Following is the Semi-Annual Report for
Tennessee Tax-Free Bond Fund, covering the six
month period ended January 31, 1999. If you
have any questions or comments, please contact
your investment representative.
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Portfolio of Investments
January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
- ------------------ Credit
Principal Rating* Value
Amount
Long-Term Municipals--97.7%
Tennessee--97.7%
- --------------------
$215,000 Chattanooga-Hamilton County, TN Hospital Authority,
Refunding Revenue Bonds, 5.50% (Erlanger Medical
Center)/(FSA INS)/(Original Issue Yield: 5.60%),
10/1/2006 AAA $236,188
- --------------------
1,000,000 Chattanooga-Hamilton County, TN Hospital Authority,
Refunding Revenue Bonds, 5.50% (Erlanger Medical
Center)/(FSA INS)/(Original Issue Yield: 5.85%),
10/1/2013 AAA 1,077,910
- --------------------
1,000,000 Clarksville, TN, Electric System Refunding Revenue
Bonds, 5.125%, 9/1/2011 ---------------- 1,036,700
A
- --------------------
500,000 Clarksville, TN, Water Sewer & Gas Refunding Revenue Bonds,
6.125% (MBIA INS)/(Original Issue Yield:
6.328%), 2/1/2012 AAA 540,835
- --------------------
105,000 Cleveland, TN , GO UT Bonds, 4.70%, 9/1/2015 A 105,388
- --------------------
600,000 Germantown, TN, GO UT, 4.20%, 1/1/2001 AAA 611,256
- --------------------
250,000 Jackson, TN Health Educational & Housing Facilities
Board, Hospital Revenue Bonds, 5.90%
(Jackson-Madison County General Hospital)/(MBIA
INS)/(Original Issue Yield: 5.95%), 4/1/2000
AAA 257,958
- --------------------
400,000 Jackson, TN, Water & Sewer Refunding Revenue Bonds,
5.125% (AMBAC INS)/(Original Issue Yield: 5.35%),
1/1/2010 AAA 419,316
- --------------------
440,000 Johnson City, TN Health & Education Facilities
Board, Refunding Revenue Bonds, 6.75% (Johnson City
Medical Center Hospital)/(MBIA INS)/(Original Issue
Yield: 6.912%), 7/1/2006 AAA 480,686
- --------------------
Tennessee Tax-Free Bond Fund
- ------------------- Credit
Principal Rating* Value
Amount
$250,000
-----------------------------------------------------
Johnson City, TN Health & Education Facilities
Board, Revenue Bonds, 6.75% (MBIA INS)/(United
States Treasury PRF)/(Original Issue Yield: 6.912%), AAA $274,377
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 INS)/(Original Issue Yield:
5.099%), 1/1/2005
AAA 529,315
900,000 Knox County, TN, GO UT, 4.75%, 2/1/2006 AA 944,622
500,000 Knoxville, TN Electric, Refunding Revenue Bonds,
4.40% (Original Issue Yield: 4.48%), 7/1/2009
AA 508,315
1,030,000 Knoxville, TN Water System, Refunding Revenue Bonds
(Series M), 5.20% (Original Issue Yield: 5.45%),
3/1/2010 AA 1,058,212
700,000 Memphis, TN, GO UT, 5.00% (Original Issue Yield:
5.10%), 10/1/2018 AA 706,097
1,000,000 Metropolitan Government Nashville & Davidson County,
TN HEFA, Refunding Revenue Bonds, 5.20% (Vanderbilt
University), 7/1/2018
AA 1,021,570
750,000 Metropolitan Government Nashville & Davidson County,
TN, Revenue Bonds (Series A), 6.00% (Original Issue
