PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Peachtree Bond Fund. This
report, which covers the six-month period from October 1, 1995 through March 31,
1996, provides you with complete financial information for the fund, including
an investment review by the portfolio manager, a list of holdings, and the
financial statements.
Reflecting a rising interest rate environment during the first quarter of
1995--which adversely impacted bond prices--the fund's diversified portfolio of
corporate bonds, U.S. government bonds, and U.S. Treasury notes produced a total
return based on net asset value of 2.54%* for the six-month period ended March
31, 1996. The net asset value decreased by a minimal $0.04 to end the period at
$9.57. During the six-month period, the fund paid a dividend stream totaling
$0.29 per share. Net assets stood at $78.6 million on the last day of the
period.
Thank you for selecting Peachtree Bond Fund as a way to pursue income through a
diversified, professionally managed portfolio of bonds. We will continue to keep
you up-to-date on your investment progress through the highest quality service.
Sincerely,
LOGO
Edward C. Gonzales
President
May 15, 1996
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the fund's sales charge was (0.06%).
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Over the past six months, fixed income market sentiment has shifted. Earlier in
the year, it was anticipated the Federal Reserve Board would aggressively ease
monetary policy but it is now believed to have adopted a "wait-and-see" attitude
on the economy, inflation and monetary policy. As a result, market sentiment has
turned negative, pushing interest rates higher across the coupon curve, with
most of the damage done in the first three months of 1996. Short to intermediate
maturities (2-10 years) rose 60-80 basis points over the last three months.
Longer dated maturities (10+ years) rose 70-80 basis points.
For most of this period, Peachtree Bond Fund (the "Fund") assumed a defensive
posture with an average maturity and duration less than that of its benchmark,
the Lehman Brothers Aggregate Bond Index.* We remain constructive on the long
term outlook for rates, with a steady decline expected into the second half of
the year.
The Fund continues to emphasize corporates. With a slow-growth economic forecast
and a relatively stable interest rate outlook, this exposure should perform
quite well. This higher exposure may also improve the portfolio securities yield
profile relative to the broad market. In the corporate market, credit
fundamentals remain strong and supply/demand technicals remain positive. Heavy
demand for corporates persisted, with insurance companies and corporate bond
mutual funds leading the way. The sector has performed very well relative to the
broad bond market.
The Fund's total return based on net asset value for the six-month period ended
March 31, 1996 was 2.54%** versus the Lehman Brothers Aggregate Bond Index of
2.40%.
* Lehman Brothers Aggregate Bond Index is a total return index measuring both
the capital price changes and income provided by the underlying universe of
securities, weighted by market value outstanding. This index is unmanaged,
and investments cannot be made in an index.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the Fund's sales charge was (0.06%).
PEACHTREE BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
LONG-TERM INVESTMENTS--93.1%
- -------------------------------------------------------------------------------------
CORPORATE BONDS--51.4%
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
AEROSPACE--5.2%
------------------------------------------------------------------
$ 1,000,000 Boeing Co., 6.35%, 6/15/2003 $ 980,060
------------------------------------------------------------------
1,000,000 Rockwell International Corp., 6.625%, 6/1/2005 993,590
------------------------------------------------------------------
1,000,000 Rockwell International Corp., 6.750%, 9/15/2002 1,008,180
------------------------------------------------------------------
1,000,000 Rockwell International Corp., 8.375%, 2/15/2001 1,078,170
------------------------------------------------------------------ -----------
Total 4,060,000
------------------------------------------------------------------ -----------
BANKING--10.3%
------------------------------------------------------------------
2,000,000 Bank of New York Medium Term Notes, 7.00%, 8/15/2005 2,019,520
------------------------------------------------------------------
3,000,000 Chase Manhattan Corp., 8.00%, 5/1/2005 3,093,150
------------------------------------------------------------------
1,000,000 Fleet Norstar Financial Group, 7.25%, 9/1/1999 1,023,300
------------------------------------------------------------------
1,000,000 Norwest Corp., 6.50%, 6/1/2005 981,890
------------------------------------------------------------------
1,000,000 Norwest Corp., 7.125%, 4/1/2000 1,025,820
------------------------------------------------------------------ -----------
Total 8,143,680
------------------------------------------------------------------ -----------
BEVERAGES--4.7%
------------------------------------------------------------------
3,500,000 Coca Cola Enterprises, Inc., 7.875%, 2/1/2002 3,716,510
------------------------------------------------------------------ -----------
ELECTRONIC TECHNOLOGY--1.2%
------------------------------------------------------------------
1,000,000 Motorola, Inc., 6.50%, 3/1/2008 976,780
------------------------------------------------------------------ -----------
ENERGY--0.7%
------------------------------------------------------------------
500,000 BP America, Inc., 9.375%, 11/1/2000 557,470
------------------------------------------------------------------ -----------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- -------------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------------
FINANCE--11.1%
------------------------------------------------------------------
$ 1,000,000 Exxon Capital Corp., 7.875%, 8/15/1997 $ 1,026,260
------------------------------------------------------------------
450,000 Ford Motor Credit Co., 6.98%, 6/28/2010 433,431
------------------------------------------------------------------
1,500,000 Ford Motor Credit Co., 7.75%, 10/1/1999 1,560,450
------------------------------------------------------------------
500,000 General Electric Capital Corp., 8.75%, 11/26/1996 510,225
------------------------------------------------------------------
500,000 Heller Financial, Inc., 7.00%, 5/15/2002 502,535
------------------------------------------------------------------
3,000,000 Household Finance Corp., 7.65%, 5/15/2007 3,131,340
------------------------------------------------------------------
500,000 Norwest Financial, Inc., 8.375%, 1/15/2000 525,255
------------------------------------------------------------------
1,000,000 Potomac Capital, Medium Term Notes, 8.65%, 10/3/1998 1,051,370
------------------------------------------------------------------ -----------
Total 8,740,866
------------------------------------------------------------------ -----------
FOOD & BEVERAGE--1.3%
------------------------------------------------------------------
1,000,000 Heinz (H. J.) Co., 6.75%, 10/15/1999 1,012,860
------------------------------------------------------------------ -----------
HEALTHCARE--1.3%
------------------------------------------------------------------
1,000,000 Lilly (Eli) & Co., 6.75%, 11/15/1999 1,011,530
------------------------------------------------------------------ -----------
INDUSTRIAL SERVICES--2.6%
------------------------------------------------------------------
2,000,000 Smithkline Beecham Corp., 7.50%, 5/1/2002 2,064,480
------------------------------------------------------------------ -----------
PHARMACEUTICALS--3.2%
------------------------------------------------------------------
2,500,000 Abbott Labs, 6.80%, 5/15/2005 2,521,275
------------------------------------------------------------------ -----------
PROCESS INDUSTRIES--1.3%
------------------------------------------------------------------
1,000,000 International Business Machines, 6.375%, 6/15/2000 1,002,360
------------------------------------------------------------------ -----------
RETAIL TRADE--3.4%
------------------------------------------------------------------
1,500,000 Wal-Mart Stores, Inc., 7.50%, 5/15/2004 1,565,010
------------------------------------------------------------------
500,000 Wal-Mart Stores, Inc., 8.625%, 4/1/2001 543,205
------------------------------------------------------------------
500,000 Wal-Mart Stores, Inc., 9.10%, 7/15/2000 547,985
------------------------------------------------------------------ -----------
Total 2,656,200
------------------------------------------------------------------ -----------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--CONTINUED
- -------------------------------------------------------------------------------------
CORPORATE BONDS--CONTINUED
- -------------------------------------------------------------------------------------
SECURITIES--3.9%
------------------------------------------------------------------
$ 2,000,000 Lehman Brothers Holdings, Inc., 8.875%, 11/1/1998 $ 2,111,820
------------------------------------------------------------------
1,000,000 Merrill Lynch & Co., Inc., 6.25%, 10/15/2008 923,730
------------------------------------------------------------------ -----------
Total 3,035,550
------------------------------------------------------------------ -----------
TELECOMMUNICATIONS--1.2%
------------------------------------------------------------------
1,000,000 BellSouth Telecommunications, 5.875%, 1/15/2009 921,760
------------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $40,661,481) 40,421,321
------------------------------------------------------------------ -----------
U.S. GOVERNMENT AGENCY OBLIGATIONS--29.6%
- -------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--1.9%
------------------------------------------------------------------
1,000,000 5.45%, 9/16/1996 1,001,284
------------------------------------------------------------------
500,000 8.25%, 5/1/2007 508,065
------------------------------------------------------------------ -----------
Total 1,509,349
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN BANK--2.0%
------------------------------------------------------------------
1,500,000 7.34%, 4/4/2005 1,567,920
------------------------------------------------------------------ -----------
FEDERAL HOME LOAN MORTGAGE CORPORATION--15.9%
------------------------------------------------------------------
1,000,000 6.19%, 1/21/2004 959,960
------------------------------------------------------------------
3,000,000 6.615%, 3/3/2004 2,928,810
------------------------------------------------------------------
2,000,000 7.09%, 6/1/2005 1,994,980
------------------------------------------------------------------
3,000,000 7.37%, 6/16/2005 3,011,430
------------------------------------------------------------------
3,500,000 7.65%, 5/10/2005 3,587,815
------------------------------------------------------------------ -----------
Total 12,482,995
------------------------------------------------------------------ -----------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--CONTINUED
- -------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--7.0%
------------------------------------------------------------------
$ 2,000,000 6.14%, 1/21/2004 $ 1,909,960
------------------------------------------------------------------
500,000 6.27%, 4/1/1999 500,155
------------------------------------------------------------------
1,000,000 6.40%, 1/13/2004 971,820
------------------------------------------------------------------
1,000,000 7.30%, 10/28/2002 1,006,480
------------------------------------------------------------------
1,000,000 9.05%, 4/10/2000 1,099,290
------------------------------------------------------------------ -----------
Total 5,487,705
------------------------------------------------------------------ -----------
STUDENT LOAN MARKETING ASSOCIATION--0.9%
------------------------------------------------------------------
700,000 5.38%, 3/7/2001 698,705
------------------------------------------------------------------ -----------
TENNESSEE VALLEY AUTHORITY--1.9%
------------------------------------------------------------------
1,000,000 7.318%, 5/31/1999 1,003,580
------------------------------------------------------------------
500,000 8.375%, 10/1/1999 534,975
------------------------------------------------------------------ -----------
Total 1,538,555
------------------------------------------------------------------ -----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(IDENTIFIED COST, $23,455,091) 23,285,229
------------------------------------------------------------------ -----------
U.S. TREASURY OBLIGATIONS--12.1%
- -------------------------------------------------------------------------------------
U.S. TREASURY NOTES--12.1%
------------------------------------------------------------------
2,000,000 7.875%, 4/15/1998 2,079,120
------------------------------------------------------------------
3,000,000 8.00%, 8/15/1999 3,181,500
------------------------------------------------------------------
1,000,000 8.50%, 2/15/2000 1,083,790
------------------------------------------------------------------
3,000,000 9.00%, 5/15/1998 3,189,000
