Following is the Semi-Annual Report for the Tennessee Tax-Free Bond Fund,
covering the six-month period ended January 31, 1997. If you have any
questions or comments, please contact your investment representative.
G00906-01 (3/97)
TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1997 (UNAUDITED)
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
LONG-TERM MUNICIPAL NOTES--99.9%
TENNESSEE--99.9%
$215,000 Chattanooga-Hamilton
County, TN Hospital
Authority, Refunding
Revenue Bonds, 5.50%
(Erlanger Medical AAA $224,907
Center)/(FSA
Insured)/(Original Issue
Yield: 5.60%), 10/1/2006
1,000,000 Chattanooga-Hamilton
County, TN Hospital
Authority, Refunding
Revenue Bonds, 5.50%
(Erlanger Medical AAA 1,001,620
Center)/(FSA
Insured)/(Original Issue
Yield: 5.85%), 10/1/2013
1,130,000 Clarksville, TN, Electric
System Refunding Revenue A 1,086,179
Bonds, 5.125%, 9/1/2011
500,000 Clarksville, TN, Water
Sewer & Gas Refunding
Revenue Bonds, 6.125% (MBIA
Insured)/(Original Issue AAA 533,000
Yield: 6.15%), 2/1/2007
500,000 Clarksville, TN, Water
Sewer & Gas Refunding
Revenue Bonds, 6.125% (MBIA
Insured)/(Original Issue AAA 521,935
Yield: 6.328%), 2/1/2012
600,000 Germantown, TN, GO UT
Refunding Bonds, 4.10%, AAA 602,850
1/1/2000
600,000 Germantown, TN, GO UT, AAA 602,238
4.20%, 1/1/2001
250,000 Jackson, TN Health
Educational & Housing
Facilities Board, Hospital
Revenue Bonds, 5.90%
(Jackson-Madison County AAA 261,218
General Hospital)/(MBIA
Insured)/(Original Issue
Yield: 5.95%), 4/1/2000
$400,000 Jackson, TN, Water & Sewer
Refunding Revenue Bonds,
5.125% (AMBAC AAA $393,312
Insured)/(Original Issue
Yield: 5.35%), 1/1/2010
440,000 Johnson City, TN Health &
Education Facilities Board,
Refunding Revenue Bonds,
6.75% (Johnson City Medical
Center Hospital)/(MBIA AAA 481,360
Insured)/(Original Issue
Yield: 6.912%), 7/1/2006
250,000 (a) Johnson City, TN Health
& Education Facilities
Board, Revenue Bonds, 6.75%
(MBIA Insured)/(Original AAA 275,818
Issue Yield:
6.912%),(United States
Treasury PRF), 7/1/2001
(@102)
500,000 Knox County, TN Health
Education & Housing
Facilities Board, Hospital
Facilities Revenue Bonds
(Series A), 4.90% (Fort AAA 503,405
Sanders Alliance)/(MBIA
Insured)/(Original Issue
Yield: 5.099%), 1/1/2005
500,000 (a) Knox County, TN Health
Education & Housing
Facilities Board, Hospital
Facilities Revenue Bonds
(Series C), 7.00% (Fort AAA 543,500
Sanders Alliance)/(MBIA
Insured)/(United States
Treasury PRF), 1/1/2000
(@102)
500,000 Knoxville, TN Gas System,
Refunding Revenue Bonds,
5.05% (Original Issue AA 498,090
Yield: 5.10%), 3/1/2008 *
1,330,000 Knoxville, TN Water System,
Refunding Revenue Bonds
(Series M), 5.20% (Original AA 1,331,410
Issue Yield: 5.45%),
3/1/2010
1,500,000 Memphis-Shelby County, TN,
Airport Refunding Revenue
Bonds, 6.75% (Federal BBB 1,599,660
Express Corp.), 9/1/2012
1,500,000 Metropolitan Government
Nashville & Davidson
County, TN HEFA, Refunding
Revenue Bonds, 5.20% AA 1,424,715
(Vanderbilt University),
7/1/2018
$750,000 Metropolitan Government
Nashville & Davidson
County, TN, Revenue Bonds
(Series A), 6.00% (Original AA $764,310
Issue Yield: 6.282%),
5/15/2017
230,000 Metropolitan Government
Nashville & Davidson
County, TN, Water & Sewer
Refunding Revenue Bonds,
5.20% (FGIC AAA 226,541
Insured)/(Original Issue
Yield: 5.53%), 1/1/2013
75,000 Metropolitan Government
Nashville & Davidson