Yield: 6.282%), 5/15/2017
AA 821,078
230,000 Metropolitan Government Nashville & Davidson County,
TN, Water & Sewer Refunding Revenue Bonds, 5.20%
(FGIC INS)/(Original Issue Yield: 5.53%), 1/1/2013
AAA 248,372
800,000 Mount Juliet, TN Public Building Authority, Revenue
Bonds (Series O), 7.00% (MBIA INS), 2/1/2006
AAA 868,320
900,000 Putnam County, TN, GO UT Bonds, 5.125% (MBIA
INS)/(Original Issue Yield: 5.35%), 4/1/2011
AAA 938,088
- --------------------
Tennessee Tax-Free Bond Fund
- ------------------- Credit
Principal Rating* Value
Amount
$375,000 Shelby County, TN Health Education & Housing
Facilities Board, Revenue Bonds, 6.00% (St. Joseph
Hospital East, Inc.)/(Original Issue Yield: 6.37%),
3/1/2005 Aaa $401,254
500,000 Shelby County, TN, GO UT Bonds, 5.10% (Original
Issue Yield: 5.25%), 3/1/2011 AA+ 512,595
185,000 Shelby County, TN, GO UT Refunding Bonds (Series B),
5.875% (Original Issue Yield: 5.95%), 3/1/2007 ----------------
197,055
AA+
65,000 Shelby County, TN, GO UT Refunding Bonds (Series B),
5.875% (Original Issue Yield: 5.95%), 3/1/2007 ----------------
69,020
AA+
400,000 Sullivan, County, TN Health Educational & Housing
Facilities Board, Revenue Bonds, 5.75% (Holston ----------------
Valley Health Board)/(MBIA INS)/(Original Issue
Yield: 5.93%), 2/15/2013 432,160
AAA
900,000 Tennessee Housing Development Agency, Refunding
Revenue Bonds (Series A), 5.85%, 7/1/2013
A+ 941,544
500,000 Tennessee State Local Development Authority,
Refunding Revenue Bonds (Series A), 5.65%, 3/1/2007
AA- 537,060
495,000 Tennessee State Local Development Authority, Revenue
Bonds, 6.10% (Community Provider Pooled Loan
Program)/(Tennessee State GTD), 10/1/2007
A 549,895
500,000 Tennessee State School Board Authority, Higher
Education Facilities Revenue Bonds (Series A), 6.25%
(Original Issue Yield: 6.309%), 5/1/2017 AA 548,545
700,000 (1) Tennessee State, GO UT Bonds (Series A), 5.55%,
3/1/2010 AAA 764,022
450,000 Tennessee State, GO UT Bonds (Series B), 6.60%
(United States Treasury PRF)/(Original Issue Yield:
6.60%), 6/1/2001 (@101.5) AAA 489,443
- --------------------
Tennessee Tax-Free Bond Fund
- -------------------
Principal Credit
Amount or Shares Rating* Value
$785,000 Williamson County,TN, GO UT Refunding Bonds, 6.00%
(Original Issue Yield: 6.217%), 3/1/2008
---------------- $901,361
Aa1
Total Long Term Municipals (identified cost 19,028,557
$18,010,240)
Mutual Fund--0.0%
- ---------------------------------------------------------------------------
2,066 Federated Tennessee Municipal Cash Trust Fund (at
net asset value) 2,066
- --------------------
Total Investments (identified cost $18,012,306)(2)
===================
$19,030,623
- --------------------
</TABLE>
(1) 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.
(2) The cost of investments for federal tax purposes amounts to
$18,012,306. The net unrealized appreciation of investments on a
federal tax basis amounts to $1,018,317 at January 31, 1999.
* 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
($19,470,691) at January 31, 1999.