------------------------------------------------------------------ -----------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST, $10,155,157) 9,533,410
------------------------------------------------------------------ -----------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST, $74,271,729) 73,239,960
------------------------------------------------------------------ -----------
</TABLE>
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
SHORT-TERM INVESTMENTS--5.4%
- -------------------------------------------------------------------------------------
CASH EQUIVALENT--1.8%
- -------------------------------------------------------------------------------------
$ 1,393,742 Bank of New York Cash Reserves, 4.40% $ 1,393,742
------------------------------------------------------------------ -----------
U.S. TREASURY OBLIGATIONS--3.6%
- -------------------------------------------------------------------------------------
U.S. TREASURY BILL--3.6%
------------------------------------------------------------------
3,000,000 3/6/1997 2,853,665
------------------------------------------------------------------ -----------
TOTAL SHORT-TERM INVESTMENTS (AT AMORTIZED COST) 4,247,407
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $78,519,136)(A) $77,487,367
------------------------------------------------------------------ -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $78,519,136. The
net unrealized depreciation of investments on a federal tax basis amounts to
$1,031,769 which is comprised of $582,476 appreciation and $1,614,245
depreciation at March 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($78,614,768) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $78,519,136) $77,487,367
- ---------------------------------------------------------------------------------
Income receivable 1,618,883
- ---------------------------------------------------------------------------------
Deferred expenses 19,010
- --------------------------------------------------------------------------------- -----------
Total assets 79,125,260
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Payable for shares redeemed $ 4,381
- --------------------------------------------------------------------
Income distribution payable 401,757
- --------------------------------------------------------------------
Accrued expenses 104,354
- -------------------------------------------------------------------- ----------
Total liabilities 510,492
- --------------------------------------------------------------------------------- -----------
Net Assets for 8,214,477 shares outstanding $78,614,768
- --------------------------------------------------------------------------------- -----------
NET ASSETS CONSISTS OF:
- ---------------------------------------------------------------------------------
Paid in capital $81,605,343
- ---------------------------------------------------------------------------------
Net unrealized appreciation of investments (1,031,769)
- ---------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,958,806)
- --------------------------------------------------------------------------------- -----------
Total Net Assets $78,614,768
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, and Redemption Proceeds Per Share:
($78,614,768 / 8,214,477 shares outstanding) $9.57
- --------------------------------------------------------------------------------- -----------
OFFERING PRICE PER SHARE (100/97.50 of $9.57)* $9.82
- --------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest $3,071,296
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $337,963
- ---------------------------------------------------------------------
Administrative personnel and services fee 62,751
- ---------------------------------------------------------------------
Custodian fees 7,344
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 23,020
- ---------------------------------------------------------------------
Directors'/Trustees' fees 1,796
- ---------------------------------------------------------------------
Auditing fees 6,408
- ---------------------------------------------------------------------
Legal fees 2,157
- ---------------------------------------------------------------------
Portfolio accounting fees 24,125
- ---------------------------------------------------------------------
Share registration costs 9,435
- ---------------------------------------------------------------------
Printing and postage 6,114
- ---------------------------------------------------------------------
Insurance premiums 2,545
- ---------------------------------------------------------------------
Miscellaneous 4,434
- --------------------------------------------------------------------- --------
Total expenses 488,092
- ---------------------------------------------------------------------
Reimbursement of other operating expenses by Adviser (28,186)
- --------------------------------------------------------------------- --------
Net expenses 459,906
- -------------------------------------------------------------------------------- ----------
Net investment income 2,611,390
- -------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------
Net realized gain on investments 433,049
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (595,329)
- -------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments (162,280)
- -------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $2,449,110
- -------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, 1996 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1995
--------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------
OPERATIONS--
- -----------------------------------------------------
Net investment income $ 2,611,390 $ 5,175,355
- -----------------------------------------------------
Net realized gain (loss) on investments ($433,049 and
$(1,054,686), respectively, as computed for federal
tax purposes) 433,049 (1,437,698)
- -----------------------------------------------------
Net change in unrealized appreciation (depreciation) (595,329) 3,816,330
- ----------------------------------------------------- -------------- ----------------
Change in net assets resulting from operations 2,449,110 7,553,987
- ----------------------------------------------------- -------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------
Distributions from net investment income (2,611,390) (5,175,355)
- ----------------------------------------------------- -------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------
Proceeds from sale of shares 4,612,141 26,590,444
- -----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 1,734,417 4,346,372
- -----------------------------------------------------
Cost of shares redeemed (21,093,833) (21,385,393)
- ----------------------------------------------------- -------------- ----------------
Change in net assets resulting from share
transactions (14,747,275) 9,551,423
- ----------------------------------------------------- -------------- ----------------
Change in net assets (14,909,555) 11,930,055
- -----------------------------------------------------
NET ASSETS:
- -----------------------------------------------------
Beginning of period 93,524,323 81,594,268
- ----------------------------------------------------- -------------- ----------------
End of period $ 78,614,768 $ 93,524,323
- ----------------------------------------------------- -------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-----------------------------
1996(D) 1995 1994(A)
------- ------- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.61 $ 9.34 $10.00
- --------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------
Net investment income 0.29 0.57 0.35
- --------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.04) 0.27 (0.66)
- -------------------------------------------------------------------- ------ ------ -------
Total from investment operations 0.25 0.84 (0.31)
- -------------------------------------------------------------------- ------ ------ -------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------
Distributions from net investment income (0.29) (0.57) (0.35)
- -------------------------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.57 $ 9.61 $ 9.34
- -------------------------------------------------------------------- ------ ------ ------
TOTAL RETURN (B) 2.54% 9.30% (3.08%)
- --------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------
Expenses 1.02%* 1.02% 0.97%*
- --------------------------------------------------------------------
Net investment income 5.80%* 6.11% 5.92%*
- --------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.06%* 0.15% 0.10%*
- --------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------
Net assets, end of period (000 omitted) $78,615 $93,524 $81,594
- --------------------------------------------------------------------
Portfolio turnover 0% 76% 21%
- --------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(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.
(d) Six months ended March 31, 1996 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PEACHTREE BOND FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Peachtree Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end, management investment company. The
Trust consists of five portfolios. The financial statements included herein are
only those of Peachtree Bond Fund (the "Fund"), a diversified portfolio. The
Fund's investment objective is to achieve current income. The financial
statements of the other portfolios are presented separately. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
(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--U.S. government securities are generally valued at
the mean of the latest bid and asked price as furnished by an independent
pricing service. Listed corporate bonds, other fixed income and
asset-backed securities, and unlisted securities and private placement
securities are valued at prices provided by an independent pricing service.
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 September 30, 1995, the Fund, for federal tax purposes, had a capital
loss carryforward of $1,054,686, 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 in 2003.
Additionally, net capital losses of $1,337,168 attributable to security
transactions incurred after October 31, 1994 were treated as arising on the
first day of the Fund's next taxable year.
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
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 using the straight-line method over a period of 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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
---------------------- ------------------
<S> <C> <C>
- ----------------------------------------------
Shares sold 474,165 2,831,857
- ----------------------------------------------
Shares issued to shareholders in payment of
distributions declared 177,598 461,339
- ----------------------------------------------
Shares redeemed (2,166,849) (2,298,869)
- ---------------------------------------------- ----------- -----------
Net change resulting from share transactions (1,515,086) 994,327
- ---------------------------------------------- ----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--NationsBanc Advisors, Inc., 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.
NationsBanc Advisors, Inc. became the Fund's investment adviser on January 17,
1996. Prior to January 17, 1996, Bank South served as the Fund's investment
adviser and received for its services an annual investment advisory fee equal to
0.75% of the Fund's average daily net assets.
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
For the six months ended March 31, 1996, the adviser(s) earned fees as follows:
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF
ADVISER NAME FEE EARNED FEE WAIVED
------------------------------------- ----------- -----------
<S> <C> <C>
NationsBanc Advisors, Inc. $ 132,117 $ 0
--------- ----
Bank South $ 205,846 $ 0
--------- ----
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. For the six months ended March
31, 1996, the Advisers reimbursed the Fund for operating expenses in the amount
of $28,186. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and TradeStreet
Investment Associates, Inc., TradeStreet Investment Associates, Inc., receives
an annual fee from the Adviser based on the level of the Fund's average daily
net assets.
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 Trust for the period.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund for which it receives a fee. The fee paid
to FServ 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 Trust's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $44,639 were borne initially
by Federated Administrative Services ("FAS").
The Fund has agreed to reimburse FAS for the organizational expenses during the
five year period following the Fund's effective date. For the six months ended
March 31, 1996, the Fund paid $4,158 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
PEACHTREE BOND FUND
- --------------------------------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended March 31, 1996, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $ 0
- ------------------------------------------------------------------------------- -----------
SALES $17,299,879
- ------------------------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Charles L. Davis, Jr.
