<PAGE> 1
June 30, 2000
Annual Report to Shareholders
of
[FIRST FUNDS LOGO]
Discipline, Consistency, Patience (R)
[GRAPHIC ARM STRENGTH CONTEST - 3 GENERATIONS]
[FIRST TENNESSEE LOGO]
Investment Adviser
<PAGE> 2
LETTER FROM THE CHAIRMAN
Dear Shareholder:
This report for First Funds covers the 12-month period that ended June 30, 2000.
It includes commentary from our portfolio managers on fund performance, the
financial market outlook and the strategies employed. The portfolio holdings,
financial highlights and performance results are also reported.
Over the last year, a variety of publications have recognized the success of
First Funds. One feature article about the FIRST FUNDS GROWTH & INCOME PORTFOLIO
with co-managers Edward Goldstein and David Thompson, appeared in Barron's. The
mutual fund rating agencies of Morningstar, ValueLine, Lipper, Inc., and
Standard & Poor's also recognized the portfolio and its management team during
the year. In addition, nationally syndicated radio show interviews with David
Thompson were aired to audiences from coast to coast.
For two of our fixed income portfolios, the INTERMEDIATE BOND PORTFOLIO and the
TENNESSEE TAX-FREE PORTFOLIO, local press coverage in the Knoxville area
featured an interview with Ralph Herbert and Ted Flickinger, Jr., co-managers of
these funds. On a national level, recognition for the TENNESSEE TAX-FREE
PORTFOLIO was received from Lipper, Inc. and Morningstar.
Other exciting news for the fund family happened at the end of the fiscal year.
On June 1, 2000, a change was made in the day-to-day management of the FIRST
FUNDS CAPITAL APPRECIATION PORTFOLIO that was approved by, and for the benefit
of the shareholders. At a special meeting of the shareholders on May 17, 2000,
Delaware Management Company was approved as the new co-adviser to the portfolio.
THE FIRST FUNDS CAPITAL APPRECIATION MANAGEMENT TEAM
- Eight small cap growth analysts-portfolio managers including senior portfolio
manager Gerald Frey are "prepared to invest in the stocks they endorse"
- The analysts-managers cover four market segments enabling a broad
perspective for comparison
- Consumer and retail - Technology
- Financial and business services - Healthcare
- The analysts-managers bring 115 years of combined investment management
experience to the portfolio
- Delaware was founded in 1929 and currently manages about $47 billion
for 200 institutions, large private trusts and mutual funds
i
<PAGE> 3
LETTER FROM THE CHAIRMAN CONTINUED
In contrast to many investment management organizations that have a team of
analysts that present ideas before a decision-maker portfolio manager, the team
members managing the CAPITAL APPRECIATION PORTFOLIO both analyze and pick
stocks. We found with this team that there is no "disconnect" between the person
who reviews a stock and the person who chooses it for the portfolio. They get
the analysts' best recommendations, and they're expected to be prepared to
invest in the stocks they endorse. The role of the analyst-managers allows the
team to act quickly when markets change course. With the volatility that can be
experienced in the small cap sector, this flexibility and decisive action is a
key factor for success.
For the small cap team, the universe of investment possibilities generally
includes companies with market capitalizations between $200 million and $2
billion at the time of purchase. The average market cap of the portfolio is
intended not to exceed $1.5 billion. At this size, many growth stock
opportunities exist.
Read the Annual Report for more information on the FIRST FUNDS CAPITAL
APPRECIATION PORTFOLIO as well as the other stock, bond and money market
portfolios. You can access additional information through our website
www.firstfunds.com or by calling 1-800-442-1941, option 1.
First Funds will continue to commit to Discipline, Consistency, Patience (R)
while managing portfolios on behalf of our shareholders. And, we look forward to
your additional investments with us.
Sincerely,
/s/ Richard Rantzow
Richard C. Rantzow
Chairman, Board of Trustees
FIRST FUNDS
- Are NOT insured by the FDIC 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.
ii
<PAGE> 4
FIRST FUNDS GROWTH & INCOME PORTFOLIO
[PHOTO]
GROWTH & INCOME PORTFOLIO MANAGERS
EDWARD GOLDSTEIN AND DAVID THOMPSON, CFA
Mr. Goldstein is Executive Vice President of Memphis, Tennessee-based
Highland Capital Management Corp., sub-adviser to the Portfolio. After
graduating from Boston University in 1971, he went on to receive his MBA from
Columbia University in 1976. Joining Goldman, Sachs & Company 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 a portfolio manager for the
portfolio since 1994.
Mr. Thompson is Senior Managing Director with Highland Capital Management
Corp. and is a Chartered 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 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.
YEAR IN REVIEW
PERFORMANCE REVIEW
For the year ended June 30, 2000, the First Funds Growth & Income Portfolio
Class I, II, and III returned 8.15%, 1.62%, and 6.02% respectively, net of
fees and sales charges, versus a return of 7.25% for the S&P 500.
MARKET REVIEW
The market again provided equity investors with a positive rate of return for
the past twelve months ended June 30, 2000. However, the magnitude of gains
has begun to approach the more normalized 9 - 10% gains that the market has
traditionally delivered over time, versus the outsized gains many have come
to expect over the past five years.
The trailing twelve month period exhibited a heightened period of market
volatility, as we experienced two quarters with positive returns (the first
quarter of 2000 and the fourth quarter of 1999), and two quarters of negative
return (the second
COMPARISON OF CHANGE IN VALUE OF A $750,000 INVESTMENT IN THE FIRST FUNDS
GROWTH & INCOME PORTFOLIO (CLASS I) AND THE S&P 500.
[GRAPH]
<TABLE>
<CAPTION>
Growth & Income Portfolio (Class I) S&P 500
----------------------------------- -------
<S> <C> <C>
8/2/93 750,000 750,000
780,000 774,750
776,256 768,784
783,786 784,698
783,786 777,244
804,164 786,648
839,789 813,394
824,588 791,351
797,130 756,848
810,123 766,536
823,085 779,107
6/30/94 805,553 760,019
830,042 784,948
872,208 817,131
854,589 797,111
867,408 815,046
835,314 785,378
846,591 797,002
872,497 817,644
896,839 849,532
922,040 874,594
945,645 900,394
974,203 936,410
6/30/95 1,000,410 958,134
1,036,420 989,945
1,036,420 992,419
1,052,070 1,034,300
1,033,980 1,030,580
1,080,090 1,075,820
1,096,400 1,096,580
1,140,810 1,133,860
1,158,260 1,144,410
1,190,580 1,155,400
1,202,840 1,172,380
1,237,720 1,202,630
6/30/96 1,235,990 1,207,200
1,187,910 1,153,840
1,216,780 1,178,190
1,272,990 1,244,520
1,307,230 1,278,870
1,400,440 1,375,550
1,380,690 1,348,310
1,467,260 1,432,580
1,454,200 1,443,760
1,424,390 1,384,420
1,467,270 1,467,070
1,555,890 1,556,410
6/30/97 1,592,300 1,626,140
1,728,760 1,755,580
1,669,810 1,657,270
1,786,030 1,748,090
1,742,800 1,689,700
1,834,820 1,767,930
1,879,780 1,798,340
1,895,380 1,818,300
2,007,590 1,949,400
2,117,000 2,049,210
2,114,040 2,069,910
2,053,360 2,034,310
6/30/98 2,110,240 2,116,900
2,069,090 2,094,250
1,783,970 1,791,420
1,913,310 1,906,250
2,065,230 2,061,230
2,179,020 2,186,140
2,307,580 2,312,060
2,384,190 2,409,400
2,385,150 2,334,230
2,465,770 2,427,600
2,536,530 2,521,540
2,522,330 2,462,040
6/30/99 2,652,480 2,598,680
2,613,220 2,517,600
2,557,560 2,505,010
2,552,700 2,436,370
2,770,450 2,590,600
2,765,460 2,643,180
2,823,540 2,798,870
2,748,850 2,658,370
2,659,440 2,608,120
2,906,150 2,863,200
2,835,960 2,777,020
2,894,830 2,720,090
6/30/00 2,868,790 2,787,270
</TABLE>
Please note: Class I inception is August 2, 1993. Minimum investment for Class I
is $750,000. Past performance is not predictive of future results.*
iii
<PAGE> 5
FIRST FUNDS GROWTH & INCOME PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS GROWTH
& INCOME PORTFOLIO (CLASS II) AND THE S&P 500.
[GRAPH]
<TABLE>
<CAPTION>
Growth & Income Portfolio (Class II) S&P 500
------------------------------------ -------
<S> <C> <C>
12/20/95 9,425 10,000
9,576 10,171
9,956 10,517
10,115 10,615
10,389 10,717
10,488 10,874
10,785 11,155
6/30/96 10,770 11,197
10,350 10,702
10,594 10,928
11,083 11,543
11,382 11,862
12,185 12,758
12,005 12,506
12,758 13,287
12,644 13,391
12,385 12,841
12,750 13,607
13,528 14,436
6/30/97 13,836 15,083
15,021 16,283
14,501 15,371
15,510 16,214
15,135 15,672
15,925 16,398
16,315 16,680
16,442 16,865
17,416 18,081
18,365 19,007
18,323 19,199
17,797 18,869
6/30/98 18,288 19,635
17,924 19,425
15,449 16,616
16,569 17,681
17,883 19,118
18,866 20,277
19,966 21,445
20,625 22,348
20,625 21,650
21,322 22,516
21,923 23,388
21,910 22,836
6/30/99 23,041 24,103
22,691 23,351
22,210 23,234
22,159 22,598
24,038 24,028
23,995 24,516
24,499 25,960
23,831 24,657
23,057 24,191
25,185 26,557
24,567 25,757
25,067 25,229
6/30/00 24,841 25,852
</TABLE>
Please note: Class II inception is December 20, 1995. Class II is subject to a
maximum initial front-end sales load of 5.75% and $9,425 is the net initial
investment after the sales load is deducted. Past performance is not predictive
of future results.*
quarter of 2000 and the third quarter of 1999). The trailing year started off
poorly with the Federal Reserve raising interest rates in the third quarter of
1999 to slow the economy. Investor concerns over rising rates and inflation
contributed to the 6.25% drop in the S&P 500.
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
INVESTMENT PROFILE AS OF JUNE 30,2000
[PIE CHART]
<S> <C>
Money Market Mutual Funds 1.7%
Consumer Cyclicals 12.9%
Consumer Staples 7.3%
Capital Goods 2.8%
Energy 6.1%
Finance and Insurance 20.9%
Healthcare 17.9%
Technology 18.1%
Telecommunications 12.3%
</TABLE>
A 14.8% surge in the S&P 500 was recorded in the fourth quarter of 1999. The
gain was led by the technology sector. All of the advance hype surrounding
potential Y2K problems failed to materialize and investors greeted the new
year with enthusiasm. The first quarter of 2000 started out much like the
ending of 1999 with technology stocks leading the way and old economy stocks
lagging. However, by the end of the first quarter of 2000 the market was
beginning to make a major distinction between technology companies with
profits, versus money-losing dot com companies. By the end of the quarter,
only a handful of tech stocks accounted for the gain in the NASDAQ. The S&P
500 finished the quarter up 2.29%.
The second quarter of 2000 saw the NASDAQ drop significantly. The index fell
37% from its peak in early March, and managed to rally by the end of the
quarter to cut its losses to 13%. While the Dow Jones Industrial Average and
the S&P 500 also lost ground in the second quarter, they fared significantly
better than the NASDAQ, falling only 4.3% and 2.6%, respectively.
PORTFOLIO UPDATE
The portfolio continues to be overweighted in telecommunications, healthcare,
and financials. Pharmaceuticals performed particularly well in the second
quarter of 2000 and should continue to post strong earnings gains even in the
face of a slowing economy. While financials have not performed well over the
past twelve months due to rising interest rates, the group has started to
perform better due to perceptions that the Federal Reserve may be close to
the end of its rate increases.
iv
<PAGE> 6
FIRST FUNDS GROWTH & INCOME PORTFOLIO
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]
<TABLE>
<CAPTION>
Growth & Income Portfolio (Class III) S&P 500
------------------------------------- -------
<S> <C> <C>
12/9/93 10,000 10,000
10,250 10,060
10,695 10,402
10,492 10,120
10,133 9,679
10,288 9,803
10,452 9,964
6/30/94 10,201 9,719
10,501 10,038
11,016 10,450
10,794 10,194
10,935 10,423
10,520 10,044
10,641 10,192
10,967 10,456
11,262 10,864
11,567 11,185
11,853 11,515
12,200 11,975
6/30/95 12,518 12,253
12,947 12,660
12,937 12,691
13,131 13,227
12,885 13,179
13,460 13,758
13,649 14,024
14,168 14,500
14,385 14,635
14,775 14,776
14,915 14,993
15,327 15,380
6/30/96 15,284 15,438
14,677 14,756
15,023 15,067
15,695 15,915
16,106 16,355
17,245 17,591
16,979 17,243
18,032 18,320
17,848 18,463
17,470 17,705
17,975 18,762
19,051 19,904
6/30/97 19,476 20,796
21,128 22,451
20,382 21,194
21,780 22,355
21,242 21,609
22,343 22,609
22,868 22,998
23,035 23,253
24,391 24,930
25,701 26,206
25,629 26,471
24,878 26,016
6/30/98 25,545 27,072
25,021 26,782
21,546 22,909
23,093 24,378
24,913 26,360
26,258 27,957
27,781 29,568
28,673 30,812
28,660 29,851
29,615 31,045
30,432 32,247
30,225 31,486
6/30/99 31,763 33,233
31,261 32,196
30,564 32,035
30,491 31,157
33,055 33,130
32,956 33,802
33,632 35,793
32,703 33,996
31,609 33,354
34,520 36,616
33,645 35,514
34,315 34,786
6/30/00 33,987 35,645
</TABLE>
Please note: Class III inception is December 9, 1993. Past performance is not
predictive of future results.*
The telecommunications sector has also had mixed performance over the past year.
The recent breakup of the Worldcom/Sprint deal has resulted in short term
upheaval in the group, but will most likely lead to further consolidation in the
group.
CURRENT STRATEGY AND OUTLOOK
With slowing retail sales and existing home sales as evidence that the economy
is beginning to slow, investors will once again focus on the ability of
companies to grow earnings per share. And while the slowing economy will have an
impact on the growth in corporate earnings, we believe that earnings will
continue to grow in the second half of this year at a double digit pace. This is
of course a slowdown from the near 20% earnings growth in the first quarter, but
it is nevertheless still a healthy growth rate. Our portfolio continues to have
a long term expected growth rate of earnings that exceeds that of the S&P 500
(16.6% vs 7.0%). We continue to look for stocks that: 1) have reasonable
valuations relative to their growth rates, and 2) can continue to grow earnings
in a slowing economy.
GROWTH & INCOME PORTFOLIO
<TABLE>
<CAPTION>
CUMULATIVE AVERAGE ANNUAL
TOTAL RETURN* TOTAL RETURN*
SINCE SINCE
INCEPTION 1 YEAR 5 YEAR INCEPTION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I 282.46% 8.15% 23.42% 21.41%
CLASS II 255.81% 1.62% 21.65% 20.15%
CLASS III 255.21% 6.02% 22.09% 20.12%
CLASS IV 254.53% 1.81% 21.86% 20.08%
S&P 500 271.64% 7.25% 23.78% 20.91%
</TABLE>
*Total Returns are for the period ended 06/30/2000 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. Portfolio inception date is
8/2/1993. On 12/9/1993, the Portfolio commenced sales of Class III shares, which
include a .75% distribution fee and a .25% shareholder services fee. Performance
information prior to 12/9/1993 for Class III shares 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. Quotation of Class III performance
reflects a 1% Deferred Sales Load applied to redemptions made during the first
year after purchase. Without this load, the figures quoted would have been 7.02%
for 1 Year. The Portfolio commenced sales of Class II shares on 12/20/1995,
which include a .25% shareholder services fee. Class II performance shown is
based on a maximum 5.75% initial sales charge. 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. The Portfolio commenced sales of Class IV shares on
8/3/1999. These shares include a 1.00% distribution fee. Performance information
for Class IV shares prior to their inception reflect applicable Class III and
Class I performance data. Class IV performance shown is net of CDSC. Class IV
shares of the Portfolio are subject to a 5.00% CDSC which declines to 0.00% for
shares held up to six years. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE
RESULTS.
v
<PAGE> 7
FIRST FUNDS CAPITAL APPRECIATION PORTFOLIO
THE ANALYSTS-PORTFOLIO MANAGERS HAVE A TOTAL OF 115 YEARS OF INVESTMENT
EXPERIENCE.
[PHOTO] SEATED (L-R):
LORI P. WACHS - Analyst-Portfolio Manager - Consumer
& Retail
STEVEN T. LAMPE - Analyst-Portfolio Manager - Business &
Financial Services
STANDING (L-R):
JOHN A. HEFFERN - Analyst-Portfolio Manager - Business &
Financial Services
JEFFREY W. HYNOSKI - Analyst-Portfolio Manager- Technology
GERALD S. FREY - Analyst-Senior Portfolio Manager - Technology & Healthcare
MARSHALL T. BASSETT - Analyst-Portfolio Manager - Consumer & Retail
NOT PICTURED:
FRANCIS J. HOUGHTON, JR. - Analyst-Senior Portfolio Manager - Healthcare
BARRY GLADSTEIN - Analyst-Portfolio Manager - Quantitative Analysis
YEAR IN REVIEW
PERFORMANCE REVIEW
For the year ended June 30, 2000, the Capital Appreciation Portfolio advanced
41.17%, 32.26%, and 38.64% for Class I, II, and III shares, respectively, net
of fees and sales charges. The Russell 2500 Growth Index returned 44.24% over
the same period.
MARKET REVIEW
The year ended June 30, 2000, was far better for small- and mid-cap stocks
than for larger-cap equities. The Russell 2000 Growth Index was up 28.39% for
the twelve-month period and the Russell 2500 Growth Index rose 44.24%, while
the S&P 500 gained just 7.25%. Over the period, value - and valuation -
appeared to be making a return to center stage after a very long absence.
Narrow markets marked the first two quarters of the year, with large
percentage gains being made by select large-cap stocks. The Federal Reserve,
anticipating the possibility of a Y2K crisis as year-end approached, injected
funds into the system. This increased liquidity
COMPARISON OF CHANGE IN VALUE OF A $750,000 INVESTMENT IN THE FIRST FUNDS
CAPITAL APPRECIATION PORTFOLIO (CLASS I) AND THE RUSSELL 2500 GROWTH INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Capital Appreciation Portfolio (Class I) Russell 2500 Growth Index
---------------------------------------- -------------------------
<S> <C> <C>
34,213 750,000 750,000
788,250 802,950
728,974 752,846
719,934 741,327
742,468 738,659
745,438 728,982
816,702 791,529
861,702 820,895
863,167 828,365
808,442 775,184
34,514 805,451 783,091
749,956 724,750
596,965 560,087
611,232 609,207
657,747 650,328
694,515 696,566
754,313 763,646
728,138 785,715
670,469 721,994
691,254 755,639
722,015 815,939
750,462 824,343
34,879 788,135 882,624
770,481 864,618
746,673 845,942
744,359 852,033
761,256 893,527
829,540 999,053
962,267 1,187,470
945,385 1,180,820
1,181,730 1,483,710
1,221,630 1,367,530
1,114,200 1,234,330
1,006,770 1,124,480
35,245 1,110,370 1,273,130
</TABLE>
Please note: Class I inception is September 2, 1997. Minimum investment for
Class I is $750,000. Past performance is not predictive of future results.*
vi
<PAGE> 8
FIRST FUNDS CAPITAL APPRECIATION PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS CAPITAL
APPRECIATION PORTFOLIO (CLASS II) AND THE RUSSELL 2500 GROWTH INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Capital Appreciation Portfolio (Class II) Russell 2500 Growth Index
----------------------------------------- -------------------------
<S> <C> <C>
10/2/97 9,425 10,000
9,229 9,376
9,105 9,233
9,390 9,199
9,438 9,079
10,332 9,858
10,893 10,223
10,913 10,317
10,219 9,654
6/30/98 10,181 9,753
9,477 9,026
7,538 6,975
7,728 7,587
8,308 8,099
8,764 8,675
9,522 9,511
9,181 9,785
8,459 8,992
8,723 9,411
9,112 10,162
9,463 10,266
6/30/99 9,941 10,992
9,718 10,768
9,407 10,535
9,387 10,611
9,581 11,128
10,437 12,442
12,110 14,789
11,896 14,706
14,862 18,478
15,358 17,031
13,977 15,372
12,625 14,004
6/30/00 13,919 15,856
</TABLE>
Please note: Class II inception is October 2, 1997. Class II is subject to a
maximum initial front-end sales load of 5.75% and $9,425 is the net initial
investment after the sales load is deducted. Past performance is not predictive
of future results.*
fueled price-momentum investing, especially in technology-related shares.
Relatively high valuations seemed not to deter investing in this area. Smaller
companies, particularly semiconductor, internet infrastructure and dot coms were
especially buoyed by this phenomenon.
While this trend continued into the new year, by mid-March it abruptly ended.
Despite double-digit gains for technology and biotech stocks during the first
quarter, previously lagging sectors - financials, manufacturing and retail -
were clearly making a comeback by quarter's end. This reversal continued through
April and May; growth stocks were particularly hard hit. As signs began to
appear that the Federal Reserve's interest rate hikes might be coming to an end,
the markets bounced back with strong returns in June.
PORTFOLIO UPDATE
During the last two quarters of 1999, the technology and communications sectors
led to the biggest gains within the portfolio. Technology companies reported
very strong earnings and investors reacted favorably with the belief that
business investment in technology would continue. The consumer sectors detracted
from the portfolio's performance. Earnings shortfalls led to the decline.
The portfolio started 2000 with a bang as small company stocks outperformed
large caps during the first quarter. Once again technology was a large
contributor to performance. The companies in the portfolio that benefited the
most were experiencing the rewards from the rapid growth of communications
networks and services. Weakness in the portfolio existed in the healthcare
sector.
CAPITAL APPRECIATION PORTFOLIO
INVESTMENT PROFILE AS OF JUNE 30, 2000
[PIE CHART]
<TABLE>
<S> <C>
Capital Goods 6.2%
Technology 20.9%
Consumer Staples 14.6%
Financial 10.6%
Healthcare 11.7%
Consumer Cyclicals 21.1%
U.S. Government & Agency Obligations 14.9%
</TABLE>
The portfolio faced volatility during the second quarter of 2000.
Growth-oriented and technology-based stocks fell both in April and May yet the
market turnaround in June had a positive affect on the portfolio's holdings.
We have implemented several changes to the composition of the First Funds
Capital Appreciation
vii
<PAGE> 9
FIRST FUNDS CAPITAL APPRECIATION PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS CAPITAL
APPRECIATION PORTFOLIO (CLASS III) AND THE RUSSELL 2500 GROWTH INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Capital Appreciation Portfolio (Class III) Russell 2500 Growth Index
------------------------------------------ -------------------------
<S> <C> <C>
10/2/97 10,000 10,000
9,229 9,376
9,105 9,233
9,381 9,199
9,420 9,079
10,304 9,858
10,856 10,223
10,876 10,317
10,172 9,654
6/30/98 10,125 9,753
9,420 9,026
7,488 6,975
7,659 7,587
8,230 8,099
8,677 8,675
9,426 9,511
9,084 9,785
8,362 8,992
8,606 9,411
8,987 10,162
9,338 10,266
6/30/99 9,816 10,992
9,591 10,768
9,278 10,535
9,248 10,611
9,433 11,128
10,272 12,442
11,901 14,789
11,664 14,706
14,566 18,478
15,072 17,031
13,728 15,372
12,394 14,004
6/30/00 13,650 15,856
</TABLE>
Please note: Class III inception is October 2, 1997. Past performance is not
predictive of future results.*
Portfolio since taking over management responsibility of the portfolio on June
1st. On a sector basis, the portfolio's technology was reduced from
approximately 40% of the portfolio as of June 1st, to approximately 20% of the
portfolio on June 30th. Although technology still represents a large sector of
the portfolio, we feel that other areas, such as consumer and business services,
will perform better if the forecasts of a slower overall economy prove to be
true.
Finally, in order to reduce overall portfolio risk, the number of names in the
portfolio grew from 44 (as of June 1st) to 63 (as of June 30th). We have also
reduced the impact of the largest names in the portfolio, with the top five
names now representing 15% of the overall portfolio, compared to the top five
names representing almost 25% of the portfolio on June 1st.
CURRENT STRATEGY AND OUTLOOK
Looking forward, we are hopeful that the Fed's interest rate increases are
coming to an end, and that their actions will result in a "soft landing" of a
healthy, non-inflationary overall economy. Under this scenario, we see the
healthcare sector continuing its recent gains, and will increase our exposure in
this area. We will also maintain our current overweighting in business and
consumer services and our intension is to have the fund fully invested in
stocks. On an individual security basis, we will maintain our focus on
companies that have strong earnings outlooks and are the recognized leaders of
their respective industries.