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)
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Statement of Assets and Liabilities
January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Total investments in securities, at value
- ------------------------------------------------------------------------------- 19,030,623 $
(identified and tax cost $18,012,306)
Cash 300,329
Income receivable 319,245
Other assets 813
Total assets 19,651,010
Liabilities:
Payable for investments purchased $ 105,644
Accrued expenses 74,675
Total liabilities 180,319
Net Assets for 1,756,884 shares outstanding 19,470,691
$
Net Assets Consist of:
Paid in capital 18,392,386
$
Net unrealized appreciation of investments 1,018,317
Accumulated net realized loss on investments (5,207)
Undistributed net investment income 65,195
Total Net Assets 19,470,691
$
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Net Asset Value Per Share ($19,470,691 / 1,756,884 shares outstanding) $11.08
Offering Price Per Share (100/98.00 of $11.08)* $11.31
Redemption Proceeds Per Share $11.08
================================================================================
*See "What Shares Cost" in the Prospectus
(See Notes which are an integral part of the Financial Statements) Investment
Income:
Interest $ 498,649
- ----------------------------------------------------------------------------
Expenses:
- ----------------------------------------------------------------------------
Investment advisory fee $ 74,589
- ----------------------------------------------------------------------------
Administrative personnel and services fee 60,494
- ----------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 15,232
- ----------------------------------------------------------------------------
Directors'/Trustees' fees 7,362
- ----------------------------------------------------------------------------
Auditing fees 10,666
- ----------------------------------------------------------------------------
Legal fees 2,116
- ----------------------------------------------------------------------------
Portfolio accounting fees 26,763
- ----------------------------------------------------------------------------
Share registration costs 8,849
- ----------------------------------------------------------------------------
Printing and postage 1,904
- ----------------------------------------------------------------------------
Insurance premiums 1,132
- ----------------------------------------------------------------------------
Miscellaneous 933
- ----------------------------------------------------------------------------
Total expenses 210,040
- ----------------------------------------------------------------------------
Waivers and reimbursements--
- ----------------------------------------------------------------------------
Waiver of investment advisory fee $ (74,589 )
- ----------------------------------------------------------------------------
Net expenses 135,451
- ----------------------------------------------------------------------------
Net investment income 363,198
- ----------------------------------------------------------------------------
Realized and Unrealized Gain on Investments:
- ----------------------------------------------------------------------------
Net realized gain on investments 3,205
- ----------------------------------------------------------------------------
Net change in unrealized appreciation of investments 339,009
- ----------------------------------------------------------------------------
Net realized and unrealized gain on investments 342,214
- ----------------------------------------------------------------------------
Change in net assets resulting from operations $ 705,412
- ----------------------------------------------------------------------------
(See Notes which are an integral part of the Financial Statements)
Six Months Ended
January 31, 1999 Year Ended
------------------- July 31,1998
(unaudited)
Increase (Decrease) in Net Assets:
- -----------------------------------------------------------------
Operations--
- -----------------------------------------------------------------
Net investment income $ 363,198 $ 886,010
- -----------------------------------------------------------------
Net realized gain (loss) on investments
($3,205 and $131,970, respectively, as computed for federal tax
purposes) 3,205 131,970
- -----------------------------------------------------------------
Net change in unrealized appreciation/depreciation 339,009 (151,527 )
- -----------------------------------------------------------------
Change in net assets resulting from operations 705,412 866,453
- -----------------------------------------------------------------
Distributions to Shareholders--
- -----------------------------------------------------------------
Distributions from net investment income (371,427 ) (887,438 )
- -----------------------------------------------------------------
Distributions from net realized gains (3,323 ) --
- -----------------------------------------------------------------
Change in net assets resulting from distributions to
shareholders (374,750 ) (887,438 )
- -----------------------------------------------------------------
Share Transactions--
- -----------------------------------------------------------------
Proceeds from sale of shares 122,918 588,837
- -----------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of
distributions declared 98,495 155,726
- -----------------------------------------------------------------
Cost of shares redeemed (988,120 ) (6,666,092 )
- -----------------------------------------------------------------
