable
effect. The plunge in a number of Asian currencies relative to the dollar had a
number of effects in this country. First, most of the affected countries would
not be able to afford
COMPARISON OF CHANGE IN VALUE OF A $100,000 INVESTMENT IN THE FIRST FUNDS BOND
PORTFOLIO (CLASS I) AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[GRAPH]
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<PAGE>
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FIRST FUNDS BOND PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS BOND
PORTFOLIO (CLASS II) AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[GRAPH]
many U.S. products, driving down our exports and helping to slow our economy.
Second, our imports from that region would be cheaper. Both of these effects
would help alleviate any near-term inflationary concerns. Another noticeable
impact from the Asian crisis was a "flight-to-quality", as many foreign assets
were shifted to U.S. Treasury bonds. The net effect of these combined influences
was a steady decline in interest rates over the latter half of the year. For
example, 10-year Treasury yields declined from 6.49% to 5.74%, and 30-year
Treasuries fell from 6.78% to 5.92%.
PORTFOLIO UPDATE
Our primary focus remained on seeking the best relative values in the
marketplace without exposing the Portfolio to substantial risk from changes in
interest rates. This steady focus resulted in additions of corporate, mortgage,
and agency bonds as yields were higher in these sectors comparable to
Treasuries. The Portfolio's corporate bond weighting at December 31, 1997 was
about 58%, as compared to 28% in the Lehman Brothers Government/Corporate Bond
Index. Mortgage-related securities were increased 1% to almost 8%, versus 0% in
the index. Agency obligations of 3% were added, versus almost 10% in the index.
Finally, some shorter maturity Treasuries were exchanged for longer maturities,
offsetting the shortening of the Portfolio's average maturity through the
passage of time.
For this six month period, corporate bonds were the best performers, although
only modestly better than Government securities. Corporate bonds would have
performed even better, but were affected by the Asian crisis. Bond dealers were
in many cases forced into selling good quality, investment grade corporate bonds
to help offset their exposure to Asian debt, which was deteriorating in quality.
This caused corporate bonds to lose some of the relative performance advantage
gained in October. Meanwhile the "flight-to-quality" noted earlier boosted the
Treasury sector's performance. As for mortgages, this sector lagged, as it
usually does when rates drop significantly.
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Bond Portfolio
Asset Type Profile as of December 31, 1997
[CHART]
<TABLE>
<S> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS 27.4%
MORTGAGE-BACKED OBLIGATIONS 7.5%
COMMERCIAL PAPER 3.2%
REPURCHASE AGREEMENTS 3.5%
COPORATE BONDS & NOTES 58.4%
</TABLE>
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ix ----------------------------------------------------------------------------
<PAGE>
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FIRST FUNDS BOND PORTFOLIO
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COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS BOND
PORTFOLIO (CLASS III) AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX
[GRAPH]
CURRENT STRATEGY AND OUTLOOK
As long as Asia remains in turmoil and regional currencies depressed, global
competitive pressures are likely to intensify. The stronger dollar means imports
from Asia will be cheaper. Conversely, they'll be able to afford less U.S.
exports. This situation is not lost on domestic car manufacturers, in
particular, as GM recently announced a 19% reduction in auto production for the
first quarter of 1998. Cuts by Ford and Chrysler are expected. Scaling back may
occur in other industries, as well. All this has created investor expectations
of slowing growth and continued mild inflation. It has also fostered a generally
bullish tone to the market. However, should the Asian situation stabilize before
there is any perceptible slowing in our economy, market sentiment could change
quickly. Substantial mortgage refinancing, year-end bonuses, income tax
refunds, and strong consumer confidence suggest that the potential for spending
early in the new year is sufficient to continue stimulating an already strong
economy and job market. This would resurrect pre-Asian concerns that rising wage
pressures could finally outweigh all the other favorable factors that have kept
inflation in check. With a lot of good news already priced into the market, the
Portfolio starts the new year with a neutral positioning - neither bullish nor
bearish.
<TABLE>
<CAPTION>
BOND PORTFOLIO
Cumulative Average Annual
Total Return* Total Return*
Since 1 Year Since
Inception Inception
- ---------------------------------------------------
<S> <C> <C> <C>
CLASS I 31.70% 9.28% 6.42%
CLASS II 25.63% 5.01% 5.29%
CLASS III 24.99% 8.02% 5.17%
LEHMAN BROS. 33.01% 9.75% 6.67%
GOV'T/CORP
BOND INDEX
</TABLE>
*TOTAL RETURNS ARE FOR THE PERIOD ENDED DECEMBER 31, 1997 AND REFLECT
REINVESTMENT OF ALL DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, ALL FEE WAIVERS
IN EFFECT AND ANY EXPENSE REIMBURESEMENTS. WITHOUT THE FEE WAIVERS AND
EXPENSE REIMBURESEMENTS, THE TOTAL RETURN FIGURES WOULD HAVE BEEN LOWER.
FUND INCEPTION DATE IS AUGUST 2, 1993. ON DECEMBER 2, 1993, THE PORTFOLIO
COMMENCED SALES OF CLASS III SHARES, WHICH INCLUDE A HIGHER TRANSFER AGENCY
FEE, A .75% DISTRIBUTION FEE AND A .25% SHAREHOLDER SERVICES FEE.
PERFORMANCE INFORMATION PRIOR TO DECEMBER 2, 1993 FOR CLASS III IS BASED ON
THE PERFORMANCE OF CLASS I SHARES AND DOES NOT REFLECT THE EFFECTS OF THESE
FEES, WHICH IF INCLUDED, WOULD LOWER CLASS III PERFORMANCE. THE PORTFOLIO
COMMENCED SALES OF CLASS II SHARES ON DECEMBER 20, 1995. THESE SHARES
INCLUDE A HIGHER TRANSFER AGENCY FEE AND A .25% SHAREHOLDER SERVICES FEE.
PERFORMANCE INFORMATION FOR CLASS II SHARES PRIOR TO THEIR INCEPTION DATE IS
BASED ON THE PERFORMANCE OF CLASS I SHARES AND DOES NOT REFLECT THE EFFECTS
OF THESE FEES WHICH IF INCLUDED, WOULD LOWER CLASS II PERFORMANCE. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
- ----------------------------------------------------------------------------- x
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS TENNESSEE TAX-FREE PORTFOLIO
- --------------------------------------------------------------------------------
[PHOTO]
TENNESSEE TAX-FREE PORTFOLIO MANAGER
RALPH HERBERT
Mr. Herbert, Vice President and Portfolio Manager, has seventeen years
experience in the financial services industry. A 1977 graduate of the University
of Tennessee, Mr. Herbert began his career with First American Bank in 1979,
first in retail banking and later joining the bank's bond division. He joined
Culver Securities in 1987 where his duties included municipal debt underwriting,
before joining Valley Fidelity Bank as a Portfolio Manager in 1989. Valley
Fidelity Bank merged with First Tennessee Bank in 1991. Mr. Herbert has managed
the Tennessee Tax-Free Portfolio since its inception.
SIX-MONTHS IN REVIEW -----------------------------------------------------------
PERFORMANCE
For the six-month period ended December 31, 1997, the First Funds Tennessee
Tax-Free Portfolio, Class I, II and III, returned 5.36%, 1.50% and 5.23%,
respectively, net of fees and sales charges, versus a return of 5.77% for the
Lehman Brothers 10-Year Municipal Bond Index.
MARKET REVIEW
The bond market finished the third quarter on a strong note. Interest rates fell
almost .40% from July 1 to September 30, 1997. Although the end result was
favorable, it was a volatile quarter. The five-year Treasury yielded 6.375% on
July 1, falling to 5.875% by July 31.
Then, over the next three weeks, the five-year Treasury yield rose to 6.25%,
fell to 6.05% and then rose to 6.25%, finally closing out the quarter at 6.00%.
Most of the volatility stemmed from investors hanging on to every word from the
Federal Reserve and attempting to figure out what their next move was following
the release of key economic statistics.
For over six years, the economy has continued to grow. The unemployment rate has
stabilized between 4.8% and 5.0% for the past six months, and inflation remains
surprisingly benign. The Federal budget deficit has continued to fall, with some
predicting a budget surplus.
COMPARISON OF CHANGE IN VALUE OF A $100,000 INVESTMENT IN THE FIRST FUNDS
TENNESSEE TAX-FREE PORTFOLIO (CLASS I) AND THE LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX.
[GRAPH]
xi ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS TENNESSEE TAX-FREE PORTFOLIO
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS
TENNESSEE TAX-FREE PORTFOLIO (CLASS II) AND THE LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX.
[GRAPH]
The markets in the fourth quarter of 1997 were dominated by the crisis in
Southeast Asia and the Pacific Rim. With each new collapse in those countries'
stock markets, equity markets in Europe and the U.S. reacted as well. This
caused a "flight to quality" on a scale not seen since the Persian Gulf War.
Billions of dollars flowed out of the world's stock markets and into U.S. bonds.
The intermediate Treasury market rallied strongly, although, interest rates in
short-term securities actually rose, primarily due to continued tight policy on
the part of the Federal Reserve. The Tennessee and general municipal market
rallied about 15 basis points, as well, and we enter 1998 with interest rates
near their historic lows.
PORTFOLIO UPDATE
Tennessee municipal bond yields dropped about 40 basis points for the six-month
period ending December 31, 1997. During this time the Portfolio was purchasing
Tennessee municipal bonds with maturities of 12-to 15-years. Early in the
period, the supply of new issues in Tennessee were slim so most of the bonds
were purchased in the secondary market. After months of short supply, however,
new tax-exempt supply expanded greatly in September. Volume increased 68% over
the same period last year, due largely to lower interest rates, which allowed
many issuers to refund existing debt at lower rates. This sudden glut in the
market did, however, hold back on price appreciation in Tennessee municipal
bonds for a short time.
Municipal bond yields are now close to 25 year lows. Because many bond funds
were purchasing bonds during periods when interest rates were higher, they tend
to have higher quotable yields. However, higher yields can equate to higher
taxable gains when the bonds are sold. Although nobody ever "went broke" paying
capital gains taxes, buyers of tax-exempt bond funds may be facing tax burdens
not to their liking. Because it is a fairly young fund, First Funds Tennessee
Tax-Free Portfolio has an average dollar price that is considerably lower than
most funds, translating to minimal exposure to taxable capital gains.
- --------------------------------------------------------------------------------
Tennessee Tax-Free Portfolio
Asset Type Profile as of December 31, 1997
[CHART]
<TABLE>
<S> <C>
Mutual Funds 1.5%
General Obligation Bonds 50.3%
Revenue Bonds 48.2%
</TABLE>
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------- xii
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS TENNESSEE TAX-FREE PORTFOLIO
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS
TENNESSEE TAX-FREE PORTFOLIO (CLASS III) AND THE LEHMAN BROTHERS 10-YEAR
MUNICIPAL BOND INDEX.
[GRAPH]
CURRENT STRATEGY AND OUTLOOK
1998 could be another good year for financial assets. The economy is still
firing on all cylinders, but many economists see the recent Asian turmoil as
having a moderate slowing effect on U.S. growth in the later half of the year.
Although it has been mentioned, deflation will likely not be much of an issue
for the domestic economy. If anything, imports will become cheaper, and our
exports are likely to suffer.
Although bonds were modestly undervalued at the beginning of the fourth quarter,
the decline in rates brought them back to fair value. Municipals remained
undervalued, offering high taxable equivalent yields. Recently, however, yields
on municipals have begun to contract.
Billions of dollars in redemptions and interest payments early in 1998 will keep
the Tennessee municipal market firm. Most of this money will be looking for new
municipal bonds to buy. This condition will be compounded by slow sales of new
debt. The last few weeks of 1997 saw a flood of new issues in Tennessee, keeping
the municipal market stable despite a rally in the Treasury markets.
With interest rates this low and not much room left for price appreciation, bond
returns may seem lower than in recent years. With this in mind, we feel that
real returns on bonds have fallen. We will begin reducing interest rate risk by
shortening the duration of the Portfolio.
<TABLE>
<CAPTION>
TENNESSEE TAX-FREE PORTFOLIO
Cumulative Average Annual
Total Return* Total Return*
Since 1 Year Since
Inception Inception
- -------------------------------------------------
<S> <C> <C> <C>
CLASS I 13.33% 8.61% 6.30%
CLASS II 9.19% 4.60% 4.38%
CLASS III 12.87% 8.42% 6.09%
LEHMAN BROS. 14.20% 9.24% 6.86%
10-YEAR
MUNICIPAL
BOND INDEX
*TOTAL RETURNS ARE FOR THE PERIOD ENDED DECEMBER 31, 1997 AND REFLECT
REINVESTMENT OF ALL DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, ALL FEE WAIVERS
IN EFFECT AND ANY EXPENSE REIMBURSEMENTS. WITHOUT THE FEE WAIVERS AND
EXPENSE REIMBURSEMENTS, THE TOTAL RETURN FIGURES WOULD HAVE BEEN LOWER.
CLASS I INCEPTION DATE IS DECEMBER 15, 1995. ON DECEMBER 15,1995, THE
PORTFOLIO ALSO COMMENCED SALES OF CLASS III SHARES, WHICH INCLUDE A HIGHER
TRANSFER AGENCY FEE AND A .50% DISTRIBUTION FEE. ON DECEMBER 29, 1995, THE
PORTFOLIO COMMENCED SALES OF CLASS II SHARES, WHICH INCLUDE A HIGHER TRANSFER
AGENCY FEE. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
</TABLE>
xiii --------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
DEFINITION OF COMMON TERMS
GAIN (OR LOSS)
If a stock or bond appreciates in price, there is an unrealized gain; if it
depreciates there is an unrealized loss. A gain or loss is "realized" upon the
sale of a security; if a Portfolio's net gains exceed net losses, there may be a
capital gain distribution to shareholders. There could also be an ordinary
income distribution if the net gain is short term or no distribution if there is
a capital loss carryover.
DIVIDEND
Net income distributed to shareholders generated by securities in a
Portfolio. The Growth & Income, Bond, Tennessee Tax-Free and all the Money
Market Portfolios pay dividends monthly. The Capital Appreciation Portfolio pays
dividends annually.
NET ASSET VALUE (NAV)
Total value of all securities and other assets held by a Portfolio, minus
liabilities, divided by the number of shares outstanding. It is the value of a
single share of a mutual fund on a given day. The total value of your investment
would be the NAV multiplied by the number of shares you own. NAV generally
fluctuates daily for all the First Funds Portfolios except the Money Market
Portfolios, which seek to maintain a stable $1.00 per share NAV.
INSURED BONDS
Insured Bonds refer to municipal obligations which are covered by an
insurance policy issued by independent insurance companies. The policies insure
the payment of principal and interest of the issuer. Examples of such companies
would be MBIA (Municipal Bond Investors Assurance Corporation), or AMBAC
(American Municipal Bond Assurance Corporation). Bonds insured by either AMBAC
or MBIA are rated AAA.