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return* Total Return*
SINCE SINCE
INCEPTION 1 YEAR INCEPTION
--------- ------ ---------
<S> <C> <C> <C>
CLASS I 48.35% 41.17% 14.97%
CLASS II 31.59% 32.26% 10.52%
CLASS III 36.81% 38.64% 12.09%
CLASS IV 35.20% 35.78% 11.61%
RUSSELL 2500 69.75% 44.24% 20.58%
GROWTH INDEX
</TABLE>
*Total Returns are for the period ended 06/30/2000 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 9/2/1997.
The Portfolio commenced sales of Class II shares on 10/2/1997. These shares
include a .25% shareholder services fee. Class II performance shown is based on
a maximum 5.75% initial sales charge. On 10/2/1997, the Portfolio commenced
sales of Class III shares, which include a .75% distribution fee and a .25%
shareholder services fee. Quotation of Class III performance reflects a 1%
Deferred Sales Load applied to redemptions made during the first year after
purchase. Without this load, the figures quoted would have been 39.64% for 1
Year. The Portfolio commenced sales of Class IV shares on 8/3/1999. These shares
include a 1.00% distribution fee. Class IV shares of Capital Appreciation prior
to their inception reflect applicable Class III performance data. Class IV
performance shown is net of CDSC. Class IV shares of the Portfolio are subject
to a 5.00% CDSC which declines to 0.00% for shares held up to six years. PAST
PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
viii
<PAGE> 10
FIRST FUNDS BOND PORTFOLIO
[PHOTO]
BOND PORTFOLIO MANAGERS
JAMES TURNER AND STEVEN WISHNIA
Mr. Turner is Senior Vice President with Highland Capital Management Corp., the
sub-adviser to the portfolio. A 1959 graduate of the U.S. Military Academy, he
received a master's of science 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. In 1986 he joined First
Tennessee Investment Management, and was part of that group's merger with
Highland Capital in 1994. He has managed/co-managed the portfolio since 1993.
Mr. Wishnia is President of Highland Capital Management Corp. A 1972 graduate of
Pace University, Mr. Wishnia was Treasurer of S.G. Securities, a closed-end 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 co-managed the portfolio since
1994.
YEAR IN REVIEW
PERFORMANCE REVIEW
For the year ended June 30, 2000, the Class I, II, and III shares of the First
Funds Bond Portfolio, returned 3.35%, (0.80)%, and 1.82% respectively, net of
fees and sales charges, versus a return of 4.28% for the Lehman Brothers
Government/Corporate Bond Index.
MARKET REVIEW
Interest rates rose during the last 12 months. June 1999 to January 2000
represented a period of rising yields. By late January most rates peaked then
generally declined thereafter. At the end of June, only short-term rates
remained higher than at the beginning of the year. For example, 2 year Treasury
yields were up 0.12% while 10 and 30 year yields were down 0.41% and 0.58%
respectively. The net rise in short yields reflected six rate increases by the
Federal Reserve totaling 1.75%. This indicated their concern that a very robust
economy, tight labor markets, and a significant rise in oil prices could lead to
higher inflation down the road.
COMPARISON OF CHANGE IN VALUE OF A $750,000 INVESTMENT IN THE FIRST FUNDS BOND
PORTFOLIO (CLASS I) AND THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Bond Portfolio (Class I) Lehman Brothers Gov't/Corp Bond Index
------------------------ -------------------------------------
<S> <C> <C>
32,721 750,000 750,000
766,530 767,250
769,826 769,935
773,059 773,092
764,710 764,356
768,534 767,719
779,370 779,235
763,783 762,248
749,195 743,573
741,553 737,401
741,034 736,000
33,053 739,774 734,307
752,054 748,993
753,333 749,293
743,464 737,979
742,423 737,167
740,493 735,840
742,788 740,696
756,456 754,918
771,585 772,432
776,523 777,607
787,938 788,416
820,243 821,451
33,418 827,707 828,022
824,479 824,793
835,527 835,350
844,802 843,871
858,488 856,276
872,996 870,404
886,877 883,199
892,021 888,675
869,185 869,835
861,275 862,529
854,041 856,577
851,393 855,121
33,784 862,717 866,580
863,579 868,573
859,175 866,401
876,101 881,823
897,740 902,370
916,683 918,973
904,124 908,773
904,305 909,863
906,837 911,774
895,048 900,924
908,116 914,077
915,835 922,578
34,149 928,107 933,649
955,672 962,219
945,446 951,442
959,722 966,380
973,254 981,842
977,147 987,045
987,994 997,409
1,001,730 1,011,470
999,423 1,009,450
1,002,520 1,012,580
1,007,430 1,017,040
1,019,420 1,027,920
34,514 1,030,330 1,038,400
1,030,430 1,040,060
1,051,660 1,060,340
1,075,850 1,090,670
1,066,600 1,082,930
1,073,640 1,089,420
1,076,860 1,092,040
1,085,150 1,099,790
1,060,620 1,073,620
1,066,880 1,078,980
1,067,740 1,081,680
1,055,990 1,070,540
34,879 1,051,030 1,067,220
1,048,820 1,064,230
1,046,620 1,063,380
1,053,940 1,072,850
1,052,780 1,075,640
1,051,520 1,074,990
1,048,360 1,068,430
1,049,270 1,068,110
1,058,760 1,081,460
1,073,320 1,097,040
1,066,300 1,091,660
1,065,060 1,090,680
35,245 1,086,360 1,112,930
</TABLE>
Please note: Class I inception is August 2, 1993. Minimum investment for Class I
is $750,000. Past performance is not predictive of future results.*
ix
<PAGE> 11
FIRST FUNDS BOND PORTFOLIO
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]
<TABLE>
<CAPTION>
Bond Portfolio (Class II) Lehman Brothers Gov't/Corp Bond Index
------------------------- -------------------------------------
<S> <C> <C>
12/20/95 9,625 10,000
9,752 10,147
9,806 10,210
9,552 9,993
9,462 9,910
9,381 9,841
9,358 9,824
6/30/96 9,470 9,956
9,478 9,979
9,436 9,954
9,610 10,131
9,844 10,367
10,049 10,558
9,897 10,441
9,906 10,453
9,921 10,475
9,799 10,351
9,940 10,502
10,022 10,599
6/30/97 10,144 10,727
10,453 11,055
10,328 10,931
10,492 11,103
10,627 11,280
10,667 11,340
10,794 11,459
10,942 11,621
10,903 11,597
10,946 11,633
10,986 11,685
11,115 11,810
6/30/98 11,232 11,930
11,229 11,949
11,458 12,182
11,731 12,531
11,616 12,442
11,690 12,516
11,723 12,546
11,811 12,635
11,541 12,335
11,606 12,396
11,625 12,427
11,483 12,299
6/30/99 11,443 12,261
11,404 12,227
11,377 12,217
11,466 12,326
11,438 12,358
11,421 12,351
11,396 12,276
11,402 12,271
11,503 12,425
11,658 12,604
11,579 12,542
11,562 12,531
6/30/00 11,791 12,786
</TABLE>
Please note: Class II inception is December 20, 1995. Class II is subject to a
maximum front-end initial sales load of 3.75% and $9,625 is the net initial
investment after the sales load is deducted. Past performance is not predictive
of future results.*
The declines in yields of longer maturities were the result of two factors.
First, several economic numbers in May and June showed signs of possible
moderation in growth with inflation remaining tame. This suggested that little,
if any, rate hikes may be necessary by the Fed. Second, the Treasury began using
some of the budget surplus earlier in the year to buy back Treasury debt,
particularly 20 to 25 year maturities.
PORTFOLIO UPDATE
Over the course of the year, the most noticeable change in the portfolio was a
reduction in cash reserves of nearly 3.5% with about 3.0% shifted to governments
and the balance to corporate bonds. Most of the realignment occurred in the
first quarter of 2000 with a primary focus on purchasing long Treasuries in
order to take advantage of the Treasury's buyback program.
After lagging all other sectors the first half of the year, Treasuries rebounded
in the second half due to the buyback program. This gave Treasuries the best
return for the year at 5.31%. Although the portfolio was underweighted in this
sector, it had a heavier exposure than the market in long Treasuries that
returned 6.68%.
Mortgages had the next best return at 5.03% having benefited primarily from the
earlier rise in interest rates. Agencies followed at 3.95% and reflected some
market worry that the government was questioning the desirability of allowing
them to remain as government sponsored enterprises.
BOND PORTFOLIO
INVESTMENT PROFILE AS OF JUNE 30, 2000
[PIE CHART]
<TABLE>
<S> <C>
Mortgage-Backed Obligations 0.7%
U.S. Government & Agency Obligations 35.4%
Corporate Bonds & Notes 63.9%
</TABLE>
Finally, corporate bonds returned 3.0%. Corporates labored because of concerns
over the Fed's boosting of rates and an oversupply of bonds. This, in turn,
caused some drag on portfolio performance due to its overweighting of corporates
(for their higher yield) relative to the market. Fortunately, the portfolio was
underweighted in the long maturities whose performance lagged the most at 1.63%.
CURRENT STRATEGY AND OUTLOOK
While there have been some recent signs of slowing in the economy, bond
investors are well aware that the
x
<PAGE> 12
FIRST FUNDS BOND PORTFOLIO
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]
<TABLE>
<CAPTION>
Bond Portfolio (Class III) Lehman Brothers Gov't/Corp Bond Index
-------------------------- -------------------------------------
<S> <C> <C>
12/2/93 10,000 10,000
10,036 10,044
10,170 10,195
9,948 9,972
9,760 9,728
9,639 9,647
9,619 9,629
6/30/94 9,592 9,607
9,738 9,799
9,732 9,803
9,592 9,655
9,577 9,644
9,530 9,627
9,558 9,690
9,722 9,877
9,894 10,106
9,955 10,173
10,090 10,315
10,480 10,747
6/30/95 10,562 10,833
10,510 10,791
10,642 10,929
10,751 11,040
10,916 11,203
11,090 11,387
11,245 11,555
11,310 11,626
11,010 11,380
10,900 11,284
10,800 11,207
10,767 11,187
6/30/96 10,890 11,337
10,892 11,363
10,827 11,335
11,030 11,537
11,292 11,806
11,520 12,023
11,350 11,889
11,340 11,904
11,362 11,929
11,203 11,787
11,356 11,959
11,442 12,070
6/30/97 11,585 12,215
11,917 12,589
11,778 12,448
11,945 12,643
12,101 12,845
12,138 12,913
12,260 13,049
12,418 13,233
12,379 13,207
12,405 13,247
12,453 13,306
12,589 13,448
6/30/98 12,710 13,585
12,696 13,607
12,943 13,872
13,228 14,269
13,100 14,168
13,176 14,253
13,203 14,287
13,294 14,388
12,982 14,046
13,047 14,116
13,046 14,152
12,892 14,006
6/30/99 12,828 13,962
12,793 13,923
12,782 13,912
12,876 14,036
12,838 14,072
12,827 14,064
12,778 13,978
12,778 13,974
12,883 14,149
13,048 14,352
12,951 14,282
12,927 14,269
6/30/00 13,189 14,560
</TABLE>
Please note: Class III inception is December 2, 1993. Past performance is not
predictive of future results.*
pattern for the last several years has been weaker growth during the April
through June period and a stronger pace the balance of the year. So, if the
economy were to pick up again going forward, the market might conclude that the
Fed would likely respond by boosting short-term rates further. The consensus
says not, but if rates were raised, then this could be problematic for bonds.
Until more data is available to make a definitive judgment, the portfolio
reflects no bias about the future direction of interest rates.
Meanwhile, the moderating economy should prove beneficial for corporate bonds
unless new issuance picks up significantly. Therefore, the portfolio retains its
higher weighting in this sector for both its value and higher yield. Long
Treasuries also continue to be overweighted because of the government buybacks.
BOND PORTFOLIO
<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return* Total Return*
SINCE SINCE
INCEPTION 1 YEAR 5 YEAR INCEPTION
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I 44.86% 3.35% 5.59% 5.51%
CLASS II 37.20% (0.80)% 4.44% 4.68%
CLASS III 34.49% 1.82% 4.54% 4.38%
LEHMAN BROS. 48.39% 4.28% 6.09% 5.87%
GOV'T/CORP.
BOND INDEX
</TABLE>
*Total Returns are for the period ended 06/30/2000 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. Portfolio inception date is
8/2/1993. On 12/2/1993, the Portfolio commenced sales of Class III shares, which
include a .50% distribution fee and a .25% shareholder services fee. Performance
information prior to 12/2/1993 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. Quotation of Class III performance
reflects a 1% Deferred Sales Load applied to redemptions made during the first
year after purchase. Without this load, the figures quoted would have been 2.82%
for 1 Year. The Portfolio commenced sales of Class II shares on 12/20/1995.
These shares include a .25% shareholder services fee. Class II performance shown
is based on a maximum 3.75% initial sales charge. 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.
xi
<PAGE> 13
FIRST FUNDS INTERMEDIATE BOND PORTFOLIO
[RALPH W. HERBERT INTERMEDIATE BOND PORTFOLIO MANAGERS
TED L. FLICKINGER, JR. RALPH W. HERBERT AND TED L. FLICKINGER, JR.
PICTURE]
Mr. Herbert is Vice President for Martin & Company, the sub-adviser to the
portfolio. He is a graduate of the University of Tennessee and in 1979 he began
his career with First American Bank. In 1987 he joined Culver Securities as a
municipal debt underwriter and two years later became portfolio manager for
Valley Fidelity Bank. That bank merged with First Tennessee Bank in 1991. Mr.
Herbert joined Martin & Company in 1998 when the firm became a subsidiary of
First Tennessee National Corporation.
Mr. Flickinger is Executive Vice President for Martin & Company and is a
Chartered Financial Analyst. Prior to joining the firm in 1990, he was an
assistant manager of the investment department of Home Federal Bank of Tennessee
for six years. His 21-year career includes management positions in the
investment departments of The Park National Bank and Fidelity Federal Savings
and Loan of Knoxville.
YEAR IN REVIEW
PERFORMANCE REVIEW
For the year ended June 30, 2000, the Class I, II, and III shares of the
Intermediate Bond Portfolio returned 3.97%, 1.08%, and 2.16% respectively, net
of fees and sales charges, versus the Lehman Brothers Intermediate
Government/Corporate Bond Index return of 4.22% over the same period.
MARKET REVIEW
On June 30, 1999, the Fed Funds rate stood at 5.00%.
One year later, the Fed Funds rate was 6.50%. The Federal Open Market
Committee's increase in interest rates has been the primary factor behind the
lackluster performance of the bond market over the past twelve months. With
recent signs of slowing retail sales and creation of fewer jobs by the economy,
the Fed's hope for a "soft landing" has provided some economists with initial
evidence of a cooling economy. Further rate hikes will depend on whether the
economy slows to a manageable level.
COMPARISON OF CHANGE IN VALUE OF A $750,000 INVESTMENT IN THE FIRST FUNDS
INTERMEDIATE BOND PORTFOLIO (CLASS I) AND THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Intermediate Bond Portfolio (Class I) Lehman Brothers Intermediate Gov't/Corp Bond Index
------------------------------------- --------------------------------------------------
<S> <C> <C>
3/2/98 750,000 750,000
752,100 752,400
755,785 756,162
761,832 761,682
766,250 766,557
768,472 769,240
779,923 781,317
795,209 800,928
794,970 800,127
795,606 800,047
798,948 803,247
802,863 807,665
794,513 795,792
799,280 801,761
800,719 804,246
794,954 798,053
6/30/99 793,920 798,612
792,967 797,893
793,681 798,532
801,777 805,958
803,220 808,053
804,585 809,104
801,125 806,434
798,319 803,450
803,695 810,038
811,875 818,463
811,518 816,580
812,141 817,887
6/30/00 825,507 832,282
</TABLE>
Please note: Class I inception is March 2, 1998. Minimum investment for Class I
is $750,000. Past performance is not predictive of future results.*
xii
<PAGE> 14
FIRST FUNDS INTERMEDIATE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS
INTERMEDIATE BOND PORTFOLIO (CLASS II) AND THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Intermediate Bond Portfolio (Class II) Lehman Brothers Intermediate Gov't/Corp Bond Index
-------------------------------------- --------------------------------------------------
<S> <C> <C>
3/9/98 9,750 10,000
9,775 10,047
9,820 10,097
9,896 10,171
9,952 10,236
9,979 10,272
10,125 10,433
10,321 10,695
10,316 10,684
10,322 10,683
10,363 10,726
10,421 10,785
10,300 10,626
10,359 10,706
10,375 10,739
10,297 10,657
6/30/99 10,280 10,664
10,266 10,654
10,272 10,663
10,374 10,762
10,391 10,790
10,406 10,804
10,358 10,769
10,318 10,729
10,385 10,817
10,488 10,929
10,480 10,904
10,486 10,921
6/30/00 10,656 11,114
</TABLE>
Please note: Class II inception is March 9, 1998. Class II is subject to a
maximum initial front-end sales load of 2.50% and $9,750 is the net initial
investment after the sales load is deducted. Past performance is not predictive
of future results.*
During the third quarter of 1999, as budget surpluses mounted, the Treasury
announced that they planned to no longer sell 30 year bonds at the November
semi-annual refunding. They also began working out details to buy back some of
the higher coupon outstanding Treasury securities. Throughout the next nine
months, continued tightening by the Federal Reserve and the Treasury's campaign
to reduce long-term debt combined to invert the yield curve. Two year Treasury
notes climbed 83 basis points to 6.36% and 30 year bonds fell 7 basis points to
5.9%.
U.S. agency and corporate debt yield spreads widened significantly over the past
year for five particular reasons: 1) A reduced Treasury debt supply provided
downward pressure on Treasury interest rates. 2) Comments from Treasury
officials in support of a bill in Congress to remove federal lines of credit
from Fannie Mae and Freddie Mac caused spreads to widen on these two issuers'
debt. 3) Corporate debt issuance grew to $223.7 billion for the first six months
of 2000, $10 billion more than the first half of 1999. 4) The Federal Reserve
continued to tighten money supply. 5) Y2K liquidity concerns increased demand
for Treasury debt.
All of these factors interacted throughout most of the year to cause 10 year
agency spreads to widen from 65 basis points in June 1999 to 105 basis points in
June 2000. Corporate A-rated bonds experienced spreads widening from 115 basis
points in June 1999 to 180 basis points in June 2000.
INTERMEDIATE BOND PORTFOLIO
INVESTMENT PROFILE AS OF JUNE 30, 2000
[PIE CHART]
<TABLE>
<S> <C>
Mortgage-Backed Obligations 0.4%
U.S. Government & Agency Obligations 56.0%
Corporate Bonds & Notes 43.5%
Money Market Mutual Funds 0.1%
</TABLE>
PORTFOLIO UPDATE
We maintained a duration of 105% of the duration of the Lehman Brothers
Intermediate Government/Corporate Bond Index throughout the third and fourth
quarters of 1999 or an average maturity of about 4.5 years. However, when 10
year Treasury rates, which began rising sharply in November and December of
1999, climbed from 6% to 6.75% we increased the duration to 110% of the
benchmark in January 2000 or an average maturity of approximately 4.8 years.
This move was justified as real returns had improved sufficiently enough to
warrant the increase in interest rate risk.
xiii
<PAGE> 15
FIRST FUNDS INTERMEDIATE BOND PORTFOLIO
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE FIRST FUNDS
INTERMEDIATE BOND PORTFOLIO (CLASS III) AND THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.
[CHART]
<TABLE>
<CAPTION>
Intermediate Bond Portfolio (Class III) Lehman Brothers Intermediate Gov't/Corp Bond Index
--------------------------------------- --------------------------------------------------
<S> <C> <C>
5/19/98 10,000 10,000
10,042 10,041
10,092 10,105
10,113 10,141
10,256 10,300
10,448 10,558
10,436 10,548
10,437 10,547
10,474 10,589
10,518 10,647
10,402 10,491
10,457 10,569
10,469 10,602
10,386 10,520
6/30/99 10,355 10,528
10,346 10,518
10,347 10,527
10,444 10,625
10,455 10,652
10,454 10,666
10,412 10,631
10,357 10,592
10,430 10,678
10,527 10,790
10,492 10,765
10,515 10,782
6/30/00 10,681 10,972
</TABLE>
Please note: Class III inception is May 19, 1998. Past performance is not
predictive of future results.*
We were overweighted in agency and corporate bonds due to their attractive
spreads that offered superior risk/return potential versus Treasuries. In
January 2000, agency and corporate spreads began to widen which adversely
affected the portfolio. However, this over-weighting helped the portfolio in the
second quarter of 2000 when the spreads contracted.
CURRENT STRATEGY AND OUTLOOK
With our positioning in the intermediate/short-end of the yield curve we believe
the portfolio is positioned to capture a significant portion of the return if
yields should fall with far less volatility than is being experienced in the
long-end of the yield curve.
Despite the recent stock market volatility, most factors point to a solid case
for financial assets. The economy continues to put up solid growth numbers with
no significant signs of inflation. Wage pressures have been contained, job
growth has slowed and we have also seen some comforting reports of slowing
retail sales.
The wild card in the forecast is the Fed. Will they continue to raise short-term
rates over the coming months? If the Fed begins to implement 50 basis point rate
increases, the bond markets could become vulnerable.
INTERMEDIATE BOND PORTFOLIO
<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return* Total Return*
SINCE SINCE
INCEPTION 1 YEAR INCEPTION
--------------------------------------------------------------
<S> <C> <C> <C>
CLASS I 10.04% 3.97% 4.19%
CLASS II 6.54% 1.08% 2.78%
CLASS III 6.79% 2.16% 3.15%
LEHMAN BROS. 10.97% 4.22% 4.57%
INTERMEDIATE
GOV'T/CORP.
BOND INDEX
</TABLE>
*Total Returns are for the period ended 06/30/2000 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 3/2/1998.
The Portfolio commenced sales of Class II shares on 3/9/1998. These shares
include a .25% shareholder services fee. Class II performance shown is based on
a maximum 2.50% initial sales charge. On 5/19/1998, the Portfolio commenced
sales of Class III shares, which include a .50% distribution fee and a .25%
shareholder services fee. Quotation of Class III performance reflects a 1%
Deferred Sales Load applied to redemptions made during the first year after
purchase. Without this load, the figures quoted would have been 3.16% for 1
Year. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
xiv
<PAGE> 16
FIRST FUNDS TENNESSEE TAX-FREE PORTFOLIO
[PHOTO]
TENNESSEE TAX-FREE PORTFOLIO MANAGERS
RALPH W. HERBERT AND TED L. FLICKINGER, JR.
Mr. Herbert is Vice President for Martin & Company, the sub-adviser to the
portfolio. He is a graduate of the University of Tennessee and in 1979 he began
his career with First American Bank. In 1987 he joined Culver Securities as a
municipal debt underwriter and two years later became portfolio manager for
Valley Fidelity Bank. That bank merged with First Tennessee Bank in 1991. Mr.
Herbert joined Martin & Company in 1998 when the firm became a subsidiary of
First Tennessee National Corporation.
Mr. Flickinger is Executive Vice President for Martin & Company and is a
Chartered Financial Analyst. Prior to joining the firm in 1990, he was an
assistant manager of the investment department of Home Federal Bank of Tennessee
for six years. His 21-year career includes management positions in the
investment departments of The Park National Bank and Fidelity Federal Savings
and Loan of Knoxville.
YEAR IN REVIEW
PERFORMANCE REVIEW
For the year ended June 30, 2000, the Class I, II, and III shares of the
Tennessee Tax-Free Portfolio returned 2.83%, 0.12%, and 1.29% respectively, net
of fees and shares charges, versus a return of 4.48% for the Lehman Brothers
10-Year Municipal Bond Index.
MARKET REVIEW
During the past twelve months, continued tightening by the Federal Reserve and
the Treasury's campaign to reduce long-term debt combined to invert the Treasury
yield curve. The two government entities seemed to be working in opposite
directions. As the Fed tried to slow economic growth by raising short rates, the
Treasury caused lower long-term yields by decreasing the supply of long bonds.
Municipal bonds are most often priced off of Treasury securities, but while the
longer-term Treasuries dropped in yield, longer-term municipals rose. Therefore,
the municipal yield curve did not invert as the Treasury curve did. Ten year
municipals rose 30
COMPARISON OF CHANGE IN VALUE OF A $750,000 INVESTMENT IN THE FIRST FUNDS
TENNESSEE TAX-FREE PORTFOLIO (CLASS I) AND THE LEHMAN BROTHERS 10-YEAR MUNICIPAL
BOND INDEX.
