This report and the financial statements contained herein are submitted for the
general information of the shareholders of the corporation. The report is not
authorized for distribution to prospective investors in the corporation unless
preceded or accompanied by an effective prospectus for each of the Funds
included. Shares in the Funds are not deposits or obligations of, or guaranteed
or endorsed by, First Bank National Association or any of its affiliates. Such
shares are also not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency.
FIRST AMERICAN MUTUAL FUNDS
680 East Swedesford Road
Wayne, Pennsylvania 19087
Investment Adviser
FIRST BANK NATIONAL ASSOCIATION
601 Second Avenue South
Minneapolis, Minnesota 55480
Custodian
FIRST TRUST NATIONAL ASSOCIATION
180 East Fifth Street
St. Paul, Minnesota 55101
Administrator
SEI FINANCIAL MANAGEMENT
CORPORATION
680 East Swedesford Road
Wayne, Pennsylvania 19087
Transfer Agent
SUPERVISED SERVICE COMPANY
811 Main Street
Kansas City, Missouri 64105
Distributor
SEI FINANCIAL SERVICES COMPANY
680 East Swedesford Road
Wayne, Pennsylvania 19087
Independent Auditors
KPMG PEAT MARWICK
90 South Seventh Street
Minneapolis, Minnesota 55402
Counsel
DORSEY & WHITNEY
220 South Sixth Street
Minneapolis, Minnesota 55402
FAMF 1475 (5/94) RI
FIRST AMERICAN MUTUAL FUNDS
SEMI-ANNUAL REPORT
MAY 31, 1994
Diversified Growth
Equity Income
Managed Income
Limited Term Tax Free Income
FIRST AMERICAN FAMILY OF FUNDS
We never forget the reasons you're investing.
FIRST AMERICAN FUNDS:
* Are NOT insured by the FDIC or any other governmental agency;
* Are NOT obligations of First Bank System or any of its affiliates;
* Are NOT guaranteed by First Bank System or any of its affiliates;
* Involve investment risk, including possible loss of principal.
First American Funds are sponsored by SEI Financial Services Company, a party
independent of First Bank System and its affiliates. First Bank System
receives compensation for its role as investment advisor to the First
American Funds.
FUND INFORMATION
<TABLE>
<S> <C>
Introduction 1
Fund Descriptions 2
Letter to 3
Shareholders
Family of Other 4
Funds
</TABLE>
EQUITY FUNDS
<TABLE>
<S> <C>
Schedule of Investments -- 6
Diversified Growth Fund
Schedule of Investments -- Equity 7
Income Fund
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Financial Highlights 17
Notes to Financial Statements 18
</TABLE>
FIXED INCOME FUNDS
<TABLE>
<S> <C>
Schedule of Investments -- 9
Managed Income Fund
Statement of Assets and 14
Liabilities
Statement of Operations 15
Statement of Changes in Net 16
Assets
Financial Highlights 17
Notes to Financial Statements 18
</TABLE>
TAX-EXEMPT FUNDS
<TABLE>
<S> <C>
Schedule of Investments -- 11
Limited Term Tax Free Income
Fund
Statement of Assets and 14
Liabilities
Statement of Operations 15
Statement of Changes in Net 16
Assets
Financial Highlights 17
Notes to Financial Statements 18
</TABLE>
At the First American Funds family, we are committed to providing you with
easy to understand information about your investment decisions.
If you have any questions or comments about the information contained in
this report, or more specifically about your account, please do not hesitate to
call your First American Funds Representative or the Funds directly at (800)
637-2548.
The First American Funds family has been developed over the past 12 years,
based on understanding the different objectives of investors like you. With the
First American Funds family, you can choose from a wide variety of funds, each
with unique investment objectives. Whichever Fund you choose, you'll enjoy the
comfort of knowing that your assets are being managed by professionals who
believe that the best long-term results are achieved through disciplined
investment strategies. Following is a description of each of the First American
Funds portfolios.
<PAGE> 1
FIRST AMERICAN MUTUAL FUNDS:
Objectives as of July 5, 1994
DIVERSIFIED GROWTH FUND Investment Objective: The primary objective of
the Diversified Growth Fund is to achieve long-term growth of capital. The
Fund's secondary objective is to provide income. The Fund will invest in
equity securities of a diverse group of companies to provide
representation across all economic sectors included in the S&P 500
Composite Stock Index.
EQUITY INCOME FUND Investment Objective: The objective of the Equity
Income Fund is to achieve long-term growth of capital and income. The Fund
will invest in equity securities that have relatively high dividend
yields, and which, in the Advisor's opinion, will result in a relatively
stable Fund dividend with a growth rate sufficient to maintain the
purchasing power of the "income stream".
MANAGED INCOME FUND Investment Objective: The objective of the Managed
Income Fund is to provide current income while attempting to provide a
high degree of principal stability. The Fund invests in a portfolio of
investment grade securities consisting of U.S. Government obligations and
corporate debt obligations, and mortgage related securities rated in one
of the four highest rating categories of a nationally recognized rating
agency. The Fund's portfolio securities will have a weighted average
maturity of six months to two years.
LIMITED TERM TAX FREE INCOME FUND Investment Objective: The objective
of the Limited Term Tax Free Income Fund is to provide dividend income
that is exempt from federal regular income tax while attempting to provide
a high degree of principal stability. The Fund seeks to achieve its
objective by investing in municipal obligations. The Fund's portfolio
securities will have an average effective weighted maturity of six months
to two years.
<PAGE> 2
Letter to Shareholders
Dear Shareholder:
The First American Mutual Funds ended its first six months with assets
under management reaching $131 million. Many notable events have taken
place within the Fund family during this time period.
As a previous shareholder of The Boulevard Funds, you invested in a family
of mutual funds advised by Boulevard Bank National Association. On March
25, 1994, Boulevard Bank was acquired by First Bank System, whereby a
number of changes occurred.
In attempt to provide good, long-term consistent growth in the portfolios,
First Asset Management, a division of First Bank National Association,
became the new investment advisor for the Funds. And, as of May 18th, the
name of the Funds family was changed to First American Mutual Funds, and
the names of the portfolios, and their investment policies, changed as well.
The First American Funds is a family of 22 mutual funds which provide you
with a full range of investment options, and we are always considering
other funds that would help round out the Fund family and expand your
investment choices. For a further description of each of these portfolios,
please see the fund description section of this report.
While we have made a number of changes to the Funds, we want to assure you
that we are committed to helping you, and other potential investors, in
building a solid investment portfolio. Our investment services and high
quality money management are dedicated to trying to help you meet your
goals and achieve financial growth.
Sincerely,
Joseph D. Strauss
Chairman
<PAGE> 3
Family of Other Funds
EQUITY FUNDS
GOAL: The primary goal of equity investing is long-term growth. Over the
past six decades common stocks have outperformed other leading investment
categories by a wide margin-despite periods of market fluctuation, market
losses over shorter periods of time, global conflict, and economic
turmoil. While all equities carry an inherent risk of principal loss, this
risk can be decreased through diversification among a wide range of
securities, and through prudent investment management.