GENERAL OBLIGATION BONDS
General Obligation Bonds (GOs) are debts backed by the general taxing power
of the issuer. Payment of the obligation may be backed by a specific tax or the
issuer's general tax fund. Examples of GOs include sidewalk bonds, sewer bonds,
street bonds and so on. These bonds are also known as FULL FAITH AND CREDIT
bonds because the debt is a general obligation of the issuer.
REVENUE BONDS
Revenue Bonds are issued to provide capital for the construction of a
revenue-producing facility. The interest and principal payments are backed to
the extent that the facility produces revenue to pay. Examples of revenue bonds
include toll bridges, roads, parking lots and ports. The municipality is not
obligated to cover debt payments on revenue bonds in default.
BOND RATINGS
The quality of bonds can, to some degree, be determined from the ratings of
the two most prominent rating services: Moody's and Standard & Poor's. The
ratings are used by the government and industry regulatory agencies, the
investing public, and portfolio managers as a guide to the relative security and
value of each bond. The ratings are not used as an absolute factor in
determining the strength of the pledge securing a particular issue. However,
since Moody's and Standard & Poor's rate bonds on a fee basis, some issuers
choose not to be rated. Many non-rated issues are sound investments. The rating
symbols of the two services are shown in the accompanying table.
SEC YIELD
The SEC Yield was mandated by the Securities and Exchange Commission in
1988 as a standardized yield calculation intended to put performance
presentations for all bond and money market funds on a level playing field. The
SEC yield does not take into account income derived from capital gains, option
writing, futures, or return of capital. The formula also adjusts the income from
premium or discounted bonds to reflect the amortization of that bond.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MOODY'S INVESTORS STANDARD & POOR'S CORP.
SERVICES, INC. (PLUS (+) OR MINUS (-)
----------------- -----------------------
<S> <C> <C>
Prime Aaa AAA
Execellent Aa AA
Good A A
Average Baa BBB
Fair Ba BB
Poor B B
Marginal Caa C
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------- xiv
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
DEFINITION OF COMMON TERMS (CONTINUED)
TOTAL RETURN
Total return measures a Portfolio's performance over a stated period of
time, taking into account the combination of dividends paid and the gain or loss
in the value of the securities held in the Portfolio. It may be expressed on an
average annual basis or a cumulative basis (total change over a given period).
DEFINITION OF INDICES
STANDARD & POOR'S 500 is a broad-based measurement of changes in stock market
conditions based on the average performance of 500 widely-held common stocks. It
is an unmanaged index.
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX, an unmanaged index, is a broad
measure of bond performance, and includes reinvestment of dividends and capital
gains.
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX, an unmanaged index, is a broad
measure of municipal bond performance and includes reinvestment of dividends and
capital gains.
RUSSELL 2500 INDEX, an unmanaged index, measures performance of the 2,500
smallest companies in the Russell 3000 Index which represents approximately 23%
of the total market capitalization of the Russell 3000. As of the latest
reconstitution, the average market capitalization was approximately $659
million; the median market capitalization was approximately $438 million. The
largest company in the index had an approximate market capitalization of $2.6
billion.
The Russell 2500 Index is broken down further into a growth component and a
value component. The Capital Appreciation Portfolio uses the Russell 2500 Growth
Index as a benchmark.
The RUSSELL 2500 GROWTH INDEX measures the performance of those Russell 2500
companies with higher price-to-book ratios and higher forecasted growth values.
xv ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ------------
<S> <C> <C>
COMMON STOCKS - 91.1%
Basic Materials - 3.3%
Morton International, Inc. 353,200 $ 12,141,250
------------
CAPITAL GOODS - 5.3%
Belden, Inc. 264,900 9,337,725
General Electric Co. 142,150 10,430,256
------------
TOTAL CAPITAL GOODS 19,767,981
------------
COMMUNICATION SERVICES - 11.9%
Airtouch Communications, Inc.* 355,950 14,794,172
GTE Corp. 313,500 16,380,375
Sprint Corp. 215,700 12,645,412
------------
TOTAL COMMUNICATION SERVICES 43,819,959
------------
CONSUMER CYCLICALS - 6.4%
Federated Department Stores, Inc.* 253,500 10,916,344
Interpublic Group of Companies, Inc. 253,200 12,612,525
------------
TOTAL CONSUMER CYCLICALS 23,528,869
------------
CONSUMER STAPLES - 11.6%
Belo (A.H.) Corp., Class A 183,800 10,315,775
Pepsico, Inc. 141,300 5,148,619
Sara Lee Corp. 216,850 12,211,366
Sysco Corp. 328,800 14,980,950
------------
TOTAL CONSUMER STAPLES 42,656,710
------------
ENERGY - 9.5%
Input/Output, Inc.* 274,575 8,151,445
Repsol S.A. ADR 191,217 8,138,674
Texaco, Inc. 160,200 8,710,875
YPF S.A. ADR 294,950 10,083,603
------------
TOTAL ENERGY 35,084,597
------------
FINANCE & INSURANCE - 16.3%
BankBoston Corp. 144,400 13,564,575
Chase Manhattan Corp. 104,500 11,442,750
Fannie Mae 205,600 11,732,050
Norwest Corp. 385,800 14,901,525
UNUM Insurance Corp. 161,000 8,754,375
------------
TOTAL FINANCE & INSURANCE 60,395,275
------------
HEALTHCARE - 14.4%
Abbott Laboratories 159,900 10,457,219
Elan Corp., plc ADR* 295,050 13,260,122
Medtronic, Inc. 94,500 4,943,531
Merck & Co., Inc. 107,300 11,400,625
Schering-Plough Corp. 209,400 13,008,975
------------
TOTAL HEALTHCARE 53,070,472
------------
TECHNOLOGY - 12.4%
Electronic Data Systems Corp. 192,400 8,453,575
EMC Corp.* 387,100 10,621,056
Grainger (W.W.), Inc. 116,840 11,355,388
Intel Corp. 71,400 5,011,388
Motorola, Inc. 179,650 10,251,277
------------
TOTAL TECHNOLOGY 45,692,684
------------
TOTAL COMMON STOCKS
(Cost $206,338,580) 336,157,797
------------
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
- ---- ----------- ------ --------
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 8.9%
COMMERCIAL PAPER - 7.5%
Alfa Insurance
01/30/98 5.87% $ 1,425,000 $ 1,418,262
01/30/98 5.87% 1,000,000 995,271
American Express Corp.
01/12/98 5.83% 2,000,000 2,000,000
American Family Insurance Co.
01/14/98 5.75% 2,000,000 1,995,847
Bell Atlantic Corp.
01/06/98 5.83% 2,000,000 1,996,468
01/12/98 5.78% 2,000,000 1,998,380
Bell South
01/09/98 6.00% 2,000,000 1,997,333
Dillards, Inc.
01/16/98 5.63% 1,500,000 1,496,481
Ford Motor Corp.
01/08/98 5.74% 2,000,000 2,000,000
GE Capital Management, Inc.
01/05/98 5.87% 2,000,000 2,000,000
Goldman Sachs & Co.
01/16/98 5.80% 2,000,000 1,995,167
Hartford Steam Boilers
01/06/98 5.79% 1,000,000 999,196
Louisville Gas & Electric
03/17/98 5.55% 2,000,000 1,976,875
Michigan Gas
01/09/98 5.53% 1,000,000 998,771
Northwestern University
02/24/98 5.58% 2,000,000 1,983,260
University of Chicago
01/23/98 5.76% 2,000,000 1,992,960
------------
TOTAL COMMERCIAL PAPER 27,844,271
------------
<CAPTION>
Maturity
Amount
------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 1.4%
HSBC Securities, Inc., 6.25%, dated
12/31/97, due 01/02/98, collateralized
by $3,997,000 U.S. Treasury Bond,
8.50%, due 02/15/20 5,183,399 5,181,600
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $33,025,871) 33,025,871
------------
TOTAL INVESTMENTS - 100%
(Cost $239,364,451) $369,183,668
------------
------------
*Non-income producing security
ADR - American Depository Receipt
INCOME TAX INFORMATION:
At December 31, 1997, the net unrealized appreciation based on cost for income
tax purposes of $239,411,997 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost $129,809,759
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value (38,088)
------------
Net unrealized appreciation $129,771,671
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 1
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1997 (Unaudited)
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the six
months ended December 31, 1997 aggregated $42,135,147 and $13,926,185,
respectively.
CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ------------
<S> <C> <C>
COMMON STOCKS - 94.7%
BASIC MATERIALS - 5.4%
CHEMICALS - 2.0%
Polymer Group, Inc.* 49,000 $ 465,500
------------
METALS & MINING - 1.1%
Kennametal, Inc. 5,000 259,063
------------
MINERALS - 2.3%
Minerals Technologies, Inc. 12,000 545,250
------------
TOTAL BASIC MATERIALS 1,269,813
------------
CAPITAL GOODS - 5.0%
BUILDING & CONSTRUCTION - 5.0%
Advanced Lighting Technologies 28,000 525,000
Oakwood Homes Corp. 11,000 365,062
Watsco, Inc. 11,600 286,375
------------
1,176,437
------------
TOTAL CAPITAL GOODS 1,176,437
------------
COMMERCIAL SERVICES - 10.1%
Barnett, Inc.* 11,000 242,000
Catalina Marketing Corp.* 9,000 416,250
G & K Services, Inc. - Class A 11,000 460,625
Right Management Consultants, Inc.* 20,000 255,000
Service Experts, Inc.* 14,500 415,063
Strayer Education, Inc. 18,000 594,000
------------
TOTAL COMMERCIAL SERVICES 2,382,938
------------
CONSUMER NON-DURABLES - 4.7%
BEVERAGES - 0.5%
Robert Mondavi Corp., Class A* 2,500 121,562
------------
HOSPITAL SUPPLIES & SERVICES - 4.2%
Impath, Inc.* 11,300 358,775
Mentor Corp.* 7,100 259,150
Patterson Dental Co.* 8,000 362,000
------------
979,925
------------
TOTAL CONSUMER NON-DURABLES 1,101,487
------------
CONSUMER SERVICES - 15.0%
ADVERTISING - 5.8%
Lamar Advertising Co.* 6,200 246,450
Universal Outdoor Holdings, Inc.* 15,000 780,000
Valassis Communications, Inc.* 9,700 358,900
------------
1,385,350
------------
AUTO RELATED - 4.2%
Aftermarket Technology Corp.* 44,000 797,500
Lithia Motors, Inc., Class A* 9,000 124,875
Miller Industries, Inc.* 5,800 62,350
------------
984,725
------------
HOUSEHOLD FURNITURE/APPLIANCES - 1.0%
Heilig Meyers Co. 20,000 240,000
------------
OFFICE EQUIPMENT - 1.1%
Danka Business Systems - ADR* 16,000 255,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2 -----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER SERVICES (CONTINUED)
OTHER CONSUMER SERVICES - 1.7%
Coach USA, Inc.* 11,700 $ 391,950
------------
RENTAL/LEASING - 1.2%
Emergent Group, Inc.* 21,000 291,375
------------
TOTAL CONSUMER SERVICES 3,548,400
------------
ENERGY & NATURAL RESOURCES - 2.8%
OIL SUPPLY/CONSTRUCTION - 2.8%
Forecenergy, Inc.* 8,000 209,500
Petroleum Geo Services ADR* 7,000 453,250
------------
662,750
------------
TOTAL ENERGY & NATURAL RESOURCES 662,750
------------
FINANCE - 2.7%
BANKS - 0.8%
First Int'l Bancorp, Inc. 15,700 190,363
------------
FINANCIAL SERVICES - 1.9%
Credit Acceptance Corp.* 45,000 348,750
United Asset Management Co. 4,000 97,750
------------
446,500
------------
TOTAL FINANCE 636,863
------------
INSURANCE - 7.1%
INSURANCE COMPANIES- 0.7%
First Commonwealth, Inc.* 15,000 168,750
------------
PROPERTY CASUALTY - 6.4%
Amerin Corp.* 21,000 588,000
Capmac Holdings, Inc. 9,000 312,750
Enhance Financial Services Group, Inc. 8,000 476,000
Vesta Insurance Group, Inc. 2,200 130,625
------------
1,507,375
------------
TOTAL INSURANCE 1,676,125
------------
INDUSTRIAL SERVICES - 1.9%
Zebra Technologies Corp. - Class A* 15,100 449,225
------------
PROCESS INDUSTRIES - 2.6%
Aptar Group, Inc. 9,000 499,500
Palex, Inc.* 10,000 118,750
------------
TOTAL PROCESS INDUSTRIES 618,250
------------
TECHNOLOGY - 37.1%
ELECTRONICS - 14.5%
Allen Telecom, Inc.* 24,000 442,500
Computer Products, Inc.* 49,394 1,117,539
Flanders Corp.* 30,100 280,306
Incontrol, Inc.* 29,000 174,000
Microchip Technology, Inc.* 2,600 78,000
PPT Vision, Inc.* 20,000 155,000
Perclose, Inc.* 18,200 348,074
Reptron Electronics, Inc.* 15,100 156,662
Ubics, Inc.* 45,000 675,000
------------
3,427,081
------------
HEALTH - 3.8%
R. P. Scherer Corp.* 4,000 244,000
Xomed Surgical Products, Inc.* 28,000 644,000
------------
888,000
------------
TECHNOLOGY SERVICES - 16.7%
American Management Systems, Inc.* 28,000 542,500
The Bisys Group, Inc.* 8,800 292,600
Black Box Corp.* 19,600 693,350
CCC Information Services Group, Inc.* 35,900 695,563
Gtech Holdings Corp.* 10,800 344,925
Inspire Insurance Solutions, Inc.* 20,000 410,000
Mastech Corp.* 30,700 974,725
------------
3,953,663
------------
TELECOMMUNICATIONS - 2.1%
Centennial Cellular Corp. - Class A* 25,000 503,125
------------
TOTAL TECHNOLOGY 8,771,869
------------
TRANSPORTATION - 0.3%
Trailer Bridge, Inc.* 9,000 75,375
------------
TOTAL COMMON STOCKS
(Cost $22,621,647) 22,369,532
------------
Shares
------------
MUTUAL FUNDS - 5.3%
Vista Cash Money Market Fund - Inst. 621,069 621,069
Vista Prime Money Market Fund - Inst. 621,069 621,069
------------
TOTAL MUTUAL FUNDS 1,242,138
(Cost $1,242,137)
------------
TOTAL INVESTMENTS - 100%
(Cost $23,863,784) $ 23,611,670
------------
------------
*Non-income producing security
ADR - American Depository Receipt
INCOME TAX INFORMATION:
At December 31, 1997, the net unrealized appreciation based on cost for income
tax purposes of $23,863,784 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost $ 1,848,925
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value (2,101,039)
------------
Net unrealized appreciation $ (252,114)
------------
------------
</TABLE>
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the six
months ended December 31, 1997 aggregated $24,174,800 and $1,546,049,
respectively.