[GRAPH]
<TABLE>
<CAPTION>
Tennessee Tax-Free Portfolio (Class I) Lehman Brothers 10-Year Municipal Bond Index
-------------------------------------- --------------------------------------------
<S> <C> <C>
12/15/95 750,000 750,000
755,175 754,575
759,706 762,196
756,895 759,071
746,753 749,659
741,899 747,035
740,860 744,943
6/30/96 745,083 752,020
753,503 759,240
756,743 759,240
763,856 767,060
771,113 776,725
783,836 792,415
782,582 788,849
782,112 791,925
789,229 799,369
779,206 788,658
784,115 794,494
796,269 805,776
6/30/97 806,700 814,639
828,562 837,530
819,696 829,406
830,188 839,940
834,339 844,392
838,427 848,276
850,082 861,679
858,412 871,243
859,013 871,156
861,762 870,546
860,039 865,758
869,327 880,476
6/30/98 872,630 883,734
874,288 885,148
885,305 900,549
893,715 913,968
897,022 914,333
899,444 917,076
901,962 919,919
914,139 933,994
908,471 925,588
910,197 925,125
911,744 927,623
908,189 921,130
6/30/99 894,747 903,997
899,131 910,053
896,434 906,686
898,048 909,769
891,672 903,401
898,716 913,248
896,289 908,499
893,348 904,774
896,515 911,922
908,311 929,613
905,137 924,965
899,297 919,508
6/30/00 920,166 944,518
</TABLE>
Please note: Class I inception is December 15, 1995. Minimum investment for
Class I is $750,000. Past performance is not predictive of future results.*
xv
<PAGE> 17
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]
<TABLE>
<CAPTION>
Tennessee Tax-Free Portfolio (Class II) Lehman Brothers 10-Year Municipal Bond Index
--------------------------------------- --------------------------------------------
<S> <C> <C>
12/29/95 9,750 10,000
9,752 10,061
9,798 10,163
9,771 10,121
9,640 9,995
9,578 9,960
9,564 9,933
6/30/96 9,619 10,027
9,738 10,123
9,770 10,123
9,862 10,227
9,966 10,356
10,129 10,566
10,113 10,518
10,107 10,559
10,199 10,658
10,069 10,515
10,133 10,593
10,300 10,744
6/30/97 10,425 10,862
10,717 11,167
10,603 11,059
10,728 11,199
10,780 11,259
10,843 11,310
10,993 11,489
11,089 11,617
11,097 11,615
11,143 11,607
11,109 11,543
11,229 11,740
6/30/98 11,282 11,783
11,292 11,802
11,433 12,007
11,541 12,186
11,583 12,191
11,615 12,228
11,646 12,266
11,801 12,453
11,728 12,341
11,749 12,335
11,779 12,368
11,721 12,282
6/30/99 11,558 12,053
11,602 12,134
11,565 12,089
11,585 12,130
11,502 12,045
11,592 12,177
11,560 12,113
11,519 12,064
11,558 12,159
11,708 12,395
11,631 12,333
11,590 12,260
6/30/00 11,869 12,594
</TABLE>
Please note: Class II inception is December 29, 1995. Class II is subject to a
maximum front-end initial sales load of 2.50% and $9,750 is the net initial
investment after the sales load is deducted. Past performance is not predictive
of future results.*
basis points in yield over the last twelve months as ten year Treasuries rose 24
basis points.
PORTFOLIO UPDATE
As bond yields rose, the average maturity of the portfolio was extended slightly
each quarter from 7.5 years in the third quarter 1999 to 8.1 years by the end of
the second quarter of 2000. This lengthening was justified as real returns
improved sufficiently enough to warrant the increase in interest rate risk.
In addition, tax-adjusted rates of return on municipal bonds reached levels that
we felt justified going a little further out on the yield curve. This extension
was accomplished by selling shorter maturities and buying longer maturities in
order to capture more yield. This swapping did not result in any change to the
quality of the portfolio however, as the percentage of AAA and AA bonds have
remained constant at approximately 85%.
The percentage of general obligation debt decreased slightly from 50.2% on June
30, 1999 to 49.9% on June 30, 2000. We will not sacrifice the quality of the
portfolio for a few basis points of performance.
CURRENT STRATEGY AND OUTLOOK
The portfolio is positioned to increase its net asset value (NAV) should rates
decline. If rates continue to increase, the intermediate maturity structure of
the fund should insulate it from giving up too much NAV
TENNESSEE TAX-FREE PORTFOLIO
INVESTMENT PROFILE AS OF JUNE 30, 2000
[PIE CHART]
<TABLE>
<S> <C>
Money Market Mutual Funds 0.3%
Tennessee Revenue Bonds 48.4%
Other State General Obligation Bonds 0.8%
Tennessee General Obligation Bonds 49.1%
Other State Revenue Bonds 1.4%
</TABLE>
relative to longer duration funds. Our target maturity was increased due to
higher real returns being realized in the 10 to 15 year sector of the municipal
market.
Municipal bonds continue to remain particularly attractive for investors in the
upper income tax brackets. Ten-year municipal valuations currently provide 84%
of the yield of the equivalent Treasury security, before any tax adjustment.
Despite the recent stock market volatility, most factors point to a solid case
for financial assets. The economy continues to put up solid growth numbers with
no significant signs of inflation. Wage pressures have been
xvi
<PAGE> 18
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]
<TABLE>
<CAPTION>
Tennessee Tax-Free Portfolio (Class III) Lehman Brothers 10-Year Municipal Bond Index
---------------------------------------- --------------------------------------------
<S> <C> <C>
12/15/95 10,000 10,000
10,072 10,061
10,126 10,163
10,086 10,121
9,947 9,995
9,878 9,960
9,860 9,933
6/30/96 9,913 10,027
10,024 10,123
10,057 10,123
10,151 10,227
10,268 10,356
10,436 10,566
10,409 10,518
10,413 10,559
10,498 10,658
10,364 10,515
10,429 10,593
10,589 10,744
6/30/97 10,726 10,862
11,025 11,167
10,905 11,059
11,031 11,199
11,083 11,259
11,145 11,310
11,286 11,489
11,394 11,617
11,400 11,615
11,433 11,607
11,408 11,543
11,529 11,740
6/30/98 11,571 11,783
11,591 11,802
11,734 12,007
11,841 12,186
11,883 12,191
11,913 12,228
11,941 12,266
12,098 12,453
12,019 12,341
12,036 12,335
12,051 12,368
12,000 12,282
6/30/99 11,818 12,053
11,871 12,134
11,831 12,089
11,848 12,130
11,759 12,045
11,847 12,177
11,809 12,113
11,765 12,064
11,801 12,159
11,951 12,395
11,903 12,333
11,821 12,260
6/30/00 12,090 12,594
</TABLE>
Please note: Class III inception is December 15, 1995. Past performance is not
predictive of future results.*
contained and job growth has slowed. We have also seen some comforting reports
of slowing retail sales.
The wild card in the forecast appears to be the Fed. Will they continue to raise
short-term rates over the coming months, and might they go too far? If the Fed
begins to implement 50 basis point rate increases, the financial markets could
become vulnerable. While we maintain our cautious stance, we feel that one has
to remain invested in the market to realize its potential.
TENNESSEE TAX-FREE PORTFOLIO
<TABLE>
<CAPTION>
Cumulative Average Annual
Total Return* Total Return*
SINCE SINCE
INCEPTION 1 YEAR INCEPTION
-------------------------------------------------------------
<S> <C> <C> <C>
CLASS I 22.66% 2.83% 4.60%
CLASS II 18.71% 0.12% 3.88%
CLASS III 20.89% 1.29% 4.26%
CLASS IV 19.71% (0.85)% 4.04%
LEHMAN BROS. 25.94% 4.48% 5.20%
10-YEAR
MUNICIPAL
BOND INDEX
</TABLE>
*Total Returns are for the period ended 06/30/2000 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
12/15/1995. On 12/15/1995, the Portfolio also commenced sales of Class III
shares, which include a .50% distribution fee. On 12/29/1995, the Portfolio
commenced sales of Class II shares, which include a .10% shareholder services
fee. Class II performance shown is based on a maximum 2.50% initial sales
charge. Quotation of Class III performance reflects a 1% Deferred Sales Load
applied to redemptions made during the first year after purchase. Without this
load, the figures quoted would have been 2.29% for 1 Year. The Portfolio
commenced sales of Class IV shares on 8/3/1999. These shares include a 0.70%
distribution fee. Class IV shares prior to their inception reflect applicable
Class III performance data. Class IV performance shown is net of CDSC. Class IV
shares of the Tennessee Tax-Free Portfolio are subject to a 3.00% CDSC which
declines to 0.00% for shares held up to five years. PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE RESULTS.
xvii
<PAGE> 19
FIRST FUNDS ANNUAL REPORT
DEFINITION OF COMMON TERMS
BASIS POINT
Smallest measure of quoting yields on bonds and notes. One basis point
is 0.01% of yield.
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.
<TABLE>
<CAPTION>
MOODY'S INVESTORS STANDARD & POOR'S CORP.
SERVICES, INC. (Plus (+) or minus (-))
-------------- -----------------------
<S> <C> <C>
Prime Aaa AAA
Excellent Aa AA
Good A A
Average Baa BBB
Fair Ba BB
Poor B B
Marginal Caa C
</TABLE>
DIVIDEND
Net income distributed to shareholders generated by securities in a
Portfolio. The Bond, Intermediate Bond, Tennessee Tax-Free, and all the Money
Market Portfolios pay dividends monthly. The Growth & Income Portfolio pays
dividends quarterly and the Capital Appreciation Portfolio pays dividends
annually.
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.
GENERAL OBLIGATION BONDS
General Obligation Bonds (GOs) are debt-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 and street bonds. These bonds are also known as full faith and credit
bonds because the debt is a general obligation of the issuer.
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/or interest of the issuer. Examples of such
companies are MBIA (Municipal Bond Investors Assurance Corporation), and AMBAC
(American Municipal Bond Assurance Corporation).
NET ASSET VALUE (NAV)
NAV is the 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.
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.
xviii
<PAGE> 20
FIRST FUNDS ANNUAL REPORT
DEFINITION OF COMMON TERMS (CONTINUED)
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.
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. This index includes only investment-grade bonds with maturities over one
year.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX, an unmanaged
index, is a broad measure of bond performance, and includes reinvestment of
dividends and capital gains. This index includes only investment-grade bonds
with maturities of up to ten years.
LEHMAN BROTHERS 10-YEAR MUNICIPAL BOND INDEX, an unmanaged index, is a broad
measure of shorter-term 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.
xix
<PAGE> 21
Intentionally Left Blank
<PAGE> 22
[DELOITTE & TOUCHE LOGO]
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders
of First Funds:
We have audited the accompanying statements of assets and liabilities of First
Funds (comprising, respectively, the Growth & Income, Capital Appreciation,
Bond, Intermediate Bond, Tennessee Tax-Free, U.S. Treasury Money Market, U.S.
Government Money Market, Municipal Money Market, and Cash Reserve Portfolios,
collectively the "Trust"), including the schedules of investments, as of June
30, 2000, and the related statements of operations for the year then ended and
the statements of changes in net assets and financial highlights for each of
the two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The financial highlights for the
period from July 1, 1995 to June 30, 1998 were audited by other auditors whose
report, dated August 21, 1998, expressed an unqualified opinion on those
financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of June 30, 2000, by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
First Funds as of June 30, 2000, the results of its operations for the year
then ended and the changes in its net assets and the financial highlights for
each of the two years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
August 4, 2000
[DELOITTE TOUCHE TOHMATSU LOGO]
1
<PAGE> 23
FIRST FUNDS ANNUAL REPORT
GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Value
Shares (Note 1)
------ --------
COMMON STOCKS - 98.3%
CAPITAL GOODS - 2.8%
<S> <C> <C>
General Electric Co. 518,700 $ 27,491,100
--------------
CONSUMER CYCLICALS - 12.9%
Costco Wholesale Corp.* 348,100 11,487,300
Federated Department Stores, Inc.* 546,200 18,434,250
Interpublic Group of Companies, Inc. 927,300 39,873,900
Sysco Corp. 737,400 31,062,975
Viacom, Inc.* 418,810 28,557,607
--------------
TOTAL CONSUMER CYCLICALS 129,416,032
--------------
CONSUMER STAPLES - 7.3%
Belo (A.H.) Corp., Class A 519,700 8,997,306
Kimberly Clark Corp. 455,000 26,105,625
Pepsico, Inc. 854,300 37,962,956
--------------
TOTAL CONSUMER STAPLES 73,065,887
--------------
ENERGY - 6.1%
Coastal Corp. 630,050 38,354,294
Texaco, Inc.* 435,100 23,169,075
--------------
TOTAL ENERGY 61,523,369
--------------
FINANCE & INSURANCE - 20.9%
American International Group, Inc. 267,780 31,464,150
Capital One Financial Corp 462,300 20,630,138
Chase Manhattan Corp. 719,325 33,133,908
Federal Home Loan Mortgage Corp. 607,550 24,605,775
Federal National Mortgage Assn. 174,300 9,096,281
FleetBoston Financial Corp. 819,131 27,850,454
Wells Fargo & Co. 1,003,900 38,901,125
XL Capital Ltd., Class A 428,000 23,165,500
--------------
TOTAL FINANCE & INSURANCE 208,847,331
--------------
HEALTHCARE - 17.9%
American Home Products Corp. 546,950 32,133,313
Bristol Myers Squibb Co. 345,000 20,096,250
Elan Corp., plc ADR* 981,650 47,548,672
Guidant Corp.* 471,400 23,334,300
Medtronic, Inc. 493,950 24,604,884
Schering-Plough Corp. 611,200 30,865,600
--------------
TOTAL HEALTH CARE 178,583,019
--------------
TECHNOLOGY - 18.1%
Concord EFS, Inc.* 915,250 23,796,500
Electronic Data Systems Corp. 671,900 27,715,875
EMC Corp.* 677,800 52,148,237
Equifax Inc. 1,052,450 27,626,813
Microsoft Corp.* 301,500 24,101,156
Motorola, Inc. 893,250 25,960,078
--------------
TOTAL TECHNOLOGY 181,348,659
--------------
TELECOMMUNICATIONS - 12.3%
GTE Corp. 549,375 34,198,594
Sprint Corp. 628,400 32,048,400
Vodafone Airtouch plc ADR 703,125 29,135,742
Worldcom, Inc.* 611,143 28,036,185
--------------
TOTAL TELECOMMUNICATIONS 123,418,921
--------------
TOTAL COMMON STOCKS
(Cost $668,761,693) 983,694,318
--------------
MONEY MARKET MUTUAL FUNDS - 1.7%
SSGA Prime Money Market Fund 8,392,280 8,392,280
SSGA U.S. Treasury Money Market Fund 8,656,471 8,656,471
--------------
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost $17,048,751) 17,048,751
--------------
TOTAL INVESTMENTS - 100%
(Cost $685,810,444) $1,000,743,069
==============
*Non-income producing security
ADR - American Depositary Receipt
</TABLE>
Income Tax Information:
At June 30, 2000, the net
unrealized appreciation
based on cost for income tax
purposes of $685,810,444
was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized
appreciation for all investments
in which there was an excess
of value over tax cost $ 334,173,753
Aggregate gross unrealized
depreciation for all investments
in which there was an excess
of tax cost over value (19,241,128)
--------------
Net unrealized appreciation $ 314,932,625
==============
</TABLE>
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the
year ended June 30, 2000 aggregated $283,450,054 and $262,803,386,
respectively.
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 24
FIRST FUNDS ANNUAL REPORT
CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
---- ------ --------- ---------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 14.9%
U.S. TREASURY BILLS - 13.9%
07/06/00 $7,955,000 $7,954,125
----------
FEDERAL HOME LOAN BANK - 1.0%
07/06/00 575,000 574,713
----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $8,512,346) 8,528,838
----------
</TABLE>
<TABLE>
<CAPTION>
Shares
------
COMMON STOCKS - 85.1%
CAPITAL GOODS - 6.2%
<S> <C> <C>
Advanced Energy Industries, Inc.* 10,300 607,056
MSC Industrial Direct, Inc.* 43,000 900,312
SBA Communications Corp.* 23,900 1,241,306
West Teleservices Corp.* 31,000 784,688
-----------
TOTAL CAPITAL GOODS 3,533,362
-----------
CONSUMER CYCLICALS - 21.1%
Bright Horizons Family Solutions, Inc. 5,400 115,088
Broadbase Software, Inc.* 14,100 431,812
Corporate Executive Board Co.* 26,800 1,604,650
Cost Plus, Inc.* 37,400 1,072,913
Diamond Technology Partner, Inc.* 5,800 510,037
Digital Insight Corp.* 7,800 273,000
Extended Stay America, Inc.* 120,600 1,115,550
Exult, Inc.* 1,400 14,000
Getty Images, Inc.* 22,900 848,731
Hot Topic, Inc.* 12,100 387,200
Linens `N Things, Inc.* 46,400 1,258,600
NCO Group, Inc.* 33,800 781,625
Register.com, Inc.* 4,800 146,700
Skechers USA, Inc.* 79,000 1,249,188
Too, Inc. 41,500 1,055,656
Tweeter Home Entertainment Grp., Inc. 38,200 1,148,388
West Marine, Inc. 1,900 13,003
-----------
TOTAL CONSUMER CYCLICALS 12,026,141
-----------
CONSUMER STAPLES - 14.6%
ACME Communications, Inc.* 5,100 93,075
American Italian Pasta Co.* 29,500 610,281
CBRL Group, Inc. 80,800 1,186,750
CEC Entertainment, Inc.* 32,500 832,813
Cheesecake Factory, Inc.* 31,500 862,312
Duane Reade, Inc.* 18,900 486,675
Hall Kinion & Associates, Inc.* 34,000 1,130,500
Heidrick & Struggles Int'l, Inc.* 24,100 1,519,806
Insight Communications Co., Inc.* 3,300 51,562
Morrison Mgt. Specialists, Inc. 11,100 312,881
Ruby Tuesday, Inc. 22,800 286,425
Sonic Corp.* 34,000 998,750
-----------
TOTAL CONSUMER STAPLES 8,371,830
-----------
FINANCIAL - 10.6%
American Capital Strategies, Ltd. 37,200 855,600
E.W. Blanch Holdings, Inc. 55,600 1,129,375
Doral Financial Corp 70,500 801,938
eSpeed, Inc.* 7,100 308,406
Financial Federal Corp.* 53,400 927,825
Metris Companies, Inc. 10,650 267,581
Radian Group, Inc. 11,700 595,940
Webster Financial Corp. 53,300 1,179,263
-----------
TOTAL FINANCIAL 6,065,928
-----------
HEALTHCARE- 11.7%
Cima Labs, Inc.* 42,600 862,650
Cubist Pharmaceuticals, Inc.* 28,200 1,388,850
Exelixis, Inc.* 9,700 323,131
Inhale Therapeutic Systems, Inc.* 4,000 405,750
Intrabiotics Pharmaceuticals, Inc.* 26,600 708,225
Neurocrine Biosciences, Inc.* 19,300 692,388
Pharmacopeia, Inc.* 6,100 282,888
Trimeris, Inc.* 13,100 916,181
United Therapeutics Corp.* 8,700 942,319
Wesley Jessen Visioncare, Inc.* 3,600 135,225
-----------
TOTAL HEALTH CARE 6,657,607
-----------
TECHNOLOGY - 20.9%
Concord Communications, Inc.* 23,700 967,256
Crossworlds Software, Inc.* 44,900 813,812
CYSIVE, Inc.* 53,200 1,270,150
eLoyalty Corp.* 35,200 444,400
Exchange Applications, Inc.* 72,800 1,929,200
Extensity, Inc.* 18,700 649,825
LTX Corp.* 16,200 565,988
Mettler-Toledo Int'l, Inc.* 23,000 920,000
NetIQ Corp.* 33,900 2,021,287
Onyx Software Corp.* 38,500 1,142,969
Packard BioScience Co.* 70,200 1,189,012
Sanchez Computer Assoc., Inc.* 2,200 50,875
-----------
TOTAL TECHNOLOGY 11,964,774
-----------
TOTAL COMMON STOCKS
(Cost $45,796,368) 48,619,642
-----------
MONEY MARKET MUTUAL FUNDS - 0.0%
SSGA Prime Money Market Fund 12 12
SSGA U.S. Treasury Money Market Fund 13 13
-----------
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost $25) 25
-----------
TOTAL INVESTMENTS - 100%
(Cost $54,308,739) $57,148,505
-----------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 25
FIRST FUNDS ANNUAL REPORT
CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
INCOME TAX INFORMATION:
At June 30, 2000, the net unrealized appreciation based on cost for income tax
purposes of $54,682,076 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value
over tax cost $ 3,914,537
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax
cost over value (1,448,108)
-----------
Net unrealized appreciation $ 2,466,429
===========
</TABLE>
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the
year ended June 30, 2000 aggregated $117,107,175 and $117,512,223,
respectively.
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
---- ------ --------- --------
<S> <C> <C>
U.S GOVERNMENT & AGENCY
OBLIGATIONS - 35.4%
U.S. TREASURY BONDS - 19.2%
05/15/16 7.250% $ 12,120,000 $ 13,335,794
08/15/23 6.250% 29,985,000 30,172,406
------------
TOTAL U.S. TREASURY BONDS 43,508,200
------------
U.S. TREASURY NOTES - 10.8%
02/28/02 6.250% 1,100,000 1,095,875
08/15/02 6.375% 2,945,000 2,940,400
10/31/02 5.750% 1,000,000 985,313
08/15/03 5.750% 2,750,000 2,702,736
02/15/04 5.875% 1,915,000 1,888,669
02/15/06 5.625% 3,930,000 3,810,874
08/15/07 6.125% 4,450,000 4,423,580
02/15/08 5.500% 6,930,000 6,635,475
------------
TOTAL U.S. TREASURY NOTES 24,482,922
------------
FEDERAL HOME LOAN BANK - 0.5%
11/20/02 6.170% 1,100,000 1,078,823
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 2.6%
12/14/01 4.750% 1,500,000 1,456,299
01/15/05 6.875% 2,010,000 1,997,622
03/15/09 5.750% 2,775,000 2,519,550
------------
TOTAL FEDERAL HOME LOAN MRTG. CORP. 5,973,471
------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 2.3%
10/11/06 7.150% 2,000,000 1,946,984
06/15/09 6.375% 2,730,000 2,587,136
01/15/30 7.125% 625,000 626,545
------------
TOTAL FEDERAL NAT'L MORTGAGE ASSOC. 5,160,665
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS
(Cost $81,266,622) 80,204,081
------------
CORPORATE BONDS & NOTES - 63.9%
BANKS - 2.3%
First Chicago Corp.
01/15/03 7.625% 3,250,000 3,248,310
First Empire Cap Tr I
02/01/27 8.234% 2,200,000 1,907,774
------------
TOTAL BANKS 5,156,084
------------
BROKER/DEALERS - 8.8%
Bear Stearns Co.
08/01/02 6.500% 3,000,000 2,937,228
Donaldson, Lufkin & Jenrette, Inc.
07/15/03 6.170% 3,000,000 2,881,362
11/01/05 6.875% 1,000,000 951,688
02/15/16 5.625% 2,000,000 1,972,750
Lehman Brothers, Inc.
02/26/01 6.000% 2,500,000 2,480,205
04/15/03 7.250% 3,575,000 3,526,544
Merrill Lynch, Inc.
01/15/07 7.000% 2,200,000 2,159,362
Morgan Stanley Dean Witter & Co.
01/28/02 7.00% 3,000,000 2,987,571
------------
TOTAL BROKER/DEALERS 19,896,710
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 26
FIRST FUNDS ANNUAL REPORT
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
---- ------ --------- ------------
<S> <C> <C>
CORPORATE BONDS & NOTES
(CONTINUED)
CAPITAL GOODS - 11.4%
Arrow Electronics, Inc.
01/15/07 7.000% $ 3,800,000 $ 3,680,061
Dover Corp.
11/15/05 6.450% 3,525,000 3,365,776
Lockheed Martin Corp.
05/15/01 6.850% 2,250,000 2,239,706
03/15/03 6.750% 3,500,000 3,413,403
05/15/06 7.250% 2,300,000 2,231,833
Raytheon Co.
08/15/00 6.300% 2,500,000 2,497,188
07/15/05 6.500% 3,850,000 3,647,917
Tyco International Limited
11/01/01 6.500% 2,700,000 2,684,534
06/15/28 7.000% 2,300,000 1,993,454
------------
TOTAL CAPITAL GOODS 25,753,872
------------
CONSUMER NON-DURABLES - 2.5%
Anheuser Busch, Inc.
06/01/05 6.750% 1,200,000 1,171,505
09/01/05 7.000% 2,400,000 2,360,429
Coca-Cola Enterprises, Inc.
