Following is the Semi-Annual Report for the Tennessee Tax-Free Bond Fund,
covering the six-month period ended January 31, 1998. If you have any
questions or comments, please contact your investment representative.
<PAGE>
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Portfolio of Investments
January 31, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Principal Credit
Amount Rating* Value
Long-Term Municipal Notes--98.0%
Tennessee--98.0%
$215,000 Chattanooga-Hamilton County, TN
Hospital Authority, Refunding
Revenue Bonds, 5.50% (Erlanger
Medical Center)/(FSA INS)/(Original AAA $233,494
Issue Yield: 5.60%), 10/1/2006
1,000,000 Chattanooga-Hamilton County, TN
Hospital Authority, Refunding
Revenue Bonds, 5.50% (Erlanger
Medical Center)/(FSA INS)/(Original AAA 1,046,360
Issue Yield: 5.85%), 10/1/2013
1,000,000 Clarksville, TN, Electric System
Refunding Revenue Bonds, 5.125%, NR 1,015,650
9/1/2011
500,000 Clarksville, TN, Water Sewer & Gas
Refunding Revenue Bonds, 6.125%
(MBIA INS)/(Original Issue Yield: AAA 541,470
6.328%), 2/1/2012
250,000 Germantown, TN, GO UT Refunding
Bonds, 4.10%, 1/1/2000 AAA 252,337
600,000 Germantown, TN, GO UT, 4.20%, AAA 608,214
1/1/2001
250,000 Jackson, TN Health Educational &
Housing Facilities Board, Hospital
Revenue Bonds, 5.90%
(Jackson-Madison County General AAA 260,290
Hospital)/(MBIA INS)/(Original Issue
Yield: 5.95%), 4/1/2000
400,000 Jackson, TN, Water & Sewer Refunding
Revenue Bonds, 5.125% (AMBAC
INS)/(Original Issue Yield: 5.35%), AAA 413,268
1/1/2010
440,000 Johnson City, TN Health & Education
Facilities Board, Refunding Revenue
Bonds, 6.75% (Johnson City Medical
Center Hospital)/(MBIA AAA 484,044
INS)/(Original Issue Yield: 6.912%),
7/1/2006
<PAGE>
Tennessee Tax-Free Bond Fund
Principal Credit
Amount Rating* Value
Long-Term Municipal Notes--98.0%
250,000 (a) Johnson City, TN Health &
Education Facilities Board, Revenue
Bonds, 6.75% (MBIA INS)/(United
States Treasury PRF)/(Original Issue AAA 276,167
Yield: 6.912%), 7/1/2001 (@102)
$500,000 Knox County, TN Health Education &
Housing Facilities Board, Hospital
Facilities Revenue Bonds (Series A),
4.90% (Fort Sanders Alliance)/(MBIA AAA $519,900
INS)/(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 Sanders Alliance)/(MBIA AAA 537,805
INS)/(United States Treasury PRF),
1/1/2000 (@102)
1,000,000 Knox County, TN, GO UT, 4.75%, AA 1,035,630
2/1/2006
1,030,000 Knoxville, TN Water System,
Refunding Revenue Bonds (Series M),
5.20% (Original Issue Yield: 5.45%), AA 1,054,669
3/1/2010
1,000,000 Metropolitan Government Nashville &
Davidson County, TN HEFA, Refunding
Revenue Bonds, 5.20% (Vanderbilt AA 1,008,530
University), 7/1/2018
750,000 Metropolitan Government Nashville &
Davidson County, TN, Revenue Bonds
(Series A), 6.00% (Original Issue AA 797,010
Yield: 6.282%), 5/15/2017
230,000 Metropolitan Government Nashville &
Davidson County, TN, Water & Sewer
Refunding Revenue Bonds, 5.20% (FGIC
INS)/(Original Issue Yield: 5.53%), AAA 242,731
1/1/2013
165,000 Montgomery Co, TN Public Building
Authority, Pooled Financing
Government Obligation Revenue Bonds,
7.50% (Tennessee County Loan
Pool)/(Prudential Insurance Co. of AA- 167,232
America INS), 12/15/2000
<PAGE>
Tennessee Tax-Free Bond Fund
Principal Credit
Amount Rating* Value
Long-Term Municipal Notes--98.0%
800,000 Mount Juliet, TN Public Building
Authority, Revenue Bonds (Series O), AAA 878,368
7.00% (MBIA INS), 2/1/2006
1,000,000 Putnam County, TN, GO UT Bonds,
5.125% (MBIA INS)/(Original Issue AAA 1,024,330
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 System, AAA 773,655
Inc.)/(MBIA INS)/(Original Issue
Yield: 7.50%), 6/1/2003
$650,000 Shelby County, TN Health Education &
Housing Facilities Board, Revenue
Bonds, 6.00% (St. Joseph Hospital
East, Inc.)/(Original Issue Yield: AAA $696,475
6.37%), 3/1/2005
500,000 Shelby County, TN, GO UT Bonds,
5.10% (Original Issue Yield: 5.25%), AA+ 510,820
3/1/2011
185,000 Shelby County, TN, GO UT Refunding
Bonds (Series B), 5.875% (Original 195,406
Issue Yield: 5.95%), 3/1/2007
65,000 Shelby County, TN, GO UT Refunding
Bonds (Series B), 5.875% (Original 68,762
Issue Yield: 5.95%), 3/1/2007
400,000 Sullivan County, TN Health
Educational & Housing Facilities
Board, Revenue Bonds, 5.75% (Holston