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 3
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
- ---- ------ ------------ ------------
<S> <C> <C> <C>
U.S GOVERNMENT & AGENCY OBLIGATIONS - 27.4%
U.S. TREASURY BONDS
05/15/16 7.250% $ 12,490,000 $ 14,219,091
08/15/23 6.250% 3,065,000 3,158,866
U.S. TREASURY NOTES
05/31/98 5.375% 2,440,000 2,438,475
04/30/00 6.750% 6,285,000 6,428,380
05/31/01 6.500% 4,555,000 4,663,181
08/15/02 6.375% 1,345,000 1,379,887
FEDERAL HOME LOAN BANK
11/06/02 6.250% 1,500,000 1,504,557
11/19/02 6.220% 1,500,000 1,495,867
FEDERAL HOME LOAN MORTGAGE CORPORATION
11/12/02 6.340% 750,000 750,524
11/20/02 6.170% 750,000 750,179
FEDERAL NATIONAL MORTGAGE ASSOCIATION
10/11/06 7.150% 2,000,000 2,056,316
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $37,461,816) 38,845,323
------------
CORPORATE BONDS & NOTES - 58.4%
BANKS - 7.6%
Barnett Cap II
12/01/26 7.950% 2,400,000 2,550,286
First Chicago Corp.
01/15/03 7.625% 2,300,000 2,430,785
First Empire Cap Tr I
02/01/27 8.234% 1,600,000 1,731,995
Wachovia Corp.
11/15/06 6.625% 2,100,000 2,150,222
Wells Fargo Capital
12/15/26 7.960% 1,800,000 1,899,366
------------
TOTAL BANKS 10,762,654
------------
BASIC MATERIALS - 2.6%
BHP Finance USA
03/01/06 6.690% 2,400,000 2,424,955
USX Corp.
01/21/99 8.050% 1,190,000 1,212,922
------------
TOTAL BASIC MATERIALS 3,637,877
------------
BROKER/DEALERS - 8.0%
Bear Stearns Co.
08/01/02 6.500% 2,500,000 2,510,515
Donaldson, Lufkin & Jenrette
02/15/16 5.625% 2,000,000 1,975,476
Lehman Brothers, Inc.
04/15/03 7.250% 2,500,000 2,580,940
Merrill Lynch, Inc.
01/15/07 7.000% 2,050,000 2,124,765
Morgan Stanley Group, Inc.
10/01/03 6.125% 2,200,000 2,174,179
------------
TOTAL BROKER/DEALERS 11,365,875
------------
CAPITAL GOODS - 11.1%
Arrow Electronics, Inc.
01/15/07 7.000% 1,700,000 1,778,025
Dover Corp.
11/15/05 6.450% 1,900,000 1,917,117
CORPORATE BONDS & NOTES (CONTINUED)
CAPITAL GOODS (CONTINUED)
Lockheed Martin Corp.
05/15/01 6.850% $ 2,000,000 $ 2,031,892
03/15/03 6.750% 2,400,000 2,444,227
Raytheon Co.
07/15/05 6.500% 2,500,000 2,512,245
Tyco International Limited
11/01/01 6.500% 2,500,000 2,523,448
Waste Management, Inc.
10/01/02 7.700% 2,500,000 2,608,580
------------
TOTAL CAPITAL GOODS 15,815,534
------------
CONSUMER NON-DURABLES - 4.5%
Anheuser Busch, Inc.
09/01/05 7.000% 2,300,000 2,370,433
Coca-Cola Enterprises, Inc.
10/15/36 6.700% 1,650,000 1,710,354
Philip Morris, Inc.
12/01/99 7.125% 2,200,000 2,235,747
------------
TOTAL CONSUMER NON-DURABLES 6,316,534
------------
CONSUMER SERVICES - 6.9%
Belo (AH) Corp.
06/01/02 6.875% 2,600,000 2,644,307
Federal Express Corp., Series 97-B
01/15/18 7.520% 2,000,000 2,150,560
Price/Costco, Inc.
06/15/05 7.125% 2,500,000 2,557,540
US West Capital Funding, Inc.
01/15/07 7.300% 2,400,000 2,489,083
------------
TOTAL CONSUMER SERVICES 9,841,490
------------
FINANCIAL SERVICES - 9.1%
Aon Capital Trust
01/01/27 8.205% 2,000,000 2,243,200
Associates Corp. of North America
09/17/99 6.680% 1,230,000 1,241,828
05/15/37 5.960% 1,500,000 1,526,861
CNA Financial Corp.
11/15/03 6.250% 2,400,000 2,366,069
Ford Capital
05/01/98 9.125% 910,000 919,027
Ford Motor Credit Co.
09/25/01 7.000% 2,400,000 2,457,050
General Motors Acceptance Corp.
02/15/01 5.625% 2,250,000 2,214,915
------------
TOTAL FINANCIAL SERVICES 12,968,950
------------
TRAVEL & TRANSPORTATION - 5.3%
Norfolk Southern Corp.
02/15/04 7.875% 2,400,000 2,573,799
Northwest Airlines Corp.
01/02/15 7.670% 2,281,992 2,465,441
Union Pacific Corp.
01/15/04 6.125% 2,500,000 2,437,265
------------
TOTAL TRAVEL & TRANSPORTATION 7,476,505
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4 -----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
- ---- ------ ------------ ------------
<S> <C> <C> <C>
CORPORATE BONDS & NOTES (CONTINUED)
UTILITIES - 3.3%
GTE of the North
11/01/08 6.900% $ 2,500,000 $ 2,605,515
Public Service Electric & Gas Co.
11/01/01 7.875% 2,000,000 2,097,804
------------
TOTAL UTILITIES 4,703,319
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $80,592,405) 82,888,738
------------
MORTGAGE-BACKED OBLIGATIONS - 7.5%
Federal Home Loan Mortgage Corp.,
Series 1698-E
10/15/06 6.000% 2,400,000 2,395,776
Federal National Mortgage Association,
1994-M3, Class B
04/25/06 7.710% 2,225,000 2,274,367
Federal National Mortgage Association,
1997-M5, Class C
08/25/07 6.740% 2,400,000 2,477,016
Federal National Mortgage Association,
Pool #250885
04/01/27 7.500% 3,227,099 3,300,719
Resolution Trust Corp.,
Series 1992-8 A2**
12/25/26 8.250% 24,461 24,461
Resolution Trust Corp.,
Series 1992-C6 A2
07/25/24 6.750%* 96,789 96,880
------------
TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $10,492,187) 10,569,219
------------
SHORT-TERM INVESTMENTS - 6.7%
COMMERCIAL PAPER - 3.2%
Alfa Insurance
01/30/98 5.870% 1,000,000 995,435
Goldman Sachs
01/16/98 5.800% 1,000,000 997,744
Hartford Steam Boilers
01/06/98 5.790% 1,000,000 999,356
University of Chicago
01/23/98 5.760% 1,500,000 1,494,960
------------
TOTAL COMMERCIAL PAPER 4,487,495
------------
Maturity
Amount
------------
REPURCHASE AGREEMENTS - 3.5%
HSBC Securities, Inc., 6.250%, dated
12/31/97, due 01/02/98, collateralized
by $4,466,000 U.S. Treasury Bond, 8.75%
due 11/15/08 5,019,942 5,018,200
------------
TOTAL SHORT-TERM INVESTMENTS 9,505,695
(Cost $9,505,695) ------------
TOTAL INVESTMENTS - 100%
(Cost $138,052,103) $141,808,975
------------
------------
* Floating or variable rate security - rate disclosed as of
December 31, 1997. Maturity date represents the next interest
reset date.
**Security is valued at fair value. See Note 1.
INCOME TAX INFORMATION:
At December 31, 1997, the net unrealized depreciation based on cost for income
tax purposes of $138,053,885 was as follows:
Aggregate gross unrealized appreciation for
All investments in which there was an excess
Of value over tax cost $ 3,828,885
Aggregate gross unrealized depreciation for
All investments in which there was an excess
Of tax cost over value (73,795)
------------
Net unrealized depreciation $ 3,755,090
------------
------------
</TABLE>
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the
year ended December 31, 1997 aggregated $18,393,976 and $9,578,668 respectively.
Purchases and sales of U.S. Government and Agency securities, other than
short-term securities, for the year ended December 31, 1997 aggregated
$14,599,423 and $8,078,668, respectively.
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 5
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
TENNESSEE TAX-FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Bond Rating Principal Value
Date Coupon Moody/S&P Amount (Note 1)
- ---- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
GENERAL OBLIGATION BONDS - 53.9%
Crockett County, Tennessee
04/10/11 5.000%, AMBAC Aaa/NR $ 500,000 $ 507,735
Franklin, Tennessee
Special School District
06/01/12 5.100% Aa3/NR 1,000,000 1,017,880
Grundy County, Tennessee
05/01/06 5.350%, FGIC Aaa/AAA 300,000 319,644
Johnson City, Tennessee
06/01/12 5.900%, FSA Aaa/AAA 245,000 260,830
05/01/14 5.500%, FGIC Aaa/AAA 750,000 787,830
Knox County, Tennessee
02/01/12 5.000% Aa3/AA 750,000 755,918
Knoxville, Tennessee
Refunding & Improvements
05/01/08 5.300%, MBIA Aaa/AAA 350,000 368,015
Memphis, Tennessee
08/01/06 5.200% Aa2/AA 500,000 519,885
11/01/10 5.200% Aa2/AA 1,000,000 1,031,360
Metropolitan Nashville, Tennessee
11/15/11 5.125% Aa2/AA 1,000,000 1,027,660
01/01/13 5.200%, FGIC Aaa/AAA 500,000 517,960
07/01/13 5.125% Aa3/AA 500,000 507,460
Oak Ridge, Tennessee
07/01/10 5.550% Aa/A+ 500,000 522,430
Putnam County, Tennessee
04/01/07 5.100%, MBIA Aaa/AAA 1,000,000 1,036,700
Rutherford County, Tennessee
04/01/09 5.250% Aa3/AA- 500,000 520,670
Sevier County, Tennessee
04/01/12 5.600%, FGIC Aaa/AAA 400,000 413,536
Shelby County, Tennessee
04/01/10 5.500% Aa2/AA+ 750,000 785,348
State of Tennessee
03/01/07 5.400% Aaa/AA+ 240,000 256,248
05/01/09 4.750% Aaa/AA+ 1,000,000 1,015,070
05/01/14 5.350% Aaa/AA+ 750,000 786,585
Tipton County, Tennessee
04/01/12 5.250%, AMBAC Aaa/NR 500,000 518,880
Weakley County, Tennessee
05/01/09 5.000%, FGIC Aaa/AAA 350,000 358,827
Williamson County, Tennessee
05/01/10 4.800% Aa1/NR 1,000,000 1,002,360
Wilson County, Tennessee
06/01/13 5.500%, FGIC Aaa/AAA 500,000 512,760
------------
TOTAL GENERAL OBLIGATION BONDS
(Cost $14,860,437) 15,351,591
------------
REVENUE BONDS - 44.6%
HOSPITAL - 6.2%
Bristol County, Tennessee
Health & Education Facilities
09/01/13 5.125%, FGIC Aaa/AAA 500,000 508,205
Knox County, Tennessee
Health & Education
(Ft. Sanders Hospital)
01/01/11 5.750%, MBIA Aaa/AAA 300,000 319,839
Madison County, Tennessee
(Jackson Hospital)
04/01/10 5.500%, AMBAC Aaa/AAA 400,000 419,772
Shelby County, Tennessee
Health & Education
08/01/12 5.500%, MBIA Aaa/AAA 500,000 521,925
------------
TOTAL HOSPITAL 1,769,741
------------
HOUSING - 2.8%
Tennessee Housing
Development Authority
01/01/11 5.800% Aa2/AA 400,000 424,552
07/01/13 5.800% Aa2/AA 350,000 364,228
------------
TOTAL HOUSING 788,780
------------
PUBLIC BUILDING AUTHORITY - 3.5%
Johnson City, Tennessee
Public Building
09/01/14 5.000%, MBIA Aaa/AAA 1,000,000 998,810
------------
STATE AUTHORITY - 4.5%
Tennessee State Local
Development Authority
03/01/11 5.750% A2/AA- 250,000 261,925
03/01/16 5.125%, MBIA Aaa/AAA 500,000 502,325
Tennessee State School
Board Authority
05/01/11 5.500% A1/AA 500,000 526,000
------------
TOTAL STATE AUTHORITY 1,290,250
------------
UTILITY - 27.6%
Clarksville, Tennessee
Water, Sewer & Gas
02/01/10 5.300%, MBIA AAA/NR 900,000 945,405
Collierville, Tennessee
Water & Sewer
11/01/10 5.300%, MBIA AAA/AAA 475,000 492,247
Franklin, Tennessee
Water & Sewer
09/01/11 5.000% AA2/NR 750,000 764,294
Harpeth Valley, Tennessee
Utility District
09/01/11 5.500% A1/A 650,000 678,001
Knox County, Tennessee
1st Utility District
12/01/14 5.500%, MBIA AAA/AAA 750,000 787,807
Knoxville, Tennessee
Electric
07/01/12 5.700% AA3/AA 500,000 520,060
Knoxville, Tennessee
Gas
03/01/14 5.350% AA3/AA 760,000 778,096
La Follette, Tennessee
Electrical Systems
06/01/11 5.800%, AMBAC AAA/AAA 430,000 462,250
La Vergne, Tennessee
Water & Sewer
03/01/14 5.400% A1/NR 500,000 517,130
Lawrenceburg, Tennessee
Electric
07/01/06 5.200%, MBIA AAA/AAA 345,000 363,647
Rutherford County, Tennessee
Utility
02/01/11 5.100%, FGIC AAA/NR 500,000 507,065
Sevier County, Tennessee
Utility District
05/01/11 5.400%, AMBAC AAA/NR 1,000,000 1,043,110
------------
TOTAL UTILITY 7,859,112
------------
TOTAL REVENUE BONDS
(Cost $12,241,816) 12,706,693
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 -----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
TENNESSEE TAX-FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------------ ------------
<S> <C> <C>
MUTUAL FUNDS - 1.5%
Federated Tennessee Municipal Cash Trust 417,082 $ 417,082
(Cost $417,082) ------------
TOTAL INVESTMENTS - 100%
(Cost $27,519,335) $ 28,475,366
------------
------------
</TABLE>
The Portfolio had the following insurance concentration greater than 10% at
December 31, 1997 (as a percentage of net assets):
<TABLE>
<S> <C>
MBIA 18.6%
FGIC 13.7%
AMBAC 10.3%
</TABLE>
INCOME TAX INFORMATION:
At December 31, 1997, the net unrealized depreciation based on cost for income
tax purposes of $27,519,335 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value
over tax cost $ 956,031
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax
cost over value 0
------------
Net unrealized appreciation $ 956,031
------------
</TABLE>
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the six
months ended December 31, 1997 aggregated $14,866,811 and $7,362,364,
respectively.