EMERGING GROWTH FUND Investment Objective: The objective of the
Emerging Growth Fund is to seek growth of capital by investing primarily
in a diversified portfolio of equity securities of small- to medium-sized
companies.
EQUITY INDEX FUND Investment Objective: The objective of the Equity
Index Fund is to provide investment results that correspond to the
performance of the S&P 500 Index.
INTERNATIONAL FUND Investment Objective: The objective of the
International Fund is to seek long-term growth of capital by investing
primarily in non-U.S. equity securities.
REGIONAL EQUITY FUND Investment Objective: The objective of the
Regional Equity Fund is to seek capital appreciation by investing
primarily in equity securities of small and medium-sized regional
companies.
SPECIAL EQUITY FUND Investment Objective: The objective of the Special
Equity Fund is to seek capital appreciation by investing in undervalued
securities.
STOCK FUND Investment Objective: The primary objective of the Stock
Fund is to seek long-term capital appreciation of equity securities and
the secondary objective is to seek current income.
TECHNOLOGY FUND Investment Objective: The objective of the Technology
Fund is to seek long-term growth of capital by investing primarily in a
non-diversified portfolio of equity securities concentrated in the
technology industry.
*
FIXED INCOME
FUNDS
GOAL: The overall goal of a fixed income fund is to provide a competitive
rate of income which is based on its current investment holdings and
overall market conditions.
Generally speaking, the share prices of fixed income funds tend to
increase during times of falling market interest rates, and decrease
during times when interest rates are rising.
MONEY MARKET FUND Investment Objective: The objective of the Money
Market Fund is to seek maximum current income consistent with preservation
of capital while maintaining liquidity.
FIXED INCOME FUND Investment Objective: The objective of the Fixed
Income Fund is to seek a high level of current income consistent with
preservation of capital.
GOVERNMENT BOND FUND Investment Objective: The objective of the
Government Bond Fund is to seek maximum current income to the extent
consistent with the preservation of capital.
INTERMEDIATE-TERM INCOME FUND Investment Objective: The objective of the
Intermediate-Term Income Fund is to seek current income, with a secondary
objective of capital appreciation.
LIMITED-TERM INCOME FUND Investment Objective: The objective of the
Limited-Term Income Fund is to seek current income in investment-grade
fixed income securities.
MORTGAGE SECURITIES FUND Investment Objective: The objective of the
Mortgage Securities Fund is to seek current income by investing in a
variety of mortgage related securities.
<PAGE> 4
Family of Other Funds (continued)
BALANCED FUNDS
GOAL: Balanced funds take a broader approach to investing, seeking to
capitalize on relative strengths and weaknesses within these various
categories over various market cycles.
The goal is to maximize total return, consistent with reducing the
volatility associated with investing in a particular category.
ASSET ALLOCATION FUND Investment Objective: The objective of the Asset
Allocation Fund is to seek maximum total return over the long term by
allocating its assets among stocks, bonds and short-term instruments.
BALANCED FUND Investment Objective: The objective of the Balanced Fund
is to seek to maximize total return over the long term by investing in a
combination of equity and fixed income securities.
TAX-EXEMPT FUNDS
GOAL: The overall goal of a municipal bond fund is to deliver a
competitive rate of tax-free income. The level of income from a particular
fund will fluctuate based on its current investment holdings and overall
market conditions.
Generally speaking, the share prices of municipal bond funds tend to
increase during times of falling market interest rates, and decrease
during times when interest rates are rising.
COLORADO INTERMEDIATE TAX-FREE FUND Investment Objective: The objective
of the Colorado Intermediate Tax-Free Fund is to seek current income which
is exempt from both federal income tax and Colorado state income tax,
consistent with preservation of capital.
MINNESOTA INSURED INTERMEDIATE TAX-FREE FUND Investment Objective: The
objective of the Minnesota Insured Intermediate Tax-Free Fund is to seek
current income which is exempt from both federal income tax and Minnesota
state income tax, consistent with preservation of capital.
MUNICIPAL BOND FUND Investment Objective: The objective of the
Municipal Bond Fund is to seek current income free from federal income
tax.
MORE ABOUT THE INVESTMENT
ADVISOR OF THE FIRST AMERICAN MUTUAL FUNDS
First American Mutual Funds is a part of the First American Funds family
of 22 mutual funds managed by First Asset Management, a division of First
Bank National Association. First Asset Management (FAM) brings experience,
competitive performance and understanding of client needs to investment
management with the First American Mutual Funds.
As one of the largest investment advisors in the upper midwest, FAM
manages investments for corporations, employee benefit plans, endowment
funds, foundations, and individuals to achieve their diverse investment
goals. Today they manage over $22 billion in assets, including over $3
billion in the First American Funds family.
<PAGE> 5
Schedule of Investments -- May 31, 1994 (Unaudited)
DIVERSIFIED GROWTH FUND
Percentages of each investment category relate to total net assets.
<TABLE>
<CAPTION>
Description Shares Value (000)
<S> <C> <C>
COMMON STOCKS -- 94.5%
AUTOMOTIVE -- 2.2%
Ford Motor Co. 10,000 $ 578
BEVERAGES-SOFT DRINKS -- 8.7%
Coca-Cola Co. 30,000 1,211
PepsiCo 29,000 1,044
2,255
CONGLOMERATES -- 3.5%
Minnesota Mining & Manufacturing Co. 18,000 918
COSMETIC/PERSONAL CARE -- 3.2%
Gillette Co. 12,000 837
DIVERSIFIED -- .7%
Tenneco, Inc. 4,000 192
ELECTRICAL EQUIPMENT -- 4.4%
General Electric Co. 23,000 1,141
ENTERTAINMENT -- 4.7%
Disney 28,000 1,211
FOODS -- 8.0%
Albertsons, Inc. 4,000 112
Sara Lee Corp. 34,000 727
Sysco Corp. 20,000 517
Wrigley (Wm.), Jr. Co. 14,000 716
2,072
HOUSEHOLD PRODUCTS -- 7.4%
Procter & Gamble 19,000 1,071
Rubbermaid, Inc. 31,000 864
1,935
INFORMATION-PROCESSING/TECHNOLOGY -- 10.4%
Automatic Data Processing, Inc. 19,000 1,014
Cisco Systems, Inc.* 10,000 248
Hewlett-Packard Co. 14,000 1,099
Oracle Systems Corp.* 10,000 342
2,703
MEDICAL PRODUCTS/HOSPITAL SUPPLIES -- 6.5%
Bausch & Lomb, Inc. 14,000 693
Johnson & Johnson 22,500 996
1,689
MERCHANDISING -- 9.3%
Toys 'R' Us, Inc.* 21,000 $ 745
Walgreen Co. 23,000 940
Wal-Mart Stores, Inc. 31,000 729
2,414
OIL & GAS -- 1.7%
Atlantic Richfield Co. 2,500 252
Du Pont E I de Nemours 3,000 186
438
PHARMACEUTICALS -- 1.8%
Merck and Co., Inc. 15,000 458
POLLUTION CONTROL -- 2.7%
WMX Technologies, Inc. 26,000 712
PUBLISHING-PRINTING RELATED -- 3.6%
Dun & Bradstreet Corp. 16,000 932
RESTAURANTS -- 4.3%
McDonald's Corp. 18,000 1,116
SPECIALTY CHEMICAL -- 5.4%
International Flavours & Fragrance, Inc. 27,000 1,039
Sigma Aldrich 9,000 374
1,413
TELECOMMUNICATIONS -- 3.8%
American Telephone & 18,000 981
Telegraph Co.