10/15/36 6.700% 2,250,000 2,202,869
------------
TOTAL CONSUMER NON-DURABLES 5,734,803
------------
CONSUMER SERVICES - 14.5%
Airtouch Communications, Inc.
05/01/08 6.650% 4,450,000 4,167,661
Belo (AH) Corp.
06/01/02 6.875% 4,000,000 3,897,240
Computer Sciences Corp.
03/15/09 6.250% 4,200,000 3,848,233
MCI WorldCom, Inc.
04/15/02 6.125% 4,425,000 4,320,791
Price/Costco, Inc.
06/15/05 7.125% 3,700,000 3,634,332
Rite Aid Corp.
08/15/13 6.875% 3,450,000 1,535,250
Sprint Corp.
11/15/28 6.875% 2,300,000 1,989,684
USA Waste Services, Inc.
10/01/04 7.000% 3,000,000 2,782,446
WMX Technologies, Inc.
10/15/00 6.250% 3,100,000 3,074,989
Waste Management Step Bond
10/01/02 7.700% 3,800,000 3,684,016
------------
TOTAL CONSUMER SERVICES 32,934,642
------------
FINANCIAL SERVICES - 11.4%
Associates Corp. of North America
10/15/02 6.375% 1,000,000 979,184
BHP Finance USA
03/01/06 6.690% 3,500,000 3,303,808
CNA Financial Corp.
04/15/05 6.500% 2,775,000 2,508,628
Countrywide Funding Corp.
10/22/04 6.840% 2,500,000 2,397,008
Ford Motor Credit Co.
06/15/03 7.500% 3,500,000 3,484,471
General Motors Acceptance Corp.
12/07/01 5.350% 3,500,000 3,407,590
Nationwide Mutual Insurance Co.
144A*
02/15/04 6.500% 1,000,000 953,126
Provident Companies, Inc.
03/15/28 7.250% 2,600,000 2,029,308
Sun Canada Financial Co.
12/15/07 6.625% 2,850,000 2,713,134
TXU Eastern Funding Co.
05/15/09 6.750% 4,600,000 4,124,774
------------
TOTAL FINANCIAL SERVICES 25,901,031
------------
HEALTHCARE - 0.9%
Cardinal Health, Inc.
02/15/04 6.500% 2,000,000 1,930,276
------------
TRAVEL & TRANSPORTATION - 3.7%
Continental Airlines, Inc.
02/02/20 6.795% 2,243,718 2,052,418
Norfolk Southern Corp.
02/15/04 7.875% 2,400,000 2,433,338
Union Pacific Corp.
01/15/04 6.125% 4,000,000 3,817,424
------------
TOTAL TRAVEL & TRANSPORTATION 8,303,180
------------
UTILITIES - 8.4%
Coastal Corp.
02/01/09 6.375% 4,000,000 3,637,744
Enron Corp.
07/15/28 6.950% 3,150,000 2,770,167
General Electric Co.
03/02/01 7.000% 3,425,000 3,414,821
GTE Corp.
04/15/06 6.360% 4,400,000 4,146,938
11/01/08 6.900% 3,250,000 3,068,946
Public Service Electric & Gas Co.
11/01/01 7.875% 2,000,000 2,013,156
------------
TOTAL UTILITIES 19,051,772
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $152,937,577) 144,662,370
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 27
FIRST FUNDS ANNUAL REPORT
BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
---- ------ --------- -------------
<S> <C> <C>
MORTGAGE-BACKED OBLIGATIONS - 0.7%
Federal National Mortgage Association
Pool #250885
04/01/27 7.500% $ 1,588,438 $ 1,569,281
Government National Mortgage Association
Pool #26825
09/15/08 9.000% 71,564 73,916
-------------
TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $1,655,304) 1,643,197
-------------
MONEY MARKET MUTUAL FUND - 0.0%
SSGA Prime Money Market Fund 5 5
-------------
TOTAL MONEY MARKET MUTUAL FUND 5
(Cost $5) -------------
TOTAL INVESTMENTS - 100%
(Cost $235,859,508) $ 226,509,653
=============
*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 June 30, 2000, these securities
amounted to a value of $953,126 or 0.4% of net assets.
INCOME TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation
based on cost for income tax purposes of $235,930,801 was as follows:
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost $ 582,981
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value (10,004,129)
-------------
Net unrealized depreciation $ (9,421,148)
=============
</TABLE>
As of June 30, 2000, the Bond Portfolio had a capital loss carry-over of
approximately $52,298 available to offset capital gains to the extent provided
in regulations, which will expire on June 30, 2008.
The Bond Portfolio intends to elect to defer to its fiscal year ending June 30,
2001, $277,762 of losses recognized during the period November 1, 1999 to June
30, 2000.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the
year ended June 30, 2000 aggregated $44,264,449 and $37,655,005, respectively.
Purchases and sales of U.S. Government and Agency securities, other than
short-term securities, for the year ended June 30, 2000 aggregated $17,371,548
and $18,166,856, respectively.
INTERMEDIATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
---- ------ --------- -----------
U.S GOVERNMENT & AGENCY
OBLIGATIONS - 56.0%
U.S. TREASURY NOTES - 12.6%
<S> <C> <C>
04/30/01 6.250% $ 2,000,000 $ 1,996,250
08/31/01 6.500% 2,500,000 2,500,000
05/31/02 6.500% 2,000,000 2,001,250
08/15/02 6.375% 1,000,000 998,438
08/15/07 6.125% 9,000,000 8,946,567
05/15/08 5.625% 10,000,000 9,643,750
-----------
TOTAL U.S. TREASURY NOTES 26,086,255
-----------
FEDERAL HOME LOAN BANK - 12.7%
09/20/00 6.125% 3,000,000 2,995,641
11/05/01 5.350% 2,500,000 2,450,075
11/06/02 6.250% 600,000 589,537
11/20/02 6.170% 700,000 686,524
09/02/03 5.575% 5,000,000 4,796,860
08/15/06 6.375% 5,000,000 4,831,155
02/12/10 7.375% 10,000,000 10,170,900
-----------
TOTAL FEDERAL HOME LOAN BANK 26,520,692
-----------
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 9.5%
11/12/02 6.340% 700,000 688,782
01/15/04 5.000% 5,000,000 4,684,635
01/05/07 6.700% 5,500,000 5,397,034
03/15/09 5.750% 10,000,000 9,079,460
-----------
TOTAL FEDERAL HOME LOAN MRTG. CORP. 19,849,911
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 19.3%
03/15/01 5.625% 5,000,000 4,958,815
01/15/03 5.250% 5,000,000 4,807,735
02/13/04 5.125% 5,000,000 4,697,490
11/13/06 6.950% 2,100,000 2,038,468
01/15/09 5.250% 10,000,000 8,775,460
06/15/09 6.375% 5,000,000 4,738,345
01/15/10 7.250% 10,000,000 10,081,640
-----------
TOTAL FEDERAL NAT'L MORTGAGE
ASSOC. 40,097,953
-----------
TENNESSEE VALLEY AUTHORITY - 1.9%
11/01/00 6.000% 4,000,000 3,986,176
-----------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS
(Cost $119,815,954) 116,540,987
-----------
CORPORATE BONDS & NOTES - 43.5%
Banks - 4.9%
BancOne Corp.
05/01/07 7.600% 725,000 709,350
Bank One Texas
02/15/08 6.250% 5,000,000 4,493,350
First Chicago Corp.
01/15/03 7.625% 1,525,000 1,524,207
National City Corp.
03/01/04 6.625% 1,650,000 1,591,618
Wachovia Corp.
02/20/01 5.400% 2,000,000 1,977,944
-----------
TOTAL BANKS 10,296,469
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 28
FIRST FUNDS ANNUAL REPORT
INTERMEDIATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Due Principal Value
Date Coupon Amount (Note 1)
---- ------ --------- --------
<S> <C> <C>
CORPORATE BONDS & NOTES (CONTINUED)
BASIC MATERIALS - 4.3%
Aluminum Co. of America
02/01/01 5.750% $ 4,000,000 $ 3,977,952
E. I. du Pont de Nemours & Co.
09/01/02 6.500% 3,000,000 2,972,436
10/11/00 6.210% 2,000,000 1,997,032
------------
TOTAL BASIC MATERIALS 8,947,420
------------
BROKER/DEALERS - 6.6%
Merrill Lynch & Co., Inc.
02/12/03 6.000% 4,000,000 3,870,372
01/15/04 5.880% 4,000,000 3,782,768
08/01/04 6.550% 1,400,000 1,355,105
Morgan Stanley Group, Inc.
03/01/07 6.875% 5,000,000 4,712,340
------------
TOTAL BROKER/DEALERS 13,720,585
------------
CAPITAL GOODS - 7.0%
Lockheed Martin Corp.
05/15/01 6.850% 650,000 647,026
03/15/03 6.750% 1,300,000 1,267,835
McDonnell Douglas Corp.
07/01/00 8.250% 4,600,000 4,600,000
Pitney Bowes, Inc.
02/01/05 5.950% 5,000,000 4,789,065
Raytheon Co.
08/15/02 6.450% 1,350,000 1,318,478
Rockwell International Corp.
09/15/02 6.750% 2,000,000 1,992,962
------------
TOTAL CAPITAL GOODS 14,615,366
------------
CONSUMER NON-DURABLES - 1.1%
Dow Jones & Co., Inc.
12/01/00 5.750% 1,000,000 996,475
Philip Morris, Inc.
01/01/01 9.000% 1,250,000 1,255,219
------------
TOTAL CONSUMER NON-DURABLES 2,251,694
------------
CONSUMER SERVICES - 4.8%
CPC International, Inc.
09/19/00 6.200% 2,000,000 1,996,924
Safeway, Inc.
09/15/04 6.850% 1,400,000 1,365,855
Wal-Mart Stores, Inc.
05/15/02 6.750% 2,000,000 1,991,654
Walt Disney Co.
12/15/03 5.125% 5,000,000 4,685,835
------------
TOTAL CONSUMER SERVICES 10,040,268
------------
FINANCIAL SERVICES - 6.8%
CNA Financial Corp.
11/15/03 6.250% 2,000,000 1,859,816
Cigna Corp.
01/15/06 6.375% 1,350,000 1,242,378
Ford Motor Credit Co.
11/08/00 6.250% 2,000,000 1,993,730
09/25/01 7.000% 1,000,000 995,943
General Electric Capital Corp.
04/15/02 7.450% 2,000,000 2,008,576
12/15/07 6.290% 5,000,000 4,961,300
Pitney Bowes Credit Corp.
07/16/01 6.780% 1,000,000 996,902
------------
TOTAL FINANCIAL SERVICES 14,058,645
------------
TRAVEL & TRANSPORTATION - 1.8%
Norfolk Southern Corp.
05/15/07 7.350% 3,800,000 3,690,670
------------
UTILITIES - 6.2%
GTE North, Inc.
11/01/08 6.900% 3,500,000 3,305,019
National Rural Utilities Coop.
04/01/01 6.450% 2,000,000 1,991,744
New York Telephone Co.
02/15/04 6.250% 875,000 839,258
Texas Utilities Co.
10/01/02 6.200% 2,000,000 1,948,518
U.S. West Capital Funding, Inc.
07/15/05 6.250% 5,000,000 4,721,625
------------
TOTAL UTILITIES 12,806,164
------------
TOTAL CORPORATE BONDS & NOTES
(Cost $93,795,554) 90,427,281
------------
MORTGAGE-BACKED OBLIGATIONS - 0.4%
Federal Home Loan Mortgage
Corporation
Series 1665 Class KA
07/15/00 6.500% 2,662 2,655
Federal Home Loan Mortgage
Corporation
Series 1698 Class E
10/15/06 6.000% 841,634 839,000
------------
TOTAL MORTGAGE-BACKED OBLIGATIONS
(Cost $842,570) 841,655
------------
MONEY MARKET MUTUAL FUND - 0.1%
SSGA Prime Money Market Fund 11,628 11,628
------------
TOTAL MONEY MARKET MUTUAL FUND 11,628
(Cost $11,628) ------------
TOTAL INVESTMENTS - 100%
(Cost $214,465,706) $207,821,551
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 29
FIRST FUNDS ANNUAL REPORT
INTERMEDIATE BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(Showing Percentage of Total Value of Investments)
INCOME TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on cost for income tax
purposes of $214,465,706 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for
all investments in which there was an excess
of value over tax cost $ 210,022
Aggregate gross unrealized depreciation for
all investments in which there was an excess
of tax cost over value (6,854,177)
-------------
Net unrealized depreciation $ (6,644,155)
=============
</TABLE>
As of June 30, 2000, the Intermediate Bond Portfolio had a capital loss
carry-over of approximately $220,051 available to offset capital gains to the
extent provided in regulations, which will expire on June 30, 2008.
The Intermediate Bond Portfolio intends to elect to defer to its fiscal year
ending June 30, 2001, $843,911 of losses recognized during the period November
1, 1999 to June 30, 2000.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the
year ended June 30, 2000 aggregated $46,774,090 and $52,097,382 respectively.
Purchases and sales of U.S. Government and Agency securities, other than
short-term securities, for the year ended June 30, 2000 aggregated $44,790,109
and $28,590,856 respectively.
TENNESSEE TAX-FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Showing Percentage of Total Value of Investments)
TENNESSEE MUNICIPAL OBLIGATIONS - 97.5%
GENERAL OBLIGATION BONDS - 49.1%
<TABLE>
<CAPTION>
Due Bond Rating Principal Value
Date Coupon Moody/S&P Amount (Note 1)
---- ------ --------- ------ --------
<S> <C> <C> <C> <C>
Anderson County
Refunding & Improvement -
Rural Elementary School
03/01/08 5.150%, FGIC Aaa/AAA $ 500,000 $ 503,270
Bradley County
03/01/10 4.250%, FGIC Aaa/AAA 4,065,000 3,735,125
Chattanooga
11/01/06 5.600% Aa3/AA 500,000 516,485
05/01/08 5.400%, FSA Aaa/AAA 500,000 509,290
Crockett County
04/01/11 5.000%, AMBAC Aaa/NR 500,000 493,835
Franklin City
Special School District
06/01/12 5.100% Aa3/NR 2,500,000 2,467,000
Franklin County
03/01/13 5.250%, MBIA Aaa/AAA 750,000 745,838
Gatlinburg
12/01/01 6.500%, AMBAC Aaa/AAA 500,000 513,350
Grundy County
05/01/06 5.350%, FGIC Aaa/AAA 300,000 307,506
Hamilton County
07/01/03 5.200% Aa2/NR 1,000,000 1,013,220
07/01/05 5.400% Aa2/NR 500,000 512,715
Jackson
Refunding & Improvement
03/01/14 5.125%, MBIA Aaa/NR 3,100,000 3,021,105
Johnson City
06/01/07 4.350%, FGIC Aaa/AAA 1,000,000 953,900
06/01/08 5.600%, FSA Aaa/AAA 500,000 518,935
06/01/12 5.900%, FSA Aaa/AAA 245,000 256,868
05/01/14 5.550%, FGIC Aaa/AAA 2,250,000 2,276,527
Kingsport
09/01/02 5.500% A1/NR 1,000,000 1,016,540
09/01/07 5.900% A1/A+ 1,000,000 1,034,190
Knox County
04/01/08 5.100% Aa/AA 2,000,000 2,009,020
02/01/12 5.000% Aa3/AA 2,000,000 1,956,980
Knoxville
Refunding & Improvement, MBIA
05/01/07 5.250%, Aaa/AAA 3,000,000 3,052,380
05/01/08 5.300%, Aaa/AAA 1,350,000 1,373,544
Maury County
04/01/07 5.125%, AMBAC Aaa/AAA 2,000,000 2,018,660
Memphis
10/01/10 4.375% Aa2/AA 2,500,000 2,314,575
11/01/10 5.200% Aa/AA 1,000,000 1,004,730
07/01/12 5.250% Aa/AA 3,000,000 2,999,970
04/01/13 5.250% Aa2/AA 4,000,000 3,977,640
11/01/13 5.250% Aa/AA 1,000,000 988,610
Metropolitan Nashville & Davidson
05/15/07 5.700% Aa/AA 1,000,000 1,027,390
12/01/07 5.000% Aa/AA 1,000,000 1,004,250
11/15/10 5.125% Aa2/AA 500,000 500,470
11/15/11 5.125% Aa2/AA 1,000,000 995,260
Monroe County
05/01/06 5.250%, FSA Aaa/NR 1,500,000 1,530,000
Murfreesboro
08/01/04 5.500% A1/NR 1,000,000 1,021,490
Oak Ridge
07/01/08 5.400% Aa/A+ 1,000,000 1,014,290
07/01/10 5.550% Aa/A+ 500,000 508,020
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 30
FIRST FUNDS ANNUAL REPORT
TENNESSEE TAX-FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(Showing Percentage of Total Value of Investments)
TENNESSEE MUNICIPAL OBLIGATIONS (CONTINUED)
GENERAL OBLIGATION BONDS (CONTINUED)
<TABLE>
<CAPTION>
Due Bond Rating Principal Value
Date Coupon Moody/S&P Amount (Note 1)
---- ------ --------- ------ --------
<S> <C> <C> <C> <C>
Putnam County, MBIA
04/01/05 5.250% Aaa/AAA $ 3,000,000 $3,056,370
04/01/07 5.100% Aaa/AAA 1,540,000 1,552,767
Rutherford County
04/01/08 5.200% Aa3/AA- 2,000,000 2,014,000
04/01/09 5.250% Aa3/AA- 500,000 505,380
Sevier County
04/01/08 5.250%, FGIC Aaa/AAA 750,000 764,542
Shelby County
04/01/03 5.000% Aa2/AA+ 500,000 503,520
03/01/04 5.550% Aa2/AA+ 1,000,000 1,012,030
04/01/09 5.500% Aa3/AA+ 1,125,000 1,150,402
06/01/09 5.625% Aa2/AA+ 1,000,000 1,038,800
11/01/09 5.300% Aa2/AA+ 3,000,000 3,070,860
03/01/10 5.500% Aa3/AA+ 2,000,000 2,069,600
04/01/10 5.500% Aa2/AA+ 750,000 775,170
04/01/14 5.625% Aa3/AA+ 1,500,000 1,513,380
04/01/14 5.625% NR/AA+ 500,000 521,245
Tennessee State
06/01/05 6.700% Aaa/AA+ 1,000,000 1,034,690
03/01/06 5.300% Aaa/AA+ 2,500,000 2,576,200
03/01/07 5.400% Aaa/AA+ 1,740,000 1,798,795
05/01/08 5.000% Aaa/AA+ 5,000,000 5,022,150
05/01/09 4.750% Aaa/AA+ 2,000,000 1,958,980
05/01/11 5.000% Aaa/AA+ 4,000,000 3,970,040
05/01/13 5.300% Aaa/AA+ 750,000 752,790
Tipton County
04/01/12 5.250%, AMBAC Aaa/NR 500,000 500,800
Weakley County
05/01/09 5.000%, FGIC Aaa/AAA 350,000 349,975
White House
02/01/12 5.300%, MBIA Aaa/AAA 1,000,000 1,003,820
Williamson County
04/01/06 5.500% Aa1/NR 2,000,000 2,045,840
05/01/10 4.800% Aa1/NR 1,000,000 976,230
03/01/11 6.000% Aa1/NR 1,000,000 1,071,910
Wilson County
04/01/07 5.250% A1/NR 1,000,000 1,012,030
----------
TOTAL GENERAL OBLIGATION BONDS 93,315,294
----------
REVENUE BONDS - 48.4%
AIRPORT AUTHORITY - 1.2%
Memphis - Shelby County
09/01/12 5.350% Baa2/BBB 500,000 465,545
Metropolitan Nashville
07/01/08 4.600%, FGIC Aaa/AAA 2,000,000 1,913,300
----------
TOTAL AIRPORT AUTHORITY 2,378,845
----------
HEALTH & EDUCATION - 20.1%
Anderson County
Methodist Medical Center
07/01/05 5.500% A1/NR 1,400,000 1,408,778
07/01/08 5.700% A1/NR 1,000,000 1,005,970
Blount County
07/01/09 5.250% Baa1/NR 2,765,000 2,523,892
Bristol
Memorial Hospital
09/01/13 5.125%, FGIC Aaa/AAA 1,500,000 1,449,075
Chattanooga-Hamilton
10/01/04 5.375%, FSA Aaa/AAA 2,000,000 2,031,960
Franklin
09/01/09 4.750% NR/A+ 2,150,000 2,061,119
Jackson
04/01/06 5.300% A1/A+ 1,000,000 985,360
04/01/07 5.300% A1/A+ 2,000,000 1,950,140
04/01/10 5.500%, AMBAC Aaa/AAA 400,000 403,996
Johnson City
07/01/09 5.125%, MBIA NR/AAA 5,705,000 5,751,952
Knox County
04/01/05 4.875% Baa1/NR 2,600,000 2,462,356
Knox County
Baptist Health
04/15/11 5.500%, CONLEE NR/AAA 3,000,000 3,037,500
Knox County
Ft. Sanders
01/01/15 5.250% AAA/Aaa 2,175,000 2,119,015
Metropolitan Nashville & Davidson
Baptist Hospital
11/01/05 5.000%, MBIA Aaa/AAA 1,000,000 996,700
Shelby County
Methodist Healthcare, MBIA
04/01/03 5.000% Aaa/AAA 2,000,000 2,003,400
08/01/12 5.500% Aaa/AAA 2,000,000 2,013,880
Shelby County
Rhodes College, MBIA
08/01/06 4.350% NR/AAA 2,335,000 2,205,291
Sullivan County
Holston Valley Healthcare, MBIA
02/15/13 5.750% Aaa/AAA 1,200,000 1,214,424
Tennessee State School
Board Authority
05/01/11 5.500% A1/AA 500,000 512,240
Wilson County
03/30/07 5.000%, FSA Aaa/NR 2,000,000 2,003,240
----------
TOTAL HEALTH & EDUCATION 38,140,288
----------
HOUSING - 0.9%
Metropolitan Nashville & Davidson
Multi-Family Housing
02/01/21 5.200%, FSA NR/AAA 1,000,000 1,008,610
Tennessee Housing
Development Agency
01/01/11 5.800% Aa2/AA 400,000 411,048
07/01/13 5.800% Aa2/AA 350,000 352,702
----------
TOTAL HOUSING 1,772,360
----------
INDUSTRIAL DEVELOPMENT - 0.9%
Hamilton County
09/01/01 5.300%, FGIC Aaa/AAA 1,000,000 1,008,160
Memphis-Shelby County
03/15/05 5.400% NR/AA- 650,000 654,225
----------
TOTAL INDUSTRIAL DEVELOPMENT 1,662,385
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 31
FIRST FUNDS ANNUAL REPORT
TENNESSEE TAX-FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(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>
TENNESSEE MUNICIPAL OBLIGATIONS (CONTINUED)
REVENUE BONDS (CONTINUED)
PUBLIC BUILDING AUTHORITY - 0.7%
Sevier County, AMBAC
09/01/06 5.500% Aaa/AAA $ 775,000 $ 795,739
09/01/10 5.400% Aaa/NR 500,000 505,540
----------
TOTAL PUBLIC BUILDING AUTHORITY 1,301,279
----------
STATE AUTHORITY - 3.7%
Tennessee State Local
Development Authority
03/01/02 6.600% A2/AA- 250,000 258,375
10/01/02 5.600% A/A 400,000 407,272
03/01/03 6.700% A2/AA- 750,000 775,358
03/01/05 5.500% A2/AA- 2,500,000 2,556,350
03/01/14 5.125%, MBIA Aaa/AAA 2,000,000 1,947,220
10/01/14 6.450% A/A 1,000,000 1,078,440
----------
TOTAL STATE AUTHORITY 7,023,015
----------
UTILITY - 20.9%
Clarksville
Water, Sewer & Gas, MBIA
02/01/01 5.500% Aaa/AAA 500,000 503,465
02/01/10 5.300% Aaa/NR 900,000 907,983
Dickson
Electric
09/01/11 5.625%, MBIA Aaa/AAA 1,000,000 1,037,120
Fayetteville
Electric
04/01/11 5.250% A/NR 1,750,000 1,738,520
Franklin
Water & Sewer
09/01/11 5.000% Aa2/NR 750,000 738,623
Harpeth Valley
Utility District
09/01/03 5.250% A1/A 1,000,000 1,015,880
09/01/06 5.500% A1/A 500,000 511,655
09/01/11 5.500% A1/A 1,650,000 1,666,071
Johnson City
Electric, MBIA
05/01/10 5.400%, Aaa/AAA 500,000 505,675
05/01/12 5.100%, Aaa/AAA 1,500,000 1,473,780
Knox Chapman
Water & Sewer
01/01/04 5.500%, MBIA Aaa/AAA 520,000 531,388
Knoxville
Electric
07/01/12 5.700% Aa3/AA 500,000 514,600
Knoxville
Gas
03/01/03 5.300% Aa3/AA 1,000,000 1,024,910
03/01/14 5.350% Aa3/AA 2,760,000 2,736,071
La Follette
Electric, AMBAC
06/01/11 5.800% Aaa/AAA $ 430,000 $ 455,379
03/01/15 5.250% Aaa/NR 1,000,000 978,930
La Vergne
Water & Sewer
03/01/14 5.400% A1/NR 500,000 494,730
Lawrenceburg
Electric
07/01/06 5.200%, MBIA Aaa/AAA 345,000 349,419
Lenoir City
Electric
06/01/07 5.000%, AMBAC Aaa/NR 2,000,000 1,997,600
Madison
Utility District
02/01/10 5.600%, MBIA Aaa/AAA 500,000 513,620
Memphis
Electric
01/01/03 5.800% Aa/AAA 3,000,000 3,076,560
01/01/10 5.000% Aa/AAA 1,000,000 991,060
Memphis
Sanitation Sewer System
01/01/05 5.250% Aa2/AA+ 2,250,000 2,290,410
Metropolitan Nashville & Davidson
Electric
05/15/06 4.700% Aa3/AA 2,000,000 1,981,740
Metropolitan Nashville & Davidson
Water & Sewer
01/01/08 5.000%, FGIC Aaa/AAA 4,000,000 3,982,720
01/01/13 5.200%, FGIC Aaa/AAA 1,500,000 1,498,620
01/01/15 5.750%, AMBAC Aaa/AAA 1,000,000 1,034,580
Rutherford County
Water Works
02/01/11 5.100%, FGIC Aaa/NR 500,000 496,755
Sevier County
Gas
05/01/11 5.400%, AMBAC Aaa/NR 1,000,000 1,013,570
Tennessee
Energy Acquisition
09/01/05 4.400%, AMBAC Aaa/AAA 4,000,000 3,712,320
-----------
TOTAL UTILITY 39,773,754
-----------
TOTAL REVENUE BONDS 92,051,926
-----------
TOTAL TENNESSEE MUNICIPAL OBLIGATIONS
(Cost $187,588,159) 185,367,220
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 32
--------------------------------------------------------------------------------
FIRST FUNDS ANNUAL REPORT
--------------------------------------------------------------------------------
TENNESSEE TAX-FREE PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(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>
OTHER STATE MUNICIPAL OBLIGATIONS - 2.2%
GENERAL OBLIGATION BONDS - 0.8%
Austin, Texas
09/01/06 7.000% Aa/AA $ 750,000 $ 752,895
Harris County, Texas
08/15/15 6.500% Aa2/AA 785,000 817,405
----------
TOTAL GENERAL OBLIGATION BONDS 1,570,300
----------
REVENUE BONDS - 1.4%
BANKS - 0.3%
Indiana
02/01/04 5.500% NR/AAA 500,000 511,335
----------
TRANSPORTATION - 0.5%
Indianapolis
Public Improvement Transportation
07/01/10 6.000% Aa/AA- 950,000 987,221
----------
UTILITY - 0.6%
Wisconsin State Clear Water
06/01/05 6.700% NR/AA+ 1,000,000 1,039,040
----------
TOTAL REVENUE BONDS 2,537,596
----------
TOTAL OTHER STATE MUNICIPAL OBLIGATIONS
(Cost $3,990,442) 4,107,896
----------
</TABLE>
<TABLE>
<CAPTION>
Shares
------
<S> <C> <C>
MONEY MARKET MUTUAL FUND - 0.3%
Federated Tennessee Municipal
Cash Trust 616,644 616,644
----------
TOTAL MONEY MARKET MUTUAL FUND 616,644
(Cost $616,644) ----------
TOTAL INVESTMENTS - 100%
(Cost $192,195,245) $190,091,760
============
</TABLE>
The Portfolio had the following insurance concentration of 10% or greater at
June 30, 2000 (as a percentage of net assets):
<TABLE>
<S> <C>
MBIA 18.6%
FGIC 10.0%
</TABLE>
INCOME TAX INFORMATION:
At June 30, 2000, the net unrealized depreciation based on cost for income tax
purposes of $192,195,245 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for all
investments in which there was an excess of value
over tax cost $ 1,321,624
Aggregate gross unrealized depreciation for all
investments in which there was an excess of tax
cost over value (3,425,110)
-----------
Net unrealized depreciation $(2,103,485)
===========
</TABLE>
As of June 30, 2000, the Tennessee Tax-Free Portfolio had a capital loss
carry-over of approximately $135,053 available to offset capital gains to the
extent provided in regulations, which will expire on June 30, 2008.