County, TN, Water & Sewer
Refunding Revenue Bonds, A 75,922
7.25% (United States
Treasury PRF), 1/1/2006
120,000 Metropolitan Government
Nashville & Davidson
County, TN, Water & Sewer
Refunding Revenue Bonds, A 119,998
7.30% (United States
Treasury PRF), 1/1/2008
250,000 Metropolitan Government
Nashville & Davidson
County, TN, Water & Sewer
Revenue Bonds, 5.75% (AMBAC AAA 255,198
Insured)/(Original Issue
Yield: 6.15%), 1/1/2012
175,000 Montgomery Co, TN Public
Building Authority, Pooled
Financing Government
Obligation Revenue Bonds,
7.50% (Tennessee County AA+ 177,380
Loan Pool)/(Prudential
Insurance Co. of America
Insured), 12/15/2000
800,000 Mount Juliet, TN Public
Building Authority, Revenue
Bonds (Series O), 7.00% AAA 878,600
(MBIA Insured), 2/1/2006
1,200,000 Putnam County, TN, GO UT
Bonds, 5.125% (MBIA
Insured)/(Original Issue AAA 1,165,788
Yield: 5.35%), 4/1/2011
$750,000 Shelby County, TN Health
Education & Housing
Facilities Board, Refunding
Revenue Bonds (Series A),
7.40% (Methodist Health AAA $792,870
System, Inc.)/(MBIA
Insured)/(Original Issue
Yield: 7.50%), 6/1/2003
1,000,000 Shelby County, TN Health
Education & Housing
Facilities Board, Revenue
Bonds, 6.00% (St. Joseph AAA 1,044,150
Hospital East,
Inc.)/(Original Issue
Yield: 6.37%), 3/1/2005
(Escrowed to Maturity)
500,000 Shelby County, TN, GO UT
Bonds, 5.10% (Original AA+ 489,900
Issue Yield: 5.25%),
3/1/2011
250,000 Shelby County, TN, GO UT
Refunding Bonds (Series B),
5.875% (Original Issue AA+ 261,655
Yield: 5.95%), 3/1/2007
400,000 Sullivan County, TN Health
Educational & Housing
Facilities Board, Revenue
Bonds, 5.75% (Holston AAA 404,604
Valley Health
Board)/(Original Issue
Yield: 5.93%), 2/15/2013
1,250,000 Tennessee Housing
Development Agency,
Refunding Revenue Bonds A+ 1,263,238
(Series A), 5.70%, 1/1/2008
1,205,000 Tennessee Housing
Development Agency,
Refunding Revenue Bonds A+ 1,217,761
(Series A), 5.70%, 7/1/2008
1,800,000 Tennessee Housing
Development Agency,
Refunding Revenue Bonds A+ 1,816,560
(Series A), 5.85%, 7/1/2013
430,000 Tennessee Housing
Development Agency, Revenue A+ 453,839
Bonds, 6.90%, 7/1/2005
500,000 Tennessee State Local
Development Authority,
Refunding Revenue Bonds AA- 514,505
(Series A), 5.65%, 3/1/2007
$495,000 Tennessee State Local
Development Authority,
Revenue Bonds, 6.10%
(Community Provider Pooled A- $524,532
Loan Program)/(State Aid
Withholding Guaranty),
10/1/2007
500,000 Tennessee State School
Board Authority, Higher
Education Facilities AA 520,050
Revenue Bonds (Series A),
6.25% (Original Issue
Yield: 6.309%), 5/1/2017
195,000 Tennessee State School
Board Authority, Refunding AA 196,065
Revenue Bonds , 5.75%,
5/1/2006
700,000 Tennessee State, GO UT
Bonds (Series A), 5.55%, AA+ 717,500
3/1/2010
450,000 (a) Tennessee State, GO UT
Bonds (Series B), 6.60%
(Original Issue Yield: AA+ 493,313
6.60%), 6/1/2001 (@101.5)
250,000 Tennessee State, GO UT
Refunding Bonds (Series A), AA+ 264,895
6.10%, 6/1/2000
1,035,000 Williamson County,TN, GO UT
Refunding Bonds, 6.00%
(Original Issue Yield: AA 1,120,818
6.217%), 3/1/2008
TOTAL INVESTMENTS
(IDENTIFIED COST $27,645,209
$27,395,133)(B)
TENNESSEE TAX-FREE BOND FUND
(a) The issuer of this security has placed U.S. government securities
in escrow with a trustee. The proceeds from the government securities will
be used to pay principal and interest on the security.