Gregor F. Meyer Vice President and Assistant Treasurer
John E. Murray, Jr. Richard B. Fisher
Wesley W. Posvar Vice President
Marjorie P. Smuts David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Peachtree Equity Fund. This
report, which covers the six-month period from October 1, 1995 through March 31,
1996, provides you with complete financial information for the fund, including
an investment review by the portfolio manager, a list of holdings, and the
financial statements.
At the end of the period, the fund's portfolio of stocks included many household
names like Boeing, Chrysler, General Motors, General Electric, Hewlett Packard,
Intel, American Express, PepsiCo, Bristol-Myers Squibb, Gillette, McDonalds,
Harley Davidson, and Wal-Mart. It delivered a total return based on net asset
value of 10.56%* for the six-month period ended March 31, 1996. The net asset
value grew by 8.2% to end the period at $12.95. The fund paid dividends totaling
$0.05 per share, and capital gains totaling $0.21. Net assets stood at $112
million on the last day of the period.
Thank you for selecting Peachtree Equity Fund as a way to pursue growth
opportunities through a diversified, professionally managed portfolio of
high-quality stocks. We will continue to keep you up-to-date on your investment
progress through the highest quality service.
Sincerely,
LOGO
Edward C. Gonzales
President
May 15, 1996
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the fund's sales charge was 6.38%.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Despite some weakness in the bond market in early 1996, equities continued to
provide investors with attractive returns for the six-month period ended March
31, 1996. Sporadic reports of disappointing earnings have been offset by
continued good news on the inflation front, strong market liquidity and growing
investor optimism that the economy can maintain a course of moderate economic
growth. The Peachtree Equity Fund's (the "Fund") total return based on net asset
value over the last six months was 10.56%* compared to a 11.71% total return for
the Standard & Poor's 500 Index.**
With the rate of corporate earnings growth slowing, we are increasingly focused
on the sustainability of growth prospects in our equity selection process.
Consequently, recent price strength has been used to reduce exposure to
economically sensitive companies whose earnings are relatively cyclical.
Increasing areas of emphasis for the Fund are technology, healthcare and
telecommunications. We believe the technology sector offers attractive long-term
investment opportunities given its leverage to the productivity-driven capital
spending trends currently embedded in corporate America. The healthcare sector
should benefit from its highly visible growth prospects in an uncertain economic
environment. We also see the potential for increased investment opportunities in
the telecommunications sector as a result of recent deregulation initiatives. As
always, our efforts remain focused on those stocks that our analysis shows are
undervalued and pose attractive long-term growth potential.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the Fund's sales charge was 6.38%.
** Standard & Poor's 500 Index is an index of 500 common stocks in industry,
transportation, and financial and public utility companies. This index is
unmanaged, and investments cannot be made in an index.
PEACHTREE EQUITY FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------- ------------
<C> <S> <C> <C>
COMMON STOCKS--98.0%
- ----------------------------------------------------------------------------------
AEROSPACE & DEFENSE--4.4%
--------------------------------------------------------------
19,000 Boeing Co. $ 1,645,875
--------------------------------------------------------------
67,000 Loral Corp. 3,283,000
-------------------------------------------------------------- ------------
Total 4,928,875
-------------------------------------------------------------- ------------
AUTOMOTIVE--7.4%
--------------------------------------------------------------
20,000 Chrysler Corp. 1,245,000
--------------------------------------------------------------
25,000 Eaton Corp. 1,506,250
--------------------------------------------------------------
40,000 Echlin, Inc. 1,450,000
--------------------------------------------------------------
20,000 General Motors Corp. 1,065,000
--------------------------------------------------------------
28,000 General Motors Corp. Class H 1,771,000
--------------------------------------------------------------
50,000 Superior Industries International, Inc. 1,250,000
-------------------------------------------------------------- ------------
Total 8,287,250
-------------------------------------------------------------- ------------
BUILDING MATERIALS--0.8%
--------------------------------------------------------------
32,000 Masco Corp. 928,000
-------------------------------------------------------------- ------------
CHEMICALS--1.8%
--------------------------------------------------------------
20,000 Imperial Chemical Industries PLC ADR 1,140,000
--------------------------------------------------------------
58,750 R.P.M. Inc., Ohio 910,625
-------------------------------------------------------------- ------------
Total 2,050,625
-------------------------------------------------------------- ------------
COMPUTER SERVICES--1.3%
--------------------------------------------------------------
26,800 (a) Bay Networks, Inc. 824,100
--------------------------------------------------------------
15,000 (a) Madge NV 601,875
-------------------------------------------------------------- ------------
Total 1,425,975
-------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------- ------------
<C> <S> <C> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--5.0%
--------------------------------------------------------------
49,500 (a) Andrew Corp. $ 1,893,375
--------------------------------------------------------------
22,000 Emerson Electric Co. 1,776,500
--------------------------------------------------------------
25,000 General Electric Co. 1,946,875
-------------------------------------------------------------- ------------
Total 5,616,750
-------------------------------------------------------------- ------------
ELECTRONIC OFFICE EQUIPMENT--7.9%
--------------------------------------------------------------
80,000 American Business Products, Inc. 1,810,000
--------------------------------------------------------------
19,000 Hewlett Packard Co. 1,786,000
--------------------------------------------------------------
34,000 Intel Corp. 1,933,750
--------------------------------------------------------------
23,000 Motorola, Inc. 1,219,000
--------------------------------------------------------------
40,000 Sensormatic Electronics Corp. 810,000
--------------------------------------------------------------
25,000 Texas Instruments, Inc. 1,271,875
-------------------------------------------------------------- ------------
Total 8,830,625
-------------------------------------------------------------- ------------
ENERGY--7.7%
--------------------------------------------------------------
29,000 Amoco Corp. 2,095,250
--------------------------------------------------------------
25,000 Anadarko Petroleum Corp. 1,387,500
--------------------------------------------------------------
33,000 Baker Hughes, Inc. 965,250
--------------------------------------------------------------
10,000 Mapco, Inc. 558,750
--------------------------------------------------------------
15,000 Royal Dutch Petroleum Co. 2,118,750
--------------------------------------------------------------
18,000 Schlumberger Ltd. 1,424,250
-------------------------------------------------------------- ------------
Total 8,549,750
-------------------------------------------------------------- ------------
FINANCE--2.2%
--------------------------------------------------------------
10,000 Chubb Corp. 938,750
--------------------------------------------------------------
48,000 Federal National Mortgage Association 1,530,000
-------------------------------------------------------------- ------------
Total 2,468,750
-------------------------------------------------------------- ------------
FINANCE-COMMERCIAL--5.8%
--------------------------------------------------------------
17,000 American Express Co. 839,375
--------------------------------------------------------------
20,000 Barnett Banks, Inc. 1,245,000
--------------------------------------------------------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------- ------------
<C> <S> <C> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
FINANCE-COMMERCIAL--CONTINUED
--------------------------------------------------------------
19,000 Morgan (J. P.) & Co., Inc. $ 1,577,000
--------------------------------------------------------------
45,000 Signet Banking Corp. 1,119,375
--------------------------------------------------------------
25,000 Suntrust Banks, Inc. 1,750,000
-------------------------------------------------------------- ------------
Total 6,530,750
-------------------------------------------------------------- ------------
FOOD & BEVERAGES--6.2%
--------------------------------------------------------------
93,000 Flowers Industries, Inc. 1,255,500
--------------------------------------------------------------
50,000 IBP Inc. 1,281,250
--------------------------------------------------------------
27,000 PepsiCo, Inc. 1,707,750
--------------------------------------------------------------
18,000 Philip Morris Companies, Inc. 1,579,500
--------------------------------------------------------------
35,000 Sara Lee Corp. 1,141,875
-------------------------------------------------------------- ------------
Total 6,965,875
-------------------------------------------------------------- ------------
FOREST PRODUCTS & PAPER--1.1%
--------------------------------------------------------------
26,000 Weyerhaeuser Co. 1,199,250
-------------------------------------------------------------- ------------
HEALTH CARE--10.0%
--------------------------------------------------------------
35,000 Abbott Laboratories 1,426,250
--------------------------------------------------------------
20,000 Bausch & Lomb, Inc. 740,000
--------------------------------------------------------------
10,000 Bristol-Myers Squibb Co. 856,250
--------------------------------------------------------------
20,000 (a) Forest Labs, Inc. 975,000
--------------------------------------------------------------
25,000 Merck & Co., Inc. 1,556,250
--------------------------------------------------------------
60,000 Mylan Labs, Inc. 1,260,000
--------------------------------------------------------------
20,000 Pfizer, Inc. 1,340,000
--------------------------------------------------------------
33,000 (a) Scherer R.P. Corp. 1,447,875
--------------------------------------------------------------
30,000 Smithkline Beecham PLC ADR 1,545,000
-------------------------------------------------------------- ------------
Total 11,146,625
-------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------- ------------
<C> <S> <C> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--1.9%
--------------------------------------------------------------
24,000 Gillette Co. $ 1,242,000
--------------------------------------------------------------
11,000 Proctor & Gamble Co. 932,250
-------------------------------------------------------------- ------------
Total 2,174,250
-------------------------------------------------------------- ------------
INSURANCE--1.0%
--------------------------------------------------------------
6,200 American International Group, Inc. 580,475
--------------------------------------------------------------
4,000 General Re Corp. 583,000
-------------------------------------------------------------- ------------
Total 1,163,475
-------------------------------------------------------------- ------------
MACHINERY & EQUIPMENT--3.3%
--------------------------------------------------------------
82,000 Agco Corp. 1,978,250
--------------------------------------------------------------
25,000 Caterpillar, Inc. 1,700,000
-------------------------------------------------------------- ------------
Total 3,678,250
-------------------------------------------------------------- ------------
MEDIA--1.8%
--------------------------------------------------------------
18,000 Reuters Holdings PLC 1,172,250
--------------------------------------------------------------
20,000 Times Mirror Co. 787,500
-------------------------------------------------------------- ------------
Total 1,959,750
-------------------------------------------------------------- ------------
METALS & MINING--1.6%
--------------------------------------------------------------
30,000 Nucor Corp. 1,773,750
-------------------------------------------------------------- ------------
MISCELLANEOUS--2.2%
--------------------------------------------------------------
24,000 Millipore 918,000
--------------------------------------------------------------
27,000 Tenneco Inc. 1,508,625
-------------------------------------------------------------- ------------
Total 2,426,625
-------------------------------------------------------------- ------------
MOVIES/ENTERTAINMENT--4.0%
--------------------------------------------------------------
40,000 Harley Davidson Inc. 1,555,000
--------------------------------------------------------------
10,000 Hilton Hotels Corp. 940,000
--------------------------------------------------------------
24,000 McDonalds Corp. 1,152,000