The Tennessee Tax-Free Portfolio intends to elect to defer to its fiscal year
ending June 30, 2001, $33,281 of losses recognized during the period November 1,
1999 to June 30, 2000.
OTHER INFORMATION:
Purchases and sales of securities, other than short-term securities, for the
year ended June 30, 2000 aggregated $11,998,671 and $31,199,274 respectively.
RATINGS:
The Moody's and S&P ratings are believed to be the most recent ratings at June
30, 2000. Ratings are not covered by the report of Independent Accountants.
UNAUDITED INCOME TAX INFORMATION:
Tennessee Tax-Free Portfolio had designated all dividends paid during the year
ended June 30, 2000 as exempt-interest dividends. Thus, 100% of these
distributions are exempt from Federal income tax.
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 33
--------------------------------------------------------------------------------
FIRST FUNDS ANNUAL REPORT
--------------------------------------------------------------------------------
U.S. TREASURY MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(Showing Percentage of Total Value of Investments)
<TABLE>
<CAPTION>
Maturity Value
Amount (Note 1)
-------- --------
<S> <C> <C>
REPURCHASE AGREEMENTS - 100.0%
Barclays Dezeot, 6.40%,
dated 06/30/00, due 07/03/00,
collaterized by $3,605,442 U.S. Treasury
Bond, 6.25%, due 08/15/23 $3,501,867 $3,500,000
Shearson Lehman, 6.60%,
dated 06/30/00, due 07/03/00,
collaterized by $3,569,964 U.S. Treasury
Bond, 10.63%, due 08/15/15 3,501,925 3,500,000
State Street, 6.40%,
Dated 06/30/00, due 07/03/00,
collaterized by $1,133,512 U.S. Treasury
Bond, 8.13%, due 08/15/21 1,107,590 1,107,000
----------
TOTAL REPURCHASE AGREEMENTS 8,107,000
----------
TOTAL INVESTMENTS - 100% $8,107,000
==========
</TABLE>
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $8,107,000
As of June 30, 2000, the U.S. Treasury Money Market Portfolio had capital loss
carry-overs of approximately $173, $8,086, and $2,755 available to offset
capital gains to the extent provided in regulations, which will expire on June
30, 2005, June 30, 2006, and June 30, 2007, respectively.
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(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. GOVERNMENT OBLIGATIONS - 96.8%
FEDERAL HOME LOAN BANK - 29.2%
07/14/00 6.42% $15,000,000 $14,965,225
10/04/00 6.13%* 10,000,000 9,997,461
-----------
TOTAL FEDERAL HOME LOAN BANK 24,962,686
-----------
FEDERAL HOME LOAN MORTGAGE CORP. - 7.4%
08/10/00 6.45% 5,000,000 4,963,944
05/24/01 6.39%* 1,500,000 1,411,029
-----------
TOTAL FEDERAL HOME LOAN MRTG. CORP. 6,374,973
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 60.2%
07/13/00 6.40% 2,000,000 1,995,970
07/17/00 6.83% 7,000,000 6,999,848
08/02/00 6.47% 5,000,000 4,999,705
08/17/00 6.44% 5,000,000 4,957,308
09/14/00 6.43% 10,000,000 9,865,729
10/16/00 6.40% 4,000,000 3,922,960
11/13/00 6.42% 4,000,000 3,902,500
12/07/00 6.41% 5,000,000 4,856,458
05/10/01 6.24% 5,000,000 5,000,000
05/24/01 6.53% 5,000,000 5,000,000
-----------
TOTAL FEDERAL NAT'L MORTGAGE ASSOC. 51,500,478
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 82,838,137
-----------
REPURCHASE AGREEMENTS - 3.2%
State Street, 6.50%,
dated 06/30/00, due 07/03/00,
collaterized by $2,851,200 U.S. Treasury
Bond, 7.00%, due 12/15/29 2,769,499 2,768,000
-----------
TOTAL REPURCHASE AGREEMENTS 2,768,000
-----------
TOTAL INVESTMENTS - 100% $85,606,137
===========
</TABLE>
*Floating or variable rate security - rate disclosed as of June 30, 2000.
Maturity date represents the next interest rate reset date.
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $85,606,137
As of June 30, 2000, the U.S. Government Money Market Portfolio had capital loss
carry-overs of approximately $7,014, $919, and $6,010 available to offset
capital gains to the extent provided in regulations, which will expire on June
30, 2005, June 30, 2006, and June 30, 2008, respectively.
The U.S. Government Money Market Portfolio intends to elect to defer to its
fiscal year ending June 30, 2001, $3,916 of losses recognized during the period
November 1, 1999 to June 30, 2000.
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 34
FIRST FUNDS ANNUAL REPORT
MUNICIPAL MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(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%
ALABAMA - 1.0%
Alabama Housing Financial Authority
07/05/00 4.75%* $ 500,000 $ 500,000
----------
ARIZONA - 3.1%
Apache County
Industrial Development
07/05/00 4.70%* 1,600,000 1,600,000
----------
CALIFORNIA - 0.6%
Los Angeles
Water Department
07/06/00 4.25%* 300,000 300,000
----------
CONNECTICUT - 2.7%
Connecticut State
Health & Education
07/06/00 4.35%* 1,400,000 1,400,000
----------
DELAWARE - 3.9%
Delaware State
Economic Development Authority
07/05/00 4.85%* 2,000,000 2,000,000
----------
FLORIDA - 5.9%
Gainesville Utility Systems
07/28/00 4.00% 1,000,000 1,000,000
Jacksonville
07/14/00 4.00% 1,000,000 1,000,000
St. Lucie County
Pollution Control
08/10/00 4.05% 1,000,000 1,000,000
----------
3,000,000
----------
GEORGIA - 2.5%
Cobb County Housing Authority
Post Bridge Project
07/05/00 4.75%* 550,000 550,000
Smyrna Housing Authority
Villages Project
07/05/00 4.75%* 700,000 700,000
----------
1,250,000
----------
ILLINOIS - 3.1%
Cook County
07/05/00 4.75%* 1,600,000 1,600,000
----------
INDIANA - 2.0%
Sullivan Pollution Control
08/14/00 4.00% 1,000,000 1,000,000
----------
KANSAS - 2.0%
City of Burlington
Pollution Control
10/11/00 4.20% 1,000,000 1,000,000
----------
KENTUCKY - 2.0%
Kentucky Interlocal School
06/29/01 5.00% 1,000,000 1,005,680
----------
LOUISIANA - 2.8%
Louisiana
Public Hospital
07/05/00 4.70%* $ 400,000 $ 400,000
Plaquemines Port
09/08/00 4.15% 1,000,000 1,000,000
----------
1,400,000
----------
MARYLAND - 2.0%
Montgomery County
Economic Development
07/05/00 4.77%* 1,000,000 1,000,000
----------
MICHIGAN - 3.9%
Kalamazoo
12/01/00 4.50% 1,000,000 1,003,300
Lakeview
Calhoun School District
08/22/00 4.00% 1,000,000 1,000,343
----------
2,003,643
----------
MINNESOTA - 1.0%
Minnesota School District
02/28/01 4.25% 500,000 500,245
----------
MISSOURI - 4.1%
Kansas City
Industrial Development
07/03/00 4.75%* 900,000 900,000
Missouri State
Environmental Improvement
07/05/00 5.00%* 1,200,000 1,200,000
----------
2,100,000
----------
NEVADA - 4.5%
Clark County, Airport Authority
07/05/00 4.70%* 2,274,000 2,274,030
----------
NEW MEXICO - 2.0%
New Mexico State
Hospital Equipment
07/05/00 4.85%* 1,000,000 1,000,000
----------
NEW YORK - 1.8%
Long Island
Power Authority
07/05/00 4.40%* 800,000 800,000
New York City
Transitional
07/06/00 4.65%* 100,000 100,000
----------
900,000
----------
OHIO - 16.8%
Allen County
09/14/00 4.73% 1,000,000 1,002,180
Hamilton County
Healthcare
07/07/00 4.87%* 1,000,000 1,000,000
Lake County
03/15/01 5.13% 1,000,000 1,003,070
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 35
FIRST FUNDS ANNUAL REPORT
MUNICIPAL MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(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 (CONTINUED)
OHIO (CONTINUED)
Lima City School District
07/26/00 4.55% $ 1,000,000 $ 1,002,300
Mansfield City
School District
07/18/00 4.40% 2,000,000 2,005,160
Medina County Housing
Oaks at Medina
07/06/00 4.80%* 990,000 990,000
South Western City School District
12/08/00 5.13% 1,000,000 1,002,320
Union TWP
04/10/01 4.86% 500,000 502,435
-----------
8,507,465
-----------
PENNSYLVANIA - 7.2%
Luzerne County
Convention Center
07/06/00 4.75%* 1,790,000 1,790,000
Pennsylvania State
Higher Education
07/05/00 4.80%* 500,000 500,000
07/05/00 4.80%* 100,000 100,000
07/05/00 4.80%* 500,000 500,000
Sayre
Healthcare Facilities
07/05/00 4.80%* 400,000 400,000
Washington County
Higher Education
07/05/00 4.85%* 380,000 380,000
-----------
3,670,000
-----------
SOUTH CAROLINA - 0.4%
Piedmont
Power Agency
07/05/00 4.60%* 200,000 200,000
-----------
TENNESSEE - 9.1%
Chattanooga Health, Education & Housing
Baylor
07/05/00 4.80%* 915,000 915,000
Clarksville Public Building Authority
07/06/00 4.75%* 1,250,000 1,250,000
Memphis
07/05/00 4.85%* 700,000 700,000
Metro. Gov't Nashville
Airport
07/05/00 4.80%* 800,000 800,000
Washington County
Industrial Development Springbrook
Property
07/05/00 4.80%* 980,000 980,000
-----------
4,645,000
-----------
TEXAS - 5.3%
Harris County
09/07/00 4.50% 1,000,000 1,000,000
Texas State
08/31/00 4.50% 1,700,000 1,706,834
-----------
2,706,834
-----------
UTAH - 3.0%
Intermountain Power Agency
08/08/00 4.00% $ 1,000,000 $ 1,000,000
Salt Lake City
07/05/00 4.85%* 500,000 500,000
-----------
1,500,000
-----------
VIRGINIA - 4.3%
Fairfax County
Industrial Development
07/05/00 4.90%* 300,000 300,000
Hampton
Housing Authority
07/05/00 4.55%* 1,600,000 1,600,000
Lynchburg
Industrial Development Authority
07/05/00 4.85%* 300,000 300,000
-----------
2,200,000
-----------
WASHINGTON - 3.0%
Port Anacortes
07/11/00 3.90% 1,500,000 1,500,000
-----------
TOTAL MUNICIPAL BONDS & NOTES 50,762,897
-----------
TOTAL INVESTMENTS - 100% $50,762,897
===========
</TABLE>
*Floating or variable rate security - rate disclosed as of June 30, 2000.
Maturity date represents the next interest rate reset date.
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $50,762,897
As of June 30, 2000, the Municipal Money Market Portfolio had capital loss
carry-overs of approximately $3,013 and $897 available to offset capital gains
to the extent provided in regulations, which will expire on June 30, 2002, and
June 30, 2006, respectively.
The Municipal Money Market Portfolio intends to elect to defer to its fiscal
year ending June 30, 2001, $3,392 of losses recognized during the period
November 1, 1999 to June 30, 2000.
UNAUDITED INCOME TAX INFORMATION:
Municipal Money Market Portfolio had designated all dividends paid during the
year ended June 30, 2000 as exempt-interest dividends. Thus, 100% of these
distributions are exempt from Federal income tax.
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 36
FIRST FUNDS ANNUAL REPORT
MUNICIPAL MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 2000
(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 (CONTINUED)
OHIO (CONTINUED)
Lima City School District
07/26/00 4.55% $ 1,000,000 $ 1,002,300
Mansfield City
School District
07/18/00 4.40% 2,000,000 2,005,160
Medina County Housing
Oaks at Medina
07/06/00 4.80%* 990,000 990,000
South Western City School District
12/08/00 5.13% 1,000,000 1,002,320
Union TWP
04/10/01 4.86% 500,000 502,435
-----------
8,507,465
-----------
PENNSYLVANIA - 7.2%
Luzerne County
Convention Center
07/06/00 4.75%* 1,790,000 1,790,000
Pennsylvania State
Higher Education
07/05/00 4.80%* 500,000 500,000
07/05/00 4.80%* 100,000 100,000
07/05/00 4.80%* 500,000 500,000
Sayre
Healthcare Facilities
07/05/00 4.80%* 400,000 400,000
Washington County
Higher Education
07/05/00 4.85%* 380,000 380,000
-----------
3,670,000
-----------
SOUTH CAROLINA - 0.4%
Piedmont
Power Agency
07/05/00 4.60%* 200,000 200,000
-----------
TENNESSEE - 9.1%
Chattanooga Health, Education & Housing
Baylor
07/05/00 4.80%* 915,000 915,000
Clarksville Public Building Authority
07/06/00 4.75%* 1,250,000 1,250,000
Memphis
07/05/00 4.85%* 700,000 700,000
Metro. Gov't Nashville
Airport
07/05/00 4.80%* 800,000 800,000
Washington County
Industrial Development Springbrook
Property
07/05/00 4.80%* 980,000 980,000
-----------
4,645,000
-----------
TEXAS - 5.3%
Harris County
09/07/00 4.50% 1,000,000 1,000,000
Texas State
08/31/00 4.50% 1,700,000 1,706,834
-----------
2,706,834
-----------
</TABLE>
<TABLE>
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
---- ----------- ------ --------
<S> <C> <C> <C>
UTAH - 3.0%
Intermountain Power Agency
08/08/00 4.00% $ 1,000,000 $ 1,000,000
Salt Lake City
07/05/00 4.85%* 500,000 500,000
-----------
1,500,000
-----------
VIRGINIA - 4.3%
Fairfax County
Industrial Development
07/05/00 4.90%* 300,000 300,000
Hampton
Housing Authority
07/05/00 4.55%* 1,600,000 1,600,000
Lynchburg
Industrial Development Authority
07/05/00 4.85%* 300,000 300,000
-----------
2,200,000
-----------
WASHINGTON - 3.0%
Port Anacortes
07/11/00 3.90% 1,500,000 1,500,000
-----------
TOTAL MUNICIPAL BONDS & NOTES 50,762,897
-----------
TOTAL INVESTMENTS - 100% $50,762,897
===========
</TABLE>
*Floating or variable rate security - rate disclosed as of June 30, 2000.
Maturity date represents the next interest rate reset date.
INCOME TAX INFORMATION:
Total cost for Federal income tax purposes - $50,762,897
As of June 30, 2000, the Municipal Money Market Portfolio had capital loss
carry-overs of approximately $3,013 and $897 available to offset capital gains
to the extent provided in regulations, which will expire on June 30, 2002, and
June 30, 2006, respectively.
The Municipal Money Market Portfolio intends to elect to defer to its fiscal
year ending June 30, 2001, $3,392 of losses recognized during the period
November 1, 1999 to June 30, 2000.
UNAUDITED INCOME TAX INFORMATION:
Municipal Money Market Portfolio had designated all dividends paid during the
year ended June 30, 2000 as exempt-interest dividends. Thus, 100% of these
distributions are exempt from Federal income tax.
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 37
FIRST FUNDS ANNUAL REPORT
CASH RESERVE PORTFOLIO
PORTFOLIO OF INVESTMENTS
June 30, 2000
(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>
COMMERCIAL PAPER - 68.1%
ASSET-BACKED SECURITIES - 20.5%
CC USA, Inc.
08/18/00 6.70% $ 5,000,000 $ 4,955,333
Delaware Funding Corp.
08/23/00 6.63% 3,775,000 3,738,153
Discover Card MST
08/28/00 6.65% 5,000,000 4,946,431
Dorada Finance, Inc.
08/30/00 6.61% 5,000,000 4,944,917
Edison
08/28/00 6.58% 5,000,000 4,946,994
Grand Funding Corp.
09/06/00 6.62% 5,000,000 4,938,397
------------
28,470,225
------------
BASIC MATERIALS - 12.2%
Alcoa Co.
09/19/00 6.65% 5,000,000 4,926,111
Great Lakes Chemical Corp.
07/05/00 6.95% 6,000,000 5,995,367
Sonoco Products Co.
07/05/00 6.90% 6,000,000 5,995,400
------------
16,916,878
------------
BROKER/DEALERS - 7.1%
Bear Stearns Co.
09/19/00 6.58% 5,000,000 4,926,889
Goldman Sachs Group
07/06/00 6.20% 5,000,000 5,000,000
------------
9,926,889
------------
FINANCIAL SERVICES - 21.8%
Citibank Capital Markets
08/22/00 6.68% 5,000,000 4,951,756
Forrestal
07/17/00 6.41% 5,000,000 4,985,756
Marsh USA, Inc.
12/11/00 6.65 5,000,000 4,849,451
Prudential Funding Corp.
12/11/00 6.62% 5,000,000 4,850,130
St. Michael Financial Ltd.
07/28/00 6.60% 4,770,000 4,746,388
UBS Financial, Inc.
07/05/00 6.90% 6,000,000 5,995,400
------------
30,378,881
------------
PERSONAL CREDIT INSTITUTIONS - 3.6%
American Honda Finance
09/05/00 6.60% 5,000,000 4,939,500
------------
</TABLE>
<TABLE>
<CAPTION>
Due Discount Rate or Principal Value
Date Coupon Rate Amount (Note 1)
---- ----------- ------ --------
<S> <C> <C> <C>
TELECOMMUNICATIONS - 2.9%
American Telephone & Telegraph Co.
07/13/00 6.24% $ 4,000,000 $ 3,999,948
------------
TOTAL COMMERCIAL PAPER 94,632,321
------------
VARIABLE RATE NOTES - 15.1%
BROKER/DEALER - 3.6%
Merrill Lynch & Co., Inc.
04/12/01 6.24% 5,000,000 4,999,214
------------
Financial Services - 7.9%
BankOne Corp.
10/06/00 6.87% 4,000,000 3,999,607
First Union National
03/01/01 6.68% 5,000,000 5,000,000
Fleet Financial Group Inc.
07/28/00 6.45% 2,000,000 2,000,012
------------
10,999,619
------------
UTILITIES - 3.6%
National Rural Utilities Coop.