Change in net assets resulting from share transactions (766,707 ) (5,921,529 )
- -----------------------------------------------------------------
Change in net assets (436,045 ) (5,942,514 )
- -----------------------------------------------------------------
Net Assets:
- -----------------------------------------------------------------
Beginning of period 19,906,736 25,849,250
- -----------------------------------------------------------------
End of period (including undistributed net investment income of
$65,195 and $73,424, respectively) $ 19,470,691 $ 19,906,736
- -----------------------------------------------------------------
=================================================================
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
Six Months
Ended
January 31, Year Ended July 31,
1999
---------
(unaudited) 1998 1997 1996 1995 1994(1)
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------
Net Asset Value, Beginning of Period $10.90 $10.91 $10.54 $10.46 $10.22 $10.50
- ---------------------------------------------
Income from Investment Operations
- ---------------------------------------------
Net investment income 0.20 0.44 0.45 0.50 0.51 0.44
- ---------------------------------------------
Net realized and unrealized gain (loss) on
investments --------- --------- ) --------- ---------- --------- --------
0.19 (0.02 0.38 0.07 0.24 (0.31)
- ---------------------------------------------
Total from investment operations 0.39 0.42 0.83 0.57 0.75 0.13
- ---------------------------------------------
Less Distributions
- ---------------------------------------------
Distributions from net investment income (0.20 ) (0.43 ) (0.46) (0.49) (0.51) (0.41)
- ---------------------------------------------
Distributions from net realized gain on
investments (0.01 ) --------- --------- ---------- --------- --------
-- -- -- -- --
- --------------------------------------------- ----------
Total distributions (0.21 ) (0.43 ) (0.46) (0.49) (0.51) (0.41)
Net Asset Value, End of Period $11.08 $10.90 $10.91 $10.54 $10.46 $10.22
Total Return (2) 3.60 % 3.91 % 8.12 % 5.57 % 7.60 % 1.19 %
Ratios to Average Net Assets
Expenses 1.36 %* 1.19 % 1.10 % 0.86 % 0.61 % 0.56 %*
Net investment income 3.65 %* 3.92 % 4.23 % 4.62 % 4.93 % 4.69 %*
Expense waiver/reimbursement (3) 0.75 %* 0.75 % 0.75 % 0.80 % 0.95 % 0.87 %*
Supplemental Data
Net assets, end of period (000 omitted) $19,471 $19,907 $25,849 $29,668 $35,888 $42,400
Portfolio turnover 3 % 4 % 11 % 0 % 3 % 30 %
- ---------------------------------------------
</TABLE>
* Computed on an annualized basis.
(1) 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
administrator.
(2) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable. (3) 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)
<PAGE>
Tennessee Tax-Free Bond Fund
(A Portfolio of The Planters Funds)
Notes to Financial Statements
January 31, 1999 (unaudited)
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, 1999, 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.
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 relevent. 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. Investments in other open-end regulated investment
companies are valued at net asset 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, 1998, the Fund, for federal tax purposes, had a capital loss
carryforward of $5,089, 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
2004 $5,089
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.
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.
Shares of Beneficial Interest
The Declaration of Trust permits the Board of Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
---------------- ------------------
Six Months Year Ended
Ended January July 31,
31.
1999 1998
<S> <C> <C>
- ---------------------------------------------------------------------
Shares sold 11,164 53,992
- ---------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 8,950 14,293
- ---------------------------------------------------------------------
Shares redeemed (89,767) (611,569)
-------- ---------
- ---------------------------------------------------------------------
Net change resulting from share transactions (69,653) (543,284)
======== =========
- ---------------------------------------------------------------------
Investment Advisory Fee and Other Transactions with Affiliates
</TABLE>
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 January 31, 1999, Union Planters National Bank was the owner of
record of approximately 1,579,630 shares, which is 90.1% 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.
General - Certain of the Officers and Trustees of the Trust are Officers
and Directors or Trustees of the above companies.
Investment Transactions
Purchases and sales of investments, excluding short-term securities (and in-kind
contributions), for the period ended January 31, 1999, were as follows:
Purchases $ 601,640
---------
---------------------------------
Sales $ 921,695
---------
---------------------------------
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, 1999, 36.0% of the securities in the portfolio of investments were
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 22.7% of total investments.
7. YEAR 2000
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000, or experience other date-related problems. The Fund's Adviser and
Administrator are taking measures that they believe are reasonably designed to
address the Year 2000 issue with respect to computer systems that they use and
to obtain reasonable assurances that comparable steps are being taken by each of
the Fund's other service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Fund.
G00906-01 (3/99)