--------------------------------------------------------------
20,000 Viacomm, Inc. 842,500
-------------------------------------------------------------- ------------
Total 4,489,500
-------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------- ------------
<C> <S> <C> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
RETAIL TRADE--7.0%
--------------------------------------------------------------
25,000 (a) Autozone, Inc. $ 846,875
--------------------------------------------------------------
15,000 (a) Barnes & Noble, Inc. 521,250
--------------------------------------------------------------
23,000 Circuit City Stores, Inc. 687,125
--------------------------------------------------------------
30,000 Home Depot, Inc. 1,436,250
--------------------------------------------------------------
21,756 Limited, Inc. 413,364
--------------------------------------------------------------
30,000 Lowes Cos. Inc. 1,072,500
--------------------------------------------------------------
45,000 (a) Office Depot, Inc. 883,125
--------------------------------------------------------------
15,000 Penney (J.C.) Co., Inc. 746,250
--------------------------------------------------------------
25,000 (a) Toys R Us, Inc. 675,000
--------------------------------------------------------------
25,000 Wal-Mart Stores, Inc. 578,125
-------------------------------------------------------------- ------------
Total 7,859,864
-------------------------------------------------------------- ------------
SOFTWARE--4.1%
--------------------------------------------------------------
10,700 (a) BMC Software, Inc. 585,825
--------------------------------------------------------------
20,000 Computer Association International, Inc. 1,432,500
--------------------------------------------------------------
18,000 Microsoft Corp. 1,856,250
--------------------------------------------------------------
16,800 (a) Parametric Technology Corp. 657,300
-------------------------------------------------------------- ------------
Total 4,531,875
-------------------------------------------------------------- ------------
TELECOMMUNICATIONS--0.5%
--------------------------------------------------------------
13,200 (a) Glenayre Technologies, Inc. 504,900
-------------------------------------------------------------- ------------
TRANSPORTATION--3.5%
--------------------------------------------------------------
70,000 Atlantic Southeast Airlines, Inc. 1,793,750
--------------------------------------------------------------
53,000 Southwest Airlines Co. 1,570,125
--------------------------------------------------------------
30,000 Swift Transportation, Inc. 532,500
-------------------------------------------------------------- ------------
Total 3,896,375
-------------------------------------------------------------- ------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ----------- -------------------------------------------------------------- ------------
<C> <S> <C> <C>
COMMON STOCKS--CONTINUED
- ----------------------------------------------------------------------------------
UTILITIES--5.5%
--------------------------------------------------------------
20,000 AT&T Corp. $ 1,225,000
--------------------------------------------------------------
60,000 MCI Communications, Inc. 1,815,000
--------------------------------------------------------------
34,000 Telefonos De Mexico S.A. de C.V. ADR 1,117,750
--------------------------------------------------------------
43,000 Worldcom, Inc. 1,978,000
-------------------------------------------------------------- ------------
Total 6,135,750
-------------------------------------------------------------- ------------
TOTAL COMMON STOCKS (IDENTIFIED COST $84,008,146) 109,523,464
-------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $84,008,146)(B) $109,523,464
-------------------------------------------------------------- ------------
</TABLE>
(a) Non-income producing security.
(b) The cost of investments for federal tax purposes amounts to $84,008,146. The
net unrealized appreciation of investments on a federal tax basis amounts to
$25,515,318 which is comprised of $27,555,491 appreciation and $2,040,173
depreciation at March 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($111,757,147) at March 31, 1996.
The following acronym(s) are used throughout this portfolio:
ADR--American Depositary Receipt
PLC --Public Limited Company
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $84,008,146) $109,523,464
- --------------------------------------------------------------------------------
Income receivable 185,136
- --------------------------------------------------------------------------------
Receivable for investments sold 5,331,872
- --------------------------------------------------------------------------------
Deferred expenses 21,591
- -------------------------------------------------------------------------------- ------------
Total assets 115,062,063
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for shares redeemed $ 5,463
- -------------------------------------------------------------------
Payable for investments purchased 3,173,364
- -------------------------------------------------------------------
Accrued expenses 126,089
- ------------------------------------------------------------------- ----------
Total liabilities 3,304,916
- -------------------------------------------------------------------------------- ------------
Net Assets for 8,632,609 shares outstanding $111,757,147
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $ 81,535,908
- --------------------------------------------------------------------------------
Net unrealized appreciation of investments 25,515,318
- --------------------------------------------------------------------------------
Accumulated net realized gain on investments 4,677,540
- --------------------------------------------------------------------------------
Undistributed net investment income 28,381
- -------------------------------------------------------------------------------- ------------
Total Net Assets $111,757,147
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, AND REDEMPTION PROCEEDS PER SHARE:
($111,757,147 / 8,632,609 shares outstanding) $12.95
- -------------------------------------------------------------------------------- ------------
OFFERING PRICE PER SHARE (100/96.25 of $12.95)* $13.45
- -------------------------------------------------------------------------------- ------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Dividends $ 978,738
- --------------------------------------------------------------------------------
Interest 115,695
- -------------------------------------------------------------------------------- -----------
Total income 1,094,433
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $459,709
- ---------------------------------------------------------------------
Administrative personnel and services fee 85,360
- ---------------------------------------------------------------------
Custodian fees 11,249
- ---------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 21,340
- ---------------------------------------------------------------------
Directors'/Trustees' fees 1,640
- ---------------------------------------------------------------------
Auditing fees 6,315
- ---------------------------------------------------------------------
Legal fees 2,765
- ---------------------------------------------------------------------
Portfolio accounting fees 24,010
- ---------------------------------------------------------------------
Share registration costs 9,702
- ---------------------------------------------------------------------
Printing and postage 8,263
- ---------------------------------------------------------------------
Insurance premiums 2,832
- ---------------------------------------------------------------------
Miscellaneous 4,366
- --------------------------------------------------------------------- --------
Total expenses 637,551
- ---------------------------------------------------------------------
Waivers and reimbursements--
- ---------------------------------------------------------------------
Reimbursement of other operating expenses by Adviser (24,355)
- --------------------------------------------------------------------- --------
Net expenses 613,196
- -------------------------------------------------------------------------------- -----------
Net investment income 481,237
- -------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------
Net realized gain on investments 4,679,108
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 7,058,313
- -------------------------------------------------------------------------------- -----------
Net realized and unrealized gain on investments 11,737,421
- -------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $12,218,658
- -------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, 1996 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1995
- ------------------------------------------------------- -------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 481,237 $ 1,360,383
- -------------------------------------------------------
Net realized gain (loss) on investments ($4,679,108 and
$2,190,081, respectively, as computed for federal tax
purposes) 4,679,108 2,190,081
- -------------------------------------------------------
Net change in unrealized appreciation (depreciation) 7,058,313 18,526,466
- ------------------------------------------------------- ------------- --------------
Change in net assets resulting from operations 12,218,658 22,076,930
- ------------------------------------------------------- ------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (494,561) (1,334,319)
- -------------------------------------------------------
Distributions from net realized gains (2,190,666) (47,164)
- ------------------------------------------------------- ------------- --------------
Change in net assets resulting from distributions
to shareholders (2,685,227) (1,381,483)
- ------------------------------------------------------- ------------- --------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 7,662,410 34,305,834
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 2,176,027 1,176,820
- -------------------------------------------------------
Cost of shares redeemed (32,646,200) (27,943,107)
- ------------------------------------------------------- ------------- --------------
Change in net assets resulting from share
transactions (22,807,763) 7,539,547
- ------------------------------------------------------- ------------- --------------
Change in net assets (13,274,334) 28,234,994
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 125,031,481 96,796,487
- ------------------------------------------------------- ------------- --------------
End of period (including undistributed net investment
income of $28,381 and $41,705, respectively) $111,757,147 $125,031,481
- ------------------------------------------------------- ------------- ----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1996(D) 1995 1994(A)
------- ------ -------
<S> <C> <C> <C>
- ----------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.97 $ 9.92 $10.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.05 0.13 0.10
- ----------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 1.19 2.05 (0.08)
- ---------------------------------------------------------------------- ------ ------ ------
Total from investment operations 1.24 2.18 0.02
- ---------------------------------------------------------------------- ------ ------ ------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Distributions from net investment income (0.05) (0.13) (0.10)
- ----------------------------------------------------------------------
Distributions from net realized gain on investments (0.21) (0.00) (0.00)
- ---------------------------------------------------------------------- ------ ------ ------
Total distributions (0.26) (0.14) (0.10)
- ---------------------------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.95 $11.97 $ 9.92
- ---------------------------------------------------------------------- ------ ------ ------
TOTAL RETURN (B) 10.56% 22.19% 0.20%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 1.00%* 1.01% 0.96%*
- ----------------------------------------------------------------------
Net investment income 0.79%* 1.26% 1.66%*
- ----------------------------------------------------------------------
Expense waiver/reimbursement (c) 0.04%* 0.09% 0.09%*
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $111,757 $125,031 $96,796
- ----------------------------------------------------------------------
Average commission rate paid $0.0694 $-- $--
- ----------------------------------------------------------------------
Portfolio turnover 6% 17% 4%
- ----------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(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.
(d) Six months ended March 31, 1996 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PEACHTREE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Peachtree Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of five portfolios. The financial statements included herein are
only those of Peachtree Equity Fund (the "Fund"), a diversified portfolio. The
Fund's investment objective is to achieve long-term growth of capital and
income. The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
(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--Listed equity securities are valued at the last sale
price reported on a national securities exchange. 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.
REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Fund to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Fund could
receive less than the repurchase price on the sale of collateral
securities.
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
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
Revenue Code, as amended (the "Code"). Dividend income and 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.
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 using the straight-line method over a period of 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:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
- ------------------------------------------------------ -------------- ------------------
<S> <C> <C>
Shares sold 629,774 3,273,154
- ------------------------------------------------------
Shares issued to shareholders in payment of
dividends declared 181,117 110,706
- ------------------------------------------------------
Shares redeemed (2,620,008) (2,696,750)
- ------------------------------------------------------ ------------- ---------------
Net change resulting from share transactions (1,809,117) 687,110
- ------------------------------------------------------ ------------- ---------------
</TABLE>
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--NationsBanc Advisors, Inc., 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.
NationsBanc Advisors, Inc. became the Fund's investment adviser on January
17, 1996. Prior to January 17, 1996, Bank South served as the Fund's
investment adviser and received for its services an annual investment
advisory fee equal to 0.75% of the Fund's average daily net assets.
For the six months ended March 31, 1996, the Adviser(s) earned fees as
follows:
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF
ADVISER NAME FEE EARNED FEE WAIVED
------------------------------------------ -------------- -------------
<S> <C> <C>
NationsBanc Investment Advisors, Inc. $182,719 $ 0
------------------------------------------ ------------ --------
Bank South $276,990 $ 0
------------------------------------------ ------------ --------
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. For the six months ended
March 31, 1996, the Advisers reimbursed the Fund for operating expenses in
the amount of $24,355. The Adviser can modify or terminate this voluntary
waiver and/or reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and
TradeStreet Investment Associates, Inc., TradeStreet Investment Associates,
Inc. receives an annual fee from the Adviser based on the level of the
Fund's average daily net assets.
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 Trust for the
period.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund for which it receives a fee. The fee
paid to FServ 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 $41,462 were borne
initially by Federated Administrative Services ("FAS").
The Fund has agreed to reimburse FAS for the organizational expenses during
the five year period following the Fund's effective date. For the six
months ended March 31, 1996, the Fund paid $3,997 pursuant to this
agreement.
PEACHTREE EQUITY FUND
- --------------------------------------------------------------------------------
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 six
months ended March 31, 1996, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------
PURCHASES $ 7,169,480
- ------------------------------------------------------------------------------- -----------
SALES $30,857,914
- ------------------------------------------------------------------------------- -----------
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and
Peter E. Madden Secretary
Gregor F. Meyer Charles L. Davis, Jr.
John E. Murray, Jr. Vice President and Assistant
Wesley W. Posvar Treasurer
Marjorie P. Smuts Richard B. Fisher
Vice President
David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report for the Peachtree Money Market
Funds. This report, which covers the six-month period from October 1, 1995
through March 31, 1996, provides you with complete financial information for
Peachtree Prime Money Market Fund and Peachtree Government Money Market Fund. It
includes a list of the funds' holdings and the financial statements.
During the period, each fund continued to help shareholders earn daily income on
their ready cash. Each fund also gives its shareholders daily access to their
money when they need it, and the peace of mind that comes with knowing the
funds' managers strive to maintain a stable share value. Each dollar invested
may be redeemed for a dollar, plus any earned income.*
PEACHTREE PRIME MONEY MARKET FUND, a portfolio of high-quality money market
securities, paid a total of $0.03 per share in dividends during the period. The
fund's net assets stood at $139 million at the end of the period.
PEACHTREE GOVERNMENT MONEY MARKET FUND, a portfolio of U.S. government money
market securities, paid a total of $0.03 per share in dividends during the
period. The fund's net assets stood at $78 million at the end of the period.
Thank you for selecting a Peachtree Money Market Fund to pursue daily income on
your ready cash through a professionally managed portfolio of money market
securities. We will continue to keep you up-to-date on your investment through
the highest quality service.
Sincerely,
LOGO
Edward C. Gonzales
President
May 15, 1996
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment in
the funds is neither insured nor guaranteed by the U.S. government.
PEACHTREE PRIME MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
COMMERCIAL PAPER--2.0%
- ------------------------------------------------------------------------------------
FINANCE--2.0%
----------------------------------------------------------------
$ 500,000 Associates Corp. North America, 8.375%, 6/1/1996 $ 502,229
----------------------------------------------------------------
800,000 Heller Financial, Inc., 8.85%, 4/15/1996 800,891
----------------------------------------------------------------
1,500,000 IBM Credit Corp., 4.87%, 9/3/1996 1,494,247
---------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 2,797,367
---------------------------------------------------------------- ------------
CORPORATE BONDS--13.2%
- ------------------------------------------------------------------------------------
AUTOMOBILE--1.2%
----------------------------------------------------------------
1,646,000 General Motors Acceptance Corp., 5.25%-8.80%,
7/8/1996-11/15/1996 1,647,483
---------------------------------------------------------------- ------------
BANKING--0.8%
----------------------------------------------------------------
1,040,000 Continental Bank Corp., 9.875%, 6/15/1996 1,047,272
---------------------------------------------------------------- ------------
FINANCE--1.8%
----------------------------------------------------------------
825,000 Bankers Trust NY Corp, 4.70%-7.25%, 7/1/1996-11/1/1996 825,774
----------------------------------------------------------------
700,000 CIT Group Holdings, Inc., 8.875%, 6/15/1996 704,090
----------------------------------------------------------------
1,000,000 Transamerica Financial Corp., 5.85%, 7/15/1996 1,000,000
---------------------------------------------------------------- ------------
Total 2,529,864
---------------------------------------------------------------- ------------
FOOD & BEVERAGE--4.4%
----------------------------------------------------------------
515,000 PepsiCo Inc., 4.60%, 6/30/1996 513,498
----------------------------------------------------------------
5,475,000 Philip Morris Cos, Inc., 8.75%-8.875%, 7/1/1996-12/1/1996 5,551,439
---------------------------------------------------------------- ------------
Total 6,064,937
---------------------------------------------------------------- ------------
INDUSTRIAL SERVICES--0.2%
----------------------------------------------------------------
250,000 WMX Technologies, 4.875%, 6/15/1996 249,540
---------------------------------------------------------------- ------------
PROCESS INDUSTRIES--1.4%
----------------------------------------------------------------
1,950,000 Waste Management, Inc., 4.625%, 4/14/1996 1,948,966
---------------------------------------------------------------- ------------
RETAIL--0.8%
----------------------------------------------------------------
1,105,000 Wal Mart Stores, Inc., 8.00%, 5/1/1996 1,106,952
---------------------------------------------------------------- ------------
SECURITIES--0.5%
----------------------------------------------------------------
750,000 Merrill Lynch & Co., Inc., 4.75%, 6/24/1996 747,762
---------------------------------------------------------------- ------------
</TABLE>
PEACHTREE PRIME MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------
TELECOMMUNICATIONS--2.1%
----------------------------------------------------------------
$ 475,000 AT&T Corp., 6.30%, 7/25/1996 $ 475,564
----------------------------------------------------------------
2,450,000 Southwestern Bell Telephone Co., 8.30%, 6/1/1996 2,459,652
---------------------------------------------------------------- ------------
Total 2,935,216
---------------------------------------------------------------- ------------
TOTAL CORPORATE BONDS 18,277,992
---------------------------------------------------------------- ------------
GOVERNMENT AGENCIES--65.7%
- ------------------------------------------------------------------------------------
FEDERAL FARM CREDIT BANK--0.7%
----------------------------------------------------------------
1,000,000 6.39%, 4/17/1996 1,000,000
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN BANK--18.6%
----------------------------------------------------------------
26,000,000 4.59%-4.95%, 5/7/1996-6/10/1996 25,873,616
---------------------------------------------------------------- ------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--32.3%
----------------------------------------------------------------
45,000,000 5.19%-5.27%, 4/11/1996-4/15/1996 44,922,969
---------------------------------------------------------------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--10.5%
----------------------------------------------------------------
15,000,000 4.90%-5.10%, 8/9/1996-8/23/1996 14,711,917
---------------------------------------------------------------- ------------
TENNESSEE VALLEY AUTHORITY--3.6%
----------------------------------------------------------------
5,000,000 5.00%, 5/3/1996 4,977,778
---------------------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES 91,486,280
---------------------------------------------------------------- ------------
CASH EQUIVALENT--0.0%
- ------------------------------------------------------------------------------------
425 Bank of New York Cash Reserves, 4.40% 425
---------------------------------------------------------------- ------------
(A)REPURCHASE AGREEMENT--19.1%
- ------------------------------------------------------------------------------------
26,602,000 CS First Boston Corp., 5.23%, dated 3/29/1996, due 4/4/1996 26,602,000
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $139,164,064
---------------------------------------------------------------- ------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
obligations, based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($139,076,628) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investment in repurchase agreement $ 26,602,000
- -----------------------------------------------------------------
Investments in securities 112,562,064
- ----------------------------------------------------------------- ------------
Total investments in securities, at amortized cost and value $139,164,064
- --------------------------------------------------------------------------------
Income receivable 539,940
- --------------------------------------------------------------------------------
Deferred expenses 20,605
- -------------------------------------------------------------------------------- ------------
Total assets 139,724,609
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Income distribution payable 580,059
- -----------------------------------------------------------------
Payable to Bank 3,206
- -----------------------------------------------------------------
Accrued expenses 64,716
- ----------------------------------------------------------------- ------------
Total liabilities 647,981
- -------------------------------------------------------------------------------- ------------
Net Assets for 139,078,958 shares outstanding $139,076,628
- -------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid in capital $139,078,958
- --------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (2,330)
- -------------------------------------------------------------------------------- ------------
Total Net Assets $139,076,628
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per
Share:
($139,076,628 / 139,078,958 shares outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest $4,258,888
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $ 374,007
- --------------------------------------------------------------------
Administrative personnel and services fee 104,162
- --------------------------------------------------------------------
Custodian fees 13,633
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 18,542
- --------------------------------------------------------------------
Directors'/Trustees' fees 1,927
- --------------------------------------------------------------------
Auditing fees 6,473
- --------------------------------------------------------------------
Legal fees 2,275
- --------------------------------------------------------------------
Portfolio accounting fees 22,550
- --------------------------------------------------------------------
Share registration costs 10,698
- --------------------------------------------------------------------
Printing and postage 7,979
- --------------------------------------------------------------------
Insurance premiums 2,528
- --------------------------------------------------------------------
Miscellaneous 4,402
- -------------------------------------------------------------------- ---------
Total expenses 569,176
- --------------------------------------------------------------------
Waiver of investment advisory fee (231,884)
- -------------------------------------------------------------------- ---------
Net expenses 337,292
- -------------------------------------------------------------------------------- ----------
Net investment income $3,921,596
- -------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
---------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------
OPERATIONS--
- ----------------------------------------------------
Net investment income $ 3,921,596 $ 5,547,249
- ---------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------
Distributions from net investment income (3,923,926) (5,547,249)
- ---------------------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- ----------------------------------------------------
Proceeds from sale of shares 145,109,385 269,427,785
- ----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 1,129,326 1,227,252
- ----------------------------------------------------
Cost of shares redeemed (157,587,628) (204,906,850)
- ---------------------------------------------------- ------------- -------------
Change in net assets resulting from share
transactions (11,348,917) 65,748,187
- ---------------------------------------------------- ------------- -------------
Change in net assets (11,351,247) 65,748,187
- ----------------------------------------------------
NET ASSETS:
- ----------------------------------------------------
Beginning of period 150,427,875 84,679,688
- ---------------------------------------------------- ------------- -------------
End of period $ 139,076,628 $ 150,427,875
- ---------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE PRIME MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------
1996(D) 1995 1994(A)
------- ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.03 0.05 0.02
- ------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.03) (0.05) (0.02)
- ------------------------------------------------------------ ------ ------ -----
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------ ------ ------ -----
TOTAL RETURN (B) 2.65% 5.45% 2.41%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.45%* 0.50% 0.38%*
- ------------------------------------------------------------
Net investment income 5.24%* 5.38% 3.99%*
- ------------------------------------------------------------
Expense waiver/reimbursement (c) 0.31%* 0.31% 0.51%*
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $139,077 $150,428 $84,680
- ------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to September 30, 1994.