01/24/01 6.26% 5,000,000 5,000,000
------------
TOTAL VARIABLE RATE NOTES 20,998,833
------------
REPURCHASE AGREEMENTS - 16.8%
State Street, 6.50%,
dated 06/30/00, due 07/03/00,
collaterized by $24,139,200 U.S. Treasury
Bond, 7.00%, due 12/15/29 23,446,693 23,434,000
------------
TOTAL REPURCHASE AGREEMENTS 23,434,000
------------
TOTAL INVESTMENTS - 100% $139,065,154
============
INCOME TAX INFORMATION:
Total cost for income tax purposes - $139,065,154
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 38
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2000
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
--------------- --------------------
<S> <C> <C>
ASSETS:
Investments, at value (cost-see below)
(Note 1) $1,000,743,069 $ 57,148,505
Cash 0 21,242
Receivable for investments sold 0 619,514
Receivable for portfolio shares sold 820,233 54,342
Dividends receivable 802,100 270
Interest receivable 140,312 75,734
Other assets 8,713 0
-------------- --------------
Total assets 1,002,514,427 57,919,607
-------------- --------------
LIABILITIES:
Payable for investments purchased 2,602,325 7,092,735
Payable for portfolio shares redeemed 487,708 5,148
Accrued management fee 530,029 32,054
Accrued administration fee 122,111 5,730
Accrued co-administration fee 41,267 1,977
Accrued 12b-1 fee 60,280 397
Accrued shareholder servicing fee 51,947 879
Other payables and accrued expenses 205,708 46,007
-------------- --------------
Total liabilities 4,101,375 7,184,927
-------------- --------------
NET ASSETS $ 998,413,052 $ 50,734,680
============== ==============
NET ASSETS CONSIST OF:
Paid in capital $ 583,732,482 $ 36,341,313
Undistributed net investment income 66,630 0
Accumulated net realized gain on
investments 99,681,315 11,553,601
Net unrealized appreciation
in value of investments 314,932,625 2,839,766
-------------- --------------
NET ASSETS $ 998,413,052 $ 50,734,680
============== ==============
COST OF INVESTMENTS $ 685,810,444 $ 54,308,739
============== ==============
NET ASSET VALUE PER SHARE
Net Assets
Class I $ 790,050,033 $ 46,042,218
Class II $ 101,906,614 $ 3,883,286
Class III $ 101,084,495 $ 634,415
Class IV $ 5,371,910 $ 174,761
-------------- --------------
Shares outstanding of no par value capital
stock, unlimited shares authorized
Class I 31,191,090 3,181,428
Class II 4,022,564 271,315
Class III 4,064,466 45,261
Class IV 213,748 12,064
-------------- --------------
Net Asset Value and redemption price per
share
Class I $ 25.33 $ 14.47
Class II $ 25.33 $ 14.31
Class III $ 24.87 $ 14.02
Class IV $ 25.13 $ 14.49
-------------- --------------
Maximum offering price per share
Class I (no sales charge) $ 25.33 $ 14.47
Class II (net asset value plus maximum
sales charge of 5.75% of offering
price) $ 26.88 $ 15.18
Class III (no sales charge) $ 24.87 $ 14.02
Class IV (no sales charge) $ 25.13 $ 14.49
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 39
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2000
<TABLE>
<CAPTION>
BOND INTERMEDIATE BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost-see below) (Note 1) $ 226,509,653 $ 207,821,551 $ 190,091,760
Receivable for portfolio shares sold 25,662 25,871 30,000
Interest receivable 4,339,942 4,202,453 3,009,446
Other assets 1,119 1,906 1,629
------------- ------------- -------------
Total assets 230,876,376 212,051,781 193,132,835
------------- ------------- -------------
LIABILITIES:
Payable for portfolio shares redeemed 185,431 128,461 5,000
Accrued management fee 51,952 47,373 42,615
Accrued administration fee 27,286 26,686 23,332
Accrued co-administration fee 9,091 8,881 7,859
Dividends payable 397,916 604,846 620,731
Accrued 12b-1 fee 2,138 402 5,359
Accrued shareholder servicing fee 2,011 1,257 925
Other payables and accrued expenses 90,233 95,022 57,018
------------- ------------- -------------
Total liabilities 766,058 912,928 762,839
------------- ------------- -------------
NET ASSETS $ 230,110,318 $ 211,138,853 $ 192,369,996
============= ============= =============
NET ASSETS CONSIST OF:
Paid in capital $ 239,915,054 $ 218,691,254 $ 194,633,590
(Over) Undistributed net investment income (109,461) 106,974 32,060
Accumulated net realized loss on
investments (345,420) (1,015,220) (192,169)
Net unrealized depreciation
in value of investments (9,349,855) (6,644,155) (2,103,485)
------------- ------------- -------------
NET ASSETS $ 230,110,318 $ 211,138,853 $ 192,369,996
============= ============= =============
COST OF INVESTMENTS $ 235,859,508 $ 214,465,706 $ 192,195,245
============= ============= =============
NET ASSET VALUE PER SHARE
Net Assets
Class I $ 222,222,166 $ 202,385,194 $ 172,620,378
Class II $ 6,107,137 $ 7,484,737 $ 10,580,472
Class III $ 1,781,015 $ 1,268,922 $ 8,969,066
Class IV n/a n/a $ 200,080
------------- ------------- -------------
Shares outstanding of no par value capital
stock, unlimited shares authorized
Class I 23,308,230 21,098,505 17,446,486
Class II 642,104 780,290 1,067,110
Class III 186,576 132,286 905,825
Class IV n/a n/a 20,214
------------- ------------- -------------
Net Asset Value and redemption price per
share
Class I $ 9.53 $ 9.59 $ 9.89
Class II $ 9.51 $ 9.59 $ 9.92
Class III $ 9.55 $ 9.59 $ 9.90
Class IV n/a n/a $ 9.90
------------- ------------- -------------
Maximum offering price per share
Class I (no sales charge) $ 9.53 $ 9.59 $ 9.89
Class II (net asset value plus maximum
sales charge of 3.75%, 2.50% and 2.50%,
respectively, of offering price) $ 9.88 $ 9.84 $ 10.17
Class III (no sales charge) $ 9.55 $ 9.59 $ 9.90
Class IV (no sales charge) n/a n/a $ 9.90
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 40
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 2000
<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) $ 8,107,000 $ 85,606,137 $ 50,762,897 $139,065,154
Cash 673 579 43,747 732
Receivable for portfolio shares sold 29,250 0 0 12,000
Interest receivable 1,461 346,966 433,219 349,987
Other assets 0 2,370 183 79
------------ ------------ ------------ ------------
Total assets 8,138,384 85,956,052 51,240,046 139,427,952
------------ ------------ ------------ ------------
LIABILITIES:
Payable for investments purchased 0 0 1,005,680 0
Payable for portfolio shares redeemed 29,250 0 0 7,803
Dividends payable 34,615 441,566 140,049 138,641
Accrued management fee 5,660 7,433 4,081 9,383
Accrued administration fee 800 5,566 3,049 7,014
Accrued co-administration fee 0 1,903 1,180 2,340
Accrued 12b-1 fee 1,566 1,421 1,104 17,451
Other payables and accrued expenses 33,852 71,498 22,303 63,215
------------ ------------ ------------ ------------
Total liabilities 105,743 529,387 1,177,446 245,847
------------ ------------ ------------ ------------
NET ASSETS $ 8,032,641 $ 85,426,665 $ 50,062,600 $139,182,105
============ ============ ============ ============
NET ASSETS CONSIST OF:
Paid in capital $ 8,040,602 $ 85,444,080 $ 50,069,902 $139,181,866
Undistributed net investment income 73 331 0 22
Accumulated net realized gain (loss)
on investments (8,034) (17,746) (7,302) 217
------------ ------------ ------------ ------------
NET ASSETS $ 8,032,641 $ 85,426,665 $ 50,062,600 $139,182,105
============ ============ ============ ============
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 $8,107,000, $2,768,000, $0 and $23,434,000
respectively.
<TABLE>
<CAPTION>
(2) Shares Outstanding
Net (no par value, unlimited
Assets shares authorized)
------ ------------------------
<S> <C> <C>
U.S. Treasury Money Market
Class I $ 6,879,829 6,883,398
Class III 1,075,881 1,080,316
Class IV 76,931 76,888
U.S. Government Money Market
Class I 81,992,005 82,009,191
Class III 3,434,660 3,434,889
Municipal Money Market
Class I 44,535,390 44,542,309
Class III 5,527,210 5,527,593
Cash Reserve
Class I 32,028,227 32,027,556
Class III 107,153,878 107,154,310
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 41
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF OPERATIONS
For the Year Ended June 30, 2000
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
--------------- --------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 11,026,228 $ 17,217
Interest 1,859,290 161,252
------------- -------------
Total investment income 12,885,518 178,469
------------- -------------
EXPENSES:
Management fee (Note 3) 6,396,817 362,733
Administration fee (Note 4) 1,476,188 64,012
Co-administration fee (Note 4) 492,063 21,337
Fund accounting/custody fee 209,415 66,315
Transfer agent fee 310,444 8,936
Transfer agent out-of-pocket fee:
Class I 29,649 2,229
Class II 51,779 4,552
Class III 45,174 1,041
Class IV 483 19
Blue sky fee:
Class I 13,364 0
Class II 8,784 769
Class III 10,940 548
Class IV 507 18
Distribution fee:
Class III 740,407 3,737
Class IV 24,157 161
Shareholder servicing fee:
Class II 239,818 6,793
Class III 246,802 1,246
Trustees fee 34,202 2,727
Registration fee 13,000 12
Audit and tax 120,270 0
Legal 52,668 2,736
Reports to shareholders 47,581 4,033
Miscellaneous 108,193 1,736
------------- -------------
Total expenses before waiver 10,672,705 555,690
Waiver of expenses (Note 5) (744,918) (27,614)
------------- -------------
Net expenses 9,927,787 528,076
------------- -------------
NET INVESTMENT INCOME (LOSS) 2,957,731 (349,607)
------------- -------------
Net realized gain on investments 130,526,395 15,055,298
Change in net unrealized appreciation/
depreciation (57,074,725) 167,445
------------- -------------
Net gain on investments 73,451,670 15,222,743
------------- -------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 76,409,401 $ 14,873,136
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
19
<PAGE> 42
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF OPERATIONS
For the Year Ended June 30, 2000
<TABLE>
<CAPTION>
BOND INTERMEDIATE BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------------- ------------------
<S> <C> <C> <C>
INTEREST INCOME $ 15,323,419 $ 13,950,919 $ 10,264,186
------------ ------------ ------------
EXPENSES:
Management fee (Note 3) 1,276,424 1,103,772 1,022,399
Administration fee (Note 4) 348,116 331,132 306,720
Co-administration fee (Note 4) 116,038 110,377 102,240
Fund accounting/custody fee 103,861 97,560 119,579
Transfer agent fee 64,727 72,264 33,568
Transfer agent out-of-pocket fee:
Class I 7,764 12,789 7,402
Class II 1,321 1,765 2,942
Class III 2,639 644 4,323
Class IV -- -- 12
Blue sky fee:
Class I 2,728 0 501
Class II 2,540 1,535 501
Class III 1,453 847 501
Class IV -- -- 5
Distribution fee:
Class III 17,184 7,565 96,066
Class IV -- -- 815
Shareholder servicing fee:
Class II 14,406 14,888 11,494
Class III 5,728 2,522 0
Trustees fee 9,066 8,165 7,931
Registration fee 0 5,236 2,174
Audit and tax 11,505 5,290 12,528
Legal 11,418 8,052 10,146
Reports to shareholders 9,982 13,950 10,772
Miscellaneous 26,263 21,261 22,179
------------ ------------ ------------
Total expenses before waiver 2,033,163 1,819,614 1,774,798
Waiver of expenses (Note 5) (764,281) (785,320) (765,173)
Fees reimbursed by administrator (Note 5) 0 0 (2,860)
------------ ------------ ------------
Net expenses 1,268,882 1,034,294 1,006,765
------------ ------------ ------------
NET INVESTMENT INCOME 14,054,537 12,916,625 9,257,421
------------ ------------ ------------
Net realized loss on investments (401,353) (930,373) (168,336)
Change in net unrealized appreciation/
depreciation (6,020,826) (3,275,871) (3,661,842)
------------ ------------ ------------
Net loss on investments (6,422,179) (4,206,244) (3,830,178)
------------ ------------ ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 7,632,358 $ 8,710,381 $ 5,427,243
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
20
<PAGE> 43
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF OPERATIONS
For the Year Ended June 30, 2000
<TABLE>
<CAPTION>
U.S. TREASURY U.S. GOVERNMENT MUNICIPAL
MONEY MARKET MONEY MARKET MONEY MARKET CASH RESERVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME $ 632,453 $ 5,537,082 $ 2,034,239 $ 6,672,625
----------- ----------- ----------- -----------
EXPENSES:
Management fee (Note 3) 34,575 245,996 135,514 283,279
Administration fee (Note 4) 8,597 73,798 40,655 84,960
Co-administration fee (Note 4) 5,731 49,198 27,105 56,819
Fund accounting/custody fee 4,685 9,143 4,414 31,544
Transfer agent fee 8,972 25,730 20,093 33,461
Blue sky fee:
Class I 1,373 3,525 2,796 2,226
Class III 3,616 3,760 3,660 2,925
Class IV 68 -- -- --
Distribution fee:
Class III 5,448 13,726 13,863 203,844
Class IV 280 -- -- --
Trustees fee 366 7,104 1,371 3,982
Registration fee 0 3,000 0 16,536
Audit and tax 3,098 0 1,838 1,740
Legal 366 7,772 1,518 6,624
Reports to shareholders 732 7,701 2,624 8,849
Miscellaneous 9,479 11,052 4,989 13,450
----------- ----------- ----------- -----------
Total expenses before waiver 87,386 461,505 260,440 750,239
Waiver of expenses (Note 5) (33,759) (172,195) (94,862) (198,467)
----------- ----------- ----------- -----------
Net expenses 53,627 289,310 165,578 551,772
----------- ----------- ----------- -----------
NET INVESTMENT INCOME 578,826 5,247,772 1,868,661 6,120,853
----------- ----------- ----------- -----------
Net realized gain (loss) on investments 9,723 (8,819) (3,392) 0
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 588,549 $ 5,238,953 $ 1,865,269 $ 6,120,853
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 44
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH & INCOME CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO
-------------------------------- -------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 2,957,731 $ 3,696,398 $ (349,607) $ (343,925)
Net realized gain (loss) on
investments 130,526,395 88,739,605 15,055,298 (3,081,885)
Change in net unrealized
appreciation/depreciation (57,074,725) 104,769,457 167,445 2,466,249
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from operations 76,409,401 197,205,460 14,873,136 (959,561)
------------- ------------- ------------- -------------
DISTRIBUTIONS:
From net investment income:
Class I (2,716,942) (3,611,722) 0 0
Class II (171,838) (98,157) 0 0
Class III 0 0 0 0
Class IV 0 -- 0 --
From net realized gain:
Class I (83,965,430) (18,142,545) 0 (780,800)
Class II (10,248,758) (1,602,790) 0 (37,718)
Class III (10,564,379) (2,209,366) 0 (10,677)
Class IV (196,133) -- 0 --
------------- ------------- ------------- -------------
Net decrease in net assets
from distributions (107,863,480) (25,664,580) 0 (829,195)
------------- ------------- ------------- -------------
SHARE TRANSACTIONS (NOTE 2):
Proceeds from sales of shares 136,242,850 116,277,623 2,676,078 2,147,360
Reinvested dividends 67,779,916 15,884,506 0 796,222
Cost of shares redeemed (143,564,234) (111,879,817) (3,061,056) (3,913,074)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from share transactions 60,458,532 20,282,312 (384,978) (969,492)
------------- ------------- ------------- -------------
Total increase (decrease) in
net assets 29,004,453 191,823,192 14,488,158 (2,758,248)
NET ASSETS:
Beginning of period 969,408,599 777,585,407 36,246,522 39,004,770
------------- ------------- ------------- -------------
End of period* $ 998,413,052 $ 969,408,599 $ 50,734,680 $ 36,246,522
============= ============= ============= =============
*Includes (over) undistributed
net investment income of $ 66,630 $ (2,321) $ 0 $ 0
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 45
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BOND INTERMEDIATE BOND
PORTFOLIO PORTFOLIO
--------------------------------- --------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
--------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 14,054,537 $ 13,212,685 $ 12,916,625 $ 12,357,769
Net realized gain (loss) on investments (401,353) 1,106,799 (930,373) 157,324
Change in net unrealized
appreciation/depreciation (6,020,826) (9,618,801) (3,275,871) (5,299,490)
------------- ------------- ------------- -------------
Net increase in net assets
from operations 7,632,358 4,700,683 8,710,381 7,215,603
------------- ------------- ------------- -------------
DISTRIBUTIONS:
From net investment income:
Class I (13,603,855) (12,947,111) (12,533,433) (12,192,668)
Class II (333,078) (205,107) (332,890) (133,188)
Class III (117,604) (118,305) (50,301) (31,913)
From net realized gain:
Class I (746,146) (1,953,692) 0 (478,824)
Class II (18,564) (29,251) 0 (6,249)
Class III (8,127) (23,546) 0 (1,405)
------------- ------------- ------------- -------------
Net decrease in net assets
from distributions (14,827,374) (15,277,012) (12,916,624) (12,844,247)
------------- ------------- ------------- -------------
SHARE TRANSACTIONS (NOTE 2):
Proceeds from sales of shares 24,111,383 30,018,648 48,098,486 57,021,977
Reinvested dividends 9,766,981 10,217,950 5,300,553 5,439,657
Cost of shares redeemed (28,869,165) (20,365,500) (61,506,110) (34,193,286)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from share transactions 5,009,199 19,871,098 (8,107,071) 28,268,348
------------- ------------- ------------- -------------
Total increase (decrease) in net assets (2,185,817) 9,294,769 (12,313,314) 22,639,704
NET ASSETS:
Beginning of period 232,296,135 223,001,366 223,452,167 200,812,463
------------- ------------- ------------- -------------
End of period* $ 230,110,318 $ 232,296,135 $ 211,138,853 $ 223,452,167
============= ============= ============= =============
*Includes (over) undistributed
net investment income of $ (109,461) $ (102,903) $ 106,974 $ 106,973
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 46
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TENNESSEE TAX-FREE
PORTFOLIO
--------------------------------
For the Year For the Year
Ended June 30, Ended June 30,
2000 1999
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,257,421 $ 9,464,899
Net realized gain (loss) on investments (168,336) 352,760
Change in net unrealized
appreciation/depreciation (3,661,842) (4,927,848)
------------- -------------
Net increase in net assets
from operations 5,427,243 4,889,811
------------- -------------
DISTRIBUTIONS:
From net investment income:
Class I (8,224,992) (8,303,485)
Class II (508,697) (496,265)
Class III (519,356) (665,149)
Class IV (4,375) --
From net realized gain:
Class I (245,870) (513,687)
Class II (15,221) (31,953)
Class III (18,938) (44,141)
Class IV (141) --
------------- -------------
Net decrease in net assets
from distributions (9,537,590) (10,054,680)
------------- -------------
SHARE TRANSACTIONS (NOTE 2):
Proceeds from sales of shares 29,727,493 60,438,058
Reinvested dividends 987,516 1,088,193
Cost of shares redeemed (50,284,627) (35,438,573)
------------- -------------
Net increase (decrease) in net assets
from share transactions (19,569,618) 26,087,678
------------- -------------
Total increase (decrease) in net assets (23,679,965) 20,922,809
NET ASSETS:
Beginning of period 216,049,961 195,127,152
------------- -------------
End of period* $ 192,369,996 $ 216,049,961
============= =============
*Includes undistributed
net investment income of $ 32,060 $ 32,059
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 47
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY MONEY U.S. GOVERNMENT MONEY
MARKET PORTFOLIO MARKET PORTFOLIO
------------------------------- ------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 578,826 $ 2,429,867 $ 5,247,772 $ 4,405,001
Net realized gain (loss) on
investments 9,723 2,940 (8,819) (1,107)
------------- ------------- ------------- -------------
Net increase in net assets from
operations 588,549 2,432,807 5,238,953 4,403,894
------------- ------------- ------------- -------------
DISTRIBUTIONS:
From net investment income
Class I (475,625) (666,882) (4,967,178) (4,289,430)
Class III (100,952) (1,762,992) (280,594) (115,571)
Class IV (2,249) -- -- --
------------- ------------- ------------- -------------
Net decrease in net assets from
distributions (578,826) (2,429,874) (5,247,772) (4,405,001)
------------- ------------- ------------- -------------
SHARE TRANSACTIONS AT NET ASSET VALUE
OF $1.00 PER SHARE (NOTE 2):
Proceeds from sales of shares 51,855,258 158,496,952 206,853,727 148,976,160
Reinvested dividends 99,545 478,573 276,283 114,515
Cost of shares redeemed (55,901,418) (208,610,939) (217,447,326) (144,105,292)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from share transactions (3,946,615) (49,635,414) (10,317,316) 4,985,383
------------- ------------- ------------- -------------
Total increase (decrease) in
net assets (3,936,892) (49,632,481) (10,326,135) 4,984,276
NET ASSETS:
Beginning of period 11,969,533 61,602,014 95,752,800 90,768,524
------------- ------------- ------------- -------------
End of period* $ 8,032,641 $ 11,969,533 $ 85,426,665 $ 95,752,800
============= ============= ============= =============
*Includes undistributed net
investment income of $ 73 $ 73 $ 331 $ 331
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 48
FIRST FUNDS ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MUNICIPAL MONEY CASH RESERVE
MARKET PORTFOLIO PORTFOLIO
------------------------------- ------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 1,868,661 $ 1,408,437 $ 6,120,853 $ 4,464,245
Net realized gain (loss) on
investments (3,392) 0 0 3,447
------------- ------------- ------------- -------------
Net increase in net assets from
operations 1,865,269 1,408,437 6,120,853 4,467,692
------------- ------------- ------------- -------------
DISTRIBUTIONS:
From net investment income
Class I (1,691,165) (1,297,153) (1,752,487) (1,682,792)
Class III (177,496) (111,284) (4,368,366) (2,781,453)
------------- ------------- ------------- -------------
Net decrease in net assets from
distributions (1,868,661) (1,408,437) (6,120,853) (4,464,245)
------------- ------------- ------------- -------------
SHARE TRANSACTIONS AT NET ASSET VALUE
OF $1.00 PER SHARE (NOTE 2):
Proceeds from sales of shares 95,589,191 107,473,646 289,202,600 187,659,183
Reinvested dividends 176,772 111,074 4,334,771 2,753,796
Cost of shares redeemed (107,470,677) (86,022,985) (246,667,089) (196,589,773)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
from share transactions (11,704,714) 21,561,735 46,870,282 (6,176,794)
------------- ------------- ------------- -------------
Total increase (decrease)
in net assets (11,708,106) 21,561,735 46,870,282 (6,173,347)
NET ASSETS:
Beginning of period 61,770,706 40,208,971 92,311,823 98,485,170
------------- ------------- ------------- -------------
End of period* $ 50,062,600 $ 61,770,706 $ 139,182,105 $ 92,311,823
============= ============= ============= =============
*Includes undistributed net
investment income of $ 0 $ 0 $ 22 $ 22
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE> 49
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
GROWTH & INCOME PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-----------------------------------------------------------
For the Year
Ended June 30,
-----------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 26.26 $ 21.56 $ 17.03 $ 14.12 $ 12.22
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income 0.11 0.13 0.17 0.18 0.19
Net realized and unrealized gain on investments 1.88 5.30 5.25 3.75 2.58
-------- -------- -------- -------- --------
Total from investment operations 1.99 5.43 5.42 3.93 2.77
-------- -------- -------- -------- --------
Distributions:
Net investment income (0.09) (0.12) (0.17) (0.18) (0.19)
Net realized gain (2.83) (0.61) (0.72) (0.84) (0.68)
-------- -------- -------- -------- --------
Total distributions (2.92) (0.73) (0.89) (1.02) (0.87)
-------- -------- -------- -------- --------
Net asset value, end of period $ 25.33 $ 26.26 $ 21.56 $ 17.03 $ 14.12
======== ======== ======== ======== ========
TOTAL RETURN+ 8.15% 25.69% 32.55% 28.83% 23.54%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $790,050 $790,985 $651,363 $221,136 $159,146
Ratio of expenses to average daily net assets(1) 0.87% 0.80% 0.82% 0.83% 0.76%
Ratio of net investment income to average net assets 0.44% 0.57% 0.78% 1.19% 1.40%
Portfolio turnover rate 28% 21% 7% 25% 41%
(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% 0.95% 0.97% 0.98% 1.00%
</TABLE>
<TABLE>
<CAPTION>
CLASS II
-----------------------------------------------------------
For the Year
Ended June 30,
-----------------------------------------------------------
2000 1999 1998 1997 1996**
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 26.30 $ 21.58 $ 17.05 $ 14.12 $13.05
------- ------- ------- ------- ------
Income from investment operations:
Net investment income 0.03 0.06 0.10 0.13 0.09
Net realized and unrealized gain on investments 1.88 5.31 5.27 3.76 1.74
------- ------- ------- ------- ------
Total from investment operations 1.91 5.37 5.37 3.89 1.83
------- ------- ------- ------- ------
Distributions:
Net investment income (0.05) (0.04) (0.12) (0.12) (0.08)
Net realized gain (2.83) (0.61) (0.72) (0.84) (0.68)
------- ------- ------- ------- ------
Total distributions (2.88) (0.65) (0.84) (0.96) (0.76)
------- ------- ------- ------- ------
Net asset value, end of period $ 25.33 $ 26.30 $ 21.58 $ 17.05 $14.12
======= ======= ======= ======= ======
TOTAL RETURN+*** 7.80% 25.33% 32.17% 28.48% 14.71%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $101,907 $82,896 $46,863 $16,514 $1,918
Ratio of expenses to average daily net assets(1) 1.18% 1.10% 1.13% 1.14% 1.06%*
Ratio of net investment income to average net assets 0.13% 0.28% 0.47% 0.88% 1.10%*
Portfolio turnover rate 28% 21% 7% 25% 41%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.25% 1.25% 1.28% 1.29% 1.30%*
</TABLE>
* Annualized.