TIMBER PRODUCTS -- .8%
Weyerhaeuser Co. 5,000 208
CLIMATE CONTROL SYSTEMS -- 1.4%
York International 10,000 360
TOTAL COMMON STOCKS 24,563
(Cost $25,542)
REPURCHASE AGREEMENT -- 4.4%
Morgan Stanley & Co., Inc., 4.23%, dated 1,140
5/31/94, due 6/1/94, repurchase price
$1,140,128 (collateralized by $1,170,000 FFCB,
4.43%, maturity 4/3/95; market value
$1,169,431)
TOTAL INVESTMENTS $25,703
</TABLE>
(Cost $26,682)
* Non-income producing security
The accompanying notes are an integral part of the financial statements.
<PAGE> 6
EQUITY INCOME FUND
Percentages of each investment category relate to total net assets.
<TABLE>
<CAPTION>
Description Par (000) Value (000)
<S> <C> <C>
CORPORATE BONDS -- 49.5%
AEROSPACE -- 2.6%
Lockheed Corp., 4.57%, $ 250 $ 247
4/3/95
United Technologies Corp., 350 370
9.625%, 5/15/99
617
BANKING -- 5.7%
Allied Corp., 0.00%, 8/1/95 400 401
Credit Suisse, 9.50%, 750 755
7/1/94
Wells Fargo & Co., 7.625%, 250 233
10/1/94
1,389
BUSINESS CREDIT -- 5.2%
IBM Credit Corp., 5.55%, 1,000 999
1/27/95
Xerox Credit Corp., 9.25%, 250 255
2/15/2000
1,254
CHEMICAL -- 2.1%
ICI Wilmington, Inc., 500 508
7.83%, 5/9/95
DIVERSIFIED -- 2.1%
Textron, Inc., 10.20%, 500 504
9/1/94
FOOD & BEVERAGE -- 3.2%
Conagra, Inc., 9.19%, 500 516
6/30/95
Sara Lee Corp., 9.70%, 250 260
9/1/2000
776
HEALTHCARE -- 2.1%
Vencor, Inc., 6.00%, 500 505
10/01/2002
PERSONAL CREDIT -- 7.1%
Commercial Credit Group, 500 502
Inc., 6.95%, 10/1/94
General Motors Acceptance 700 702
Corp., 8.50%, 7/18/94
Household Finance Corp., 500 507
9.25%, 4/1/95
1,711
PHOTOGRAPH EQUIPMENT -- 2.1%
Eastman Kodak Co., 9.625%, 500 509
11/15/99
RAILWAYS -- 1.0%
GATX Leasing Corp., 9.90%, 250 250
</TABLE>
6/15/94
<TABLE>
<CAPTION>
DESCRIPTION PAR (000) VALUE (000)
<S> <C> <C>
RETAIL -- 8.7%
Dayton Hudson Corp., 4.82%, $500 $ 486
4/1/96
Sears Roebuck & Co., 9.05%, 500 500
6/13/94
Sears Roebuck & Co., 8.19%, 150 150
7/20/94
Sears Roebuck & Co., 4.58%, 500 499
9/15/94
Super Valu Stores, Inc., 250 250
5.875%, 11/15/95
Super Valu Stores, Inc., 200 202
9.375%, 8/15/94
2,087
SECURITY BROKERS -- 2.1%
Paine Webber Group, Inc., 200 206
9.625%, 5/1/95
Shearson Lehman Bros. 300 305
Holdings, Inc., 7.625%,
6/15/97
511
TOBACCO -- 1.3%
Philip Morris Cos., Inc., 300 311
9.10%, 11/14/95
UTILITIES -- 4.2%
Houston Lighting & Power 500 518
Co., 8.625%, 1/15/96
New York State Electric & 500 503
Gas Corp., 8.375%, 8/15/94
1,021
TOTAL CORPORATE BONDS 11,953
(Cost $12,427)
FLOATING RATE NOTES -- 6.2% (A)
AEROSPACE -- 2.1%
Lockheed Corp., 1.00%, 500 500
5/11/95
SECURITY BROKERS -- 4.1%
Shearson Lehman Brothers, 1,000 1,000
Inc., 5.375%, 5/17/96
TOTAL FLOATING RATE NOTES 1,500
</TABLE>
(Cost $1,500)
<PAGE> 7
EQUITY INCOME FUND (CONCLUDED)
<TABLE>
<CAPTION>
SHARES/
DESCRIPTION PAR (000) VALUE (000)
<S> <C> <C>
COMMON STOCKS -- 29.1%
AEROSPACE -- 2.3%
Boeing Co. 12,000 $ 557
ALUMINUM -- 2.3%
Aluminum Co. of America 8,000 565
AUTOMOTIVE -- 2.0%
Ford Motor Co. 5,000 476
BANKING -- 4.6%
Boatmen's Bancshares, Inc. 25,000 838
National City Corp 10,000 280
TOTAL 1,118
CHEMICAL -- 2.8%
Dow Chemical Co. 10,000 683
DIVERSIFIED -- 1.0%
Tenneco, Inc. 5,000 239
ELECTRICAL EQUIPMENT -- 2.1%
General Electric Co. 10,000 496
FOOD & BEVERAGE -- 1.3%
Sanfilippo, John B & Sons, Inc. 30,000 315
MACHINERY -- 2.2%
Caterpillar, Inc. 5,000 534
OIL -- 2.5%
Atlantic Richfield Co. 6,000 605
PHARMACEUTICALS -- 2.9%
Merck & Co., Inc. 10,000 305
Pfizer, Inc. 6,000 383
TOTAL 688
RETAIL -- 1.1%
Sear Roebuck & Co. 5,000 253
TOBACCO -- 2.0%
Philip Morris Cos., Inc. 10,000 492
TOTAL COMMON STOCKS 7,021
(Cost $6,911)
GOVERNMENT OBLIGATIONS -- 9.8%
U.S. Treasury Notes, 4.250-5.125%, $ 2,500 2,365
</TABLE>
5/15/96-12/31/98
(Cost $2,485)
<TABLE>
<CAPTION>
DESCRIPTION VALUE (000)
<S> <C>
REPURCHASE AGREEMENT -- 4.4%
Morgan Stanley & Co., 4.23%, dated 5/31/94, due 6/1/94, $ 1,063
repurchase price $1,062,901 (collateralized by $1,090,000 FFCB, 3.53%,
maturity 2/1/95; market value $1,091,244)
TOTAL INVESTMENTS $23,902
(Cost $24,386)
</TABLE>
(A) Floating Rate Notes -- the rate reported is the rate in effect as of May
31, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE> 8
MANAGED INCOME FUND
Percentages of each investment category relate to total net assets.