(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.
(d) Six months ended March 31, 1996 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS--16.7%
- -------------------------------------------------------------------------------------
$ 13,000,000 U.S. Treasury Notes, 6.25%-7.625%, 4/30/1996-8/31/1996 $13,046,897
----------------------------------------------------------------- -----------
GOVERNMENT AGENCIES--67.2%
- -------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--16.6%
-----------------------------------------------------------------
13,000,000 5.03%-5.15%, 4/1/1996-5/29/1996 12,959,480
----------------------------------------------------------------- -----------
FEDERAL HOME LOAN MORTGAGE CORP.--37.8%
-----------------------------------------------------------------
29,650,000 5.02%-5.28%, 4/11/1996-6/3/1996 29,543,992
----------------------------------------------------------------- -----------
TENNESSEE VALLEY AUTHORITY--12.8%
-----------------------------------------------------------------
10,000,000 5.00%, 5/3/1996 9,955,556
----------------------------------------------------------------- -----------
TOTAL GOVERNMENT AGENCIES 52,459,028
----------------------------------------------------------------- -----------
(A)REPURCHASE AGREEMENT--16.3%
- -------------------------------------------------------------------------------------
12,706,000 CS First Boston Corp., 5.23%, dated 3/29/1996, due 4/1/1996 12,706,000
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED COST) (B) $78,211,925
----------------------------------------------------------------- -----------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($78,098,097) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investment in repurchase agreement $12,706,000
- -------------------------------------------------------------------
Investments in securities 65,505,925
- ------------------------------------------------------------------- -----------
Total investments in securities, at amortized cost and value $78,211,925
- ---------------------------------------------------------------------------------
Cash 901
- ---------------------------------------------------------------------------------
Income receivable 213,615
- ---------------------------------------------------------------------------------
Deferred expenses 22,223
- --------------------------------------------------------------------------------- -----------
Total assets 78,448,664
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable 315,565
- -------------------------------------------------------------------
Accrued expenses 35,002
- ------------------------------------------------------------------- -----------
Total liabilities 350,567
- --------------------------------------------------------------------------------- -----------
Net Assets for 78,098,097 shares outstanding $78,098,097
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($78,098,097 / 78,098,097 shares outstanding) $1.00
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest $2,053,926
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $ 183,385
- --------------------------------------------------------------------
Administrative personnel and services fee 52,153
- --------------------------------------------------------------------
Custodian fees 4,974
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 14,258
- --------------------------------------------------------------------
Directors'/Trustees' fees 1,349
- --------------------------------------------------------------------
Auditing fees 5,927
- --------------------------------------------------------------------
Legal fees 2,103
- --------------------------------------------------------------------
Portfolio accounting fees 21,872
- --------------------------------------------------------------------
Share registration costs 9,889
- --------------------------------------------------------------------
Printing and postage 5,922
- --------------------------------------------------------------------
Insurance premiums 1,959
- --------------------------------------------------------------------
Miscellaneous 4,055
- -------------------------------------------------------------------- ---------
Total expenses 307,846
- --------------------------------------------------------------------
Waiver of investment advisory fee (110,031)
- -------------------------------------------------------------------- ---------
Net expenses 197,815
- -------------------------------------------------------------------------------- ----------
Net investment income $1,856,111
- -------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995
----------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------
OPERATIONS--
- ----------------------------------------------------
Net investment income $ 1,856,111 $ 3,604,721
- ---------------------------------------------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------
Distributions from net investment income (1,856,111) (3,604,721)
- ---------------------------------------------------- ------------- -------------
SHARE TRANSACTIONS--
- ----------------------------------------------------
Proceeds from sale of shares 106,554,939 180,164,804
- ----------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 31,066 29,187
- ----------------------------------------------------
Cost of shares redeemed (87,500,974) (211,621,111)
- ---------------------------------------------------- ------------- -------------
Change in net assets resulting from share
transactions 19,085,031 (31,427,120)
- ---------------------------------------------------- ------------- -------------
Change in net assets 19,085,031 (31,427,120)
- ----------------------------------------------------
NET ASSETS:
- ----------------------------------------------------
Beginning of period 59,013,066 90,440,186
- ---------------------------------------------------- ------------- -------------
End of period $ 78,098,097 $ 59,013,066
- ---------------------------------------------------- ------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------
1996(D) 1995 1994(A)
------- ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- --------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------
Net investment income 0.03 0.05 0.02
- --------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------
Distributions from net investment income (0.03) (0.05) (0.02)
- -------------------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------- ------ ------ ------
TOTAL RETURN (B) 2.55% 2.26% 2.44%
- --------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------
Expenses 0.54%* 0.54% 0.38%*
- --------------------------------------------------------------
Net investment income 5.06%* 5.05% 4.05%*
- --------------------------------------------------------------
Expense waiver/reimbursement (c) 0.30%* 0.30% 0.53%*
- --------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------
Net assets, end of period (000 omitted) $78,098 $59,013 $90,440
- --------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from February 14, 1994 (date of initial
public investment) to
September 30, 1994.
(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.
(d) Six months ended March 31, 1996 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PEACHTREE MONEY MARKET FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Peachtree Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end management investment company. The
Trust consists of five portfolios. The financial statements of the following
portfolios (individually referred to as the "Fund", or collectively as the
"Funds") are presented herein:
<TABLE>
<S> <C>
PORTFOLIO NAME INVESTMENT OBJECTIVE
- ----------------------------------- --------------------------------------------------------
Peachtree Prime Money Market Fund Current income consistent with stability of principal
("Prime Money Fund") and liquidity.
Peachtree Government Money Market Current income consistent with stability of principal
Fund ("Government Money Fund") and liquidity.
</TABLE>
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other open-end regulated investment companies are valued at
net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
agreement transactions. Additionally, procedures have been established by
the Funds to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
PEACHTREE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
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 Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain 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 each Fund with respect to
registration of their shares in their first fiscal year, excluding the
initial expense of registering their shares, have been deferred and are
being amortized using the straight-line method over a period of five years
from each Funds' 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). At March
31, 1996, capital paid-in for Prime Money Fund and Government Money Fund was
aggregated $139,078,958 and $78,098,097, respectively.
PEACHTREE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PRIME MONEY FUND GOVERNMENT MONEY FUND
----------------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED MARCH YEAR ENDED ENDED MARCH YEAR ENDED
31, 1996 SEPTEMBER 30, 1995 31, 1996 SEPTEMBER 30, 1995
- --------------------------- -------------- ------------------ -------------- ------------------
<S> <C> <C> <C> <C>
Shares sold 145,109,385 269,427,785 106,554,939 180,164,804
- ---------------------------
Shares issued to
shareholders in payment
of distributions declared 1,129,326 1,227,252 31,066 29,187
- ---------------------------
Shares redeemed (157,587,628) (204,906,850) (87,500,974) (211,621,111)
- --------------------------- ------------- --------------- ------------- ---------------
Net change resulting from
share transactions (11,348,917) 65,748,187 19,085,031 (31,427,120)
- --------------------------- ------------- --------------- ------------- ---------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--NationsBanc Advisors, Inc., the Funds' investment
adviser, (the "Adviser"), receives for its services an annual investment
advisory fee equal to 0.50% of each Fund's average daily net assets.
NationsBanc Advisors, Inc. became the Funds' investment adviser on January 17,
1996. Prior to January 17, 1996, Bank South served as the Funds' investment
adviser and received for its services an annual investment advisory fee equal to
0.50% of each Fund's average daily net assets.