** Class II commenced operations on December 20, 1995.
*** Class II total return does not include the one time front-end sales charge.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 50
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
GROWTH & INCOME PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
---------------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 26.00 $ 21.47 $ 16.99 $ 14.11 $ 12.23
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income (loss) (0.13) (0.11) (0.04) 0.02 0.03
Net realized and unrealized gain on investments 1.83 5.25 5.24 3.74 2.60
----------- ----------- ----------- ----------- -----------
Total from investment operations 1.70 5.14 5.20 3.76 2.63
----------- ----------- ----------- ----------- -----------
Distributions:
Net investment income -- -- -- (0.04) (0.07)
Net realized gain (2.83) (0.61) (0.72) (0.84) (0.68)
----------- ----------- ----------- ----------- -----------
Total distributions (2.83) (0.61) (0.72) (0.88) (0.75)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 24.87 $ 26.00 $ 21.47 $ 16.99 $ 14.11
=========== =========== =========== =========== ===========
TOTAL RETURN+ 7.02% 24.35% 31.16% 27.44% 22.19%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 101,084 $ 95,528 $ 79,360 $ 50,178 $ 36,892
Ratio of expenses to average daily net assets(1) 1.92% 1.88% 1.87% 1.94% 1.87%
Ratio of net investment income to average net assets (0.61)% (0.50)% (0.28)% 0.08% 0.29%
Portfolio turnover rate 28% 21% 7% 25% 41%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 2.00% 2.03% 2.02% 2.09% 2.11%
</TABLE>
<TABLE>
<CAPTION>
CLASS IV
--------------
For the Period
Ended June 30,
--------------
2000**
--------------
<S> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 25.83
-----------
Income from investment operations:
Net investment loss (0.07)
Net realized and unrealized gain on investments 2.20
-----------
Total from investment operations 2.13
-----------
Distributions:
Net investment income --
Net realized gain (2.83)
-----------
Total distributions (2.83)
-----------
Net asset value, end of period $ 25.13
===========
TOTAL RETURN+ 8.72%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 5,372
Ratio of expenses to average daily net assets(1) 1.91%*
Ratio of net investment income to average net assets (0.60)%*
Portfolio turnover rate 28%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.98%*
</TABLE>
* Annualized.
** Class IV commenced operations on August 3, 1999.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
28
<PAGE> 51
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------------
For the Year
Ended June 30,
--------------------------------------------------
2000/\ 1999/\ 1998**
------------- ------------- -------------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.25 $ 10.74 $ 10.00
Income from investment operations:
Net investment loss (0.09) (0.09) (0.03)
------------- ------------- -------------
Net realized and unrealized gain (loss) on
investments 4.31 (0.16) 0.77
------------- ------------- -------------
Total from investment operations 4.22 (0.25) 0.74
------------- ------------- -------------
Distributions:
Net realized gain -- (0.24) --
------------- ------------- -------------
Net asset value, end of period $ 14.47 $ 10.25 $ 10.74
============= ============= =============
TOTAL RETURN+ 41.17% (2.16)% 7.40%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 46,042 $ 33,803 $ 37,014
Ratio of expenses to average daily net assets(1) 1.19% 1.29% 1.16%*
Ratio of net investment loss to average net assets (0.77)% (1.00)% (0.54)%*
Portfolio turnover rate 286% 47% 44%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.26% 1.44% 1.36%*
</TABLE>
<TABLE>
<CAPTION>
CLASS II
--------------------------------------------------
For the Year
Ended June 30,
--------------------------------------------------
2000/\ 1999/\ 1998**
------------- ------------- -------------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.20 $ 10.71 $ 10.51
------------- ------------- -------------
Income from investment operations:
Net investment loss (0.15) (0.13) (0.05)
Net realized and unrealized gain (loss) on
investments 4.26 (0.14) 0.25
------------- ------------- -------------
Total from investment operations 4.11 (0.27) 0.20
------------- ------------- -------------
Distributions:
Net realized gain -- (0.24) --
------------- ------------- -------------
Net asset value, end of period $ 14.31 $ 10.20 $ 10.71
============= ============= =============
TOTAL RETURN+*** 40.29% (2.35)% 1.90%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 3,883 $ 2,051 $ 1,400
Ratio of expenses to average daily net assets(1) 1.63% 1.66% 1.52%*
Ratio of net investment loss to average net assets (1.21)% (1.37)% (0.90)%*
Portfolio turnover rate 286% 47% 44%*
(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% 1.81% 1.72%*
</TABLE>
* Annualized.
** Classes I and II commenced operations on September 2, 1997 and October 2,
1997, 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 returns for periods of less than one year are not annualized.
/\ Per share amounts calculated based on the average shares outstanding during
the period.
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 52
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
CAPITAL APPRECIATION PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
--------------------------------------------------
For the Year
Ended June 30,
--------------------------------------------------
2000/\ 1999/\ 1998**
------------- ------------- -------------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.04 $ 10.64 $ 10.51
------------- ------------- -------------
Income from investment operations:
Net investment loss (0.25) (0.19) (0.10)
Net realized and unrealized gain (loss) on
investments 4.23 (0.17) 0.23
------------- ------------- -------------
Total from investment operations 3.98 (0.36) 0.13
------------- ------------- -------------
Distributions:
Net realized gain -- (0.24) --
------------- ------------- -------------
Net asset value, end of period $ 14.02 $ 10.04 $ 10.64
============= ============= =============
TOTAL RETURN+ 39.64% (3.22)% 1.24%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 634 $ 392 $ 590
Ratio of expenses to average daily net assets(1) 2.50% 2.44% 2.28%*
Ratio of net investment loss to average net assets (2.09)% (2.15)% (1.65)%*
Portfolio turnover rate 286% 47% 44%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 2.57% 2.59% 2.47%*
</TABLE>
<TABLE>
<CAPTION>
CLASS IV
--------------
For the Period
Ended June 30,
--------------
2000**/\
--------------
<S> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.06
-------------
Income from investment operations:
Net investment loss (0.19)
Net realized and unrealized gain on investments 4.62
------------
Total from investment operations 4.43
------------
Distributions: --
------------
Net asset value, end of period $ 14.49
============
TOTAL RETURN+ 44.04%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 175
Ratio of expenses to average daily net assets(1) 2.46%*
Ratio of net investment loss to average net assets (2.04)%*
Portfolio turnover rate 286%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 2.52%*
</TABLE>
* Annualized.
** Class III and IV commenced operations on October 2, 1997 and August 3,
1999, respectively.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
/\ Per share amounts calculated based on the average shares outstanding during
the period.
The accompanying notes are an integral part of the financial statements.
30
<PAGE> 53
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
BOND PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
---------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.83 $ 10.29 $ 9.84 $ 9.73 $ 9.91
---------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.58 0.59 0.61 0.61 0.60
Net realized and unrealized gain (loss) on
investments (0.27) (0.37) 0.45 0.11 (0.18)
---------- ---------- ---------- --------- ---------
Total from investment operations 0.31 0.22 1.06 0.72 0.42
---------- ---------- ---------- --------- ---------
Distributions:
Net investment income (0.58) (0.59) (0.61) (0.61) (0.60)
Net realized gain (0.03) (0.09) -- -- --
---------- ---------- ---------- --------- ---------
Total distributions (0.61) (0.68) (0.61) (0.61) (0.60)
---------- ---------- ---------- --------- ---------
Net asset value, end of period $ 9.53 $ 9.83 $ 10.29 $ 9.84 $ 9.73
========== ========== ========== ========= =========
TOTAL RETURN+ 3.35% 2.04% 11.02% 7.58% 4.23%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 222,222 $ 224,467 $ 219,088 $ 123,184 $ 107,832
Ratio of expenses to average daily net assets (1) 0.53% 0.48% 0.49% 0.49% 0.41%
Ratio of net investment income to average net assets 6.07% 5.73% 5.98% 6.20% 5.99%
Portfolio turnover rate 17% 22% 26% 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. 0.86% 0.88% 0.89% 0.89% 0.91%
</TABLE>
<TABLE>
<CAPTION>
CLASS II
---------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996**
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.81 $ 10.26 $ 9.81 $ 9.71 $ 10.18
---------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.55 0.55 0.57 0.57 0.29
Net realized and unrealized gain (loss) on
investments (0.27) (0.35) 0.46 0.10 (0.47)
---------- ---------- ---------- --------- ---------
Total from investment operations 0.28 0.20 1.03 0.67 (0.18)
---------- ---------- ---------- --------- ---------
Distributions:
Net investment income (0.55) (0.56) (0.58) (0.57) (0.29)
Net realized gain (0.03) (0.09) -- -- --
---------- ---------- ---------- --------- ---------
Total distributions (0.58) (0.65) (0.58) (0.57) (0.29)
---------- ---------- ---------- --------- ---------
Net asset value, end of period $ 9.51 $ 9.81 $ 10.26 $ 9.81 $ 9.71
========== ========== ========== ========= =========
TOTAL RETURN+*** 3.04% 1.86% 10.72% 7.12% (1.75)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 6,107 $ 5,172 $ 1,801 $ 841 $ 67
Ratio of expenses to average daily net assets(1) 0.84% 0.81% 0.84% 0.90% 0.80%*
Ratio of net investment income to average net assets 5.76% 5.40% 5.63% 5.79% 5.61%*
Portfolio turnover rate 17% 22% 26% 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. 1.17% 1.21% 1.24% 1.30% 1.30%*
</TABLE>
* Annualized.
** Class II commenced operations on December 20, 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 returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 54
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
---------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.81 $ 10.27 $ 9.82 $ 9.71 $ 9.89
---------- ---------- ---------- ---------- ---------
Income from investment operations:
Net investment income 0.49 0.47 0.48 0.49 0.49
Net realized and unrealized gain (loss) on
investments (0.23) (0.36) 0.46 0.11 (0.18)
---------- ---------- ---------- ---------- ---------
Total from investment operations 0.26 0.11 0.94 0.60 0.31
---------- ---------- ---------- ---------- ---------
Distributions:
Net investment income (0.49) (0.48) (0.49) (0.49) (0.49)
Net realized gain (0.03) (0.09) -- -- --
---------- ---------- ---------- ---------- ---------
Total distributions (0.52) (0.57) (0.49) (0.49) (0.49)
---------- ---------- ---------- ---------- ---------
Net asset value, end of period $ 9.55 $ 9.81 $ 10.27 $ 9.82 $ 9.71
========== ========== ========== ========== =========
TOTAL RETURN+ 2.82% 0.94% 9.72% 6.37% 3.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 1,781 $ 2,656 $ 2,113 $ 2,553 $ 3,445
Ratio of expenses to average daily net assets(1) 1.45% 1.55% 1.67% 1.63% 1.49%
Ratio of net investment income to average net assets 5.15% 4.66% 4.80% 5.07% 4.92%
Portfolio turnover rate 17% 22% 26% 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. 2.03% 2.12% 2.07% 2.03% 1.99%
</TABLE>
* Annualized
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 55
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------
For the Year
Ended June 30,
--------------------------------------------
2000 1999 1998**
----------- ----------- -----------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.78 $ 10.02 $ 10.00
----------- ----------- -----------
Income from investment operations:
Net investment income 0.56 0.58 0.19
Net realized and unrealized gain (loss)
on investments (0.19) (0.22) 0.02
----------- ----------- -----------
Total from investment operations 0.37 0.36 0.21
----------- ----------- -----------
Distributions:
Net investment income (0.56) (0.58) (0.19)
Net realized gain -- (0.02) --
Total distributions (0.56) (0.60) (0.19)
----------- ----------- -----------
Net asset value, end of period $ 9.59 $ 9.78 $ 10.02
=========== =========== ===========
TOTAL RETURN+ 3.97% 3.60% 2.17%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 202,385 $ 219,298 $ 199,872
Ratio of expenses to average daily net assets(1) 0.46% 0.36% 0.37%*
Ratio of net investment income to average net assets 5.86% 5.76% 5.87%*
Portfolio turnover rate 22% 48% 9%*
(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% 0.86% 0.87%*
</TABLE>
<TABLE>
<CAPTION>
CLASS II
--------------------------------------------
For the Year
Ended June 30,
--------------------------------------------
2000 1999 1998**
----------- ----------- -----------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.78 $ 10.02 $ 9.99
----------- ----------- -----------
Income from investment operations:
Net investment income 0.53 0.55 0.18
Net realized and unrealized gain (loss)
on investments (0.19) (0.22) 0.03
----------- ----------- -----------
Total from investment operations 0.34 0.33 0.21
----------- ----------- -----------
Distributions:
Net investment income (0.53) (0.55) (0.18)
Net realized gain -- (0.02) --
----------- ----------- -----------
Total distributions (0.53) (0.57) (0.18)
----------- ----------- -----------
Net asset value, end of period $ 9.59 $ 9.78 $ 10.02
=========== =========== ===========
TOTAL RETURN+*** 3.66% 3.32% 2.07%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 7,485 $ 3,057 $ 923
Ratio of expenses to average daily net assets(1) 0.75% 0.68% 0.65%*
Ratio of net investment income to average net assets 5.57% 5.43% 5.59%*
Portfolio turnover rate 22% 48% 9%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.11% 1.19% 1.16%*
</TABLE>
* Annualized.
** Classes I and II commenced operations on March 2, 1998 and March 9, 1998,
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 returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
33
<PAGE> 56
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
INTERMEDIATE BOND PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
----------------------------------------
For the Year
Ended June 30,
----------------------------------------
2000 1999 1998**
---------- ---------- ----------
<S> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 9.77 $ 10.02 $ 9.99
---------- ---------- ----------
Income from investment operations:
Net investment income 0.48 0.49 0.06
Net realized and unrealized gain (loss)
on investments (0.18) (0.23) 0.03
---------- ---------- ----------
Total from investment operations 0.30 0.26 0.09
---------- ---------- ----------
Distributions:
Net investment income (0.48) (0.49) (0.06)
Net realized gain -- (0.02) --
---------- ---------- ----------
Total distributions (0.48) (0.51) (0.06)
---------- ---------- ----------
Net asset value, end of period $ 9.59 $ 9.77 $ 10.02
========== ========== ==========
TOTAL RETURN+ 3.16% 2.58% 0.92%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 1,269 $ 1,097 $ 17
Ratio of expenses to average daily net assets(1) 1.35% 1.22% 1.35%*
Ratio of net investment income to average net assets 4.97% 4.90% 4.89%*
Portfolio turnover rate 22% 48% 9%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.95% 1.92% 1.86%*
</TABLE>
* Annualized.
** Class III commenced operations on May 19, 1998.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 57
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
TENNESSEE TAX-FREE PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
---------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996**
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.08 $ 10.31 $ 9.99 $ 9.71 $ 10.00
---------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.45 0.46 0.48 0.50 0.23
Net realized and unrealized gain (loss) on
investments (0.18) (0.20) 0.32 0.28 (0.29)
---------- ---------- ---------- --------- ---------
Total from investment operations 0.27 0.26 0.80 0.78 (0.06)
---------- ---------- ---------- --------- ---------
Distributions:
Net investment income (0.45) (0.46) (0.48) (0.50) (0.23)
Net realized gain (0.01) (0.03) -- -- --
---------- ---------- ---------- --------- ---------
Total distributions (0.46) (0.49) (0.48) (0.50) (0.23)
---------- ---------- ---------- --------- ---------
Net asset value, end of period $ 9.89 $ 10.08 $ 10.31 $ 9.99 $ 9.71
========== ========== ========== ========= =========
TOTAL RETURN+ 2.83% 2.54% 8.16% 8.26% (0.65)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 172,620 $ 185,445 $ 176,884 $ 8,935 $ 5,925
Ratio of expenses to average daily net assets(1) 0.45% 0.36% 0.31% 0.07% 0.50%*
Ratio of net investment income to average net assets 4.57% 4.49% 4.71% 5.09% 4.31%*
Portfolio turnover rate 6% 31% 15% 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. 0.81% 0.86% 0.85% 1.14% 1.42%*
</TABLE>
<TABLE>
<CAPTION>
CLASS II
---------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------
2000 1999 1998 1997 1996**
---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.11 $ 10.34 $ 10.01 $ 9.73 $ 10.06
---------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.44 0.46 0.48 0.51 0.21
Net realized and unrealized gain (loss) on
investments (0.18) (0.20) 0.33 0.28 (0.33)
---------- ---------- ---------- --------- ---------
Total from investment operations 0.26 0.26 0.81 0.79 (0.12)
---------- ---------- ---------- --------- ---------
Distributions:
Net investment income (0.44) (0.46) (0.48) (0.51) (0.21)
Net realized gain (0.01) (0.03) -- -- --
---------- ---------- ---------- --------- ---------
Total distributions (0.45) (0.49) (0.48) (0.51) (0.21)
---------- ---------- ---------- --------- ---------
Net asset value, end of period $ 9.92 $ 10.11 $ 10.34 $ 10.01 $ 9.73
========== ========== ========== ========= =========
TOTAL RETURN+*** 2.70% 2.46% 8.22% 8.37% (1.25)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 10,580 $ 13,227 $ 8,973 $ 5,941 $ 1,875
Ratio of expenses to average daily
net assets(1) 0.58% 0.44% 0.37% 0.12% 0.49%*
Ratio of net investment income to average net assets 4.44% 4.41% 4.65% 5.03% 4.32%*
Portfolio turnover rate 6% 31% 15% 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% 0.94% 0.91% 1.14% 1.42%*
</TABLE>
* Annualized.
** Classes I and II commenced operations on December 15, 1995 and December 29,
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 returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
35
<PAGE> 58
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
TENNESSEE TAX-FREE PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS III
-----------------------------------------------------------------------
For the Year
Ended June 30,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996**
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.09 $ 10.32 $ 10.00 $ 9.72 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.40 0.42 0.45 0.50 0.19
Net realized and unrealized gain (loss) on
investments (0.18) (0.20) 0.32 0.28 (0.28)
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.22 0.22 0.77 0.78 (0.09)
---------- ---------- ---------- ---------- ----------
Distributions:
Net investment income (0.40) (0.42) (0.45) (0.50) (0.19)
Net realized gain (0.01) (0.03) -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.90 $ 10.09 $ 10.32 $ 10.00 $ 9.72
========== ========== ========== ========== ==========
TOTAL RETURN+ 2.29% 2.13% 7.86% 8.20% (0.87)%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 8,969 $ 17,378 $ 9,270 $ 5,750 $ 896
Ratio of expenses to average daily
net assets(1) 0.96% 0.75% 0.61% 0.23% 0.98%*
Ratio of net investment income to average net assets 4.06% 4.10% 4.41% 4.93% 3.83%*
Portfolio turnover rate 6% 31% 15% 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. 1.59% 1.65% 1.65% 1.91% 1.91%*
</TABLE>
<TABLE>
<CAPTION>
CLASS IV
--------------
For the Period
Ended June 30,
--------------
2000**
----------
<S> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 10.09
----------
Income from investment operations:
Net investment income 0.34
Net realized and unrealized loss on investments (0.18)
----------
Total from investment operations 0.16
----------
Distributions:
Net investment income (0.34)
Net realized gain (0.01)
----------
Total distributions (0.35)
----------
Net asset value, end of period $ 9.90
==========
TOTAL RETURN+ 1.69%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 200
Ratio of expenses to average daily
net assets(1) 1.16%*
Ratio of net investment income to average net assets 3.86%*
Portfolio turnover rate 6%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.52%*
</TABLE>
* Annualized.
** Class III and IV commenced operations on December 15, 1995 and August 3,
1999, respectively.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
36
<PAGE> 59
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
U.S. TREASURY MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
------------------------------------------------------------------------
For the Year
Ended June 30,
------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- ---------- ---------- ----------
<S> <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
--------- --------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.052 0.044 0.051 0.050 0.052
--------- --------- ---------- ---------- ----------
Distributions:
Net investment income (0.052) (0.044) (0.051) (0.050) (0.052)
--------- --------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- ---------- ---------- ----------
TOTAL RETURN+ 5.31% 4.51% 5.19% 5.09% 5.30%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 6,880 $ 7,309 $ 19,314 $ 6,141 $ 75,703
Ratio of expenses to average net assets(1) 0.39% 0.51% 0.45% 0.37% 0.36%
Ratio of net investment income to average net assets 5.13% 4.57% 5.09% 5.01% 5.19%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.68% 0.69% 0.63% 0.55% 0.56%
</TABLE>
<TABLE>
<CAPTION>
CLASS III
------------------------------------------------------------------------
For the Year
Ended June 30,
------------------------------------------------------------------------
2000 1999 1998 1997 1996**
--------- --------- ---------- ---------- ----------
<S> <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
--------- --------- ---------- ---------- ----------
Income from investment operations:
Net investment income 0.048 0.042 0.049 0.047 0.044
--------- --------- ---------- ---------- ----------
Distributions:
Net investment income (0.048) (0.042) (0.049) (0.047) (0.044)
--------- --------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========== ========== ==========
TOTAL RETURN+ 4.90% 4.27% 5.03% 4.84% 4.47%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 1,076 $ 4,661 $ 42,288 $ 61,135 $ 3,528
Ratio of expenses to average net assets(1) 0.78% 0.73% 0.62% 0.62% 0.62%*
Ratio of net investment income to average net assets 4.74% 4.35% 4.92% 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. 1.08% 0.91% 0.80% 0.80% 0.82%*
</TABLE>
* Annualized.
** Class III commenced operations on August 8, 1995.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
37
<PAGE> 60
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
U.S. TREASURY MONEY MARKET PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
CLASS IV
--------------
For the Period
Ended June 30,
--------------
2000**
--------------
<S> <C>
SELECTED PER-SHARE DATA
Net asset value, beginning of period $ 1.00
--------
Income from investment operations:
Net investment income 0.030
--------
Distributions:
Net investment income (0.030)
--------
Net asset value, end of period $ 1.00
========
TOTAL RETURN+ 3.01%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 77
Ratio of expenses to average net assets(1) 1.12%*
Ratio of net investment income to average net assets 4.40%*
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 1.42%*
</TABLE>
* Annualized.
** Class IV commenced operations on December 2, 1999.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
38
<PAGE> 61
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-----------------------------------------------------------------------
For the Year
Ended June 30,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- --------- ---------
<S> <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
---------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.053 0.047 0.052 0.051 0.053
---------- ---------- ---------- --------- ---------
Distributions:
Net investment income (0.053) (0.047) (0.052) (0.051) (0.053)
---------- ---------- ---------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- --------- ---------
TOTAL RETURN+ 5.48% 4.81% 5.37% 5.23% 5.37%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 81,992 $ 94,079 $ 88,255 $ 94,541 $ 88,111
Ratio of expenses to average net assets(1) 0.28% 0.39% 0.35% 0.35% 0.33%
Ratio of net investment income to average net assets 5.35% 4.71% 5.24% 5.11% 5.28%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.45% 0.56% 0.52% 0.53% 0.53%
</TABLE>
<TABLE>
<CAPTION>
CLASS III
-----------------------------------------------------------------------
For the Year
Ended June 30,
-----------------------------------------------------------------------
2000 1999 1998 1997 1996**
---------- ---------- ---------- --------- ---------
<S> <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
---------- ---------- ---------- --------- ---------
Income from investment operations:
Net investment income 0.050 0.043 0.049 0.048 0.044
---------- ---------- ---------- --------- ---------
Distributions:
Net investment income (0.050) (0.043) (0.049) (0.048) (0.044)
---------- ---------- ---------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========= =========
TOTAL RETURN+ 5.15% 4.42% 5.05% 4.91% 4.49%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 3,435 $ 1,674 $ 2,513 $ 3,486 $ 228
Ratio of expenses to average net assets(1) 0.59% 0.73% 0.65% 0.65% 0.65%*
Ratio of net investment income to average net assets 5.04% 4.37% 4.94% 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. 0.77% 0.90% 0.82% 0.83% 0.85%*
</TABLE>
* Annualized.
** Class III commenced operations on August 8, 1995.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
39
<PAGE> 62
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
-------------------------------------------------------------------
For the Year
Ended June 30,
-------------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
<S> <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
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 0.035 0.029 0.033 0.033 0.035
--------- --------- --------- --------- ---------
Distributions:
Net investment income (0.035) (0.029) (0.033) (0.033) (0.035)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN+ 3.56% 2.92% 3.33% 3.32% 3.52%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 44,535 $ 56,438 $ 36,279 $ 45,988 $ 71,665
Ratio of expenses to average net assets(1) 0.27% 0.33% 0.38% 0.35% 0.32%
Ratio of net investment income to average net assets 3.48% 2.87% 3.28% 3.25% 3.50%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows. 0.45% 0.50% 0.56% 0.53% 0.52%
</TABLE>
<TABLE>
<CAPTION>
CLASS III
-------------------------------------------------------------------
For the Year
Ended June 30,
-------------------------------------------------------------------
2000 1999 1998 1997 1996**
--------- --------- --------- --------- ---------
<S> <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
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income 0.032 0.025 0.030 0.030 0.030
--------- --------- --------- --------- ---------
Distributions:
Net investment income (0.032) (0.025) (0.030) (0.030) (0.030)
--------- --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN+ 3.24% 2.56% 3.06% 3.03% 3.03%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 5,527 $ 5,333 $ 3,929 $ 12,886 $ 2,905
Ratio of expenses to average net assets(1) 0.58% 0.68% 0.63% 0.62% 0.58%*
Ratio of net investment income to average net assets 3.17% 2.52% 3.03% 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. 0.76% 0.86% 0.81% 0.79% 0.78%*
</TABLE>
* Annualized.