<TABLE>
<CAPTION>
Description Par (000) Value (000)
<S> <C> <C>
ASSET BACKED SECURITIES -- 6.1%
Capital Auto Receivables A $1,502 $1,484
1993 1, 5.85%, 2/17/98
Leasing Solution Receivable, 2,399 2,399
1994 1, 5.575%, 3/15/99
ASSET BACKED SECURITIES 3,883
(Cost $3,886)
CORPORATE BONDS -- 77.9%
AEROSPACE -- 1.2%
Lockheed Corp., 4.57%, 4/3/95 750 741
AUTO/RENTAL -- .8%
Hertz, Corp., 8.00%, 4/1/95 500 508
BANKING -- 7.4%
Citicorp, 8.84%, 6/17/94 500 500
Citicorp, 8.625%, 11/15/94 500 506
Credit Suisse, 9.50%, 7/1/94 600 602
Fleet/Norstar Financial 1,000 1,050
Group, 10.20%, 9/15/95
Wells Fargo & Co., 7.63%, 2,000 2,013
10/1/94
TOTAL 4,671
BUSINESS CREDIT -- 4.0%
International Lease & Finance 500 500
Corp., 5.50%, 6/20/94
International Lease & Finance 500 503
Corp., 7.00%, 11/7/94
Xerox Credit Corp., 9.50%, 500 506
11/1/94
Xerox Credit Corp., 5.375%, 1,000 992
7/15/95
2,501
CHEMICALS -- .8%
ICI Wilmington, Inc., 7.83%, 500 508
5/9/95
COMPUTERS -- 2.5%
Comdisco, 6.50%, 6/15/94 1,000 1,004
Intel Overseas, Corp., 0.00%, 608 574
5/15/95
1,578
DIVERSIFIED -- 2.0%
Tenneco Inc., 9.625%, 750 762
11/15/94
Textron, Inc., 10.20%, 9/1/94 500 504
1,266
FINANCE -- 1.6%
Heller Financial, Inc. 6.50%, 1,000 1,005
11/15/95
FINANCE-LEASING -- 1.6%
GATX Leasing, Corp., 9.90%, $1,000 $1,001
6/15/94
FINANCE-RECEIVABLE -- 1.6%
IBM Credit, Corp., 5.13%, 1,000 991
8/11/95
FOOD & BEVERAGE -- 2.9%
ConAgra, Inc., 9.19%, 6/30/95 1,000 1,032
Wendy's International, Inc., 750 785
12.125%, 4/1/95
1,817
HEALTHCARE -- .8%
Baxter International, 8.20%, 500 509
4/1/95
INSURANCE -- 2.3%
Provident Life Capital Corp., 1,425 1,450
9.65%, 12/1/94
OIL & GAS -- 1.7%
Ashland Oil Co., 9.875%, 500 519
9/1/95
Atlantic Richfield Co., 500 524
10.375%, 7/15/95
1,043
PAPER PRODUCTS -- .7%
International Paper, Co., 450 470
9.625%, 10/15/95
PERSONAL CREDIT -- 8.7%
American General Finance 500 510
Corp., 7.30%, 10/16/95
American General Finance 200 201
Corp., 9.25%, 7/1/94
American General Finance 750 764
Corp., 9.50%, 12/15/94
Beneficial Corp., 6.06%, 1,000 1,002
6/30/95
Commercial Credit Group, 500 502
Inc., 6.95%, 10/1/94
Discover Credit Corp. 6.68%, 500 502
5/15/95
Household Finance Corp., 500 507
9.25%, 4/1/95
ITT Financial Corp., 7.125%, 1,000 1,004
10/1/94
Nordstrom Credit, Inc., 500 510
8.75%, 3/20/95
5,502
PHOTOGRAPH EQUIPMENT -- 1.1%
Eastman Kodak Co., 9.20%, 700 714
1/15/95
<PAGE> 9
MANAGED INCOME FUND (CONCLUDED)
RAILWAYS -- .4%
Union Pacific Corp., 9.16%, $ 250 $ 259
9/25/95
RETAIL -- 7.1%
Dayton Hudson Corp., 4.82%, 1,000 971
4/1/96
Sears Roebuck & Co., 8.19%, 500 502
7/20/94
Sears Roebuck & Co., 9.05%, 500 500
6/13/94
Sears Roebuck & Co., 4.58%, 1,000 997
9/15/94
Super Valu Stores, Inc., 750 756
9.375%, 8/15/94
Super Valu Stores, Inc., 750 751
5.875%, 11/15/95
4,477
SECURITY BROKERS -- 9.2%
Goldman Sachs & Co., 7.00%, 1,170 1,179
11/29/94
Paine Webber Group, Inc., 1,000 1,003
9.90%, 6/20/94
Salomon Inc., 4.60%, 1/15/95 1,000 991
Salomon Inc., 4.80%, 5/15/95 1,000 985
Shearson Lehman Brothers, 1,000 1,000
Inc., 6.00%, 12/30/94
Shearson Lehman Hutton, Inc., 615 639
12.50%, 10/15/94
5,797
TELECOMMUNICATIONS -- 1.2%
Southwestern Bell, 9.00%, 750 773
7/17/95
TOBACCO -- 3.1%
Philip Morris Cos., 8.875%, 900 938
7/1/96
Philip Morris Cos., Inc., 1,000 1,002
6.25%, 6/5/95
1,940
UTILITIES -- 13.7%
Houston Light & Power Co., 1,000 1,036
8.625%, 1/15/96
Jersey Central Power & Light, 1,150 1,160
8.70%, 9/20/94
Mississippi Power & Light 1,000 989
Co., 4.625%, 3/1/95
New York State Electric & Gas 1,000 1,005
Corp., 8.375%, 8/15/94
Niagara Mohawk Power Corp., 1,050 1,055
8.88%, 8/1/94
Pacific Gas & Electric Co., $ 725 $ 698
4.50%, 6/1/96
Pacificorp, 8.41%, 2/1/95 700 711
Southern Natural Gas Co., 500 501
9.625%, 6/15/94
United Illuminating Co., 500 501
7.62%, 9/12/94
Washington Gas & Lighting 1,000 1,003
Co., 7.01%, 9/26/94
8,659
TOTAL CORPORATE BONDS 48,180
(Cost $50,053)
FLOATING RATE CORPORATE NOTES -- 4.8% (A)
AEROSPACE -- 1.6%
Lockheed Corp., 5.26%, 1,000 999
5/11/95
BANKING -- 3.2%
Chemical Banking Corp., 1,000 1,000
5.19%, 2/15/95
Citicorp, 8.633%, 12/15/95 1,000 1,013
2,013
SECURITY BROKERS -- 1.6%
Shearson Lehman Brothers, 1,000 1,000
Inc. 5.375%, 5/17/96
TOTAL FLOATING RATE NOTES 4,012
(Cost $4,063)
GOVERNMENT AGENCY OBLIGATIONS -- 4.5%
Federal Home Loan Bank, 1,000 923
REMIC, 4.83%, 8/24/98 (A)
Federal Home Loan Mortgage, 1,000 959
Corp., 4.75%, 1/15/2001
Federal National Mortgage 1,000 1,000
Association, 4.02%, 4/16/95
(A)
TOTAL GOVERNMENT AGENCY OBLIATIONS 2,882
(Cost $3,003)
REPURCHASE AGREEMENT -- 7.7%
Morgan Stanley & Co. Repo., 4,833
4.23%, dated 5/31/94, due
6/1/94, repurchase price
$4,833,174 (collateralized
by $4,900,000 FFCB, 3.77%,
maturity 9/1/94; market
value $4,929,400)
TOTAL INVESTMENTS $63,790
(Cost $65,838) </TABLE>
(A) Floating Rate Notes -- the rate reported is the rate in effect as of May
31, 1994.