Valley Health Board)/(Original Issue AAA 424,676
Yield: 5.93%), 2/15/2013
1,000,000 Tennessee Housing Development
Agency, Refunding Revenue Bonds A+ 1,044,980
(Series A), 5.70%, 7/1/2008
1,000,000 Tennessee Housing Development
Agency, Refunding Revenue Bonds A+ 1,038,300
(Series A), 5.85%, 7/1/2013
430,000 Tennessee Housing Development
Agency, Revenue Bonds, 6.90%, A+ 455,099
7/1/2005
<PAGE>
Tennessee Tax-Free Bond Fund
Principal Credit
Amount Rating* Value
Long-Term Municipal Notes--98.0%
500,000 Tennessee State Local Development
Authority, Refunding Revenue Bonds
(Series A), 5.65%, 3/1/2007 AA- 535,960
495,000 Tennessee State Local Development
Authority, Revenue Bonds, 6.10%
(Community Provider Pooled Loan A- 545,856
Program)/(Tennessee State GTD),
10/1/2007
500,000 Tennessee State School Board
Authority, Higher Education
Facilities Revenue Bonds (Series A), AA 535,870
6.25% (Original Issue Yield:
6.309%), 5/1/2017
195,000 Tennessee State School Board
Authority, Refunding Revenue Bonds , AA 195,638
5.75%, 5/1/2006
700,000 Tennessee State, GO UT Bonds (Series
A), 5.55%, 3/1/2010 AA+ 746,683
450,000 (a) Tennessee State, GO UT Bonds
(Series B), 6.60% (Original Issue AA+ 492,602
Yield: 6.60%), 6/1/2001 (@101.5)
$1,035,000 Williamson County,TN, GO UT
Refunding Bonds, 6.00% (Original NR $1,170,927
Issue Yield: 6.217%), 3/1/2008
Total Investments (identified $21,829,208
cost $20,929,951)(b)
</TABLE>
(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 $20,929,951.
The unrealized appreciation of investments on a federal tax basis amounts
to $899,257 at January 31, 1998.
* Please refer to the Appendix of the Statement of Additional
Information for an explanation of the credit ratings. Current
credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net
assets ($22,277,684) at January 31, 1998.
<PAGE>
The following acronym(s) are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
GO --General Obligation
GTD --Guaranty
HEFA --Health and Education Facilities Authority
INS --Insured
MBIA --Municipal Bond Investors Assurance
PRF --Prerefunded
UT --Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
<PAGE>
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Statement of Assets and Liabilities
January 31, 1998 (unaudited)
Assets:
Total investments in securities, at value (identified and $ 21,829,208
tax cost $20,929,951)
Cash 135,961
Income receivable 329,334
Other assets 3,942
Total assets 22,298,445
Liabilities:
Accrued expenses 20,761
Net Assets for 2,029,762 shares outstanding $ 22,277,684
----------
Net Assets Consist of:
Paid in capital $ 21,379,607
Net unrealized appreciation of investments 899,257
Accumulated net realized loss on investments (74,772 )
Undistributed net investment income 73,592
Total Net Assets $ 22,277,684
----------
Net Asset Value, Offering Price and Redemption Proceeds Per
Share:
Net Asset Value Per Share ($22,277,684 / 2,029,762 shares $10.98
outstanding)
----------
Offering Price Per Share (100/98.00 of $10.98)* $11.20
----------
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Statement of Operations
Six Months Ended January 31, 1998 (unaudited)
Investment Income:
Interest $ 615,811
Expenses:
Investment advisory fee $ 91,612
Administrative personnel and services fee 60,494
Custodian fees 163
Transfer and dividend disbursing agent fees and 15,498
expenses
Directors'/Trustees' fees 6,838
Auditing fees 11,796
Legal fees 450
Portfolio accounting fees 21,575
Share registration costs 12,570
Printing and postage 346
Insurance premiums 1,758
Miscellaneous 4,328
Total expenses 227,428
Waiver of investment advisory fee (91,612 )
Net expenses 135,816
Net investment income 479,995
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments 62,287
Net change in unrealized appreciation of investments 68,422
Net realized and unrealized gain on investments 130,709
Change in net assets resulting from operations $ 610,704
(See Notes which are an integral part of the Financial
Statements)
<PAGE>
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Statement of Changes in Net Assets
Six Months
Ended Year Ended
(unaudited) July 31,
January 31, 1997
1998
Increase (Decrease) in Net Assets:
Operations--
Net investment income 479,995 $ 1,181,895 $
Net realized gain on investments ($62,287