For the six months ended March 31, 1996, the Adviser(s) earned fees as follows:
<TABLE>
<CAPTION>
PRIME MONEY FUND AMOUNT OF AMOUNT OF
ADVISER NAME FEE EARNED FEE WAIVED
------------------------------------------------------- ---------- ----------
<S> <C> <C>
NationsBanc Advisors, Inc. $147,314 $ 91,335
-------- --------
Bank South $226,693 $140,549
-------- --------
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT MONEY FUND AMOUNT OF AMOUNT OF
ADVISER NAME FEE EARNED FEE WAIVED
------------------------------------------------------- ---------- ----------
<S> <C> <C>
NationsBanc Advisors, Inc. $ 80,005 $ 48,003
-------- --------
Bank South $103,380 $ 62,028
-------- --------
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.
PEACHTREE MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
Under the terms of a sub-advisory agreement between the Adviser and TradeStreet
Investment Associates, Inc., TradeStreet Investment Associates, Inc. receives an
annual fee from the Adviser based on the level of the Fund's average daily net
assets.
ADMINISTRATIVE FEE--Federated Services Company ("FServ") provides the Funds with
certain administrative personnel and services. The fee paid to FServ is based on
the level of average aggregate net assets of the Trust for the period.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Funds. The fee paid to FServ is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($39,837 for Prime Money Fund
and $39,426 for Government Money Fund) were borne initially by Federated
Administrative Services.
The Funds have agreed to reimburse Federated Administrative Services for the
organizational expenses during the five year period following the date the Funds
became effective. For the period ended March 31, 1996, the Funds paid $3,686 and
$3,025, respectively, pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
<TABLE>
<S> <C>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and
Peter E. Madden Secretary
Gregor F. Meyer Charles L. Davis, Jr.
John E. Murray, Jr. Vice President and Assistant
Wesley W. Posvar Treasurer
Marjorie P. Smuts Richard B. Fisher
Vice President
David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds' prospectus which contains facts concerning
the Funds' objectives and policies, management fees, expenses and other
information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report for Peachtree Georgia Tax-Free
Income Fund. This report, which covers the six-month period from October 1, 1995
through March 31, 1996, provides you with complete financial information for the
fund, including an investment review by the portfolio manager, a list of
holdings, and the financial statements.
Reflecting a rising interest rate environment during the first quarter of
1995--which adversely impacted bond prices--the fund's portfolio of tax-free
bonds* issued by Georgia municipalities produced a total return based on net
asset value of 1.81%** for the six-month period ended March 31, 1996. The net
asset value decreased from $10.12 on the first day of the period to $10.02 on
the last day. During the six-month period, the fund paid a tax-free dividend
stream totaling $0.25 per share and capital gains totaling $0.03 per share. Net
assets stood at $2.1 million on the last day of the period.
Thank you for selecting Peachtree Georgia Tax-Free Income Fund as a way to
pursue double-tax-free income through a professionally managed portfolio of
municipal bonds. We will continue to keep you up-to-date on your investment
progress through the highest quality service.
Sincerely,
LOGO
Edward C. Gonzales
President
May 15, 1996
* Income may be subject to the federal alternative minimum tax or other state
and local taxes.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the fund's sales charge was (0.74%).
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
For most of the six-month period, interest rates declined. However, the last six
weeks of this period proved to be a difficult time for the debt markets.
Generally, interest rates, as measured by the U.S. Treasury market, have
increased since the end of the last reporting period. However, the municipal
bond market over this period has seen short-term rates remain unchanged,
intermediate yields (3 to 15 years) increase 10 to 15 basis points, and long
yields (16 to 30 years) decline by 10 basis points. Comparable treasury yields
increased in the intermediate sector 2 to 13 basis points, but also increased 7
to 10 basis points in the long sector. Thus, long municipals outperformed their
Treasury counterparts. This phenomena is the result of one major factor. In
1995, municipals underperformed because of the public "flat tax" debate
throughout the primary election process. As the election process uncovered the
realities of the potential outcome of a "flat tax", long-term municipals were
able to reverse course and resume their historical yield relationship to
Treasuries. Since year end, municipals have dramatically outperformed
Treasuries. This is largely due to less new issue supply as issuers have shunned
higher rates and property and casualty companies have increased their purchases
of municipals. Municipals should continue to outperform Treasuries as issuance
is restricted in this higher rate environment and the property and casualty
companies continue their investment programs. The Peachtree Georgia Tax-Free
Income Fund (the "Fund") is positioned to outperform in a higher interest rate
environment. The Fund's total return based on net asset value for the six-month
period ended March 31, 1996 was 1.81%* versus the Lipper Georgia Municipal Debt
Average** of 2.70%.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Total return for the
period reflecting the Fund's sales charge was (0.74%).
** Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
PEACHTREE GEORGIA TAX-FREE INCOME FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- --------- ----------------------------------------------------------- ------- ----------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--91.8%
- ------------------------------------------------------------------------
$ 60,000 Alpharetta, GA, (Series A), 4.85%, 5/1/2002 AA $ 60,770
-----------------------------------------------------------
85,000 Alpharetta, GA, (Series B), 5.15%, 11/1/2005 AA- 86,770
-----------------------------------------------------------
25,000 Bibb County, GA, GO UT Bonds, 4.95%, 1/1/2002 AA 25,329
-----------------------------------------------------------
100,000 Brunswick, GA, Water & Sewer Improvements Refunding Revenue
Bonds, 6.00% (MBIA Insured)/(Original Issue Yield: 6.20%),
10/1/2011 AAA 106,519
-----------------------------------------------------------
40,000 Cherokee County, GA, School System GO UT Bonds, 4.80%,
2/1/2003 A1 40,004
-----------------------------------------------------------
100,000 Cherokee County, GA, School System GO UT Bonds, 4.60%,
2/1/2001 A1 100,059
-----------------------------------------------------------
70,000 Cobb County, GA, Water & Sewer Revenue Bonds (Series A),
4.90%, 7/1/2003 AA 70,740
-----------------------------------------------------------
25,000 Cobb County, GA, Water & Sewer Revenue Bonds (Series B),
6.10%, 7/1/1997 AA 25,624
-----------------------------------------------------------
75,000 Cobb-Marietta, GA, Coliseum & Exhibit Hall Authority
Revenue Bonds, 6.75% (MBIA Insured)/(Original Issue Yield:
6.778%), (Prerefunded) AAA 84,205
-----------------------------------------------------------
100,000 De Kalb County, GA, Hospital Authority Refunding RANs
(Series A), 5.00% (De Kalb Medical Center Project)/(MBIA
Insured)/(Original Issue Yield: 5.42%), 9/1/2014 AAA 90,645
-----------------------------------------------------------
100,000 De Kalb County, GA, Water & Sewer Refunding Revenue Bonds,
5.125% (Original Issue Yield: 5.324%), 10/1/2014 AAA 93,423
-----------------------------------------------------------
25,000 Fulton County, GA, Building Authority Refunding Revenue
Bonds, 5.70% (Judicial Center Facilities Project), 1/1/2004 AA 26,317
-----------------------------------------------------------
100,000 Fulton County, GA, GO UT Bonds, 6.00%, 1/1/2005 AA 102,349
-----------------------------------------------------------
50,000 Fulton County, GA, School District GO UT Bonds, 5.625%
(Original Issue Yield: 5.85%), 1/1/2021 AA 48,949
-----------------------------------------------------------
65,000 Gainesville & Hall County, GA, Hospital Authority Revenue
Bonds, 5.30% (Northeast Georgia Healthcare Project)/(MBIA
Insured), 10/1/2005 AAA 66,387
-----------------------------------------------------------
75,000 Georgia State, (Series B), 5.90%, 3/1/2003 AAA 80,414
-----------------------------------------------------------
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- --------- ----------------------------------------------------------- ------- ----------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------
$ 50,000 Georgia State, GO UT Bonds (Series C), 6.50%, 7/1/1996 AAA $ 50,393
-----------------------------------------------------------
60,000 Georgia State, GO UT Bonds (Series E), 4.75%, 7/1/2005 AA+ 59,398
-----------------------------------------------------------
100,000 Georgia State, GO UT Refunding Bonds (Series E), 4.875%,
7/1/2006 AA+ 98,723
-----------------------------------------------------------
40,000 Georgia State, GO UT Refunding Bonds (Series E), 5.50%,
7/1/2003 AAA 42,058
-----------------------------------------------------------
35,000 Georgia State, GO UT Refunding Bonds, (Series E), 4.50%,
7/1/2002 AAA 34,894
-----------------------------------------------------------
40,000 Gwinnett County, GA, Water & Sewer Refunding Revenue Bonds,
4.60% (Original Issue Yield: 4.699%), 8/1/2000 AA+ 40,318
-----------------------------------------------------------
135,000 Gwinnett County, GA, Water & Sewer Refunding Revenue Bonds,
4.60%, 8/1/2001 AA+ 135,658
-----------------------------------------------------------
35,000 Macon Bibb County, GA IDR, Refunding Bonds, 6.95% (Parking
Facilities Project), 8/1/2003 AA 38,380
-----------------------------------------------------------
50,000 Metro Atlanta Rapid Transit Authority, GA, Sales Tax
Revenue Bonds, 4.90% (Second Indenture Series)/
(Series A)/(AMBAC Insured), 7/1/2001 AAA 50,725
-----------------------------------------------------------
40,000 Metro Atlanta Rapid Transit Authority, GA, Sales Tax
Revenue Bonds, 7.00% (Original Issue Yield: 9.75%),
7/1/2011 Escrowed to Maturity AAA 46,681
-----------------------------------------------------------
25,000 Private Colleges & University Authority, GA, Refunding
Revenue Bonds 4.65% (Agnes Scott College Project)/(Original
Issue Yield: 4.75%), 6/1/2002 AA 25,032
-----------------------------------------------------------
</TABLE>
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- --------- ----------------------------------------------------------- ------- ----------
<C> <S> <C> <C>
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------
$ 50,000 Richmond County, GA Hospital Authority GO UT Bonds, 5.90%,
1/1/2008 AAA $ 53,372
-----------------------------------------------------------
100,000 Rome, GA, New Public Housing Authority Revenue Bonds, 5.00%
(U.S. Government Guaranteed), 8/1/2004 AAA 101,699
-----------------------------------------------------------
85,000 Roswell, GA, GO UT Bonds, 5.15%, 2/1/2005 AA 86,473
----------------------------------------------------------- ----------
Total 1,972,308
----------------------------------------------------------- ----------
TOTAL INVESTMENTS (IDENTIFIED COST $1,933,832) (A) $1,972,308
----------------------------------------------------------- ----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $1,933,832. The
net unrealized appreciation of investments on a federal tax basis amounts to
$38,476 which is comprised of $39,505 appreciation and $1,029 depreciation
at March 31, 1996.