** Class III commenced operations on July 28, 1995.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
The accompanying notes are an integral part of the financial statements.
40
<PAGE> 63
FIRST FUNDS ANNUAL REPORT
FINANCIAL HIGHLIGHTS
CASH RESERVE PORTFOLIO
<TABLE>
<CAPTION>
CLASS I
---------------------------------------------------------------------------
For the Year
Ended June 30,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- -----------
<S> <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
----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income 0.054 0.048 0.053 0.051 0.053
----------- ----------- ----------- ----------- -----------
Distributions:
Net investment income (0.054) (0.048) (0.053) (0.051) (0.053)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
TOTAL RETURN+ 5.56% 4.94% 5.46% 5.23% 5.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 32,028 $ 29,351 $ 40,242 $ 14,241 $ 16,369
Ratio of expenses to average net assets (1) 0.31% 0.39% 0.36% 0.40% 0.42%
Ratio of net investment income to average net assets 5.55% 4.84% 5.33% 5.13% 5.22%
(1) During the period, various fees were waived.
The ratio of expenses to average net assets had
such waivers not occurred is as follows 0.48% 0.56% 0.54% 0.57% 0.61%
</TABLE>
<TABLE>
<CAPTION>
CLASS III
--------------------------------------------------------------------------
For the Year
Ended June 30,
--------------------------------------------------------------------------
2000 1999 1998 1997 1996**
----------- ----------- ----------- ----------- ----------
<S> <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
----------- ----------- ----------- ----------- ----------
Income from investment operations:
Net investment income 0.053 0.046 0.051 0.049 0.047
----------- ----------- ----------- ----------- ----------
Distributions:
Net investment income (0.053) (0.046) (0.051) (0.049) (0.047)
----------- ----------- ----------- ----------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ==========
TOTAL RETURN+ 5.38% 4.67% 5.21% 5.00% 4.78%#
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (thousands) $ 107,154 $ 62,961 $ 58,243 $ 35,592 $ 24,190
Ratio of expenses to average net assets(1) 0.55% 0.66% 0.60% 0.64% 0.62%*
Ratio of net investment income to average net assets 5.30% 4.58% 5.09% 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. 0.73% 0.83% 0.77% 0.82% 0.81%*
</TABLE>
* Annualized.
** Class III commenced operations on July 28, 1995.
+ Total return would have been lower had various fees not been waived during
the period.
# Total returns for periods of less than one year are not annualized.
41
<PAGE> 64
FIRST FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
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 nine 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 Bond, Intermediate Bond, U.S. Government Money Market, Municipal Money
Market and Cash Reserve Portfolios may offer three classes of shares (Classes I,
II and III) and the Growth & Income, Capital Appreciation, Tennessee Tax-Free
and U.S. Treasury Money Market Portfolios may offer four classes of shares
(Classes I, II, III and IV). As of June 30, 2000, Class II shares have not been
issued for the Money Market 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 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 Plan 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.
The following summarizes the significant accounting policies for the Trust.
Security Valuation:
Growth & Income, Capital Appreciation, Bond, Intermediate 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,
Intermediate 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 advisers 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 Intermediate Bond,
Tennessee Tax-Free and Municipal Money Market Portfolios, accretion of market
discount represents unrealized gain until realized at the time of security
disposition or maturity. For the Intermediate Bond Portfolio, amortization of
market premium represents unrealized loss 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,
Intermediate 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 quarterly. 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. For the year ended June 30, 2000, the
effects of certain differences due to net paydown losses were reclassified. The
Bond Portfolio reflected an increase in overdistributed net investment income.
In addition, $349,607 has been reclassified to accumulated net realized gain on
investments for the Capital Appreciation Portfolio to reflect an accumulated net
investment loss offset against short-term capital gains for tax-purposes. The
calculation of net investment income in the Financial Highlights excludes these
adjustments.
42
<PAGE> 65
FIRST FUNDS ANNUAL REPORT
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.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO CAPITAL APPRECIATION PORTFOLIO
---------------------------------- ----------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Dollars issued and redeemed:
Class I:
Issued $ 82,890,013 $ 72,689,105 $ 335,327 $ 777,187
Distributions reinvested 47,242,093 12,066,519 0 749,183
Redeemed (106,362,443) (86,550,330) (1,890,480) (2,964,048)
-------------- -------------- ------------ ------------
Net increase (decrease) $ 23,769,663 $ (1,794,706) $ (1,555,153) $ (1,437,678)
============== ============== ============ ============
Class II:
Issued $ 33,582,218 $ 29,534,834 $ 1,930,475 $ 1,187,706
Distributions reinvested 10,169,784 1,674,476 0 36,490
Redeemed (21,656,218) (8,928,871) (993,674) (598,870)
-------------- -------------- ------------ ------------
Net increase $ 22,095,784 $ 22,280,439 $ 936,801 $ 625,326
============== ============== ============ ============
Class III:
Issued $ 14,277,849 $ 14,053,684 $ 243,838 $ 182,467
Distributions reinvested 10,199,346 2,143,511 0 10,549
Redeemed (15,230,462) (16,400,616) (176,892) (350,156)
-------------- -------------- ------------ ------------
Net increase (decrease) $ 9,246,733 $ (203,421) $ 66,946 $ (157,140)
============== ============== ============ ============
Class IV:*
Issued $ 5,492,770 0 $ 166,438 0
Distributions reinvested 168,693 0 0 0
Redeemed (315,111) 0 (10) 0
-------------- -------------- ------------ ------------
Net increase $ 5,346,352 0 $ 166,428 0
============== ============== ============ ============
Shares issued and redeemed:
Class I:
Issued 3,290,249 3,214,783 26,481 88,649
Distributions reinvested 1,955,554 525,597 0 79,956
Redeemed (4,174,934) (3,825,520) (142,200) (318,412)
-------------- -------------- ------------ ------------
Net increase (decrease) 1,070,869 (85,140) (115,719) (149,807)
============== ============== ============ ============
Class II:
Issued 1,309,922 1,308,316 148,275 131,289
Distributions reinvested 420,881 73,080 0 3,911
Redeemed (860,236) (400,544) (78,110) (64,816)
-------------- -------------- ------------ ------------
Net increase 870,567 980,852 70,165 70,384
============== ============== ============ ============
Class III:
Issued 569,850 630,641 18,876 18,065
Distributions reinvested 428,519 94,055 0 1,143
Redeemed (608,388) (746,627) (12,681) (35,623)
-------------- -------------- ------------ ------------
Net increase (decrease) 389,981 (21,931) 6,195 (16,415)
============== ============== ============ ============
Class IV:*
Issued 219,266 0 12,065 0
Distributions reinvested 7,011 0 0 0
Redeemed (12,529) 0 (1) 0
-------------- -------------- ------------ ------------
Net increase 213,748 0 12,064 0
============== ============== ============ ============
</TABLE>
*Class IV of the Growth & Income and Capital Appreciation Portfolios commenced
operations on August 3, 1999.
43
<PAGE> 66
FIRST FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
BOND INTERMEDIATE BOND TENNESSEE TAX-FREE
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ----------------------------- -----------------------------
For the For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
June 30, June 30, June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000 1999
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Dollars issued and redeemed:
Class I:
Issued $ 21,333,003 $ 24,844,510 $ 37,069,623 $ 52,943,178 $ 25,273,539 $ 38,017,179
Distributions reinvested 9,319,717 9,867,882 5,024,733 5,283,672 131,685 71,799
Redeemed (25,942,405) (19,100,552) (54,895,729) (33,299,042) (34,699,959) (25,180,888)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) $ 4,710,315 $ 15,611,840 $(12,801,373) $ 24,927,808 $ (9,294,735) $ 12,908,090
============ ============ ============ ============ ============ ============
Class II:
Issued $ 2,642,170 $ 3,985,687 $ 10,299,935 $ 2,490,231 $ 1,466,879 $ 5,523,897
Distributions reinvested 338,165 218,438 241,242 134,814 426,534 423,324
Redeemed (1,882,690) (623,882) (6,035,793) (392,578) (4,295,096) (1,371,416)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) $ 1,097,645 $ 3,580,243 $ 4,505,384 $ 2,232,467 $ (2,401,683) $ 4,575,805
============ ============ ============ ============ ============ ============
Class III:
Issued $ 136,210 $ 1,188,451 $ 728,928 $ 1,588,568 $ 2,786,957 $ 16,896,982
Distributions reinvested 109,099 131,630 34,578 21,171 429,294 593,070
Redeemed (1,044,070) (641,066) (574,588) (501,666) (11,289,572) (8,886,269)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) $ (798,761) $ 679,015 $ 188,918 $ 1,108,073 $ (8,073,321) $ 8,603,783
============ ============ ============ ============ ============ ============
Class IV:*
Issued 0 0 0 0 $ 200,118 0
Distributions reinvested 0 0 0 0 3 0
Redeemed 0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
Net increase 0 0 0 0 $ 200,121 0
============ ============ ============ ============ ============ ============
Shares issued and redeemed:
Class I:
Issued 2,218,967 2,432,923 3,851,380 5,277,980 2,549,989 3,663,984
Distributions reinvested 975,034 962,005 523,021 526,173 13,354 6,934
Redeemed (2,712,263) (1,863,613) (5,706,769) (3,324,360) (3,506,427) (2,430,886)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 481,738 1,531,315 (1,332,368) 2,479,793 (943,084) 1,240,032
============ ============ ============ ============ ============ ============
Class II:
Issued 274,904 391,682 1,067,585 246,281 148,701 532,449
Distributions reinvested 35,490 21,314 25,134 13,437 43,047 40,794
Redeemed (195,761) (60,985) (625,118) (39,189) (433,603) (132,428)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) 114,633 352,011 467,601 220,529 (241,855) 440,815
============ ============ ============ ============ ============ ============
Class III:
Issued 14,135 114,645 76,218 158,359 279,879 1,625,294
Distributions reinvested 11,395 12,867 3,602 2,116 43,294 57,195
Redeemed (109,645) (62,631) (59,739) (49,941) (1,138,977) (858,698)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (84,115) 64,881 20,081 110,534 (815,804) 823,791
============ ============ ============ ============ ============ ============
Class IV:*
Issued 0 0 0 0 20,214 0
Distributions reinvested 0 0 0 0 0 0
Redeemed 0 0 0 0 0 0
------------ ------------ ------------ ------------ ------------ ------------
Net increase 0 0 0 0 20,214 0
============ ============ ============ ============ ============ ============
</TABLE>
*Class IV of the Tennessee Tax-Free Portfolio commenced operations on August 3,
1999.
44
<PAGE> 67
FIRST FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
U.S. TREASURY MONEY MARKET PORTFOLIO U.S. GOVERNMENT MONEY MARKET PORTFOLIO
------------------------------------ --------------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares/Dollars issued and
redeemed:
Class I:
Issued $ 37,578,292 $ 18,590,020 $ 114,773,617 $ 114,177,832
Distributions reinvested 732 1,131 22 13
Redeemed (38,014,963) (30,598,349) (126,851,898) (108,353,060)
------------ ------------- ------------- -------------
Net increase (decrease) $ (435,939) $ (12,007,198) $ (12,078,259) $ 5,824,785
============ ============= ============= =============
Class III:
Issued $ 13,705,261 $ 139,906,932 $ 92,080,110 $ 34,798,328
Distributions reinvested 97,025 477,442 276,261 114,502
Redeemed (17,389,850) (178,012,590) (90,595,428) (35,752,232)
------------ ------------- ------------- -------------
Net increase (decrease) $ (3,587,564) $ (37,628,216) $ 1,760,943 $ (839,402)
============ ============= ============= =============
Class IV:*
Issued $ 571,705 0 0 0
Distributions reinvested 1,788 0 0 0
Redeemed (496,605) 0 0 0
------------ ------------- ------------- -------------
Net increase $ 76,888 0 0 0
============ ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO CASH RESERVE PORTFOLIO
--------------------------------- ----------------------------------
For the Year For the Year For the Year For the Year
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Shares/Dollars issued and
redeemed:
Class I:
Issued $ 78,082,758 $ 84,302,797 $ 54,922,903 $ 47,673,460
Distributions reinvested 34 23 6 1
Redeemed (89,982,141) (64,144,557) (52,245,963) (58,566,116)
------------ ------------- ------------- -------------
Net increase (decrease) $(11,899,349) $ 20,158,263 $ 2,676,946 $ (10,892,655)
============ ============= ============= =============
Class III:
Issued $ 17,506,433 $ 23,170,849 $ 234,279,697 $ 139,985,723
Distributions reinvested 176,738 111,051 4,334,765 2,753,795
Redeemed (17,488,536) (21,878,428) (194,421,126) (138,023,657)
------------ ------------- ------------- -------------
Net increase $ 194,635 $ 1,403,472 $ 44,193,336 $ 4,715,861
============ ============= ============= =============
</TABLE>
* Class IV of the U.S. Treasury Money Market Portfolio commenced operations on
December 2, 1999.
3. INVESTMENT ADVISORY AND MANAGEMENT AND SUB-ADVISORY AGREEMENTS
For managing its investment and business affairs, the Growth & Income Portfolio,
Bond Portfolio, Intermediate 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%, .50% 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 Delaware Management Company ("DMC") 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 monthly management
fees at the annual rate of .15% of its average net assets. The Capital
Appreciation Portfolio is obligated to pay DMC monthly management fees at the
annual rate of .70% for the first $50 million of the Portfolio's average net
assets and .65% on average net assets of the Portfolio in excess of $50 million.
Information contained in this report prior to 6/1/2000 for the Capital
Appreciation Portfolio reflects the operations of the Portfolio while Investment
Advisers Inc. was co-adviser. DMC was approved as the Portfolio co-adviser at a
special meeting of the shareholders of the Portfolio on May 17, 2000.
45
<PAGE> 68
FIRST FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (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 Intermediate Bond and Tennessee Tax-Free Portfolios, Martin & Company,
Inc. ("Martin") serves as sub-adviser of each Portfolio pursuant to the
authority granted to it under its Sub-Advisory Agreement with First Tennessee.
Martin is an affiliate of First Tennessee and is a wholly-owned subsidiary of
First Tennessee National Corporation. Martin is paid by First Tennessee a
monthly sub-advisory fee at the annual rate of .30% of each Portfolio's average
net assets.
For the Money Market Portfolios, BlackRock Institutional Management Corporation
("BlackRock") (formerly PNC Institutional Management Corporation) serves as the
sub-adviser of each Portfolio pursuant to the authority granted to it under its
Sub-Advisory Agreement with First Tennessee. BlackRock is a wholly-owned
subsidiary of PNC Bank National Association. BlackRock 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,
Intermediate 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 and Class IV of the Growth & Income, Capital Appreciation, Tennessee
Tax-Free and U.S. Treasury Money Market Portfolios, pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended. Each Class III 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, Intermediate Bond and Tennessee Tax-Free Portfolios, and .25% of the
average net assets of Class III of each of the Money Market Portfolios. Each
Class IV Distribution Plan provides for payment of a fee to ALPS at the annual
rate of up to 1.00% of the average net assets of Class IV of the Growth & Income
and Capital Appreciation Portfolios, .70% of the average net assets of Class IV
of the Tennessee Tax-Free Portfolio and .65% of the average net assets of Class
IV of the U.S. Treasury Money Market Portfolio. The Trustees have also adopted
Shareholder Servicing Plans on behalf of Class II and III of the Growth &
Income, Capital Appreciation, Bond, Intermediate Bond and Tennessee Tax-Free
Portfolios under which broker/dealers, advisers or other financial institutions
are paid at the annual rate of up to .25% of each class' average net assets for
shareholder services and account maintenance.
5. WAIVER OF FEES
Growth & Income, Capital Appreciation, Bond and Intermediate Bond Portfolios:
For the six months ended December 31, 1999, First Tennessee voluntarily agreed
to waive its management fee for the Growth & Income, Capital Appreciation, Bond
and Intermediate Bond Portfolios to .50%, .00%, .15% and .00% of average net
assets, respectively. Effective January 1, 2000, First Tennessee eliminated its
management fee waivers on the Growth & Income and Capital Appreciation
Portfolios, and voluntarily agreed to waive its management fees for the Bond and
Intermediate Bond Portfolios to .30% of each portfolio's average net assets.
Pursuant to the voluntary waiver agreement, for the year ended June 30, 2000,
First Tennessee waived management fees of $744,918, $27,614, $758,553, and
$782,798 for the Growth & Income, Capital Appreciation, Bond and Intermediate
Bond Portfolios, respectively.
For the year ended June 30, 2000, the 12b-1 fee charged by Class III of the Bond
and Intermediate Bond Portfolios was waived to .50% of average net assets.
Pursuant to this waiver, 12b-1 fees were waived in the amount of $5,728 and
$2,522 for the Bond and Intermediate Bond Portfolios, respectively.
Tennessee Tax-Free Portfolio:
For the six months ended December 31, 1999, First Tennessee, as Investment
Adviser, voluntarily agreed to waive its entire management fee. Effective
January 1, 2000, First Tennessee voluntarily agreed to waive its management fee
to .30% of average net assets.
For the six months ended June 30, 2000, the 12b-1 fee charged by Class III of
the Tennessee Tax-Free Portfolio was waived to .50% of average net assets.
46
<PAGE> 69
FIRST FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. WAIVER OF FEES (CONTINUED)
For the period July 1, 1999 through August 31, 1999, ALPS agreed to voluntarily
reimburse Class III of the Tennessee Tax-Free Portfolio for .10% of the .50%
12b-1 fee charged by that class. After August 31, 1999, ALPS eliminated its
voluntary reimbursement of the 12b-1 fee charged by Class III of the Tennessee
Tax-Free Portfolio.
Pursuant to the voluntary waiver and reimbursement agreements, for the year
ended June 30, 2000, fees were waived and reimbursed for the Tennessee Tax-Free
Portfolio as follows:
<TABLE>
<S> <C>
Management fees waived $ 733,151
Reimbursement by administrator $ 2,860
12b-1 fees waived $ 32,022
</TABLE>
Money Market Portfolios:
For the year ended June 30, 2000, First Tennessee voluntarily agreed to waive
its management and co-administration fees for the U.S. Treasury Money Market
Portfolio to .08% and .00% of average net assets, respectively. Additionally,
for the year ended June 30, 2000, ALPS agreed to waive its entire administration
fee for the U.S. Treasury Money Market Portfolio.
For the year ended June 30, 2000, First Tennessee voluntarily agreed to waive a
portion of its management and co-administration fees payable by the U.S.
Government Money Market, Municipal Money Market and Cash Reserve Portfolios to
.10% and .025% of average net assets, respectively.
For the year ended June 30, 2000, the expense waivers were as follows:
<TABLE>
<CAPTION>
Management Fee Co-Administration Fee Administration Fee
-------------- --------------------- ------------------
<S> <C> <C> <C>
U.S. Treasury Money Market $ 19,431 $ 5,731 $ 8,597
U.S. Government Money Market $ 147,597 $ 24,598 $ 0
Municipal Money Market $ 81,308 $ 13,554 $ 0
Cash Reserve $ 169,968 $ 28,499 $ 0
</TABLE>
6. CONVERSION OF COMMON TRUST FUNDS AND COLLECTIVE INVESTMENT POOLS
On March 2, 1998, the Growth & Income Portfolio issued shares in a tax-free
conversion to acquire the net assets of the Common Stock - Total Return Fund,
the Common Stock - Stable Value Fund and the Common Trust Fund 1 of First
Tennessee Bank. The following is a summary of shares issued, net assets
acquired, net asset value per share and unrealized appreciation as of the date
acquired.
<TABLE>
<S> <C>
Shares issued 11,062,850
Net assets acquired $ 227,230,934
Net asset value $ 20.54
Unrealized appreciation $ 83,270,056
</TABLE>
On March 2, 1998, the Growth & Income Portfolio issued shares in a taxable
conversion to acquire the net assets of the Pooled Equity Fund and the Common
Trust Fund 3 of First Tennessee Bank. The following is a summary of shares
issued, net assets acquired and net asset value per share. Because the
conversion was taxable, no unrealized appreciation was acquired.
<TABLE>
<S> <C>
Shares issued 5,341,465
Net assets acquired $ 109,713,703
Net asset value $ 20.54
</TABLE>
On March 2, 1998, the Bond Portfolio issued shares in a tax-free conversion to
acquire the net assets of the Common Fixed Income - Total Return Fund of First
Tennessee Bank. The following is a summary of shares issued, net assets
acquired, net asset value per share and unrealized appreciation as of the date
acquired.
<TABLE>
<S> <C>
Shares issued 4,782,121
Net assets acquired $ 48,681,990
Net asset value $ 10.18
Unrealized appreciation $ 2,173,653
</TABLE>
On March 2, 1998, the Intermediate Bond Portfolio issued shares in a tax-free
conversion to acquire the net assets of the Common Fixed Income - Stable Value
Fund, the Pooled Intermediate Bond Fund, the Common Trust Fund 2 and the Common
Trust Fund 4 of First Tennessee Bank. The following is a summary of shares
issued, net assets acquired, net asset value per share and unrealized
appreciation as of the date acquired.
47
<PAGE> 70
FIRST FUNDS ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. CONVERSION OF COMMON TRUST FUNDS AND COLLECTIVE INVESTMENT POOLS (CONTINUED)
<TABLE>
<S> <C>
Shares issued 18,490,489
Net assets acquired $ 184,904,888
Net asset value $ 10.00
Unrealized appreciation $ 1,914,289
</TABLE>
On March 2, 1998, the Tennessee Tax-Free Portfolio issued shares in a tax-free
conversion to acquire the net assets of the Common Tax-Exempt - Total Return
Fund, the Common Tax-Exempt - Stable Value Fund and the Common Trust Fund 5 of
First Tennessee Bank. The following is a summary of shares issued, net assets
acquired, net asset value per share and unrealized appreciation as of the date
acquired.
<TABLE>
<S> <C>
Shares issued 14,429,355
Net assets acquired $ 148,766,645
Net asset value $ 10.31
Unrealized appreciation $ 5,930,274
</TABLE>
7. OTHER
As of June 30, 2000, one shareholder (a related party) owned 13% of the Growth &
Income Portfolio, 82% of the Capital Appreciation Portfolio and 41% of the Bond
Portfolio. Additionally, as of June 30, 2000, one shareholder owned 22% of the
U.S. Treasury Money Market Portfolio, 15% of the U.S. Government Money Market
Portfolio and 63% of the Cash Reserve Portfolio.
The Trustees of the Trust receive an annual Trustees fee of $6,000 and an
additional fee for each Trustees' meeting attended.
A proposal to approve a Co-Advisory Agreement between the Capital Appreciation
Portfolio and Delaware Management Company was passed by the required majority of
shareholders of the Portfolio at a special shareholders meeting held on May 17,
2000, for the purpose of voting on the proposal. 3,260,945 shares were voted for
the proposal, 139 against and 1,950 shares abstained from voting.
48
<PAGE> 71
[FIRST FUNDS LOGO] 370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
1-800-442-1941
www.firstfunds.com
INVESTMENT ADVISER - ALL PORTFOLIOS EXCEPT CAPITAL APPRECIATION PORTFOLIO
First Tennessee Bank National Association
Memphis, Tennessee
CO-INVESTMENT ADVISERS - CAPITAL APPRECIATION PORTFOLIO
First Tennessee Bank National Association
Memphis, Tennessee
Delaware Management Company
Philadelphia, Pennsylvania
SUB-ADVISER - MONEY MARKET PORTFOLIOS
BlackRock Institutional Management Corporation
Wilmington, Delaware
SUB-ADVISER - GROWTH & INCOME AND BOND PORTFOLIOS
Highland Capital Management Corporation
Memphis, Tennessee
SUB-ADVISER - INTERMEDIATE BOND AND TENNESSEE TAX-FREE PORTFOLIOS
Martin & Company, Inc.
Knoxville, Tennessee
ADMINISTRATOR AND DISTRIBUTOR
ALPS Mutual Funds Services, Inc.
Denver, Colorado
CO-ADMINISTRATOR
First Tennessee Bank National Association
Memphis, Tennessee
TRANSFER AND SHAREHOLDER SERVICING AGENT
Boston Financial Data Services
Boston, Massachusetts
CUSTODIAN
State Street Bank & Trust Company
Boston, Massachusetts
OFFICERS
Russell Burk, Secretary
Jeremy May, Treasurer
TRUSTEES
Thomas M. Batchelor
John A. DeCell
L.R. Jalenak, Jr.
George P. Lewis
Larry W. Papasan
Richard C. Rantzow
THIS REPORT HAS BEEN PREPARED FOR FIRST FUNDS SHAREHOLDERS AND MAY BE
DISTRIBUTED TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A PROSPECTUS.
NOT FDIC INSURED [FIRST TENNESSEE LOGO] [ALPS LOGO]