and $67,723, respectively, as computed for 62,287 67,723
federal tax purposes)
Net change in unrealized appreciation 68,422 884,764
Change in net assets resulting from 610,704 2,134,382
operations
Distributions to Shareholders--
Distributions from net investment income (481,255 ) (1,214,918 )
Share Transactions--
Proceeds from sale of shares 383,300 1,420,926
Net asset value of shares issued to
shareholders in payment of distributions 41,155 110,472
declared
Cost of shares redeemed (4,125,470 ) (6,269,412 )
Change in net assets resulting from (3,701,015 ) (4,738,014 )
share transactions
Change in net assets (3,571,566 ) (3,818,550 )
Net Assets:
Beginning of period 25,849,250 29,667,800
End of period (including undistributed net
investment income of $73,592 and $74,852, $ 22,277,684 $ 25,849,250
respectively)
(See Notes which are an integral part of the Financial Statements)
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Financial Highlights
(For a share outstanding throughout each period)
Six
Months
Ended
(unaudited) Year Ended July 31,
January
31,
1998 1997 1996 1995 1994(a)
Net asset value,
beginning of 10.91 10.54 10.46 10.22 10.50
period
Income from
investment
operations
Net investment 0.22 0.45 0.50 0.51 0.44
income
Net realized
and
unrealized 0.07 0.38 0.07 0.24 (0.31 )
gain (loss) on
investments
Total from
investment 0.29 0.83 0.57 0.75 0.13
operations
Less
distributions
Distributions
from net (0.22 )(0.46 ) (0.49 )(0.51 ) (0.41 )
investment
income
Net asset value,
end of period 10.98 10.91 10.54 10.46 10.22
------ ------ ------ ------ ------
Total return (b) 2.66% 8.12% 5.57% 7.60% 1.19%
Ratios to
average net
assets
Expenses 1.11% * 1.10% 0.86% 0.61% 0.56% *
Net investment 3.93% * 4.23% 4.62% 4.93% 4.69% *
income
Expense waiver/
reimbursement 0.75% * 0.75% 0.80% 0.95% 0.87% *
(c)
Supplemental data
Net assets,
end of period 22,278 25,849 29,668 35,888 42,400
(000 omitted)
Portfolio 1% 11% 0% 3% 30%
turnover
* 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)
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Notes to Financial Statements
January 31, 1998 (unaudited)
1. Organization
The Planters Funds (the "Trust") 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, 1998, the
Trust 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, 1997, the Fund, for federal tax purposes, had a capital
loss carryforward of $137,059,
<PAGE>
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 Expiration
Year Amount
2003 $85,565
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 Board of Trustees (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 Year Ended
Ended
January 31, July 31,
1998 1997
Shares sold 35,212 132,996
Shares issued to
shareholders in
3,794 10,391
payment of
distributions declared
Shares redeemed (379,065) (587,888)
--------- ---------
Net change resulting from
(340,059) (444,501)
share transactions
<PAGE>
4. Investment Advisory Fee and Other Transactions with Affiliates Investment
Advisory Fee - Union Planters Bank, N.A., 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 January 31, 1998, Union Planters Bank, N.A., was the owner of record of
approximately 2,008,938 shares which is 99.0% 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. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $120,000 per portfolio
and $25,000 per each additional class of shares.
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 Fund'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 expenses.
Organizational Expenses - Organizational expenses of $35,622 were borne
initially by FServ.
The Fund has reimbursed FServ for these expenses. These expenses have been
deferred and are being amortized over the five year period following the
Fund's effective date. For the period ended January 31, 1998, the Fund
expensed $11,874 pursuant to this agreement.
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, 1998, were as follows:
Purchases $ 258,728
---------
------------------------------------------------
Sales $ 3,506,305
-----------
------------------------------------------------
<PAGE>
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, 1998, 36.4% 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 24.3% of total investments.
G00906-01 (3/98)