(b) The cost of investments for federal tax purposes amounts to
$27,395,133. The net unrealized appreciation of investments on a federal
tax basis amounts to $250,076 which is comprised of $380,888 appreciation
and $130,812 depreciation at January 31, 1997.
* Please refer to the Appendix of the Statement of Additional
Information for an explanation of the credit ratings.
Note: The
categories of investments are shown as a percentage of net assets
($27,684,057) at January 31, 1997.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
GO --General Obligation
HEFA --Health and Education Facilities Authority
MBIA --Municipal Bond Investors Assurance
PRF --Prerefunded
UT --Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value
(identified and tax cost $27,395,133) $ 27,645,209
Income receivable 418,389
Deferred expenses 10,203
Total assets 28,073,801
LIABILITIES:
Payable to Bank $383,151
Accrued expenses 6,593
Total liabilities 389,744
Net Assets for 2,600,883 shares outstanding $ 27,684,057
NET ASSETS CONSIST OF:
Paid in capital $ 27,541,798
Net unrealized appreciation of investments 250,076
Accumulated net realized loss on investments (191,339 )
Undistributed net investment income 83,522
Total Net Assets $ 27,684,057
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PROCEEDS PER SHARE:
Net Asset Value Per Share ($27,684,057 2,600,883 $10.64
shares outstanding)
Offering Price Per Share (100/98.00 of $10.64)* $10.86
* See ``hat Shares Cost'' in the Prospectus.
(See Notes which are an integral part of the
Financial Statements)
</TABLE>
TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JANUARY 31, 1997 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest $786,195
EXPENSES:
Investment advisory fee $ 110,125
Administrative personnel and services fee 60,488
Custodian fees 15,034
Transfer and dividend disbursing agent 15,070
fees and expenses
Directors'/Trustees' fees 6,147
Auditing fees 9,675
Legal fees 2,316
Portfolio accounting fees 27,240
Share registration costs 8,448
Printing and postage 4,933
Insurance premiums 1,316
Miscellaneous 5,335
Total expenses 266,127
Waiver of investment advisory fee (110,125 )
Net expenses 156,002
Net investment income 630,193
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 13,443
Net change in unrealized appreciation of investments 304,005
Net realized and unrealized gain on investments 317,448
Change in net assets resulting from operations $947,641
(See Notes which are an integral part of the Financial
Statements)
</TABLE>
TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<S> <C> <C>
Six Months
Ended Year Ended
(unaudited) July 31, 1996
January 31,
1997
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $630,193 $1,443,710
Net realized gain (loss) on
investments
($13,443 net gain and $51,494 net 13,443 60,400
loss, respectively, as computed for
federal tax purposes)
Net change in unrealized 304,005 284,790
appreciation (depreciation)
Change in net assets resulting 947,641 1,788,900
from operations
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment (654,546) (1,444,519)
income
SHARE TRANSACTIONS--
Proceeds from sale of shares 709,759 1,564,767
Net asset value of shares issued to
shareholders in payment of 62,114 136,585
distributions declared
Cost of shares redeemed (3,048,711) (8,265,453)
Change in net assets resulting (2,276,838) (6,564,101)
from share transactions
Change in net assets (1,983,743) (6,219,720)
NET ASSETS:
Beginning of period 29,667,800 35,887,520
End of period (including
undistributed net investment income $27,684,057 $29,667,800
of $83,522 and $107,875,
respectively)
(See Notes which are an integral part of the Financial Statements)
</TABLE>
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Financial Highlights
(For a share outstanding throughout each period)
Six Months
Ended
(unaudited)
January 31, Year Ended July 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1997 1996 1995 1994(a)
Net asset value, $10.22
beginning of period $10.54 $10.46 $10.50
Income from
investment operations
Net investment 0.23 0.50 0.51 0.44
income
Net realized and
unrealized gain
(loss) on 0.11 0.07 0.24 (0.31)
investments
Total from investment
operations 0.34 0.57 0.75 0.13
Less distributions
Distributions from
net investment (0.24) (0.49) (0.51) (0.41)
income
Net asset value, end
of period $10.64 $10.54 10.46 $10.22
Total return (b) 3.26% 5.57% 7.60% 1.19%
Ratios to average net
assets
Expenses 1.06% 0.86% 0.61% 0.56%
Net investment 4.29% 4.62% 4.93% 4.69%
income
Expense waiver/
reimbursement (c) 0.75% 0.80% 0.95% 0.87%
Supplemental data
Net assets, end of
period $27,684$29,66 35,888 $42,400
(000 omitted) 8
Portfolio turnover 7% 0% 3% 30%
* Computed on an annualized basis.