RATINGS:
The moody's and s&p ratings are believed to be the most recent ratings at
December 31, 1997.
U.S. TREASURY MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
- ---- ---------------- ------------ ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 53.8%
U.S. TREASURY NOTES
02/15/98 7.25% $ 2,000,000 $ 2,003,838
02/28/98 5.13% 4,000,000 3,996,534
04/15/98 7.88% 1,500,000 1,509,269
05/31/98 5.38% 1,000,000 999,221
05/31/98 6.00% 1,000,000 1,001,386
06/30/98 6.25% 1,000,000 1,002,779
07/31/98 6.25% 1,000,000 1,003,239
08/31/98 4.75% 2,000,000 1,988,828
09/30/98 4.75% 2,000,000 1,986,685
10/31/98 5.88% 1,000,000 1,002,136
U.S. TREASURY BILLS
01/22/98 4.40% 13,000,000 12,968,222
------------
TOTAL U.S. TREASURY OBLIGATIONS 29,462,137
------------
<CAPTION>
Maturity
Amount
------------
<S> <C> <C>
REPURCHASE AGREEMENTS - 46.2%
BZW, 6.00%, dated 12/31/97, due
01/02/98, collateralized by $4,608,000
U.S. Treasury Bond, 7.13% due
02/15/23 5,272,757 5,271,000
Donaldson, Lufkin & Jenrette Securities
Corp., 6.50%, dated 12/31/97, due
01/02/98, collateralized by $10,251,000
U.S. Treasury Bill, 5.13%, due
12/31/98 10,003,611 10,000,000
HSBC Securities Inc., 6.50%, dated
12/31/97, due 01/02/98, collateralized
by $8,899,000 U.S. Treasury Note,
8.75%, due 11/15/08 10,003,611 10,000,000
TOTAL REPURCHASE AGREEMENTS 25,271,000
------------
TOTAL INVESTMENTS - 100% $ 54,733,137
------------
------------
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $54,733,137
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 7
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
- ---- ---------------- ------------ ------------
<S> <C> <C> <C>
U.S. TREASURY OBLIGATIONS - 4.7%
U.S TREASURY NOTES
01/31/98 5.00% $ 2,000,000 $ 1,998,863
04/30/98 5.13% 2,000,000 1,997,031
08/31/98 4.75% 1,000,000 994,217
------------
TOTAL U.S. TREASURY OBLIGATIONS 4,990,111
------------
U.S. GOVERNMENT OBLIGATIONS - 86.6%
Federal Farm Credit Bank
10/01/98 5.63%* 5,000,000 4,992,940
Federal Home Loan Bank
01/13/98 6.00% 2,000,000 2,000,176
01/21/98 5.35% 865,000 862,558
01/27/98 5.73% 1,000,000 1,000,053
03/06/98 5.44% 3,000,000 2,971,440
03/10/98 5.47% 1,935,000 1,915,301
03/12/98 5.34% 2,000,000 1,979,531
03/19/98 5.56% 3,000,000 2,999,291
Federal Home Loan Mortgage Corp.
01/09/98 5.69% 10,000,000 9,988,936
01/15/98 5.71% 3,020,000 3,013,773
Federal National Mortgage Association
01/02/98 6.09%* 15,000,000 14,999,757
01/06/98 5.45%* 2,000,000 1,998,789
01/06/98 5.50%* 5,000,000 5,000,000
01/13/98 5.82%* 5,000,000 4,999,899
01/15/98 5.52% 2,000,000 1,999,898
01/16/98 5.60% 1,000,000 999,967
02/05/98 5.42% 2,260,000 2,248,432
02/20/98 5.01% 2,000,000 1,998,091
02/24/98 5.51% 750,000 749,784
02/26/98 5.44% 2,000,000 1,983,378
03/03/98 5.49% 3,000,000 2,972,550
03/10/98 8.20% 5,220,000 5,242,514
03/18/98 5.71% 1,000,000 1,000,073
04/22/98 5.61% 3,000,000 2,948,575
04/24/98 5.55% 3,000,000 2,948,200
06/18/98 5.84% 1,000,000 999,852
10/09/98 5.46% 2,000,000 1,915,067
Student Loan Marketing Association
01/07/98 5.73%* 500,000 500,010
01/07/98 5.93%* 5,000,000 4,998,414
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 92,227,249
------------
<CAPTION>
Maturity
Amount
----------
<S> <C> <C>
REPURCHASE AGREEMENTS - 8.7%
HSBC Securities Inc., 6.50%, dated
12/31/97, due 01/02/98, collateralized
by $2,949,000 U.S. Treasury Bond, 11.25%,
due 02/15/15 4,630,672 4,629,000
Donaldson, Lufkin & Jenrette Securities
Corp., 6.50%, dated 12/31/97, due
01/02/98, collateralized by $3,280,000
U.S. Treasury Bond, 12.75%, due
11/15/10 4,631,672 4,630,000
------------
TOTAL REPURCHASE AGREEMENTS 9,259,000
------------
TOTAL INVESTMENTS - 100% $ 106,476,360
------------
------------
</TABLE>
*Floating or variable rate security - rate disclosed as of December 31,
1997. Maturity date represents the next interest reset date.
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $106,476,360
The accompanying notes are an integral part of the financial statements.
8 -----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
- ---- ---------------- ------------ ------------
<S> <C> <C> <C>
MUNICIPAL BONDS & NOTES - 100.0%
ALASKA - 0.6%
Valdez Terminal District (Exxon)
01/02/98 4.95%* $ 300,000 $ 300,000
------------
CALIFORNIA - 2.1%
Los Angeles County, Trans. Series A
06/30/98 4.50% 1,000,000 1,003,069
------------
FLORIDA - 11.3%
Sarasota County Public Hospital
(Sarasota Hospital)
01/23/98 3.75% 3,000,000 3,000,000
Sunshine State Government Finance
Commission
01/22/98 3.75% 2,500,000 2,500,000
------------
5,500,000
------------
GEORGIA - 10.0%
Cobb County Housing Authority
(Post Bridge Project)
01/07/98 3.80%* 1,450,000 1,450,000
Georgia, Municipal Gas Authority
01/07/98 3.65%* 2,100,000 2,100,000
Smyrna Housing Authority
Post Valley Project
01/07/98 3.80%* 1,300,000 1,300,000
------------
4,850,000
------------
ILLINOIS - 4.1%
Illinois Health Facilities
(Streeterville Corp.)
01/07/98 3.80%* 2,000,000 2,000,000
------------
LOUISIANA - 2.9%
St James Parish PCR Texaco
01/14/98 3.70% 1,400,000 1,400,000
------------
MARYLAND - 2.5%
Baltimore County Public Improvement
03/06/98 3.80% 1,200,000 1,200,000
------------
MASSACHUSETTS - 2.9%
Massachusetts State Health & Education
Facilities Authority (Partners Healthcare)
01/07/98 3.50%* 1,400,000 1,400,000
------------
MICHIGAN - 3.5%
Michigan State Building Authority
03/02/98 3.75% 1,000,000 1,000,000
Michigan Strategic Fund
Dow Chemical
02/17/98 3.70% 700,000 700,000
------------
1,700,000
MISSOURI - 0.8 %
Missouri State Health & Education
Facilities (Washington University)
01/02/98 4.13%* 400,000 400,000
------------
NORTH CAROLINA - 2.2%
Raleigh Durham Airport Authority
American Airlines
01/02/98 5.00%* 1,100,000 1,100,000
------------
OHIO - 11.0%
Hamilton Bond Anticipation Notes
06/12/98 4.25% 1,000,000 1,001,482
Medina County Housing (Oaks at Medina)
01/07/98 4.15%* 1,800,000 1,800,000
Parma Bond Anticipation Notes
08/04/98 4.95% 1,000,000 1,005,921
Toledo Bond Anticipation Notes
05/15/98 4.00% 1,560,000 1,560,833
------------
5,368,236
------------
PENNSYLVANIA - 1.4%
Emmaus General Authority,
01/07/98 4.20%* 700,000 700,000
------------
TENNESSEE - 25.6%
Chattanooga Health and Education
(Baylor)
01/07/98 4.20%* 2,100,000 2,100,000
Clarksville Public Building Authority
01/07/98 4.20%* 1,600,000 1,600,000
Knox County IDB Weisgarber Partner
01/15/98 3.95%* 1,400,000 1,400,000
Memphis General Obligation
01/07/98 3.70%* 700,000 700,000
01/07/98 3.70%* 1,200,000 1,200,000
Metropolitan Government Nashville
Airport
01/07/98 3.75%* 800,000 800,000
Metropolitan Government Nashville
Dede Wallace Health
01/07/98 4.20%* 1,900,000 1,900,000
Washington County Industrial
Development Springbrook Property
01/07/98 4.20% 2,750,000 2,750,000
------------
12,450,000
------------
TEXAS - 11.9%
Lower Colorado River Authority
02/12/98 3.80% 1,800,000 1,800,000
North Central Health Facility
Methodist Hospital
01/21/98 3.75% 2,000,000 2,000,000
Texas State Tax & Revenue
08/31/98 4.75% 2,000,000 2,011,698
------------
5,811,698
------------
UTAH - 6.4%
Intermountain Power Agency, Series 97B
01/16/98 3.75% 2,500,000 2,500,000
Salt Lake City PCR Series 94 (B.P. Project)
01/02/98 5.00%* 600,000 600,000
------------
3,100,000
------------
WYOMING - 0.8%
Lincoln County PCR
(Exxon)
01/02/98 4.95%* 400,000 400,000
------------
TOTAL MUNICIPAL BONDS & NOTES 48,683,003
------------
TOTAL INVESTMENTS - 100% $ 48,683,003
------------
------------
</TABLE>
*Floating or variable rate security - rate disclosed as of December 31,
1997. Maturity date represents the next interest rate reset.
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $48,683,003
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 9
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
CASH RESERVE PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997 (Unaudited)
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
- ---- ---------------- ------------ ------------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 3.4%
Chase Manhattan Bank
03/09/98 5.71% $ 2,000,000 $ 2,000,000
------------
COMMERCIAL PAPER - 95.9%
AGRICULTURAL SERVICES - 3.4%
Golden Peanut Co.
02/02/98 5.50% 2,000,000 1,990,528
------------
ASSET-BACKED SECURITIES - 17.9%
Barton Capital Corp.
03/16/98 5.64% 1,593,000 1,574,781
CC USA, Inc.
04/20/98 5.60% 2,000,000 1,966,400
Corporate Asset Funding, Inc.
01/12/98 5.70% 2,000,000 1,996,834
Corporate Receivables Corp.
02/05/98 5.85% 3,000,000 2,983,425
SMM Trust 1997-L, 144a**
01/29/98 5.97%* 1,800,000 1,800,000
------------
TOTAL ASSET-BACKED SECURITIES 10,321,440
------------
AUTOMOTIVE - 1.7%
Daimler Benz Corp.
02/25/98 5.50% 1,000,000 991,750
------------
BANKS - 13.8%
ABN- AMRO North American
Finance, Inc.
05/01/98 5.56% 2,000,000 1,963,242
Bank of America, N.a.
01/02/98 6.10%* 2,000,000 1,999,239
Corestates Bank, N.a.
01/30/98 5.94%* 2,000,000 2,000,000
TOTAL BANKS 7,962,481
------------
BUSINESS CREDIT INSTITUTIONS - 12.0%
Banque Nationale
06/16/98 5.67% 3,000,000 2,922,038
Ge Capital Corp.
01/20/98 5.57% 2,000,000 1,994,430
Panasonic Finance
03/06/98 5.50% 2,000,000 1,980,750
------------
TOTAL BUSINESS CREDIT INSTITUTIONS 6,897,218
------------
HEALTH SERVICES - 3.4%
Kaiser Foundation Hospitals
06/04/98 5.64% 2,000,000 1,952,060
------------
INSURANCE - 3.4%
Prudential Funding
03/25/98 5.68% 2,000,000 1,974,125
------------
METAL REFINING - 3.5%
RTZ America, Inc.
02/02/98 5.52% 2,000,000 1,990,494
------------
PERSONAL CREDIT INSTITUTIONS - 10.3%
American General Finance Corp.
04/23/98 5.68% 2,000,000 1,964,973
Associates Corp. Of North America
01/02/98 6.12%* 2,000,000 1,999,765
Dean Witter
01/21/98 6.00%* 2,000,000 2,000,833
------------
TOTAL PERSONAL CREDIT INSTITUTIONS 5,965,571
------------
PERSONAL SERVICES - 3.4%
Block Financial Corp.
03/26/98 5.75% 2,000,000 1,973,486
------------
PHARMACEUTICALS - 3.4%
Warner Lambert Co.
03/17/98 5.49% 2,000,000 1,977,430
------------
PIPELINES - 3.4%
Colonial Pipeline Co.
04/06/98 5.55% 2,000,000 1,971,016
------------
PUBLISHING - 3.4%
Monsanto Co.
02/17/98 5.50% 2,000,000 1,985,945
SECURITY BROKER/DEALERS - 16.3%
Bear Stearns Co.
02/07/98 5.72%* 2,000,000 2,000,000
Goldman Sachs & Co.
04/15/98 5.68% 3,000,000 2,951,247
Merrill Lynch & Co., INC.
04/27/98 5.70% 2,000,000 1,963,583
Morgan Stanley Group
01/07/98 5.96%* 2,500,000 2,500,000
------------
TOTAL SECURITY BROKER/DEALERS 9,414,830
------------
TOTAL COMMERCIAL PAPER 55,368,374
------------
Maturity
Amount
--------
REPURCHASE AGREEMENT - 0.7%
Hsbc Securities Inc., 6.50%, Dated
12/31/97, Due 01/02/98, Collateralized
By $301,000 U.s. Treasury Bond, 8.875%,
Due 08/15/17 398,144 398,000
------------
TOTAL INVESTMENTS - 100% $57,766,374
------------
------------
</TABLE>
*Floating or variable rate security - rate disclosed as of December 31,
1997. Maturity date represents the next interest rate reset.
**Security exempt from registration under Rule 144A of the Securities
Act of 1933. This security may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
December 31, 1997, This security amounted to a value of $1,800,000
or 3.1% of net assets.
INCOME TAX INFORMATION:
Total cost for income tax purposes - $57,766,374
The accompanying notes are an integral part of the financial statements.