The accompanying notes are an integral part of the financial statements.
<PAGE> 10
LIMITED TERM TAX FREE INCOME FUND
Percentages of each investment category relate to total net assets.
<TABLE>
<CAPTION>
Description Par (000) Value (000)
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES -- 95.9%
ALASKA -- 2.6%
Alaska State, 9.5%, CTFS $200 $ 218
Partnership in Rent (Spring
Creek Correctional Center),
10/1/2000
Anchorage, AK, 3.50%, 250 245
Telephone Utility Revenue
Bonds (Series A), 12/1/96
463
ARIZONA -- 2.3%
Maricopa County, AZ, 0.00%, 300 299
School District No. 41
(Gilbert) Bonds (FGIC
Insured), 7/1/94
Maricopa County, AZ, 7.00%, 50 51
School District No. 80,
PRE-REF 7/1/94
Mesa, AZ, 5.00%, (Mesa 50 50
Arizona)/AMBAC Insured),
7/1/94
400
CALIFORNIA -- 6.0%
California State, 6.00%, 1997 500 519
to 1999 Maturities, 5/1/97
Los Angeles, CA, Judgment 250 252
Obligation Bonds, 4.75%,
(Series A), 2/1/95
San Marcos, CA, 0.00%, CTFS 300 290
(ETM), 3/2/95
1,061
COLORADO -- 1.1%
Denver, Colorado City & 200 201
County, 7.75%, GO, 8/1/94
201
CONNECTICUT -- .9%
Connecticut State, 6.20%, 150 154
LTGO, (Series B), 7/15/95
154
DELAWARE -- 1.1%
Delaware State, 5.00%, 200 200
Transportation Authority
Revenue Bonds, 7/1/94
200
FLORIDA -- 2.8%
Jacksonville, FL, 5.45%, $200 $ 201
Electric Authority Revenue
Bonds, 10/1/94
Miami Beach, FL, 3.30% GO 300 300
Refunding Bonds, (FGIC
Insured), 9/1/94
501
GEORGIA -- 3.0%
Cobb County & Marietta, GA, 250 272
9.00%, 11/1/2000
Cobb County Georgia School 250 259
District, 6.125%, 2/1/96
531
INDIANA -- 2.8%
Indianapolis, Indiana, 4.85%, 215 216
Local Public Improvement
Bonds, (Series A), 1/10/95
New Albany, Indiana, 5.20%, 270 274
Sewage Works Revenue Bond
(AMBAC Insured), 9/1/95
490
ILLINOIS -- 5.8%
Chicago, IL, 7.80%, Water 250 254
Revenue Bonds (Chicago, IL,
Waterworks)/(FGIC Insured),
(ETM), 11/1/94
Illinois Metropolitan Pier & 200 196
Exposition Authority, 0.00%,
Revenue Bonds (AMBAC
Insured), 12/15/94
Illinois State, 3.25%, Sales 200 198
Tax Revenue Bonds (Series
S), 6/15/95
Illinois, 3.90%, Development 225 225
Financial Authority Revenue
School District Bonds,
(PG-Geneva School 304
Project)/(FGIC Insured),
3/1/95
Illinois, 4.00%, Educational 155 155
Facilities Bonds (Columbia
College), 12/1/94
1,028
<PAGE> 11
LIMITED TERM TAX FREE INCOME FUND (CONTINUED)
IOWA -- .9%
Cedar Rapids, IA, 3.70%, $150 $ 150
Hospital Facilities Revenue
Bonds (St. Luke's Methodist
Hospital Project)/(FGIC
Insured), 8/15/94
150
KENTUCKY -- 1.6%
Kenton County, KY, 9.30%, 250 273
Hospital Facility Revenue
Bonds, (St. Elizabeth
Medical Center), PRE-REF
11/1/10
273
LOUISIANA -- 3.0%
Louisiana State, 4.20%, 135 135
Offshore Term Authority
Deepwater Port Revenue
Bonds, 9/1/94
Louisiana State, 4.60%, 200 202
Offshore Term Bond (Series
B), (Loop Inc.), 9/1/95
Louisiana, 3.55%, Pub 200 196
Facilities Authority, 7/1/96
533
MAINE -- 2.8%
Maine State, 6.00%, 4/15/96 480 498
498
MASSACHUSETTS -- 2.6%
Massachusetts State, 3.60%, 250 248
Port Authority Revenue Bonds
(Series A), 7/1/95
Massachusetts State, 4.125%, 200 201
BAN (Water Resource
Authority), 10/15/95
449
MINNESOTA -- 7.1%
Minnetonka, MN, 7.25%, 500 500
Multifamily Housing
(Southampton Apartments
Project), 6/1/24
Southern MN, 4.50%, Municipal 500 503
Power Agency (Supply System
Revenue), (Series B), 1/1/96
Western Minnesota, 9.50%, 225 248
Municipal Power Agency
Supply Revenue Bonds (Series
A), PRE-REF 1/1/13
1,251
NEBRASKA -- 3.4%
Omaha, NE, 3.30%, Public $300 $ 299
Power District Nebraska
Electric Revenue Bonds
(Series D), 2/1/95
Omaha, NE, 3.40%, Public 300 299
Power District Nebraska
Electric Revenue Bonds
(Series B), 2/1/95
598
NEVADA -- 1.8%
Las Vegas Valley, Nv, 9.50% 300 318
Water District (AMBAC
Insured), 8/1/95
318
NEW MEXICO -- 1.8%
Albuquerque, NM, 8.25%, Gross 300 315
Receipt sales Tax Revenue,
7/1/2014
315
NEW YORK -- 1.6%
New York State, 8.50%, 250 272
Medical Care Facilities
(Insured Mortgage Hospital),
(Series A), 1/15/22
272
OHIO -- 1.1%
Ohio State, 3.25%, Building 200 199
Authority (William Green
Building), 4/1/95
199
PENNSYLVANIA -- 1.2%
Pittsburgh, PA, 2.75%, School 205 205
District (Series B)/(FGIC
Insured), 9/1/94
205
RHODE ISLAND -- 5.8%
Pawtuckett, RI, 7.75%, GO 750 810
Bonds, 4/15/97
State of Rhode Island, 6.90%, 200 206
LTGO, 6/15/95
1,016
<PAGE> 12
LIMITED TERM TAX FREE INCOME FUND (CONCLUDED)
SOUTH CAROLINA -- 1.5%
Florence County, SC, 8.30%, $250 $ 270
Hospital Revenue Bonds
(McLeod Regional Medical
270
TENNESSEE -- 3.8%
Chattanooga, TN, 8.70%, 225 241
4/1/97
Knoxville, TN, 4.20%, Water 100 100
Revenue Bonds, 3/1/95
Metropolitan Government, TN, 300 319
9.60%, Nashville & Davidson
Counties Convention Bonds,
PRE-REF 3/1/06
660
TEXAS -- 12.9%
Dallas, TX, 8.20%, Waterworks 500 548
& Sewer System, 4/1/97
Panhandle-Plains, TX, 1.00%, 300 300
Higher Education Authority,
Inc. Student Loan Revenue
Bonds (Series A), 6/1/21,
Putable 3/2/95
San Antonio, TX, 8.00%. UTGO, 250 262
PRE-REF 8/1/95
Texas State Park, 8.00%, 200 210
UTGO, PRE-REF 10/1/99
Texas State, 4.15%, 300 302
RFDG-Superconducting (Series
C), GO, 4/1/95
Texas State, 6.70%, 12/1/96 320 340
Texas Tech. University 200 200
Revenue Bonds, 3.35%, (Texas
Tech. Health Science
Center), 2/15/95
Tyler TX, 8.40%, Independent 100 103
School District Bonds,
2/15/97
2,265
UTAH -- 1.9%
Intermountain Power Agency, 300 324
9.25%, Utah Power Bonds
(1985 Series A), 7/1/96
324
VIRGINIA -- 2.5%
Fairfax County, VA, 3.35%, 250 246
Water Authority Revenue
Bonds, 4/1/96
Virginia Beach, VA, 3.35%, GO $200 $ 199
Bonds, 7/15/95
445
WASHINGTON -- 6.8%
King County, WA, 4.60%, UTGO 300 302
Youth Service Center, Parks
& Arterial Impacts Bonds
(ETM), 10/1/94