(a) Reflects operations for the period from August 30, 1993 (date of
initial public investment) to July 31, 1994. For the period from
August 5, 1993 (start of business) to August 29, 1993, all income was
distributed to the administrator.
(b) Based on net asset value, which does not reflect the sales charge
or contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense
and net investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TENNESSEE TAX-FREE BOND FUND
(A PORTFOLIO OF THE PLANTERS FUNDS)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997 (UNAUDITED)
1.ORGANIZATION
Tennessee Tax-Free Bond Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The financial statements included herein
are only those of Tennessee Tax-Free Bond Fund (the `Fund''), a non-
diversified portfolio. At January 31, 1997, the Fund did not offer any
other portfolios. The investment objective of the Fund is to provide
current income exempt from federal income tax and personal income taxes
imposed by the state of Tennessee and Tennessee municipalities.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS - Municipal bonds are valued by an independent
pricing service, taking into consideration yield, liquidity, risk,
credit quality, coupon, maturity, type of issue, and any other factors
or market data the pricing service deems relevant. Short-term
securities are valued at the prices provided by an independent pricing
service. However, short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized
cost, which approximates fair market value.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS - Interest income and
expenses are accrued daily. Bond premium and discount, if applicable,
are amortized as required by the Internal Revenue Code, as amended (the
"Code"). Distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES - It is the Fund's policy to comply with the provisions of
the Code applicable to regulated investment companies and to distribute
to shareholders each year substantially all of its income. Accordingly,
no provisions for federal tax are necessary.
At July 31, 1996, the Fund, for federal tax purposes, had a capital loss
carryforward of $204,782, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the
extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to
relieve the Fund of any liability for federal tax. Pursuant to the
Code, such capital loss carryforward will expire as follows:
Expiration Year Expiration Amount
2003 $153,288
2004 $51,494
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS - The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-
issued securities on the trade date and maintains security positions
such that sufficient liquid assets will be available to make payment for
the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning
interest on the settlement date.
DEFERRED EXPENSES - The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the
initial expense of registering its shares, have been deferred and are
being amortized over a period not to exceed five years from the Fund's
commencement date.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts of assets,
liabilities, expenses and revenues reported in the financial statements.
Actual results could differ from those estimated.
OTHER - Investment transactions are accounted for on the trade date.
3.SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1997 July 31, 1996
Shares sold 66,811 148,617
Shares issued to shareholders in
payment of distributions declared 5,859 12,949
Shares redeemed (286,109) (777,662)
Net change resulting from
share transactions (213,439) (616,096)
4.INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE - Union Planters National Bank, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to 0.75% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its
fee. The Adviser can modify or terminate this voluntary waiver at any
time at its sole discretion.
As of March 3, 1997, Union Planters National Bank was the owner of
record for approximately 2,270,353 shares, which is 88.09% of the Fund
ADMINISTRATIVE FEE - Federated Services Company ("FServ") provides the
Fund with certain administrative personnel and services. The fee paid
to FServ is based on the level of average aggregate net assets of the
Fund for the period.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES - FServ,
through its subsidiary, Federated Shareholder Services Company (``FSSC'')
serves as transfer and dividend disbursing agent for the Fund. The fee
paid to FSSC is based on the size, type, and number of accounts and
transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES - FServ maintains the Trust's accounting
records for which it receives a fee. The fee is based on the level of
the Fund's average daily net assets for the period, plus out-of-pocket
expense
GENERAL - Certain of the Officers and Trustees of the Trust are Officers
and Directors or Trustees of the above companies.
5.INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for
the period ended January 31, 1997, were as follows:
PURCHASES $ 2,092,190
SALES $ 3,192,043
6.CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers
located in one state, it will be more susceptible to factors adversely
affecting issuers of that state than would be a comparable tax-exempt
mutual fund that invests nationally. In order to reduce the credit risk
associated with such factors, at January 31, 1997, 31.0 % of the
securities in the portfolio of investments are backed by letters of
credit or bond insurance of various financial institutions and financial
guaranty assurance agencies. The percentage of investments insured by
or supported (backed) by a letter of credit from any one institution or
agency did not exceed 21.5% of total investments.