10 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
-------------------------------------------------
ASSETS:
<S> <C> <C>
Investments, at value (cost-see below)(Note 1) $ 369,183,668 $ 23,611,670
Receivable for portfolio shares sold 230,526 1,416
Dividends receivable 395,802 1,014
Interest receivable 26,936 7,379
Other assets 26,996 65
-------------------------------------------------
Total assets 369,863,928 23,621,544
-------------------------------------------------
LIABILITIES:
Payable for investments purchased 0 358,389
Payable for portfolio shares redeemed 2,440 0
Accrued advisory fee 154,543 11,062
Accrued administration fee 43,880 2,249
Accrued co-administration fee 15,190 937
Dividends payable 973,640 0
Accrued 12b-1 fee 41,237 216
Accrued shareholder servicing fee 19,088 256
Other payables and accrued expenses 124,435 13,652
-------------------------------------------------
Total liabilities 1,374,453 386,761
-------------------------------------------------
NET ASSETS $ 368,489,475 $ 23,234,783
-------------------------------------------------
-------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 239,536,948 $ 23,513,942
Overdistributed net investment income (40,317) (19,935)
Accumulated net realized loss on
investments (826,373) (7,110)
Net unrealized appreciation (depreciation)
in value of investments 129,819,217 (252,114)
-------------------------------------------------
NET ASSETS $ 368,489,475 $ 23,234,783
-------------------------------------------------
-------------------------------------------------
COST OF INVESTMENTS $ 239,364,451 $ 23,863,784
-------------------------------------------------
-------------------------------------------------
NET ASSET VALUE PER SHARE
Net Assets
Class I $ 278,418,785 $ 22,006,777
Class II $ 28,443,402 $ 764,751
Class III $ 61,627,288 $ 463,255
-------------------------------------------------
Shares outstanding of $.001 par value capital
stock, unlimited shares authorized
Class I 14,454,724 2,223,977
Class II 1,474,673 77,400
Class III 3,205,975 46,983
-------------------------------------------------
Net Asset Value and redemption price per
share
Class I $19.26 $9.90
Class II $19.29 $9.88
Class III $19.22 $9.86
-------------------------------------------------
Maximum offering price per share
Class I (no sales charge) $19.26 $9.90
Class II (net asset value plus maximum
sales charge of 5.75% of offering price) $20.47 $10.48
Class III (no sales charge) $19.22 $9.86
-------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 11
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO
-------------------------------------------------
ASSETS:
<S> <C> <C>
Investments, at value (cost-see below)(Note 1) $141,808,975 $ 28,475,366
Cash 30 0
Receivable for portfolio shares sold 0 9,626
Interest receivable 2,056,338 400,000
Other assets 12,844 3,728
-------------------------------------------------
Total assets 143,878,187 28,888,720
-------------------------------------------------
LIABILITIES:
Accrued advisory fee 18,325 0
Accrued administration fee 19,177 123
Accrued co-administration fee 6,388 1,154
Dividends payable 745,970 116,107
Accrued 12b-1 fee 1,845 407
Accrued shareholder servicing fee 908 0
Other payables and accrued expenses 49,321 16,708
-------------------------------------------------
Total liabilities 841,934 134,499
-------------------------------------------------
NET ASSETS $ 143,036,253 $ 28,754,221
-------------------------------------------------
-------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 139,863,462 $ 27,821,075
(Over)Undistributed net investment income (36,519) 748
Accumulated net realized loss on
investments (547,562) (23,633)
Net unrealized appreciation in value of
investments 3,756,872 956,031
-------------------------------------------------
NET ASSETS $ 143,036,253 $ 28,754,221
-------------------------------------------------
-------------------------------------------------
COST OF INVESTMENTS $ 138,052,103 $ 27,519,335
-------------------------------------------------
-------------------------------------------------
NET ASSET VALUE PER SHARE
Net Assets
Class I $ 139,066,334 $ 16,063,022
Class II $ 1,583,551 $ 7,298,935
Class III $ 2,386,368 $ 5,392,264
-------------------------------------------------
Shares outstanding of $.001 par value capital
stock, unlimited shares authorized
Class I 13,682,172 1,562,344
Class II 156,167 708,176
Class III 235,273 523,831
-------------------------------------------------
Net Asset Value and redemption price per
share
Class I $10.16 $10.28
Class II $10.14 $10.31
Class III $10.14 $10.29
-------------------------------------------------
Maximum offering price per share
Class I (no sales charge) $10.16 $10.28
Class II (net asset value plus maximum
sales charge of 3.75% of offering price) $10.54 $10.71
Class III (no sales charge) $10.14 $10.29
-------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
U.S. TREASURY U.S. GOVERNMENT MUNICIPAL CASH
MONEY MARKET MONEY MARKET MONEY MARKET RESERVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at value (1)(Note 1) $ 54,733,137 $ 106,476,360 $ 48,683,003 $ 57,766,374
Cash 224 0 53,160 514
Interest receivable 264,242 838,980 293,046 170,579
Other assets 6,119 7,348 8,961 5,945
--------------------------------------------------------------------------
Total assets 55,003,722 107,322,688 49,038,170 57,943,412
--------------------------------------------------------------------------
LIABILITIES:
Overdraft - due to Custodian 0 4,297,605 0 0
Dividends payable 239,543 502,887 148,866 291,879
Accrued management fee 4,026 9,396 4,222 5,815
Accrued administration fee 3,485 7,038 3,155 4,357
Accrued co-administration fee 1,187 2,394 1,216 1,461
Accrued 12b-1 fee 12,646 3,151 2,276 11,444
Other payables and accrued expenses 47,279 48,920 33,351 34,869
--------------------------------------------------------------------------
Total liabilities 308,166 4,871,391 193,086 349,825
--------------------------------------------------------------------------
NET ASSETS $ 54,695,556 $ 102,451,297 $ 48,845,084 $ 57,593,587
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 54,710,790 $ 102,458,787 $ 48,849,618 $ 57,593,685
Undistributed net investment income 80 330 0 22
Accumulated net realized loss
on investments (15,314) (7,820) (4,534) (120)
--------------------------------------------------------------------------
NET ASSETS $ 54,695,556 $ 102,451,297 $ 48,845,084 $ 57,593,587
--------------------------------------------------------------------------
--------------------------------------------------------------------------
NET ASSET VALUE, offering price and
redemption price per share (2) $1.00 $1.00 $1.00 $1.00
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
(1) Including repurchase agreements for the U.S. Treasury Money Market, U.S.
Government Money Market, Municipal Money Market, and Cash Reserve
Portfolios in the amounts of $25,271,000, $9,259,000, $0 and $398,000
respectively.
<TABLE>
<CAPTION>
(2) Shares Outstanding
Net ($.001 par value, unlimited
Assets shares authorized)
------ -----------------
<S> <C> <C>
U.S. Treasury Money Market
Class I $ 6,173,404 6,185,224
Class III 48,522,152 48,525,566
U.S. Government Money Market
Class I 101,289,303 101,296,905
Class III 1,161,994 1,161,882
Municipal Money Market
Class I 40,705,496 40,709,959
Class III 8,139,588 8,139,659
Cash Reserve
Class I 16,278,602 16,278,655
Class III 41,314,985 41,315,030
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 13
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 2,235,839 $ 10,340
Interest 1,027,178 54,348
------------------------------------------
Total investment income 3,263,017 64,688
------------------------------------------
EXPENSES:
Management fee (Note 3) 1,093,924 62,165
Administration fee (Note 4) 252,444 10,970
Co-administration fee (Note 4) 84,148 3,657
Fund accounting/transfer agent fee:
Class I 70,829 7,849
Class II 11,006 171
Class III 32,350 121
Blue Sky fee:
Class I 1,268 3,271
Class II 1,840 83
Class III 1,130 84
Distribution fee
Class III 215,996 568
Shareholder Servicing Fee:
Class II 28,503 241
Class III 71,999 189
Custodian fee 36,463 2,150
Trustees fee 8,164 241
Registration fee 11,228 2,216
Audit 11,656 5,639
Legal 6,644 307
Reports to Shareholders 6,479 344
Miscellaneous 24,487 1,046
------------------------------------------
Total expenses before waiver 1,970,558 101,312
Waiver of expenses (Note 5) (252,444) (16,689)
------------------------------------------
Net expenses 1,718,114 84,623
------------------------------------------
NET INVESTMENT INCOME (LOSS) 1,544,903 (19,935)
------------------------------------------
Net realized gain(loss) on investments 2,747,806 (7,110)
Change in net unrealized appreciation/
depreciation 49,510,615 (252,114)
------------------------------------------
Net gain (loss) on investments 52,258,421 (259,224)
------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 53,803,324 $ (279,159)
------------------------------------------
------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO
------------------------------------------
<S> <C> <C>
INTEREST INCOME $ 4,509,219 $ 616,809
------------------------------------------
EXPENSES:
Management fee (Note 3) 377,467 60,991
Administration fee (Note 4) 102,946 18,297
Co-administration fee (Note 4) 34,315 6,099
Fund accounting/Transfer agent fee:
Class I 41,484 7,262
Class II 571 3,886
Class III 2,589 2,387
Blue Sky fee:
Class I 4,625 609
Class II 399 609
Class III 218 609
Distribution fee:
CLASS III 9,311 17,928
Shareholder servicing fee:
Class II 1,472 0
Class III 3,104 0
Custodian fee 16,166 3,402
Trustees fee 4,016 540
Registration fee 0 1,521
Audit 10,310 7,049
Legal 3,757 294
Reports to Shareholders 3,665 287
Miscellaneous 11,195 1,558
------------------------------------------
Total expenses before waiver 627,610 133,328
Waiver of expenses (Note 5) (274,521) (79,165)
Fees reimbursed by administrator (Note 5) 0 (5,976)
------------------------------------------
Net expenses 353,089 48,187
------------------------------------------
NET INVESTMENT INCOME 4,156,130 568,622
------------------------------------------
Net realized gain on investments 126,800 12,641
Change in net unrealized appreciation/
depreciation 4,228,601 686,277
------------------------------------------
Net gain on investments 4,355,401 698,918
------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 8,511,531 $ 1,267,540
------------------------------------------
------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 15
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1997 (Unaudited)
<TABLE>
<CAPTION>
U.S. TREASURY U.S. GOVERNMENT MUNICIPAL CASH
MONEY MARKET MONEY MARKET MONEY MARKET RESERVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME $ 1,717,421 $ 2,800,203 $ 1,103,205 $ 1,742,506
--------------------------------------------------------------------------
EXPENSES:
Management fee (Note 3) 77,292 125,071 74,445 76,310
Administration fee (Note 4) 23,187 37,521 22,334 22,893
Co-administration fee (Note 4) 15,458 25,014 14,889 15,262
Fund accounting/Transfer agent fee
Class I 2,807 22,272 11,778 5,905
Class III 14,338 1,795 3,320 14,347
Blue sky fee:
Class I 2,734 2,890 2,758 1,417
Class III 771 1,682 720 1,752
Distribution fee:
Class III 68,946 8,409 15,257 56,619
Custodian fee 11,115 16,202 11,665 11,707
Trustees fee 1,989 3,424 2,921 1,709
Audit 7,400 11,513 9,718 5,285
Legal 2,673 2,982 2,516 1,369
Reports to shareholders 2,607 2,906 2,453 1,334
Miscellaneous 6,174 8,439 5,879 4,631
--------------------------------------------------------------------------
Total expenses before waiver 237,491 270,120 180,653 220,540
Waiver of expenses (Note 5) (54,104) (87,550) (52,112) (53,417)
--------------------------------------------------------------------------
Net expenses 183,387 182,570 128,541 167,123
--------------------------------------------------------------------------
NET INVESTMENT INCOME 1,534,034 2,617,633 974,664 1,575,383
--------------------------------------------------------------------------
Net realized loss on investments (3,219) (104) (46) (182)
--------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 1,530,815 $ 2,617,529 $ 974,618 $ 1,575,201
--------------------------------------------------------------------------
--------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
----------------------------------------------------------------------------------------
For the Period
For the Six Months For the Year September 2, 1997
Ended December 31, Ended June 30, to December 31,
1997 (Unaudited) 1997 1997 (Unaudited)
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ 1,544,903 $ 2,298,772 $ (19,935)
Net realized gain (loss) on
investments 2,747,806 14,550,673 (7,110)
Change in net unrealized
appreciation/depreciation 49,510,615 43,526,139 (252,114)
----------------------------------------------------------------------------------------
Net increase (decrease) in
net assets from operations 53,803,324 60,375,584 (279,159)
----------------------------------------------------------------------------------------
DISTRIBUTIONS:
From net investment income:
Class I (1,492,318) (2,145,885) 0
Class II (92,902) (48,979) 0
Class III 0 (103,908) 0
From net realized gain:
Class I (10,122,600) (9,969,819) 0
Class II (1,029,465) (309,364) 0
Class III (2,240,690) (2,220,318) 0
----------------------------------------------------------------------------------------
Net decrease in net assets
from distributions (14,977,975) (14,798,273) 0
----------------------------------------------------------------------------------------
SHARE TRANSACTIONS (NOTE 2):
Proceeds from sales of shares 43,379,572 51,974,255 23,684,444
Reinvested dividends 13,889,849 14,030,548 0
Cost of shares redeemed (15,433,104) (21,710,132) (170,502)
----------------------------------------------------------------------------------------
Net increase in net assets
from share transactions 41,836,317 44,294,671 23,513,942
----------------------------------------------------------------------------------------
Total increase in net assets 80,661,666 89,871,982 23,234,783
NET ASSETS:
Beginning of period 287,827,809 197,955,827 0
----------------------------------------------------------------------------------------
End of period* $ 368,489,475 $ 287,827,809 $ 23,234,783
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
*Includes overdistributed
net investment income of $ (40,317) $ 0 $ (19,935)
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 17
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
For the Six Months For the Year For the Six Month For the Year
Ended December 31, Ended June 30, Ended December 31, Ended June 30,
1997 (Unaudited) 1997 1997 (Unaudited) 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income $ 4,156,130 $ 7,390,633 $ 568,622 $ 661,422
Net realized gain (loss) on
investments 126,800 289,070 12,641 (28,586)
Change in net unrealized
appreciation/depreciation 4,228,601 1,087,850 686,277 422,965
---------------------------------------------------------------------------------------
Net increase in net assets
from operations 8,511,531 8,767,553 1,267,540 1,055,801
---------------------------------------------------------------------------------------
DISTRIBUTIONS:
From net investment income:
Class I (4,060,966) (7,213,796) (306,977) (364,252)
Class II (34,172) (30,004) (155,431) (173,237)
Class III (60,992) (146,985) (106,214) (123,185)
---------------------------------------------------------------------------------------
Net decrease in net assets
from distributions (4,156,130) (7,390,785) (568,622) (660,674)
---------------------------------------------------------------------------------------
SHARE TRANSACTIONS (NOTE 2):
Proceeds from sales of shares 15,996,301 17,933,516 12,900,642 17,035,878
Reinvested dividends 3,011,351 6,757,582 180,020 255,022
Cost of shares redeemed (6,905,501) (10,833,267) (5,652,040) (5,755,651)
---------------------------------------------------------------------------------------
Net increase in net assets
from share transactions 12,102,151 13,857,831 7,428,622 11,535,249
---------------------------------------------------------------------------------------
Total increase in net assets 16,457,552 15,234,599 8,127,540 11,930,376
NET ASSETS:
Beginning of period 126,578,701 111,344,102 20,626,681 8,696,305
---------------------------------------------------------------------------------------
End of period* $ 143,036,253 $ 126,578,701 $ 28,754,221 $ 20,626,681
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
*Includes (over) undistributed
net investment income of $ (36,519) $ (49,220) $ 748 $ 748
</TABLE>
The accompanying notes are an integral part of the financial statements.