Seattle, WA, 3.45%, Municipal 300 299
Light & Power Revenue Bonds,
5/1/95
Washington State, 3.40%, 300 298
8/1/95
Washington State, 3.50%, 300 298
Public Power Supply System
Nuclear Project No. 3,
7/1/95
1,197
WISCONSIN -- 3.4%
Kenosha, WI, 3.80%, GO 200 200
Promissory Notes (Series
A)/(AMBAC Insured), 4/1/95
Milwaukee, WI, 3.75%, (series 200 200
B3), 6/15/95
South Columbia, 4.80%, Basin 200 202
Irrigation District, 12/1/95
602
TOTAL LONG-TERM MUNICIPAL SECURITIES 16,869
(cost $16,901)
CASH EQUIVALENTS -- 4.4%
Louisiana Public Facility 500 500
Authority, 3.10%, 6/7/94 (A)
SEI Tax Exempt Trust 2.49%, 279 279
6/1/94 (A)
779
TOTAL INVESTMENTS $17,648
(cost $17,680)
</TABLE>
(A) Variable Rate Security with Demand Features -- the rate reported is the
rate in effect as of May 31, 1994. The date shown is the longer of the reset
or demand date.
CTFS -- Certificates of Participation
GO -- General Obligation
UTGO -- Unlimited Tax General Obligation
LTGO -- Limited Tax General Obligation
BAN -- Bond Anticipation Note
PRE-REF -- Pre-Refunded
AMBAC -- American Municipal Bond Assurance Company
FGIC -- Financial Guaranty Insurance Corporation
The accompanying notes are an integral part of the financial statements.
<PAGE> 13
Statements of Assets and Liabilities (000) -- May 31, 1994 (Unaudited)
As of May 31, 1994
<TABLE>
<CAPTION>
Limited
Term
Tax
Diversified Equity Managed Free
Growth Income Income Income
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS:
Investment securities, at value (cost $26,682, $24,386, $ 25,703 $ 23,902 $ 63,790 $ 17,648
$65,838 and $17,680, respectively)
Cash 1,362 -- 4,626 --
Receivables:
Securities sold -- -- -- 206
Capital shares sold 31 6 -- 5
Interest and dividend receivable 56 240 1,077 249
Deferred organizational costs 34 35 35 34
Other assets 14 14 26 11
------------------------------------------
TOTAL ASSETS 27,200 24,197 69,554 18,153
------------------------------------------
LIABILITIES:
Payable for securities purchased 1,140 -- 6,324 500
Accrued expenses and other liabilities 58 73 84 61
------------------------------------------
TOTAL LIABILITIES 1,198 73 6,408 561
------------------------------------------
NET ASSETS:
Portfolio Shares -- (no par value -- unlimited 28,666 24,745 66,297 17,603
authorization) based on shares outstanding of 2,862,455;
2,462,400; 6,588,610; and 1,759,409, respectively
Undistributed net investment income 47 31 55 28
Accumulated net realized loss on investments (1,732) (168) (1,158) (7)
Unrealized depreciation of investments (979) (484) (2,048) (32)
------------------------------------------
TOTAL NET ASSETS $ 26,002 $ 24,124 $ 63,146 $ 17,592
==========================================
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $ 9.08 $ 9.80 $ 9.58 $ 10.00
Maximum sales charge OF 4.5%+, 4.5%+, 2%+ AND 2%+, respectively $ .43 $ .46 $ .20 $ .20
OFFERING PRICE PER SHARE $ 9.51 $ 10.26 $ 9.78 $ 10.20
</TABLE>
+ The offer price is calculated by dividing the net asset value by 1 minus
the maximum sales charge of 4.5%, 4.5%, 2% and 2%, respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE> 14
Statements of Operations (000) (Unaudited)
For the six month period ended May 31, 1994
<TABLE>
<CAPTION>
Limited
Term
Diversified Equity Managed Tax Free
Growth Income Income Income
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 15 $ 721 $ 2,434 $ 310
Dividends 284 103 -- --
Total investment income 299 824 2,434 310
EXPENSES:
Investment advisory fees 109 102 242 66
Administrator and portfolio accounting fees 46 47 77 46
Transfer agent fees 13 12 11 10
Amortization of organizational costs 5 5 5 5
Directors' fees 1 1 1 --
Registration fees 12 12 12 10
Professional fees 7 6 10 6
Printing 8 10 18 9
Other 5 9 8 7
Total expenses 206 204 384 159
Less: investment advisory fees waived (66) (77) (138) (64)
Total net expenses 140 127 246 95
Investment income -- net 159 697 2,188 215
REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS -- NET:
Net realized loss on investments (1,688) (144) (712) (5)
Net change in unrealized appreciation
(depreciation) of investments 640 (83) (655) (68)
Net loss on investments (1,048) (227) (1,367) (73)
Net increase (decrease) in net assets resulting
from operations $ (889) $ 470 $ 821 $ 142
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 15
Statements of Changes in Net Assets (000) (Unaudited)
For the six-month period ended May 31, 1994 and the period ended
November 30, 1993
<TABLE>
<CAPTION>
Diversified Equity
Growth Fund Income Fund
11/30/93 12/18/92(1) 11/30/93 12/18/92(1)
to to to to
5/31/94 11/30/93 5/31/94 11/30/93
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income - net $ 159 $ 343 $ 697 $ 1,468
Net realized gain (loss) on
investments (1,688) (44) (144) (23)
Net change in unrealized
appreciation (depreciation)
of investments 640 (1,619) (83) (401)
Net increase in net assets
resulting from operations (889) (1,320) 470 1,044
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income - net (164) (291) (678) (1,457)
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales 1,491 37,488 3,204 35,768
Reinvestment of distributions 156 276 574 1,278
Payments for redemptions (5,676) (5,069) (8,232) (7,847)
Increase (decrease) in net assets
from capital share transactions (4,029) 32,695 (4,454) 29,199
Total increase (decrease)
in net assets (5,082) 31,084 (4,662) 28,786
Net assets at beginning of period 31,084 -- 28,786 --
Net assets at end of period+ $ 26,002 $ 31,084 $ 24,124 $ 28,786
Capital share transactions:
Proceeds from sales 160 3,835 323 3,572
Reinvestment of distributions 16 30 58 129
Payments for redemptions (624) (555) (836) (784)
Net increase (decrease) from