* 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
($2,148,731) at March 31, 1996.
The following acronym(s) are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
GO -- General Obligation
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
RANs -- Revenue Anticipation Notes
UT -- Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Total investments in securities, at value (identified and tax cost $1,933,832) $1,972,308
- ---------------------------------------------------------------------------------
Cash 79,004
- ---------------------------------------------------------------------------------
Income receivable 28,241
- ---------------------------------------------------------------------------------
Receivable for investments sold 92,265
- ---------------------------------------------------------------------------------
Deferred expenses 1,994
- --------------------------------------------------------------------------------- ----------
Total assets 2,173,812
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable $ 9,087
- -----------------------------------------------------------------------
Accrued expenses 15,994
- ----------------------------------------------------------------------- -------
Total liabilities 25,081
- --------------------------------------------------------------------------------- ----------
Net Assets for 214,352 shares outstanding $2,148,731
- --------------------------------------------------------------------------------- ----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid in capital $2,081,486
- ---------------------------------------------------------------------------------
Net unrealized appreciation of investments 38,476
- ---------------------------------------------------------------------------------
Accumulated net realized gain on investments 28,769
- --------------------------------------------------------------------------------- ----------
Total Net Assets $2,148,731
- --------------------------------------------------------------------------------- ----------
NET ASSET VALUE, and Redemption Proceeds Per Share:
($2,148,731 / 214,352 shares outstanding) $10.02
- --------------------------------------------------------------------------------- ----------
OFFERING PRICE PER SHARE (100/97.50 of $10.02)* $10.28
- --------------------------------------------------------------------------------- ----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------
Interest $ 64,386
- ------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------
Investment advisory fee $ 10,291
- -----------------------------------------------------------------------------
Administrative personnel and services fee 49,999
- -----------------------------------------------------------------------------
Custodian fees 1,343
- -----------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 13,443
- -----------------------------------------------------------------------------
Directors'/Trustees' fees 1,149
- -----------------------------------------------------------------------------
Auditing fees 5,726
- -----------------------------------------------------------------------------
Legal fees 1,438
- -----------------------------------------------------------------------------
Portfolio accounting fees 33,138
- -----------------------------------------------------------------------------
Share registration costs 7,768
- -----------------------------------------------------------------------------
Printing and postage 4,918
- -----------------------------------------------------------------------------
Insurance premiums 1,818
- -----------------------------------------------------------------------------
Miscellaneous 4,084
- ----------------------------------------------------------------------------- ---------
Total expenses 135,115
- -----------------------------------------------------------------------------
Waiver and reimbursements--
- -----------------------------------------------------------------------------
Waiver of investment advisory fee $ (10,291)
- -----------------------------------------------------------------
Reimbursement of other operating expenses by Adviser (124,824)
- ----------------------------------------------------------------- ---------
Total waivers and reimbursements (135,115)
- ----------------------------------------------------------------------------- ---------
Net expenses 0
- ------------------------------------------------------------------------------------------
Net investment income 64,386
- ------------------------------------------------------------------------------------------ --------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------
Net realized gain on investments 28,777
- ------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (25,429)
- ------------------------------------------------------------------------------------------ --------
Net realized and unrealized gain on investments 3,348
- ------------------------------------------------------------------------------------------ --------
Change in net assets resulting from operations $ 67,734
- ------------------------------------------------------------------------------------------ --------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(UNAUDITED) PERIOD ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995*
---------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------
OPERATIONS--
- ---------------------------------------------------
Net investment income $ 64,386 $ 91,981
- ---------------------------------------------------
Net realized gain on investments ($28,777 and
$9,322 as computed for federal tax purposes) 28,777 9,322
- ---------------------------------------------------
Net change in unrealized appreciation
(depreciation) (25,429) 63,905
- --------------------------------------------------- ---------- -----------
Change in net assets resulting from operations 67,734 165,208
- --------------------------------------------------- ---------- -----------
DISTRIBUTIONS TO SHAREHOLDERS--
- ---------------------------------------------------
Distributions from net investment income (64,386) (91,981)
- ---------------------------------------------------
Distributions from net realized gains (9,330) 0
- --------------------------------------------------- ---------- -----------
Change in net assets resulting from
distributions to shareholders (73,716) (91,981)
- --------------------------------------------------- ---------- -----------
SHARE TRANSACTIONS--
- ---------------------------------------------------
Proceeds from sale of shares 69,000 4,095,522
- ---------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 39,070 42,572
- ---------------------------------------------------
Cost of shares redeemed (1,156,345) (1,008,333)
- --------------------------------------------------- ----------- -----------
Change in net assets resulting from share
transactions (1,048,275) 3,129,761
- --------------------------------------------------- ----------- -----------
Change in net assets (1,054,257) 3,202,988
- ---------------------------------------------------
NET ASSETS:
- ---------------------------------------------------
Beginning of period 3,202,988 0
- --------------------------------------------------- ---------- -----------
End of period $2,148,731 $ 3,202,988
- --------------------------------------------------- ---------- -----------
</TABLE>
* For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
------------------
1996(D) 1995(A)
------- -------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.12 $10.00
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.25 0.42
- ------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.07) 0.12
- ------------------------------------------------------------------------------ ------ ------
Total from investment operations 0.18 0.54
- ------------------------------------------------------------------------------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Distributions from net investment income (0.25) (0.42)
- ------------------------------------------------------------------------------
Distributions from net realized gain on investments (0.03) 0.00
- ------------------------------------------------------------------------------ ------ ------
Total distributions (0.28) (0.42)
- ------------------------------------------------------------------------------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.02 $10.12
- ------------------------------------------------------------------------------ ------ ------
TOTAL RETURN (B) 1.81% 5.56%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 0.00% 0.00%
- ------------------------------------------------------------------------------
Net investment income 4.69%* 4.80%*
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (c) 9.85%* 11.59%*
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $2,149 $3,203
- ------------------------------------------------------------------------------
Portfolio turnover 4% 58%
- ------------------------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from October 6, 1994 (date of initial
public investment) to September 30, 1995.
(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.
(d) Six months ended March 31, 1996 (unaudited).
(See Notes which are an integral part of the Financial Statements)
PEACHTREE GEORGIA TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Peachtree Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company. The
Trust consists of five portfolios. The financial statements included herein are
only those of Peachtree Georgia Tax-Free Income Fund (the "Fund"), a
non-diversified portfolio. The Fund's investment objective is to provide current
income exempt from federal income tax and the personal income taxes imposed by
the State of Georgia. The financial statements of the other portfolios are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held.
(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.
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 the shares, have been deferred and
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
are being amortized using the straight-line method over a period of 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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
MARCH 31, 1996 SEPTEMBER 30, 1995*
---------------------- -------------------
<S> <C> <C>
- ---------------------------------------------
Shares sold 6,734 412,731
- ---------------------------------------------
Shares issued to shareholders in payment of
distributions declared 3,816 4,236
- ---------------------------------------------
Shares redeemed (112,845) (100,320)
- --------------------------------------------- -------- --------
Net change resulting from share
transactions (102,295) 316,647
- --------------------------------------------- -------- --------
</TABLE>
* For the period from October 6, 1994 (date of initial public investment) to
September 30, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--NationsBanc Advisors, Inc., 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.
NationsBanc Advisors, Inc. became the Fund's investment adviser on January 17,
1996. Prior to January 17, 1996, Bank South served as the Fund's investment
adviser and received for its services an annual investment advisory fee equal to
0.75% of the Fund's average daily net assets.
PEACHTREE GEORGIA TAX-FREE INCOME FUND
- --------------------------------------------------------------------------------
For the six months ended March 31, 1996, the adviser(s) earned fees as follows:
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF
ADVISER NAME FEE EARNED FEE WAIVED
------------------------------------- ----------- -----------
<S> <C> <C>
NationsBanc Advisors, Inc. $ 3,637 $ 3,637
------- -------
Bank South $ 6,654 $ 6,654
------- -------
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. For the six months ended March
31, 1996, the Advisers reimbursed the Fund for operating expenses in the amount
of $124,824. The Adviser can modify or terminate this voluntary waiver and/or
reimbursement at any time at its sole discretion.
Under the terms of a sub-advisory agreement between the Adviser and TradeStreet
Investment Associates, Inc., TradeStreet Investment Associates, Inc., receives
an annual fee from the Adviser based on the level of the Fund's average daily
net assets.
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 Trust for the period.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--FServ, through its
subsidiary, Federated Shareholder Services Company serves as transfer and
dividend disbursing agent for the Fund for which it receives a fee. The fee paid
to FServ 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 $42,447 were borne initially
by Federated Administrative Services ("FAS").
The Fund has agreed to reimburse FAS for the organizational expenses during the
five year period following the Fund's effective date. For the six months ended
March 31, 1996, the Fund paid $3,667 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
PEACHTREE GEORGIA TAX-FREE INCOME FUND
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(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended March 31, 1996, were as follows:
<TABLE>
<S> <C>
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PURCHASES $ 113,631
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SALES $1,233,324
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</TABLE>
(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
March 31, 1996, 25% 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 value of investments insured by or
supported (backed) by a letter of credit from any one institution or agency did
not exceed 18% of total investments.
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<S> <C>
TRUSTEES OFFICERS
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John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Charles L. Davis, Jr.
Gregor F. Meyer Vice President and Assistant Treasurer
John E. Murray, Jr. Richard B. Fisher
Wesley W. Posvar Vice President
Marjorie P. Smuts David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
Mutual funds are not deposits or obligations, are not guaranteed by any bank,
and are not insured or guaranteed by the U.S. government, the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency. Investment in mutual funds involves investment risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