18 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY MONEY U.S. GOVERNMENT MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
---------------------------------------------------------------------------------------
For the Six Months For the Year For the Six Month For the Year
Ended December 31, Ended June 30, Ended December 31, Ended June 30,
1997 (Unaudited) 1997 1997 (Unaudited) 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,534,034 $ 4,098,295 $ 2,617,633 $ 4,857,113
Net realized loss on investments (3,219) (8,150) (104) (5,138)
---------------------------------------------------------------------------------------
Net increase in net assets from
operations 1,530,815 4,090,145 2,617,529 4,851,975
---------------------------------------------------------------------------------------
DISTRIBUTIONS:
From net investment income
Class I (169,692) (3,282,521) (2,451,162) (4,786,653)
Class III (1,364,262) (815,774) (166,471) (70,130)
---------------------------------------------------------------------------------------
Net decrease in net assets from
distributions (1,533,954) (4,098,295) (2,617,633) (4,856,783)
---------------------------------------------------------------------------------------
SHARE TRANSACTIONS AT NET ASSET VALUE
OF $1.00 PER SHARE (NOTE 2):
Proceeds from sales of shares 112,859,421 414,876,674 97,230,789 162,950,792
Reinvested dividends 91,306 150,378 126,939 66,833
Cost of shares redeemed (125,527,440) (426,975,015) (92,933,649) (153,324,382)
---------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from share transactions (12,576,713) (11,947,963) 4,424,079 9,693,243
Total increase (decrease) in
net assets (12,579,852) (11,956,113) 4,423,975 9,688,435
NET ASSETS:
Beginning of period 67,275,408 79,231,521 98,027,322 88,338,887
---------------------------------------------------------------------------------------
End of period* $ 54,695,556 $ 67,275,408 $ 102,451,297 $ 98,027,322
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
*Includes undistributed net
investment income of $ 80 $ 0 $ 330 $ 330
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 19
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MUNICIPAL MONEY CASH RESERVE
MARKET PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------
For the Six Months For the Year For the Six Month For the Year
Ended December 31, Ended June 30, Ended December 31, Ended June 30,
1997 (Unaudited) 1997 1997 (Unaudited) 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 974,664 $ 2,534,543 $ 1,575,383 $ 2,436,766
Net realized loss on investments (46) (1,475) (182) 0
---------------------------------------------------------------------------------------
Net increase in net assets from
operations 974,618 2,533,068 1,575,201 2,436,766
---------------------------------------------------------------------------------------
DISTRIBUTIONS:
From net investment income
Class I (787,282) (2,378,120) (419,863) (927,206)
Class III (187,382) (156,423) (1,155,520) (1,509,538)
---------------------------------------------------------------------------------------
Net decrease in net assets from
distributions (974,664) (2,534,543) (1,575,383) (2,436,744)
---------------------------------------------------------------------------------------
SHARE TRANSACTIONS AT NET ASSET VALUE
OF $1.00 PER SHARE (NOTE 2):
Proceeds from sales of shares 51,556,027 136,289,737 81,466,809 132,549,772
Reinvested dividends 158,588 165,874 909,471 1,571,520
Cost of shares redeemed (61,744,048) (152,149,764) (74,615,275) (124,848,130)
---------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from share transactions (10,029,433) (15,694,153) 7,761,005 9,273,162
---------------------------------------------------------------------------------------
Total increase (decrease) in net assets (10,029,479) (15,695,628) 7,760,823 9,273,184
NET ASSETS:
Beginning of period 58,874,563 74,570,191 49,832,764 40,559,580
---------------------------------------------------------------------------------------
End of period* $ 48,845,084 $ 58,874,563 $ 57,593,587 $ 49,832,764
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
*Includes undistributed net investment
income of $ 0 $ 0 $ 22 $ 22
</TABLE>
The accompanying notes are an integral part of the financial statements.
20 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
GROWTH & INCOME PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
------------------------------------------------------------------------
1997 1997 1996 1995 1994**
---- ---- ----- ---- ------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $17.03 $14.12 $12.22 $10.53 $10.00
------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.11 0.18 0.19 0.23 0.17
Net realized and unrealized gain on
investments 2.95 3.75 2.58 2.21 0.57
------------------------------------------------------------------------
Total from investment operations 3.06 3.93 2.77 2.44 0.74
------------------------------------------------------------------------
Distributions:
Net investment income (0.11) (0.18) (0.19) (0.23) (0.17)
Net realized gain (0.72) (0.84) (0.68) (0.52) (0.04)
------------------------------------------------------------------------
Total distributions (0.83) (1.02) (0.87) (0.75) (0.21)
------------------------------------------------------------------------
Net asset value, end of period $19.26 $17.03 $14.12 $12.22 $10.53
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL RETURN+ 18.06%# 28.83% 23.54% 24.20% 7.39%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $278,419 $221,136 $159,146 $114,000 $82,751
Ratio of expenses to average daily net assets(1) 0.81%* 0.83% 0.76% 0.47% 0.34%*
Ratio of net investment income to average net assets 1.11%* 1.19% 1.40% 2.12% 1.83%*
Portfolio turnover rate 5% 25% 41% 33% 83%*
Average commission rate ^ $ 0.0600 $ 0.0604 n/a n/a n/a
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.96%* 0.98% 1.00% 0.99% 1.05%*
<CAPTION>
CLASS II
------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
------------------------------------------------------------------------
1997 1997 1996**
---- ---- -------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $17.05 $14.12 13.05%
------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.08 0.13 0.09
Net realized and unrealized gain on
investments 2.96 3.76 1.74
------------------------------------------------------------------------
Total from investment operations 3.04 3.89 1.83
------------------------------------------------------------------------
Distributions:
Net investment income (0.08) (0.12) (0.08)
Net realized gain (0.72) (0.84) (0.68)
------------------------------------------------------------------------
Total distributions (0.80) (0.96) (0.76)
------------------------------------------------------------------------
Net asset value, end of period $19.29 $17.05 $14.12
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL RETURN+ 17.92%# 28.48%*** 14.71%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $28,443 $16,514 $1,918
Ratio of expenses to average daily net assets(1) 1.12%* 1.14% 1.06%*
Ratio of net investment income to average net assets 0.81%* 0.88% 1.10%*
Portfolio turnover rate 5% 25% 41%
Average commission rate ^ $ 0.0600 $ 0.0604 n/a
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.27%* 1.29% 1.30%*
</TABLE>
^ For fiscal years beginning on or after September 1, 1995, a fund that
invests more than 10% of the value of its average net assets in equity
securities is required to disclose its average commission rate per share
for security trades on which commissions are charged.
* Annualized.
** Classes I and II commenced operations on August 2, 1993 and December 20,
1995, respectively.
*** Class II total return does not include the one time sales charge.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 21
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
GROWTH & INCOME PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
Class III
-----------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------
1997 1997 1996 1995 1994**
---- ---- ----- ---- ------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Selected Per-Share Data
Net asset value, beginning of period $16.99 $14.11 $12.23 $10.51 $10.60
------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0.02 0.03 0.06 0.06
Net realized and unrealized gain (loss) on
investments 2.94 3.74 2.60 2.24 (0.05)
------------------------------------------------------------------------
Total from investment operations 2.95 3.76 2.63 2.30 0.01
------------------------------------------------------------------------
Distributions:
Net investment income 0.00 (0.04) (0.07) (0.06) (0.06)
Net realized gain (0.72) (0.84) (0.68) (0.52) (0.04)
------------------------------------------------------------------------
Total distributions (0.72) (0.88) (0.75) (0.58) (0.10)
------------------------------------------------------------------------
Net asset value, end of period $19.22 $16.99 $14.11 $12.23 $10.51
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL RETURN+ 17.41%# 27.44% 22.19% 22.61% 0.08%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $61,627 $50,178 $36,892 $19,363 $2,094
Ratio of expenses to average daily net assets(1) 1.87%* 1.94% 1.87% 1.72% 1.83%*
Ratio of net investment income to average net assets 0.06%* 0.08% 0.29% 0.87% 0.34%*
Portfolio turnover rate 5% 25% 41% 33% 83%*
Average commission rate ^ $ 0.0600 $ 0.0604 n/a n/a n/a
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 2.02%* 2.09% 2.11% 2.26% 6.03%*
</TABLE>
^ For fiscal years beginning on or after September 1, 1995, a fund that
invests more than 10% of the value of its average net assets in equity
securities is required to disclose its average commission rate per share
for security trades on which commissions are charged.
* Annualized.
** Class III commenced operations on December 9, 1993.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
22 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
------------------------------------------------------------------------------
For the Period For the Period For the Period
Ended December 31**, Ended December 31,** Ended December 31,**
(Unaudited) (Unaudited) (Unaudited)
------------------------------------------------------------------------------
1997 1997 1997
---- ---- -------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $10.00 $10.49 $10.49
------------------------------------------------------------------------------
Income from investment operations:
Net investment income (0.01) (0.01) (0.02)
Net realized and unrealized gain (loss) on
investments (0.09) (0.60) (0.61)
------------------------------------------------------------------------------
Total from investment operations (0.10) (0.61) (0.63)
------------------------------------------------------------------------------
Net asset value, end of period $9.90 $9.88 $9.86
------------------------------------------------------------------------------
------------------------------------------------------------------------------
TOTAL RETURN+ (1.00)%# (1.20)%#*** (1.40)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $22,007 $765 $463
Ratio of expenses to average daily net assets(1) 1.20%* 1.56%* 2.35%*
Ratio of net investment income to average net assets (0.27)%* (0.63)%* (1.42)%*
Portfolio turnover rate 7% 7% 7%
Average commission rate $ 0.0600 $ 0.0600 $ 0.0600
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.44%* 1.79%* 2.59%*
</TABLE>
* Annualized.
** Class I commenced operations on September 2, 1997 and Classes II and III
commenced operations on October 2, 1997.
*** Class II total return does not include the one time sales charge.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 23
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
BOND PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-----------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------------
1997 1997 1996 1995 1994**
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $9.84 $9.73 $9.91 $9.41 $10.00
-----------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.31 0.61 0.60 0.57 0.45
Net realized and unrealized gain (loss) on
investments 0.32 0.11 (0.18) 0.50 (0.57)
-----------------------------------------------------------------------------
Total from investment operations 0.63 0.72 0.42 1.07 (0.12)
-----------------------------------------------------------------------------
Distributions:
Net investment income (0.31) (0.61) (0.60) (0.57) (0.46)
Net realized gain - - - - (0.01)
-----------------------------------------------------------------------------
Total distributions (0.31) (0.61) (0.60) (0.57) (0.47)
-----------------------------------------------------------------------------
Net asset value, end of period $10.16 $9.84 $9.73 $9.91 $9.41
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
TOTAL RETURN+ 6.44%# 7.58% 4.23% 11.87% (1.38)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $139,066 $123,184 $107,832 $90,574 $75,686
Ratio of expenses to average daily net assets (1) 0.49%* 0.49% 0.41% 0.35% 0.36%*
Ratio of net investment income to average net assets 6.08%* 6.20% 5.99% 6.07% 5.07%*
Portfolio turnover rate 8% 56% 56% 23% 36%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.89%* 0.89% 0.91% 0.91% 0.96%*
<CAPTION>
CLASS II
--------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
--------------------------------------------------------------
1997 1997 1996**
---- ---- -------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $9.81 $9.71 $10.18
--------------------------------------------------------------
Income from investment operations:
Net investment income 0.29 0.57 0.29
Net realized and unrealized gain (loss) on
investments 0.33 0.10 (0.47)
--------------------------------------------------------------
Total from investment operations 0.62 0.67 (0.18)
--------------------------------------------------------------
Distributions:
Net investment income (0.29) (0.57) (0.29)
--------------------------------------------------------------
Total distributions (0.29) (0.57) (0.29)
--------------------------------------------------------------
Net asset value, end of period $10.14 $9.81 $9.71
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL RETURN+ 6.41%# 7.12%*** (1.75)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $1,584 $841 $67
Ratio of expenses to average daily net assets(1) 0.84%* 0.90% 0.80%*
Ratio of net investment income to average net assets 5.73%* 5.79% 5.61%*
Portfolio turnover rate 8% 56% 56%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.24%* 1.30% 1.30%*
</TABLE>
* Annualized.
** Classes I and II commenced operations on August 2, 1993 and December 20,
1995, respectively.
*** Class II total return does not include the one time sales charge.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
24 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
--------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
--------------------------------------------------------------------------
1997 1997 1996 1995 1994**
---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $9.82 $9.71 $9.89 $9.40 $10.04
--------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.25 0.49 0.49 0.43 0.21
Net realized and unrealized gain (loss) on
investments 0.32 0.11 (0.18) 0.49 (0.62)
--------------------------------------------------------------------------
Total from investment operations 0.57 0.60 0.31 0.92 (0.41)
--------------------------------------------------------------------------
Distributions:
Net investment income (0.25) (0.49) (0.49) (0.43) (0.22)
Net realized gain - - - - (0.01)
--------------------------------------------------------------------------
Total distributions (0.25) (0.49) (0.49) (0.43) (0.23)
--------------------------------------------------------------------------
Net asset value, end of period $10.14% $9.82 $9.71 $9.89 $9.40
--------------------------------------------------------------------------
--------------------------------------------------------------------------
TOTAL RETURN+ 5.84%# 6.37% 3.11% 10.12% (4.19)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $2,386 $2,553 $3,445 $1,916 $923
Ratio of expenses to average daily net assets(1) 1.65%* 1.63% 1.49% 1.84% 1.82%*
Ratio of net investment income to average net assets 4.92%* 5.07% 4.92% 4.58% 3.61%*
Portfolio turnover rate 8% 56% 56% 23% 36%*
(1)During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 2.05%* 2.03% 1.99% 3.35% 6.36%*
</TABLE>
* Annualized.