capital share transactions (448) 3,310 (455) 2,917
</TABLE>
<TABLE>
<CAPTION>
Managed Limited Term
Income Fund Tax Free Income Fund
11/30/93 11/17/92(1) 11/30/93 2/19/93(1)
to to to to
5/31/94 11/30/93 5/31/94 11/30/93
<S> <C> <C> <C> <C>
OPERATIONS:
Investment income - net $ 2,188 $ 3,789 $ 215 $ 276
Net realized gain (loss) on
investments (712) (446) (5) (2)
Net change in unrealized
appreciation (depreciation)
of investments (655) (1,393) (68) 36
Net increase in net assets
resulting from operations 821 1,950 142 310
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income - net (2,183) (3,738) (198) (264)
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales 6,459 87,518 3,151 20,877
Reinvestment of distributions 1,727 2,847 89 84
Payments for redemptions (17,426) (14,929) (4,922) (1,677)
Increase (decrease) in net assets
from capital share transactions (9,240) 75,436 (1,682) 19,284
Total increase (decrease)
in net assets (10,602) 73,648 (1,738) 19,330
Net assets at beginning of period 73,748 100 19,330 --
Net assets at end of period+ $ 63,146 $ 73,748 $ 17,592 $ 19,330
Capital share transactions:
Proceeds from sales 664 8,749 315 2,087
Reinvestment of distributions 179 288 9 8
Payments for redemptions (1,797) (1,504) (492) (167)
Net increase (decrease) from
capital share transactions (954) 7,533 (168) 1,928
</TABLE>
(1) Commencement of operations.
+ Including undistributed net investment income (000) of $47 and $52 for
Diversified Growth Fund, $31 and $12 for Equity Index Fund, $55 and $50 for
Managed Income Fund and $28 and $11 for Limited Term Tax Free Income Fund for
the period ended May 31, 1994 and for the period ended November 30, 1993,
respectively.
The accompanying notes are an integral part of the financial statements.
<PAGE> 16
Financial Highlights (Unaudited)
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Net Realized and Net
Asset Unrealized Dividends Asset
Value Net Gains or from Net Value
Beginning Investment (Losses) Investment End Total
of Period Income on Investments Income of Period Return+
<S> <C> <C> <C> <C> <C> <C>
DIVERSIFIED GROWTH
1994(1)(4) $ 9.39 $ 0.05 $(0.31) $(0.05) $ 9.08 (2.78)%
1993(2) 10.00 0.11 (0.63) (0.09) 9.39 5.18)
EQUITY INCOME
1994(1)(4) $ 9.87 $ 0.25 $(0.08) $(0.24) $ 9.80 1.76%
1993(2) 10.00 0.57 (0.14) (0.56) 9.87 4.44
MANAGED INCOME
1994(1)(4) $ 9.78 $ 0.31 $(0.20) $(0.31) $ 9.58 1.09%
1993(2) 10.00 0.61 (0.23) (0.60) 9.78 3.88
LIMITED TERM TAX
FREE INCOME
1994(1)(4) $10.03 $ 0.12 $(0.04) $(0.11) $10.00 .75%
1993(3) 10.00 0.18 0.02 (0.17) 10.03 2.02
</TABLE>
<TABLE>
<CAPTION>
Ratio
Ratio of Expenses
Net Ratio of Net to Average
Assets of Expenses Income Net Assets Portfolio
End to Avereage to Average (Excluding Turnover
of Period (000) Net Assets(a) Net Assets(a) Waivers)(a) Rate
<S> <C> <C> <C> <C> <C>
DIVERSIFIED GROWTH
1994(1)(4) $26,002 0.95% 1.08% 1.40% 12%
1993(2) 31,084 0.78 1.26 1.25 5
EQUITY INCOME
1994(1)(4) $24,124 0.92% 5.05% 1.48% 24%
1993(2) 28,786 0.75 6.09 1.36 68
MANAGED INCOME
1994(1)(4) $63,146 0.72% 6.37% 1.12% 12%
1993(2) 73,748 0.65 6.69 1.07 39
LIMITED TERM TAX
FREE INCOME
1994(1)(4) $17,592 1.01% 2.28% 1.69% 36%
1993(3) 19,330 0.81 2.30 1.76 22
</TABLE>
(1) For the six-month period ended May 31, 1994.
(2) For the period from December 18, 1992 (date of initial public investment)
to November 30, 1993.
(3) For the period from February 19, 1993 (date of initial public investment)
to November 30, 1993.
(4) On March 25, 1994, First Bank National Association replaced Boulevard
Bank as investment adviser for the Funds.
+ Returns are for the period indicated and have not been annualized.
(a) Computed on an annualized basis.
The accompanying notes are an integral part of the financial statements.
<PAGE> 17
Notes to Financial Statements -- May 31, 1994
(1) ORGANIZATION
First American Mutual Funds (FAMF), formerly The Boulevard Funds, is
registered under the Investment Company Act of 1940, as amended, as an
open-end, management investment company. FAMF presently includes a series
of four funds (the Funds) which are Diversified Growth Fund, Equity Income
Fund, Managed Income Fund and Limited Term Tax Free Income Fund (formerly
Boulevard Blue-Chip Growth Fund, Boulevard Strategic Balance Fund,
Boulevard Managed Income Fund and Boulevard Managed Municipal Fund,
respectively). FAMF's declaration of trust permits the Board of Trustees
to create additional series and classes in the future. As of May 31, 1994,
the Equity Income Fund had approximately 30% of its portfolio in equity
securities. The investment policy has since changed so that under normal
market conditions the portfolio will hold at least 80% of its total assets
in equity securities (including common stocks and convertible securities).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
Security Valuation -- Investment securities of the Funds which are listed
on a securities exchange for which market quotations are available are
valued by an independent pricing service at the last quoted sales price
for such securities on each business day. If there is no such reported
sale, these securities and unlisted securities for which market quotations
are readily available are valued at the mean between the latest bid and
ask prices. Debt obligations with sixty days or less remaining until
maturity may be valued at their amortized cost. Under this valuation
method, purchase discounts and premiums are accreted and amortized ratably
to maturity and are included in interest income. When market quotations
are not readily available, securities are valued at fair value as
determined in good faith by procedures established by the Board of
Trustees.
Security Transactions and Investment Income -- The Funds record security
transactions on the trade date, the date the securities are purchased or
sold. Dividend income is recorded on the ex-dividend date. Interest income
is recorded on the accrual basis. For financial reporting purposes, except
for original issue discount and market premium for Limited Term Tax Free
Fund, the Funds do not amortize bond premium and discount. Security gains
and losses are determined on the basis of identified cost, which is the
same basis used for federal income tax purposes.
Repurchase Agreements -- Securities pledged as collateral for repurchase
agreements are held by each Fund's custodian bank until maturity of the
repurchase agreements. Provisions of the agreements and procedures adopted
by the Fund's adviser ensure that the market value of the collateral,
including accrued interest thereon, is sufficient in the event of default
by the counterparty. If the counterparty defaults and the value of the
collateral declines or if the counterparty enters an insolvency
proceeding, realization of the collateral by the Fund may be delayed or
limited.
Distributions to Shareholders -- Equity Income Fund, Managed Income Fund
and Limited Term Tax Free Income Fund declare and pay income dividends
monthly (effective June 1994, Equity Income Fund will declare and pay
income dividends quarterly). Diversified Growth Fund declares and pays
income dividends quarterly. All of the Funds pay realized long term
capital gains distributions, if any, at least once a year. Reinvestments
of dividends and capital gains distribution in additional shares are made
at the net asset value at the close of business on the payable date.
<PAGE> 18
Notes to Financial Statements -- continued
Federal Taxes -- It is each Fund's intention to continue to qualify as a
regulated investment company and distribute all of its taxable income.
Accordingly, no provision for Federal income taxes is required. At
November 30, 1993, Diversified Growth Fund, Equity Income Fund, Managed
Income Fund, and Limited Term Tax Free Income Fund had capital loss
carryovers for federal income tax purposes of $43,652, $23,645, $446,246
and $1,667, respectively, which, if not offset by subsequent capital gains
will expire in 2001.
Expenses -- Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses of the Company are
prorated to the Funds on the basis of relative net asset value. Income,
other expenses and accumulated realized and unrealized gains and losses of
a Fund are allocated to the respective class on the basis of the relative
net asset value each day.
(3) INVESTMENT SECURITY TRANSACTIONS
During the six-month period ended May 31, 1994, purchases of securities
and proceeds from sales of securities, other than temporary investments in
short-term securities, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
(000) (000)
<S> <C> <C>
Diversified Growth Fund $3,440 $ 7,943
Equity Income Fund 6,226 9,249
Managed Income Fund 7,657 17,881
Limited Term Tax Free Income 6,081 7,131
</TABLE>
Fund
At May 31, 1994, the total cost of securities and the net realized gains
or losses on securities sold, for Federal income tax purposes, was not
materially different from amounts reported for financial reporting
purposes. The aggregate gross unrealized appreciation and depreciation for
securities held by the Funds at May 31, 1994 is as follows (000):
<TABLE>
<CAPTION>
Limited Term
Tax Free
Diversified Equity Managed Income
Growth Fund Income Fund Income Fund Fund
<S> <C> <C> <C> <C>
Aggregate gross unrealized
appreciation $ 1,022 $ 505 $ 1 $ 16
Aggregate gross unrealized
depreciation (2,001) (989) (2,049) (48)
Net unrealized appreciation
(deprecciation) $ (979) $(484) $(2,048) $(32)
</TABLE>
(4) FEES AND EXPENSES
Pursuant to an investment advisory agreement (the Agreement), effective
March 25, 1994, First Bank National Association (the Adviser) manages each
Fund's assets and furnishes related office facilities, equipment, research
and personnel. The Agreement requires each Fund to pay the Adviser a fee,
calculated on an annual basis, equal to .70% of the Fund's average daily
net assets.
Prior to the acquisition by First Bank System, Inc. of Boulevard Bancorp
Inc. in March 1994, Boulevard Bank was the investment adviser to the Funds
and received fees, calculated on an annual basis, equal to .75% of the
average daily net assets of Diversified Growth Fund and Equity Income Fund
and .70% of the average daily net assets of Managed Income Fund and
Limited Term Tax Free Income Fund.
First Trust National Association, an affiliate of the Adviser, will become
the Funds' custodian, effective June 20, 1994, replacing State Street Bank
and Trust Company who served as the Funds' custodian prior to this date.
<PAGE> 19
Notes to Financial Statements -- concluded
Effective May 1, 1994, SEI Financial Services Company (SFS) and SEI
Financial Management Corporation (SFM) serve as the Funds' distributor and
administrator, respectively. The distribution agreement calls for the each
fund to pay SFS a distribution fee at the annual rate of .25% of average
daily net assets. However, the Funds will not accrue or pay any
distribution fees until a separate class of shares is created for certain
institutional investors. SFM provides administrative services, including
certain accounting, legal and shareholder services, at an annual rate of
.20% of each Fund's average daily net assets, with a minimum annual fee of
$50,000 per fund. Supervised Service Company Inc. will provide transfer
agent services for the Funds effective June 10, 1994.
Pursuant to prior agreements which terminated April 30, 1994 (June 9, 1994
for the transfer agent agreement), Federated Securities Corp., Federated
Administrative Services and Federated Services Company served as the
Funds' distributor, administrator and transfer agent, respectively.
In addition to the investment advisory and management fees, custodian
fees, distribution fees, administrator fees and transfer agent fees, each
fund is responsible for paying most other operating expenses including
organization costs, fees and expenses of outside directors, registration
fees, printing and shareholder reports, legal, auditing, insurance and
other miscellaneous expenses.
For the six month period ended May 31, 1994, total fees and expenses were
voluntarily limited by the Adviser and previous adviser in order to assist
the funds in maintaining a competitive expense ratio.
The following is a summary of investment advisory fees earned for the
six-month period ended May 31, 1994 (000).
<TABLE>
<CAPTION>
Limited Term
Tax
Diversified Equity Managed Free Income
Growth Fund Income Fund Income Fund Fund
<S> <C> <C> <C> <C>
First Bank National
Total investment advisory fee 47 34 85 24
Less: investment advisory fees waived (23) (25) (48) (23)
Net investment advisory
fees after waiver 24 9 37 1
Boulevard Bank
Total investment advisory fee 62 68 157 42
Less: investment advisory fees waived (43) (52) (90) (41)
Net investment advisory fees
after waiver 19 16 67 1
Total
Total investment advisory fee 109 102 242 66
Less: investment advisory fees waived (66) (77) (138) (64)
Net investment advisory fees
after waiver 43 25 104 2
</TABLE>
For the six-month period ended May 31, 1994, legal fees and expenses were
paid to a law firm of which the Secretary of the Funds is a partner.
(5) DEFERRED ORGANIZATION COSTS
The Funds incurred organization expenses in connection with their start-up
and initial registration. These costs are being amortized over 60 months
on a straight-line basis.
<PAGE> 20