** Class III commenced operations on December 2, 1993.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 25
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
TENNESSEE TAX-FREE PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
----------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
---------------------------------------------------------
1997 1997 1996**
---- ---- -------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $9.99 $9.71 $10.00
---------------------------------------------------------
Income from investment operations:
Net investment income 0.24 0.50 0.23
Net realized and unrealized gain (loss) on
investments 0.29 0.28 (0.29)
---------------------------------------------------------
Total from investment operations 0.53 0.78 (0.06)
---------------------------------------------------------
Distributions:
Net investment income (0.24) (0.50) (0.23)
---------------------------------------------------------
Total distributions (0.24) (0.50) (0.23)
---------------------------------------------------------
Net asset value, end of period $10.28 $9.99 $9.71
---------------------------------------------------------
---------------------------------------------------------
TOTAL RETURN+ 5.36%# 8.26% (0.65)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $16,063 $8,935 $5,925
Ratio of expenses to average daily net assets (1) 0.34%* 0.07% 0.50%*
Ratio of net investment income to average net assets 4.71%* 5.09% 4.31%*
Portfolio turnover rate 32% 122% 8%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.94%* 1.14% 1.42%
<CAPTION>
CLASS II
----------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
---------------------------------------------------------
1997 1997 1996**
---- ---- -------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $10.01 $9.73 $10.06
---------------------------------------------------------
Income from investment operations:
Net investment income 0.24 0.51 0.21
Net realized and unrealized gain (loss) on
investments 0.30 0.28 (0.33)
---------------------------------------------------------
Total from investment operations 0.54 0.79 (0.12)
---------------------------------------------------------
Distributions:
Net investment income (0.24) (0.51) (0.21)
---------------------------------------------------------
Total distributions (0.24) (0.51) (0.21)
---------------------------------------------------------
Net asset value, end of period $10.31 $10.01 $9.73
---------------------------------------------------------
---------------------------------------------------------
TOTAL RETURN+ 5.45%# 8.37%*** (1.25)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $7,299 $5,941 $1,875
Ratio of expenses to average daily
net assets (1) 0.36%* 0.12% 0.49%*
Ratio of net investment income to average net assets 4.69%* 5.03% 4.32%*
Portfolio turnover rate 32% 122% 8%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.95%* 1.14% 1.42%*
</TABLE>
* Annualized.
** Class I commenced operations on December 15, 1995. Class II commenced
operations on December 29, 1995.
*** Class II total return does not include the one time sales charge.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
26 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
TENNESSEE TAX-FREE PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
--------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-------------------------------------------------------------
1997 1997 1996**
---- ---- -------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $10.00 $9.72 $10.00
--------------------------------------------------------------
Income from investment operations:
Net investment income 0.23 0.50 0.19
Net realized and unrealized gain (loss) on
investments 0.29 0.28 (0.28)
--------------------------------------------------------------
Total from investment operations 0.52 0.78 (0.09)
--------------------------------------------------------------
Distributions:
Net investment income (0.23) (0.50) (0.19)
--------------------------------------------------------------
Total distributions (0.23) (0.50) (0.19)
--------------------------------------------------------------
Net asset value, end of period $10.29 $10.00 $9.72
--------------------------------------------------------------
--------------------------------------------------------------
TOTAL RETURN+ 5.23%# 8.20% (0.87)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $5,392 $5,750 $896
Ratio of expenses to average daily
net assets (1) 0.60%* 0.23% 0.98%*
Ratio of net investment income to average net assets 4.45%* 4.93% 3.83%*
Portfolio turnover rate 32% 122% 8%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.70%* 1.91% 1.91%
</TABLE>
* Annualized.
** Class III commenced operations on December 15, 1995.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 27
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
U.S. TREASURY MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-------------------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993**
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.026 0.050 0.052 0.050 0.030 0.018
-------------------------------------------------------------------------------------
Distributions:
Net investment income (0.026) (0.050) (0.052) (0.050) (0.030) (0.018)
-------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
TOTAL RETURN+ 2.59%# 5.09% 5.30% 5.10% 3.06%.76%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $6,173 $6,141 $75,703 $67,377 $100,868 $59,326
Ratio of expenses to average net assets (1) 0.47%* 0.37% 0.36% 0.36% 0.33% 0.39%*
Ratio of net investment income to
average net assets 5.08%* 5.01% 5.19% 5.00% 3.04% 2.73%*
(1) During the period, various fees were
waived. The ratio of expenses to average
net assets had such waivers not occurred
is as follows. 0.64%* 0.55% 0.56% 0.63% 0.60% 0.65%*
<CAPTION>
CLASS III
----------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
----------------------------------------------------------------------
1997 1997 1996**
<S> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00
----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.025 0.047 0.044
----------------------------------------------------------------------
Distributions:
Net investment income (0.025) (0.047) (0.044)
----------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL RETURN+ 2.52%# 4.84% 4.47%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $48,522 $61,135 $3,528
Ratio of expenses to average net assets (1) 0.61%* 0.62% 0.62%*
Ratio of net investment income to average
net assets 4.94%* 4.76% 4.93%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets
had such waivers not occurred is as follows. 0.78%* 0.80% 0.82%*
</TABLE>
* Annualized.
** Classes I and III commenced operations on November 12, 1992 and August 8,
1995, respectively.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
28 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-----------------------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993**
---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.026 0.051 0.053 0.053 0.032 0.019
-----------------------------------------------------------------------------------------
Distributions:
Net investment income (0.026) (0.051) (0.053) (0.053) (0.032) (0.019)
-----------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL RETURN+ 2.67%# 5.23% 5.37% 5.39% 3.23% 1.87%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $101,289 $94,541 $88,111 $88,057 $67,854 $94,903
Ratio of expenses to average net
assets (1) 0.34%* 0.35% 0.33% 0.31% 0.28% 0.27%*
Ratio of net investment income to
average net assets 5.25%* 5.11% 5.28% 5.27% 3.18% 2.98%*
(1)During the period, various fees were
waived. The ratio of expenses to
average net assets had such waivers
not occurred is as follows. 0.52%* 0.53% 0.53% 0.58% 0.55% 0.55%*
<CAPTION>
CLASS III
---------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
----------------------------------------------------------------------
1997 1997 1996**
---- ---- ------
<S> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00
----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.025 0.048 0.044
----------------------------------------------------------------------
Distributions:
Net investment income (0.025) (0.048) (0.044)
----------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL RETURN+ 2.52%# 4.91% 4.49%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $1,162 $3,486 $228
Ratio of expenses to average net assets (1) 0.64%* 0.65% 0.65%*
Ratio of net investment income to average net assets 4.96%* 4.81% 4.96%*
(1)During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.82%* 0.83% 0.85%*
</TABLE>
* Annualized.
** Classes I and III commenced operations on November 12, 1992 and August 8,
1995, respectively.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 29
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-----------------------------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------------------------
1997 1997 1996 1995 1994 1993**
---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.017 0.033 0.035 0.034 0.024 0.014
-----------------------------------------------------------------------------------------
Distributions:
Net investment income (0.017) (0.033) (0.035) (0.034) (0.024) (0.014)
-----------------------------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
TOTAL RETURN+ 1.69%# 3.32% 3.52% 3.48% 2.40% 1.40%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $40,705 $45,988 $71,665 $94,078 $76,231 $74,362
Ratio of expenses to average
net assets (1) 0.38%* 0.35% 0.32% 0.30% 0.28% 0.31%*
Ratio of net investment income to
average net assets 3.32%* 3.25% 3.50% 3.44% 2.39% 2.26%*
(1)During the period, various fees
were waived. The ratio of expenses
to average net assets had such
waivers not occurred is as follows. 0.55%* 0.53% 0.52% 0.57% 0.55% 0.58%*
<CAPTION>
CLASS III
----------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
----------------------------------------------------------------------
1997 1997 1996**
---- ---- ------
<S> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00
----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.016 0.030 0.030
----------------------------------------------------------------------
Distributions:
Net investment income (0.016) (0.030) (0.030)
----------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00
----------------------------------------------------------------------
----------------------------------------------------------------------
TOTAL RETURN+ 1.56%# 3.03% 3.03%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $8,140 $12,886 $2,905
Ratio of expenses to average net assets (1) 0.63%* 0.62% 0.58%*
Ratio of net investment income to average net assets 3.07%* 2.98% 3.24%*
(1)During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.81%* 0.79% 0.78%*
</TABLE>
* Annualized.
** Classes I and III commenced operations on November 12, 1992 and July 28,
1995, respectively.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
30 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CASH RESERVE PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-----------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------
1997 1997 1996 1995**
---- ---- ---- ------
<S> <C> <C> <C> <C>
SELECTED PER - SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.027 0.051 0.053 0.042
-----------------------------------------------------------------------
Distributions:
Net investment income (0.027) (0.051) (0.053) (0.042)
-----------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
TOTAL RETURN+ 2.72%# 5.23% 5.39% 4.27%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $116,279 $14,241 $16,369 $15,460
Ratio of expenses to average net assets (1) 0.38%* 0.40% 0.42% 0.43%*
Ratio of net investment income to average net assets 5.33%* 5.13% 5.22% 5.48%*
(1)During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.55%* 0.57% 0.61% 0.70%*
<CAPTION>
Class III
-----------------------------------------------------------------------
For the Six Months
Ended December 31, For the Year
(Unaudited) Ended June 30,
-----------------------------------------------------------------------
1997 1997 1996**
---- ---- ------
<S> <C> <C> <C>
Selected Per - Share Data
Net asset value, beginning of period $1.00 $1.00 $1.00
-----------------------------------------------------------------------
Income from investment operations:
Net investment income 0.026 0.049 0.047
-----------------------------------------------------------------------
Distributions:
Net investment income (0.026) (0.049) (0.047)
-----------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00 $1.00
-----------------------------------------------------------------------
-----------------------------------------------------------------------
TOTAL RETURN+ 2.60%# 5.00% 4.78%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $41,315 $35,592 $24,190
Ratio of expenses to average net assets (1) 0.61%* 0.64% 0.62%*
Ratio of net investment income to average net
assets 5.10%* 4.88% 5.02%*
(1)During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.78%* 0.82% 0.81%*
</TABLE>
* Annualized.
** Classes I and III commenced operations on September 26, 1994 and July 28,
1995, respectively.
+ Total return would have been lower had various fees not been waived during
the period.
# Total return for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 31
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING AND OPERATING POLICIES
First Funds (the Trust) is registered under the Investment Company Act of 1940,
as amended (the 1940 Act), as an open-ended management investment company
organized as a Massachusetts business trust by a Declaration of Trust dated
March 6, 1992, as amended and restated on September 4, 1992.
The Trust currently has eight active investment portfolios (each referred to as
a "Portfolio"). The Trust's financial statements are prepared in accordance with
generally accepted accounting principles. This requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
The following summarizes the significant accounting policies for the Trust.
Each Portfolio may offer three classes of shares (Class I, Class II and Class
III). As of June 30, 1997, Class II shares have been issued only for the Growth
& Income, Capital Appreciation, Bond, and Tennessee Tax-Free Portfolios. Class I
and Class III shares have been issued for all Portfolios. Each Class of shares
has equal rights as to earnings, assets and voting privileges except that each
Class bears different distribution, shareholder service, transfer agent/fund
accounting and blue sky expenses. Each Class has exclusive voting rights with
respect to its Distribution Plans and Shareholder Servicing Plans. Income,
expenses (other than expenses incurred under each Class Distribution and Service
Plans and other class specific expenses) and realized and unrealized gains or
losses on investments are allocated to each Class of shares based upon their
relative net assets or dividend assets.
SECURITY VALUATION:
GROWTH & INCOME, CAPITAL APPRECIATION, BOND AND TENNESSEE TAX-FREE PORTFOLIOS:
Securities held in the Growth & Income and Capital Appreciation Portfolios for
which exchange quotations are readily available are valued at the last sale
price, or if no sale price or if traded on the over-the-counter market, at the
closing bid price. Securities held in the Bond and Tennessee Tax-Free
Portfolios are valued based upon a computerized matrix system and/or appraisals
by a pricing service, both of which consider market transactions and
dealer-supplied valuations. Securities for which quotations are not readily
available are valued using dealer-supplied valuations or at the fair value as
determined in good faith under consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities maturing within
sixty days are valued at amortized cost or original cost plus accrued interest,
both of which approximate current value.
MONEY MARKET PORTFOLIOS: Each of the Money Market Portfolios values securities
utilizing the amortized cost method of valuation under Rule 2a-7 of the 1940
Act, pursuant to which each Money Market Portfolio must adhere to certain
conditions. Under this method, investments are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
REPURCHASE AGREEMENTS: Each Portfolio, through its custodian, receives delivery
of underlying securities, whose market value, including interest, is required
to be at least equal to 102% of the resale price. The Trust's sub-advisers,
under the supervision of the investment adviser, First Tennessee Bank (First
Tennessee), are responsible for determining that the value of these underlying
securities remains at least equal to 102% of the resale price. If the seller
defaults, each Portfolio would suffer a loss to the extent that the proceeds
from the sale of the underlying securities were less than the repurchase price.
INCOME TAXES: As a qualified regulated investment company under Subchapter M of
the Internal Revenue Code, each Portfolio is not subject to income taxes to the
extent that it distributes all of its taxable income for its fiscal year.
INTEREST INCOME: Interest income, which includes amortization of premium and
accretion of discount, is accrued as earned. For the Municipal Money Market
Portfolio, accretion of market discount represents unrealized gain until
realized at the time of security disposition or maturity. Dividend income is
recorded on the ex-dividend date.
EXPENSES: Most expenses of the Trust can be directly attributed to a Portfolio.
Expenses which cannot be directly attributed are apportioned among the
Portfolios based on average net assets.
DISTRIBUTIONS TO SHAREHOLDERS: For the Money Market Portfolios, Bond Portfolio
and Tennessee Tax-Free Portfolio, distributions are declared daily and paid
monthly from net investment income. Distributions for the Growth & Income
Portfolio are declared and paid monthly. Distributions for the Capital
Appreciation Portfolio are declared and paid annually. Any net capital gains
earned by each Portfolio are distributed at least annually to the extent
necessary to avoid federal income and excise taxes.
Income and capital gains to be distributed are determined in accordance with
income tax regulations which may differ from income and gains reported under
generally accepted accounting principles.
OTHER: Investment security transactions are accounted for as of trade date.
Realized gains and losses from securities transactions are determined using the
identified cost basis for both financial reporting and income tax purposes.
32 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------
For the Six Months For the Period September 2,
Ended December 31, For the Year to December, 31
1997 Ended June 30, 1997*
(Unaudited) 1997 (Unaudited)
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dollars issued and redeemed:
Class I:
Issued $ 26,846,696 $ 28,624,247 $ 22,457,089
Distributions reinvested 10,570,028 11,375,774 0
Redeemed (9,808,148) (14,039,927) (168,965)
---------------------------------------------------------------------------------------------
Net increase $ 27,608,576 $ 25,960,094 $ 22,288,124
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class II:
Issued $ 9,832,705 $ 13,350,241 $ 769,513
Distributions reinvested 1,117,332 353,865 0
Redeemed (1,416,432) (659,970) (1,465)
---------------------------------------------------------------------------------------------
Net increase $ 9,533,605 $ 13,044,136 $ 768,048
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class III:
Issued $ 6,700,171 $ 9,999,767 $ 457,842
Distributions reinvested 2,202,489 2,300,909 0
Redeemed (4,208,524) (7,010,235) (72)
---------------------------------------------------------------------------------------------
Net increase $ 4,694,136 $ 5,290,441 $ 457,770
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I:
Issued 1,441,509 1,875,264 2,241,155
Distributions reinvested 553,302 754,234 0
Redeemed (523,309) (919,542) (17,178)
---------------------------------------------------------------------------------------------
Net increase 1,471,502 1,709,956 2,223,977
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class II:
Issued 524,144 850,780 77,555
Distributions reinvested 58,347 23,380 0
Redeemed (76,084) (41,752) (155)
---------------------------------------------------------------------------------------------
Net increase 506,407 832,408 77,400
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class III:
Issued 361,844 647,961 46,991
Distributions reinvested 115,132 152,701 0
Redeemed (224,668) (461,201) (8)
---------------------------------------------------------------------------------------------
Net increase 252,308 339,461 46,983
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------------------------------------------------------- 33
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------------
For the Six Months For the Six Months
Ended December, 31 For the Year Ended December 31, For the Year
1997 Ended June 30, 1997 Ended June 30,
(Unaudited) 1997 (Unaudited) 1997
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dollars issued and redeemed:
Class I:
Issued $ 14,941,319 $ 17,022,861 $ 9,490,004 $ 7,234,437
Distributions reinvested 2,937,879 6,594,162 15,621 19,739
Redeemed (6,235,462) (9,607,777) (2,736,825) (4,456,397)
---------------------------------------------------------------------------------------------
Net increase $ 11,643,736 $ 14,009,246 $ 6,768,800 $ 2,797,779
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class II:
Issued $ 830,237 $ 770,186 $ 1,333,534 $ 4,505,744
Distributions reinvested 26,176 28,502 94,375 141,816
Redeemed (151,715) (25,432) (259,260) (680,046)
---------------------------------------------------------------------------------------------
Net increase $ 704,698 $ 773,256 $ 1,168,649 $ 3,967,514
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class III:
Issued $ 224,745 $ 140,469 $2,077,104 $ 5,295,697
Distributions reinvested 47,296 134,918 70,024 93,467
Redeemed (518,324) (1,200,058) (2,655,955) (619,208)
---------------------------------------------------------------------------------------------
Net increase (decrease) $ (246,283) $ (924,671) $ (508,827) $ 4,769,956
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Shares issued and redeemed:
Class I:
Issued 1,491,127 1,746,590 934,713 733,904
Distributions reinvested 292,472 673,294 1,538 1,999
Redeemed (622,357) (981,496) (268,561) (451,365)
---------------------------------------------------------------------------------------------
Net increase 1,161,242 1,438,388 667,690 284,538
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class II:
Issued 83,175 78,480 131,048 455,420
Distributions reinvested 2,610 2,913 9,266 14,328
Redeemed (15,338) (2,590) (25,503) (69,180)
---------------------------------------------------------------------------------------------
Net increase 70,447 78,803 114,811 400,569
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class III:
Issued 22,380 14,410 204,558 535,937
Distributions reinvested 4,718 13,810 6,881 9,446
Redeemed (51,867) (122,936) (262,580) (62,659)
---------------------------------------------------------------------------------------------
Net increase (decrease) (24,769) (94,716) (51,141) 482,724
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
34 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
U.S. TREASURY U.S. GOVERNMENT
MONEY MARKET PORTFOLIO MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------------------
For the Six Months For the Six Months
Ended December 31, For the Year Ended December 31, For the Year
1997 Ended June 30, 1997 Ended June 30,
(Unaudited) 1997 (Unaudited) 1997
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares/Dollars issued and
redeemed:
Class I:
Issued $ 7,033,247 $ 288,035,908 $ 79,878,371 $ 148,660,358
Distributions reinvested 171 1,910 343 2,235
Redeemed (7,000,320) (357,592,644) (73,130,270) (142,227,950)
---------------------------------------------------------------------------------------------
Net increase (decrease) $ 33,098 $ (69,554,826) $ 6,748,444 $ 6,434,643
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class III:
Issued $ 105,826,174 $ 126,840,766 $ 17,352,418 $ 14,290,434
Distributions reinvested 91,135 148,468 126,596 64,598
Redeemed (118,527,120) (69,382,371) (19,803,379) (11,096,432)
---------------------------------------------------------------------------------------------
Net increase (decrease) $ (12,609,811) $ 57,606,863 $ (2,324,365) $ 3,258,600
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
<CAPTION>
MUNICIPAL CASH RESERVE
MONEY MARKET PORTFOLIO PORTFOLIO
---------------------------------------------------------------------------------------------
For the Six Months For the Six Months
Ended December 31, For the Year Ended December 31, For the Year
1997 Ended June 30, 1997 Ended June 30,
(Unaudited) 1997 (Unaudited) 1997
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares/Dollars issued and
redeemed:
Class I:
Issued $ 42,821,039 $ 110,038,524 19,582,212 $ 32,622,397
Distributions reinvested 144 1,233 0 1
Redeemed (48,103,770) (135,715,106) (17,544,837) (34,750,381)
---------------------------------------------------------------------------------------------
Net increase (decrease) $ (5,282,587) $ (25,675,349) $ 2,037,375 $ (2,127,983)
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Class III:
Issued $ 8,734,988 $ 26,251,213 61,884,597 $ 99,927,375
Distributions reinvested 158,444 164,641 909,471 1,571,519
Redeemed (13,640,278) (16,434,658) (57,070,438) (90,097,749)
---------------------------------------------------------------------------------------------
Net increase (decrease) $ (4,746,846) $ 9,981,196 $ 5,723,630 $ 11,401,145
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>
3. INVESTMENT ADVISORY AND MANAGEMENT AND SUB-ADVISORY AGREEMENTS
For managing its investment and business affairs, Growth & Income Portfolio,
Bond Portfolio and Tennessee Tax-Free Portfolio each pay First Tennessee Bank
National Association ("First Tennessee"), a monthly management fee at the
annual rate of .65%, .55% and .50% respectively, of its average net assets. For
managing its investment and business affairs, each of the Money Market
Portfolios pays First Tennessee its pro-rated portion of a monthly management
fee at the annual rate of .25% of aggregate average monthly net assets of all
Money Market Portfolios of the Trust managed by First Tennessee through $1
billion, and .22% on amounts greater than $1 billion. Under the Investment
Advisory and Management Agreement, First Tennessee is authorized, at its own
expense, to hire sub-advisers to provide investment advice to it and to each
Portfolio.
First Tennessee and Investment Advisers, Inc. ("IAI") serve as co-advisers of
the Capital Appreciation Portfolio pursuant to the authority granted to them
under their respective Co-Advisory Agreements with the Portfolio. The Capital
Appreciation Portfolio is obligated to pay First Tennessee and IAI monthly
management fees at the annual rate of .15% and .70%, respectively, of its
average net assets.
- ---------------------------------------------------------------------------- 35
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. INVESTMENT ADVISORY AND MANAGEMENT AND SUB-ADVISORY AGREEMENTS (CONTINUED)
For the Growth & Income and Bond Portfolios, Highland Capital Management Corp.
(Highland) serves as the sub-adviser of each Portfolio pursuant to the authority
granted to it under its Sub-Advisory Agreement with First Tennessee. Highland is
an affiliate of First Tennessee and is a wholly-owned subsidiary of First
Tennessee National Corporation. Highland is paid by First Tennessee a monthly
sub-advisory fee at the annual rate of .38% of Growth & Income Portfolio's
average net assets and .33% of Bond Portfolio's average net assets. For the
Money Market
Portfolios, PNC Institutional Management Corporation (PIMC) serves as the
sub-adviser of each Portfolio pursuant to the authority granted to it under its
Sub-Advisory Agreement with the First Tennessee. PIMC is a wholly-owned
subsidiary of PNCBank National Association. PIMC is paid by First Tennessee a
monthly sub-advisory fee at the annual rate of .08% of each Portfolio's average
net assets through $500 million, .06% of the next $500 million, and .05% of net
assets greater than $1 billion.
4. ADMINISTRATOR, CO-ADMINISTRATOR AND DISTRIBUTOR
ALPS Mutual Funds Services, Inc. serves as Administrator and Distributor for the
Trust under separate Administration and General Distribution Agreements. ALPS'
duties include distribution services, providing office space and various legal
and accounting services in connection with the regulatory requirements
applicable to each Portfolio. ALPS is entitled to receive administration fees
from each of the Money Market Portfolios at the annual rate of .075% of average
net assets and, from the Growth & Income, Capital Appreciation, Bond and
Tennessee Tax-Free Portfolios, at the annual rate of .15% of average net assets.
First Tennessee serves as the Co-Administrator for each Portfolio. As the
Co-Administrator, First Tennessee assists in each Portfolio's operation,
including but not limited to, providing non-investment related research and
statistical data and various operational and administrative services. First
Tennessee is entitled to receive co-administration fees from each Portfolio at
the annual rate of .05% of average net assets.
The Trustees have adopted a Distribution Plan on behalf of Class III of each
Portfolio pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended. Each Distribution Plan provides for payment of a fee to ALPS at the
annual rate of up to .75% of the average net assets of Class III of the Growth &
Income, Capital Appreciation, Bond and Tennessee Tax-Free Portfolios, and .25%
of the average net assets of Class III of each of the Money Market Portfolios.
The Trustees have also adopted Shareholder Servicing Plans on behalf of Class II
and III of the Growth & Income, Capital Appreciation and Bond Portfolios under
which Investment Professionals are paid at the annual rate of .25% of each
Class' average net assets for shareholder services and account maintenance.
5. WAIVER OF FEES
GROWTH & INCOME AND BOND PORTFOLIOS:
For the six-months ended December 31, 1997, First Tennessee voluntarily agreed
to waive its management fee for the Growth & Income and Bond Portfolios to .50%
and .15% of average net assets, respectively. Pursuant to the voluntary waiver
agreement, for the six-months ended December 31, 1997, First Tennessee waived
management fees of $252,444 and $274,521 for the Growth & Income and Bond
Portfolios, respectively.
CAPITAL APPRECIATION PORTFOLIO:
Since the Portfolio's inception, First Tennessee has voluntarily agreed to waive
its entire management fee. Pursuant to this voluntary waiver agreement, for the
period ended December 31, 1997, First Tennessee waived management fees of
$10,970.
From the inception of the Portfolio through September 30, 1997, ALPS voluntarily
agreed to waive its entire administrative fee. For the next six months of
Portfolio operations, ALPS has voluntarily agreed to waive its administration
fee to .075% on the first $20 million of average net assets in the Portfolio,
.1125% on the next $5 million and .15% of the average net assets in excess of
$25 million. Pursuant to this voluntary waiver agreement, for the period ended
December 31,1997, ALPS waived administration fees of $5,719.
TENNESSEE TAX-FREE PORTFOLIO:
Since the Portfolio's inception, First Tennessee, as Investment Adviser, has
voluntarily agreed to waive its entire management fee.
For the six-months ended December 31, 1997, the 12b-1 fee charged by Class III
of the Tennessee Tax-Free Portfolio was waived to .50% of average net assets.
For the six-months ended December 31, 1997, ALPS voluntarily agreed to waive its
administration fee to 0.05% of average net assets. ALPS also agreed to
voluntarily reimburse Class III of the Tennessee Tax-Free Portfolio for half of
the 12b-1 fee charged by that Class or 0.25% of that Class' average net assets.
Thereafter, 12b-1 fees for Class III will be voluntarily maintained at 0.25% by
ALPS.
36 ----------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
FIRST FUNDS SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. WAIVER OF FEES (CONTINUED)
Pursuant to the voluntary waiver and reimbursement agreements, for the
six-months ended December 31, 1997, fees were waived and reimbursed for the
Tennessee Tax-Free Portfolio as follows:
<TABLE>
<S> <C>
Management fees waived $60,991
Administration fees waived $12,198
Reimbursement by administrator $ 5,976
12b-1 fees waived $ 5,976
</TABLE>
MONEY MARKET PORTFOLIOS:
For the six-months ended December 31, 1997, First Tennessee voluntarily agreed
to waive a portion of its management and co-administration fees payable by each
of the Money Market Portfolios so that each Money Market Portfolio pays .10% and
.025%, respectively, of its average net assets. For the six-months ended
December 31, 1997, the expense waivers were as follows:
<TABLE>
<CAPTION>
MANAGEMENT FEE CO-ADMINISTRATION FEE
<S> <C> <C>
U.S. Treasury Money Market $46,375 $7,729
U.S. Government Money Market $75,043 $12,507
Municipal Money Market $44,667 $7,445
Cash Reserve $45,786 $7,631
</TABLE>
6. OTHER
As of December 31, 1997, one shareholder owned 42% of the Growth & Income
Portfolio, 91% of the Capital Appreciation Portfolio and 63% of the Bond
Portfolio. Additionally, as of December 31, 1997, one shareholder owned 17% of
the U.S. Treasury Money Market Portfolio, one shareholder owned 14% of the U.S.
Government Money Market Portfolio, one shareholder owned 14% of the Municipal
Money Market Portfolio and one shareholder owned 62% of the Cash Reserve
Portfolio.
The Trustees of the Trust receive an annual Trustees fee of $4,000 and an
additional fee for each Trustee's meeting attended.
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<PAGE>
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------ 370 Seventeenth Street
FIRST Suite 3100
FUNDS Denver, Colorado 80202
------ www.firstfunds.com
INVESTMENT ADVISER - All Portfolios except Capital Appreciation Portfolio
- ------------------
First Tennessee Bank National Association
Memphis, Tennessee
CO-INVESTMENT ADVISORS - Capital Appreciation Portfolio
- ----------------------
First Tennessee Bank National Association
Memphis, Tennessee
Investment Advisers, Inc.
Minneapolis, Minnesota
SUB-ADVISER - Money Market Portfolios
- -----------
PNC Institutional Management Corporation
Wilmington, Delaware
SUB-ADVISER - Growth & Income and Bond Portfolios
- -----------
Highland Capital Management Corporation
Memphis, Tennessee
OFFICERS
- --------
Richard C. Rantzow, President
James Hyatt, Secretary
Jeremy May, Treasurer
TRUSTEES
- --------
Thomas M. Batchelor
John A. DeCell
L.R. Jalenak, Jr.
Larry W. Papasan
Richard C. Rantzow
ADMINISTRATOR AND DISTRIBUTOR
- -----------------------------
ALPS Mutual Funds Services, Inc.
Denver, Colorado
CO-ADMINISTRATOR
- ----------------
First Tennessee Bank National Association
Memphis, Tennessee
TRANSFER AND SHAREHOLDER SERVICING AGENT
- ----------------------------------------
Chase Global Funds Services Company
Boston, Massachusetts
CUSTODIAN
- ---------
Chase Manhattan Bank, N.A.
New York, New York
[LOGO] FIRST TENNESSEE
HERE FOR YOU ALPS MUTUAL FUNDS SERVICES
--------------------------
NOT FDIC INSURED Investment Adviser Sponsor and Distributor
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